Jugaad: A breakthrough Growth Strategy

By: O P Agrawal ---------------------------------------------------------------------------------------------------------------Business Environment

Unprecedented Challenges: Resource constraint Volatile market condition Complex & unpredictable business environment

Innovation will be the key differentiator between the winners & the also-rans. ---------------------------------------------------------------------------------------------------------------------------Key Questions: What kind of innovation we need to enhance & sustain our competitiveness? How do we implant that kind of innovation in our organizations?

But, Jugaad, which is a Hindi word, is different in its approach & content. It tries to solve problems under conditions of constraint, scarcity & challenging circumstances.

Innovation

Jugaad

Is done in structured R&D Flexible, Instinct depts. driven Expensive (Capital Frugal (Economic) Intensive) Bottom-up Top down approach approach We need a dynamic balance between innovation & Jugaad by integrating structured R&D model of innovation with a Jugaad mindset for growth & competitive advantage ensuring sustainable & inclusive development. It should be an affordable solutions, innovative business model or process, looking beyond the conventional way of doing things, which ease delivering of desired results. -------------------------------------------------------------------------------------------------------Jugaad: (Story of Prajapati, a potter from Gujarat, developed a Mitti Cool - a Fridge) An innovative fix; an improvised solution born from ingenuity & cleverness It is quite simple, a unique way of thinking & acting in response to challenges; it is spotting opportunities in the adverse circumstances & improvising solutions using simple means, it is about doing more with less.

We need to: Nurture Jugaad mindset by unleashing & harnessing grass root employees led creativity. Right balance between top-down R&D strategies while supporting bottom-up Jugaad innovation. Finding, sharing & integrating the dispersed knowledge among all levels of employees is equally important for generating ideas. Culture that promotes openness & adaptability; harnessing the creativity of employees, customers & suppliers

-------------------------------------------------------------------------------------------------------------Negativity in Innovation: 1. Structured approach is too expensive & resource consuming. Money cant buy innovations. We spent $2 Billion (`10,000 Crores) on R&D and all we got was this lousy Tshirt. Commented by one CEO. 2. It lacks flexibility. ---------------------------------------------------------------------------------------------------------------------The six principles of Jugaad: 1. Seek opportunity in adversity 2. Do more with less 3. Think & act flexibly - Dont just think outside the box, they create whole new boxes. - Question the status quo. 4. Keep it simple - Shift over engineering to good enough solution.

5. Include the margin Include to serve marginal segments of un-served and undeserved consumers 6. Follow your heart Employ intitution, empathy & passion. Deliver more value to customers at less cost. Develop high quality products at low cost. ---------------------------------------------------------------------------------------------------------------------------1. Seek opportunity in adversity: Harsh environment nurtures resilience. - Suzlon wind Wind air to generate electricity for his Textile Mill, Worlds 5 th largest wind energy solution

provider, employs more than 13,000 people, Serves in 30 countries on 6 Continents. - Mr. Kanak Das of Assam provided in his bicycle a shock absorber, which compresses & releases energy to the rear wheel. Now cycle runs faster on bumpy roads. Recognize that the glass is always half full not half empty. - Reframe challenges as opportunities and constraint as a spur to innovate. - Leaders must have realistic optimism. Realize extreme conditions are fertile soil for extreme innovation. Build Psychological (Human) capital to boost confident Resilience - Create motivation, engagement, confidence, resiliency, hope & optimism amongst employees by empowering employees at every level to think & act like Jugaad innovators (SGAs & QITs). -------------------------------------------------------------------------------------------------------------------------------Riboud, CEO of Danone Our future hinges on our ability to explore & invent new business models & new types of business corporations. Addressing local challenges & opportunities by sharing ideas through peer-to-peer knowledge networks. Decentralize decision making and R&D operations. Reduce operating cost without compromising quality. Approach big challenges with a growth mindset. Tap the power of networks to tackle big market threats. 3M: 15% of paid up work time to pursue their dream projects. 30% of its total revenues from new products, introduced in preceding 5years. -------------------------------------------------------------------------------------------------------------------2. Do more with less: Argentinean farmer Gustavo Grovocopatel

Problem
Land scarcity Scarcity of Labour

Solution
Leasing rather than acquiring Subcontracting every aspect of farm work

Hire labourers only when needed from service providers network Lack of capital owning equipments for Renting equipments

---------------------------------------------------------------------------------------------------------------------------------------- Scarcity is the mother of invention. Being resourceful in a resource-scare environment. - Apply frugality in every activity at every step along the value chain. Reuse & recombine. X-ray machine chest X-ray machine - cost `10 Lakhs against `75 Lakhs. Remain asset - light. Leverage existing networks for distribution.

