ChotuKool: Disruptive innovation @ GodrejDisruptive Innovation, a term of art coined by Professor Clayton Christensen, describes a process by which a product or service takes root initially in simple applications, at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. An innovation that is disruptive allows a new set of consumers an access to products or services that were earlier only accessible to high-end consumers. Companies following Disruptive Innovation in their initial stages have the following characteristics - lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics.Disruptive Innovation begins by understanding unexpressed needs and creating means for tapping those unexpressed needs. For example, 20 years ago, no one felt the need to communicate with their family members from a moving train. But, mobile phones created that need amongst the consumers and today there is an evident need to communicate from wherever they are to whoever they want to reach out to. At Godrej, it has developed its own process of creating Disruptive Innovation. Currently, the Disruptive Innovation process is used for unlocking large untapped market at the bottom of the income pyramid and fostering inclusive growth by improving their livelihood, living standards and their lifestyles. Thus, the Disruptive Innovation journey will help the company to meet aspirations of millions of people and making a huge difference to their lives. Navroze Godrej said, With innovation as our most powerful weapon and a brighter future our most noble goal, we need to act now and ensure that in ten years we have the whole world asking - How did you find it in yourselves to rise up to the challenge?About Godrej&Boyce:In 1897 a young man named Ardeshir Godrej gave up law and turned to lock-making. Ardeshir went on to make safes and security equipment of the highest order, and then stunned the world by creating toilet soap from vegetable oil. His brother Pirojsha Godrej carried Ardeshir's dream forward, leading Godrej towards becoming a vibrant, multi-business enterprise. Pirojsha laid the foundation for the sprawling industrial garden township now called Pirojshanagar in the suburbs of Mumbai, where the Godrej Group has its headquarters.Godrej & Boyce Mfg. Co. Ltd., the holding company of the Godrej Group, started its journey with the manufacture of high quality locks in 1897. Today, we have 15 diverse business divisions offering consumer, office, and industrial products and services of the highest quality to every corner of India and across the globe.About Godrej ChotuKoolChotuKool, a re-imagined household solution from Godrej is a project driven by an innate passion to achieve a vision beyond profit. chotuKool, a top-loading, compact and portable cooling solution does not have a compressor. It weighs only 7.8 kgs and runs on a cooling chip along with a fan similar to those used to cool computers. The chotuKool vision is to endow a brighter future to the millions of households in rural India by improving living standard with cool comforts, convenience and social status, livelihood by building an ecosystem of 5000+ micro entrepreneurs with Rs.3000+ earning and lifestyle by ensuring fun, joy, freedom and leisure. Vision of chotukoolOur vision is to endow a brighter future to the millions of households in rural India.Living Standard : By providing rural India with cool comforts, convenience and social status.Livelihood : Building an ecosystem of 5000+ micro entrepreneurs with Rs.3000+ earningLifestyle : Enhancing lifestyle by ensuring fun and joy, freedom and leisure

New Product development process of ChotuKool:Mumbai: In 2005, on the day G. Sunderraman completed 25 years of work at Godrej and Boyce Manufacturing Co. Ltd, he walked into the office of his chairman, Jamshyd Godrej, and declared: I think I want to do something different now. Tailor-made: G. Sunderraman and Sanjay Lonial with the ChotuKool, a low-cost refrigerator designed for Indias poorest households. Abhijit Bhatlekar/Mint All right. What would you like to do? Sunderraman remembers Godrej asking. The truth was, Sunderraman didnt really know. In 25 years, he had caromed across the organization, accreting a vast set of skills. He had worked in marketing and sales, in manufacturing, in sourcing and purchase, in supply-chain logistics, and in quality management and strategy. What Sunderraman needed was a role that could synthesize all that came before it. And then, he says, things just happened. Since 2007, Sunderraman has been workingfirst by himself, and then with further staff numbering precisely oneon the ChotuKool, a low-cost refrigerator designed for Indias poorest households. In between his other duties as vice-president for corporate development, he worried over equations of cost and power loads and performance coefficients, nudging these elements into a fine balance. When the low-cost fridge was mooted, Sunderraman figured a development cycle of a few monthsa gross underestimate, as it turned out. A market research firm could dig up only wan insight, so he brushed them aside and, with the same meticulousness he displays in even the most casual conversations, set out to conduct what he calls his version of ethnographic