Innovation – Type 10 – Customer experience innovation [Case: Bigbasket]

Bigbasket
Bigbasket

The tenth and final type of innovation is around customer experience, which is all about creating a superior experience to customer’s entry to exit. In India many players attempted to do online grocery store for quite some-time now. It is extremely challenging business in Indian context (logistics, poor roads, unpredictable traffic, varying climate conditions etc…), which Bigbasket is able break by creating very good customer experience around it. I have personally tried and tested this many times, it works all the time with great experience.

Simple and effective User interface

The first thing that impressed me about Bigbasket is their simple and effective user interface. It was very easy to search/navigate for individual grocery items and create an order in a hassle free manner. Every item contains optimal information (neither too less nor too much) with put me into ease. Also when individuals go back for re-ordering, it keeps previous list handy for modification, which saves time for second time. This works very well for monthly grocery ordering.

Prompt alerts

While building an easy to use user interface might look relatively easy, integrating with backend supply chain to meet the promise is super critical. Especially in India, where the probability of providing prompt service is less (due to inherent challenges like infrastructure) providing prompt alerts to customers about the order status creates a lot of trust. In case of Bigbasket I get regular alerts (both in form of email and SMS) about my order status. Just before the final delivery of goods, authentication PIN is provided via SMS, so that both delivery person and customer can be assured about delivery.

Service delivery guarantee

Bigbasket
Bigbasket

After placing order, customers get to choose the time-slot in which they wanted the goods to be delivered. This super critical item (similar to Flipkart’s cash on delivery service) which helps office goers to get goods delivered at a convenient time. Their interface also shows the current booking status and slot availability in order to help customers choose the proper delivery time. From execution point of view, I have always seen they deliver goods on the time promised.

Return policy and wallet

During delivery, in case of item mismatch (ex: quantity) or damage (ex: broken seal), Bigbasket delivery folks take it back without any questions. Upon entering these items in backend (using Mobile application) customers again get immediate notification about when the updated item will be delivered. In case of item return, the money is kept back in a digital wallet which can be adjusted for next purchase.

In summary right from order placing to goods return, Bigbasket has done massive integration and prompt execution of their service. This gives a great end-to-end experience for customers in terms of quality, on-time delivery and reliability.

Piracy zindabad

Its hardly few weeks since Aravind Adiga’s novel ‘The white tiger’ won the man booker price. Starting this week I am getting emails from vendors like indiaplaza.in, Crossword etc. about the deals/discounts they are offering for the book. While I was pondering which deal to go with, got a huge shock when I went out for lunch today. The pirated version of the book is already available on roadside shops for 145 rupees (check photo below).

In countries like India, piracy spreads faster than the original version. When are we going to realize the importance buying original copies or start innovating around piracy?

Related article: Piracy = Opportunity

iPhone – Not India phone?

It’s been a month since Apple’s much hyped iPhone launched in India. In midst of huge expectations the product hit the market on Aug 22, with Airtel and Vodafone taking up the distributorship in India. In order to boost up the initial sales, both service provides kept their shop open throughout the night. More importantly India’s ‘tech’ city Bangalore was all geared up to welcome this popular Gizmo, where many technologists lined up in the showroom to pickup their phone before their friends. The next day’s local newspapers flashed pictures of proud iPhone owners from the city. The first say sales numbers were pretty good and everybody believed iPhone will take off in India in a big day, given its one billion population. Much against the expectations and media hype, the iPhone sales started taking nosedive in subsequent weeks and it has not even crossed 1500 handsets throughout India. It clearly proves that iPhone is a big failure out here.

According to Geoffrey Moore’s technology adaptation life cycle model, every technology product takes its own cycle to create significant business proposition. To start with, the ‘Early adaptors’ (technology enthusiasts) would start evangelizing the product who contribute to 13.5% of the total customer base. In order to create a successful business, a technology product should capture the next major chunk called ‘Early majorities’, who constitute to 34% of the customers. Even though iPhone was able to initially attract certain technology enthusiasts (especially in a city like Bangalore), it has clearly not impressed Early Majorities. Given the fact that India is one of the hottest markets for mobile operators and handset manufactures, Apple clearly missed a huge opportunity by not understanding the psychology of Indian customers. This exclusive story talks about some of the major reasons for iPhone not able to take off in India.

