Embrace Your Constraints to Create New Markets
October 4, 2012 Editor 0
For more than half of India’s citizens, seeing was a problem.
About 7 percent of the population wore eyeglasses in 2002, while whopping 65 percent of those in need did not have them. But for an average worker living in rural India, earning $1 a day was the norm. Nearly two-thirds of the country’s population in need lived outside the reach of services. Add work time lost due to travel; cultural norms requiring that people travel together; the expense of transportation; and a general lack of awareness about the value of correcting eyesight problems, and the French eyeglass company Essilor was faced with a perfect storm of what we call external constraints.
This term is just what it sounds like: external constraints are market, environmental and/or consumer conditions forced on any company doing business in their space — something from outside the company that it has little or no control over.
So how could Essilor deliver quality to an extremely large population with few personal resources, at fraction of the cost? As one of the world’s largest lens manufacturers, with 30 percent global share of the lens industry, the company had special reason to consider the enormity of India’s eyesight problems.
Smartly, Essilor realized that in order to problem solve, they would have to intentionally impose constraints on themselves. They threw out Western-style of care as a solution, recognizing and eliminating old constraints. And they forced their team to answer what seemed like impossible questions: How do you produce a $1 pair of glasses? How do you make a profit on it? Intentionally imposed constraints are mechanisms actively used to force inventiveness — “necessity is the mother of invention” turns out to be not just a great quote but a powerful tool.
In the end, the company embraced all of its constraints and reinvented eye care in India.
If customers couldn’t get to opticians in urban centers, why not bring them to the customers? Looking for innovations they could reapply, Essilor built upon the model of mobile cataract surgery vans that first made these surgeries affordable to the masses. In 2005, Essilor launched its first “refraction vans” — mobile vans that allowed an optician to offer on-the-spot diagnosis and prescriptions for visual problems with a limited range of spectacles ready for immediate sale.
The vans accessed rural areas and offered services that could lead to a sale within an hour. The solution brought costs down to as low as $4 for custom spectacles, and $1 for premade common correction lenses.
Yes, these mobile clinics reached a large percentage of the population. But before rolling out more, Essilor — both for profit and social mission reasons — decided that the price was still too expensive for many. By using another innovation management best practice, they analyzed their system and found that the opticians themselves were the most expensive piece. Essilor eliminated this intentionally imposed constraint by creating a way to deliver with a fraction of opticians.
As they scaled this project, they worked on efficiency, operations and reducing overhead to achieve a true innovation: something that changed the lives of millions while achieving profitability.
This isn’t particularly surprising. When my colleagues and I analyzed hundreds of large companies while assembling The World Database of Innovation, we found that those with the most consistent year-over-year top line growth used scarcity to drive inventiveness in one way or another.
Emerging markets pose a complex set of external constraints that companies have really only begun to think about, much less tackle (for more on this challenge, see Dr. Pasha Mahmood’s work at IMD). We’ve seen small successes with Tata’s Nano, the world’s cheapest car at $2,500, or with Dr. Devi Shetty, whose hospital group made cardiac surgery available to India’s poor while beating Western quality standards. But even P&G and other large savvy innovators say they have not yet mastered this world of externally imposed constraints. Essilor’s success, then, is even more remarkable considering the combination of intentionally and externally imposed constraints.
In order to use constraints to your advantage, companies must first have an attitude that allows them to embrace the world as it changes — something absent in most large organizations that are inherently designed to manage current assets and maybe grow them a little each year. We’ve all seen companies flounder or even die as they ignore external constraints (think super computer companies in the ’80s, or Kodak). These companies and countless other showed an attitude of institutional arrogance, “not invented here” syndrome, or had a cultures that have them not facing reality and then dealing with it. Essilor’s attitude is to be commended — it was the gateway that allowed it to embrace constraints that to success.
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