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Sport SWOT analysis of Indian innovation

Sci. & Tech.

Entertainment
Bangalore
D. Murali & Sriram Lakshman

Agri. & Commodities
Chennai

Delhi

Index Chennai, Aug. 17: Over the last about 15 years, entrepreneurial Indian
Hyderabad
companies have been generating social and economic impact, and this is just the
Kolkata

Photo Gallery beginning of the most profound national transformation since gaining
Mumbai
independence, says Mr Michael Hugos, author of ‘The Greatest Innovation Since
Pondicherry
The Hindu the Assembly Line: Powerful Strategies for Business Agility’ (Meghan-Kiffer Press,
Thiruvananthapuram

Print Edition 2007).

Front Page “There is no other single force in India or the Indian diaspora that has the

National potential to motivate innovation as powerfully as the ideas of starting, owning

Tamil Nadu and operating a business in a free market economy,” he adds.

Andhra Pradesh

Karnataka Mr Hugos, who introduces himself as “an American who spent his childhood

Kerala
growing up in Manila, Hong Kong, New Delhi, Paris, New York, and Tripoli Libya,”

Delhi
is an MBA from Northwestern University’s Kellogg School of Management, and a

Other States
mentor in business and IT (information technology) agility with the Chicago-

International
based Center for Systems Innovation.

Opinion

Business

Sport ‘The greatest innovation since the assembly line’, according to his new book, is

Miscellaneous the agile enterprise or real time enterprise; a process, a way of life, if you will, for

Index a firm. It is a ‘how’ and not a ‘what’ (since we are arguably drawn to a ‘what’
when we think of innovations).

Life

Magazine

Literary Review An agile firm constantly makes adjustments, in real time, to update its business

Metro Plus and management processes to make effective decisions that will ultimately make

Business the customer happy and increase profits, he explains. “The agile firm can

Education Plus consistently earn 2-4 per cent beyond its non-agile competitors.” Mr Hugos

Open Page coaches companies to innovate, through what he calls ‘30-day blitz’. Because, in

Book Review every situation there are significant improvements that can be made in 30 days

SciTech or less, he reasons.

Entertainment

Young World
Recently, when in India for one such ‘blitz’, Mr Hugos interacted with Business

Property Plus
Line over the email on the potential of Indian companies to innovate in the years

Quest

Folio ahead, and more importantly on Indian innovation’s strengths, weaknesses,
opportunities, and threats (SWOT).

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Excerpts.

Do you see any threats that stand in the way of the Indian growth story?

To continue their development Indian companies need to recognise and respond

to two major threats. The biggest threat is the tendency to rely on price alone as
the preferred strategy to win new business. Indian companies got their start by
being the lowest cost providers in the industries where they competed. Now they
must find other ways to distinguish themselves in the eyes of their customers and
prospects.

Other ways, such as?

Indian companies need to build a reputation for finely crafted and well designed
products and services delivered at good prices but not the lowest prices. They are
already finding their pricing strategies undercut by Chinese companies with lower
operating costs. With the rapid growth of Chinese companies, Indian companies
can no longer hope to grow and win new business based on just having the
lowest price. When Indian companies develop their reputation for well-crafted
and responsive products, global customers will still want those products even
though they no longer sell for the lowest prices.

And what is the other threat?

The second major threat to the growth of Indian companies is the serious lack of
public infrastructure. Roads, harbours and airports, and sewer, water, power, and
communications systems all urgently need to be upgraded. It is no secret that
the sorry state of existing infrastructure is already slowing the rate of Indian
economic growth. Yet in this urgent need, are also the seeds of a vast
opportunity.

An opportunity for the private sector?

Yes. Private Indian companies operating on free market principles are the best
means to deliver the massive public infrastructure improvements that are
needed. Local, state and national government have shown themselves over the
last 50 years to be incapable of either doing or administering this work. Instead,
they should raise the funding, put in place the legal and financial regulations and
provide the oversight to ensure compliance with laws and contracts.

How can private sector be motivated to perform in public infrastructure?

If governments deliver funding and enforce a transparent process for bidding on

public infrastructure projects; if performance and product quality requirements
are set to meet the highest standards; and if payment is strictly tied to meeting
these standards, then a powerful cycle of business innovation and growth will
ensue. As Indian companies rise to the challenge of upgrading their country’s
infrastructure, they will also develop the innovative new products and services
required for this job.

Aren’t Indian companies capable of meeting the challenges? Are there

weaknesses?

In order to rise to the challenges of an opportunity of this magnitude, Indian

companies need to address some key weaknesses in the way they currently
operate. Chief among these weaknesses is what I would call an inordinate

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reverence for hierarchy.

But hierarchy is a natural way for people to organise themselves, isn’t it?

True, and it works well for the maintenance of the status quo. But to innovate
and do new things there must be mechanisms in place to temporarily suspend
hierarchical behaviour. And the hierarchy itself must also be flexible enough to
accommodate changing circumstances and peoples’ personal growth.

How does hierarchy hinder innovation?

I have seen and participated in the dysfunctional behaviour that happens when
Indian companies try to use traditional hierarchical procedures to create new
products and expand into new markets. The fear and discomfort of doing new
things leads senior managers to make demands and issue orders and even
implied threats that only serve to increase everyone’s level of confusion and
anxiety.

Middle managers (like I was) who want to keep their jobs become weak-kneed
yes men and workers blindly follow orders and do as they are told whether it
makes any sense or not. Opportunities for innovative thinking become all but
impossible. Participation in situations such as this is like experiencing a slow
motion train wreck; people can see what will happen or not happen; but no one
can talk about it, and people soon devote most of their energy to getting off the
train before the final wreck.

Terrifying! Any other lacuna that you notice?

Another weakness I’ve seen in Indian companies is an inability to make plans

with enough flexibility to guide project teams through the process of creating
something new. Indian companies display a strong work ethic and people work
long hours but hard work alone does not make up for the lack of clear plans to
coordinate peoples’ actions and guide them toward their goal. Much confusion
and wasted effort results from people not knowing what progress has been made
and where to concentrate their activity.

Wouldn’t better planning help?

Rather, a better understanding of planning should help. There is a mindset that

believes a plan, once in place, is then etched in stone and must be rigidly
adhered to regardless of how events unfold. People fail to understand that it is
the final goal that does not change, yet the plan for reaching that goal is a living
thing, and must change continually based on progress and new realities. Many
American companies have this same weakness as well.

Coming to strengths, which is the most important one?

I have witnessed significant strengths that Indian companies can draw upon. The
first great strength is that India itself is a real, functioning democracy with an
active and articulate free press (the American press often looks passive in
comparison). India has a history and tradition of transparency and due process in
government that can be applied to the process of granting public infrastructure
contracts and regulating performance and payments. This tradition of democracy
is a distinct advantage that other developing countries do not have.

Reassuring thought, that is. Any other pluses that we can bank upon?

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Another great strength of Indian companies is their ability to put teams of highly
trained and educated people onto challenging tasks. Indian companies can draw
on a labour pool that is perhaps the best trained of any in the developing world. I
have felt the surge of can-do spirit and positive energy that happens when these
teams are well led and given a free hand to get the job done. I have seen levels
of creative collaboration and excellence of execution that I once thought Indian
companies were not capable of.

The combination of a clear and urgent need for public infrastructure, a highly
skilled and motivated labour force and the transparency and accountability
provided by a functioning democracy and a free press is India’s unique source of
strength.

BusinessLine@gmail.com

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