Lessons in Reverse Innovation

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Visit to Bharti Airtel

The theme of this year’s Chazen India trip is “reverse innovation,” and prior to our trip, the class spent time researching innovative products and solutions developed in India for possible export to the US market, as well as participating in a design simulation workshop. While in Mumbai and Bangalore, we’ve had the opportunity to visit senior leaders at roughly a dozen companies to learn about their approaches to innovation. I’ll highlight a few of those visits here.

We began our visits at a division of Monitor/Deloitte called Monitor Inclusive Markets, a mission-driven group with the goal to make market-based solutions work in areas such as affordable housing, mobile payment systems, and clean cookstoves. In terms of housing, a huge number of people are moving from rural to urban India and this presents a large opportunity for developers – as well as a challenge to provide homes that provide people with what they aspire to have, at an affordable price, and with appropriate financing options. In terms of marketing clean and safe cookstoves, the cultural context provides a wrinkle in that the wife’s health often isn’t prioritized; successful ads have instead included depictions of sons suffering from the pollution from a traditional stove. (To note: gender relations have come a long way from issues such as the banned practice of sati, in which a recently widowed woman would immolate herself on her husband’s funeral pyre). One of Monitor’s many insights was that in the social enterprise space, people typically think about products, but “it takes a lot more than a great product to scale” because you have to contend with entrenched customer behaviors. They’ve found that “innovation is about the business model, and scaling it.”

Probably no visit to India is complete without a visit to Tata Group. The Tata Nano, with its claim to fame as the cheapest car in the world, has been the subject of business school case studies, and I was lucky enough to meet Chairman Emeritus Ratan Tata when he visited Columbia this past fall. In terms of a few takeaways from this visit, I found it particularly interesting that the cross-functional teams working to develop the Nano were 28 years old on average – the company was conscious that “past experience of older employees would have to be unlearned.” Some additional insights from the Nano’s mixed success were that in retrospect, the car’s development maybe should have been quieter – while the hype put Tata on the map, they encountered significant delays before they could start selling to their target customers. Additionally, they learned to modify their original brand positioning to portray a more “fun” car, as India is a very aspirational society. Consumers didn’t want to feel that the car was cheap (vs. affordable) and perhaps “incomplete.”

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Latest Nano ads (source: company website)

We went to Godrej Industries to learn about the Chotukool, a low-cost refrigerator. Their philosophy starts with “a noble mind: 80% of families can’t afford refrigerators in India, but they aspire to have a cooling solution to meet their specific and different needs.” The team shared how they have developed and tweaked the product over the years, and a lesson that we took away from that visit were that when creating a disruptive innovation you have to keep away from a “features” mindset; they’ve been very frugal in their developments and make sure that any features that they add are necessary, as opposed to “nice to have.” For instance, the product is a bit heavy, but they decided not to add wheels due to the additional cost that they would have to pass on to the consumer. Additionally, the company had a significant business breakthrough in their public-private partnership with the India Post, which provides them with an excellent distribution system.

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Demonstration of the Chotukool refrigerator

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A small group of us interested in innovations in wind energy met with Suzlon Energy

We met with Harsh Mariwala, CEO of Marico, which is a CPG company focused on providing select products (such as hair oils) in locations where they can be profitable and hold a market leadership position. Their approach seems highly pragmatic in an industry that has a lot of global players and tends to be low margin. Mariwala emphasized the importance of culture building; theirs is “very open, equal, transparent, participatory, and empowering,” and he strongly attributes the company’s success to this. He shared about one of their innovations, which was to create a plastic container for their coconut oils, which had up to this point been kept in more expensive metal containers to keep away mice. Distributors initially balked when Marico wanted to move to a plastic container, but the Marico team tested different plastic bottles in a mouse cage, found a design that worked, and today 100% of the market players use plastic bottles.

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Tiny 2-rupee bottles of hair oil targeted at low-income customers

We later met with Manish Sabharwal, CEO of HR services TeamLease, to learn about his work within “the agony and ecstasy of India’s labor market.” Corporate India has been lowering its hiring standards, so this gives many new people access to the labor force, but opportunities are not available in every location or due to family status. Given the large population increase and demographic transitions (people moving from farms to non-farm living, schools to work, rural to urban, and subsistence to surplus, etc.) there is a growing population of young people who have little chance of finding a job. TeamLease provides solutions, for instance, in that it offers low-cost, basic training to make people more employable for temporary jobs, which could turn into full-time opportunities. The benefit for the companies is that they can test out employees.

The challenge in all of this work? It’s kind of illegal. Sabharwal spends 30% of his time working with public policy leaders to effect change in India’s labor laws and noted that there are hundreds of lawsuits against him, but he is clearly very passionate about the work he is doing.

This meeting was one of the most fun visits because Sabharwal is a fantastic storyteller. Some of his best lines:

“As an entrepreneur, there are two kinds of companies you can create: a baby and a dwarf. (The difference being that the former can grow)

“Entrepreneurship is the art of staying alive long enough to get lucky.”

“The biggest challenge in public policy is when everyone agrees with you.”

“India doesn’t have an ideas deficit; it has an execution deficit.”

All useful things to ponder.

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TeamLease office

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Visit to Innovation Alchemy

Our last visit was with the founders of TutorVista, impressive entrepreneurs who have had several successful exits. (It’s safe to say that we were all paying very close attention to them!) TutorVista is an online tutoring service in which Indian teachers with masters’ or PhD degrees teach students in the US who can’t afford private tutoring, at a flat rate of $100/month. Sounds straightforward, and there are definitely other companies in this space, but their competitors tend to target the lucrative but much smaller market for wealthy and struggling students, whereas TutorVista’s disruption is that they “ensure that everyone can be their customer.” Indeed, the company is even working with US schools that need to comply with the No Child Left Behind act, and they’ve carefully thought through issues such as disintermediation. I was lucky to grow up with an identical twin – e.g. instant study buddy – but I could picture myself taking advantage of such an easy-to-use tutoring service growing up, had it been available.

There is so much more that I could include here, but I’ll leave it at that before this blog becomes too long. The company visits were a valuable opportunity to learn more about innovation in India, and there’s a large stack of follow-up reading I’d like to do in this subject area if the time permits! I’ll post another blog later this week with impressions of Mumbai, Bangalore, and the trip experience as a whole.

Krista Sande-Kerback ‘14

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