An obvious impact has been on jobs. It’s not just that American manufacturers have been moving production out of the country, but the jobs that have been lost often paid more than what displaced workers are left with. People in other countries who work for a fraction of what American workers make directly affect what American workers make.

Another impact, described recently in The Economist, is on the medical device market. (“Life should be cheap,” January 20, 2011) Innovators in China and India must, of necessity, develop products that are significantly cheaper than their Western equivalents to serve the “bottom of the pyramid,” the four billion people who live on less than $2 a day. As the article notes, “They create products that are stripped to their essentials: scanners that cost $10,000 rather than $100,000; portable electrocardiographs that cost $500 instead of $5,000.”

American medical device manufacturers struggle to compete in these markets, which is why many are investing in research centers and factories in China and India, “developing frugal inventions of their own, which they gleefully sell both locally and in other emerging markets.”

But not back here in the U.S.

The Economist attributes this to two factors: (1) health care is not an efficient market in the U.S., where patients demand the best of everything no matter the cost, and (2) the Food and Drug Administration takes years longer to approve a new medical technology than regulatory bodies in the rest of the world.

As the job situation has shown, the U.S. cannot shield itself from the impact of serving emerging markets. Last year, General Motors sold more cars in China than in the United States. It’s only a matter of time before American workers with stagnant or declining wages seek the cheaper products that are flooding emerging markets.

To read more about frugal innovators, click on these articles:

• Purpose-Inspired Growth
  
• Lessons from a 15-Story Hotel Built in 6 Days
• Implications of a $300 House

Tata’s award process, which aligns with the Baldrige application process, is called the Tata Business Excellence Model, reaffirming its cultural significance. Tata companies must score 600 or higher to win the award. To date, eight companies have received it: Tata Steel, Tata Consultancy Services, Tata Motors, Titan Industries, Tata Chemicals, Tata Metaliks, The Tinplate Company of India, and Telcon.

At its annual Business Excellence convention in 2006, Chairman Ratan Tata said, “Excellence is not something we can buy. It is not something that we can acquire overnight. It is a long process. It takes commitment…This is not a world of just taking awards. It is a long, twisted, difficult road, filled with obstacles. Let us all keep excellence and operations through excellence as being our guidelines as we move into the future and continue to believe in what we are doing, so that we can continue to lead and never to follow.”

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