Managing innovation: journey of Tanishq, jewelry division of Titan

I got an opportunity to listen to Mr. L. R. Natarajan (LRN), head of innovation council at Titan and Chief Manufacturing Officer of Tanishq, Titan’s jewelry division. He was one of the guest speakers at our workshop on innovation management at IIM Bangalore. The first thing you notice about LRN is the passion he carries for building a culture of innovation. After listening to the seven year journey LRN presented, most of us felt, “There is a lot more we can do in my organization”. What kinds of innovation management practices are followed at Tanishq? Here is a short summary.

“What’s new” campaign (2004): The journey at Tanishq began in 2004 where each of the 14 manufacturing departments was given a structured white board. Each team was supposed to write “What’s new” they are attempting on the whiteboard given to them. Competitive spirit was created by defining a review process and attaching rewards. This simple and effective process is still active after seven years of its launch.

Dreaming workshop & HOD fund (2006): In 2006, Titan had a workshop called “future shock” in which the MD asked 600 managers to dream about “Where do you see Titan 5 years down the road?” More than 130 new business ideas were generated. Through a selection process they were narrowed down to 2 new brands to be launched: Goldplus and Eyeplus.

“HOD fund” was initiated after observing that purchase of any capital item goes through a long chain of approvals – Sr. Manager, Deputy GM, GM, VP, COO, Corporate finance, Corp purchase & finally MD. By then the person who initiated the process loses interest. HOD fund created a shorter route for innovative ideas. Each Head of the Dept (HOD) was given a budget of upto Rs. 1 Lakh which he can approve himself.

Innovation school of management (2008): Between 2004 and 2008, many ideas got implemented. However, a closer look revealed that ideas had come from only 10% of the employees. Innovation school of management was started to involve every employee in this journey. A six month course was created and a written test & viva were conducted to select the first batch of 30 participants. For the first 3 days, the participants are taught about what, why and tools and techniques on how to think creatively. Then they were given a challenge to work on. If the inventory is 1 crore the challenge could be “How can we manage with 10 lakh inventory?” All HODs are trained mentors and they mentor the participants. Each participant is given 6 hrs per week to work on the challenge. There is a review once a month. At the end of the course, the MD hands over the certificates. The goal is to have all the employees as trained innovators by 2014-15. So far 187 out of 400 employees in the factory have been certified through the school.

Currently innovation group in Tanishq has 9 full-time members with 1 division manager, 3 managers and 5 executives.

3 success stories: (out of several LRN presented)

1.      Diamond setting: The process for preparing the casting mould was improved so that a highly skilled job of diamond setting becomes easier. In place of 100 to 150 stones a karigar is now setting 1500 stones every day. This process improvement idea has been patented.

2.      Diamond bagging: Diamond bagging is a process of starting with a work order, picking the right set of diamonds from hundred different varieties, putting it in a bag and giving it to the production to put it in the necklace. The idea of automating this process came from the theme that was launched in 2007: “Simplify and automate”. After about 4 years of working closely with the machine building division, a robotic arm was created that automated diamond bagging. This may be first time diamond bagging got automated in the world.

3.      Gold out of stone: Hard silicon carbide crucibles were lying around the factory. People knew that these might contain gold. However, people didn’t know what to do. One day, Rajsekhar, one of the operators got a road-roller from his neighbor and crushed the crucibles. About four and a half kilos of gold was recovered.

Beyond jugaad: A summary of current practices and participant takeaways in managing innovation

Three of us (Prof. Rishikesha T. Krishnan, Prof. S. Rajeev and I) facilitated a three day Executive Development Program at IIM Bangalore last month titled “Going beyond jugaad: Building a systematic innovation capability”. 22 executives from 12 organizations participated in the workshop. On the third & last day, one representative from each organization presented their current practices for managing innovation as well as areas they would like to improve upon based on the learning at the program. Here is an attempt to summarize their perspective (not meant to be exhaustive and limited by what I captured in my notes).

