The Digital boost to the Business: A practical approach

Business are looking at Digital as a mean to drive revenues, efficiencies and competitive advantage. 'Digital' could mean different things for different people. For some, its about digitisation and mobile devices. For others its Cloud, IoT and Data Analytics. Digital is not IT. The discussion on Digital is often skewed towards a narrow set to technologies. Instead, the starting point should be the business and then comes the technologies that can be leveraged.

A straightforward approach would be to divide the business into following areas and then frame the digital initiatives:

Customer Offerings: Digital can be a game changer in terms of how a business designs its offerings and serves its customers. 

An entire new line of product based services can be enabled by digital initiatives. There are examples of a water purifier company selling pure water remotely. Consumers can buy the pure water just like a prepaid talktime on mobile.   

Sensors, Digital Material Technology (MIT) and others can improve the physical products itself. 

Various digital technology enablers include Big Data, IoT, Analytics, Augmented Reality, UAVs, Digital Materials and so on...

Processes: Digital innovations can improve effectiveness of processes like design, supply chain, production, maintenance, financial, marketing, HR and administrative.  

Production can benefit from IoT, 3D printing, AR, Wearables, and Robotics based solutions.

Supply chain can benefit from Tracking and Analytics solutions.

Fintech is an emerging area. Serious Gaming, AR, VR and Virtual Simulation technologies can benefit training and design processes. Marketing can benefit from social media analytics, mobility and animation technologies.

Decision Making: Digital can help make decision making at all levels of management more objective and data driven. 

Data visualisation and analytics is a common thrust area. Social media technologies help management keep an ear to ground and also communicate better.

Infrastructure: Digitalising the infrastructure allows the company to get more out of its fixed investments, be it buildings, equipment or IT. 

Smart buildings save money. Digital solutions enable predictive maintenance which can improve equipment productivity. IT infrastructure can expand its horizons to data lakes, remote sharing and connectivity, contextual search, mobility to give the digital edge to organisational working.

Digital initiatives in above areas can be at both departmental level and corporate level. Coherence and synergies between them can be ensured by transparency and open interaction across departments. A core central team can also help coordinate and facilitate such initiatives.

Lastly, there is a behavioural aspect to this topic. There is no ready template for digital business or digital initiatives that a business can simply adopt and implement. Its innovation driven and an intrapreneur skillsets are required to conceive and implement digital initiatives in an organisation.

Indian Aviation: Lifts & Drags

Indian Aviation is gaining global attention with the potential it holds. It is fastest growing and 3rd largest in absolute number of passenger growth. Billionaires growth rate of 20% indicates the potential for corporate aviation. The huge gap in flights per capita (4 times less than China and 40 times less than US) is another indicator of unrealised potential.

The 'Lift' that Indian Aviation is experiencing is more due to favourable econometric factors.

• Growing GDP and GDP/capita
• Income distribution moving towards to middle and high income groups
• Young demographics and increasing working population
• Increasing urbanisation
• Downward trend in inflation adjusted travel cost due to competition driven efficiencies

However, story of Indian Aviation is also of missed opportunities. It missed out on using geographic advantage of India to become a major hub for East-West connectivity in 1990s. More than half of the revenues of foreign travel in & out of India is with foreign players rather than with Indian operators. India also lost out on becoming MRO hub to smaller countries in neighbourhood. India constitutes just about 1% of Global MRO market. 

The 'Drags' on the Indian Aviation are due to policy and structural issues.

• High fuel cost compared to global prices due to taxes (excise, sales tax). Hence, airlines in India are saddled with higher fuel cost compared to their global counterparts.
• 5/20 rule (International operations only after 5 years of domestic operations and 20 aircrafts fleet). This rule delayed the airlines in India spreading their wings globally. Only few large airlines operate internationally. And the rule stifles new entrants with ambitious growth plans. 
• Unattractive incentives for route dispersal to remote and unprofitable hubs. 
• Lack of low cost airports. Lack of alternate airports in busy hubs. For example, Bangalore is not allowed to have its old airport as an alternate airport for domestic LCC. 
• High tax burden on MRO operations.
• Inadequate FBOs for General Aviation.
• Non Acceptance of Bio jet fuel for aviation. Biojet fuel can cut both costs and emissions. In addition, it will stimulate growth in biofuel segment which has links to rural economy.

