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Making Inclusive Innovation Work

[This week's post is a continuation from last week's post - insights from the Inclusive Innovation conference held at Rashtrapati Bhavan.]

Funding Innovation

Funding of innovation is always a challenge, and one that different countries solve in different ways.

Gilles G. Patry, President & CEO spoke about how the Canada Foundation for Innovation has invested over a billion dollars in state-of-the-art facilities at universities across Canada to help them do world-class research. The Foundation funds upto 40% of the project cost and focuses on partnerships. He suggested that the model is largely successful. The evidence? -  Canada punches above its weight on research and accounts for 5% of impactful research papers [sorry, I can’t recall exactly how this was measured or over which period.]

For me, one of the big attractions of the Round Table was the participation of Nobel Laureate and Grameen Bank founder Mohammed Yunus. For someone who has brought revolutionary ideas like microfinance to the world, he was surprisingly skeptical about the availability of finance.  According to Yunus, the sector needing the largest innovations is the finance sector! Professor Yunus drew our attention to what he considered the biggest achievement of Grameen Bank - in savings and not in lending! He estimated that the Grameen Bank had contributed to more than $2B savings so far.

A German participant pointed out that money is available for impact investment but not enough social enterprises are available to absorb this investment. But, other participants were skeptical of Impact investing, citing a conflict between the social mission of the enterprise and the investor’s desired outcomes

Anil Gupta said the ecosystem should support both managed innovation and spontaneous innovation. He stressed the need for both a sanctuary model  that has chaos inside and order outside and an incubator model  that has chaos outside and order inside.

Making Social Innovation Work

Several useful ideas emerged on this theme:

One participant made an interesting observation – most people today recognize 1000 corporate logos but fewer than 10 plant species. Parag Anand of the School of Planning & Architecture (SPA) at Delhi came up with at least one solution to this problem – the SPA organizes tours for student immersion as user experience is critical to social innovation.

Iyer from the Mumbai-based Indian Foundation for Development (IFD) spoke about the need for tinkering rooms/workshops in schools as also innovation exchange programmes. The IFD has started 185 balagurukuls that host 12500 children, and there is a need to expose them to creativity and innovation.

Anil Gupta advocated the Indian concept of samavedana – making others’ pain your own, or empathetic innovation.

Mohammed Yunus suggested targeting waste. He said that at least one out of every 6 pairs of shoes bought by customers is not worn. Can’t these be re-channelised to the poor? Can’t cloth rejected by textile mills also be used?

Some participants wondered how existing innovations could be spread or diffused better. Reaching the market is often difficult. Anil Gupta gave an interesting example of four machine tool start-ups in Ghazaiabad/Faridabad that started a common marketing company so that together they would have a broad enough catalogue and a large enough volume of products to justify marketing expenditures.

Grameen Bank uses the joint venture route to solve new problems and reach users. For example, it has a joint venture with BASF for treated mosquito nets, and uses the Grameen Bank channel including self-help groups to reach users. The scientist from LBNL advocated coming up with innovations that the corporate sector will embrace.

Corporate Sector vs. Social Sector

In fact, the liveliest debates were about the role of the corporate sector and the social sector.  Lines were clearly drawn with some people like this scientist clearly preferring market-based solutions and others clearly distrusting the private sector to do anything beyond enriching itself. The word “trust” figured in many of these discussions.

Solomon Darwin of the University of California at Berkeley pointed out that while open innovation is a 2-way street involving ideas flowing both outside in and inside out, corporations have tended to focus only on the former. He pronounced that the world of high margins is over though I wonder how this can be completely true when Apple is sitting on hundreds of billions of dollars amassed through huge margins.

One of the most engaged participants in the Round Table was Jin Hyo Joseph Yun of South Korea. One could almost see his mind working as he tried to relate what he had seen in the exhibition to the discussion in the conference room! He tried to build a model on the fly – volunteers are needed to connect technology to society/market but virtuous big business is needed to make it commercially successful.

Stuart Hart cited Polanyi to make a point that was in one of his articles - production has got disembedded from the social world. People have come to distrust the business process. There is a need to re-embed economic activity in society, that is to build business models that create mutual value.

Mukesh Puri, Secretary Higher & Technical Education, Government of Gujarat believed that successful innovations have to be owned by the people . The perceived benefits need to be clear. He cited Pravesh Utsav, a celebration held at the time of girls joining school in Class 1 All political figures participate. He said that the drop-out rate has declined as a result.