Before we look at how different organizations are managing innovation in India, it makes sense to see participant and company profiles. The 12 companies represented following sectors: Aircraft manufacturing (India center), Automotive manufacturing, Consulting, India centers of high-tech products, IT services, IT enabled services (BPO) & Media (leading FM radio channel). Titles of the executives varied from CTO, DGM Innovation cell, VP New business / Marketing, Group Manager, Sr. Development Manager, Mobile Architect, Technical Fellow, Senior Staff Engineer etc. All the participants were very serious and active players in the innovation initiatives in their respective organizations.

Let me classify their perspectives into 3 key areas: idea management, buzz creation and learning & development.

1. Idea management: Almost all the participating organizations had a system in place for managing ideas. What varied was the scope of the innovation. In some organizations there was a bias for the IP (patent) management. In some cases the global process for big ideas was very active. However, the contribution from India center was low. In some places the system was active only in some part of the organization and in a few places the existing approach was primarily top-down.

Key takeaways: Encourage small ideas, implement bottom-up approach, create a challenge book (problem focus), make the measurement system more robust, improve the idea velocity, use cross functional teams. A couple of executives said their focus would be large impact idea creation using strategy models.

2. Buzz creation: Many organizations had events such as sponsored challenge or bright idea campaign to generate ideas and buzz around innovation. In some cases these events generated several hundred ideas every year. Garage forums encourage prototyping, Tech fair creates a platform for technical paper presentation, Inspire series invites external speakers, Wall of innovation displays innovators, Quarterly newsletter raises awareness on innovations inside and outside the organization.

Key takeaways: Almost all executives felt that they need to improve the participation level. Some said they need to improve the reward and recognition system.

3. Learning & development: For educating employees on innovation, organizations conduct idea generation workshops using methodologies such as design thinking, encourage informal communities for knowledge sharing, sponsor MTech/PhD and introduce innovation during company induction program.

Key takeways: More awareness building, Spot new trends in a structured manner, Inculcate right brain thinking.

12 organizations is a small sample. However, we hope that the seriousness demonstrated by the executives spreads in their organizations and beyond. Let’s build a culture of innovation systematically!

Innovation dashboard: 4 indicators of idea velocity

Last year I presented a simple innovation dashboard with 4 parameters: pipeline, prototypes, portfolio and participation. What do these parameters measure?

• Pipeline: How many ideas do we generate?
• Prototypes: At what rate do ideas move forward?
• Portfolio: What is the total potential impact?
• Participation: Is the innovation activity likely to sustain?

A few months back I wrote about innovation pipeline and how CEOs are using it for strategic decisions. In this article

I want to focus on idea velocity – the rate at which ideas move forward. What are the different indicators of idea velocity? Let’s look at 4 such indicators below.

1. Responsiveness: How fast does the system respond to an idea submitted? In places like Boardroom Inc, a Connecticut publisher, ideas get evaluated in weekly team meeting. Many small ideas can be implemented within the team and don’t need any approval of higher authority. In Toyota, it works in a monthly cycle and uses hierarchical approval system. Small ideas get evaluated and awarded locally. In any process that takes more than a month to respond to the idea author, it is a cause of concern. In a social network with a voting system, the feedback can start very quickly.

2. Prototypes: First prototype could be a paper sketch (used by Tata Nano team), a skit depicting the usage scenario or a computer simulation model. What matters is how fast does the idea go from a concept to a prototype? And then from the first to the second and so on. First AdSense prototype was built in a few hours by Paul Buchheit. Amy Radin, Chief Innovation Officer of Citigroup, looks at: getting x number of pilots in market by y date. Google says, it performed 20,000 experiments in 2010 to improve its search algorithm and finally took 500 ideas live.

3. Champions: How many ideas have a champion? Champions are people with clout. They can push your idea through the resistance faced within the organization or outside. You are lucky when the idea champion is the group chairman (like Ratan Tata). However, more often he is likely to be a senior manager like David Patrick at IBM. Sometimes, your customer could also become your champion. For example, Lego involved selected advanced users in co-designing & championing its Mindstorm NXT.