The above issues stem from years of Govt. indifference to aviation. Aviation unfortunately has been considered transport of elite and its stimulating effect on economy has been ignored. Aviation can speed up the business exchange, goods movement, tourism and overall economic growth. Today commercial aviation caters to a middle class citizen for both leisure and business travel. 

Even if we were to take the corporate aviation which is used by business heads, it helps them save 20% of time compared to commercial airlines and enable them to visit remote places at their convenience. Thats a huge improvement in their productivity and connectivity which translates into faster decision making and business growth.

In India, Aviation is a major employer and supports 1.7 million jobs. Globally, aviation contributes to 3.5% of Global GDP, but in India it contributes just about 1.5%. The 'Lift' from the favourable econometric factors presents an opportunity to derive substantial economic benefit and create jobs provided the 'Drags' are addressed. Or else, it would again become another of many missed opportunities.

Data sources: Airbus, IATA, Frost & Sullivan

Framework for Trans-national R&D strategy

Multinational companies generally tend to have R&D concentrated at their parent company location. Having a closed setup in one place has its obvious advantages in terms of better coordination, efficiency and information security. 

However, multinationals do want to break the mould and connect with and learn from broader ecosystem around the world. The approach though has been more or less ad-hoc,

• captive centres to fulfill an offset obligation or for access to cost effective talent
• sponsoring research in relevant areas 

Some multinationals just do it since other are doing the same. 

A more structured and strategic approach can not only deliver operational benefits but can also build competitive advantage. This blog post would highlight a strategic approach to R&D setup and partnerships in different regions of the world.

A regional R&D strategy would be aligned and in sync with corporate and R&D strategy of the company. And it would have following three objectives as its corner stones:

• Leverage strengths of the geographic region
• Provide advantage over competition
• Build strategic relations/assets for the company in that region

To build the above strategy, a broad based research would be required covering various aspects of the given region. 

To analyse the research data and derive meaningful insights, one could use a matrix layout to analyse and rank on multiple criteria. The outcome of the analysis has to be actionable insights related to the three corner stones mentioned above.

However, a strategy is never complete with an executable plan. Following framework is a good tool to derive and communicate the action plan.

For many companies, decision for expanding R&D outside home location is driven by operational and obligational considerations. However, companies gain to benefit more by treating it as a strategic move and putting more thought and diligence behind it.

Emerging Hyper-local Aggregation markets and startups

Aggregation model of business brings various sellers and buyers on a common platform. Flipkart, Snapdeal, Redbus, MakemyTrip and many more companies have since matured the aggregation model and grown in both valuations and scale of operations.

These aggregators sacrificed profitability to build market share. The nascent e-commerce market and sluggish economy only added to their woes. Soon the long term sustainability of aggregator model came under questioning. But interestingly, the aggregator model is only picking up pace, now in its new avtaar of Hyper-local Aggregation.

New startups have cropped up who are aggregating at the local level of a city or even a neighbourhood. Big Basket is delivering locally sourced groceries at one's doorstep. FoodPanda, TinyOwl, Delyver are delivering food from nearby restaurants. And new players like Grofers are delivering from your trusted shops in the neighbourhood. Then there is Practo who helps locate and rank doctors locally. SeekSherpa aggregates local people who provide tours with real local flavour.

The urban lifestyle is fuelling the demand for such hyper local aggregators. A typical urban consumer has disposable income but not time. They look for convenience and tend to buy experience. It's not the lack of demand but the poor service delivery which can hurt a hyper local aggregator startup. Cracks are already showing up; Cab drivers do not show up, Food orders get cancelled, Low quality vegetables delivered, not enough SKUs. 

Another area of concerns is scale. Can these hyper local aggregators scale up and become unicorns? Or would their growth stabilize at a smaller scale. Unlike Flipkart and likes, these startups are not nationwide. The only way to grow in scale is to replicate their business model in as many cities as possible.

Nevertheless, its encouraging to see new sprouts of economic activity at local levels and should be nurtured. And with creative offerings of these young startups, its certainly interesting times ahead for urban consumer.