Conclusion

It is ironic that innovation which is inherently an integrative activity is today impeded by silos. These silos are reinforced by different philosophies and worldviews. We may have to rely on other forces at work to lower these walls. Take the new requirement of compulsory CSR activity by Indian companies – this is forcing companies to work more closely with NGOs and other social organizations. Hopefully, this will create an environment in which companies and NGOs recognize each others’ worth, and lead to collaborative and inclusive innovation in the future.

[This blog has been written based on notes taken by the author. These have not been re-checked with the speakers. Views expressed are those of the individuals and do not necessarily represent the institutions they work for.]

Revisiting Inclusive Innovation: Notes from a Recent Roundtable

The practice of inviting outstanding grassroot innovators to the majestic environs of Rashtrapati Bhavan, the home of India’s head of state, was started by President APJ Abdul Kalam when he was president. It’s a tribute to the rootedness of our national leaders and the persistence of Drs. Anil Gupta and RA Mashelkar that the practice has not only continued but been reinforced over time. This year, the event evolved into a week-long “Festival of Innovations” with award ceremonies, workshops and roundtables.

Under the Tent…

The centre of the festival was a huge temporary structure pitched on the Rashtrapati Bhavan Football Grounds that had exhibits and demonstrations of all the award-winning innovations. The innovators must have been encouraged by the large crowds in the hall, even though the main destination of the crowds was the famed Mughal Gardens, thrown open to the public at this time every year.

The innovations themselves were not very different from earlier grassroot innovations that I have seen, at least in terms of the categories they represented. The most prominent was mechanical devices to do tasks that would otherwise be done manually. Many of these were focused on farm operations but some were on health and sanitation. Devices to help people with disabilities, and improved agricultural varieties were other important categories.

Some of the impressive innovations included a modified walker that enables climbing stairs, interlocking bricks, and wearing a helmet as an ignition switch for a motorcycle.

The centre of the hall had banners with quotations on innovation, largely from Anil Gupta and Mashelkar. Truth be said though, there weren’t many people reading these banners, and I wonder how many people would have appreciated the nuances of the quotes even if they had read them!

The innovators themselves were present, and many of them were peppered with questions by enthusiastic visitors. I imagine this must have been motivating for them, though by the end of the day they must have been exhausted!

But, if the purpose of the event was to recognize and encourage innovators from all corners of our country, and to underline the democratic idiom of innovation (“Anyone can innovate”), I am sure this event served its purpose.

…. And Inside the Conference Room

Inside the newly constructed Rashtrapati Bhavan Cultural Centre with its high ceilings and ornate decorations (including larger than life size portraits of all India’s presidents till date), innovation experts from all over the world conferred about the future of inclusive innovation. 

What are the problems to solve?

If you read our book 8 Steps to Innovation, you might remember that we advocated creating a challenge book of the most pressing problems that are literally crying for innovation. One piece of good news is that the Lawrence Berkeley National Laboratory (LBNL) Institute for GloballyTransformative Technologies has identified the fifty most important global problems to solve with technology. These include low-cost desalination to make drinking water available at a reasonable cost; a DNA-based diagnostic for accurate detection of tuberculosis; an integrated “clinic-in-a-box” for maternal and child care; low-cost homes for the urban poor; and a very timely point-of-use DNA-based rape kit to enable timely collection of evidence against perpetrators of rape.

Of course, there are solutions searching for problems as well. The co-founder of the notion of the fortune at the bottom of the pyramid (BoP), Stuart Hart drew attention to the wealth of “shelf technologies” in universities. At Cornell alone he reported that the university found about 4,000 technologies / patents that had not been exploited.

Anshu Gupta, founder of Goonj had a different take on problems. He argued that there are many “non-issues” that need to be made issues. Clothing is important, as important as food and shelter. Why can’t clothing also be a parallel currency? Earlier clothing was only part of disaster relief and charity. Why can’t cloth be given for work?

Anshu pointed out the importance of clothing by reminding the audience that more people die due to cold in winter than due to other calamities.

Drawing attention to another “non-issue” that needs to become an issue, he said that 88% of women don’t have access to sanitary napkins.

How to solve the problems?

Hart advocated an intermingling of what he called “exponential technologies” with traditional ones to address the problems of people at the BoP.

But, going back to the exhibition for a moment, it’s interesting to reflect that there were hardly any “modern” technologies like electronics or computers on display in any of the exhibits. The only such device in use was the mobile phone, and even this was in very small numbers.

