New economic order calls for affordable, accessible and sustainable solutions
Growing up in India in a middle class family in the 80s and 90s, and having lived abroad in the US and Finland for the past 16 years, enables me to appreciate both worlds. Let us take the simple everyday task of taking a shower. As a kid, I have seen how showering in India constituted having a 15 litre bucket of water, and no more. Whereas here (Finland), I turn my shower on and at least 7 litres of water comes out every minute. I obviously was/am able to take a good bath in both circumstances. This is a good example for understanding two things: how we use resources and how we can work under constraints leading to similar outcomes.
Let us go back in time for a moment. Apparently after World War II, when Westerners were asked what “Made in Japan” meant, the most common answer was that they were no good. Back then Japan had one of the world’s worst reputations for producing things. But soon enough, “Made in Japan”, or anything Japanese, has come to be seen as high quality. South Korean produced products, such as cars, machinery, and phones, had a bad reputation initially. But these days they are seen as producing quality goods. How did Japan and South Korea achieve this amazing transformation? They worked on their processes, manufacturing practices, and skills development.
Now we often read and hear that Chinese products are copies and that they don’t innovate. Wait a few more years and I am sure they will have a similar transformation. So will Indians. But what these emerging economies are also doing, and obviously are good at, is learning to innovate under resource constraints and cost controls. The reason I mention these countries is that currently they are offering their affordable solutions in their home markets but soon enough they will start offering them in Finland and Europe as well. If Finnish and European solution providers cannot and will not create affordable solutions, they will just be ceding this space to competitors from these emerging markets.
I want to suggest that we need to have a similar kind of mindset that we can embrace here in Finland and Europe. One way is by working together with talented students, companies, and entrepreneurs from these countries – who can give you the insights necessary to create such solutions. This is similar to the showering analogy I initially made. SMEs, large businesses, start-ups and entrepreneurs need to realise this.
Since 2009 the Finnish economic recovery has been on and off. Well, mostly off. We can say that this is also repeating across the Nordics as well as Europe. The Finnish and European economy is growing at a much slower pace than the Central Banks or International Monetary Fund and other forecasters are predicting.
The biggest thing on everyone’s mind, from policy makers to businesses, to economists and people on the street, is how to get the economy back on track. Job creation via entrepreneurship has been the goal of governments across Europe. The word “innovation” has been used a lot. But we need to understand that the economic structure in general has changed. We are beginning to see that what has worked for the past five decades does not work anymore.
All of this will lead to an increase in demand for the creation of quality, accessible, affordable and sustainable solutions. And I shall list the reasons now for creating such solutions:
- Since 2009 we have seen a few years of negative growth, some of zero growth and a few years of very slow growth. ECB and the Bank of Finland predict that slow growth of 1-2% may persist for the next 5-10 years. What this means is weaker purchasing power among individuals, families and even businesses.
- Deleveraging (as in debt reduction). Governments and businesses are in debt reduction mode and we see this clearly in the case of Finland. Now with less purchasing power, municipalities, universities, hospitals and other entities will be asking and looking at quality, accessible, affordable and sustainable solutions.
- Environmental and climate change issues are going to push governments to take action towards a carbon neutral society. This means being able to find ways for consumption as well as production that are frugal in nature.
- Rapidly ageing societies in Finland and Europe mean a significant subset of the population will have a limited income compared to the earning population. They will also need social and healthcare solutions that are of good quality whilst also being accessible, and affordable.
- If the above four points do not convince you, then one of the biggest reasons is, of course, that businesses need to create solutions that they can sell in emerging economies. These are the fastest growing and biggest markets that cannot and should not be ignored. But to be able to export to these countries, Finland and other developed countries should be able to create and offer solutions that are good quality, accessible, affordable and sustainable.
To help businesses and policy makers with these issues is why we started our non-profit, The Nordic Frugal Innovation Society (http://tnfis.org), in Finland in early 2014. Our aim is to help businesses use various paths such as:
- Using the principles and processes of circular economies, shared economies, open innovation, inclusive/social innovation, co-creation, and a DIY/Maker mindset.
- Using open source hardware and software where possible. Some of the new technologies, like 3D printing, are making it possible to create accessible and affordable solutions on demand.
- Thinking how to redesign a product or service to make it simple and affordable.
Obviously this does not mean not doing high-end and high-margin products. But in this new economic order, there is clearly a huge market for affordable solutions and this huge volume will help make up the profits from lower margins. The businesses that can leverage this and create such solutions will have a leg-up over their competitors.
Venkata Gandikota is Founder and President of The Nordic Frugal Innovation Society ry, the CEO of Indianeer Consulting and an innovation strategist. At TWINKLE, he will give a talk “Generic Economic Growth by Innovating under Resource Constraints & Cost Controls to Create Affordable & Sustainable Solutions”.