I deem it a special privilege and an honour to have been invited to deliver the convocation address of Lal Bahadur Shastri Institute of Management.
This Institute draws its prestige from the very name of that most iconic leader of India, Shri Lal Bahadur Shastri. As a young student, I remember simply worshipping him. I remember crying inconsolably when the news of his untimely passing away reached us on All India Radio. India has not seen another leader like him.
Our former President Dr. S. Radhakrishnan had said ` Lal Bahadur Shastri was quiet, unostentious but a determined nationalist’. And what we require today is precisely the leadership of this kind.
While congratulating the graduating students, I want to remind them about their responsibility to imbibe and emulate the values of austerity, simplicity, humanity and integrity, which personified Lal Bahadur Shastri.
The vision of the Lal Bahadur Shastri Institute of Management is very inspirational. It is `to be a leader in providing excellent, accessible and value based management through innovation and research’ while building a symbolic relationship with corporates and community. That is a great vision.
I was trained as an engineer. And I thought it will be appropriate to speak on that special field of engineering, which symbolised the very life, work and the message of Lal Bahadur Shastri.
What Engineering would be most crucial for the 21st century? Chemical Engineering? Computer Engineering? Electronics Engineering? No. None of these. It will be ‘Gandhian engineering’, which is all about “getting more from less for more and more people of the world”!
How did the term `Gandhian Engineering’ arise in the first place? A few years ago, the Australian Academy of Technological Sciences and Engineering (ATSE) honoured me with the Fellowship of this Academy. I instantly decided that I must enlighten the audience about ‘my India’. I decided to speak to them about something that we as Indians are particularly proud of.
I asked myself, what was India’s greatest gift to the world in the 20th Century? I remembered what Einstein had said’ “Generations to come, it may be, will scarce believe that such a one as this, ever in flesh and blood walked upon this earth”. Yes, it was, Mahatma Gandhi, that was India’s greatest gift to the world in the 20th Century.
Then I asked myself, what could be India’s greatest gift to the world in the 21st Century? A world that is deeply divided due to stark inequalities. A world, where 800 million people go to sleep every day without a meal. A world, which is threatened with crisis such as global warming, global economic melt down, terrorism and so on.
And then I remembered two of Gandhi’s tenets: “I would prize every invention of science made for the benefit of all” and “Earth provides enough to satisfy every man’s need but not every man’s greed”. The first tenet referred to affordability. The second tenet referred to sustainability. And I felt they so relevant for solving all the problems that the world was facing today – so it was Gandhi’s way based on these two tenets — his solutions – his engineering – Gandhian Engineering – that would be the saviour for the world. And Gandhian Engineering could be India’s greatest gift to the world in the twenty first century.
The title of my talk in Canberra on 28 April 2008 to ATSE was decided there and then. It was `Indian Innovation: From Gandhi to Gandhian Engineering’.
I explained to the audience the essence of Gandhian Engieering. The Industrial enterprises strive for getting `more from less for more’. What did it mean? That meant getting more (performance) from less (resource) for more (profit). But Gandhian Engineering has a different message. It means getting more (performance) from less (resource) for more (people), not just for more (profit). Remember, what Gandhi had said – benefit of all – not for just a few but for more and more people. Getting More from Less for More (MLM) became the mantra that I would repeat from Delhi to Washington over the five years after I gave this lecture in Canberra in April 2008.
The concept of MLM got enriched to an extent that the legendary C.K. Prahalad (CK as we fondly called him) and I wrote a paper `Innovation’s Holy Grail’ in the July-August 2010 issue of Harvard Business Review. Unfortunately that was the last paper written by the legendary CK. We explained what MLM meant in terms of business perspective. We showed how industry could do well as well as do good by following the MLM strategy through technological innovations, business process innovation, work flow innovations and so on. MLM is getting further traction now.
Getting it for billions of `have nots’ means making products and services available not just at `low cost’ but at `ultra-low cost’ – and that too at the same level of performance!
For instance, can we make a laptop costing $ 2000 available at $ 100? Can we make a Hepatitis-B vaccine costing $ 20 per dose available at 40 cents per dose? Can we make a psoriasis treatment costing $ 20,000 available at $ 100? Can we make a comfortable, safe and fuel efficient car available, not at $ 20,000, but at $ 2000? Can an artificial foot costing $ 10,000, be made available at $ 30? Can we make a high quality cataract eye surgery made available, not at $ 3000, but at $ 30?
All these sound impossible. But all these have been made possible. And that too, in India.
Such innovations should not just be `affordable’ but `extremely affordable’. This means not just `incremental innovation’ but `disruptive innovation’. The lecture will discuss the drivers for such innovations and also the generic lessons.
‘More from less for more’ can also be achieved by more & more participants in the innovation process. How do we move from ‘national laboratories’ to ‘nation as a laboratory’? Grand co-creation of products & services can involve grass root innovation, open innovation, crowd sourcing, patent pools, etc.
The MLM strategy forces us to measure an opportunity by the ends of innovation—what people actually get to enjoy—as opposed to just an increase in their means. In important ways, this rationale invokes a return to the traditional case for innovation—its ability to produce break-through improvements in the quality of life—alongside the usual objective of competitiveness.
The objective of MLM type of innovation would not be just to produce low performance, cheap knock-off versions of rich country technologies so that they can be marketed to poor people. Rather, the objective is to harness sophisticated science and technology know-how to invent, design, produce and distribute high performance technologies at prices that can be afforded by majority of people.
