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Good morning everyone. Let me also add, as the Convenor of the Conference, my welcome to all of you. It is so important that all of you are here, and I am just delighted. I would like to take the first twenty minutes or so to the set the stage on what we are trying to do, and then start seamlessly into the first panel on innovations and new business models that are emerging from India.
 This Conference is about strategic innovation, it is about being a special conference of the Strategic Management Society. So the first question that we should ask ourselves is what is so special about this conference? It is somewhat different because for the first time SMS is meeting in India. The location is not the reason why it is special. It is a good idea, but that is not the reason. The real reason is that we have taken a fundamental different approach to an academic conference. If you look at the structure of the programme, we have a significant portion of time allocated to non-academic sessions. We politely call them ‘Plenary Sessions’. These sessions are about listening to CEOs who are causing this change. For a change we are going to listen to CEOs. We are also going to listen to Deans. We started thinking about the idea of bringing the Deans into the conversation so that academics cannot say “if only my Dean could understand how smart I am,” and the Deans would stop saying, “if only my faculty could be more creative and entrepreneurial.” What we thought is the best way was to get the Deans and the faculty together, young scholars and senior scholars together, and so the structure of the programme is quite different.
The substance of the programme is also very different. We could have spent a lot of time looking at traditional areas of research. However, consciously we decided to look at ‘next practices’, and what is emerging as the new ways of doing things. Therefore, I want you to start with the perspective that this programme is not a traditional academic programme. There is of course a huge academic content, for example yesterday we had the Faculty and Doctoral sessions which were extraordinarily well-attended. Large number of papers were presented. But that is just a part of what we do. A part of what we are going to do is somewhat different. This third part of what hopefully will come out of this conference will be about how do you build new theories, and I think it is quite important for us to ask ourselves – “do we have theoretical underpinnings in our field which are appropriate and adequate, or do we have an opportunity to rethink?” One of my colleagues at Michigan calls it ‘disciplined imagination’, which I think is a very good way of thinking about theory building.
I believe we have taken imagination out of most of the research and have only kept the discipline part in. I would like to suggest that we better rebalance - a little bit of imagination and a lot of discipline. So, rigorous research does not exclude creative research. I also believe that like managers, we too may have a forgetting curve as a problem. Sometimes forgetting is as important as learning, and I would like to suggest that this gives an opportunity, at least for us, to re-examine the forgetting curves. Finally I think this Conference is about building a new eco system for research. It means bringing people from around the world together in a new location so that we can build a eco system that spreads around the world for creation of knowledge that is not primarily dependent on North American/ European views about what management can be and should be. All these, I think, makes this Conference somewhat special, and I also think we are going to approach the Plenary Sessions in a very interesting sequence.
The first panel, which I am going to chair, is going to look at emerging markets as a source of innovation. Every time I say ‘emerging markets’ read Indian markets because that is what I am going to focus on thought a lot is happening in China and Brazil which are equally interesting .
Hopefully, during the Conference, we will ask ourselves, individually and collectively as a society of scholars, as to how do we advance this research, what should be our agenda, personal agenda as well as the agenda for the scholarly community. Sandwiched in between we have the Deans Conclave, and I think it is very important that we pay attention to it because their charge is to look at their future of management education and the future of management research, I think the Deans are an integral part of shifting the focus if we need to, and I believe that their contribution to this Conference, their encouragement of the faculty to be more innovative and creative, as well as the support structure they can create, will go a long way in shifting this field, and all the fields of research. I am extremely happy that we have had a great luck with the Deans, and so many of you have showed up. I am particularly grateful for your presence here.
