Reference no: EM133428910

Case study:

Embrace infant Warmer: sometimes a business start is a Matter of life and Death introduction

When Rahul Panicker, Jane Chen, and Linus Liang enrolled in Design for Extreme Affordability, a course taught at Stanford University's Design School, little did they know that the class would change their lives. And little did they know that a short three years later, premature babies born in rural India, who often don't survive because of hypothermia, would have a new chance at life because of a product they designed.

The Design for Extreme Affordability class draws students from across the Stanford campus. The goal of the course is to develop solutions for challenging, real-world problems. The project Panicker, Chen, and Liang were assigned was to develop a low-cost infant incubator for use in developing countries. It was a topic that the three knew nothing about. They were electrical engineering, MBA, and computer science students,

respectively. To get started, they did some simple google searches. They learned that millions of

premature babies are born annually in developing countries. About a million of them die, often within 24 hours. The biggest cause of death is hypothermia. They learned that 15 million pre-term and underweight babies are born annually in developing countries. Three million babies die in the first 28 days of their life-that's six babies every minute. The biggest cause of death is hypothermia.

Premature babies don't have enough fat to regulate their body temperature. As a result, they can literally freeze to death in a room that is at room temperature. Nearly half of the world's low-birth-weight babies are born in India. Hospitals have incubators that provide consistent, life-saving heat to premature babies. But incubators cost up to $20,000 apiece. But incubators cost up to $20,000 apiece, require a constant supply of electricity, and are difficult to operate.

The obvious solution was to drive down the cost of incubators. The team could systematically reduce the cost of traditional incubators by eliminating nonessential parts and using cheaper materials. Rather than moving forward, Liang got funding for a trip to Nepal to study incubators in developing countries. While visiting a hospital he noticed something that was odd. Many of the incubators were empty. He then learned the sad truth. About 80 percent of the premature babies born in the developing world are born in rural villages. They never are brought to a hospital and placed in an incubator. Even when they are they were often taken home before the baby is ready to leave due to family needs back at the village. Back at Stanford, the team grappled with what to do with the insight. The easier road ahead would be to redesign the traditional incubator, to make them more affordable. But that wasn't the answer. The harder challenge was to find a solution for saving premature babies where they were born-in rural villages.

Early Prototypes

Early Prototypes The team tackled the harder challenge: How to make a baby-warming device that doctors and parents in rural villages could use to save premature babies? The team set to work and started creating rough prototypes of an original design. The earliest prototypes were made using old sleeping bags, baby dolls, and blankets. The design was a portable infant warmer

that looks like a tiny sleeping bag. The warmer open in the front, allowing mothers to nurse their babies and maintain intimate contact. The bag contained a pouch of a wax-like phase-change material that keeps the baby warm for up to six hours at regular body temperatures. It required just 30 minutes of electricity to heat the pouch, an ideal situation for areas where the availability of electricity is spotty. To provide additional warmth, mothers would be instructed to hold their babies as much as possible against their skin. This activity prompted the team to call the product" "Embrace".

The class ended and the team had a decision to make. All had promising prospects. In the end, the team member couldn't walk away. The lives of premature babies were at stake. They would move forward and continue to work on what was now known as the Embrace Infant Warmer. embrace infant warmer

Embrace Infant Warmer

The team, now joined by a fourth Stanford student, Naganand Murty, took the prototype to India to solicit customer feedback. They used rapid prototyping techniques to iterate on feedback and zero in on the attributes that are of the highest relevance and value in a rural setting. Some of what they found out was surprising, and would have never been learned had they remained in California. For example, they found that women in India believe that Western medicine is very powerful, so they routinely cut back on the recommended dosages of Western medicines, just to be safe. That knowledge impacted early prototypes of the Embrace Infant Warmer. The early prototypes instructed mothers to set the temperature at 37 degrees Celsius. What they found was that the devices were being set at about 30 degrees. To solve the problem, they preprogrammed the ideal temperature into the device and just put an oak and Not oK switch on it. Commenting on the decision to go to India rather than remain at Stanford to build out the Embrace Infant Warmer, Chen told Helen Walters, who wrote an article on Embrace" "There are so many nuances that are critical to design and effective implementation, so many nuances that you don't understand unless you were there and living and breathing the culture every day".

Talking to potential customers raised other issues. For example, they learned that villagers wanted different pricing options-like an option to rent the device. Commenting on changes that were made as a result of feedback from rural villagers, Chen said in an HBR blog post" "Entrepreneurs often fall in love with their original product idea or business model and fail to listen to customers. We (meaning the Embrace team), on the other hand, have no qualms about modifying our product features and pricing again and again until we find a solution that delivers the highest value to our customers at the lowest cost for the".

