Culverhouse STEM MBAs are Back in India!
For the second summer, I’m spending about three weeks in India with roughly a dozen STEM Path to the MBA students. It’s very hot, very humid, and we are having a terrific time and a great learning experience. Our itinerary this year is roughly the same as last year – we are spending time in New Delhi, Kajuraho, Agra, Chennai and Mahabilipuram – but with all but one of the students making their first trip to India (Rachel Ramey is a veteran from last summer’s trip) and mixing in some visits to new sites and with new Indian villagers, slum dwellers, and others, it’s makes for a whole new experience.
Why Poverty in India?
You may ask why India and why study impoverished consumers? Why villagers in the Indian state of Madhya Pradesh, out in the middle of nowhere and slum dwellers in the middle of India’s largest urban areas? It’s a long story. Each summer, students in the STEM Path to the MBA program, from incoming freshmen right out of high school to UA graduates who are rising into their MBA year of study, participate in a common reading experience exercise. The faculty choose a book and everyone in the program reads the book over the summer and writes a short reaction paper that they turn in during the fall. Over the course of the school year, we bring in experts to talk about the topics addressed in the book. Sometimes those experts are the authors of the book that was read.
During the summer of 2013, we all read “Reverse Innovation” by Dr. Vijay Govindarajan. Vijay is an emeritus professor of strategic management at the Tuck School of Business at Dartmouth College. Vijay grew up in a relatively poor urban area of India and was fortunate enough to be invited to attend college in the U.S., at Harvard. One of Vijay’s mentors was the famous University of Michigan strategy guru, C. K. Prahalad. Prahalad was born and raised in the Indian state of Tamil Nadu. He attended one of the IIT engineering colleges and earned undergraduate and graduate degrees in engineering. After practicing engineering and managing in tech-oriented businesses, he went on to earn his doctorate in business at Harvard. Prahalad, like I said, was a thought leader in strategic management, but also an early contributor to thinking on development in emerging markets. He pioneered the concept “bottom of the pyramid”, which refers to the roughly 4 billion poor people on the planet who live on less than $2 per day and make up the base of an economic pyramid. Toward the end of his career, he encouraged companies to consider the fortune that could be made from doing business with this segment of consumers. The idea is that these consumers have needs for products that are inexpensive and address basic human needs, and because of the sheer number of these consumers in our world’s handful of emerging markets, a fortune could be made by addressing their needs.
Vijay Govindarajan shares Prahalad’s vision and developed an approach for putting it into action. Govindarajan encourages companies to practice “reverse innovation.” Traditionally, a common approach used by companies accustom to doing business in developed countries (typically from the western portion of the northern hemisphere) when entering developing markets (typically located in the eastern and southern hemispheres) is to create stripped-down, low cost versions of the products they are currently selling at home and introduce them to developing markets. The results of this approach have been, at best, mixed. Govindarajan argues for a different approach. Companies should instead, he argues, determine the needs of consumers in developing markets and create products that address those needs. The logic is that products developed in this way, once introduced in the developing market, will have small profit margins but, because of the very large number of potential consumers of the product, overall profits will be attractive. However, it is not intended that the story ends there. Numerous examples of products developed through reverse innovation are modified and introduced to the home, developed market where higher profit margins can be enjoyed and make the entire effort more attractive.
In the fall of 2013, Vijay visited campus in Tuscaloosa and had a number of great conversations with the STEM MBA students. The students were inspired and asked me to put together a study abroad experience in rural India to perform reverse innovation exercises. We began working with Mahesh Sriram and his company, I-India, located in Chennai. Almost two years later, we made our first trip last summer. It was a big success and we had sufficient interest this past year to repeat the trip this summer. This summer’s students come from majors in mechanical engineering, chemical engineering, civil engineering, electrical engineering, computer science, and biology. All but two of them have started their MBA coursework. Nine guys and two young women, they come from Illinois, Pennsylvania, Ohio, Tennessee, South Carolina, Louisiana, Mississippi, and, of course, Alabama.
