A wake-up call for India Inc

The most valuable insights in this book come from the survey of the views of 100-odd managers in Indian firms. For instance, 71 per cent of the managers polled believe that innovation is one of the three most important sources of competitive advantage, but 64 per cent are disappointed with the outcome of the innovation efforts put in by their companies. That should make managements sit up and take notice. Also, the fact that 60 per cent of the respondents feel that their organisations do not have clearly specified goals for new businesses or products, is worrying: in some firms, definitions tend to be fuzzy such as "regular new product launches" as opposed to, say, "six launches in the next twelve months". Apparently there is a huge disconnect between CEO and the management on the importance of innovation; a young manager fired by a consumer goods company to specifically create new products, ends up totally frustrated because the CEO does not want to take any risks and doesn't allocate adequate resources for the manager to launch his initiatives. The short point: CEOs, it appears, prefer to play it safe until it's too late. There's a study of how managements tend to be lethargic if they command the lion's share of the market, a case in point being Bajaj Auto in the autorickshaws space. Autorickshaw owners spoken to by the authors claimed the product had seen hardly any changes in design over the years, forcing them to invest fairly large sums to make the vehicle more comfortable and safe. This, despite the fact that the market is not a small one at 269,000 vehicles per annum.

Many companies believe that acquisitions can do the trick though the data on M&As are quite definitive; they do not work. However, it is possible that innovation and acquisition need not be mutually exclusive "" pharma and biotech firms for example have brought in new technologies and products thereby buying innovation capabilities, rather than growth. The first-mover advantage has been debated and the authors point out that companies also need to adjust to the emergence of modern retailing, which allows consumers time to browse, making the recommendations of store owners less important. That has to some extent eroded the advantage of gaining mindspace and letting the consumer get familiar with the concept of a new product or service. Also if one can afford to spend money, it's not too difficult to outshout the incumbent. So, in today's highly competitive market, the first-mover advantage lasts only for a brief period and the objectives need to go well beyond that, taking into account the realities of the Indian market. Also, the authors point out, most innovation activity in India , at least till the recent past, was focused on richer households. That would need to change, given that the largest market, in sheer size, is with middle income households. Of course there have been price warriors, Reliance Communications for instance.

The case studies are somewhat disappointing For instance, the study on the toy industry "" why Indian companies have not ventured into the toy industry despite there being hordes of children in the country "" is more a case of risk aversion probably for valid reasons, rather than the lack of innovation. The launch of Kaya skin clinics by Marico is a good example of a company moving into unchartered territory with a new service positioned innovatively. The most interesting is the story of the regional manager, HR, EID Parry, who handled labour relations beautifully by making workers take an "Art of Living" course. It was a great idea and one that was difficult to execute, but over a few months, the course was taken by officers, workers and some of the workers' families. The results were better than expected: productivity was up while gate meetings were down. New fora for exchanging ideas and information were established ""something that did not seem possible earlier.

The survey has shown that the Indian model of innovation appears to be somewhere between the American and Japanese models where most parameters are concerned. Much like in America, in India too strategy tends to flow from the top with the middle-management responsible for implementing rather than leading. And CEOs want big ideas and want them fast. Yet the culture appears similar to that of the Japanese in that hierarchy rules, seniors are to be respected regardless of the quality of their ideas and employees are expected to be workaholics. Indeed, some of these findings could be an eye-opener for CEOs who may feel they're on the right path, but may be completely lost. As one case study shows, even Hindustan Unilever failed to understand Amul's strategy in the ice-cream market and was left out in the cold. Some of them might want to pick up a tip or two from the survey.

INNOVATIVE INDIA
INSIGHTS FOR THE THINKING MANAGER

Parmit Chadha and Radhika Chadha
Penguin
Rs 395