Management, Entrepreneurship & Innovation

In an interview to The Hindu Business Line, dated 23rd April 2007, Prof. T.N. Srinivasan, currently the Samuel J. Park Jr Professor of Economics at Yale University was asked a question: "Does innovation lead to entrepreneurship or is it the other way around, entrepreneurship leading to innovation?” Prof. Srinivasan's answer is quite prescriptive in terms of outlining the role of entrepreneurship education both in promoting innovation in academic campuses and growth in the world outside. He said:

"It's a two-way relationship. In one sense innovation, somebody finds something but that somebody may not be equipped to translate that something into a commercial proposition that is where the entrepreneurship comes in. The entrepreneur identifies this idea. You may produce the idea, but you may not have the capital or the skills to find out what the market is. But as an entrepreneur, I may find that I can borrow your idea and do it. The outside of the story is what you are saying - if there was no innovation at all, what's the point in entrepreneurs. But the entrepreneur himself could be an innovator; there, the two functions combine."

Traditionally, management and entrepreneurship as areas of study and practice were considered independent of one another. It was the venerable management guru, Peter F. Drucker who visualized them as two sides of the same coin. He famously observed: “Management and entrepreneurship are only two different dimensions of the same task. An entrepreneur who does not learn how to manage will not last long. A management that does not learn to innovate will not last long”.

Rightly, Drucker and other management experts viewed innovation as a defining character of entrepreneurs. Innovative capacity is supposed to differentiate the successful entrepreneurs from the not so successful ones. This explains why the terms entrepreneurship and innovation are used interchangeably. A relook at what Drucker said about management and entrepreneurship clears much of the ground. While he expects every entrepreneur to be a good manager as well, he uses the term management - not manager – to emphasize the need to be proficient in innovation. Implicitly, he indicates the possibility or necessity of outsourcing innovation.

Prof. Srinivasan’s observation about entrepreneurship and innovation has to be looked at in this backdrop. Management education is imparted or considered necessary for those who are aspiring for a career in management as well as for the practicing managers (without formal management education) besides the entrepreneurs. In the same way, entrepreneurship education should be given to entrepreneurs and aspiring entrepreneurs as well as to those who want to become innovation professionals or practitioners.

Like management consultancies, a new breed of professional innomediaries should proliferate. Prof. Srinivasan’s thinking on the subject indicates this underlying trend. For long, we had a rare breed of people called inventors on the one side and entrepreneurs on the other – those who commercialize the inventions of the scientists. Rarely we see them in one person. In the same way, there would be a horde of people who innovate and those who leverage those innovations by setting up ventures.

Here, innovators include business model or concept innovators as well as management innovators. Unlike in the case of scientific inventors who rarely become successful entrepreneurs, more business or management innovators will morph into successful entrepreneurs. But at the same time, there is a tremendous scope and a dire necessity to create innovation professionals and innomediaries through well-conceived and well structured entrepreneurship education programmes focusing mainly on INNOVATION.

Study Groups, Working Committees, or What?

Two recent articles/stories in two different business dailies acted as a trigger for this Blogger to send this suggestion to Honorable Finance Minister, Shri.P.Chidambaram virtually for a virtuous reason.

One relates to a pertinent and powerful observation made by the Management Guru, Prof. C.K. Prahalad (The Economic Times dated 5th January 2007) on the efficacy of market mechanism in addressing the inefficiencies of the agricultural sector. The other is an article by Prof.Aneel Karnani (Business Standard dated 6/7 January 2007) where he emphasised the role and responsibility of the State in making available the essential services like basic education, public health, water, sanitation, public safety and infrastructure. Interestingly, both the Indian Professors are teaching at Michigan Business School.

While responding to reporters at Great Lakes Institute of Management,Chennai after addressing its students and alumni, Prahalad made this observation : "I think agriculture is not going to be reformed by agricultural policies. Agriculture is going to be reformed by logistics".

Obviously, Prof.Prahalad bets on the power of market mechanism rather than on Government policies. The huge investments made by large retailers in their supply chains, Prahalad believes would address the problems that remained stuck despite a plethora of policy interventions.

