CK: Next would've been what?

Quite unlike many other management gurus, CK was not a one concept wonder. Every five to seven years he would come out with a blockbuster idea that would change the way people looked at business globally. Be it around core competency and strategic intent, value co-creation with customers, business opportunity at the bottom of the pyramid or his latest thoughts on the new age of innovation where he set out the arithmetic that defined the future of business as N=1 & R=G!

What also stood out about CK was that he was a man who would hardly leave his ideas at conceptual level for the management practitioners to follow up. Instead, he would himself aggressively campaign and canvas for them and seek ways of translating concepts into action on the ground.

That said, I must mention that this piece is not so much about CK the man and what he was, but more about what his next blockbuster idea would've been and about which action agenda was engaging his mindspace.

Last year, while writing an update on ITC e-Choupal for the fifth anniversary edition of his book 'Fortune at the Bottom of the Pyramid', I concluded my piece articulating the vision of eChoupal using a metaphor from physics 'black holes for a green world'. CK, as many would know was himself a physics student and was quite intrigued; we had a long conversation on the subject. My idea was to pursue a pull based model (symbolised by black holes) to achieve sustainable development (symbolised by green world) as against the current approach of "pushing" sustainability that's obviously unsustainable. It was then that he shared his thoughts on how the challenge of sustainability was engaging his attention, and how it could be the new frontier of innovation. He was looking at creating a fusion in a manner that there was no conflict between the developed and emerging nations or business, Government and civil society organisations. Further, synthesising this domain with the BoP space, he was also visualising market mechanisms where poor people produced some kind of positive climate change instruments and trading them with rich nations thereby creating new sources of income for the poor. Alas, we have now missed out on the next blockbuster idea from CK!

On a different plane, CK was in the middle of cascading an action plan on India@75 to see India as a developed nation by 2022. If there was one programme to which he was giving his heart and soul in recent times, this was it! Interestingly our paths crossed on this front too! Around this time he was also guiding the field work of a team of Michigan students to write a case on 'the making of ITC eChoupal 3.0'. CK quickly picked up that personalised crop management advisory envisaged under eChoupal 3.0 was aligned with the core theme of 'the new age of innovation' i.e. servicing one farmer at a time (N=1) taking the unique circumstances of each one into consideration, and by leveraging the capabilities of multiple firms and resources (R=G) as against the traditional method of one generic solution serving a mass of farmers. He immediately wanted this approach to be an important component of the agri agenda in 'India@75' programme. He suggested that we develop a detailed working paper together along these lines, whereafter he wanted to meet the Prime Minister to propose this as a solution to rejuvenate Indian agriculture. I was to download his thoughts during one of his forthcoming visits to India before I worked on this. Any which way, India@75 was what he was keenly looking forward to as his pet action project. India would find it hard to replace CK in this journey.

It is at once stimulating and saddening to imagine the next steps of the master of next practices. May his soul rest in peace...

PS:

1. Published in Business Today issue dated May 16 2010 (page 84) with the title "What CK would have done next"

2. I wasn't sure if this piece belonged to Third Eye or Random Reflections! Cross posting in both...

Evolving Landscape of Rural India: Role of Mobile Devices

Mobility will play a central role and significantly influence the very evolution of rural India hereafter. Therefore, rather than suggesting a plain list of ‘many ways in which mobile devices can be used in rural areas’, I would like to start with a quick look at the underlying drivers of rural India and then propose a framework to visualize the consequent strategic role that mobile devices can play.

My presentation is set in four parts:

1. Aspirations of rural people
2. Fundamental characteristics of rural India and how they come in the way of fulfilling those aspirations
3. Components of value in general, and their relevance to rural India vis-à-vis the aspirations and characteristics
4. The role mobile devices can play in this backdrop

Over the thirty years I have been working in rural India, the most remarkable facet I observed is the transformation of rural mind-set from one of ‘resignation due to deprivation’ to ‘aspiration arising out of empowerment’!

