Sunday, March 23, 2014

Innovation in Emerging Markets: Insights from MART Rural Conference

Though there has been so much interest in innovation in, and for, emerging markets, conferences on this subject rarely go below the surface and get into the challenges involved in detail. So, I must give all credit to Pradeep Kashyap, founder and head of MART Rural (a consultancy and think-tank that started with a focus on rural marketing and has now become a specialist on innovation for rural markets) for putting together one of these rare conferences on March 7, 2014 at the India Habitat Centre in New Delhi.

Some Key Insights

Speakers at the conference identified important insights, challenges and questions in innovation for emerging markets:

  • Scaling is perhaps the largest unsolved problem. It’s not the same as replicating a pilot. Major resource commitment from top management is required. Pradeep Kashyap had an interesting way of capturing the futility of doing one pilot after another: “Can you have a pilot without a plane?.” Arvind Chinchure echoed a widely held view that scaling up involves partnering with government.
  • Relevance is critical for innovation in emerging markets. As Pradeep Kashyap pointed out, rubber chappals replaced leather ones because rubber chappals could be washed after a day in the field without any problem. Of course, rubber chappals meet the affordability criterion as well.
  • The innovation challenge in India is “75% of the functionality at 50% of the cost” – this is how Pradeep Kashyap described it.
  • Innovation in India is still focused on solving basic problems. Tech-type innovators will come later. (Several speakers (including me!) referred to this).
  • Along with relevance, social acceptability was emphasized. There was an interesting comment from a member of the audience: “People don’t have toilets, but have mobiles and are now moving into the internet. Isn’t that strange?” This led to a discussion on behavioral change & social context. Someone mentioned that constructing toilets in parts of rural India was not successful because open defecation gave women a chance to talk to each other and share concerns. Hence women don’t like closed toilets. Someone mentioned new toilet designs that retain the social interaction dimension!
  • “Does innovation have to lead to income enhancement?” was an interesting question that was posed. This led to a discussion reminiscent of the Prahalad-Karnani debate. Pradeep Kashyap attributed e-choupal’s success to the fact that it enhanced incomes first; farmers then came and bought other things from ITC’s retail stores at the choupal. This discussion reminded me of Prahalad’s insightful comment that spending less is like earning more, so perhaps income enhancement per se does not have to be an outcome of innovation for emerging markets.
  • David Wittenberg distinguished between opportunities (unvoiced needs) and problems (voiced needs). His view was that the big dollar opportunities are in the unvoiced needs. 

  • But in my presentation, I put it differently by saying that what we are looking for is creative, context-relevant solutions for known needs, like Gillette’s Guard.

There was a vigorous discussion about jugaad with people predictably lined up on both sides of the debate. Proponents of structured innovation like Arvind Chinchure and Wittenberg (who makes his living from innovation consulting!) were skeptical about jugaad. Pradeep Kashyap thought that jugaad is important. I was glad to see a member of the audience raise the question of the definition of jugaad in the Radjou, Prabhu, Ahuja book and point out that their definition is very different from the way we colloquially understand the term in India. In fact, much of the debate on jugaad arises from the different connotations and definitions of the term!

Our Panel

I was on a panel with Preeti Shriniwas of RB (formerly called Reckitt Benckiser) and Nilesh Shah of the US embassy. Ranjan Malik of Erehwon was the moderator of our panel. Our brief was to look at innovation for emerging markets from a process perspective.

Preeti leads the open innovation team for RB in India. She focused on the consumer-centric innovation process at RB.  She told the story of RB’s Veet Hot Gel wax. It didn’t do well initially because people applied it too thick and didn’t use the spreader properly. Research revealed that that people preferred warm gels though the RB product did not need heating. Fortunately, RB found that heating did not reduce performance. So, they decided to go with familiarity, and not discourage people from using the wax after heating. This echoes the point about familiarity and behavioral context that was made earlier.

Preeti explained the open innovation model at RB as primarily a “Want – find – get” model that is used to fill gaps in RB’s knowledge pool. But, in the process, they sometimes come across serendipitous findings, and in these cases the model becomes a “find-want-get” process.

To me the most insightful part of Preeti’s contribution to the panel was her identification of the challenges to open innovation in India.  According to Preeti, the four main challenges are:

  • Creating a steady in-flow of technologies as there are not enough proactive suppliers seeking out such partnerships
  • Maintaining sustained levels of interest in suppliers/technology providers. Her experience is that many of them are not patient enough to go through the processes that a large multinational requires and want quick results. They tend to drop off if there are no immediate gains.
  • Identifying the global relevance of local opportunistic ideas / innovation
  • Lack of understanding and awareness of Intellectual Property & related legal arrangements leading to long delays. In one case, it took 6 months to a year just to sign a non-disclosure agreement.

For Nilesh Shah, innovation is all about the Silicon Valley breakthrough model.

I spoke about some of my current favorite examples including Bajaj Pulsar, Tata Nano, and Gillette Guard. I emphasized the importance of finding the right problems to work on, and suggested the “pain-wave-waste” model of 8 Steps to Innovation as a useful means of identifying these problems. I underlined the importance of market and consumer-centric innovation processes while contrasting the success of the Tata Ace to the relatively poor performance of the Tata Nano. I pointed out that successful innovators in emerging markets get immersed in the lives of users to understand how their needs can be met. In many cases, these needs are basic in nature, but existing solutions are not fulfilling these needs well. That’s where innovation comes in.

Postscript: Vigyanlabs Update

I wrote about Vigyanlabs about a year ago when the company was chosen for the Nasscom Innovation Award. I have been talking about his company frequently since then because they addressed an important problem (power consumption and greenhouse gas emission due to data centres) with a proprietary solution backed by a US patent.

So, it was great to meet Srinivas Varadarajan of Vigyanlabs again at the MART conference. Srinivas introduced me to his latest product – Intelligent Power Management (IPM) for the mobile phone, tablet, or laptop. It uses the same patented process (algorithm) as his product for data centers, but in this case it helps your battery last upto 50% extra after every charge. It’s sold in retail by Vigyanlabs’ partner, NCS Computech. For an MRP of Rs. 399, you get a scatch card with a key. The software itself is downloaded from the net, and is activated with the key. Not only has this created a new revenue stream for Vigyanlabs, it adds to the company’s credibility by giving an almost instant demonstration of what its software does. The company is now getting invitations from large users of batteries in the field to explore ways of extending the life of the battery after every charge!

[The MART conference had a very interesting healthcare panel. I’ll write about that next week.]

[The views expressed here are the personal views of the author.]

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