Reason why Large Firms need to implement Jugaad

Jugaad Innovators can be seen at all levels of economy. Right from an ordinary potter who made a refrigerator that runs without electricity to the Chairman of the country’s biggest bank. Jugaad Innovations occur when there are adversities and constrains. This ideally gives us an understanding that the larger firms will never require to implement Jugaad and it is limited to only small and mid size firms.

We have seen some of the biggest firms getting into trouble and declaring themselves bankrupts. We have seen the Indian Airline major Kingfisher facing financial crisis, once a major cell phone manufacturer RIM has put their flagship Blackberry Phones division up for sale.

These are some of the examples that even the giant can fall. It is instructive, therefore to look at the major sources of adversity that large companies face:

 

A worsening global economy: The US and the European economies have already seen a steep decline in the economic growth. According to The International Monetary Fund (IMF) the US economy and the European economy will grow only 1.8 percent and 1.1 percent in 2012, respectively. The Indian economy too will be greatly affected by the global slowdown.

An avalanche of new regulations to come: The rules and regulations are constantly refined to serve the consumers and the common man. For instance, the Reserve Bank of India is soon planning to introduce comprehensive consumer protection legislation in the financial services sector. Increasing taxes to the corporate and large firms and increasing fuel prices are also a concern. 

Tectonic shifts in demographics: Europe and US workforce are growing older and older. For instance, Germany will lose 50 lakh workers (12 percent of their current work force) over fifteen years. US will have to work with the multi-cultural and multi-diversity workforce to sustain economy. India will be adding 1.1 crore workers every year for next several years.

The social computing revolution: The explosive growth of social media networks like Facebook, Twitter, etc. which enable improvised and informal grassroot interactions among hundreds of crores of users worldwide can be a challenge to some of the orthodox ways of thinking of the large corporate. India showed an increase of 132 percent in Facebook users in 2011 compared to 16 percent in US during the same year.

The accelerating scarcity of natural resources: Natural resources like Oil, Food, Water, etc. will play a major role in the way companies work. People like Tulsi Tanti and companies like Suzlon will become the Googles and Microsofts few years down the line. Nestle chairman Peter Brabeck-Letmathe comments “I am convinced that we will run out of water long before we run out of oil”. 

Unforgiving competition from emerging markets: Emerging markets also are major manufactures. Companies like HTC and Haier have given a major competition to Nokia and Whirlpool in cell phone and home appliance markets respectively. There is a stiff competition among emerging markets. For instance, Indian pharmaceutical companies face intense competition from Chinese rivals as they scramble to meet their $25 billion (Rs.125,000 crore) annual export target by 2014.

All these challenges are generating constraints within the environment in which large firms operate. Thus, making it increasingly important for large firm leaders to understand and implement Jugaad in their empires.