Cost, Cost and Cost

The first shock for Indian customers came in the form of cost. Apple priced their 8 GB model for 31,000 rupees and 16 GB model for 36,100. Every Indian customer felt getting ripped off by hearing such an atrocious price, given competitive handset prices. Added to that, there are no well designed offerings around the product. It’s a well known fact that India is a land of EMIs and installments, where people even buy clothes on installment basis. Even for a city like Bangalore, which consists of knowledge workers having good amount of surplus income, the 31,000 pricing has made the phone simple unaffordable. Apple should have worked on innovative offering methods, where it could have planned on recovering the cost over a period, after catching the initial sales volume.

In developed countries like US, Apple has done proper home-work by offering the iPhone at $199 (works out around 8000 rupees) by tying up with telecom service providers. On the other hand, Per capita income of US is 10 times more than India, which demands much smarter pricing strategy. This clearly shows that there needs to similar but much better pricing strategy should have been planned for Indian markets. The cost factor is been a major factor for iPhone not taking off in India.

The 3G infrastructure

The second point is about the mobile infrastructure in India. One of the major attractions of iPhone is its ability to provide mobile broadband connectivity using 3G technology. Unfortunately in India the 3G spectrum is still under negotiation and none of the service providers are offering 3G services to the customers. The applications in iPhone (known as “Apps”) become unusable with the existing low speed GPRS connectivity. Also every new iPhone has to have a brand new connection and number. For well networked professionals, it becomes very difficult to change their existing mobile numbers just to get the iPhone.

Mobile ecosystem in India

The third major point is the mobile ecosystem in India. The iPhone can be purchased only for post-paid connections, whereas more than 85% of the subscribers in India opt for pre-paid schemes. Even though about 9 million new mobile connections are added every month in India, still majority of them come under the pre-paid umbrella. Added to that, using mobile value added services has not yet caught up in India yet. Only now the mCommerce services are catching momentum and other “cool” iPhone apps would take a long-long time to catch up in India. The mobile phone is primarily seen as a device to communicate rather than accessing emails, playing network games or social networking.

Media hype

Before even the phone was launched, the India media had given too much hype for the iPhone. Many tech shows, pod casts, blogs and websites compared the $199 pricing in the US and believed that it would be offered for 8000-9000 rupee range in India. The Indian media failed to understand the mature mobile ecosystem in the US, where the service providers can afford to subsidize the handset to a larger extent and recover the cost over a period of time. In case of Indian service providers, their margins are very thin and they only make their profits due to the sheer volume of connections. They can’t afford to subsidize the handset, which will eventually start eating their pockets. The whole pre-launch analysis set “too-much” of expectations from iPhone, which it clearly didn’t live up to.

The lukewarm response for iPhone shows “How not to sell products in India?”. No matter how great a product or service is, it needs to be wrapped with innovative business model, especially for emerging countries like India. As per C.K.Prahlad’s “Fortune at the bottom of the pyramid” argument, the innovation needs to be even more profound for emerging geographies, in order to really leapfrog in terms of business proposition.

Bottom of the pyramid : Aravind eye clinic

I was watching some videos about ‘Bottom of the pyramid’ idea by C.K.Prahlad. One of their case studies was about Aravind eye clinic, which was amazing. Check out the video to get a ‘eye opening’ business model.

IT.India Part I : Offshore R & D

For the past month or so the Indian rupee is getting stronger against the American dollar, which has come down to 39 INR compared to 45 INR. This is already bleeding Indian services companies and their Q3 numbers speaks for that. When the rupee was getting weaker these service companies used to make 4-5% of their margins just by keeping their money in dollars and converting them back during the results announcement. Nowadays Indian service companies are mulling multiple options to resolve this problem — six day working week, reduced hike for employees, productivity improvement, moving to lower cost geographies (like China and eastern europe) etc. With STPI tax sops are getting withdrawn by 2009, Indian IT companies are having challenging times ahead.

Let me take the example of product R & D happening in Indian companies as an example. Of course value creation can be done at multiple levels apart from R & D as well. Majority of MNCs which are having their engineering centers in India are working in the ‘Offshore R & D’ or ‘Engineering services’ model. In this model, the offshore team owns majority piece of the SW that goes as a part of the product and take the complete ‘delivery ownership’ from India. This is slightly better than the ‘pure-vanilla-service’ model which Indian service companies (like Infosys, Wipro etc..) are offering majorly.