• This transformation occurred as the rural infrastructure improved (especially roads and telecom) and their incomes rose. And the sources of income expanded too - within agriculture diversification helped, while the non-farm activities multiplied (livestock, sales & services in rural markets). Several Government schemes as well as remittances from the kin who migrated to towns brought in more money into rural hands.
• The aspiration is primarily for better basic services (education and health), and superior quality of life (access to consumer goods used in urban India, financial services and entertainment). People, naturally, are also looking for opportunities to step up their incomes further (new livelihood sources and appropriate production inputs are the needs here) to be able to afford such products & services.

However, three characteristics of rural India come in the way of realizing these aspirations…

• The wide geographic dispersion of our villages constrains access to products & services mentioned earlier, in terms of timeliness, quality and cost - if they access at all. Because villages are a long way away from the centres of action (urban areas) where specialists reside or these products & services originate.
• Extreme fragmentation in terms of the size of rural production units reduces their bargaining power when they buy their inputs or sell their output. This is true even for financial services and consumer goods as well, as the ticket size of their purchases is very small. Aggregation can empower them, be it in the form of cooperatives, or self help groups; whether physically or virtually
• Wide heterogeneity in circumstances of the people across rural India requires products and solutions that are personalised to their unique needs. Delivering such solutions is expensive as is, and is further unattractive when the unit volumes and paying capacities are small.

Value has three components. Value Creation, Value Delivery and Value Capture

• By a logical extension of the three characteristics already described, it is obvious that value can be created in rural India by delivering services remotely (overcoming dispersion), by personalizing solutions (that address heterogeneity) and by democratizing access (neutralizing scale / class disadvantage, eg. for poor people & women).
• What is not commonly appreciated is the fact, that the same three characteristics constrain rural people from taking advantage of even the available products & services unless they are delivered as a complete end-to-end solution. For example farm productivity won’t rise unless relevant agri advisory, real-time weather / market information, credit, seed, nutrients, crop protection chemicals etc are all available in a coordinated fashion. So, a well-orchestrated ecosystem is needed for actually delivering the value created by using the ideas mentioned in the first bullet.
• For any enterprise to scale and sustain over time, some of the value created & delivered must be captured for its financial investors. All of you know the famous examples of many dotcom companies that created value for their customers, yet went bust as their business models could not capture enough value for themselves! In case of rural markets, plain vanilla business models that try to capture more share of the small wallets find it difficult to sustain. Innovative models leverage aggregate volumes of these markets and get interested third parties to cross-subsidise (much like the media business), besides capturing some value from the rising incomes (having facilitated such rise in the first instance)

Interestingly, with their wide-ranging capabilities, mobile devices can play a central role in all the three components of value in rural India

• Remote delivery of certain virtual elements in areas like education, health, entertainment; both information & transactions in income generating areas like agriculture, financial services, governance & citizen services; exchanges for employment and matrimonial; social networking platforms etc are all already happening at some basic level using mobile devices by extending the applications designed for Web.
• Additionally, by integrating features like unique identification, crowd sourcing, GPS, GIS, visual mapping, text-to-voice, multi-player collaboration etc., several other value creating applications can be developed which wouldn’t be operationally feasible without mobile devices.
• Finally, with targeted delivery of content & advertisements mobile devices will facilitate the value capture process.
• Remote delivery at door-step, personalized solutions for relevance, virtual aggregation for economies of scale, collaboration for putting end-to-end solutions together, unconstrained access even for the disadvantaged – all so necessary for development of rural India, are now possible due to mobile devices

Let me now illustrate these propositions with some specific uses of mobile devices along these lines

