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Will B.PAC and iSPIRT Transform Urban Politics & the Software Product Industry Respectively?

While we usually focus on product, process and business model innovation as the main facets of innovation, some of the most impactful innovation can be the result of new organizational forms.

Take the case of India’s white revolution. This was driven by a unique 3-tier structure of organizations – the farmers’ cooperative at the village level as the basic organizational unit; a district-level federation of cooperatives with milk processing and marketing capabilities; and a state level apex body with brand and product management capabilities. And, behind this structure were larger organizations like the National Dairy Development Board at the national level that channelizes resources, support long-term investment activities, and accesses new knowledge and inputs. This arrangement takes advantage of flexibility – when required NDDB can look like an extension of the government, when required it is an independent body working with farmers’ cooperatives. This flexibility has helped it manage in a complex environment.

Last week saw the birth of some organizations nowhere as complex as the milk production structure, but with the potential to have major impact.

B.PAC

NR Narayana Murthy launched the Bangalore Political Action Committee or B.PAC as it is being called. This is the first time we are seeing an organization christened as a PAC in India, though this is a common term in the US. I presume this similarity is not just a matter of coincidence. PACs in the US are not political parties, but organizations created to advocate and support a particular agenda. The B.PAC has similar objectives. At one level it aims to restore the quality of life of the city of Bangalore. But at another level it is a pressure group for more political power to cities which are the value creation engines of a modern economy.

The B.PAC’s initial agenda is to enhance urban (read middle class, educated) voter enrolment and voter participation. They also promise to support candidates who back their agenda (new forms of city government, more resources, better urban planning, etc.) In the forthcoming assembly, parliament and municipal corporation elections. Subject, of course, to their meeting other criteria like no criminal cases against them, no record of corruption, etc.

B.PAC has been formed by a group of resourceful and successful individuals who have for long been expressing their dissatisfaction with the state of affairs like Kiran Mazumdar Shaw and Mohandas Pai. It represents their response to many of the issues they have raised in the past falling on deaf ears, and their inability to have a sustained impact on the political system.

Of course, the “involvement” of successful industrialists in efforts to improve Bangalore is not new. During the chief ministership of SM Krishna (1999-2004), the Bangalore Agenda Task Force was created under the chairmanship of Nandan Nilekani. The BATF tried to play the role of a coordinating body, creating a platform for different civic agencies, citizen groups and the state government to come together. While the BATF did manage to do some of this as well as have new bus shelters and toilets built, it was a body without any political legitimacy and was hastily disbanded after the Congress lost the 2004 elections in the state.

Newspaper reports indicate the existence of a similar attempt in the last few years under the chairmanship of Rajeev Chandrashekar. However, this one has been low key, restricting its role to that of a think tank. But again the long term impact doesn’t appear to be substantial.

B.PAC is an interesting development because it shows an inching of rich, successful “middle class” entrepreneurs towards electoral politics. Though apolitical in the sense that it is not a political party, B.PAC clearly has a political agenda. It represents a growing realization that technocratic approaches can’t solve India’s problems. It also suggests that the efforts to create alternate public spaces such as those tried out by Janagraha or the BATF itself could have only limited success. The creation of the B.PAC is a welcome development, for the next logical step will be immersion in electoral politics. I hope to see a party such as the German Green Party emerging out of this process with the ability to push urban issues at the national level.

iSPIRT

The second organizational innovation in the last week was the creation of iSPIRT – the Indian Software Product Industry Round Table. It came into the public view amidst controversy with a Times of India headline announcing it as a breakaway trade body from Nasscom. iSPIRT’s spokesmen were quick to assert that the organisation is an industry round table (not a trade body), that it will not offer membership, and that the founders will continue to be part of Nassom (Disclosure: I am a part of the iSPIRT Founding Circle).

I am excited by the prospect of iSPIRT because of the new activities it is promoting. An important role it will play is to act as a market maker. India has lakhs of small and medium businesses. These businesses are important sources of employment and economic growth but they face a major challenge of maintaining their competitiveness. Information technology has the potential to enhance the efficiency of these businesses. However, these SMBs often lack the ability to evaluate vendor proposals. They are price-sensitive, and risk-averse as far as IT is concerned. Burnt by past experiences, they are wary of making fresh investments in IT.

Under its iSMB initiative, iSPIRT plans to bridge the gap between domestic software product vendors who have relevant solutions and SMB customers. ISMB will study different verticals, map needs, and certify products meeting the vertical’s needs. Only product companies that have customer dispute resolution mechanisms in place will be accredited. Product companies will get feedback on where their solutions fall short of customer requirements. This initiative is designed to bridge the trust deficit that exists today between vendors and users.

ISMB will build on the positive experience of CIO Connect, an earlier effort to bring Indian product companies and large Indian corporate IT users together.