I am going to start with few simple ideas on why India is becoming a laboratory for new business models. It is a fairly simple set of ideas. India as you know is resource constrained. Therefore you have to innovative, there is no way you can do things if you are resource constrained and at the same time you have high aspirations about what you want to do. Resource constraints can be everything from skills, capital, infrastructure, the litany is long. Capital constraints and resource constraints have forced Indian companies to think very differently about capital intensity, very differently about cost structure, very differently about how to have logistics when the roads don’t exist, or if they exist they are in poor condition. So, there has been significant amount of innovation in this area. Second is the fact that 800 million Indians live in poverty. You could ask the question- should business worry about this issue? Can business use this as an extraordinary opportunity for doing well and doing good? Can the poor become an extraordinary source of productivity, innovation and growth? I think India is slowly proving that it can. You will hear from the CEOs present at this Conference how much their growth and their success have been based on looking at the Bottom of the Pyramid as a source of innovation. We sometimes underestimate how critical democracy in a free society, and more importantly civil society, is for innovation. And I think India has it in abundance. Sometime we don’t like what civil society says, but it is an integral part of creativity and innovation. In fact I would argue that NGOs are the proxy experimenters in this country. They create experiments, they understand the local markets, they understand and create trust. So, companies in this country have an extraordinary ally if they know what to do. Last, is huge market of young people here, all aspiring consumers wanting new things, wanting world class standards, and at the same time at low and affordable prices. In other words the Indian consumer is forcing fundamentally a different value proposition. They say, “I want world class product at Indian prices, figure out how to do it, that is your job.’ And therefore there is tremendous amount of innovation. Add to it globalisation. India is connected to the rest of the world, and rest of the world is increasingly connected with India, not just in IT, not just in pharma, not just in automotive components but it is a wide variety of industries and in the flow of knowledge of ideas.
I think we have a vibrant private sector as you all see. We have 15 CEOs from private sector today and tomorrow. You can make the judgement yourself. Connectivity is changing the character of India, character of everybody whether poor or rich, urban or rural. How they live, how they work, is changing dramatically and access to new technologies and the creation of new technologies inside the country is changing. So the innovation engine, the entrepreneurial engine, inside the country and the capacity to build new business models are driven by some fundamental forces that is going to stay here for a long time. I do not expect that in the next 10 years, the Bottom of the Pyramid community is going to dramatically alter. There are still going to be lot of poor people. It means a lot of pressure for new product and services, lot of pressure for new production opportunities, and income generating opportunities, and so it is going to be very good.
I thought it to be useful to look at price performance envelopes in just telecom, computing, semi conducted industries, just to look at what the change has been like. If you look at transistor chips, degrees in the size of micro devices, computing part, you can go down the list yourself, essentially what I find fascinating is very few people thought that today you could have 8 giga bits in this and also that it will be less than 10 dollars. This has a huge implication - for the first time in human history advanced technology solutions are not the private privilege of the rich. Everybody in the world can have advanced technology solutions. This means the world is levelling in terms of technology, access and technology use. We can create very sophisticated products at extremely low prices for the entire world and the perfect example of that is cell phones. 3 to 3.5 billion people are already connected, 4 billion will be connected in the next 5 years. That is extraordinary, first time in human history, and therefore we need to celebrate this. So the motivation for building disruptive business models exists in this country. There are big and new opportunities, and the good news about India with 1.2 billion people is that you can take any business, and there is a market here. Yesterday somebody asked me whether there was a business for diabetes here, because it is a poor country. I said, “ you will be amazed, 45 million Indians are diagnosed to have diabetes and the number is likely to go to 70 million”. Now that is a good market, and it is the same for cardiac disease. So there is a lot of market for everything, whether it is a disease or products to sell or to buy. The global trend and consumer expectations create the opportunity to build disruptive models.
What is a disruptive model? I will at least take a shot at giving one definition. According to me, it must radically alter the economics of the existing industry - that is the first concern. Does it maintain or improve functionality? I prefer it to improve functionality and at the same time change the underlying economics. Does it make it difficult for incumbents to follow? – that is the third question. The fourth is, it sustainable, is it built on logical internally consistent principles, and finally does it enlarge the size of the market. Those are 5 very simple tests.