Business-model Innovation driven by Emerging Technologies

Business model innovation can disrupt markets over a short period. It can expand markets, reduce costs and even change the competition landscape.

Examples of business model innovation tends to be around clever bundling, pricing, consumer financing and sales channels. However, the purpose of this post is to highlight how emerging technologies have enabled business model innovation.

• A good case in point is Insurance. Connected Vehicle technologies have allowed insurers to provide custom insurance solutions based on vehicle usage and driving patterns/behaviour. 

• IoT (Internet of Things) and Data Analytics are driving Product to Service model. Companies are now connecting to their product remotely and selling the service delivered by the product. For example, iBot Inc (www.iamibot.com/) is working with water purifier makers to sell pure drinking water.

• The traditional manufacturing business model of scale and specialisation is bound to lose its competitive edge to 3D printing. 3D printing technologies can manufacture far more intricate and variety of shapes (Eg: bionic designs), and allow manufacturing to be more decentralised, democratized and viable at small scale. 

• Recently, many technologies have emerged to reduce the size of video and CAD files without compromising the quality. These lightweight media technologies can now enable more cloud hosted and remote delivery business models. For example, specialized training (involving virtual simulation and walk-through) can move out from specially equipped facilities to remote portable devices.

• Emerging mobile technologies are disrupting the website based business models. Today consumers spend far more time on their smartphones and apps. But that's not the only reason why e-commerce companies are betting on mobile platforms. Mobile platforms bring more engaging technologies like searching that coveted dress with just its picture, indoor navigation and assistance in a store, virtual reality based envisioning tools and others. 

R&D and Engg. tend to focus more on product and process innovation. Business model innovation is more strategic and needs top leadership commitment. Hence, new entrants and small companies are often ahead in implementing it while large players struggle with internal approvals and bureaucracy. 

Startups and Corporates: How Goliaths are shaking hands with Davids

Big corporates have realised the need to engage with start-ups for various reasons:

• Access to new technologies to feed into R&D pipeline
• Access to solutions for improving operations and product differentiation
• Find new B2B customers and catch them young.
• Talent attraction and retention
• Attractive investment ROIs
• ‘Speed To Innovation’ 

Engaging with start-ups has its own challenges. The expectations of startups and their timelines are vastly different from those of established companies. The traditional partnership or vendor-supplier models do not fit here. Following are the emerging engagement models:

Incubator: This model is used by corporates to engage with early stage start-ups. The start-ups have an idea, skillset to execute and a working prototype in some cases. Companies incubate the start-ups if the ideas are relevant to the business and provide funds, resources and mentors (both business and technical). The engagement duration is long, about 2-4 years. The successful start-up is either acquired or the start-up team is acqui-hired. This model is more popular with investor communities and industry bodies.

Accelerator: This model is used to engage with later stage start-ups. These start-ups would have a working product/solution and a customer base. An accelerator is a 5-6 months structured program in which start-ups are given space, facilities (equipment, internet, food etc..), funding, mentorship and access to customers. Towards the end of the time-bound program, the corporate has to select the startups and decide on how to leverage/assimilate the outcome. If start-ups adapt their product to corporate's needs (also called pivoting), then they are invested in. A graduation day marks the end of the program and the start-ups are showcased in front of the industry and investor community.  

Partnerships: The above models are structured programs. However, corporates can choose to go for a flexible and open model. The start-up community is regularly scanned in areas relevant to the company. Relevant start-ups are reached out to for further discussions and partnership. In this model, compared to the earlier two models, there is limited opportunity to mould the start-ups to suit corporate needs. The model works fine if the start-ups are potential product/service providers to the corporate.

Strategic Investments: Some start-ups are matured, of high value with high potential to impact the corporate's industry. These start-ups do not need the incubation or acceleration. These are companies of future. Corporates make large investment and pick up equity in them so to enjoy high rate of return and also to remain plugged-in in their development and exercise influence. Also, it lends prestige and visibility as corporates are seen as technology leaders who are thinking ahead.

