Ten types of Innovation – Concluding notes

With article on Bigbasket, the ten part innovation series comes to an end. When I understood the innovation types (created by Doblin) way back in 2011, my idea was to apply it from Indian context and make case studies fitting various types. It took two long years for me to complete this series with decent satisfaction.

Innovation has gone beyond building a particular product or service. By building something different doesn’t guarantee a business success, whereas ensuring customer derives value will. India, unlike some of the developed countries, is in the cusp of transformation where we have both traditional old school thinking and new school of thinking co-existing with each other. This made my inquiry to innovation all the more interesting. As and when I observed some innovative way to serve customers, I started mapping them back to Doblin’s model and came up with this whole series spanning across industries.

Please find URLs to individual posts as follows:

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.

Book retailing: Traditional v/s online

Recently I had a casual conversation with owner of a large scale book store. His is a family owned business, been in book retailing for decades with great passion for reading. Upon further discussions he mentioned about his book retailing business heading south (for months together) due to the emergence of e-commerce portals like Flipkart. It is quite obvious that e-commerce portals enjoy benefits of on-demand inventory, lesser operational costs (ex: rental) and direct supplier relationships helps to offer a better price. Added to that, most of Indian e-commerce portals are backed by heavy funds from venture capitalists, which help them to provide un-realistic discounts on books with additional benefits like free shipping, cash-on-delivery etc. Over a period of time, these e-commerce portals build valuation for the company based on number of transactions and incrementally grow by bringing more products (apparels, electronics, toys etc…) thereby becoming online mega store. On the other hand, traditional book retailers are struggling to keep up their operations with increasing rental/labor costs, overhead of inventory and limitation of not able to offer higher discount as it will affect their bottom line.

As a matter of fact this problem is not new. In countries like US e-commerce portals (likes of Amazon) took away significant market share from traditional book stores but some of them re-invented themselves and survived this challenge. I was wondering what Indian book stores (considering Indian context) can do to compete fiercely online bookstores. Here are some of my ideas which can be considered:

  • Similar to book stores of the west (ex: Barns and Noble) traditional book stores should re-shape themselves as modern libraries by creating a compelling reading experience around it. Readers should be compelled to walk in, take a look of their choice and spend hours in the shop by going thru their favorites. By adding additional factors (like coffee shop, comfortable table & chairs for reading, offering sample chapters for free etc…) these book shops can attract regular visitors who will potentially end up buying these books
  • There are some specific types of books (ex: Children books) come in various shape, size and weight, which is still not comfortable to buy online. As a parent I spent lot of time considering these aspects before buying book for my daughter by physically visiting the shop. Such type of books still has a lot of ‘touch-and-feel’ factor associated with it. Traditional retailers should think of some special promotions and tie-ups to push these books thru young parents and readers
  • Among adult readers (both fiction and non-fiction) there is a strong possibility to build a community based on common interest. Such communities combined with social media can be made as early adapters of new releases and share their viewpoints in terms of face-to-face get together, sharing book reviews, meeting authors directly and exchanging book related practical experiences. Such community should be provided with special discounts and covered under loyalty programs, thereby attacking clusters
  • Even now many of the traditional shop owners are expecting customers to physically walk into the shop and order for books. This should be changed by adapting home delivery based on phone order, building a micro-site for the bookstore where alternative channels of reaching out to the customer. Such new channels should be backed with excellent customer service in terms of delivery time and quality to re-invent the whole business.

I am not sure if any of the traditional book store owners got necessary mindset to re-invent their business by adopting new ways to sell books in this digital era. Unless they adapt to this change and re-invent the way they do business, it is going to be extremely difficult to survive.

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.

Innovation and its unsung cousin Execution

Everyone loves the word Innovation, including my good friend and co blogger Jayakumar :). Companies love to call their products and solutions as Innovative. It looks terrific on resumes and billboard commercials. MBAs are taught courses on Innovation and as a consequence cannot complete a presentation without using that word at least once.

Now, I personally have nothings against Innovation, but I do believe that many companies focus on this at the expense of something which is as important, if not more – Execution.

Let me provide a broad non-dictionary meaning of what each of this mean, to me:
Innovation – something unique / new, a creative solution, a discovery or an invention.
Execution – Getting it done – efficiently and rapidly, taking things to completion.

The Philips Vs Sony war on the consumer electronics front is a great lesson on the importance of Execution (in addition to Innovation). In the Consumer Electronics front, Philips sets the benchmark when it comes to innovation. Take a look at the list of inventions that they have and its truly inspiring.

http://www.philips.com/about/company/history/keyinventions/index.page

The radio, the television, the magnetic tape and compact disc are inventions of Philips. However, when it comes to making these inventions a marketing success, the Japanese giant Sony has been a much bigger success. They have simply been able to roll these out faster, cheaper and more efficiently to the markets worldwide.

Google’s being able to Execute better on Ovetture’s Innovation of showing ads against a search is another example. Now, this is not to say that Philips cannot Execute or Sony cannot Innovate. I am not discounting Philips’ ability to deliver products or Sony’s “process innovations”. However, it remains that the core strength of Philips and Sony are on Innovation and Execution respectively.

Go ahead Innovate, but also ensure that you can execute on those ideas, roll things out, market it well to ensure that the product succeeds.

 

– NWritings