In times like these it is very important for a company to
initially survive and then grow. Jugaad Innovators know this fact very well and
act accordingly. There are four crucial ways in which they think and act
flexibly in response to the environment they face.
Think the Unthinkable
Harish Hande dared to think the unthinkable and succeeded. Hande
founded India’s Solar Electric Light Company (SELCO) in 1995. He started his
business with very little seed money, as conservative banks were not ready to
invest in an unproven business model in an unknown industry. He started with
investing his own money, Rs. 1500 to be specific.
However he soon hit the wall, he soon learnt that many of
his potential consumers earn less than Rs. 50 a day and could not afford an
upfront payment that was required. Even if these systems somehow got installed,
there was no economic way for him to maintain them for rural consumers
scattered across multiple villages. To overcome these twin problems, Hande
applied flexible thinking to improvise a truly creative solution that involved
a network of small-scale entrepreneurs in rural communities.
These grassroots entrepreneurs would own and maintain the
solar panels as well as the batteries they could charge in their stores. They
would then rent out these batteries to the end consumer on pay per use basis
and collect payments every day. This ingenious energy distribution model made
SELCO’s solution affordable and accessible to many rural consumers.
Don’t Plan - Improve
Unlike their counterparts in Silicon Valley, Jugaar
Innovators do not attempt to work everything out in advance or rely on a
business plan to determine the mid to long term roadmap for their new ventures.
Instead, they improvise their next course of action as circumstances change,
and they do so from within a framework of deep knowledge and passion.
For instance, The Tata Nano was a brain child of Ratan Tata,
who conceived it as an affordable, comfortable, and safe alternative to the two
wheelers. The factory was built in Singur, West Bengal on lands acquired from
farmers. However, the local farmers began protesting against the acquisition of
land for the factory and threw the entire project in jeopardy. Ravi Kant, then
Managing Director of Tata Motors set aside his firm’s prior manufacturing plans
and swiftly shifted the production of the Nano to Sanand, in the
investor-friendly state of Gujarat. For this he did not hire a management
consultant, he purely followed his instinct. Tata Motors build a new factory in
Sanand, Gujarat and began production of Nano in 2010.
Experiment with
Multiple Ways to Reach a Goal
Unpredictability is the norm in emerging markets. Because
diversity and rapid change, it is hard to predict how consumers will respond to
new products and services. Jugaad Innovators may have a single mind vision but
they must be willing to try different ways to reach their goal.
Dr. Mohan for instance had a vision to provide medical help
in rural parts. He would send his expensive technicians from the city to work
in remote villages. He found that these technicians could not adjust to the
village life and they would soon leave. Learning this, he developed a training
curriculum in his city hospital to impart to young men and women from villages
the basic skills they need as healthcare workers. After the 3 month training
they will return to their villages where they were more likely to remain and
help Dr. Mohan reach his goal.
Act with Speed and
Agility
In emerging markets, new threats and opportunities can emerge
from out of the blue. This forces Jugaad Innovators to not only think, but also
act with flexibility. Zhang, introduced in an earlier article is the CEO of
Haier, a Chinese consumer durable manufacturing company that is making
appliance makers like GE and Whirlpool nervous. Armed with its Value of Money
strategy, Haier has grown the market by a whopping 10,000% (that is not a typo
error, it is ten thousand percent) and it now controls 60% of the US market by
value.
Zhang came up with a Jugaad Innovation, he radically
redesigned Haier’s organization, which currently employs over fifty thousand
people worldwide. Specifically, he replaced Haier’s organizational pyramid with
a loosely coupled network of more than four thousand self managed, cross-functional
units that interact directly with customers and autonomously made decisions.
Each unit operates as an independent profit centre and is evaluated as such.
Jugaad Innovators such as these are highly adaptable. They
are capable of thinking on their feet and acting with great agility.
Comments
Post a Comment