Inclusive Business Strategies: Empowering the Underserved Markets
This article is an analysis of how GE Healthcare was able to serve the “bottom of the pyramid” in India. I used a bit of theory from Ghemawat’s triple-A framework in this analysis.
General Electronics’ approach to international business in India can be used as an example to other organizations on how to be competitive on a new frontier. G.E., a largely successful American business, realized that their ventures in the Indian healthcare market were very poor compared to their potential. According to the case study, “Within the Healthcare division, India still accounted for less than 2% of revenues”. With India having one of the largest populations on earth, there must be something wrong to explain why it only accounts for a small percentage of revenue.
Upon inspection, the organization found that they were not able to make significant sales to the bottom of the pyramid (BOP) within India. Because of G.E’s past success in the medical devices industry, they thought they could take the aggregation approach to international business by selling what they’ve standardized and perfected in other places to India.
An executive in the company admitted as such by saying, “We were selling what we were making [rather than] making what the customers here needed”. In saying this, the executive highlighted the need for a strategy that involves more adaptation. Instead of just exporting the same intricate and expensive product, G.E. would need to explore the needs of the local economy and tailor their solutions specifically for them.
G.E. recognized there was a need for electrocardiogram (ECG) equipment in India after some analysis. Cardiovascular diseases were the largest cause of death and caused 30% of all deaths according to the case study. Existing ECG machines that would help address this problem were too expensive and too complicated for many practitioners in India. But with the help of local research and development talent, G.E. was able to build the MAC 400, an ECG device that was cost-efficient, effective, and appealing to customers at the BOP in India.
Firstly, the MAC 400 was customized with features that were uniquely beneficial to people in India. The masses of people in India didn’t have 24-hour access to electricity. To make the ECG device more appealing, G.E. added rechargeable batteries so it could be used even when the user was not on the power grid. In addition, G.E. made this version of the ECG much smaller and portable. This made it easier to transport it and treat people in local areas outside of a hospital.
Secondly, G.E. focused on making the device more useable for practitioners with less sophisticated education. They did this by allowing for a limited number of keyboard inputs, simplifying the reports, and using a small text-only display. These enhancements made the MAC 400 both easier to use and cheaper to produce.
Although they made things cheaper, they didn’t compromise on core functionality. The base algorithm used by ECG machines, the Marquette 12SL algorithm, was still used in the MAC 400 like its predecessors. By doing this, G.E. made their product more appealing to BOP customers who still cared about the quality of the product.
In this case study, there are many lessons multi-national corporations can take away to improve their business model and organizational design when serving emerging markets. For one, they can start to think about the adaptation strategy early on when trying to sell a product overseas. Sure there are some cases when they might want to use the same product, but oftentimes, the needs are different and may require some customization. As mentioned, G.E. tried the aggregation method and fell far short of potential until finally leveraging the adaptation model by building the MAC 400.
On this same note, to take an adaptation model, some tweaks are required on your organizational design. According to the case study, “India overnight went from getting only two slides in the G.E. International presentation to getting a whole presentation on its own”. Actions like this and creating a management framework that was tied to India helped decentralize the business structure. Actions like this are often useful in aggregation strategies because they allow the business to move faster with more context of the local needs.
Lastly, G.E. tried to exploit existing synergies with their existing business. Although G.E. made a new product with local parts, it still leveraged the tried and true Marquette 12SL algorithm. With moves like this, they were able to avoid reinventing the wheel and leverage their existing skillsets.
Sources: “G.E. Healthcare (A): Innovating for emerging markets” — https://hbsp.harvard.edu/product/INS161-PDF-ENG