The start-up ecosystem is highly dynamic and belies the standards/norms that big corporates are used to. Engaging start-ups demands resources and time of the organisation. With start-up ecosystem expanding by leaps and bounds, the huge money pouring in and skyrocketing valuations, no corporate can ignore it. The corporates who have been running structured engagements are open to sharing their experience and resources. The newcomes need to leverage the same while formulating their approach.

Startups and Corporates: How Davids are raising stakes for Goliaths

This post is a precursor to the next one 'Startups and Corporates: How Goliaths are shaking hands with Davids'. 

Democratisation of Research & Product Development

Earlier, New Product Development used to be expensive and hence only big corporates with deep pockets and research agencies were the main R&D centres. With time, new R&D areas and inexpensive ways of working emerged, allowing a person to access and work on cutting edge technologies from comfort of his/her home.

• Software simulations reduced cost and time. One can simulate a complete physical system and run countless simulations at no incremental cost. 
• Software itself became driver for new inventions. Hardware coded functionalities gave way to software coded functionalities. Eg: Software defined radio
• Fabrication became inexpensive with 3D printing. No need for elaborate setup of lathe, 5 axes milling machines etc. One can now order Metal/Plastic printed parts over internet and get them delivered at the doorstep. Going forward even electronics will be 3D printed.
• Open Source has revolutionized access to high end technology. From hardware to software, open source has made them inexpensive and readily available. Eg: Arduino, Raspberry Pi, OpenCV, Octave etc. (visit tindie.com for various open source hardware)

With above developments, R&D is no longer an exclusive club. It is now open and democratised allowing anyone and everyone to participate. For instance, in the field of Augmented Reality, alongside big brand devices like Google Glass, MS HoloLens and Epson Moverio, there are also devices from Start-ups like Oculus, Magic Leap, InfinityAR, Meta, i2i and others.  

Technology start-ups have mushroomed who are developing new products alongside corporates. And there is no dearth of Angel & VC money to scale them up. 

Splintering/Unbundling of Value Chain

Large organisations cover large segments of value chain. And organisations tend to integrate vertically or horizontally to grow. With size, comes the rigidity and constraints. Large organisations are slow in closing performance gaps and addressing new market opportunities. And these become white spaces for startups to enter. Potentially, a large segment of value chain can be split into small segments, each being served by a start-up. This trend is visible in several industries. A good example is logistics industry where the value chain has been splintered by several start-ups. Refer https://www.cbinsights.com/blog/startups-disrupting-fedex-ups/.

Another example is Home Delivery for food items. Delivery at door step is a segment of value chain which is integral part of PizzaHut, Dominos etc. They have long advertised their home delivery to differentiate themselves. But start-ups have emerged in this segment alone, collecting the food packets from the restaurants and delivering it to doorsteps of the customer. The value chain segment of food preparation and its delivery has been split into two and competition just got tougher. 

Further, start-ups generally go after high margin and high growth business. Which naturally puts the squeeze on the high-margin value segments of large organisations. 


In next post, the ways an organisation can address above challenges will be discussed. Stay tuned...

Innovation Multiplier: Building on other Innovation & Invention Bricks

Innovation multiplier is something quite obvious to me. Yet, I am writing on this because I have seen several ideas and prototypes which do not leverage this simple concept.

Many attempts at Innovation start with the technology or concept with which the idea owner is comfortable with. He/she ignores what is state of art in both technology and does not incorporate the same. As a result, the demonstrator or MVP fails to 'Wow' the audience and investors.

For instance, an idea around Augmented Reality using cameras which use the older technology of depth sensing. It constrained the form factor and the quality of the results. 

A solution deployment proposal still leveraging the big black server boxes when the small and sleek computer sticks would suffice.

Same goes for business approach as well. Ideas built on older business assumptions are bound to have average market success and find poor traction with investors. For instance, a detailed proposal on a B2B solution attempting to build an industry data standard for entry barrier. But today when the data can be easily converted into different formats and shared across platforms, creating a data standard would be a futile exercise.

An innovation should leverage all the leading (state of the art) technological and business developments. Even if the underlying technology bricks are yet to mature. Technologies are maturing very fast today, especially when their is a specific business application. And in worst case, its always easy to scale down on technology rather than scaling up.