Innovation Flows from Emerging to the Developed World
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THRUSDAY 25 MAY 2017 beyondbrics Innovation Innovation flows from emerging to the developed world India, Africa and China act as a springboard but there are obstacles to overcome PETER VANHAM - WORLD ECOOMIC FORUM he German autobahn littering the streets with bikes policeman looked at the and has since withdrawn while it car confused, the Evening seeks permits. Bluegogo is turning TStandard reporter its attention to Seattle. noted. No wonder: the car had a Renault logo but the design was Renault Kwid car in India unrecognisable and its number A final example is the Renault plate and driver were Indian. Kwid. The car was introduced What was going on? in India in 2015, with a sales tag The policeman was looking at a that starts at around Rs256,000 Kwid, a Renault budget car made (£3,000). It has sold 130,000 in India for the Indian market and units so far, a considerable feat rarely seen in Europe. It has taken in a market dominated by local India by storm since its launch in manufacturers such as Mahindra. 2015 at the rock-bottom price of It has started exporting to just £3,000 each. © Bloomberg Indonesia and other markets are More broadly, though, the due to follow. German policeman was witnessing population lives with the virus, Bluegogo dockless bike- Renault’s unusual approach was a growing phenomenon. The this opened new market segment sharing hits the US to move its French designers over concept of “reverse innovation” for the insurer. Back in China, companies such to Chennai to work locally on the — in which innovative products The way in which AllLife manages as Mobike and Bluegogo took design and assembly for their designed for emerging markets to insure the “uninsurable” the western innovation of bike car, thus being able to adapt the boomerang back to the developed combines a twofold approach. sharing and adapted it for the Kwid entirely for local conditions. world — is spreading. First, it uses data provided competitive Shanghai and Beijing Already, 5,000 engineers and The concept derives from more by the customer to dispense markets. 35 designers are working in than mere chance. Just as Van Gogh personalised recommendations Their innovations were the Chennai Renault Nissan bootstrapped his way to genius, on how to manage their threefold: first, they simplified Technology and Business Centre. living far from Paris in rural condition, in effect extending the design as much as possible to The approach represented Provence, innovators in emerging lifetimes and thereby reducing minimise the manufacturing and a progression from Renault’s markets are making a virtue out the cost of insurance. Second, maintenance cost. Second, they strategy of designing cars such of financial, geographical and the product deploys algorithms eliminated the sharing stations, as Logan, Sandero and Duster other constraints. that use the information provided to allow users to leave and pick in France and selling them Innovations such as the low- by customers to assess their up their bikes anywhere. And in emerging markets such as tech wallet and payment service insurance risk and determine the third, they optimised the user Romania, Colombia, Russia and MPesa — which began in Kenya price of cover on a case-by-case experience by allowing people to India. and Tanzania and has spread to basis. unlock a bike with a QR code and Such examples suggest reverse South Africa, India, Romania and The company started to achieve to rent them for a small fee. innovation has a future. But there other emerging markets — show scale after receiving backing from As a result, Shanghai’s dominant are obstacles, chiefly the west’s that necessity can be an effective Leapfrog, a so-called “impact” bike-sharing offers are arguably tight regulatory environment. mother of invention. private equity investor. It now has cheaper, better and more In some developed countries, But this is by no means the only more than 100,000 HIV clients, ubiquitous than their western AllLife’s approach may fall foul example. Other cases of reverse and in 2014 it also applied its counterparts. Karly Ulrich, vice of regulatory strictures. Bluegogo innovation suggest that emerging technology to offer insurance to dean of Innovation at Wharton, already found in San Francisco markets may increasingly become diabetes patients in South Africa. estimated Mobike manufactures that what works in China is not a testing ground for products and The model is now exported its bikes at about $30 each. It has necessarily transferable without services that can prosper in the to the West as well. This year, been a success as well in terms modification. The Renault Kwid west. the company partnered with of attracting funding: Mobike for scored one out of five stars in Royal London, Britain’s largest example, the market leader, has the European NCAP safety rating AllLife diabetics insurance in mutual life insurer and pensions raised $325m in six rounds of system, indicating only marginal the UK company, with £100bn in funds financing. protection in a crash. About a decade ago, South under management, to offer It is no surprise then, that the Peter Vanham is a Global leadership African insurer AllLife became diabetes patients life insurance Chinese innovators are looking fellow at the World Economic Forum. the first company in the world in the UK. The diseases’ type to western markets, including the to offer whole life cover to HIV- and impact are different, but the US, to expand. Bluegogo started positive individuals. In a country innovative approach is the same. offering its bikes in San Francisco where almost a fifth of the adult but courted controversy for © THE FINANCIAL TIMES LIMITED 2017.