Using innovation to do business in India

Anu Chitrapu is right. India has been a lot in the news lately because of the World Economic Forum and the visit by President Bush to India. And it is very encouraging to hear that the President appreciates the forces of globalization and how they are likely to benefit the whole world. "People do lose jobs as a result of globalization and it's painful for those who lose jobs," the President said and strongly defended the outsourcing of American jobs to India as the reality of a global economy. He added that the US should instead focus on India as a vital new market for American goods. Which brings me to something that I want to talk about - Innovation!

Finding business opportunities in India

We in the world of investors, venture capitalists, and entrepreneurs tend to focus so much on the ~300 million people (the so-called Indian middle class) that we overlook the rest of the population (~2.5X of this number). In my opinion, any idiot can sell to the Indian middle class by treating it as just another market segment that happens to be growing at 3X the US GDP growth rate. These people speak/understand English, desire American products, are seeing huge growth in disposable incomes, and are ready to spend it on consumer goods. But where is the innovation here? Where is the value created? In no time, India too will become like the United States (price-based competition in every sector leading to erosion of profits) and if there was no value proposition to begin with, your Indian business may be in trouble. We all know what happened to the so-called Asian Tigers.

Need for new business models in India - only true innovators will create shareholder value

What will distinguish the "me-too" businesses from the true innovators are the new business models are:

1. Products and services that can be consumed by a broader section of the Indian society, not just the middle class.
2. Offerings that are less susceptible to commoditization.

And both these elements of the business model can only be achieved if we wear our "innovation hats" and think creatively about a new value proposition.

So when President Bush is challenging American companies to stop fighting globalization and see it as an opportunity for innovation, he is alluding to cell phone companies that have made cell phones affordable to the Indian masses or the companies that are trying to sell the Rs. 10,000 PC or the Rs. 100,000 family sedan.

I am hoping that as we delve into these issues at TieCon East 2006, we will get an opportunity to hear about some new business models. In other words, how do we leverage innovation to create more compelling value propositions.

- Posted by Jay Dwivedi