October 31, 2014

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Disruptive Innovation: For Dr. V, Life Only Starts After Retirement

A retired doctor uses entrepreneurship principles to help heal blindness in India.

Jeroen_geelhoed

By Jeroen Geelhoed

If you want to have inspiring ideas about life after retirement, listen to the story of Aravind Eye Hospital.

Aravind was founded by Govindappa Venkataswamy, a man known to most as Dr. V. He was 58 years old and recently retired when he decided to open the hospital in Madurai in 1976. Blindness was a major problem during the 1970s with India alone home to 12 million blind people.

Dr. V's Vision: End Blindness

Dr. V had a vision: eliminate needless blindness in India. He established Aravind Eye Hospital with 11 beds, but his aim was to give one million people their sight back by 2015.

He wanted the best-quality eye care. He wanted to make this care accessible to everyone including poor people who could not afford it. And, he wanted to operate in financial independence and not have to rely on donations.

He succeeded! Aravind has a higher success rate than anywhere else in the world. At the same time, the organization is highly profitable, even though only 50 percent of customers are charged a normal fee. Millions of people can now see again.

So what’s the business model?

How Much Are You Prepared to Pay?

Aravind's target group is the needlessly blind people in India, rich or poor. Patients do not Aravind Eye Hospitalneed to pay.

If they do decide to pay, they can choose from various packages ranging from $110 to $1,000 (lower than the price charged in the US: $1,650). The extras patients receive are particularly in the services that are provided, such as a spacious room, a more comfortable bed, greater privacy and different food. But the ultimate value offered to all patients is the gift of sight.

This is accompanied by a feeling of assurance. You are under the constant supervision of friendly Aravind staff who make you feel comfortable and show you the way.

Efficiency from Your Heart

Aravind has also worked extremely hard on instilling efficiency. Surgeons spend all their time performing operations and carrying out diagnoses. Friendly nurses do all other work. They make patients feel safe by guiding them through all the medical steps of the process with compassion and attention.

The nurses, who often come from villages themselves, are highly dedicated. Recruitment and selection is crucial in this case, which is why a match must exist between prospective staff and the Aravind culture. People applying for a nursing position do not necessarily have a diploma. Aravind organizes its own training courses, which people from all around the world can participate in. This is something people are happy to pay for as the education they receive is of a high level.

Minimal Costs

Another element is that Aravind reduced the greatest cost items drastically.

Consider the lenses implanted during cataract operations. Instead of importing these implant lenses at $150 per lens Dr V-ArarvindAravind manufactures them in house. That means they are 50 times cheaper. In addition to using these lenses in its own hospital, Aravind also sells them to other parties at a profit.

Again, a win-win.

Customer Service

People queue in front of the hospital’s doors daily but many others cannot get there as they live too far.

Aravind therefore visits villages to find patients. Five to six eye camps are organized every day in remote villages, during which up to 800 patients are sometimes screened.

At the eye camps patients are screened in the morning and immediately informed about following steps. These may involve taking measurements for a pair of glasses or an operation at one of the hospitals. In the event of an operation, they are taken to a hospital by bus the very same day.

After the operation and recovery period, which lasts around three days, they are returned to the eye camp and rejoined by their family. This makes them feel safe and eliminates the need for someone to accompany them.

Three Lessons

While Aravind is located in India and not necessarily comparable with our situation, there are important lessons we can learn from Dr. V's focus on the ultimate goal as well as his attention to efficiency and a self-sufficient business model:

  1. Vision: It starts with a vision. Dr. V wanted to help eliminate needless blindness in India. His aim was to remain independent, provide the highest level of quality and help poor people unable to afford such care. What is my vision? How do I want to help resolve social issues? What impossible goals do I set in this regard? These are the questions eye-glassesyou must ask yourself.
  2. Radical translation: Dr. V translated the vision in a radical and consistent manner. This did not entail a single golden touch but the interplay of many different intervening elements: pricing, efficiency, lenses, eye camps and the like. All these elements can be traced back directly to the vision. Ask yourself: which employees do I need to make the vision a reality? What do I have to focus on now to achieve the vision? How can I earn money with my marketing strategy?
  3. Think in terms of value for all stakeholders: Dr. V did not only think about profits nor was he an idealistic philanthropist who “wanted to do good things for people.” No, he sought opportunities that would help patients, make employees happy and generate money. How can you reduce costs by 40 percent in a way that yields more for your customers and staff?

Ask these questions and you'll be a lot closer to leading a company that is truly creative and challenging today's marketplace.

Next: The three waves of value.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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