BOOK REVIEW: The new age of Innovation

Author(s): CK Prahalad and MS Krishnan

The context of innovation has been over the years. In the world of business (especially the ones which are consumer centric) providing superior ‘customer experience’ has become the core, on which organizations build their competitive advantage. However building this customer experience (which varies from one customer to other) is not easy to build from the organization point of view, as they may not have all the necessary resources to do that. This is precisely where leveraging global networks (thanks to the power of Internet) and co-creating value along with customers become very critical, thus forming the new age of Innovation. In the book titled ‘The new Age of Innovation’ authors CK Prahalad and MS Krishnan provide a framework for building this new age of innovation in organizations, which is essential to stay competitive.

Before jumping into details of the book, let us understand the concept with a simple example: The iPhone ecosystem. Given the fact that Apple iPhone (and Apps) are used by millions of customers worldwide, they will have unique set of application requirements depending on their need (ex: App for a local eCommerce site). However Apple alone cannot achieve it by developing millions of applications as they may not have the necessary resources to do that. In order to address specific customer needs, releases a Software Development Kit (SDK) using which can be used by any individual for developing applications and host it as a part of the App-store. This is precisely what authors call it as N = 1, R = G model of innovation. In order to address a unique requirement of a customer (N = 1) firm can leverage Resources (R) that are available globally (G).  In the similar lines of Apple, many organizations are innovating around this N =1, R = G model, some of the examples being Wal-Mart (retail) and ICICI (Banking).

After introducing this new model of innovation, authors dive deep into intricacies in subsequent chapters by taking various aspects and case studies. The first aspect talks about having robust business processes, which lay foundation for innovation as it integrates business strategy, business process and operations. The very process of doing a business activity differently can act as a competitive differentiators, thereby enabling innovation. ICICI Bank in India is a classic example where they transformed the face of Indian banking system by being successfully executing the business process innovation. Also by consistently building on the process they are able to introduce services like internet banking, online trading account, cost-effective support system etc. The subsequent chapter talks about deriving useful insights (ex: customer behavior and expectations) with data analytics by listening deeper into customer transactions. The analytical information derived can be used to take specific actions (ex: Dynamic configuration of resources, continuous improvement, strategic redirection) in order to meet customer/market expectations. Especially for organizations like UPS or FedEx, deriving useful intelligence information from global supply chain becomes critical.

Third aspect of innovation is about having robust Information and Communication Technology (ICT) architecture where building scalable and intelligent systems for responding to unique customer demands.  For example, Google accesses 40 billion distinct pages to create unique personalized experience (N = 1) for its customers, which is aided by strong internal ICT architecture. All the above mentioned three aspects (business process, analytics, ICT architecture) cannot be successfully implemented if organization and its people are not flexible and adaptable enough to cope with changing business environment. In order to achieve the desired results, strong organization commitment should be there in terms of senior management evangelism, strong accountability with alignment and clear understanding of ICT architecture, which is covered in subsequent chapters.

The people goal can be achieved only when the organization evolves by taking real time decision backed up with strong data-points, strong yet flexible organizational structure and pro-actively addressing customer issues. The other key point is to improve the capability of the organization by understanding and continuously making competency improvement in the organization. Authors explain various case studies (ex: Madras Cements) and how they have leveraged the people part to gain business advantage out of it. The final chapter of the book talks about a list of agenda those global managers to adapt for making the innovation work in their teams and organizations.

In my opinion, the context of Innovation has changed to a larger extent recently. What was initially considered as a “cool product” may not necessarily innovative in business sense as it may not make the organizational business successful. Taking customers and their unique experiences into account is a very important for innovating in business today, where many aspects mentioned in the book can be handy. Another very interesting observation is to see many case studies from various Indian companies and their innovation models, which is quite inspiring.

Customizing open source software

The Open Source and Linux saga seem to be never ending for me!

All of a sudden my Windows 7 installation stopped booting up, probably due to virus attack. Again bitten by the interest of Open Source I installed Open SUSE 12.1 as my desktop operating system as I was pretty happy with it using from my Virtual Box earlier. The installation process was a breeze, all basic functionality including wireless interface (where I head problems with Ubuntu 10.01) came up without any issue. Just about when I thought everything is fine (which I have been thinking for the past 10 years) one major problem popped up.

