VALUE CREATION THROUGH SOCIAL INNOVATION IN THE SUPPLY CHAIN: THE CASE OF JAIPUR RUGS IN INDIA ICII Dr. Ritu Srivastava, MDI Gurgaon

Opportunity at the Bottom of the pyramid  Annual per capita income based on purchasing power parity in U.S. dollars is less than $1,500, the minimum considered necessary to sustain a decent life  4 billion

They are different  The whole world is talking about it  But more importantly to capture the opportunity  Demand and Supply side  Challenge the assumptions

Assumptions Assumption #1 The poor are not our target consumers because with our current cost structures, we can- not profitably compete for that market. Assumption #2 no use for the products and services sold in developed markets. Assumption #3 Only developed markets appreciate and will pay for new technology. The poor can use the previous generation of technology. Assumption #4 The bottom of the pyramid is not important to the long-term viability of our business. We can leave Tier 4 to governments and nonprofits. Assumption #5 Managers are not excited by business challenges that have a humanitarian dimension. Assumption #6 Intellectual excitement is in developed markets. It is hard to find talented managers who want to work at the bottom of the pyramid.

Existing business models will not work  Huge pressure on resources- not sustainable  People –planets –profits = development and growth  Social innovation  We are not markets alone  We are suppliers also

Social Innovation  Social innovations are new solutions (products, services, models, markets, processes etc) that simultaneously meet a social need (more effectively than existing solutions) and lead to new or improved capabilities and relationships and better use of assets and resources.

Jaipur Rugs Company  Creating unique value through a collaborative organization of semiskilled and unskilled labor  In the traditional Indian art of carpet/rug weaving  For a global market in the developed countries.

Rug Weaving and Entrepreneurship

Value Co creation StakeholderValue Created Artisans 28000, continual employment, with equal or better than alternative wages ContractorsRegular employment CompanyLow cost sustainable business model CustomerHigh quality hand crafted rug/carpet

Sustainable Business Model  Employment  Capacity building  Economic activity  Minimize resource  Less pressure on nature  Integrating the BOP with the global economy.