Prof. Vijay Govindrajan is recognized as one of the world’s leading business strategists. The professor of International Business at the Tuck School has helped various companies across the globe use strategy to forge ahead in highly competitive and global business environments. His book, Ten Rules For Strategic Innovators: From Idea to Execution, draws on his three decades of experience on how strategy and innovation can help companies win the game. Govindrajan is in the country for the Indian launch of his book. Campaign’s Rajeshwari Sharma spoke to the management guru, who says that over the last decade, Indian companies have pursued the approach of growing through reverse engineering of products and processes, which was introduced in the West. But that approach has now run its course and Indian business needs a fresh strategy and better innovations to keep growing. Excerpts:
What is the reason for launching an Indian edition of ‘Ten Rules For Strategic Innovators’, given the book has been in the shops for two years?
Strategic innovation is something that has tremendous ramifications for companies and states across the world. And strategic innovation is here to stay.
Obviously, we wanted the book to have a wider audience and the price tag of Rs1,600 was proving to be a hurdle to our effort. So, our publisher, Harvard Business School Press, decided to launch an Indian edition priced at Rs400. Hopefully, this should allow many more readers to benefit from the book.
What is strategic innovation and how critical is it in today’s economy?
Innovation can be a lot of things—a process, a new product or a new marketing plan. It can happen within the company’s strategy contrary to strategic innovation, which redefines a company’s business. Strategic innovation is much more than new products. It is about rejigging business processes and building new markets to meet customer demands. For instance, Tata’s Rs1 lakh car, ITC’s Chaupal initiative, and Apple Inc.’s iPhone—all these models have changed the course of their company’s business.
What kind of opportunities does innovation present to companies?
Revenues. Innovation provides huge opportunities to companies since it opens up a non-consumer market and, consequently, brings in money. For instance, if you look at the disposable- diapers market, there’s a significant customer base which doesn’t buy diaper because of its pricing. Now, if a company could offer a disposable diaper for, say, 1 cent against its current price, 35 cents, it would bring in a whole lot of customers who have not been buying. So, non-consumerism offers huge potential to companies. And large companies should be quick to react to such non-consumer markets. That can happen if they bring in entrepreneurial spirit and innovation. Small start-ups lack resources, but they more than make up for it, and often outdo big companies, with their entrepreneurial spirit and innovative streak.
However, small start-ups can’t solve the problems of large sectors such as education, water, power and health. Only big companies can tackle such sectors since they have the resources—be they financial, infrastructure or manpower.
How can India strategize to develop fast?
The three most important steps that India should take are: First, we need to liberalize the distribution network. Second, our labour laws are antiquated and we need to amend them. Labour problems in India are keeping many foreign companies from setting up their manufacturing units here and this has to change. Socialism doesn’t work and we have seen that. Today’s market demands the hire-and-fire kind of conformity. Third, we really need to develop our infrastructure.
You can’t have development limited to certain pockets since underdeveloped segments and the gap between the rich and the poor would prove to be a big drag. India needs to focus on agriculture, manufacturing and services in a big way. These sectors will not only create a lot of jobs, but will also go a long way in making growth more equitable.
The government should expand the health sector since it has the potential of becoming one of the biggest employment generators, especially for women. Another advantage with health sector is that it creates an opportunity for indirect employment through pharmaceutical companies, medical technology providers, biotech companies, etc.
How can Indian companies adapt to the global business environment and change the way they look at strategy?
The world is changing at an accelerating pace and new technologies are changing the corporate world fundamentally. Also, the entry of new players such as India and China is making the market more dynamic.
For India, it’s a great opportunity and innovation can catapult Indian corporates to become global giants. They must first address the Indian consumer, who wants more options and variants, given the diversity and segmentation in demographics, with innovative products and services. The companies can then take these local innovations to launch a global strategy.
This will not give them a competitive edge globally but also propel them to become leaders. The success story of Infosys Technologies or Wipro Technologies is a case in point.