To understand this slightly better, let me take ‘Core vs Context’ framework introduced by Geoffrey Moore’s latest book ‘Dealing with darwin’. Let us understand the four quadrants with
some new definitions:

Core: Processes that enable and amplify your chosen vector of competitive differentiation
Context: All other processes

This Core and context can be again classified on ‘Mission critical’ and ‘Non-Mission-Critical’ which leads us with four quadrants. See the picture below to get a better idea:

Indian service companies, which are offering ‘pure-vanilla-service’ come under the bottom right side of this model, which is popularly known as ‘outsourcing’. There is very little value addition can happen here as it falls under ‘non-core’ activity.

The offshore R & D organizations are operating under the top-right quadrant. This means the activity is ‘mission-critical-but-non-core’ portion. For example: if a company is working on a enterprise router, the offshore R & D team can work on adding new features, maintaining the existing code and do some level of program management. From the business point of view this is critical, because the product is generating revenue for the company at present. In a way this quadrant is higher in the product value chain, but still it is not coming under the ‘core’ portion of the company’s strategy. Because the work the offshore entity doing is not providing any ‘competitive differentiation’ to the parent company. On the other hand, the parent companies will place all the resources into developing core portion of the product.

Sitting in places like India, contributing into the ‘core’ portion is extremely difficult. Following are the major challenges Indian companies are facing now:

  • The offshore team is totally un-aware of the customer needs. They are far away from the customers and most of the technology products won’t get deployed in countries like India. I won’t see this changing in the near future because these ’emerging markets’ need to mature a lot before they start adapting any new technologies. Except for the areas mobility I don’t see any technology has taken off in countries like India.
  • The local job market is over-heated where retaining talent has become uphill task. Engineers jump jobs every 1-2 years and its very hard to build the product building expertise with this mindset. I have personally seen engineers dedicating 30 years in a same product and understanding ‘nuts-and-bolts’ it. Its very very hard to such stuff here.
  • The offshore leadership team is primarily grown in the engineering domain and lack business acumen. For example a second level manager don’t have much idea about the big picture of the overall product. They only possess expertise in areas like: resource management, delivery management and to certain extent program management.

Now, how does the future looks from here on?

At one end its hard to imagine any US/UK based company to offshore the ‘core’ work because it doesn’t make business sense.On the other end the offshore entity can’t do much because they don’t know the customer. In a way the ‘offshoring’ is stuck in top right portion (quadrant-III) of the Geoffrey Moore model. In my perspective, it will continue to stay there for a long period
of time until the local market gains significance. The local market growth will mainly depend on multiple factors like: Good governance, robust infrastructure, litracy and technology awareness. I would say the ‘india-offshore-story’ has just begun and it is foolish to start celebrations at this point in time. These companies have got to cover much more distance before they really achieve ‘value creation’.

Tech/Biz Magazines

Here is some of my favorite magazines!

These mags are targeted to a specific audience, providing vital information. I started liking these type of stuff as they are catering to my interests. They also give altogether a ‘positive’ outlook of India.

1. Dare (http://www.dare.co.in): This is published by cyber- media completely focused on Entrepreneurship. They started the print edition from Oct ’07 and the website is yet to be populated. Got a chance to read their Nov ’07 and found it very interesting. It covered various aspects of Entrepreneurship — new business ideas, VC/private funding, value creation and guest columns by successful Entrepreneurs. I also learned that their advisory committee consists of stalwarts like C.K.Prahlad, N.R.Narayana Murthy, Kanwal Reiki etc. Welcome effort from cybermedia!

2. Smart techie (http://www.thesmarttechie.com): This is a technical career magazine launched from Bangalore, which is a sister concern of Silicon India. I found this magazine provides very deep insights into interesting work some of the Indian companies doing. Also comes with loads of career related articles. Considering the young nature of technology industry in India, this magazine is very vital to bring in the proper exposure.

3. Mint (http://livemint.com): Launched as JV between Hindustan times and WSJ, this provides crisp business update. I got a chance to read their print edition when I visited Delhi during May, but recently they launched in Bangalore too. But I subscribe to their RSS feeds, found it pretty good to read. In a way this magazine lives truly up to its name ‘Mint’ — Just digest it.

4. Business Gyan (http://www.businessgyan.com): Excellent magazine published out of Bangalore targeting small and medium businesses. I have read printed edition (digest) as well as RSS feeds. The ‘classifieds’ section of their printed edition gives very useful information about all contact details (legal, real-estate, website building etc…), which are the first set of elements to build a business ground up.

