TWELVEMAXIMIZE SERVICE, NOT PROFIT

Like the rest of Aravind, Aurolab presents an uplifting conundrum. It is a factory whose products compete in a fierce, international market. Yet it is run as a nonprofit by founders with no prior production experience, driven by a bottom line that aspires to provide access to the poorest of customers.

The biggest innovation at Aurolab was not technology based. Aurolab purchased the same equipment and trained in the standard production techniques of its Western counterparts. The real innovation was around pricing strategy. As David Green points out, Aurolab chose to lower prices not merely because its production costs were lower but because its goal “is maximizing service rather than maximizing profit.”1

The ...

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