VALUE CREATION THROUGH
SOCIAL INNOVATION IN THE
SUPPLY CHAIN: THE CASE OF
JAIPUR RUGS IN INDIA
ICII-53013
Dr. Ritu Srivastava,
MDI Gurgaon
Opportunity at the Bottom of the
pyramid
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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
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The whole world is talking about it
But more importantly to capture the opportunity
Demand and Supply side
Challenge the assumptions
Assumptions
Assumption
#1
• Assumption
#2
• Assumption
#3
• Assumption
#4
• Assumption
#5
• Assumption
#6
The poor are not our target consumers because with our current cost
structures, we can- not profitably compete for that market.
no use for the products and services sold in developed markets.
Only developed markets appreciate and will pay for new technology.
The poor can use the previous generation of technology.
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.
Managers are not excited by business challenges that have a
humanitarian dimension.
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
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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
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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
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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
Stakeholder Value Created
Artisans
28000, continual employment, with equal
or better than alternative wages
Contractors Regular employment
Company
Low cost sustainable business model
Customer
High quality hand crafted rug/carpet
Sustainable Business Model
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Employment
Capacity building
Economic activity
Minimize resource
Less pressure on nature
Integrating the BOP with the global economy.