studies. Sunderraman and Lonial travelled for many months, staying in villages in every quadrant of India, observing what their customers needed and how they would use a fridge. Then, as Godrejs engineers came up with iterations, these were promptly dispatched to villages in Maharashtra to be stress-tested in ground conditions and to elicit feedback from their users. A few results were predictable. The families they visited earned as little as Rs7,000 per year, so costs had to be kept low; the ChotuKool is priced roughly at Rs3,500. Electricity was sporadic and, for these families, expensive. The ChotuKool, thus, runs off 12-volt DC supply, mutated from the mains AC feed by a laptop-style converter that has been amped up by Godrej; during power cuts, the fridge can be kept alive on an inverter or a battery. The average electricity bill for running the ChotuKool is only Rs60-70 per month, Lonial says. Some first-hand observations Sunderraman couldnt have done without. The few families with second-hand fridges rarely used their freezers, so Godrej knew that deep chilling was unnecessary. Servicing was a constant worry, so every one of the ChotuKools essential components sits in one of the lids two detachable parts, which can be toted even by a child to the nearest service centre. Even the candy-red colour scheme emerged from a straw poll of 600 women in the village of Osmanabad.Even though theChotuKool entered the market earlier this year, Sunderraman says its development isnt over. Were still taking in feedback, still working on improvements. Innovative Channels of DistributionSelf Help GroupShantipriya Gavali of Vashi village in Marathwada, head, literally and figuratively She is part of a self-help group created and run by Swayam Shikshan Prayog, an NGO microfinance institution (MFI). Shantipriya is Godrejs new retailer, one of 101 such retailers it now has in 77 villages. With two growing kids, there is pressure on the household to increase income. In three months, I have already sold six ChotuKools, she says with pride. She markets ChotuKool to her villagers, explains its features and benefits using a flip-chart, and knocks on several doors every day to hard-sell it.Women like Shantipriya convinced Godrej to cut the price of ChotuKool from Rs 3,700 to Rs 3,200. She earns Rs 150 as commission for every ChotuKool sold. Sakhi Retail, a specialist company promoted by Swayam Shikshan Prayog, earns another Rs 100. Godrej has junked the traditional model of a proprietary channel with a sales force and a distributor-dealer chain. Instead, it has joined hands with MFIs to create a new distribution ecosystem.Indian Post officeIndia Post has entered into collaboration with Godrej Limited for sale of chotukool (fridge). The chotukools are available for sale in all post offices under the central region. As a special feature, Godrej Limited will offer special discount of Rs. 300 to all central and State government employees purchasing chotukool at post offices. The special offer will be applicable exclusively for Union and State government employees by producing the identity card issued by the department,Awards:Godrej has won the gold winner in the category of social impact of Edison award. Being recognized with an Edison Award has become one of the highest accolades a company can receive in the name of innovation and business. The awards are named after Thomas Alva Edison (1847-1931) whose inventions, new product development methods and innovative achievements literally changed the world, garnered him 1,093 U.S. patents, and made him a household name around the world. Challenges faced by ChotuKoolKnowledge of consumersRural consumers were unaware about the benefits of refrigeration of food items. Marketing of a product in rural markets is always difficult because of diversity and different media.Threat of substitutesChotukool also had a big threat of substitutes. One was the locally available ice boxes. Second was a similar product called Mitticool. This was a refrigerator made from clay with dual compartments. It was priced at around Rs. 2,000, worked on the principle of evaporation, didnt consume electricity and hence zero maintenance cost.Traditional channelsTraining was required to be given to intermediaries so that they can educate the end users. It was because the product was new to the market and it required demonstration. Thus Godrej was reluctant to use traditional trade channels. Priced at just around Rs. 3,200, Godrej had to market its product in such a way that it doesnt affect its profit margin No EMI facility was given by Godrej to its consumers and the price of Rs. 3,200 had to be paid up front.

Bibliography1. http://www.chotukool.in/SocialImpact/news/Indias_New_Retailers.pdf2. http://www.chotukool.in/SocialImpact/news/EdisonWinnersPressRelease_Chotukool.pdf3. http://www.chotukool.in/SocialImpact/news/the_new_cool.pdf4. http://www.godrejandboyce.com/godrej/godrejandboyce/aboutgodrejandboyce.aspx?id=16&menuid=9295. http://www.slideshare.net/prasadkulkarnihnml/savedfiles?s_title=challenges-faced-by-godrej-chotukool&user_login=JHALAvivek6. http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/chotukool-offer-in-post-offices/article4796839.ece7.