Both B.PAC and iSPIRT are Market-Makers

Though in theory markets provide the opportunity for sellers and buyers to come together, information asymmetry and high transaction costs can prevent markets from functioning efficiently. Initiatives like ISMB and CIO Connect help smoothen out these market imperfections.

B.PAC can also be seen as a market maker. A democratic system in which a whole chunk of voters does not participate will not reflect the needs of different interest groups accurately.

We tend to expect government to combat market failure. Both B.PAC and the ISMB initiative of iSPIRT represent voluntary, community efforts to do so. I will watch both these organizational initiatives with interest.

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Re-positioning and Re-imaging India

Over the last year or so, the image of India, like the Indian Test team, has taken a beating. The halcyon days of India Shining, of India Everywhere and the world’s “fastest growing free market economy” are now over; the brand-builders and spin-masters are not able to conjure up the magic of old. Instead, we have the picture of a struggling economy, just chugging along at barely over 5% a year; simmering social unrest fuelled by a hugely inequitous society; scam-a-day revealations of corruption; a divisive polity and – certainly till recently – an indecisive leadership. Many feel that if BRIC is the new power-house of the global economy, the “I” in it should now mean Indonesia, not India.

Yet, any attempt to write-off India may be, as Mark Twain said about false reports of his demise “The report of my death was an exaggeration”. After all, the fundamental underlying factors driving the India economy have not changed: demographics, a huge domestic market, an extensive education system with a sufficient topping of high quality, a thrifty and hard-working population, and a strong institutional base. However, converting these potential advantages to real economic benefit requires appropriate action.

The gains of a proportionately large young population, the “demographic dividend”, can be reaped only if they are imparted sufficient education and trained in skills that the economy needs. While recent years have seen a major thrust on education – through both the Right to Education at the school level and a huge expansion at the university level – and an ambitious skills development programme, their results depend on efficient implementation. It will not be easy to simultaneously achieve the goals of expansion, equity and excellence. The veneer of a few institutions producing high-quality professionals will no longer be sufficient, especially in an evolving, globally-competitive market for goods, services and ideas. We will need to be flexible and innovative not only in content and pedagogy, but also in the administration and structures of the education system.

The advantages of a large domestic market are currently reduced by regulations and structural barriers, inhibiting the free and easy movement of goods across the country. These include barriers to movement of agricultural commodities, octroi, and too many and inefficient toll collection points, causing unnecessary harassment and delays. Poor infrastructure slows movement. The introduction of GST – much delayed, already – will certainly ease the numerous tax-related obstacles and provide a big boost to the economy. Similarly, changes in the APMC regulations, and better management and use of technology at toll collection points on highways, can lower costs in the movement of goods.

India’s institutional base – a strong and fair legal framework and an independent judiciary, in particular – have long been projected as major strengths and a comparative advantage. In addition to the Election Commission, independent regulators, including SEBI and RBI, are much respected around the world. All these contribute to business confidence, especially amongst foreign companies and investors. However, the gains of many years have been endangered by retrospective tax laws, cancellation of contracts/licenses which had been entered into within existing laws, and perceptions of government pressure on regulators. Institutions and their credibility are built over decades; destroying them is, unfortunately, much faster and easier. Government needs to tread with caution to sustain and build on the respect that our institutions command overseas.

Globalisation has been driven not only by trade and investment, but equally through bonds of religion and ideology, which – aided by new communication technologies – transcend national boundaries. The battles of today are for the hearts and minds of people rather than territory. In a world where wars between countries have become rare, “soft power” has become far more important. While recognizing the importance of the economic dimension, the image of India needs to go beyond that. India’s unique advantages lie, in fact, in other areas.

India has substantial soft power assets: its rich culture – including films, music, yoga and spirituality – cuisines, historical heritage and natural beauty. These are a powerful magnet for people around the world. Of late, the country is also recognized as a hub for innovation. In the developing world – and, often, elsewhere too – its democracy and electoral process is highly regarded. A large number of countries admire India’s higher education system, despite its many flaws, and the top institutions are held in awe even in the developed world.

Leveraging these advantages can position India strongly in the mind-space of the global community. This, however, demands strong and pro-active action by both, government and industry. Image building without substance is like a soufflé: hot air will hold it up, but it will soon collapse. Therefore, in each area, concrete steps on the ground are necessary. In education, for example, the high drop-out rates and very poor quality at school level need to be quickly remedied. Higher education calls for major reform. In addition, a large scheme of scholarships (say, 5000 a year) for foreign students for study in top universities and professional institutions will engender much goodwill and be an investment for the future (foreign students develop a special relationship with the country; Suu Kyi is but one example). Similarly, promoting Indian cinema, music and tourism abroad can lead to great benefits. An independent global TV channel – aimed at viewers beyond the Indian diaspora –  which sees world events through Indian eyes can be another contributor.

