Innovation in India

Yesterday I attended a TIE workshop on Innovation in India.  A stimulating discussion on the challenges we face as an “innovation economy”.  All participants tended to converge on the perspective that “jugaad” is omnipresent – but true innovation is somewhat lacking.  Several interesting reasons were highlighted:

1. Education: Our system focusses on grades and doesn’t foster invention/discovery.  The educational process helps build theoretical knowledge, but doesn’t encourage us to be hands-on people.  The presence of several Ramu’s prevents kids from learning how to do things themselves.  We know “what”, but don’t know “how” – and hence we can’t build a better product.

2. The workplace: Too little diversity and paternalistic organisations – which tends to discourage fresh thinking.  The assumptions are rarely challenged.  Someone also brought up the issue of performance appraisals and how they tend to create a metrics only culture which stifles innovation.

3. Capital: While there is gazzillions of venture capital money available, there is very little seed capital going around.  It’s therefore tough for an entrepreneur to get that 10-50 Lk funding that would help him get to POC level.  However, with a good product and 5-10 marquis customers, the VCs tend to line up.  I call this the problem of “the fat man dying of starvation” – and its common across many parts of the Indian economy.

4. Marketing: Another paradox.  India produces some of the best advertising and has some really smart marketing brains.  But again, there are too few of them going around – and its really tough for smaller entrepreneurs to get the right marketing and sales team in place.  Culturally, we grow up thinking that sales is a second-grade job – for the people who can’t do maths – and that has created its own problems.

5. Knowledge of IP: Creating global products requires a strong understanding of the IP landscape and the ability to protect one’s invention.  Another area where we pay scant attention and allocate inadequate resources.

6. Mentorship: Arguably this is one area where a lot has improved.  Start-ups today have better access to senior industry professionals to guide them in their journey.  But again, not every entrepreneur understands the value of having the right mentors.

So we know what’s wrong.  Do we know how to fix it?  Again, the consensus is that we need a huge change in the overall ecosystem for innovation to flourish in India.  But we can’t wait for that to happen.  In the meantime, here are a few thoughts:

1. Get really focussed on the customer.  Make sure you are addressing a real customer need in a meaningful way.  Spend lots of time with consumers understanding their problem and develop your solution around it.

2. Innovate on the business model – especially the financial part – if you’re looking to address the Indian market.  Develop lower price point solutions, create financing structures, involve other stakeholders – and make the product buy-able for the consumer (even if she can’t afford it).

3. Seek out and build the right team structure.  A smaller slice of a larger pie may be better than a small pie.

4. Be clear about what you’re trying to be.  Are you creating a world beating product, or a cash-cow for a lifestyle business.  Too many people try both.

Personally, I’m pretty interested in the ecosystem question.  Any thoughts?

Markets in Everything

Ever wondered about the opportunity in anti-theft lunch bags, russian armoured cars, gold dispensing ATMs, cupzzas or fake engagement rings?

Here’s all that and more:

http://marketsineverything.com/

Enjoy!

Jugaad worship

Now this is distressing.  Apparently hospitals in India are being hailed for their best practices.  By none less than Raghuram Rajan in his new book Fault Lines.

Hospitals in the United States could learn more from each other, as well as from hospitals elsewhere, including India, where costs have been brought down by bringing mass-production techniques perfected in manufacturing to health care.  Indian hospitals have found that error rate are reduced when their doctors specialize and perform many procedures of a similar kind.  The time for operations is also cut down, with no loss of safety.  A focus on eliminating unnecessary frills and on utilizing expensive resources like doctor time most effectively also helps even though good surgeons in India earn about as much as surgeons in the United States, the cost of operations is often an order of magnitude lower.

Are we in India blind to our remarkable capabilities, or has the world gone completely blind-sighted and/or desperate!

The rule of 10,000

We all know that it takes hard work to be good.  But just how long does it take to be really great at something?  Not just average, run-of-the-mill good – but truly great?

The answer, apparently, is 10,000 hrs.  Thats about 5 years of 8 hours of practice a day – before one can be great.  An MBA gives you a maximum of 0.5  years in a subject of your choosing.  You still need to put in the other 9.5.