An earnest NRI from a US lab had a different take on this. While he felt that India should continue to build world class R&D institutions, he thought that solutions may be available more quickly if the government were to subsidize private sector R&D or, more radically, “reverse outsource” critical problems to western research centres. What he was suggesting here is that the Indian government commission (say) a Pfizer or a Merck to come up with a new cure for tuberculosis and make it worth their while by underwriting all the research expenses. But I really wonder whether that’s a business model they would be interested in; what could work though is for the government to give a research contract to one or more outstanding academic or research laboratories abroad.

Brock from the UNICEF Innovation Centre underlined the importance of design with the user rather than for the user. He emphasized that design should be for scale, and that an organization liked UNICEF should embrace open standards (not open source) since a public organization should embrace public goods.

But, he admitted that there was a need to change their mindset from seeing the private sector only as suppliers to working with grassroot innovators as partners.

I spoke about the importance of government procurement, and policies regarding standards in making social innovation work. Rigid standards designed with existing technologies and suppliers in mind can keep out important innovations. Pre-qualification clauses can act as barriers to entry. The government sometimes encourages imitation without respecting intellectual property. And tender procedures prevent government from procuring things that might have been developed specifically for the government. Instead, the government should play a more positive and proactive role in supporting inclusive innovation.

How do you make Inclusive Innovation work?

To conclude this piece and share the key takeaways, please visit this space next week….

[This blog has been written based on notes taken by the author. These have not been re-checked with the speakers. Views expressed are those of the individuals and do not necessarily represent the institutions they work for.]

Madhya Pradesh as a Manufacturing Hub

When prominent demographer Ashish Bose suggested the name “Bimaru” for the collective of four north Indian states that were struggling to perform well on both the economic and social fronts, little did he realize that this name would stick for several decades to follow. But, it’s now a moniker that at least one of the four states – Madhya Pradesh – is keen to shed as it projects itself as a growth state for the future.

At a workshop organized by CII at Bhopal on March 5, Professor BB Bhattacharya (BBB) [picture below], economist and former VC of JNU, suggested  an interesting distinction – you are still a Bimaru state when, like Bihar, you are seeking special economic packages, and not like MP when you are confident of creating your own destiny.

As is well known, MP’s economic growth in recent years has come from agriculture. It is the country’s leading producer of soybean and pulses and #2 in wheat. The state has won the Krishi Karman award – an award given by the National Food Security Mission to states excelling in foodgrain production - the last three years in a row.

I am still not completely clear about how and why the state has been able to achieve 10+ % growth in agriculture the last three years. While the government of MP credits the growth to improved irrigation, adoption of technology and better farming practices, and optimum utilization of rain-fed areas, media reports refer to a zero-interest loan scheme to farmers, availability of power, and better irrigation coverage.

But, whatever the reason, the state has realized that it can’t depend on growth in agriculture alone for the future development of the state. That’s why it is increasingly looking at industry as the key to future growth.

An Industrial Growth Strategy for MP?

At the workshop, Professor BBB made a few important observations in his opening remarks. The East Asian growth story was as much a story of social development as economic development, and the availability of skilled and educated manpower made the growth story possible. East Asia also became technologically savvy quickly, and rapidly made the transition from being a mere recipient of technology to a creator of technology as well. He therefore underlined the importance of human development and technological capabilities for industrial growth.

Mr. Prabhakar Kadapa, CEO of Avtec, a CK Birla group company that makes engines for the automotive industry observed that his company’s products are becoming more knowledge and technology-intensive. While it has plants in multiple locations, the technology-intensive work that has a higher element of value-added happens in Hosur near Bangalore and not in his older plant in Pithampur near Indore. He estimated that 70% of his future capex would flow into Hosur.

As a participant in the panel, I observed that the East Asian countries had followed a similar trajectory of industrial growth, starting with relatively less complex industries and then graduating to more complex ones. But I wondered aloud whether manufacturing will remain the same going forward, or whether there will be fundamental changes. Some recent developments like the growth of 3D printing [see picture below] and the shift of some manufacturing back to the developed world might point to fundamental changes in the nature and patterns of global manufacturing.

Mr. Prabhakar felt that in spite of these changes there would still be plenty of opportunities in low-cost manufacturing. He felt that manufacturing could make a leap if MP is able to attract one or two big name automotive companies to make the state their hub.