4. Dedicated team: Any not-so-small idea can run only so far as a side activity. It needs a dedicated team, even though it could be just 3-4 people to begin with. Dedicated team is an indicator of the seriousness and attention from the management. For example, Tesco India has a problem solving track where a cross-functional team attempts to solve a chronic problem of the businesses. Rigor and rhythm of innovation reviews play an important role in making sure that selected ideas get appropriate resources.

I am sure there are more or better indicators you may be using. Your input will really help me get a better view of this metric.

Poor Economics: Designing robust interventions to fight poverty through randomized experiments

When I hear a professor from MIT saying she knows how to fight poverty, my first reaction is that of skepticism. “Does she even know what poverty is?” That’s how my mind would respond. And yet when I heard the TED talk by Prof. Esther Duflo of MIT titled “Social experiments to fight poverty”, I was thoroughly impressed. It took me some time to understand what exactly in the talk that impressed me so much. Subsequently I bought the book “Poor Economics” which she co-wrote with Abhijit Banerjee. Now, I am slowly beginning to understand why Amartya Sen has said, “A marvelously insightful book by two outstanding researchers on the real nature of poverty”. In this article I want to highlight three things that I find interesting in the book.

Intractable problem, manageable sub-problems: Poverty eradication looks like an unsolvable problem. People from Karl Marx to Mahatma Gandhi have taken a shot at it. However, it is not clear whether we have a handle on it. Silver bullet approach like “give aids” is not helping. Banerjee-Duflo take a different view. They feel that instead of trying to answer the top question, why not look at some sub-problems – each of which might have a definite and practical solution. For example, in the talk, Duflo presents three such sub-problems: How can we have more kids immunized? How can we get more people to use bednets that can reduce malaria affliction? How can we get students to attend school more number of days for a given dollar spent on the cause? The book, like the talk, shows how we can go about systematically addressing these sub-problems.

Randomized experimentation: Let’s take the question of immunization. In Udaipur district of Rajasthan, it was found out that only 1% of the children are fully immunized. The vaccines are there and are available for free. It is not that the parents don’t care about their kids. When their kids get measles parents end up spending thousands of rupees in treatment. So you have empty village sub-centres on one hand, and crowded hospitals on the other hand. So looks like the intention is not translating into action. What do you do? Dulfo & team decided to try random trials in 134 villages in Udaipur district. For one third villages there was no change, another one third villages had immunization monthly camps conducted and the last one third had camp plus a kilo of lentil free for camp participant. As it turned out the immunization percentage jumped by a whopping 37%. Note that this approach is analogous to randomized control trials used in medicine to discover drugs.

Design as if implementation matters: The beauty of Banerjee-Duflo approach is not that it does not make any assumption about the culture, anxiety, aspirations of the poor. The experiments reveal their biases anyway. I call this approach of designing an intervention – design as if implementation matters. Note that the approach does not advocate laboratory experiments – the experiments are performed in-field in actual conditions. I feel that experimentation and immersive research are the heart and the soul of systematic innovation. Banerjee-Duflo approach epitomizes both. Now, I know why the TED talk struck such a chord with me.

I strongly recommend the book for every student of social innovation.

Maganlal Gandhi: Mahatma Gandhi’s innovation partner

"He [Maganlal] was, in my opinion, a genius... He laid the foundation of the science of Khadi by writing his Vanat Shastra” said Mahatma Gandhi at the inaugural ceremony of Magan Museum of Khadi (pdf) at Wardha on Dec 30, 1938². Ever since I read this, I became curious about Maganlal Gandhi. Where did Maganlal learn the science of khadi? Was this science backed up by rigorous experiments? If so, where did Maganlal perform those experiments? I wanted to find out. Finally, I got a peek into the story when my friend Prof. Rishikesha Krishnan connected me to Prof. Shambu Prasad of XIMB Bhubaneswar. Shambu has done extensive research on science of Gandhi. I found answers to some of my questions in an excellent article written by Shambu “Gandhi and Maganlal: Khadi science and the Gandhian scientist”. Here is a short summary.