• In education, e-learning will morph into m-learning; further moving to potentially deliver books over mobile devices as the screen sizes expand; with the ability to stay in touch on an ongoing basis, life-long delivery of continuing education is possible
• Last mile access in health services, drawing upon experiences from web based tele-medicine services. Mobile device itself as a medical instrument (eg pulse reader) is not a distant dream.
• Entertainment applications do not need much elaboration; will have instant demand
• Location based information services like Yellow Pages (eg doctors, agri input stores) can morph into mini meta markets
• In agriculture and other livelihood activities, starting with elementary services like information provision - delivered as text or voice - (eg. weather forecasts, market prices) to transactions (eg e-procurement through auctions, negotiations) to sophisticated applications like precision farming through personalized crop management advice (with the ability to click and transmit photographs on one hand, and integration with GIS on the other hand)
• Banking transactions
• m-commerce transactions like railway ticket booking
• Calendar integrated notifications and alerts
• Remote monitoring and activation of farm automation systems (eg irrigation, fertigation), some of which is already happening as a grassroots innovation
• Supply chain management applications in rural marketing (for FMCG, medicines etc) like order taking, promotions, information uploading, remote stock management in rural outlets
• Governance applications like voice / text alerts of Government Scheme; or operational activities like uploading of local data by Village Accountants, Anganwadi Workers, Warehouse Keepers etc
• Citizen reporters generated news and other local information, or even poll based market research, visually mapped by integrating with GPS for reading patterns & movements and re-casting for local action

In short, a mobile device can become a hand held transaction platform, a personalized bank branch, a retail store, a cinema screen, a teacher, a doctor and many such, besides being the good old communication tool. Thereby, playing the role of a key enabler in taking rural people forward with rest of India; delivering the much desired inclusive growth :)

PS:

1. This blog is a summary of my talk at the Nokia Strategy Summit in Amby Valley (Lonavala) on 29th April 2010.
2. I am thankful to so many friends (a record fifty four in all) who shared their thoughts via Twitter, Facebook and LinkedIn as valuable inputs for this talk.

Investment Opportunities in Indian Food & Agri Business Sector

Here is a summary of my talk at the BRIC-IBSA Business Forum in Rio De Janeiro on 14 April 2010

Investment Opportunity in Indian Food & Agri Business Sector is founded on Four Pillars

1. Large Sector with further tremendous upside

2. Indian Consumer is seeking new products

3. Production system has potential to supply those new products

4. The Business environment is very conducive

Pillar 1: Large Sector & Further Upside

• Size > US$ 200 Billion

• 50% of household expenditure is on Food

• 50% of workforce is engaged in agriculture

• That rest of the economy is outgrowing agriculture, is a signal for investment opportunities in agriculture

Pillar 2: The Consumer Dimension

• More than 1 billion consumers

• Rising incomes & rapid urbanisation changing the profile of consumption

• Global experience: US$ 1000 per capita is the sweet spot for shift in food consumption patterns, from basic to value added food

• Consumer is looking for new value: quality, variety, safety, convenience etc.

• Besides this domestic opportunity, there are export prospects too in several products

Pillar 3: The Production System

• Large arable area > 150 million ha

• Rich & diverse agro climatic zones

• Characterised by small farmers

• Good scope for productivity enhancement through technology induction

Pillar 4: The Business Environment

• Significant private participation after policy reforms in the last decade

• Traditional farm labour seeking new jobs

• Large infrastructure investments in the recent past: roads, telecom, irrigation etc

• Thrust area for Government as a strategy for “inclusive growth”

The Investment Opportunities

• Innovation at the consumer end of the chain (Processing, packaging, retail formats)

• Effectiveness at the farmer end of the chain (Productivity, quality - pre & post harvest, labour saving technologies)

• Efficiency along the whole chain (Integration, coordination, infrastructure)

• Cross BRIC-IBSA collaboration imperative (Food Security, Climate Change)

Investment Opportunities in Rural India

Here is a summary of my talk on "Investment Opportunities in Rural India" at the Credit Suisse Investors' Conference, Hong Kong in the session on "Emergence of Rural Asian Economy" (24 March 2010)

My talk had three parts.