The Indian MLM Strength
Contextual factors have undoubtedly facilitated the growth of Indian MLM capacity. There are five factors that stand out.
First, the country’s political leaders experimented with socialism for more than four decades, which kept out foreign capital and technologies, but spurred local innovation on trying to get `more performance from less financial resources’.
Second, the Indian economy didn’t start growing until the 1990s, so local companies were small. Indian entrepreneurs, therefore, developed a penchant for undertaking small projects and using capital carefully. In bad times we develop good habits. When the times are good, we should keep these good habits. So in the post-1991 era, Indian enterprises, while growing large, managed to maintain their good habits, namely an unwavering focus on capital efficiency, again achieving `more from less’.
Third, local companies know that while India has both rich and poor people, catering only to the rich limits their market. They were forced to develop value-for-money products and services by changing the price-performance equation. So they worked on giving value for money as well as value for many.
Fourth, the mix of miniscule research budgets, small size, low prices, and big ambitions had created the need to think and manage differently. The combination of extreme scarcity and extreme aspiration ignited the Indian innovation.
And finally, the audacity of out-of-the-box thinking by some of the iconic industrial leaders showed the way. Dhirubai Ambani said `phone call at the cost of a post card’. And it was achieved. Ratan Tata said `a car at the prize’ `a one lakh car’. And it was achieved. G. Venkataswamy set a target of doing a cataract surgery at one by hundredth of a cost in USA. It was achieved.
Mahatma Gandhi had favoured “production by the masses”, rather than mass production. While mass production is dominant today, there is a strong countertendency towards smaller, more nimble custom-manufacturing facilities. Consumer tastes — a preference for a differentiated, “special” products — are changing, driven by technological advances that make it possible to get away from a “scale” Gandhian engineering can be facilitated by technologies that facilitate dispersal and decentralization. Earlier, the issues connected with logistics, the availability of talent, and infrastructure had favoured agglomeration and centralisation. Large industrial complexes and industrial townships were established. Size seemed critical for success.
Now, thanks to new information and communication technology as also the expansion of transportation networks, with widespread availability of power, and education — it is possible to set up factories in smaller towns and more remote parts of the country.
The movement of raw materials and finished products has become simpler, more efficient, cheaper and practically — location independent. Appropriate human resources too are now widely available. The task of setting up facilities in a dispersed and decentralized manner has been made much easier as a result.
This trend is very much evident in service industries. Take for example, the IT-BPO (Information Technology and Business Process Outsourcing) sector. First, as in most knowledge industries, the continuous stream of new start-ups is its lifeblood. In addition, being talent-intensive, and comparatively less dependent on physical infrastructure, new ventures tend to start-up wherever there is talent and entrepreneurship — which means, anywhere in the country. This ensures geographical decentralisation. This has now been taken much further — again, thanks to technology — and the BPO segment, in particular, is now beginning to set up facilities in small towns and even rural areas, so-called “rural BPOs”. Communications technology has made this possible by assuring high-reliability and large-bandwidth to networks, while IT has provided the ability to slice-and-dice work and later re-integrate it. These developments have made it possible to move work to wherever there is electronic connectivity. The level of expertise and education required has been reduced by breaking up a task into various components, some of which require a lower level of skills and training.
Another catalyst for the move to decentralisation has been costs: moving to small towns and rural areas can result in huge cost-saving, especially on real-estate, since this cost is practically proportional to the size of the city/location. While this pushes decentralisation, it also ensures small size, since it is just not feasible to hire thousands of people (with the right talent) in small towns or villages. Thus, new technologies are driving the trend towards decentralisation, dispersal and smaller-size organizations. While duplicating hardware in multiple locations means a near-linear multiplication of costs (hardware in ten locations will practically cost ten times as having it in one location), this is not true of software: it can be replicated any number of times — easily and quickly — at only marginal cost. This too could provide a further impetus to decentralized and local industry.
For creating MLM business innovation models, we require leadership of special quality. First, MLM CEOs must develop a deep commitment to inclusive growth, which will force them to think of unserved customers, be they rural or urban poor. Companies often start by asking: “Given our cost structure, which segments can we serve? ”They should ask: “ Given that we need to cater to the unserved, what should our cost structure be?
Second, MLM CEOs must have clear vision with a human dimension: for example, helping poor Indians travel safely and affordably with their families; using connectivity to improve people’s work and lives; and enabling patients to buy cheap medicines.
Third, MLM CEOs must establish ambitious goals and clear time frames for achieving them. Companies should ask: “What is our on-the-moon project?” Or, as they do in India’s boardrooms: “What is our Nano project?”
Fourth, MLM CEO’s must continuously ask “What if we change the way we operate to reduce costs and focus on return on capital employed, not just on operating margins? If we reduce prices enough and make our products available to the poor, won’t there be explosive growth as they quickly find uses for and buy our offerings?”
Finally, MLM leaders must force project teams to work within self-imposed boundaries that stem from a deep understanding of consumers. That will result in a novel, outside-in view of innovation. The language inside their organizations should be about consumers as people, suppliers as partners, and employees as innovators.
I am sure that the very message of Lal Bahadur Shastri’s inspirational life and monumental work is Gandhian Engineering for creating a better world for all, not for some privileged few.
After all Gandhian Engineering is all about getting more from less for more people. MLM way of innovation is anchored on the solid foundation of affordability and sustainability. It is all about creating a more equitable society. It is all about designing a sustainable future for the mankind.