The chemicals sector was the first significant arena for industrial innovation in our country. Buoyed by our traditional strength in chemistry, we created new processes for a variety of pesticides and drugs in the laboratory. But, scaling these to industrial levels required marrying chemistry with chemical engineering and plant design. Investments for the intermediate step of setting up a pilot plant were often not available, and trying out experiments in an operating plant was just too expensive.
Scaling up proved difficult in discrete manufacturing as well. Whether it was the design of a new tank for the army or a car for personal transport, transferring products from the lab to the production line at an acceptable quality level posed a steep learning curve. The challenge continues in the social sector. Impactful local NGOs and pilot projects abound, but they rarely scale up successfully. To be fair, scaling up innovation is a challenge everywhere but in India this has been particularly acute.
Today, scale is more important than ever before. Whether you are targeting a Nano at a group of aspirational buyers moving up from a two-wheeler to a car, or a chotukool at “bottom-of-the-pyramid” rural consumers, scale is critical to achieving the cost level that makes the product affordable. A big draw for suppliers who designed components especially for the Nano was the projected volume of a million cars a year.
For manufactured products, effective innovation involves designing a product that meets a sweet spot in the market, the capacity to produce it in large volumes to drive down costs, and the ability to price it right upfront, anticipating the achievable cost levels. A lack of scale may hamper enhanced adoption of innovative new products. The chotukool is priced at #3,700, which places it just below the price of a second-hand refrigerator — perhaps this impedes its sales.
Some Indian innovations have clearly overcome the challenges of scale. While India’s first metro in Kolkata covered just a small part of the city for many years after its inception, the Delhi metro has spanned not only Delhi but several parts of the adjoining National Capital Region in just a decade. Bajaj’s Pulsar, an attractively-priced sports bike targeted at the upwardly-mobile, young male, has been India’s most successful sports bike and has sold millions across the country since its launch in 2001.
What has allowed these innovations to achieve scale rapidly while others have not been as successful?
The Delhi metro combined managerial and process innovation with the adoption of new technology. Whether it was the tendering processes for allocating work packages, the procurement of inputs, or the monitoring of the progress, the metro introduced new practices that allowed it to complete work on time and within the framework. Scaling up of the Bajaj Pulsar was helped by the fact that the product was conceived by a product development team based out of the company’s then new factory that incorporated manufacturing practices from the Toyota Production System.
Thus, making sure that an innovation scales is at one level about vision and resources, but at another level is about planning, design for scale or manufacturability, and supportive managerial policy and practices. Sometimes, a major investment in re-designing processes is critical to enabling scale-up: within a couple of years of its first launch, Tata Motors re-jigged the Indica in terms of product, production and delivery processes. The re-launched car has done steady business since then with an evolving road-map of product improvements and new variant launches. Likewise, Infosys, which was already a successful software services company by the mid-1990s, designed new quality and project management processes in the succeeding period that enabled it to scale up its global delivery model.
While in the past, scale was at times a challenge and at other times a necessity, today scale represents a significant opportunity for innovation. This is particularly visible in information technology-driven businesses. Take the mobile services space. No American company has more than 100 million consumers but India has three such companies. This means that Indian mobile service providers have some of the largest-scale data centres. Given the pricing of Indian mobile services, these have to be low-cost operations and, hence, super-efficient IT infrastructure is required. IBM Research in India has developed novel process streaming methods to analyse call data records stored in these data centres that are far superior to analysing static data. This is a need driven from India and the fruits of the research will ultimately be sold back to the rest of the world.
As a part of its efforts to address emerging markets, financial software product company Intuit has created Fasal, a platform that uses algorithms to connect farmers with intermediaries and buyers so as to enable better price realisation. Already, more than 600,000 farmers are a part of Fasal, and 90% of them have reported benefiting from the platform. Intuit does not envisage any serious problems in scaling this over a million users during the current year.
Aadhaar, the government’s ambitious programme to give each resident of India a unique identification number, provided the opportunity to design a contemporary, scalable architecture and powerful algorithms that allow the rapid comparison and validation of biometric data on a scale not seen anywhere else in the world. Such opportunities of scale represent India’s demographic dividend with a twist — the potential to become an innovation superpower.