1. What factors helped rural India grow phenomenally in the recent past?

2. Will the growth sustain?

3. What are the investment opportunities!

Six factors helped growth

1. Infrastructure investments (roads by Govt, telecom by private)

2. Higher farm incomes (high commodity prices, more crop diversification)

3. Government programs like Universal Education, Employment Guarantee, Waiver of loan repayment by small farmers

4. Remittances from youth employed in towns

5. Rural non-farm (live stock, new services)

6. Income from sale of land (urbanisation, industrialisation)

While there is no problem to this growth momentum in the short run, there are several (six again!) show-stoppers that need to be dealt with

1. Food Security, due to stagnating farm yields and land use diversification; malnourishment of women & children in particular

2. Climate Change will compound the yields problem. An IFPRI model says Indian wheat yields can decline by 50% by 2050; rice 17%, maize 6%. We need to build the small farmer capacity in yield improvements and in dealing with climate variability

3. Need to create more urban jobs, especially in small towns; ratio of agri workforce to arable land is rising to unsustainable levels

4. Investments in "energy" still woefully inadequate

5. Policy reforms to link farmers to markets have slowed down / reversed

6. Quality of delivery mechanisms for basic services still poor (education, health care, financial services)

These challenges present opportunities in four specific areas of investment!

1. Infrastructure businesses (energy solutions, logistics, micro irrigation). PPP opportunity

2. Provision of Basic Services (education, healthcare, financial services). PPP + innovative business models required

3. New Technologies (labour saving crops, chemicals, equipment; mobile phone apps, rapid testing equipment for crop quality & biometrics)

4. Delivery Channels (Govt Services, Agri Extension, Basic Services as in 2 above, Consumer goods)

Agriculture Practicals at a Primary School

Friends on my Facebook and Twitter network already know of a school programme I attended today, on bringing agriculture through practical work. This was at Academic Heights Public School’s new campus in Nagole (Hyderabad). This school was set up by a bunch of six professional managers / entrepreneurs who took a franchise for Andhra Pradesh from the SK Group of Bachpan fame (more popular in Delhi). Today I was the Chief Guest at the launch of their new programme called “Continuing Education and Learning Programmes for Students”. The first domain for this programme is titled “Hello Farmer” to enable students experience villages and farmers lives.

Many of you gave me valuable inputs on what I should cover in my talk. I’ve synthesized all of those ideas into my talk, as you can make out from what I reproduce below! I enjoyed the whole experience largely because of this interaction with many of you on Fb & Twitter over the last two days :-) Thanks a ton!

Before I started my talk, I wanted a sense of what the parents and kids present there thought about the whole initiative. Since the numbers were large, I couldn’t ask individual opinions. Instead I gave two options and asked for a raise of hands.

1. Parents: First choice was whether they “agree that practical / project work is great; exposure to agriculture is wonderful”. The second choice was if “all this is a waste of time and distraction from studies in today’s competitive world”. Overwhelming majority went with the first choice. There were a few who raised hands for the second choice too.

2. Kids: One choice was if “all of this was fun and joy” or anyone thought “this was pain, hard work and more burden”. Every single kid raised hand confirming this was fun!

I was therefore talking to the converted. So I focused on underscoring the value of this approach and brought out some nuances.

Here’s a summary of my talk:

I compliment the management and the faculty of the school for conceiving a structured programme that helps “learning by doing”.

In my opinion, ‘learning by doing’ is the second best form of learning, in the sequence of ‘learning by’… 1. ‘listening’ to a teacher / parent / friend, 2. ‘reading’ books, 3. ‘writing’ notes, 4. ‘seeing’ action as it happens or in films, 5. ‘doing’ by oneself, and 6. ‘teaching’ someone else using whatever method, the ultimate method of learning!

I believe, through this programme, the children learn three things:

1. Life Skills: Through any method of “learning by doing’, whether this programme or other such practicals / project work etc., children learn the very critical life skills. By life skills, I mean capabilities like gathering information, determining alternatives, making choices, appreciating future consequences of current actions, time management! These are as important, if not more, as the many subjects the children learn in the class room. Growing plants, watering them, monitoring the progress will develop a disciplined routine in the child.

