To be truly innovative, technology is king and a hefty budget is required to deliver a successful end product. Or is it?
While many researchers and business practitioners have espoused the resource-based view on innovation, where supply drives the size and cost of a project, a new school of thought has emerged where demand is the driver. A look at emerging countries and economies and how they get the best out of their relatively limited budgets could just break the western perspective on social innovation.
In many ways, the resource-based view on innovation (or RBV, as it is commonly abbreviated) makes perfect sense within certain economies and countries. Technology comes at a cost and so social projects designed to offer something new will invariably involve an intensive level of investment. However, not all companies, economies and countries can afford to invest so heavily. They are therefore left with a choice – to over-spend or to scale down their level of ambition whilst keeping customers and users happy.
Customer preferences in emerging economies
One thing is certain – with the growth of emerging countries across the world, this issue should not only be a matter of interest to researchers and businesspeople but also an increasing matter of urgency, especially in areas such as urban development that are so heavily impacted by population growth. Over the period 1995-2005 it has been estimated that the urban population of developing countries grew by 165,000 people every day. It has also been estimated that the overall urban population in emerging countries should reach 5.2 billion by 2050. However, the economies in place to support these populations are not necessarily getting any richer. Just take a look at the recent uproar from the Brazilian people at the millions and millions ploughed into hosting a football world cup that the country seemingly couldn’t afford in the first place…
On a more positive note, what has been observed within emerging countries is the different customer preferences and how quickly people can switch or, more precisely, leapfrog stages in technological advancement and adapt arguably more rapidly to new technologies than their western counterparts. The rise of mobile phone technology in India is a case in point, with a huge population that barely had a landline telecom network worthy of the name now making the kinds of strides in mobile telephone technology that are the envy of many other nations.
Meeting demand within reasonable limits
A recent case study of the overhauling of the public transport system in the Brazilian city of Curitiba shows how emerging economies can succeed in improving the social infrastructure for its inhabitants without rendering the country in question destitute. In fact, “overhaul” isn’t quite what the project involved, precisely for financial reasons.
By carefully observing the needs of the community and the budget at their disposal, the public authorities deployed a locally-adapted urban and road development strategic plan. The process began as far back as 1941 and the foundation of an initial urban culture, evolving into a sustainable and structured urban development project via the considered integration of public transportation in the 1960s and a carefully-thought through re-organisation of the road system and layout of blocks of buildings. This step-by-step, all-encompassing approach enabled the planners to conciliate the logic and perspective of the city as a whole with that of the individual areas and constructions, as opposed to throwing large amounts of money at one-off innovative projects that might not have actually served the needs of the public in the long run.
Not too much of a good thing
The approach adopted in the Curitiba case has been coined “just good enough innovation”, which basically involves deploying lower-cost, simpler or more convenient products and services, meeting customer/user needs but remaining within the allotted (and indeed available) budget at the same time. In countries such as Brazil, social betterment simply cannot be brought about by heavy investment in sophisticated technological innovations. Going back to the demonstrations from the Brazilian people against the money spent on the 2014 FIFA World Cup, this long-term investment was only made possible by not putting in jeopardy the other vital necessities as health, education and living conditions….
What the Curitiba case also illustrates is that by carefully weighing up supply and demand and investing wisely (which does not always have to be a question of the size of the investment but can also be an issue of how it is spent), emerging companies can still build up innovation-based competitive advantage. More to the point (and especially in light of the growth statistics quoted previously), this way forward could not only prove to be an increasing necessity but also present a significant theoretical and actual challenge to the long-held resource-based view of innovation. By adopting a considered approach based upon demand, certain economies may just find a way of absorbing rapid population growth especially in the mega-cities with a population above 10 million, and the social developments that such a rate of growth necessitates, despite a relative lack of resources.
This article was inspired by the paper Social Innovation in Emerging Economies: A Resource-Based View Perspective, written by Irena Descubes, Jean-Philippe Timsit and Yann Truong and published in Strategic Change - volume 22, issue 7-8 (2013).
Irena Descubes is an Assistant Professor of Marketing at ESC Rennes School of Business, France. Her research interests include Consumer behaviour: frugal consumer modes, sustainable consumption, downshifting, and Corporate Social Responsibilty.
Jean-Philippe Timsit is an Assistant Professor of Strategy and Innovation at Rennes School of Business, France. His research interests include Strategic Management, University-Industry Technology Transfer, and Resource-based View of Firms.
Yann Truong is an Associate Professor of Strategy and Innovation at Rennes School of Business, France. His research interests include Aspirational Marketing, New Media Advertising, and Innovations Marketing.
The old adage “the customer is always right” may apply in a retail shop but in the more complex world of business it is neither a universal truth nor even a desirable one. The dynamics of supplier-customer relations have for a long time been viewed purely from the customer perspective. However, by looking at ways to enhance the working relationship through the lens of the supplier and proposing a more strategic set-up based not only on the end product but also service and performance offers an alternative. Treating the supplier like a commodity might just become a thing of the past…