Turing “Cants” Into “Cans”: The Affordability Factor

This week’s Strategic Innovation at the Base of the Pyramid (Anderson and Markides, MIT Sloan Management Review, Fall 2007) and Inside the Tata Nano Factory (Business Week, May 9, 2008) reinforced that it is not only possible but is also vital to set a price point that is affordable to consumers.  This often requires working through design and budgetary limitations.

Digging deeper into the affordability factor of social innovation, I remain impressed with companies like Tata Motors and One Laptop Per Child (Negropante) that have “rewritten the rules” about setting price points for otherwise expensive mechanical and technological devices.  They’ve had to audacity to prove that it is possible to produce products that are attractive to consumers, meet an immediate need, and even influence other companies to lower their prices.   

One similarly inspiring story is that of Matthew Callaghan, MD (fellow CMU alum) who is developing an affordable ventilator for use in hospitals providing life-support to patients (http://csi.gsb.stanford.edu/another-biodesign-success-researchers-develop-low-cost-medical-ventilators-global-disasters).  By creating similar price parameters as both Tata and Negropante did, Callaghan is meeting a need that has the potential to save the lives of thousands of patients.  With the goal of bringing the ventilator price point down from $40,000 to less than $800, Callaghan hopes to make this product available to markets around the globe, particularly those affected by natural disasters.  Additionally, he believes that this product can serve the needs of western markets, driving down the costs of life support at hospitals attempting to cut costs. 

Could this be the next proof that we can lower prices?  Callaghan’s invention is set to be released in 2014 (http://www.popsci.com/diy/article/2010-05/invention-awards-breathing-easy).  We’ll know for sure then.