2. Focus on practical work in agriculture & rural builds the character and value system in the kids: After experiencing the hardwork involved in farming, the unpredictability of survival & growth of plants, the children will value and respect a farmer. They will appreciate the dignity of labour. The children will also realize the value of food after experiencing the hard work involved in growing, and hopefully not waste food any more! Some parents know that this approach is likely to produce better results than any amount of telling and scolding the kids about wasting food :-)

3. This programme is also a great opportunity for the children to gain knowledge in some very important areas: While introducing me, the Principal mentioned ITC’s brands like Bingo Snacks, Aashirvaad Atta and Classmate Notebooks. I know, most kids are already familiar with these brands, now they will also know how agriculture is the starting point for all such products! Most of you heard about 2012 prediction, some of you may have seen the movie too… The end may not happen in 2012, but won’t be that far away if we do not bother about global warming; I am sure many of you are familiar with that phrase. I know some kids who actively farm on Farmville via Facebook are very aware of this phenomenon. It is important that all of us learn and practice various methods of conserving natural resources. Say, reusing kitchen waste water in the garden, composting vegetable waste into manure, using drip irrigation for saving water etc. I am sure the children will come back from school and teach a thing or two to the parents on this front. And, after all, if we are worried about global warming, it is for their future! Through these practicals, children will also learn about different soils, different conditions under which different crops grow, importance of variety localization, problems in growing some alien breeds etc. Most importantly, I think, the children will start loving fruits & vegetables and eat such nutritious food, without the nagging from the parents!

The beauty is that all of these important lessons – be it life skills, or value system, or the much needed knowledge – are all learnt while having a lot of fun by playing with sand and soil:-) Therefore will be internalized better!

In order to realize all of this,

1. a lot of innovation in the classroom is required, say showing films like ‘Bee Movie’ or pictures of ‘Urban farming’ using the multimedia, besides what is covered in the science class

2. supported by outdoor practicals at the school including growing a nursery from where the children can collect saplings for growing at home. Could be simple crops like pudina, coriander or even tomatoes and chillies

3. supplemented by a highly engaging homework like growing plants in pots or small patches at home, monitoring them and bringing results back to the school.

In short, an integrated design of the programme. That’s my recommendation to the school management and the faculty.

Before the launch speech, I planted a sapling. After the launch, the kids performed a skit on village life. That was lovely. At the end, all of us took a green pledge! Included in the pledge that each of us will plant at least one sapling every year and tend to it, knowing that that’s how a whole garden is taken care…

Before closing this blog, I want to again thank many friends on Facebook and Twitter who gave suggestions on what I should cover in my talk. I hope I’ve been able to incorporate all of them.

Agriculture & Climate Change: Aligning Small Farmers

Last week I spoke on this topic at the Global Forum on Food & Agriculture, Berlin. These were the broad talking points I had jotted down for myself:

A. All of us know the three dimensions of agriculture vis-à-vis climate change

1. That agriculture is a part of the problem, causing climate change through Green House Gas emissions (methane from flooded paddy fields & ruminants like cows, nitrous oxide from the soils, CO2 from fossil fuels used in farm equipment etc)

2. That agriculture is also one of the most vulnerable sectors impacted by climate change (fall in productivity due to changing weather patterns)

3. And, that agriculture can be an important part of the solution to climate change (through emission reductions, carbon sequestration, increasing soil organic matter etc)

B. At a macro level, what needs to be done to produce abundant food that is safe, healthy and climate friendly also seems to be reasonably well known!

But, unlike in other sectors, the key actors that need to implement these solutions are hundreds of millions of small farmers spread around the world.

C. The challenge of aligning the small farmers to climate change issues is four fold!

1. Bringing relevant information to farmers living in dispersed geographies, especially where the supporting infrastructure is weak

2. Personalising the sustainable crop & livestock management practices to individual farmer circumstances, and then transferring that knowledge

3. Coordinating availability of all inputs like credit, water, seeds, risk management instruments etc, so that the new knowledge is actually adopted by everyone

4. And, most importantly, providing a financial incentive to the individual farmer when he has a difficult trade-off between today’s cost and tomorrow’s benefit, or between individual effort and common good

D. There is a solution to this apparently complex challenge. In fact, it is practically demonstrated through our company’s innovative business model named ITC eChoupal; that reaches four million small farmers in India today.