Prof. BBB emphasized the importance of individual companies inserting themselves into global value chains and then striving for continuous improvement to maintain competitiveness. Mr. Sanjay Kirloskar observed that his company’s single biggest recent investment was in 3D printing, and that the 3D printer was allowing dies and moulds to be created rapidly thereby cutting down the overall cycle time of taking new products to the market. He also cautioned that we should change perspective from low-cost to total cost of ownership, and emphasise quality.

I also emphasized the importance of catching the next wave at the right time. MP pretty much missed out on the IT services wave and managed to attract companies like Infosys and TCS too late. Given the slowdown in their businesses, it’s doubtful that their development centres in the state will ever reach a large size.

The final point I made was on last mile connectivity and speed. While MP has undoubtedly made significant progress in building highways connecting the major cities in the state, city and last-mile connectivity remains an issue. The state has the right intent, but there is a need to match the intent with speed of execution as fast response is key to competitiveness.

What the State Government is Doing

The Government of MP has taken the mantra of “Ease of doing business” seriously. At a workshop with industry on March 4, the government explored 150 different possibilities for simplifying permissions and procedures. MP CM Shivraj Chouhan personally spent a good part of the day at this workshop, and reportedly told state bureaucrats not to worry about the few percent of people who will take undue advantage of the simplified processes. Instead, he advised them to focus on the benefits that will accrue from simplification.

Participants in the workshop were appreciative of the government’s efforts but underlined the importance of the government’s industry-friendly approach trickling down to the lowest level of the government. Such a change in approach is reported to have happened in some states like Gujarat. Industries Commissioner Kantha Rao said the government hoped to use technology to overcome any problems at the delivery point.

Mr. Kantha Rao also mentioned that the state is trying to leverage the central government’s policy initiatives – it’s been one of the first states to have its own policies for supporting Electronics Systems Design and Manufacture, and Defence industries. The State also offers one of the best policies for textile units.

Cautions

Professor BBB cited the example of China to warn the state that several advantages that the state enjoys today like availability of land, water and electricity could very rapidly change into constraints if industrial development takes off. Echoing this concern, some of the participants suggested that the state be sensitive to environmental concerns upfront rather than trying to address them later in a corrective mode. One participant suggested that the state should focus on clean energy. But, as he was speaking I recalled President Obama’s travails in trying to support clean energy and wondered whether Madhya Pradesh is quite ready for such challenges.

While there was broad agreement that the state needs to be able to attract higher quality talent to support R&D investments, some participants asked whether MP can hope to attract higher end jobs without making its cities more attractive. Would techies ever consider an Indore or a Bhopal on par with a Bangalore or a Hyderabad?

Another line of discussion centered around what the state can do to promote entrepreneurship. Can it set up incubators to support young entrepreneurs? Mr. Kantha Rao said, quite rightly in my view, that the government is not ideally suited to setting up or running incubators, but could be a catalyst of such initiatives.

Some Concluding Thoughts

India is embarking on a pro-manufacturing policy at a time when manufacturing itself may be on the verge of major changes. While the speed of adoption of new manufacturing technologies is difficult to predict, it is clear that the last generation of technologies itself has made manufacturing much more technology-intensive and most plants today are run by a small core of very highly skilled people. Given  this, it’s an open question how much employment manufacturing can create. Govindraj Ethiraj, Chief Editor of the Ping Network who moderated the discussion told me that a recent McKinsey report predicts a decline even in knowledge-intensive jobs thanks to changes in the way work is done.

Having said that, government policy support will create manufacturing opportunities in some sectors for sure. Defence is one of these, with the government having indicated its preference for products manufactured in India, and its willingness to move away from the earlier public sector centric model of defence production.

But, state-level strategies remain tricky. Should all states try to woo all types of industries? How can states build additional layers of advantage that would make companies find them more attractive as investment destinations? These are some of the big questions to ponder over. 

Reflections on a trip to Odisha and Rajasthan

I just got back to Indore after a week in Odisha, Delhi and Rajasthan. It was a good trip, and set me thinking on multiple fronts.

Development Debates

One of the big debates in India in recent times has been on what conditions you need to create for investment and development to follow. This trip raised some new issues in this debate as both Odisha and Rajasthan have created high quality roads but not exactly been magnets for investment. You can get from Jodhpur to Jaisalmer, a distance of 285 km, in a little over 4 hours! And this is not even a four-lane highway! The roads between Bhubaneswar, Konark, and Puri are quite decent as well. Contrast this with Bangalore and Mumbai which are, in spite of their creaky infrastructure, getting more crowded by the day! Apparently, human resource availability and other agglomeration benefits outweigh infrastructure!

