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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November 23, 2007

"Can lean principles help product development?"

by Ajai Vasudevan, Automotive Solutions Practice Leader

In response to my earlier post on automotive industry, a reader asked the above question.

I think, at a level of abstraction, the basic lean manufacturing principles of abolishing waste (muda) apply to Product Development as well. However manufacturing processes are largely unidirectional and recurring while Product Development processes are iterative and are to a certain extent unique for each new product. Hence the tools and methodologies for identifying waste and addressing it have to be different. Of late a number of good books have emerged on the topic of lean Product Development that illustrates some pertinent tools and methodologies. The Lean Enterprise Institute of MIT has also conducted copious research on the topic. So we can expect more excitement on this topic in the time to come.

On a related note, we are seeing the adoption of lean methodologies to software development emerge very quickly. Drawing a parallel between product development and software development, we can definitely see the trend increasing in the near future where components of lean will merge with existing development methodologies.

Another core area of merging of these principles is the adoption of agile methodologies to drive consistent improvement (Kaizen) and we believe all these streams will eventually merge in the near future.

 

November 9, 2007

Updates to Innovations in Consumer Lending...

I am not sure whether some of the regular visitors to this site recall my posts on innovations in consumer lending, back in March of this year. I had discussed the emerging model of peer-to-peer lending, pioneered by firms like Prosper.com.

In the final post of the series above, I had painted a potential scenario wherein peer-to-peer lending sites find a way to securitize and sell the loans transacted; I was happy to read a recent report in the American Banker (read here – subscription may be required) which mentioned that Prosper has filed a registration with the Securities and Exchange Commission in the US to develop a system  enabling people to resell the loans originated through its website.

While I am personally happy that a trend I had predicted has been vindicated by actions in the market, this piece of news is probably very timely, given the credit-market crisis that is unraveling around us. It reinforces the fact that the Internet is constantly driving more innovative and efficient ways for markets to exploit newer transaction opportunities. It also signals the fact that Internet based business models can build resilience in traditional markets.

Prosper’s strategic move may have a limited impact in the short term, given that it currently caters to niche, high cost, individual loans; however, larger financial institutions focused on retail lending need to watch developments in this area very carefully!

November 5, 2007

The Next Big Innovation in the Automobile Industry...

I am not sure I need to contribute yet another piece on the 'greening' efforts of the Global Auto industry, but let me try!

We have read numerous news-articles on the efforts by the major manufacturers to launch hybrid cars over the past couple of years. I am aware of a few models from Toyota that have hit the roads and seem to have found a strong 'green' franchise. General Motors, the largest car manufacturer worldwide (yet, with Toyota nipping at its heels!), has announced grand plans to launch an 'unplug-and-drive' electric hybrid, aptly called the Volt.

I have tremendous respect for the Global automobile majors, despite the plight that some of them are in today, especially in the US context. However, my strong belief is that the next major innovation in the industry is not going to happen out of Detroit or Tokyo. Not even in Pune or Mumbai, where for example, Tata Motors is planning a 'One lakh Rupees' car for the masses (approximately $2500 and rising, at today’s Rupee- Dollar parity!) and is aggressively bidding for the crown jewels of Ford Motor’s portfolio (Jaguar and Land Rover). The next big innovation in the automobile industry is waiting to happen out of Silicon Valley, California!

I read a recent report in the Wall Street Journal (Read here - subscription may be required) about a ‘just-resigned’ technology executive from SAP-America, Shai Agassi, evincing interest in the technology for hybrid car batteries, the power horses which are at the heart of any electric automobile. This article caps a raft of news that I have been seeing and reading about Silicon Valley’s storied venture capitalists like Vinod Khosla investing in such greener technologies.

What has caught the attention of such hard nosed tech-investors and executives, when, arguably, the closest contact they may have had with the industry during their lucrative careers was probably a handful of visits to the luxury car dealerships that dot Silicon Valley?!

I think that these über-entrepreneurs have spotted an opportunity to innovate and commercialize a complex and expensive technology component; they are leveraging their experiences in the Google and Apple world to the more conventional automobile industry. And I do think they will ultimately succeed, given (as I have often argued in my earlier blogs here) that innovation is not just about purist technology inventions, but more about the strategy to build robust business models to commercialize such inventions.

All of us who use laptops understand the frustrations of battery life; I for one cannot understand how the impact of Moore’s Law has largely bypassed batteries that power everything from the ubiquitous laptop to next generation mp3 players and cellphones! I read somewhere that the battery stack required to power an uninterrupted 200 mile ride on a mid size car would probably end up costing more than all the other components of the car put together! Not to mention the space and the cooling capacity it would demand! It is precisely in such a situation that we need the largely inbred automobile industry to take a leaf out of other industries and find out-of-the-box solutions through business model innovations.

In the report in the Wall Street Journal I alluded to above, Shai Agassi , who was till recently a top ranking executive with SAP in the US, talks about a strategy to ‘unbundle’ the batteries from the car itself. The consumer can buy a car and rent the batteries required from another agency which would set up a network of battery recharging stations. Such an agency or entity would make the investment in innovation required to develop newer and hopefully, superior car battery technologies and derive payback through innovative, ‘pay-as-you-go’ revenue models.

We all know how financial innovation has made ownership of cars so affordable to consumers; extending that concept to leasing or renting hi-tech batteries would unleash more creativity and, in my opinion drive faster adoption of relatively new or unproven technologies. Further, unlike a car lease or a mortgage payment, one cannot drive the vehicle if the batteries are not charged, which creates an automatic incentive for the owner or driver, not to default, while adjusting travel needs to the money one wants to expend!

But wait a moment – why is this concept sounding so creative and cool to me? One always paid for Gas (Petrol) to refuel one’s cars, based on how much we drive, right? So what’s the big deal here?

The big deal is the fact that someone is thinking hard on how to unbundle key, critical components in an automobile and assign different ownership (and hence, risk-reward-payback) models to such components! Today it is for batteries, tomorrow it could be for say, an innovative internal combustion technology engine that fires up on a Gas-substitute. The possibilities are enormous and it requires people from outside the traditional four walls of an industry to come up with such innovations! I am keen to hear from you all on what you think of this, while I go and take a test drive on one of those hybrid cars!