The business world is being disrupted by the combined effects of growing emerging economies, shifts in global demographics, ubiquity of technology and accountability regulation. Infosys believes that to compete in the flat world, businesses must shift their operational priorities.

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December 22, 2006

Thoughts on Innovation

by Satish Bhat, Engagement Leader, Infosys Consulting

Innovation is a journey and not a destination.  The moment you feel that you have innovated, you are no longer innovating.  This notion is in line with the notion of “Excellence” so eloquently articulated by Barkha Dutt, chief guest at the Infosys 2006 Awards for Excellence.

Those sitting comfortably "in the middle" are not likely to innovate.  Innovators tend to be either at the cutting edge where they are proactively deploying resources and creating mechanisms to innovate or they are so deep down the drain that they have to innovate just to survive in their industry.
 
Every innovation does not have to be a blockbuster innovation.  When several smaller innovations come together, they could have a collective impact that is bigger than the sum of the parts.  We see that on the automotive dashboard all the time.   All the small technology innovations by the various tier-1 manufacturers and their suppliers who make the components of a dashboard come together to form a dashboard that is intuitive and ergonomic.


Fear of failure is a big detractor on the path to innovation.  The organization must emphasize that a certain percentage of attempts to innovate will fail and that is OK.  Otherwise, the fear of failure will create a significant barrier to innovation.

Introducing Satish Bhat

Let me introduce Satish Bhat, who will be sharing his thoughts on innovation.

Satish is an Engagement Leader with Infosys Consulting and is part of the core team developing the ideas, tools, methodologies and solutions under the Think Flat initiative.  Satish has more than 15 years of experience in assisting a wide range of clients, from startups to conglomerates, with the development of their operational strategies.  He specializes in automotive, airline, hi-tech, consumer products and retail industries.  His consulting expertise includes pricing optimization, order-to-delivery optimization, customer and product portfolio analysis, marketing, supply chain, and eBusiness strategy development. 

Satish holds an M.S. in Industrial Engineering from Louisiana State University and and MBA with Honors from Universtiy of Chicago Graduate School of Business, USA.

December 13, 2006

No one invents anything anymore

As business fads go, “innovation” is the latest craze in business vocabulary. “R&D” is passé. No one does R&D any longer.  No one invents anything.  They all innovate.

And, it seems everyone is doing innovation.  If they're creating new products it is innovation. Product design is innovation. Engineering is innovation.  New technology adoption is innovation.

According to Webster and Oxford dictionaries, innovation is "the introduction of something new; a new idea, method, or device".  The imperative word being "new".

I was talking recently to an industry analyst and this topic came up.  I believe that innovation is often misunderstood as the "Eureka moment".  And at the other extreme, the word is used as a euphemism for almost anything one does, new or not. 

So what does this have to do with thinking flat? Companies that think flat do things in new ways that are different and better than traditional methods.  They are able to introduce products faster not by throwing more people or money at the problem in a brute force manner, but by improving the underlying processes and technology.  They are able to interact with customers better and truly understand what matters to customers (and offer it fast).  And, they even innovate the process of innovation -- co-creating with their customers or even opening up innovation to "anyone" in the world.

December 11, 2006

What drives offshoring: Just low cost or other factors?

Professor San Murugesan from Southern Cross University, Australia, recently answered this question on Infosys' blog on "Managing Offshore IT".  He conducts research in information retrieval, wireless internet technologies and applications, web engineering, IT adoption, globalization and offshoring.

An excerpt:

... In advanced economies such as the US, UK and Australia, there is strong negative perception about and opposition to outsourcing (offshoring). Their major concern is job loss, though other issues such as privacy and integrity of customers’ information and intellectual property take prominence. As a journalist wrote in an Australian newspaper recently, for enterprises that offshore its service needs, it is the question of their survivability, improving their competitiveness and providing better customer service in cost-effective ways, rather than how and where it gets services accomplished. If they don’t offshore some of their services, some of the enterprises can’t remain competitive and sustain their business contributing to further job loss and strain on economy and the society.

Read full post here.

December 6, 2006

How will China impact the global auto market?

Take a mobile phone and make it bigger. Make it still bigger. Now you have got a screen size that makes it a viable competitor to the TV for your entertainment needs. Make it big enough to put enough processing power for your information needs. Make it voice activated. But it is too unwieldy to carry around with you. No problem; if you can’t carry your communication-entertainment-information unit, let it carry you. Make it even bigger and add some wheels to it. Soon, a GPS enabled car, with all its in-cabin communication/information/entertainment implications will be a regular feature on the roads of Japan and Korea. And what begins in any of these places will naturally find expression of scale in China.

Let's look at some numbers. The US consumes about 10 million cars annually. China consumes, currently, about 3 million annually. Given the low level of current penetration, the rapidly increasing infrastructure of global quality, the large population and the increasing wealth of the Chinese consumers, this number is going to increase constantly (the "emerging markets" flattener). How much will it increase to?

 

If we take a 50 year view, and assume a conservative CAGR of about 4% over that period for the Chinese auto market, it'll reach a level of 20 million cars annually in 2056. Cumulatively, between now and then, China will consume about 450 million cars. What about the US? Given the high level of penetration, the relatively static population, and lower economic growth rates, let us assume a static consumption of 10 million cars annually over the next 50 years. That's a cumulative consumption of 500 million cars; roughly speaking, the same as China. The US market is fragmented and mature; the Chinese market is the new frontier, with no clear long-term leaders established yet.

 

What does this mean for the global auto majors? How will it impact the balance of power?

 

The Japanese and the Koreans are strong in the latest generation communication technology. Will it give their automobiles an unbeatable edge?

 

Energy efficiency, either through hybrids or through alternative fuels, will be a key driver. Whichever energy source emerges as the winner, the end of the big-big car and the rise of the small/medium car looks likely. This trend will be further enhanced in China as millions of people who buy a car for the first time will go for a smaller car that's more affordable. Will this be Hyundai's window of opportunity? Does GM"s acquisition of Daewoo give it an entry here? Will the Japanese, the past masters of the small, fuel efficient car, further increase their dominance?

 

Will there be a Chinese company that will combine the potent force of local knowledge, made - in - China pride and fierce ambition to emerge as a dark horse?

 

And what would be the strategy of the US car majors? Can they fight on two fronts? Given that there is more money to be made per car in China, should they resign themselves to a gradual erosion of their market share in their domestic market, swallow their pride and focus on the China market?

If the center of gravity of the supply chain of all auto majors shifts to China completely, how will it impact the market in the US? And will the US players be able to crack the communication code in China, or will they struggle long enough for the Asian players to establish a lead?

 

We haven't even discussed the impact of the Indian market and the European auto industry, but it'll be interesting to watch the flat world phenomena play out on the roads in China.