The second of a two-part series by Next Billion on the Aravind Eye Care System discusses how the organization’s culture of service and innovation, have led to its success. Aravind serves both rich and poor customers, most of whom receive free or highly subsidized rates. It is said that this has been possible through its innovations in products and services, processes, and technology. Its product and service innovation has been tied to a range of pricing for different types of accommodation and lenses, which has led to cross-subsidization as the model has scaled. Its process innovation involves using rural healthcare workers, whom the organization has trained itself, to perform administrative and assistance tasks, for trained ophthalmologists and surgeons, which allows for high utilization rates. Finally, its technological innovation comes both in the form of low-cost lenses, and through webcasts in rural area vision centres. More details on Aravind are provided in the recent publication of a book titled, Infinite Vision by Suchitra Shenoy and Pavithra K. Mehta.
Editor’s Note: This is the second in a two-part series focused on Aravind Eye Care System, one of the few stand out success stories of a BoP enterprise profitably serving the poor. (Part one may be found here). Together these posts cover the paradoxes in Aravind’s model, the innovations behind its success, and the insights surfaced in a new book, “Infinite Vision,” written by Pavithra K. Mehta and Suchitra Shenoy.
How did Aravind’s success transpire? What is the magic in this model? And given such a clear and compelling example of success, why hasn’t the model been widely replicated? The answers have to do with the multifaceted and interdependent nature of innovations in Aravind’s model, and the fact that most BoP businesses focus on discrete elements or strategies that Aravind was able to harness in concert.
What is the formula? A Culture of Service + Innovation = Success?
Not incidental to its achievements, and very much at the core of Aravind’s success is a strong culture of service, an attitude of daily work – not as a mechanical endeavor – but as work in service of self and community. This central ethic permeates the Aravind workforce and drives its mission.
How does a culture of service, to the point where most patients are treated for free or at subsidized rates, add up to good business? If you ask those familiar with the Aravind model what core value proposition they offer customers, you will hear attributes like “quality,” and “compassion.” A culture of service appears to ensure that Aravind sees its value proposition instead as a values proposition driven by personal values, which is perhaps the secret behind their universal appeal to both affluent and poor customers en masse. To effectively deliver these values propositions, Aravind was able to leverage multiple and reinforcing sources of innovation including product/service, process and technological innovation in concert.
Product and Service Innovation that discovers a customer’s willingness and capacity to pay
Smart pricing – balancing service and value at a price point that allows a venture to scale– is vital to the success of a BoP business model. Aravind does this exceptionally well by creating differentiated products or experiences for varying levels of patients. The same operation can be priced very differently (ranging from free to a little over USD $1,000) based on the accommodations associated with the surgery and the type of lens implanted. These innovations in differentiated offerings – allowing patients to elect a level of services and accommodations based on preference and ability to pay – effectively discovers the willingness-to-pay of a broad spectrum of clients, from the poorest of the poor, to the quite wealthy. It also ensures that Aravind is extracting optimal value from each transaction. In practice, one paying patient can subsidize the no-frills surgeries and pre- and post-operative care of two non-paying patients. Cross subsidy along these lines, on top of Aravind’s high productivity, accounts for its massive scale and effective delivery of services to the poorest communities. A one-paged poster explains Aravind’s various options and pricing for surgeries and accommodations.
Process Innovations that tap into the resources of the community
Aravind conducts what has been termed as an almost “assembly line” delivery of eye care services. Employees, (primarily women from the rural villages in which Aravind works), are trained extensively in discreet skills, and perform all levels of administrative work, diagnostics, nursing and assisting. Professionally trained ophthalmologists and surgeons make initial diagnoses, verify the results of routine tests done by Aravind-trained employees and perform assembly-line style repetitive surgeries. This allows Aravind to simultaneously harness latent and untapped human resources of the communities in which it works, and to utilize the highest trained and paid professionals in its employment at their maximum capacity. Aravind averages 2,000 surgeries per doctor per year compared to roughly 400 in standard Indian clinics. Behind Aravind’s stand out success in bringing down the cost of service delivery are a host of process innovations detailed in the book “Infinite Vision.”
Technology Innovations to further drive down costs and accelerate service delivery
Process innovation aside, Aravind has further reduced costs through technology innovations. Aravind elected to start manufacturing Intraocular Lenses (required for the bulk of cataract surgeries performed) after a drawn out and failed effort to negotiate wholesale purchase prices of lenses to levels affordable to the low-income segments it served. Eventually Aravind was able to achieve nearly 95 percent cost savings on these lenses, greatly driving down the market price for these lenses and putting sight restorative cataract surgeries within reach of lower income populations around the world. Another example of employing technological innovation to drive down costs and scale up efforts, Aravind utilizes webcasting to allow patients in rural area vision centers to be examined in real time by ophthalmologists in hospitals in more central locations. At the intersection of these multiple sources of innovation was an effective environment for scale, but the road to success has not been easy.
A different kind of impact investment
The story of Aravind is not all glory and accolades. It has taken the better part of three decades and deep commitment from the family of the founder Dr. Venkataswamy, to reach scale. Success, for Aravind, was not produced by impact investment funds, but by the impact of many personal investments – some of money and resources, but more importantly, of time and service. Infinite Vision discusses, from an insider’s perspective, the personal and interpersonal struggles of Aravind’s leadership, as well as the varied institutional challenges faced over the years from high turnover of staff in a demanding model, to the process of transitioning decision making authority to new generations of leaders.
There is something for everyone in the story of Aravind. It is an against-all-odds phenomenon firmly at the intersection of health care and business, head and heart, the deeply personal and the massively scaled. If you are at all interested in social enterprises, healthcare, last mile delivery of goods and services at the BoP, innovation, work force development, or are simply in need of some inspiration … this is a must read.
Visit the “Infinite Vision” website to learn more about the book, the authors, upcoming launch events and to read an excerpt.
http://www.nextbillion.net/blog/2011/11/18/three-decades-in-the-making–