I have a Toshiba Satellite L640 model, which started heating up a lot after the Open Suse installation. Add to my woes, battery backup was hardly happening for 10 minutes. In spite of searching many online forums (and reading some stuff about ACPI interface) I couldn’t find a solution to fix the problem. While many of the threads in discussion forms acknowledge the problem, there was no solution available. Even if it exists it would be too geeky, might involve making some hacks which was not so obvious. With pretty decent understanding of Linux internals I was not able to figure it out the solution, let alone a novice customer finding it. The bottom line is many of the consumer (ex: laptop issues) specific issues don’t have an organized approach of solving the issue.

This incident popped few interesting questions in my mind. As Open Source provider, we can’t expect Open SUSE community to provide solutions for every other possible consumer hardware available in the market. Since the open source development done by thousands of developers around the world, we can’t expect them to know the vendor specific implementation information (ex: hardware spec) available. On the other hand I am not sure if it is Toshiba’s responsibility to release compatible software. Does this incompatibility issue offer some business opportunity?

In the enterprise side Redhat has implemented a model where basic Open Source software is provided at a very nominal cost but they make money by selling customization services. In the similar lines does providing open source software customization services for consumer markets offer valuable proposition? Can some innovative options thought of implementing such services and make it business viable? Currently not able to do a complete business analysis of this, but definitely this area can be explored with some innovative approaches.

Bangalore – Half empty or half full?

Striking conversations with cab drivers always provided me with very interesting and realistic perspectives at various parts of the world. Recently we were on a family vacation to Yercaud, one of the weekend gateways near Bangalore. I started my usual conversation with the cab driver (whom we hired for local sightseeing) by asking some general stuff. While traveling around, I incidentally ended up observing most of the pass-by vehicles having “KA-0x” number plates, which mean they are Bangalore registered vehicles. I couldn’t stop myself but ask the obvious question “How come so many vehicles are from Bangalore?” and the answer he gave was very interesting.

“Bangalore is been the sole reason for Yercaud’s recent growth sir”, he eagerly started and I allowed him to continue. “In the past few years so many people started coming from Bangalore. As the number started increasing, our travel and tourism industry flourished by fetching more and more business. Many of the foreign travelers (who visit Bangalore for business reasons) also started coming here to spend their weekend for getting Indian hill-side experience. In summary Bangalore played major part to grow Yercaud into a bustling tourist destination” cab driver concluded. The high amount of disposable income of global knowledge workers is the key contributing to such growth. It’s very clear – globalization is working!

Also, when I look around, there are umpteen number of blue collar jobs created in the city in form of housekeeping workers, gym assistants, security guards, corporate cab drivers, caterers etc. thanks to the globalization. Even if an individual is reasonably educated (say 10th class) with decent English speaking skills, relatively high end blue collar jobs are available. Recently I saw a job posting (from Taco Bell) for waiters’ position with base pay of 8500 INR per month plus additional benefits like free food, performance linked incentives etc. Making about 10,000 INR for 10th class qualified individual is a big deal in India. It’s heartening to see such positive signs.

On the other hand, there is equally good number of examples which creates counter opinion on the same. Recently I was talking with my close friend who runs an NGO, mainly dealing with abandoned children. As per his field studies, in Bangalore alone 8-10 children desert their homes for various reasons like family issues, anti-social element connections, resource scarcity etc. Over a period of time these children are forced to activities like begging. Taco bell providing jobs to people is definitely good news, but seeing children begging outside the restaurant is not so great news. The more concerning factor is the lack of empathy to such issues from highly paid knowledge workers who seem to wear ego on their shoulders with ‘why should I care?’ attitude. Children who are growing up in high flying apartments and studying in plush schools hardly have any idea about such issues.

The infrastructure story is more horrifying. I am one of the blessed ones to have workplace near home of about 5 kilometers. However the sad part is the sporadic traffic situation. It takes anywhere between 30-45 minutes to commute between my home and workplace. It’s anybody’s guess how the situation would become worse when distance increases within the city. There is no equation between road size, road capacity, number of vehicles purchased, resulting in ever increasing chaotic traffic.

In my opinion, Bangalore is in ‘Half empty, half full’ situation.  The amount of issues we are seeing today, even after two decades of globalization shows the incorrect implementation. The overall situation is not showing a very healthy trend. The list of issues is growing faster than the accomplishments of the city. I am not an economist to form theories based on the current situation, but definitely a worried immigrant of this city!