This article was written with the assistance of Haas intern, Micah Sanders.
Xerox is the world’s leading enterprise for business process and document management. It has a presence in more than 160 countries and has over 140,000 employees worldwide.
Innovation is and has always been an important and integral part of Xerox’s business operations. The company spends approximately $1.5B per annum on R&D in five of their research centers around the globe. Xerox also has around 10,000 active patents with twenty new incoming patents a week from the U.S.. Despite its huge R&D budget however, Xerox is focusing on a business innovation model that is geared towards jugaad or frugal innovation; which means innovating out of necessity in the most efficient and least costly ways possible.
Today, the students of UGBA193i visited the Xerox head office in Bangalore, India. Students were told that a company can eventually innovate frugally after having ample market expansion, utilizing outcome based services (commission percentage model versus fixed salary model), and pursuing constant innovations until the firm successfully tackles and overcomes unique challenges that are specific to its specific geographic location.
Xerox is currently implementing this technique into areas, namely Transportation and Healthcare. Private transportation in big cities can be pretty difficult, especially when parking is such a huge problem. Researchers reported that 25% of all driving time was spent on finding parking space. Consequently, Xerox developed innovative pricing algorithms to automatically increase rates for in-demand parking spots, and vice versa for less contended areas.
Xerox recommended and implemented this process in Los Angeles, known as the LA ExpressPark. As early as the first six months of trial, parking congestion already decreased by 10%, with spaces much easier to find; under-utilized parking spaces decreased 5% because drivers were drawn by the lower prices; and pilot-wide parking rates decreased by 11%, while LA’s parking revenue increased by 2%. Traffic rates continued to decrease exponentially after LA ExpressPark’s pilot.
In healthcare, researchers discovered that cameras can actually penetrate skin with visible and infrared light while being safe and environmentally friendly. This technology can be useful for analyzing babies, because methods that require physical contact may be harmful to a newborn’s skin; causing the skin to potentially torn in the process. The technology is currently very expensive and still not commonly used. Nonetheless, Xerox is hopeful of its more wide-scale usefulness in the future, due to the benefits that it can bring to human health and the environment.
Xerox believes that open innovation gave and continues to give them an edge in the industry. Banking, for example, is really problematic in India, simply because of the unorganized business models, cultural taboos, and misunderstandings on the customer side. Consumers often do not know enough about the banking process, which leads to wrong decisions and dissonance. In response, Xerox developed a more open business model that included rural areas; creating a more effective distribution channel and helping the company better manage customer relationships through reduction of miscommunication risks and data corruption. With the new model, Xerox was also able to lower cost of opening a bank account by 50 times, as well as cut waiting time from three days to only 10-30 minutes.
In closing, students were able to determine the difference between open and frugal innovation, while also seeing how a company can apply both to deliver the best, most efficient solutions. Since majority of the students have a generally Western point of view, the experience of seeing an American founded multinational corporation expand into an emerging market like India and thrive just shows the importance and strength of jugaad and open innovation.
Class of 2014