A good example of whether it radically alters the economics in industry , cell phone in India is a perfectly good example, does it maintain and improve functionality is the IT and ITEs industries. Does it make it difficult for incumbents to follow - Generics was a perfectly good example. Not and Pfizer and Mark did not know that generics are taking place. They could not, given their business model, react. If they reacted to generics they would have cut their own profit engines. So for a long time Indian pharma industry went below the radar screen. Not because people did not know what was going on, but because they did not want to destroy their own profit engines. Is it sustainable and consistent? A good example is single Surf and sachets. And finally does it enlarge the size of the market - health care in India, remote diagnostics, remote delivery of world class healthcare, which has just started, whether it is emergency management, whether it is health management, whether it is tele-medicine, fundamentally enlarges this scale and scope of the market opportunity. So we are going to hear a lot about this and I think this is just a simple test, I am sure given the audience here, each one of us can come with our own test.
I just thought it is a good start with one set of ideas on what a disruptive model means, at least for me. First is that almost all disruptive models use advanced technology, very interesting advanced technology solutions. Second they are highly specialised and they have scale. You have to think in 50 million , 100 million and 200 million, in large numbers. I don’t think it makes any sense otherwise. We have to think about logistics, both information and physical logistics. Tremendous amount of collaborative capacity and not individual brilliance is needed. You need to think how do you partner, how do you collaborate with people who are dissimilar, and different from the way you are, how do you leverage unique assets that you may have, not necessarily money, but unique advantage that you may have. Lots of time we do not spent much attention. We think in terms of cost plus profit equals price, implicitly or explicitly. If you want to open these markets we have to start differently. We have to start with affordable price minus profit must equal to challenge cost. That is how we get fundamentally new price performance. About constraint innovation, there is lot of literature and innovation about ‘remove constraints’. I am going to argue on that. If you want to participate in these markets you have to start with constraints, and you have to accept and embrace constraints, and then innovate within those constraints. And here I must mention that India provides an extraordinary opportunity. If we think of inclusive growth including a billion people in the organized sector, we have to learn to do more with less, for more people, that is a very different way of thinking, than to say how can we do more for less, may be we will figure this out, but how do we do it for more people is an interesting question. So why is it so interesting, just taking one idea of changing the price performance equation? We tend to look at the Bottom of the Pyramid which many people worry about, the aspiring middle class and of course the rich. But if you apply what is going on in India - a 30 dollar cataract surgery , 35 dollar DVD player. 30 dollar cell phone, less than 1 cent per minute of cell phone time, 1 cent shampoo of Pantene or Sunsilk, 2000 dollar car called Tata Nano, 20 dollar hotel room called Ginger - they are fundamentally collapsing the pricing performance equation .
I leave it to you to ask the question to figure out that if they are doing it here, are they going to do it just here, or are they going to come to the United States or Europe, and to Japan. If we all think what is happening in India is not relevant, I say better take a look again. What is happening here is going to come and create fundamentally disruptive innovations. When you listen to ICICI’s growth overseas, without a single branch, or very few branches, you will find there is a way to do it using technology and low cost structure. So emerging markets may be a new source of efficiency and break through.
Access, awareness, affordability and availability are the key constraints. Re-defining what the boundary of the firm is, and thinking about eco systems, rather than individual firms, may be an interesting way to create new opportunities. Maybe we have always thought that developed markets will create the innovation, and hopefully over a long period of time, it will flow down to emerging markets. Maybe that will still happen. United States will be an extraordinary fountain of innovation and new businesses and so will Europe and Japan. But maybe some of them will go from emerging markets to the developed markets. In other words the world might be becoming a little bit more fair and level. I also believe that multinational companies may be learning a lot about how to change price performance relationships, how to build low cost high quality component and services, how to build hybrid technology, lean management , how to build new markets and not serve existing markets, deskilling of work, how do you take people who are not credentials, who are not engineers, but high school graduates, how do you teach them skills, not doctors but high school graduates, how to teach them the protocols so that they can perform functions extremely well, new forms of governance, and certainly distribution and logistics.