So, I have explained the students’ general motivations for making the trip, but let me share mine. Part of my own motivation arises from being a huge fan of innovation and capitalism. I’ll explain more in later blog posts, but I believe that the great strides forward that we have made over the last 150 years, and especially the last two decades, in lifting the world’s poor out of poverty have been fueled by innovation. Innovations in healthcare have resulted in the eradication of small pox and the diminution of deaths and impairment from disease that had been common prior to industrialization. Admittedly, industrialization has brought its own negative consequences, and many innovations have been introduced to reduce or eliminate many of those. Innovations in agriculture have allowed us to make leaps forward in feeding the people of the planet. Innovations in information technology allow us to better monitor, in real time typically, the phenomena that threaten human health and wellbeing all over the world. I could go on but clearly, innovation has been key in reducing misery on the planet. An innovation in how industry and commerce are conducted, capitalism, is a constantly evolving approach that supports and rewards innovation activity. The media today report daily on misadventures in capitalism that can leave us with a bad impression of its overall impact, but my own opinion is that the conscientious practice of capitalism provides the best environment for innovation to occur and, in turn, increase worldwide wellbeing.
More motivating personally, I’m one of the most blessed people on the planet. I won the lottery and was born in America to parents who created a nurturing home and encouraged curiosity, learning, and compassion for others. I had teachers throughout my school years, both in public K-12 and later in college, who were terrific educators and I ended up leaving school with degrees in biology, pharmacy, finance, and marketing that prepared me well. For the last 25 years, I’ve been blessed to teach and do my research at the University of Alabama. Colleagues, administrators, and students have provided encouragement, opportunity, thought-provoking conversations and, of course, a monthly paycheck. For the last 30 years, my wife Julie and I have enjoyed a great time together that has included raising three bright, driven, compassionate daughters. I have learned more from these four women than any other people in my life and I am very grateful to and for them. Finally, but foremost, I have had the opportunity to enjoy a spiritual life full of growth, in part thanks to all of the aforementioned people and circumstances, but mostly by God’s grace. Given all of these blessings, I seek most every day the opportunity to be a blessing to someone else. I know of no greater source of those opportunities, given my strengths and weaknesses, than working with students to better understand the large emerging markets of the world. Thus, in the latter half of my academic career, this has become one of my work passions. I have a long way to go before I get good at it, but I’m encouraged every day by my family, my students and my colleagues.
Changing the Approach to Blogging
If you followed our blog last summer, students blogged from time to time as their schedules and interests allowed. My own blogs provided a daily chronology of our India trip and comments on what we were learning. Rather than repeat that style in my own posts this year, I’ve decided to take a different approach. Reflecting the motivations for making the trip, I’m organizing my own posts around progress and opportunities that the students and I have identified for improving the lives of India’s impoverished people.
Where do we look for opportunities for progress in the developing world? Well, think about the everyday areas of our lives that can make life seem much better or much worse. Perhaps the first thing that springs to mind is health, physical and mental wellness, and the presence or absence of disease. We would likely also think of our current age and expected life span. Though we may be bashful about admitting it, undoubtedly, we would consider our material wellbeing and wealth. Today, a number of researchers from a variety of disciplines study personal happiness as well as attitudes that we would expect someone to enjoy more of as the previously mentioned circumstances improve. The common thread for all of these things, as mentioned before, are innovations that take place in our environment.
Going forward, I plan to organize my own posts around a number of areas where my students and I see that opportunities exist for improving the living conditions of consumers in emerging markets, specifically focusing on Prahalad’s “bottom of the pyramid” consumers. Of course, the focus will often be further narrowed to the particular emerging market that we are studying together in this summer’s trip: India. Three of the students and I, after finishing in India, will make a short stop in Tanzania – another emerging market – and so that experience might inform the discussion as well.
For now, the areas we see where innovation can occur or areas of life that can influence the practice of innovation, especially in developing economies, include:
- Natural Resources
- Health and Healthcare
- Access to Financial Assistance
- Physical Infrastructure
- Clean and Abundant Water
- Water for Irrigation
- Environmental Stewardship
- Communications Infrastructure
- Religion and Spirituality
Many of these interact or might overlap in some areas, but should provide opportunity for substantial discussion. I hope that you enjoy it!