Innovation in resource limited settings

My last post on innovation friendly countries got a great comment. Resources limited settings are fantastic breeding grounds for breakthrough innovations that have the potential to change the world.

An example is the whole wireless communications revolution that is going on in India. India was never able to ramp up wired communication due to lack of qualified technical people and resources (money) to lay the wired lines for telephones. A pathetically paltry number of people in India had a telephone till about a decade ago.

With the innovation of wireless telecommunications, the issue of laying wired lines was made redundant. Today, over 400 million people in India have phones now and that number is growing every day. Now, the infrastructure is being upgraded to enable 3G networks. So what is innovative about this?

Well, several things. Several out of the box products have come up:

• Sloka Telecom, an India based telecom hardware company, has developed a unique design for a base station that is so small it can be installed on a traffic light pole. This base station is 50% cheaper and does not require air-conditioning or cooling. It can be installed out in the open anywhere. The cost of running this base station is 50% lesser. Read the Sloka Telecom success story here: http://specials.rediff.com/money/2009/mar/18slide1-innovation-woes-india-neglects-product-firms.htm
• Innovative mobile platform products have flooded the market. Many applications from mobile gaming to maps to you-name-it have entered the market and are extremely successful. A lot of these products have a market in the developed countries as well. Some of these product companies are getting big clients in the European and American markets.
• Cost of a phone call is the cheapest in India. It costs less than a penny a minute. Incoming calls are free. Unique calling plans have come up.
• Companies like Nokia are developing concepts, testing them and manufacturing products in India. India is their laboratory for mobile platforms.

Overall, companies from developed countries have a lot to gain from competing in resource constrained settings. They can learn how the market is evolving and will likely evolve in the future. They can finetune their offerings so that they can make money in these markets. More than anything else, they can charge a lot more for these same services in the developed countries as customers are willing to pay much more in these countries. And that is a VERY smart business model.