Innovation Notes from India
Posted on Harvard Business Review: August 12, 2010 9:30 AM
While in India last week, I gave two talks—one in New Delhi and one in Mumbai—as part of a "Thought Leadership Series" sponsored by Transearch and Harvard Business Publishing. I also visited Village Laundry Service, a business we launched in 2008 to provide affordable, high quality services for India's booming middle class.
The week started with a successful, and somewhat controversial, IPO from SKS Microfinance, one of the leading lights in the microfinance industry. (The controversy relates to whether the social mission of microfinance can co-exist with profit-seeking enterprises). And it ended with New Dehli's newspapers fielding questions about whether the city would be ready to host the Commonwealth games in October.
It was my seventh trip to India in the last 13 months. I don't consider myself an expert, and my trips have been limited to just a few big cities. Still, I thought it would be worth sharing some of my notes from the field. I jotted down six thoughts on the trip home.
1. India is a land of contrasts. New Delhi's brand new international airport is a marvel, with beautiful, efficient design. But once you get in your car, in mere minutes you are confronted with the reality of a country that still very much deserves the "emerging" tag. These kinds of contrasts are everywhere. My colleague Matt Eyring notes how many Indian markets have a "missing middle"—those who can pay get world-class service, everyone else has affordable options, and there is nothing in between.
2. There are more people than jobs in India. I noticed that many jobs used two to three times the workers I would expect were required for the task. I guess this isn't a surprise given the need to find ways to keep more than a billion people occupied. I counted interfaces with at least 12 people going through the airport, compared to perhaps four in the United States.
3. The innovation energy in India is tremendous. Some call India a "nation of entrepreneurs." If you spend any time in India you know why that's the case. Things are rarely straightforward. Changing the mailing address of our Village Laundry Service business took months. As my colleague Hari Nair says, "India is all about backups to backups." You almost have to be an entrepreneur to survive in India. The Indian concept of "jugaad," which translates roughly to "get it done," is very consistent with the habits and practices of leading innovators (and has been well covered by the late, great CK Prahalad among others).
4. Indian companies might have it too easy. I made this point in both of my speeches. Some executives privately told me about how they were very sure that they would blow through their growth plans. Not only can these companies continue to take advantage of factor cost advantages against Western competitors, the swelling middle class in India is driving domestic growth.
5. How can easy growth be bad? The ease with which a company's core business grows can mask the need to invest in innovation. Growth inevitably slows. Indian companies should be investing in innovation now, even though they appear not to need it. If they don't, they will ironically leave themselves open to disruption from Western companies who find disruptive ways to compete domestically.
6. There will be more SKS's in the coming years. There's a different air to Indian innovators these days. The first batch of innovators, like Wipro and Infosys, were all about leveraging factor cost advantages. Today's innovators are finding new ways to compete in established markets like telecommunications and automobiles, or pioneering new markets like microfinance or affordable battery-powered refrigerators.
As always, I left India eager to return. It's hard to imagine the impact that India's innovation energy could have if it could be focused on pressing commercial and public problems. Today, too much of it is dissipated in numbing bureaucracy, a creaking infrastructure, and other challenges. I think there's a real chance that India will become an innovation powerhouse in the coming years.
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