Prof.Aneel Karnani looks at the other side of the picture to show how important it is for Government to perform its function particularly in providing public goods. To quote him: "In recent years, the political ideology of the world - and of India - has shifted decisively towards an increased role for markets and a correspondingly decreased role for the state. But the role of the state has certainly not been eliminated, nor should it be".

Their points of view appears to be at loggerheads. But that is more apparent than real. In actual practice, they have a complementary role to perform. The trick is to understand clearly their respective roles. The observations made by them are prescriptive in nature and capable of producing solutions - if only an appropriate mechanism for making this happen is found out and put in place.

One such approach is briefly outlined here. The rationale behind this proposal is to encourage participation of different segments of the society in the development process. The vehicle to be used for this is enterprise creation on experimental basis. By seeding high impact making enterprises most of the agricultural and other sectors' problems can be solved.

Government from time to time set up Study Groups and Working Committees and ask them to go into the problems faced by different sectors and segments and come out with right solutions or suggestions to overcome them. They are necessary and will continue to have relevance in future as well.

But at the same time, there is a sound logic in creating Working Groups which would literally work on specific problems/issues. Such Groups can be encouraged to work on a spectrum of issues across the breadth and length of the country. When proved successful in the place of experimentation, they can morph into enterprises - commercial or social depending upon the cases.

The idea is to incorporate such a mechanism in the Union and State Budgets. Academic Institutions, Non Government Organisations(NGOs) and Special Purpose Groups in the Private Sector (assembled exclusively for the purpose) can be encouraged to participate by pitching with innovative ideas and plans. The criteria for selection and funding should be : simplicity, sustainability, and scalability of their ideas apart from their commitment.

If World Bank can reinvent itself by embedding such features in finding and funding innovative projects some five years ago, (through Development Marketplace) Government can also eminently embark on such practices and experiments. This could well be one way to make the development process much more democratic and engaging. In the process, it also makes use of the people who have fresh perspective and innovative solutions to development.

Already Presentation of Union Budget by Finance Minister is the most keenly awaited and most popular economic event in the country. By installing and institutionalizing such a system in the Budget, it could be made even more popular and participative in a meaningful manner.

India already boasts few success stories in innovatively addressing key development issues. Amul and Aravind are two shining examples each representing the commercial and social enterprise models which demonstrate the power of vision driven organizations in transforming the life of the people.

Amul today is the world's largest processor of milk and Aravind does the largest number of eye surgeries in the world. Can these kinds of success stories be replicated in other areas crying for innovative solutions? Can this be done by Government playing the "enabler" or facilitator role?. Can this feature be built into the Budgets?

It may be an IDEA whose time has come. Are we ready for that?

Strength & Future Lies in India(AND)NESS!

"What a country! Part Silicon Valley, Part Stone Age." This is taken from the quotable quote from The Week magazine attributing to Steve Hamm, writer on India in his book Bangalore Tiger.

Frankly, to me it does not come as a big criticism. It could well be taken as a big strength and there lies its future. Recently, a highly insightful and thought provoking two-part article by Hamsini Shivakumar of JWT appeared in the BrandLine of The Hindu Business Line(dated October 26 and November 2, 2006). The author eloquently talks about one unique character of India. That refers to what is now popularly termed as AND-NESS of India and things India.

The insights supplied by the author, are not just 'exploitative' in the sense they have long term relevance going beyond the immediate business concerns. The issue deserves to be researched in all its dimensions with both Industry and Institute pitching in jointly. After all, some of the research outcome can be converted into immediate business opportunities. Others have the power to determine India's future course of development.

According to the author, "India is an 'and' culture - a society where modern values don't replace traditional values but are assimilated to form new amalgams. Marketers who understand and address this 'and-ness' of Indians are the ones who will succeed with the changing Indian consumer".

By understanding this unique Indian 'AND-NESS', marketers can succeed not just in the India but at the global stage as well. Because, that is where the whole world is getting into. India is eminently positioned to leverage this unique strength to create global scale opportunities. A few examples can be sprinkled to demonstrate how India came out with unique AND Solutions and challenged the status quo.

