Over the course of 32 years, the LV Prasad Eye Institute (LVPEI) has treated over 25 million patients in 202 eye care centers across India. It also offers 50% of its services for free. How have they managed such things in an emerging market?
LVPEI’s Dr. Rao says there are two assumptions that must be discarded to succeed. The first concerns quality, and the second tough human resources decisions.
High Quality in the Value Sweet Spot
LV Prasad Eye Institute offers top quality cataract surgery, and it is this promise of quality that makes it possible for the institute to attract wealthy patients from all across India. The influx of profit then creates funding for the development of business models that provide the same quality treatment to less affluent individuals.
Which leads us to lesson 1: Everyone wants to have nice things.
While this may seem like a given, there is a misconception that quality is unimportant to consumers in emerging markets. However, if a particular value in Japan, for example, is not held in the same regard in India, this does not mean Indian consumers have no sense of value—it means they have a different one. The key is finding the value “sweet spot,” so to speak. Once you know what customers value most, focus on that. In the case of LVPEI’s cataract treatment, this meant specialized surgery on the most delicate part of the eye.
Japanese companies tend to go all or nothing, putting high quality into all aspects of a product or service sold at a high price, and proportionately lowering all aspects of quality as the price drops. We need to reject this way of thinking when moving into emerging markets. To realize quality products in more restricted price ranges, companies must ask: “What do users want, and how can we provide it?”
The truth is, even developed countries need so-called “frugal Innovation.” Let’s take hotels as an example. Luxury hotels offer all sorts of features, promising both high quality and high prices. On the other hand, budget hotels tend to offer lower quality services at a corresponding lower quality.
So where is the value sweet spot?
To answer this, let’s think about the most basic need of people who stay in hotels: to have a place to sleep for the night. Therefore, a budget hotel could refocus its resources not on raising the quality of all services, but on simply providing a high quality sleep. This means comfortable beds and relaxing bedroom spaces, above all else. The weary business traveler who comes to stay at such a hotel will likely feel he’s getting his money’s worth. And there you have it: the hotel has succeeded in providing quality in the sweet spot while still keeping its prices low.
Innovation as a Matter of Human Resources
When doing business in emerging countries, companies often make recruitment compromises. This may happen because it’s simply difficult to find people, or because the right people are out of reach, or because, in the case of startups, the company is eager to get moving.
Which brings us to lesson 2: the right people provide the right value.
Dr. Rao says that “the biggest challenge [for LVPEI] was not money. The biggest challenge was talent,” as they were thoroughly committed to acquiring the best team possible. In the creation phase of a business, companies are often eager to hire people—and keep them—regardless of whether they are really the best fit for the company or position. In established companies, it’s far easier to let ill-fitted employees go, but this may be the very attitude that will launch a new business into success early on.
The construction and operation of truly innovative business models relies on sticking with the best talent available. With reliable people in the field, the commitment to quality is assured, and any emerging market will be that much smoother to navigate for innovative business success.