Wednesday, April 24, 2013

Decoding India’s innovation DNA

Companies hail the importance of the Indian market, and there is a pleasing buzz around the concept of reverse innovation from the country. But unless the ecosystem as a whole becomes more enabling for innovation, the country will continue to seriously undermine its potential

The most unique aspect of the UIDAI (Unique Identification Authority of India) project is its scale. It’s all about innovatively applying existing technologies to a grand social goal whose value for its intended audience can hardly be questioned. With a target of over 600 million people by 2014, this is slated to be the largest biometric database of individuals on earth. The total estimated cost is pegged at around Rs.180 billion, but is linked to some Rs.3 trillion in welfare payments in India, at least half of which are estimated to be lost due to leakages and graft.

However, the project has faced considerable challenges, & a major proportion of them have little to do with the technology itself. They include lack of machines at centres, inadequate and unskilled staff, awareness issues, data collection issues, difficulty in finding competent vendors and lack of sufficient cooperation at the state level. Off late, the problems have become more complicated, as the home ministry led by P. Chidambaram feels that the UID is a security risk as it really does not demarcate citizens and residents, and that the National Popular Register (NPR) scheme is much better. On the other hand, the Standing Committee on Finance led by Yashwant Sinha has rejected the National Identification Authority of India 2010 bill in its present form citing a number of issues including the question on whether the bill itself was introduced with any clarity of purpose, since it was supposedly destined for BPL families and has now been extended to all residents of India. The Left, on the other hand, is joined by a number of activists in calling it a breach of individual privacy.

Now let us discuss one landmark innovation that came from the Indian automotive sector and was hailed as a symbol of what Indian innovation could promise the world – the Tata Nano – a unique and valuable proposition for the middle class in theory, but a terrible road to market in practice. It all began when they ran afoul of farmers who owned the land where the Singur plant was set up. They assumed that the support of the West Bengal government would be enough to ensure that all was well. Once it spiraled into a political issue, the company was compelled to pull out of its $292 million factory and relocate to Sanand, Gujarat. This created serious supply issues besides enormous relocation costs, as some suppliers reportedly complained of inadequate compensation. Moreover, the promise of the Rs.1 lakh car became unsustainable very soon as input prices started rising; and the car was eventually caught in a devastating positioning trap, with the perception of a cheap car conflicting with the new price points. The burning Nano incidents made it worse and brought quality issues with suppliers to the fore. Rightfully so, Ratan Tata called it a “wasted opportunity” recently, and the company is looking at removing the ‘poor man’s car’ tag.

What these two isolated examples highlight in particular is that when organisations are looking at innovation, especially path-breaking innovation, and even if they are convinced about the potential of that particular innovation in the market, their due diligence is far from over. They have to look at the entire innovation chain from their suppliers to all the partners and to even a wider gamut of stakeholders who may or may not have a direct stake in the value proposition of the innovation in question.
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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