First and foremost, through Mahathma Gandhi it showed to the world how Freedom Struggle can be FOUGHT without really FIGHTING. Ahimsa is the weapon which won the Freedom from the British - without really defeating them. This in itself is the typical AND solution. Mahatma may not have won Peace Nobel for this. But the Greatness of this man lies in the fact that every year the Nobel Committee has to come out with a statement for not awarding Nobel to Gandhi. Whereas for people who have been selected for the Prize they have to explain only once- at the time of awarding.

Secondly, India probably is the most prominent country in the world to adopt a Mixed Economy pattern. An AND solution again. Its failure is more in terms of degree rather than in substance. What has really failed is the Command Economy. Today every economy is a mixed economy- only the mix of the mixed economy has changed much in favour of Market Economy. Today Joint Sector Projects are out. But Public Private Partnership is very much in.

Thirdly, as a corollary to the second, India by not willing to side either with the US or Russia, spearheaded a Non Aligned Movement(NAM). NAM may not be fully alive and kicking but with the end of the Cold War, there are many Blocks in the world. Here again, India's unique AND-NESS proved right.

Apart from the above, we can go a bit farther back to see how India has been practicing AND-NESS for a long time. Two examples are enough to drive home the point.

One,Infotainment, Edutainment, Retailment, etc. may have gained currency now. But India has been practicing these for long. Patti(grandma) Katha and Village chandies have been offering only that. Two, the Siddha system is based on the tenet of "food is medicine and medicine is food". The growing popularity of herbal medicine and natural food is indicative of this trend.

One can go on and on. But before ending this piece, a quote from a recent Business Week reproduced in the latest issue of Business World (20 November) which illuminates this view point.

"Has the Bhagvad Gita replaced the Art of War as the hip new ancient Eastern management?....Swami Parthasarathy.. counselled hedge fund managers about balancing the compulsion to amass wealth with the desire for inner happiness.... the Swami's East Coast tour was one small manifestation of a significant new trend:Big Business is embracing Eastern philosophy."

P.S.: This article in a way answers my student R.Siva Subramanian's query on why India is not figuring in the list of countries that are in the forefront of Quantum Invention. This particular issue was raised by his web friend Mr. Bala Pillai of Sydney.

Citizens,Harijans,and PURA

Etymologically speaking, the word 'citizen' having its roots in Old French means 'one who is an inhabitant of a town or city'. Over a period of time, this aspirational status comes to mean anyone who is legally recognised as a member of a country. So today everyone is a citizen irrespective of whether one lives in the rural backyard or in the urban settlements.

Large scale migration of rural poor to urban areas only means transportation and transformation of rural poverty into urban poverty unless their livelihood oppourtunities improve dramatically. Urban areas also add to the stock of poor people in the country due to inadequate oppourtunities. And many remain that way. Few however find escape route by clinging on to some oppourtunity or other.

Therefore, what is needed is not just change in the nomenclature or name but the true meaning associated with that. Viewed from this angle, Dr.A.P.J.Abdul Kalam's project of Providing Urban Amenities to Rural Areas(PURA) makes enormous sense. For, it addresses and challenges the status quo by providing the necessary amenities and services. There need not not be an 'either or' situation. In many cases what is needed is an 'AND' solution.

Converting the PURA concept into reality needs no further Committees and Task Forces. People committed to the vision and having the ability to carry out the tasks are the need of the hour. And the best way to make this happen would be to select and excute few such projects across the country on an experimental basis. Simple, sustainable, and scalable PURA Projects could be the way to go ahead.

Closely related to this issue is Mahatma Gandhi calling the 'untouchables' as Harijans meaning the children of God. Despite Mahathma's noble intention the purpose has not been fully realised. The recent cotroversial policy on Reservation can be looked at from this perspective. Definitely there is a case for a preferential treatment of marginalised sections of the society. But reservation may not be the right route to achieve the goal. Something like the PURA concept could well address this issue.

