I regularly meet Indian CEOs who ask me what “innovation strategies” they need to adopt to boost their company’s performance. Similarly, when I interact with Indian policy makers, they air concerns about the country’s low investment levels in research and development (R&D) compared with rivals such as China (India currently spends less than 1% of its gross domestic product, or GDP, on R&D whereas China plans to increase its R&D to GDP ratio from 1.76 in 2010 to 2.5 by 2020).
India clearly needs to increase its R&D spending and adopt sound innovation strategies and policies if it is to realize its potential in this “decade of innovation”. But even as they pursue these top-down initiatives to strengthen the Indian innovation ecosystem, policy makers and CEOs should not overlook a key strength of the existing Indian ecosystem: its grassroots entrepreneurs’ ability to generate amazing products and services in an organic, bottom-up fashion. For instance, Mansukh Prajapati, a former tea seller in a remote village in Gujarat, has invented “MittiCool”—a “green fridge” made entirely of clay that consumes no electricity. It can keep milk and vegetables fresh for several days. Similarly, Harish Hande earned the 2011 Ramon Magsaysay Award for debunking the myth that poor people can’t afford clean technologies. His company Selco has installed solar lanterns in more than 120,000 households—many located in far-flung Indian villages.
The Indian innovations (or “Indovations”) produced by grassroots entrepreneurs such as Prajapati and Hande are the creative output of a unique mindset: the jugaad mindset. Jugaad is the gutsy Indian art of finding opportunities in the most adverse circumstances, and improvising frugal but effective solutions to pressing socio-economic problems. For example, whereas most companies see a “last-mile challenge” at the base of the economic pyramid, Prajapati and Hande saw a “first-mile opportunity”—and cleverly grabbed it.
Money can’t buy the ingenuity embodied in jugaad—nor can you legislate or “manage” jugaad innovation. Jugaad happens spontaneously. Jugaad represents—to quote Woodrow Wilson—“the highest and best form of efficiency (that) is the spontaneous cooperation of free people”.
In sum, jugaad represents a bottom-up innovation model that India excels in.
To effectively compete in a complex and fast-moving business environment, Indian CEOs need to nurture this free-spirited jugaad mindset within their organization—by empowering and enabling grassroots employee-led creativity. This is especially critical in large organizations that are process-driven and/or operate in regulated sectors: too much emphasis on processes and compliance could induce a risk-averse culture that can stifle innovation. That’s why forward-thinking CEOs of leading firms such as Yes Bank, HCL and Pepsico India are attempting to foster an entrepreneurial jugaad mindset among their workforce—without sacrificing the efficiencies gained through structured processes.
At HCL, by placing “employees first, customers second”, Vineet Nayar is tapping into the jugaad ingenuity of his workforce to make a difference for both his customers and society at large. One of HCL’s bottom-up innovation initiatives is MAD Jam—a social media platform that recognizes and celebrates grassroots ideas of employees that have had a big organizational impact.
Similarly, at Yes Bank, Rana Kapoor is nurturing an entrepreneurial jugaad culture that encourages outside-the-box thinking among employees at all levels. Yes Bank managers have used their creative freedom to conjure up innovative business solutions—whether it is providing micro-loans to poor bee farmers in Jammu and Kashmir using their honey stocks as collateral or accelerating financial inclusion through mobile banking applications (Yes Bank has partnered with Nokia and Obopay to roll out a mobile payment solution).
Interestingly, multinationals operating in India have also adopted a jugaad mindset to enable bottom-up innovation. For instance, a few Pepsico employees in India—driven by their concern for India’s growing scarcity of water—took the initiative to develop an eco-friendly farming technique called direct seeding of rice (DSR).
DSR eliminates holding water for rice cultivation, thus reducing water use by 30% and slashing carbon emissions by 70%. The successful pilot project convinced PepsiCo’s top management to scale up DSR nationally and introduce it in other emerging markets. Jugaad represents a powerful way to catalyze bottom-up innovation using frugal and flexible means. Yet, jugaad is not a panacea: it can’t solve all problems in all contexts. The most successful firms will be those whose leaders manage to integrate the agile and resilient spirit of jugaad with more structured approaches to innovation.
Two firms that have been effective in managing—and leveraging—the creative tension between the “yin” (structured) and “yang” (unstructured) aspects of innovation are:
Tata Motors: Watching Indian families travel precariously on two-wheelers triggered a jugaad insight in Ratan Tata that led him to conceptualize the Nano. He then gave free rein to a bunch of 20- and 30-something engineers at Tata Motors to tap into their own jugaad ingenuity to design and build the Rs 1 lakh car. Tata Motors then adopted a structured approach to scaling up the production and distribution of the Nano.
GE Healthcare: GE, a big proponent of structured processes such as Six Sigma, is embracing jugaad to gain flexibility in a complex business environment such as India. For example, V. Raja, former CEO of GE Healthcare South Asia, partnered with private diagnostic centres and domestic airlines in India to produce a glucose called FDG and have it delivered just-in-time to small-town hospitals that need to inject FDG into patients before they undergo CT scanning for cancer. While GE’s CT scanners are manufactured using Six Sigma processes, Raja used his jugaad thinking to create a flexible distribution model for FDG, which allows hospitals to keep the CT scanners fully utilized by scanning more patients.
As for Indian policy makers, they too should strive to unleash the entrepreneurial jugaad spirit of Indians in a bottom-up fashion, even as they increase national R&D spending and institute national innovation policies which are undoubtedly vital for scaling up India’s innovation capacity. Fortunately, the National Innovation Council (NIC)—headed by Sam Pitroda—is developing forward-thinking policies that seek to achieve precisely this balance between centralized and decentralized support for innovation. For example, NIC has set up a $1 billion fund to support grassroots jugaad entrepreneurs who have innovative ideas for driving inclusive development. NIC also plans to set up regional innovation clusters across states to enable bottom-up collaboration among local entrepreneurs, universities, and companies. And while it does this, NIC is also investing in nationwide initiatives—such as a countrywide broadband network and an innovation portal—that will help cross-fertilize and scale up creative ideas all across India.
India’s “decade of innovation” will come to fruition only if the country can unleash the creativity of its young and dynamic population. By achieving the right balance among top-down strategies and policies and support for bottom-up jugaad innovation, Indian CEOs and policy makers can effectively tap into the ingenuity of every citizen and let one billion Indovations bloom.