Theodre Roosevelt, All the resources we need are in the mind. -----------------------------------------------------------------------------------------------------------------------------------------3. Think & act flexibly: One cant alter a condition with the same mindset that created it in the first place - Albert Einstein. Think the unthinkable - Dr. Mohan in Chennai - mobile tele-medicine clinic in remotest villages. - Mr. Hande, solar electric light company (SELCO) Solar light in villages. Dont plan They Improvise Murphys Law Anything that can go wrong will go wrong. Tata Motorss Nano Car got shifted from Singur to Sanand. Act with speed & agility Chinese company Haier - 4000 self managed, cross functional units (Including R&D, supply chain, sales & marketing) - Making a big company small (Bottom-up, customer centric organizational structure) --------------------------------------------------------------------------------------------------------------------- What makes large firms so inflexible? a. Complacency Past successes can breed complacency & sow the seeds of failure. Every challenge is unique & requires a different approach for successes. b. Risk aversion Tenure of CEO is shrinking, forcing them to deliver short term results rather than drive long-term transformational changes. c. Disengaged Employees Employees grow cynical or fearful. They play safe.

 Employees feel that their inputs are not appreciated. In India, only 37% feel engaged at work. Rigid, time consuming product development processes. ------------------------------------------------------------------------------------------------------------------------------------- Learn to Improvise a. Break rules & shift values when necessary. - Breakthrough innovation occurs when commonly held values & beliefs are challenged, not reinforced. b. Create time & space for Employees to improvise & experiment. Google has 70/20/10 model for organizing work. 70% on core business tasks. 20% related projects. 10% projects unrelated to their core work. c. Get outside your comfort zone to gain new perspectives Visit to rural market. Enroll to a theatre to improve communication skill. d. Break down organizational silos to gain speed - Flat organizational structure. - Set bolder targets.

---------------------------------------------------------------------------------------------------------4. Keep it simple: Leonard da Vinci: Simplicity is the ultimate sophistication. - Advantages a. Cheaper to make, hence more affordable. b. Easier to install & maintain. c. Can satisfy large customers. - The art of simplicity: a. Focus more on customers needs than their desires. b. Employ a functional approach to product & service. c. Develop practical solutions to address needs. ---------------------------------------------------------------------------------------------------------------------- To light in Filipino Slums, a solar bottle bulb (SLB) was used. A recycled plastic bottle filled with bleach-treated water that is fitted into a hole in the corrugated roof of homes. The water in the bottle refracts the Suns rays, producing equivalent to a 55 watt light bulb.

- Nokia 1100 - a rugged cell phone with a flash light became very popular & sold 25 corer units around the world. - Indian govt. launched Rs.3000 tablet, cheapest in the world. - Simplify products & organization to serve customers better Marry the ingenuity and the process focus, and you have the best of both worlds. Dr. Wido Menhardt, Head of Philips at Bangalore - Keep improving the user experience without sacrificing simplicity. - Simplify product architectures & Reuse Platforms across products (Cars). ------------------------------------------------------------------------------------------------------------------------------5. Include the Margin : Inclusive model: Yes Bank - 46% loans to underserved segments still making profits and improving peoples lives. --------------------------------------------------------------------------------------------------------------------------------------6. Follow your Heart : Unleashing the passion of individual employees & channeling it into innovative pursuits that serve a larger purpose. Kishore Biyani, owner of Big Bazar, set up the layout & displays of products, including salesmens uniform to give an experience of real Indian bazaar to Indian customers, and not following the western system. Your heart knows what your mind does not: - Extreme conditions arouse the empathy of Jugaad entrepreneurs. - Mahatma Gandhi said, Happiness is when what you think, what you say, and what you do are in harmony. - By aligning thoughts, words and actions with heart and spirit, Jugaad entrepreneurs derive a sense of fulfillment by serving a larger cause. This is the secret of their undying passion. - Dr. Devi Shetty - founded Narayan Hrudayalaya, Bangalore, where hundreds of low income people receive heart surgery every week. ---------------------------------------------------------------------------------------------------------------- The world is too complex for the Mind alone to grasp : Pure logic will not suffice. Jack Welch called Gut Intelligence--- a creative intuition honed by years of experience. Customers yearn for authentic relationships. As per research, only 5% agree with advertising claims, and word of mouth is more effective. Customers are more likely to purchase from company that listens to and acts on their advice.

 Companies should give employees the space & time to pursue their passion in a constructive manner. Engage your customers in a heart to heart conversation. ------------------------------------------------------------------------------------------------------------------------------------Integrating Jugaad into your Organization Never try to change company culture. Try, instead, to work with what you have got Peter Drucker. Jugaad innovation delivers the most when it is practised in complex & volatile environments with following characteristics: Rapid changes - requires flexible thinking & rapid fire actions. Resource scarcity - revamping supply chains to do more with less. Frugal & diverse customers affordable cost conscious customers & seeking

products tailored to particular needs. Industry immaturity - are still nascent. Exploding interconnectivity cell phones, banks, etc.

--------------------------------------------------------------------------------------------------------------------------------------------------Implementation of Jugaad Six - Principles 1. Prioritize the principles, most relevant to your company, your need to adopt. 2. Aim first for the low hanging fruits. 3. During Jugaad adaptation Do celebrate your existing Jugaad Innovators Do persuade skeptical employees by creating a sense of urgency Have cross- pollinate and synergize Jugaad Ideas. Outline a bold vision for the companys future & then employees will come up with appropriate strategy for realizing the vision. (Vision of Rs. 1 lakh car by Tata Motors) Brainstorming through grassroots collaboration can help identifying challenging problems & generating counter-intuitive solutions. Bold and creative leadership is vital for successful adoption.

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