Saturday, 18 July 2009

Jugaad Part 2: Clinton in India

After all that talk of mobile phones and business models and meeting needs in my last post, I wake up this morning to read:

'Ms. Clinton hoped that India would leapfrog the dirty technologies that are leading to climate change "just as it has leapfrogged from having few phones to now having more than 500 million, mostly cellphones." '

I'm wondering how the Indian government is going to argue with that. Especially when innovative 'jugaad-like' business models have already been used to spread solar electricity through (hitherto unelectrified) tracts of rural India (FT reprint).

That isn't to say the Indian government's arguments on climate change are entirely without merit - it's just that they'll have to adjust their position now, especially if, as the article says:

'She said they would have "more intense discussions" on the subject with Indian officials in "both public and private sectors" during her trip that will take her to New Delhi Sunday [emphasis added]'.

I wonder what's up. I can see, however, that Hillary Clinton is well informed.

Update, July 20: It seems that the Indian government did argue with it. Environment Minister Jairam Ramesh (an MIT Tech Pol grad, by the way - so he's a sort of distant cousin of ours) says that New Delhi "is "simply not in a position" to sign up to enforceable emissions targets, even while the Indian government is committed to fighting climate change.

I think this last deserves a separate post (which I'll try and do later) - there's more to this than is immediately obvious, I think.

Friday, 17 July 2009

'Jugaad', and improvised innovation in India

Fascinating article in the WSJ, of all places, on the Indian tradition of jugaad - innovation based on improvisation, here in India.

Jugaad is a cultural tradition that's beginning to become a very powerful economic driver here, and Devita Saraf is right to have pointed it out.

I don't know if any of you are familiar with the writer Neal Stephenson - one of the great science fiction writers of our time, but also a superbly keen cultural commentator. In his masterpiece, The Diamond Age, Stephenson comments on the 'ancient relationship' between 'forgers' and 'honers'. Forgers are the go-getters with the world-changing ideas - who, after releasing a great new idea, forget all about it and go on to the next great thing. Honers are the people who tinker with the ideas that get left behind, refine them, and get them to do things that their 'forger' creators never imagined were possible.

You'll see a lot of the latter going on in India - as Devita Saraf says, it defines how innovation is happening in India today. It's driven by a pretty basic compulsion.

India has this diverse, deep, broad range of needs - driven by people fighting their way out of poverty, particularly in the rural hinterlands. This is increasingly backed by money, creating enormous new markets for everything from transportation to electricity - a 'boom from the bottom', as Newsweek puts it.

Accessing those needs, however is difficult: Markets are physically difficult to reach (in the rural hinterlands), economically difficult to access (because of low per capita affordability thresholds), and - because fifty years of socialist government apathy - have a sub-par infrastructure, with which to reach them. (How do you sell electricity to a rural village, when the state electricity board hasn't built power lines there in the last half century?)

This challenges Indian entrepreneurs, in our bottom-up economy: domestic markets represent a lucrative and safe business opportunity, but the opportunity can't be reached without some serious innovation. (If you want to sell villagers electricity, you'll have to use distributed power sources - solar panels, say.)

India's got a fairly good science and technology research infrastructure here , and a very good talent pool - but the public research network doesn't do very well at commercialisation. This means that emerging technologies aren't yet a viable source of such innovation.

The result - is a lot of tinkering. As Saraf points out, Indian entrepreneurs can't yet draw very easily on the public research infrastructure, so they use business model innovation to open up new domestic markets, and drive technology (and therefore, solutions) adoption. This is leading to some of the most exciting economic trends in the world.

Take telecom, for example. The telecom sector was crippled for decades by unbridled government apathy. Today, however, Indian mobile phone call rates are the lowest in the world - because our telecom companies use bottom-of-the-pyramid revenue models, that reach hundreds of millions of people with low affordability thresholds. This drives an enormous market for mobile phones and services, and a huge amount of economic activity transacted on them.

The knock-on effects are huge, and wide-ranging. In my own port city of Chennai, India, I see fishermen coming in from the sea calling their wives on their mobile phones. The wives are already located in the fish-markets, know what the prices are for different kinds of fish, and can tell their husbands what part of the catch to bring in - to which market, in which part of the city. Guess what that does for profitability?

PS: There's a second part to the WSJ article, where Saraf extends the discussion - almost - to a second important question: does current management theory do justice, as yet, to business forms outside the West?