But the immediate challenge would be to find translators for realising the goals set out in the PURA by His Excellency,Dr.A.P.J.Abdul Kalam the President of India. As he himself pointed out in one of his speeches, the country needs Development Councils (DC) at the Village level. By installing DC's selectively in few places, may be at the block level, PURA can be experimented before rolling out at the national level.

The Power of Three

A recent edition of The Hindu Young World (9th June 2006) carried an article written by Sujata C. It emphatically drove home the need to "understand the power of three". To substantitate her argument the author quoted quite a few illuminating examples. Some of them are reproduced here:

The three phases of time: past, present and future

The three distinct levels of human being: body, mind and soul

The sum of human capability: thought, word, and action

The Trimurti, the foundation of the Hindu religion: Brahma, Vishnu and Maheswara

The strongest form of construction: a triangle

One can think of many more. But a few can be added here to further strengthen the argument:

Matha, Pitha, and Guru, the most important sources of ones knowledge & character

Knowledge, Wealth and Courage, the three essential ingredients for success

Iyal (prose), Isai (verse) and Nadakam (drama), three aspects of language & literature

Interestingly, the concept of sustainable development is also built around three P's: Profit, People and Planet. The World Business Council for Sustainable Development (WBCSD) defines in the following manner:

"Sustainable development involves the simultaneous pursuit of economic prosperity, environmental quality, and social equity. Companies aiming for sustainability need to perform not against a single financial bottom line but against this triple bottom line".

A couple of recent developments at the national level as well as at the global corporate level seem to confirm that the concept of inclusive development has really gathered momentum. The draft approach paper to the Eleventh Plan released recently is appropriately called as "Towards Faster and More Inclusive Growth".

But what attracted the media headlines all over the world relates to the recent decisions taken by Bill Gates and Warren Buffet, the world’s richest and second richest. Gates has announced his plan to give up his day to day role at Microsoft from excatly 2 years from now and devote his time wholy for Melinda & Bill Gates Foundation. This Foundation works in the areas of Health and Education for the world's poor.

Even more path breaking is the decision taken by Warren Buffet to donate bulk of his wealth ($ 31 Billion to be precise) to Melinda & Gates Foundation. Warren Buffet is reported to have told the Fortune magazine that "We agreed with Andrew Carnegie who said that huge fortunes that flow in large part should be returned to the society". He further declared that philanthropists "should seek out talent to distribute their money just as they sought out talent to acquire it". This is a clear pointer to the need for developing and attracting management talent in the development sector.

Avaiyar, the saint Tamil Poet centuries ago referred to the possibility of inclusive development when she said " nadengum vazha kadenrum illai " . Translated into English this simply means that there is nothing in the nature that obstructs growth of one and all. The time has come that development planners all over the world shoud realise that the concept of inclusive growth is not only a desirable goal but an eminently achievable one - if only we have the courage of committment.

Can We See Dr.V ?

1918-2006

Dr.Govindappa Venkataswamy affectionately and appropriately called as Dr.V is no more. Is it possible to see Dr.V now? We can see the Vision of Dr.V through the thousands of poor people who got the vision by undergoing surgery at Aravind Eye Care System, the organisation he created. Dr.V lived upto what Martin Luther King Jr. had said about compassion. "True compassion is more than flinging a coin to a begger; it comes to see that an edifice which provides beggers need restructuring".

Dr.V one of the proud recipients of the Helen Keller International Award has lent newer meaning and substance to Helen Keller's celebrated quote on Vision. She was once asked,"What can be worse than losing your sight?" Her answer: Losing your vision". Dr.V, by having a vision to eliminate all needless blindness in India, and establishing a clutch of Eye Hospitals in the name of Aravind restored sight for thousands of poor people and prevented many more thousands from going blind.

Aravind in the process has set world beating standards of efficiency and economics in eye surgeries. In other words, Dr.V has shown to the world how quality eye care can be made available to the poor by achieving efficiency in operations, which in turn can be ensured by just following simple management practices.

