Indirect Impacts of Social Innovations

When discussing the article The Prophet of Cheap by Andy Greenberg last week, a classmate raised the point that the real innovation with Nicholas Negroponte’s $100 laptop for poor schoolchildren was bringing down market prices. While some might argue that Negroponte failed at delivering an affordable laptop for poor children, he was able influence the netbook industry. His product was innovative in the sense that it used cheaper materials while still providing key features in a laptop. His cheap laptop for the poor was regarded as a threat in the laptop market and industries paid attention. As an indirect result of Negroponte’s innovation, more people can now afford laptops because the industry took notice and produced cheap netbooks. The One Laptop Per Child project was not very successful at serving the people who it hoped to help out, but it was successful at helping out middle class people. More people now have access to laptops. It is hard to predict the impact that an innovation will have.

During our last class, some classmates pointed out that the Tata Nano failed short of its mission because it ended up costing more than the announced price and the product had a hard time finding a market in India. But as it was mentioned, it takes time for social innovations to have a significant impact. One also can’t predict whether the innovation will have different effects than the ones thought of. The Tata Nano is a great example of an innovation that is having an indirect impact very much like Negroponte’s $100 laptop.

As India’s economy continues to grow so do the number of customers and the automobile market in India took noticed of the Nano. Other car companies are now rolling out smaller affordable cars to profit from the economic changes in India. Bajaj Auto Limited is launching the RE60 to compete with the Nano and Renault-Nissan is looking to introduce a car between $4000 and $7000.

Innovations like the Nano and the $100 laptop haven’t reached their mission to help those in the very bottom of the economic pyramid, but they have had an impact on the lives of middle class consumers. The Nano perhaps didn’t do well after being launched because it was advertised as a “poor man’s car” and the “cheapest.” Not everyone is looking to buy the cheaper model and selling it as the cheapest often implies that it will lack important features. Tata Nano now began to advertise its new 2012 model as a “youth car.” It is hard to predict the effects of a social innovations. But should we be concern about negative effects such as an outstanding affordable product that could negatively impact some markets and create unemployment?