swot analysis of indian innovation

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SWOT analysis of Indian innovation

D. Murali & Sriram Lakshman

Chennai, Aug. 17: Over the last about 15 years, entrepreneurial Indian

companies have been generating social and economic impact, and this is just the

beginning of the most profound national transformation since gaining

independence, says Mr Michael Hugos, author of ‘The Greatest Innovation Since

the Assembly Line: Powerful Strategies for Business Agility’ (Meghan-Kiffer Press,

2007).

“There is no other single force in India or the Indian diaspora that has the

potential to motivate innovation as powerfully as the ideas of starting, owning

and operating a business in a free market economy,” he adds.

Mr Hugos, who introduces himself as “an American who spent his childhood

growing up in Manila, Hong Kong, New Delhi, Paris, New York, and Tripoli Libya,”

is an MBA from Northwestern University’s Kellogg School of Management, and a

mentor in business and IT (information technology) agility with the Chicago-

based Center for Systems Innovation.

‘The greatest innovation since the assembly line’, according to his new book, is

the agile enterprise or real time enterprise; a process, a way of life, if you will, for

a firm. It is a ‘how’ and not a ‘what’ (since we are arguably drawn to a ‘what’

when we think of innovations).

An agile firm constantly makes adjustments, in real time, to update its business

and management processes to make effective decisions that will ultimately make

the customer happy and increase profits, he explains. “The agile firm can

consistently earn 2-4 per cent beyond its non-agile competitors.” Mr Hugos

coaches companies to innovate, through what he calls ‘30-day blitz’. Because, in

every situation there are significant improvements that can be made in 30 days

or less, he reasons.

Recently, when in India for one such ‘blitz’, Mr Hugos interacted with Business

Line over the email on the potential of Indian companies to innovate in the years

ahead, and more importantly on Indian innovation’s strengths, weaknesses,

opportunities, and threats (SWOT).

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� Thiruvananthapuram

Weather

of 4The Hindu News Update Service

11/19/2008mhtml:file://C:\Documents%20and%20Settings\mohit\My%20Documents\Documents\S...

Excerpts.

Do you see any threats that stand in the way of the Indian growth story?

To continue their development Indian companies need to recognise and respond

to two major threats. The biggest threat is the tendency to rely on price alone as

the preferred strategy to win new business. Indian companies got their start by

being the lowest cost providers in the industries where they competed. Now they

must find other ways to distinguish themselves in the eyes of their customers and

prospects.

Other ways, such as?

Indian companies need to build a reputation for finely crafted and well designed

products and services delivered at good prices but not the lowest prices. They are

already finding their pricing strategies undercut by Chinese companies with lower

operating costs. With the rapid growth of Chinese companies, Indian companies

can no longer hope to grow and win new business based on just having the

lowest price. When Indian companies develop their reputation for well-crafted

and responsive products, global customers will still want those products even

though they no longer sell for the lowest prices.

And what is the other threat?

The second major threat to the growth of Indian companies is the serious lack of

public infrastructure. Roads, harbours and airports, and sewer, water, power, and

communications systems all urgently need to be upgraded. It is no secret that

the sorry state of existing infrastructure is already slowing the rate of Indian

economic growth. Yet in this urgent need, are also the seeds of a vast

opportunity.

An opportunity for the private sector?

Yes. Private Indian companies operating on free market principles are the best

means to deliver the massive public infrastructure improvements that are

needed. Local, state and national government have shown themselves over the

last 50 years to be incapable of either doing or administering this work. Instead,

they should raise the funding, put in place the legal and financial regulations and

provide the oversight to ensure compliance with laws and contracts.

How can private sector be motivated to perform in public infrastructure?

If governments deliver funding and enforce a transparent process for bidding on

public infrastructure projects; if performance and product quality requirements

are set to meet the highest standards; and if payment is strictly tied to meeting

these standards, then a powerful cycle of business innovation and growth will

ensue. As Indian companies rise to the challenge of upgrading their country’s

infrastructure, they will also develop the innovative new products and services

required for this job.

Aren’t Indian companies capable of meeting the challenges? Are there

weaknesses?

In order to rise to the challenges of an opportunity of this magnitude, Indian

companies need to address some key weaknesses in the way they currently

operate. Chief among these weaknesses is what I would call an inordinate



reverence for hierarchy.

But hierarchy is a natural way for people to organise themselves, isn’t it?

True, and it works well for the maintenance of the status quo. But to innovate

and do new things there must be mechanisms in place to temporarily suspend

hierarchical behaviour. And the hierarchy itself must also be flexible enough to

accommodate changing circumstances and peoples’ personal growth.

How does hierarchy hinder innovation?

I have seen and participated in the dysfunctional behaviour that happens when

Indian companies try to use traditional hierarchical procedures to create new

products and expand into new markets. The fear and discomfort of doing new

things leads senior managers to make demands and issue orders and even

implied threats that only serve to increase everyone’s level of confusion and

anxiety.

Middle managers (like I was) who want to keep their jobs become weak-kneed

yes men and workers blindly follow orders and do as they are told whether it

makes any sense or not. Opportunities for innovative thinking become all but

impossible. Participation in situations such as this is like experiencing a slow

motion train wreck; people can see what will happen or not happen; but no one

can talk about it, and people soon devote most of their energy to getting off the

train before the final wreck.

Terrifying! Any other lacuna that you notice?

Another weakness I’ve seen in Indian companies is an inability to make plans

with enough flexibility to guide project teams through the process of creating

something new. Indian companies display a strong work ethic and people work

long hours but hard work alone does not make up for the lack of clear plans to

coordinate peoples’ actions and guide them toward their goal. Much confusion

and wasted effort results from people not knowing what progress has been made

and where to concentrate their activity.

Wouldn’t better planning help?

Rather, a better understanding of planning should help. There is a mindset that

believes a plan, once in place, is then etched in stone and must be rigidly

adhered to regardless of how events unfold. People fail to understand that it is

the final goal that does not change, yet the plan for reaching that goal is a living

thing, and must change continually based on progress and new realities. Many

American companies have this same weakness as well.

Coming to strengths, which is the most important one?

I have witnessed significant strengths that Indian companies can draw upon. The

first great strength is that India itself is a real, functioning democracy with an

active and articulate free press (the American press often looks passive in

comparison). India has a history and tradition of transparency and due process in

government that can be applied to the process of granting public infrastructure

contracts and regulating performance and payments. This tradition of democracy

is a distinct advantage that other developing countries do not have.

Reassuring thought, that is. Any other pluses that we can bank upon?



Another great strength of Indian companies is their ability to put teams of highly

trained and educated people onto challenging tasks. Indian companies can draw

on a labour pool that is perhaps the best trained of any in the developing world. I

have felt the surge of can-do spirit and positive energy that happens when these

teams are well led and given a free hand to get the job done. I have seen levels

of creative collaboration and excellence of execution that I once thought Indian

companies were not capable of.

The combination of a clear and urgent need for public infrastructure, a highly

skilled and motivated labour force and the transparency and accountability

provided by a functioning democracy and a free press is India’s unique source of

strength.

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