Aravind's innovation in management starts with the organisation of workflow from patient identification to post operative care. But it does not stop with this. While its steadfast adherence to the basic principles of management promotes utmost efficiency the theory of cross-subsidisation works overtime to ensure its financial sustainability. Aravind does more than three-fourth of its operations for free.

It is abundantly clear that Dr.V is a 'social entrepreneur' par excellence though he did not have any particular liking for anything related to business. That in a way can be considered as a measure of success of his vision-driven organisation. To the management guru Peter F. Drucker, social entrepreneurs are the people who "raise the performance capacity of the society". Viewed from this perspective, Dr.V doubly fits into this definition.

First he raised the performance capacity of poor people who had undergone eye surgeries in any of the Aravind Hospitals and secondly by increasing the capacity of doctors who make eye surgeries. The latter has far-reaching implications and impact on the eye care delivery system at the global level.

So the best way to pay homage to Dr.V would be to create Aravind like organisations based on the basic principles of sustainability and scalability. By replicating the experiment, many of the socio-economic problems confronting the nation can be made a thing of the past. If only we can see the power of Dr.V's Vision!

Invasion of the Inclusive Idea

"An invasion of armies can be resisted. But not an idea whose time has come". So declared Victor Hugo. Now the time for an "inclusive"growth strategy has really arrived. The Confederation of Indian Industry(CII) has announced the four missions for this year. R.Seshasayee, its President has made a clarion call for an" inclusive and sustainable" strategy. They represent two of its missions for the year. They can infact be considered as two sides of one broad development strategy.


While one side concerns with the inclusivity in terms of 'people', the other side focuses on the concerns of the 'planet'. The people side has two different dimensions. They refer to: promoting inclusiveness in consumption and production. The former is a business imperative now. To put it in the words of Seshasayee, "we are talking about inclusive growth not because it is politically fashionable, but because unless we have inclusive growth we are not going to be able to expand the market".


Ford Motor Company is an excellent example of a company which expanded the size of its market by pursuing an inclusive growth strategy. Henry Ford famously stated once that he wanted to put a Ford car in each and every garage in American homes. One more company which immensly benefited both by penetration of cars in America and through an inclusive strategy is ofcourse is Wal-Mart.


Every one knows what an inclusive approach to market can do to determine the fortunes of a company. But what is not fully understood is how far that strategy can be taken forward without affecting the concerns of the other "P" i.e. Planet. Sometime ago, a scientist of repute made a revealing statement. That is, if every Chinese and Indian starts owning a car the world will become unlivable. That is the measure and magnitude of the problem a foretaste of which is already in evidence.


That does not however diminish the value of having an inclusive strategy at the corporate or national level. Right here in India, the shampoo market has witnessed astounding growth rate in penetration mainly through such a strategy. By spreading the "single serve" revolution - to use the celebrated phrase of CK Prahalad, who popularised the now famous Bottom of the Pyramid approach- the shampoo industry has seen its penetration in the rural areas jump from just 13% in 2000 to a third of the population in 2005. Its penetration in states like Andhra Pradesh and Tamilnadu are as high as 50%.


The other aspect of the inclusive growth strategy concerns with how a particular economic activity is carried out. It has implication for both people and planet. The idea here is to adopt a pocess which involves employment of more people and/or protection of the planet. As pointed out rightly by Seshasayee "how we grow is even more important than how much we grow". Sustainable development therefore is all about "inclusiveness".

Jairam Ramesh, the Minister of State for Commerce announced a Cluster Development Approach which for 100 Handloom Clusters in the country. This could well be one of the promising inclusive development schemes being introduced by the Government. As the second largest employer in the country with 6.5 million people at the bottom of the pyramid, the programme will promote inclusive growth. Already it generates Rs.2500 crore export turnover with prospects for greater achievement. However the ultimate success of this programme will depend on the size and quality of investment on soft side of the cluster intervention.

It is worth remembering what Arnold Toynbee said on this vital issue with conviction. "The twentieth century will be chiefly remembered in future centuries not as an age of political conflicts or technical inventions, but as an age in which human society dared to think of the welfare of the whole human race as a practical objective".

The 21st century could well make this objective a reachable or achievable one.