It is time to re-image India, going beyond the purely economic. A private-public partnership, like the Brand India Fund, could be the best means. Such re-positioning will certainly provide business and economic advantages, but will also give India a greater share of voice resulting in geo-strategic benefits.

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NPC 2012 starts off on a high energy note!

Wow, what an energetic first day of the NASSCOM Product Conclave 2012!

The ninth edition of the NASSCOM Product Conclave began with an opening address by the two co-hosts, Sharad Sharma and M.R Rangaswami who welcomed delegates and introduced them to the theme of the event this year, which revolves around the emerging technologies of Cloud, Mobility and Big Data. Some important points that Sharad Sharma made included highlighting the fact that till a few years ago, product development was more of an underground movement. He also pointed out that product entrepreneurs are fundamentally different from other entrepreneurs in the way that they are the anti-thesis of the traditional client-server model as they are literally disruptors who are focussed on transforming the lives of their customers totally. He also shed some light on the problems that the tech product industry faces today that prevent many people from seeing the complete potential clearly, such as the generational shift leading to a disconnect. In reality, the product industry will accelerate exponentially — and according to Sharad Sharma — can even lift India out of poverty!

The two co-hosts were then joined on stage by the President of NASSCOM, Mr. Som Mittal, who continued the flow of thought by saying that today, entrepreneurship is being celebrated across the world and in India. He pointed out that there are a number of entrepreneurs today who are open about the fact that they have tried and failed previously, but are willing to try again. The technology buyer is also changing, as this buyer is excited about finding solutions for the real problems that he or she faces.

M.R Rangaswami then gave the audience some insights on why the Indian tech product industry is poised to grow at an accelerated pace. He pointed out that many product entrepreneurs come equipped with enterprise experience, which is invaluable. There are also 900 million mobiles in the country which present an immense opportunity for product developers. The third aspect of this fertile product ecosystem is the emergence of cloud technology that improves accessibility — you can be sitting in one corner of the country and still market your cloud based products to customers at another end.

Did you attend Day 1 of the NASSCOM Product Conclave 2012? Which sessions were your favorite?

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Software Products Industry: Transforming India at Large

In my mind transformation is something that takes place when there is a significant change that happens and a whole genre of populace move from one condition or state to another. It is palpable, widely felt and very tangible right down to the grassroot level. One such occurrence that comes to mind is the Indian Railways reservation portal which was launched a few years back where millions across the country suddenly had the facility of bypassing greasy touts and getting a seat on a train of their choice in an honest way.

I believe another such transformation is already being felt. The phenomenon is criss-crossing the country like never before. Suddenly from the bylanes of Indiranagar and Koramangala in Bangalore and the swank office blocks of the NCR region, not to mention localities like Aundh in Pune and other such places, a breed of software product entrepreneurs are willing to stand up and be counted. But again, mistake me not, these entrepreneurs do not necessarily come from the Tier 1 and 2 cities (as demographers like to classify) but indeed from cities like Belgaum, Udupi and Bhopal, Agra, Jalandhar and Coimbatore and so on.

These new breeds of entrepreneurs are not those who have a blueprint in mind but have actually launched a software product of their own because they have identified a need in the market. These needs are not necessarily easy opportunistic needs that some early generation product companies took but those which require a sound architecture and robust package (including pricing) to positively influence the market. So why am I excited?

The first undeniable fact (and Zinnov says so, not me) is that there are about 100 million lives being transformed across 10 million SMBs in the country. To put this in another perspective, this is virtually like CK Prahlad’s “Bottom of the Pyramid”. While the software industry has been renowned for its transformational activities among the Fortune Global 2000 list, this is a bottom up revolution.

Secondly, these recently started software product enterprises offer job opportunities not far from “home”. What I mean here is that no longer will engineering graduates have to uproot themselves from hearth and home to travel across the length and breadth of the country to the large cities in search of employment. There is already evidence of companies in towns which have a population of less than a million who have demand for such skills.

Thirdly and most importantly, these software product companies have mushroomed because of a demand that has arisen from manufacturers. Small entrepreneurs, retail enterprises, cooperative banks and a variety of other organizations have made it a point to adopt best practices that once seemed to be the preserve of only the larger conglomerates. Efficiency is the buzzword down the enterprise chain and the attraction to software products has only become greater given that it is often available on a “pay for use” model. Very often the software could come bundled with the hardware at an even more attractive price. What more could a customer ask for?

Just consider this. If a pickle manufacturer in Jaipur can streamline his inventory and manage his complex distribution and invoicing using a software product that is made locally and sold on a SaaS model and for every kilo of pickle he retails he saves 20% of the cost because of efficiency and is able to achieve lesser wastage in the process because of better inventory management, then why would he not consider using local software that is easily accessible and where service is only a call away.

The transformation has already begun and there’s no turning back.

This is part of a series and watch out for the next one.