Although Information Technology is the most known face of ITC eChoupal, the model has three equally important components.

1. Firstly, leveraging Internet and increasingly Mobile phones so that real time information and personalized knowledge can reach the small farmers in an audio visual mode

2. Secondly, co-opting social capital through user groups that can help equitable distribution of common resources like water; also helps in accessing indeigenous knowledge and in conducting participative research

3. Thirdly, a collaborative network of organizations working together to bring a complete end-to-end solution to the farmer through a meta-market approach

E. With this approach, I am confident that we can align small farmers in the war against climate change. This alignment will happen faster, if the international community creates a fair reward system for farmers recognizing their contributions to climate change mitigation (eg carbon sequestration activities and bio-based energy services)

Indian Agriculture 2020

A friend was doing research for his company on rural India. He asked me to gaze into the crystal ball and tell him how Indian Agriculture will look like in 2020. Here is what I had shared with him over breakfast, earlier this morning.

Mega Trend 1: A counter-intuitive aspect of Indian agriculture today is the shortage of semi-skilled and unskilled farm labour. In itself, at a macro economic level this is a good sign; but, when you sound any farmer out, the first complaint is about labour shortage and consequent high wage bill. Over time, this is likely to trigger land consolidation and further fragmentation at once, at the two ends of the spectrum. Larger farmers will accumulate more land to make mechanization feasible. Medium farmers will off-load some land and keep just about the acreage they can cultivate with the labour available within the family. Opportunities for Business: Innovations in Indian specific farm mechanization (beyond the classic approach of tractorisation); innovations in labour saving crops, farm practices and inputs.

Mega Trend 2: Swifter shifts in land usage pattern (across different crops, as well as away from agriculture) triggered by shifting cost v benefit v risk and increasing role of free markets with decreasing information asymmetry. Gone are the days a farmer would cultivate a crop because that’s what he had done last year. Opportunities for Business: Networks for gathering market intelligence from grass roots for consumption by all the stakeholders (commodity businesses, brands with agri raw material, ag input companies, ag infrastructure companies, insurance companies, Governments)

Mega Trend 3: Inroads by Bio-Technology. After the phenomenal success of Bt Cotton, Bt Brinjal is waiting by the door. Once one food crop shows the way, others will follow! Farms will then turn into factories, farming with precision and producing crops with traits desired by the consumers. This will blur the differences between independent industry verticals like farm inputs, food, pharmaceutical and packaging. In turn, this may well create a vibrant “wellness” industry. After all, human beings long for four evergreen As. Ability (Physical & Mental performance), Anti-Ageing (internal organ functions) and Appearance (external). Bio-technology promises to deliver these!

Mega Trend 4: Concerns on Food Security for the poor will be outweighed by the concerns on Food Safety of the rich and middle class… The agri-food supply chains will need to deliver identity preserved products to retail shelves, some of which need tracing all the way to farm practices! This requires a recast of the roles of players along the supply chain. Role of Information Technology will be central.

Mega Trend 5: All of these changes ride on a fundamental shift in the agri-extension service. Today, the service is barely customized to crop and region. Tomorrow this needs to be personalized to individual farmers. More complex to design and deliver! But there lies the mother of all business opportunities… raise farm incomes and take a share of that. Create Fortune for the Bottom of the Pyramid and then look for Fortune for yourself.

I was actually looking for two more trends, shook the crystal ball vigorously; but no, can’t see them!

1. More conservation agriculture to preserve environment while improving productivity.

2. More partnerships among Government, Agri Businesses and Farmers (or their Collectives) to realise everyone’s goals!

May be passive gazing isn’t enough to make these happen. Let’s do something…