New Blog on Tech trends, Impacts and Innovation

Looking at my blogs in a critical mood a few days back, I was both happy and a little guilty. Happy for the fact that my blogs cover a variety of topics, but guilty for the fact that they do not provide much of my views on my love for technology. Wanting to keep pace with the happenings at the technology arena, I have started co-authoring an exclusive technical blog- ‘tech trends, impacts and innovation’, with some like minded people. It has proved to be an immense pleasure for me and has provided me with a sense of fulfillment to be a part of this blog space. It would be wonderful to hear your views about the blogs.

India and the flat world

In his bestselling book ‘The world is flat’, author Tom Friedman illustrates his ‘flat world’ concept. For people who have not read the book, let me give a quick background. The three billion people from India and China are much more empowered and connected today. It started when India opened up the economy and China signed the WTO agreement for open trade. Fuelled by these open trade policies, the ‘Outsourcing’ and ‘Off-shoring’ are the latest buzzwords for western world organizations for leveraging the eastern world. According to Friedman, this new worldwide phenomenon has leveled the competing field and the whole world has become flat. I really enjoyed reading the book mainly because the author extensively traveled to various geographical regions, met people, experienced the changes personally and came up with his conclusions.

Now, let me look from the reverse angle and ask some questions to myself:

Is the world really flat from India’s perspective?
Can I do the same things from Bangalore, what I would be doing from Santa Clara?
Does the word ‘Bangalored’ really threatening westerners?
Can India sustain this boom?
Are we prepared for the social consequences of capitalism?

As a technology professional, let me take example of Indian software industry and try to get answers. Before getting into answers, let us see the definition for Outsourcing from wikipedia. Please give more emphasis to the words underlined:

Outsourcing entered the business lexicon in the 1980s and often refers to the delegation of non-core operations from internal production to an external entity specializing in the management of that operation. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of worldwide labor, capital, technology and resources.

From the above definition it’s very clear that Indian companies will get to do only non-core activity. For software companies, most of the work will be in the areas of defect fixing, production support, software maintenance, software patches and working as an extended team. This is a great achievement in our history and loads of jobs got created because of outsourcing. The new ‘generation-Y’ Indians have more disposable income and purchasing power which leads to more business creation and wealth creation. The educated middle class is rising like big time and a new, vibrant, energetic and confident India is emerging. This ‘emergence’ is happening after eight hundred years of Indian history. The western companies are able to reduce the cost by handing over the work, thanks to India’s strong telecom backbone and English speaking population. It’s all a ‘Win-Win’ game. With this can I say the world has become flat from India’s perspective? Definitely NOT!

Even though the above mentioned advantages are very true, terms like product definition, understanding customer needs, customer interfacing, product marketing, technology evaluation and product ownership are still ‘unheard’ words in Indian software industry today. All we are good at is to hire bunch of fresh engineers from the college, train them, bill them, build process framework, commoditize engineers and manage attrition. What is the real ‘value addition’ happening here? According to me it is very minimal. We are currently enjoying the benefits of outsourcing mainly because of the lower wages in India which is catching up very fast. For example, today there is not much salary difference (based on my personal experience) between an engineer in Bangalore and Singapore. Then why should any firm outsource to India?

The Internet has played a significant part in making the world look ‘flat’ but lot of work needs to be done from India’s point of view. Following are three important points to consider:

  • The first need is to develop a domestic market for technology products and services, which demands ‘bottom of the pyramid’ innovations. The economic engine should fuel the domestic market creation and ultimately create an array of product making organizations from India. This is what the Asian tigers (Countries like Japan, Korea, Singapore, Taiwan and Hong-Kong) have successfully demonstrated in the past forty years.
  • India should become a manufacturing hub, mainly in semiconductors and automobile areas. This not only creates product building capability, also generates need for more software products. Of course, infrastructure is a major challenge in this case.
  • Industries should play significant role in forming relationship with academic institutions and do long-term strategic investments. This would create a competitive, industry ready workforce who can be deployed without much training. Missing on this would prove very costly in India, as it will create demand-supply problem.

I can keep adding to the list mentioned above, but they are major points to consider. As of today comparing Bangalore with Silicon Valley is nothing but a joke, where nobody in India talks about value creation. The world might look ‘flat’ from the westerner’s point of view, but India has to go a long way to really to make it a reality.