Utilizing Porter’s Evolution of Global Competition, the following section identifies several key factors that led to Aravind’s success. The factor conditions, firm strategy and rivalry, related industries and demand conditions were fundamental to this eye hospital’s social and financial realization. 1. Factor Conditions: Labor and capital conditions contributed immensely to the success of Aravind. In terms of labor, Dr. V inspired his family members to take part in his vision, therefore creating a pipeline of committed and intellectual business partners.
According to the case, as Aravind expanded from a small 20 bed hospital to a 600 bed hospital, his brother, sister, and nephew took on administrative roles in the hospital among the multiple family doctors who eventually joined the venture. The familial involvement led to many cost saving initiatives in Aravind’s capital investments. His brother, G. Srinivasan, a civil engineer contractor, constructed all hospital buildings at cost, freeing up capital to invest in other parts of the business. In addition, Dr. V provided continuous training and support to its personnel which likely contributed to their retention and attraction of eye doctors at the hospital.
2. Firm Strategy and Rivalry: Given that India contributed to one-third of the blindness in Asia, the Aravind strategy was clear. Dr. V’s vision for Aravind was to “bring eyesight to the masses of poor people in India, Asia, Africa, and all over the world. ” The case does not explore any rivalry that existed for Aravind, but as this profession requires highly skilled professionals and expensive equipment to perform the services, it can be assumed that this market would have high barriers to entry.
Although the government played an active role in blindness prevention care programs, they only allocated roughly $2 million annually. This is a far cry from the $200 million that the World Bank estimated as the required capital to build the infrastructure, purchase equipment, and overcome the country’s blindness problem. Without government support, Dr. V was able to create this empire by initially mortgaging his own home and using the revenues generated from the early operations to pay for the expanding facilities. 3. Demand Condition: As already mentioned, Dr. V’s familial support played a large role in the success of this company.
Given the vertical anthropology of the Indian society, Dr. V was able to utilize his family members acquired knowledge to further the company’s goals. Dr. V explains that as the eldest son, he was responsible for educating and looking after his younger siblings after his father died. With the commitment of his family, his sister recalled that she and the other employees worked twice as hard for half the salary. Although the income of the Aravind hospital was not market value, his sister further explained that what they lost in earnings, they gained in professional support as they were prompted by Dr.
V to take part in anything that would advance their professional standing. 4. Related industries: As discussed in the case, the main spinoff industry is clear: the eye camps. Sundar notes: “we don’t have to sell the idea of an eye camp to anyone. There are far more individuals, businesses and social organizations that need our services than what we can effectively offer. ” These camps were integral in bringing eye care to the broader communities, not only those who could afford hospital services. These camps, it seems, are beginning to reach Dr. V’s goal of spreading the Aravind model to “every nook and corner of India, Asia and Africa. ”
As we can see through the issues Thulasi describes, this will not be an easy task. Dr. Venkataswamy: His Pivotal Role and Leadership Style Dr. V’s role has been incredibly pivotal. The creation of the Aravind Eye Hospital as well as its expansion from 20 beds to 1,224 beds was largely due to his leadership. After rising to the head of the Department of Ophthalmology at the Government Madurai Medical College and to head Eye Surgery at the Government Erskine Hospital Madurai, he retired and went on to fulfill a life-long dream by opening up a private, nonprofit eye hospital that would provide quality eye care.
He believed and modeled the ideals of Mahatma Gandhi and Dwami Aurobindo by serving God and humanity through dedication to his professional life. He inspired his family to do the same and his sister and brother-in-law were the first surgeons (along with Dr. V) at the hospital. He leads by example and has garnered success and respect from his leadership. He follows the principles of the reading, “Innovation’s Holy Grail” by:
1. His goal is inclusive growth by thinking of the unserved customers. He figures out how to provide quality eye-care and to perform cataract surgery on a population that could not afford it and restores their sight at no charge. He has figured out how to do this and to do it sustainably. His vision is unambiguous. He articulated his dream and his vision very clearly and was able to convince other quality surgeons to take a dramatic decrease in pay to follow him.
Along with that, his vision has an obvious human dimension. He also remains engaged with the hospital and doesn’t ask more of the employees than what he himself provides. 2. He absolutely sets stretch targets as he is constantly thinking of how to expand to eradicate blindness all over the world. He wants to know how to mass market and franchise his operation globally to meet the needs of many more people. 3. He has learned to innovate despite constraints. He didn’t let the original lack of money or credibility hinder his progress.
