In their Mckinsey article Creating growth clusters: What role for local government? Julian Kirchherr, Gundbert Scherf, and Katrin Suder make wonderful arguments about governments role of removing obstacles that the entrepreneurs face as much as it should be building infrastructure. They began by bringing out the role of governments at various levels – like at national level it may be to device policies that help create enterprises that eventually lead to job creation. The municipal level of government that actually works at the ground level with the businesses can pick up interesting insights about what is coming in the way of new businesses.
I agree with one of their arguments that the bigger role that governments can play is in removing obstacles that young entrepreneurs usually face. They bring out 4 enabling factors that governments can play a role in creating a business friendly eco-system their regions – talent, infrastructure, capital, and networks. Developing talent means investing in education and right kind of skill development, infrastructure can mean things like Internet availability in countries like India and physical infrastructure where and when needed, capital is well understood and networks is something of a soft factor that needs involving many stakeholders from the society and becoming a nerve centre for the people to come to for any need that can be served.
Network is something that is most important for the entrepreneurs and something that they can not demand objectively. They need mentors to be their bouncing boards, they need problem solvers, they need help in finding right talent ( remember lot of new age companies have no traditional source to go to for talent and its not easy to attract good talent to a startup unless the founder has done couple of successful exits) and most importantly they need references for their initial set of customers. In the above article, authors suggest that governments need to hire talent from the business world, preferably established entrepreneurs to run their startup labs as the pace of doing things in the private and the public sector differ and that can be a deterrent to the startup economy.
Couple up reading this article with an interview with Klaus Wowereit, the Mayor of Berlin on how they scaled up a startup community in the city and their future plans.
Legal systems are designed for set ways of society, establishing rules to follow and listing what is a violation of the rule and what not. However, Innovations can change the way things work and they may sometimes fall within the purview of laws as they exist today or may fall in a grey area – where it is difficult to decide if they are on the right or wrong side of the law. Couple this with the fact that existing businesses / models pretty much are built around the existing legal systems and they usually would not allow anything to go outside the legal limits. What happens when an innovation becomes mainstream that not only disrupts the existing businesses but also requires the laws to be modified accordingly.
Incidentally, legal systems take their own time to change, they do not work at the speed of change in the rest of the environment, so while they understand the new system – debate and discuss its merits and the changes that need to be made, the existing laws continue to be relevant. This gives an advantage in the hands of existing players who can use law to stop innovations – at least for the time being.
I think the legal systems response to Innovations could be a good area to explore.
Here read the case of Aereo, a Manhattan-based startup in this HBR Blog Aereo Isn’t Illegal Just Because It Threatens Broadcasters by Orly Lobel
There is no denying the fact that Google is the most innovative company of our times – to the extent for many others the success of their innovations is linked to Google’s innovation. One change at Google platform and it can impact many fortunes. In the Fast company article GOOGLE REVEALS ITS 9 PRINCIPLES OF INNOVATION, authors talk about 9 things that make Google Innovative.
Now the 15-20% personal time to employees is something that is quite well known funda from the house of Google, but some of the others are not as well known.
I like what they say about focus on the user and the rest will follow. It is akin to saying in life follow your heart and the rest will follow. It also reminded me of what Gandhi ji said about the customer, and we must remember he was a Bania too, is that we must be always grateful to the customer for the business exists for the customer and we are there to serve the customer. This is something that lot of companies forget to focus on and end up focusing on what they can sell to the customers irrespective of whether they need it or not, whether it serves a purpose or not. So, author gives an example of how they chose to focus on the customers even at the risk of loosing some revenue but how it eventually worked in their as well as their customer’s favor.
Another synthesized insight is that there are no obvious doors that the innovation walks in from. It can come as much from the CEO’s mind as it can from a freshers mind or even a user’s mind. You need to open to all the ideas and create an environment that allows these ideas to flow, to be exchanges and to be debated. There should be openness to adapt and experiment with new ideas. I do not think you need formal processes for this but the existing systems and processes should be flexible enough to accommodate new ones.
Interesting article to read and learn.
I recently worked on 15 Indian Business Innovation Case Studies that will be published by Technology Development Board, Ministry of Science & Technology, Government of India very soon. It was a great learning process and I got to speak to some of the Innovators after a few years, as I did stories on them for another publication a few years back. It was encouraging to see some businesses have grown both financially and in their scope while most have built scale. Some new cases came and provided another new business to study.
Here are some of the insights from this study:
- Constant Innovation: Most businesses that had started in last 5-7 years and have reached a mature state now have continues to fine tune themselves to the market and the customers. They started with a premise or a hypothesis, with a market view in mind but they continuously re-invented themselves as they realized the market needs first hand, as they received feedback from customers, as the technology evolved and they set themselves new targets to achieve. At no point in time they let go of their nimbleness and assume that they are right and customer should adapt for them. The ones who did not do so, were no longer on the scene.
- Social Entrepreneurship is a viable business has been demonstrated by many of the new age innovators. There are two ways in which social entrepreneurs engage with the Bottom of Pyramid (BoP) population – One as consumers for the products and services they sell, or as a potential market to be served , and Second as producers where they produce for the urban and global markets. In the first case they prove that people in BoP segment are profitable customers willing to pay for the dependable products and services, that they can use. They can be profitable through economies of scale. In the second case, as producers, they need someone to bridge the gap between them and the markets, take their products to the markets and bring the needs and sensibilities of the market to them. Social entrepreneurs make money while enabling many others to live a better life and by making it a commercially viable venture they ensure the sustainability of the initiative. A lot of them have also demonstrated that it is possible to build scale while working in rural India, in villages across the length and breadth of the country. You need to experiment with the new business models, taking already proven models and tweaking them, you need to learn from the experience, take feedback from all stakeholders and keep on improving it till it makes mainstream.
- White Space: Many new age businesses find a white space in the emerging world, i.e. an emerging need that probably did not exist in the past, or a need that is still emerging but may take bigger proportions over a period of time. They address the problem as it happens and have a major first mover advantage. 20% of the cases I did were on addressing the issue of waste management, an issue that has emerged in the recent past with rapid urbanization and coming up of new types of wastes with it.
- Use of Digital Media: Apart from the ventures based in online world, the use of social media and digital platforms is very limited, though each one of them have a website. Most entrepreneurs though use some kind of PR to promote themselves.
- Technology and Design are the two main differentiators for designing and implementing new solutions that are effective.
Most businesses studies here are somewhere impacting the lives of their customers and partners, and this is what is eventually keeping them in business.
Roger Martin in an HBR article says that ‘You can not analyze your way to growth‘. Basically he is trying to say that you can not predict growth based on the past data. More often than not past data will predict incremental growth only.
For defining exponential growth, you need to have a sense of the customer and an appreciation for what he needs. He gives examples from the FMCG space where exponential growth was achieved by launching new products that made life easier for the user.
I think analysis is a bit over-rated. While data can give you insights, it can give you only what is available between its blinkers. For new insights you have to depend on your instincts and interactions with your customers. There may not be any data to back up your new insights and that is why the element of risk is associated when you go on to address these insights.
Navi Radjou writes at Harvard business publishing about his insight into rural innovations in India following his recent trip to India and his interactions with some of the agencies nurturing these innovations. The comments by Atanu Dey make an interesting reading.