For an inspiring and humbling read on the rule of 10,000, check out Amit Verma’s post.

New PLC management – Kites and Bollywood

Didn’t take long for the pundits to pronounce Kites a dud.  One assumes that the production machinery behind the movie had that figured out pretty early on.  Which is why they went overboard on the distribution front – opening in 2000 screens in India and 500 overseas.  The logic is pretty simple.  The critic reviews come out during the first weekend.  Go overboard on marketing and ensure that there is huge interest – and advance bookings – for the movie.  Make sure there is plentiful supply (as in screens) across the country and for the somewhat gullible NRI market.  Cash in on the first weekend (before anyone has had time to judge the product).  Keep your fingers crossed during the second and (hopefully) third week.  Move quickly to the international TV release.  Get the DVDs out in a month or so.  Cut prices on the DVDs in one more month.  Then milk the long tail of music and video rights.

Its a model that is borrowed from Hollywood and perfected in Bollywood (I prefer not to call it the Indian film industry :)).  I say perfected in Bollywood for the speed with which the industry moves to TV, DVD and price cuts.  The public is still suffering the after effects of the marketing blitz.  And the pirates aren’t given enough time or margins to capitalise on a new release.  Which means the producer can maximise the RoI on the movie.

Its a lesson in new PLC management – where speed and scale are of the essence.

Looking for seed funding?

Check out kickstarter which helps creative people find seed funding for their projects.  This from their FAQs section

What is Kickstarter?

Kickstarter is a new way to fund creative ideas and ambitious endeavors.

We believe that…

• A good idea, communicated well, can spread fast and wide.
• A large group of people can be a tremendous source of money and encouragement.

Kickstarter is powered by a unique all-or-nothing funding method where projects must be fully-funded or no money changes hands.

The site recently helped launch Diaspora a new social networking site that plans to take on facebook.  More about that here.

Ouch!

Pricing in the digital age has become a seriously complex subject.  The absence of a physical check before a transaction means that a pricing error can snowball into a disaster pretty quickly.  One example – 6pm.com recently lost $ 1.6 Mn during the course of a six hour pricing error.   This is what happened

Hey everyone – As many of you may know (and I’m sure a lot of you do not), 6pm.com is our sister site.  6pm.com is where brandaholics go for their guilt free daily fix of the brands they crave.  Every day, the site highlights discounts on products ranging up to 70% off.  Well, this morning, we made a big mistake in our pricing engine that capped everything on the site at $49.95.  The mistake started at midnight and went until around 6:00am pst.  When we figured out the mistake was happening, we had to shut down the site for a bit until we got the pricing problem fixed.

While we’re sure this was a great deal for customers, it was inadvertent, and we took a big loss (over $1.6 million – ouch) selling so many items so far under cost.  However, it was our mistake.  We will be honoring all purchases that took place on 6pm.com during our mess up.  We apologize to anyone that was confused and/or frustrated during out little hiccup and thank you all for being such great customers.  We hope you continue to Shop. Save. Smile. at 6pm.com.

Nice press release – done in a way that makes the best of a bad situation.  However, another company could have gone bust with a mistake like this.  Could one prevent this. Perhaps.  Many companies build systemic alerts linked to abnormal sales volumes.  Of course, this happened between midnight and 6 am – so an offshore monitoring centre could probably have spotted it 🙂

Jugaad Redux

Yes, gentle readers. The inevitable has happened.

As I had stated earlier, Jugaad is well on it’s way to respectability as a business word. Now, seemingly more business school professors have joined the “India improvises through jugaad” bandwagon. Another article in the Harvard Business Review blog post talks about this. And, I shiver to think about it, a full business book is on its way. What other banalities will be rediscovered, reposted, and repackaged as Indian wisdom?

And now, we quote.

Both sets of business leaders, Indian and American, preside over demanding worlds, both bring a vision of where they want to take their enterprise, both are called on to make timely decisions, and both use much the same skill set. But at the same time, American and Indian executives have evolved distinct approaches to their positions — critical leadership distinctions that, in India’s case, have helped the nation’s businesses thrive. As ICICI Bank chief executive K. V. Kamath summed up, “Time and again it has been proved that the Western model of doing business would not be a success here.”