Of course, it could also be argued that the reason the roads in Odisha and Rajasthan are good is because the states are less economically developed, and hence have less traffic. There’s definitely an element of truth in that as far as Rajasthan is concerned, the traffic was really sparse and consisted of only tourists or army trucks!

One big change that has happened over the last decade is the emergence of new education hubs. Bhubaneswar is one such with a good mix of private and government institutions. Jodhpur is one too – it has an IIT, an AIIMS, a National Law School, to just name a few. But it’s not clear if these locations are able to build any additional levels of advantage thanks to the co-location of these institutions. Instead,  they appear to be operating in their own silos. Unfortunately, the concept of a Meta University promoted by Kapil Sibal to promote collaboration between institutions in cities never took off.

Spots of Tourist Importance

It’s good to see that there has been a conscious effort to control traffic near important monuments. Whether it be at the Sun Temple in Konark, or the Jagannath Temple in Puri, vehicles are stopped some distance away from the actual location. However, this does mean that covering the “last mile” becomes difficult or expensive – a cycle rickshaw from the designated parking place to the Jagannath temple charges Rs. 30, and the distance is just that little bit longer than one would ideally like to walk in the sun. While I appreciate locals getting a livelihood thanks to these traffic restrictions, perhaps these towns should offer an electric shuttle bus service from the parking areas.

However, while traffic is under control, commerce has grown by leaps and bounds. Whether it be the Pandas of the Jagannath Temple or the guides and hawkers in front of the Sun Temple, or itinerant vendors selling everything from soft drinks to beer on the sand dunes, commerce is loud and in your face. And, the Jaisalmer Fort (see picture below) is a living fort, inhabited by more than 4,000 families, so naturally commerce is all around. The most subtle and well-organised commerce is at the privately run Mehrangarh Fort in Jodhpur where the designated route through the Fort takes you through a boutique, a local crafts fair, and two cafes!

East vs. West

While we seem to have picked up the consumerism of the west fast, we haven’t been as adept in picking up some of the western virtues. My visit to Bhubaneswar started with attending the valedictory function of a professional society. Much to my surprise, the function stretched to cover double the time planned. They had too many speakers and these speakers were either not given a clearly indicated duration to speak or the organisers thought it rude to interrupt and tell someone when they had exceeded their time. I noticed a similar phenomenon at the otherwise well-run conclave of the Indore Management Association in February, and at a Rotary jamboree in Indore recently. Maybe this is a Tier-2 city phenomenon, for I see most events in the metros sticking to their schedules!

Entrepreneurship alive and well

It was good to see entrepreneurship alive and kicking. I was particularly impressed by Manvar Resort, approximately halfway on the road from Jodhpur to Jaisalmer. Just off the highway, it’s a lovely green resort, well-mantained, and served delicious aloo parathas. The owner is from the family that is a major landowner in the area, but full marks to him for the aesthetic ambience and excellent service of the resort.

Varun Arya, an IIT Delhi and IIM Ahmedabad alumnus, set up the Aravali Institute of Management in Jodhpur over a decade ago. His endeavor has been to bring the IIMA education philosophy to students of that part of Rajasthan. Along the way, he has had to weather many storms – with different agencies of the central and state governments. One result of these ups and downs has been that he has had to suspend his education programmes for some time till regulatory issues are addressed.

In the meantime, he has converted what was barren and saline land on the Jodhpur-Jaipur highway into a mini-oasis. He has built 12 lakes on this land, and all of them still have plenty of water from the last monsoon. Thanks to the lakes, the campus is cooler by a few degrees.

Varun has done several interesting things. All construction on campus is by local labour. He has got special equipment fabricated so that he has to rely minimally on transporting things from Jodhpur. They grow only trees that help other vegetation grow, and have stopped growing some plants that are common in the area but in reality “poisonous” for other vegetation. The boundary walls allow water to flow in during the monsoon to replenish the lakes, and also allow excess water to flow out. The classrooms are minimalist but functional. It’s quite a place!

Tailpiece

The last place I expected to see empty beer bottles strewn around was on the sand dunes of Jaisalmer. The Swachha Bharat campaign has its work cut out – all the way from the beaches to the deserts!