Tomorrow when you listen to the CEOs of global companies, who established multi nationals, and are doing business in India for the last ten years, you will see that they already assimilated many of these lessons, and they are exploiting it for global competitiveness. I know some of you will call it as it is all based on anecdotal evidence. But I can say that my work has been based on anecdotes evidence. If it is so obvious, why is it so hard to recognize. I think there is a simple reason. Access to new science, new technologies, that is not a secret. Problems based opportunities, or healthcare education, that is not a secret. But if you are socialised in a certain way, if you have standard operating procedure, which I think all of us are subject to, either as a company or as an academic institution, the socialisation of the academic community may reduce our ability to perceive this as a fundamentally new opportunity, just as managers take a long time to understand how these opportunities can be understood and leveraged. In the United States, at least for companies, low growth, denominative management, polite way of saying restructuring, is denominative management, which is what we do. But if you want to change it, we need to ask how do we reframe the mindset, the opportunities are there. If you want to focus on growth, value creation, vitality, social legitimacy of large corporations, then we need to say what is the new frame of reference, and why is it so important that we as academics and scholars focus on what is the nature of the lens through which we see the world. I believe information is always there, more so today, but we are the one who create the implicit theory, sometimes implicit sometimes very explicit theories. We create lot of analytical tools, frames of reference, and therefore we are the creators of the dominant logic. Therefore we create the inference engine that managers use to create organisational processes, resource allocation routines, people management and so on. This is fine when what we are studying, the map that we are using, reflects the territory. But when the territory changes, if we apply the same theoretical lens, we are likely to get very different prescriptions that are inappropriate, inadequate, or may be both and therefore you have a crisis.
You can look at the crisis today, whether it is in GM or Ford or in financial crisis, you ask the question what were the theoretical lenses through which they saw the opportunity. It is very easy to say nobody saw it. Therefore it may be time for us to rethink the lens and I believe that is what we do as researchers, that is our job. Therefore we need to at least have some candour in asking ourselves, “are we applying mindlessly the same theories because we know them or are we willing to challenge ourselves as a community”? I hope the conversation starts, and may be we come to the conclusion that we have all the right theories, but the managers don’t apply them well. That is one possible conclusion, which is an easier one to make because the problem is in another fellow’s hands or alternately we may also have to think with the managers and that is why I think we have here the managers, academics and the Deans together, so we can collectively ask a simple question – ‘how do we reframe the lenses through which we see the opportunity and the problems?’.
As a participant, for the next 2 days, I think it would be useful to have curiosity about the new phenomena that you are going to hear on how are people thinking about creating new opportunities for themselves. Focus on new approaches. I know we do lot of work, on current practices, best practices, may be it is a good idea for a little while to think about ‘next practice’, not just best practice. If everybody benchmarked each other as managers on best practice, they will all gravitate towards mediocrity. So it is good to think about next practice. Weak signals and next practices assume we have to spend more time looking for the new - what is our intellectual curiosity, why those work differently focus on impact, it is not loosing rigour, but understanding how to create impact, building a research connection, how to collaborate with people in India and the United States and Japan and certainly in Europe, how do we build this multi-layered relationships so that we can study these problems not from a single lens but from multiple lenses, how do you think about strategy as innovation and certainly tighter academic business connections.
I also think, as senior faculty members, and many of you share the burden that I feel, that we must build on our next generation of academics. Succession planning for this community is quite important, therefore we spent a lot of time bringing almost 100 young scholars, doctoral students, just out of the doctoral programme to come here, because our ability to continue our work depends on how well we support them and nurture them and mentor them, not make them clones of ourselves but, create a vibrant community that will spread the message. I was in Poland attending a huge UN conference on sustainable development. 11,000 people from every country in the world, and it is fascinating for me that the underlying theme implicit is sustainable development means useless. My mind is somewhere else. I already crossed that phase. I want to know how to get more for less for more people. That includes sustainable development, that includes cost, quality , speed, and scope. That is the opportunity that we have as academics to change the conversation, to take people to next frontier of what is possible, how to include 5 million people into the modern economy. Therefore we have justice and good life together.
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