The blog post on HBR’s site is actually quite an interesting read. I’d recommend going there to check it out.  The post, and presumably the book, talks about four distinctive Indian business capabilities. Out here you’re likely to find our insider’s view take on it.

Now, if you know the Indian CEOs, they were born and raised on the same educational and competitive environment as the rest of my MBA batch. We answer test questions perfectly! That’s how Indian beauty queens had once cornered the Miss World and Miss Universe market. We have cute little black books (dainty, in the case of beauty queens), and we compile all the previous questions. Then, we ask what worked the last time, and remember the answers. Desi ingenuity, I suppose. In the US, this is called “teach to the test”, and boy! are desis good at this concept.

Back to the post on HBR, the authors talk about the four distinctive Indian business capabilities. You should read that post to get the “official answer”. In here, the real-world answers will be speculated.

1. Holistic engagement with employees. OFFICIALLY: “People are viewed as assets to be developed, not costs to be reduced; ” PRACTICALLY: “The guy who said that official quote was actually right. He was cooking the books of his company by showing more employees, and therefore more revenues. In his case, people were assets. He’s..er…in jail now. Truth prevailed, somehow!” (Editors note: Satyam means truth.)

2. Improvisation and adaptability. OFFICIALLY: “In a complex, often volatile environment with few resources and much red tape, business leaders have learned to rely on their wits to circumvent the innumerable hurdles they recurrently confront.” PRACTICALLY:”Psst…Boss, meet me after this interview, and we can talk about how *green* tape can cover red tape real quickly”.

3. Creative value propositions. OFFICIALLY:” …Indian business leaders are inventing entirely new product and service concepts to satisfy the needs of demanding consumers and to do so with extreme frugality”. PRACTICALLY:”We sell what people want to pay for. If they will pay more if only we make it sound cheaper, so be it!”

4. Broad mission and purpose. OFFICIALLY:”…Indian business leaders stress broader societal purpose. They take pride in company success — but also in family prosperity, regional advancement, and national renaissance.” PRACTICALLY: “We’ve done the same thing for decades. Thank god for western academics. What used to be called nepotism and regionalism is called ‘family prosperity and aha!, regional advancement’. Very nice people, these Professors!”

Cheers

Talent factories

Fast Company has an article citing research from a new book, Chasing Stars: The Myth of Talent and the Portability of Performance. The author studied Wall Street research analysts – a role that seems designed for the lone rangers.  His hypothesis was that analysts’ performance should remain fairly consistent across firms.  However,

“Star equity analysts who switched employers paid a high price for jumping ship. Overall, their job performance plunged sharply and continued to suffer for at least five years after moving to a new firm.” Worse, switching firms doubled the chance that an analyst would fall off the rankings entirely (32% versus 16%)

This corollary (from a firm’s perspective) is that it is better to groom from within, than hire “stars” from outside.  This is in line with Jim Collin’s research too – that leaders are best developed from within.  Interestingly, many of India’s most successful companies seem to follow the same mantra; most notably the Tata Group which develops a very strong internal cadre.   The article goes on to talk about HUL, a company we all admired back in B-school

For instance, Hindustan Unilever, the Indian subsidiary of the consumer goods giant, has developed a reputation as a talent factory. How? Its senior managers are expected to spend 30% to 40% of their time grooming leaders. And executives usually change roles every two to three years so that they learn different aspects of the business. These investments may seem costly, but they have helped HUL become a $4.4 billion company, which reported 5.4% net profit growth at the end of 2009 — and the envy of other companies worldwide.

Ugh

This blog has argued in favour of freeing up our education system.  Here’s one more reason why:

“The Union Cabinet was today understood to have decided in principle to dissolve the Medical Council of India (MCI) whose chief Ketan Desai has been arrested by the CBI on graft charges…  Desai, who was arrested on April 22 by CBI for allegedly accepting bribe to give permission to a Punjab medical college to recruit a fresh batch of students without having requisite infrastructure, has already submitted his resignation to MCI Vice-President P C Kesavankutty Nair

Medical colleges across the country require MCI’s permission to increase the number of seats, to set up new medical college, to add new courses and also to increase student intake.”

Give it up folks – let go – the market will figure it out for itself!