He even mortgaged his own home for the initial funding which led to enough revenue to self-sustain and eventually expand. Dr. V’s focus is absolutely, undoubtedly on people. His work has become profitable but his focus has always been on the people that he is serving, his customers. He also keeps focus on his staff, providing them with in-house training as well as (eventually) competitive salaries. The Evolution of the Aravind Eye Hospital Dr. V’s staff is made up of well educated, diversely trained family members and staff trained onsite. All are encouraged to utilize the skills they have while growing their knowledge base. 1. Dr. V brought in various family members to be part of his team and utilized their strengths.
His sister and her husband were doctors, his brother was a civil engineer/contractor, and a nephew studied health management in the states before taking over administrative duties. They all bought into their brother’s vision and mission and wanted to be part of bettering their society. One integral part of Dr. V’s vision was his spirituality – dedication and devotion to practice. In this way, everyone gains from Dr. V’s process. He encourages his staff to continue to learn, publish and teach which helps them improve their professional reputations and, in turn, build the practice… and donor support. 2. Aravind Hospital trains all of their staff from scratch. The nurses did not come from a school, they were trained onsite. This process allows for teaching Dr.
V’s methods and not having to retrain or change someone’s processes. 3. His camp staff included camp managers that are responsible for a territory which results in a “global” approach to engaging with villagers. By knowing the villagers concerns and local constraints, the managers know best how and when to advertise patients (after the busses are cleaned) and how to care for them (group transport). In one example, Dr. V questions why surgery numbers are low despite a large camp turnout. His staff conducts a small survey and quickly reacts to the issues discovered and did so in a way that continued the hospital’s mission.
Villagers had concerns about cost, travel, and the surgery in general. By working with sponsors, they were able to create a cost effective support system – camp sponsors paid for food, transportation, and camp facilities. They transport villagers to the hospital in groups and doing so creates a support system before, during, and after the surgery alleviating patient concerns. 4. Another example is the IOL factory. A family member of Dr. V, Dr. Balakrishnan, had extensive engineering experience and returned to India to manage Auro Lab.
There they manufactured lenses with the same quality as U. S. lenses at a quarter of the price. Looking towards the future, Dr. V sees the opportunity to decrease the cost by another 50% as factory yield improves. The Aravind Business Model Aravind eye clinic owes its success to their strategy. Their sense of purpose is reinforced throughout the organization among all employees. Aravind has continuously innovated and explored new approaches to deepen their reach into the market. The clinic has innovated in the areas of marketing, leadership, and operations by understanding the lives and needs of its customer.
Costs are kept low by manufacturing its own intraocular lenses used in surgery, as well as creating high surgeon productivity (400 surgeries per doctor each month). By vertically integrating through manufacturing and distribution Aravind has used economies of scale to create a large cost advantage. A key strength to Aravind’s success was its operation procedure. Cataract surgery at Aravind was a process similar to an assembly line which helped create a low turnaround time.
In certain conditions Aravind can duplicate their business model to other regions or countries but they do face some challenges. The model does not work without the dedication and efforts put in by each individual. The organization was run almost entirely by family members that were willing to work for lower wages to improve the lives of people and impact society. India is a vertical society as well as a developing nation in which the government cannot meet the healthcare needs of the entire population. These conditions convinced many of Dr. V’s family members to forgo higher paying jobs with better work conditions in order to contribute to the vision and purpose at Arvind.
The organization could not grow rapidly since it was always constrained for good managers, they also may not be able to retain the best talent since the have lower salaries as compared to private hospitals but require more strenuous work. They also are constrained by their medical staff which may not be able to grow at a rapid pace for the want of motivated and dedicated people. Aravind can expand the infrastructure but will be challenged with expanding the values and culture amongst its people.
While Aravind may run into challenges to repeat its business model in certain countries some aspects of their organization make them likely to be successful should they choose to expand. Their operations can be repeated with minimum customization required and standardization of processes is possible. Aravind would likely have the most success in communities that have little access to health care such as developing nations. Aravind also has a higher probability of success in countries that are vertical in nature to overcome the challenge of finding and retaining the staff willing to work harder for less salary with buy-in to the Arvind purpose.