Grameen's loan, Sultana also purchased a small solar-powered generator (Athalia has no electricity) and began renting out her phone to fellow villagers, most of whom had never made a single telephone call in their lives. Sultana broke even on her investment within one year and now makes about $1,000 from her mobile phone business. Her fellow villagers are now able to communicate with their distant family members - many of whom work outside of Bangladesh to provide for their families.
The idea of selling a $400 mobile phone to someone who makes less than $2 a day wouldn't appear in your average mobile operator's strategy. Companies in developing countries are so used to selling the same products to the same customers that their ability to come up with new ways of growing their business is all but non-existent. Which is a shame, because if they paid a bit more attention to companies in the developing world, they might learn something.
We don't normally think of the developing world as hotbed of innovation. After all, companies in developing countries face obstacles that other companies don't have to deal with: they lack trained scientists and world-class research universities, their target markets have very low disposable incomes and a scarcity of capital means there's not much investment in research and development.
But according to research done by Donald N. Sull, Alejandro Ruelas-Gossi, and Martin Escobari, companies in the developing world have found innovative ways to deliver growth - despite the significant constraints they operate under. Sull and his colleagues highlight three successful strategies used by companies in developing countries:
1. Innovate around, rather through technology
Take China's Haier, for example. The company, which manufacturers a wide range of household electrical appliances noticed that some of its rural customers were using its washing machines not only to wash their clothes, but to wash their vegetables as well. The company reacted by making a few modifications to its product line and ended up cornering the rural market.
2. Develop an intimate understanding of your customers' needs
When the Solar Electric Light Company (SELCO) was looking to expand its market of solar lighting products in Sri Lanka it had a hard time explaining to villagers why it would be useful for them to have a light on after the sun set. The breakthrough came when one of SELCO's salesperson realized their product was a perfect way to ensure elephants don’t trample over village huts.
3. Scour the globe for good ideas
Natura spends one-tenth of what its western counterparts spend on R&D. Yet 40% of the revenues generated by Brazil's leading cosmetics firm come from products introduced in the last 2 years. How do they do it? By realizing that most of the good ideas are already out there, Natura exploits technologies invented elsewhere and develops new products based on someone else's groundwork.
The important thing about these strategies isn't that they work for companies in the developing world, but that they could work for any company wishing to grow its business.
As companies emerge from an extensive period of cost-cutting, top-line growth is becoming a priority again. But while developed-world companies often see their creative capabilities as superior to those of companies from developing countries, some of the most interesting innovations are actually happening just there. All it takes is the willingness to look in unexpected places.
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