Gaining Momentum

Gaining Momentum The initial prototypes of the Embrace Infant Warmer were a success, which emboldened the team to keep working. Additional field research took place, involving village mothers in every aspect of design, from the straps on the warmer to the instructions printed on its front. Spending time in homes in rural India produced additional insights" "Oftentimes the mother-in-law is the decision maker"," Chen said in the same interview as the one cited above. As a result, they determined a way to involve mothers-in-law in the process of using the Embrace Infant Warmer. In December of 2010, Embrace was featured in a segment of the ABC News show 20/20. The show contained images of a five-pound baby girl in India named Nisha, the first child to use the Embrace Infant Warmer in a clinical trial-and maybe the first life saved by the device.

The Embrace Infant Warmer was formally launched in April 2011, after completing clinical trials. It went through more than 60 iterations before a final design was settled. All manufacturing is done in Bangalore, India. Some of the parts are outsourced, but the final assembly and quality testing are done by the company. To ensure distribution, Embrace is partnering with multinational medical devices companies like gE Healthcare and with local NGOs. An organizational structure has also emerged. Embrace has both a non-profit arm, which donates its baby warmer to those in need and runs educational programs, and a for-profit side, which sells the baby warmers to government entities and private clinics. It's's a two-pronged approach that the founders hope will allow the company to prosper, grow, and save an increasing number of premature babies. In spring 2014, Beyoncé made a $125,000 donation, which allowed Embrace to enter several countries in sub-Saharan Africa. Just a few months later, Jen Chen, one of Embrace's cofounders and CEO, was invited to the White House for a Maker Faire, honoring Embrace as an example of the new manufacturing revolution.

Little Lotus

In November 2015, Embrace Innovations started Little Lotus (https://littlelotusbaby.com), a retail line of baby products for the U.S. market. Prior to Little Lotus, Embrace and Embrace Innovations had relied primarily on sales to the Indian government. While grateful for the sales, relying on government contracts is not a sustainable revenue model. Little Lotus is a new line of baby products, including swaddles and sleeping bags, that uses NASA-inspired technology to keep babies at the ideal temperature. The fabric absorbs body heat when the baby is too warm and supplies it when the baby is cold. The Little Lotus products are an intersection of technology, design, art, and social impact. On average, babies sleep an additional hour a day when using a Little Lotus product because of less temperature fluctuation. Following the one-for-one model pioneered by TOMS and Warby Parker, for every Little Lotus sold a portion of the proceeds goes to purchase an Embrace Baby Warmer for a mother in need. Little Lotus' products not only provide warmth and comfort to babies in the United States and elsewhere, but provide a new source of revenue and momentum for Embrace Innovations and the entire Embrace effort.

Embrace Today

As of the end of 2016, roughly five and a half years after launch, the Embrace Infant Warmer had been used to help save the lives of more than 150,000 babies across 10 countries. The company's goal is to impact the lives of 1 million babies. Panicker and Chen lead Embrace, while their Stanford classmates and cofounders have moved on. The company is private and doesn't disclose financial information, other than to say that its margins are sufficient to keep growing and try additional products. In addition to rural villages, the Embrace Infant Warmer is being used in hospitals and clinics, to move premature babies from location to location, and to use when a premature baby is born and all of the traditional incubators are in use.

In addition to continuing to improve the Embrace Infant Warmer, the company has aspirations to tackle some of the other factors that cause infant mortality. Other potentially fatal conditions include meningitis, pneumonia, infections such as sepsis, and diarrhea.

To learn more about Embrace and Embrace Innovations, in October 2016, Jen Chen was featured on eCorner, which is an excellent podcast produced by the Stanford Technology Ventures Program. eCorner podcasts are available at ecorner.stanford.edu/podcasts. Look for Season 12, Episode 4, recorded on October 26, 2016. The title of Chen's talk is "Embrace the Entrepreneurial Journey."

Discussion Questions and add the detailes to each question:

3-38. A) What target market does Embrace seek to serve B) and how attractive is that market?
3-39. What examples of primary research that Embrace's founders completed appear in the case?
3-40. A) What actions did Embrace's founders take to solicit feedback from prospective customers B) and what did they learn from these efforts?
3-41. A) If you were asked to conduct a financial feasibility analysis for Embrace, what issues would you consider to finalize this analysis B) and why are those important?
3-42. A) Add your own personal analysis B) and your opinion of how to handle the situation.