The Power of “Good Enough”
Firms in developed economies should watch for systems-changing innovations happening elsewhere.
Research shows consumers are willing to pay 5 to 10% more
for green products and services, so long as they function as well as their non-sustainable alternatives. Sustainable options must be just as reliable, safe, convenient, usable, and aesthetically attractive as competing brands.
However, some firms have found their products need only be good enough
to reach target and niche markets. In certain cases, offering a simpler product is preferable to an unparalleled gold standard.
In December 2009, Tata Chemicals Ltd. (TCL)
introduced the “Tata Swach” ("Swach" is Hindi for “clean”), the world’s cheapest household water purification system.
Tata Group Chairman Ratan Tata stressed that it was more important to the company that their product be as accessible as possible to large amounts of people – not necessarily the cheapest. The Swach, which TCL’s Innovation Centre built using nanotechnology and natural, locally sourced materials, does not use any harsh chemical treatments like chlorine.
Tata Swach became the world’s most inexpensive water purifier, enabling a 50% savings compared to its nearest competitor. The water purifier is a prime example of a “good enough” ethical product that reportedly complies with U.S. Environmental Protection Agency
Mobile telephone services in China were traditionally targeted at affluent individuals living in urban areas. To the extent that they were served at all, bottom-of-the-pyramid customers in rural locations were sold “out-of-date” phones.
This business model was changed with the introduction of a new, domestically developed cell phone chip. The chip was simpler and cheaper than other chips, but with limited stability. Existing manufacturers would not use the chip because of the stability issue, yet it did provide a “good enough” cell phone solution for rural users.
Using the chip, a network of distributors, manufacturers, small- and medium-sized enterprises (SMEs) and local entrepreneurs worked with consumer groups to design a cell phone that reflected local needs and accounted for local manufacturing capability. The phone was technologically “deskilled,” enabling the local entrepreneurs and SMEs to participate in its design. This involvement built local capability from the bottom up and provided access to a service that stood to improve the lives of rural Chinese.
Developing economies are often unhindered by the infrastructure and institutional and regulatory frameworks present in developed economies. As such, they are freer to redesign the delivery of products and services.
Firms in developed economies should watch for systems-changing innovations happening elsewhere. Those innovations have the potential to change their own domestic markets.
The potential for market disruption is particularly true in cases where the target market is the bottom-of-the-pyramid consumer. This consumer accepts a good enough, satisfying product that works for them and is usually more affordable. Products in this category are characterized by limited and simple functionality, but they remain reliable, durable, and user-friendly.
Offering an ethical product that meets basic requirements and sells at low cost increases accessibility. In these cases, a company’s lack of innovation to create a more complex product is, in and of itself, innovative.This article has been adapted from NBS’s Innovating for Sustainability Systematic Review.