Maganlal Khushalchand Gandhi (1883-1928) was Gandhi’s nephew (a grandson of his uncle) and 19 years younger to him. Maganlal met Gandhi in 1902, two days before Gandhi was to leave for South Africa. Maganlal was then on the lookout for a job in his native Kathiawar. Gandhi asked Maganlal to come to South Africa offering it as a land of opportunities with ample scope for growth. Maganlal was immediately put into business and was running a family shop of the Gandhis. When Gandhi quit his practice and decided to set-up a farm and take to farming as an occupation, Maganlal was the first to join him unconditionally knowing it involves self-imposed poverty.

In a short time, Maganlal picked up several skills at Phoenix Farm - composing and running the machines in the press, farming, carpentry and tailoring, keeping accounts of the settlement and teaching the children Gujarati and Mathematics. It was Maganlal who suggested the name Sadagraha to Gandhiji when he solicited a better term for “passive resistance” in the local newspaper Indian Opinion. Gandhi later modified Sadagraha to Satyagraha.

Later in India, Maganlal set-up and ran the khadi laboratory at Sabarmati Ashram as he was the head of the Technical Department of the All India Khadi Board (later the All India Spinners Association). Maganlal traveled to Madras Presidency to learn the art. The technical department of the Ashram, tested several samples of yarn (over 300 every month) and gave feedback to the Provincial Congress Committees. These results were widely reported regularly in Young India and Navjivan. As a resource centre in the field of khadi the Ashram used to send its staff, spindles, specimens of yarn, and charts explaining the effect of the wheel to exhibitions all over the country. Gandhi relied on Maganlal to test the various machines and always wanted Maganlal’s opinion on technical developments whether it was Mirabehn’s discovery of the soft spindle, Shankarlal’s Gandiva spinning wheel or the Ramachandra lift pump.

In 1922, a ‘Khaddar Information Bureau’ was constituted to provide or collect information on khadi from the provinces, to inform congress committees and selected workers on reports from the centres. Maganlal edited its ‘Khadi Bulletin’. A syllabus was formulated in 1923 for the weaving school with a regular six-month course. A khaddar service scheme was also instituted under which 600 instructors were to be trained in home carding.

Maganlal passed away while at work in Bihar due to typhoid on April 23, 1928, at the peak of his life and that of the khadi movement. In a moving tribute, titled ‘My Best Comrade Gone’ Gandhi remarked that: ‘The world knows so little of how much my so-called greatness depends upon the incessant toil and drudgery of silent, devoted, able and pure workers, men as well as women. And among them all Maganlal was to me the greatest, the best and the purest.’

Source:

1. Gandhi and Maganlal: Khadi science and the Gandhian scientist” by Shambu Prasad, Presented at the Seminar ‘Gandhi and his Contemporaries’ held at the Indian Institute of Advanced Studies, Shimla, April 13-15, 1999

2. “Mahatma: Life of Mohandas Gandhi” by D. G. Tendulkar, volume 5, page 6.

3. Maganlal’s photo is from "Magan Nivas" at Sabarmati Ashram.

How GE develops innovation leaders through the LIG program

GE launched Leadership, Innovation and Growth (LIG) program in September 2006 and ran it till September 2008, mostly in Crotonville, epicenter of GE’s learning & development. Altogether 2,500 senior managers in 260 teams went through this four day program. The purpose of LIG was to make innovation and growth as much of a religion at GE as Six Sigma had been under Jack Welch. On day four the course wrapped up with a plenary session at which each team had 20 minutes to deliver a presentation to Jeff Immelt, GE’s CEO. When Immelt was asked why he devoted so much time to LIG, he said, “LIG gave me a way to drive change and develop leaders at the same time”. What happened at LIG? Here is an overview on what GE Power senior management team went through at LIG. (source: An excellent HBR article “How GE teaches teams to lead change” by Steven Prokesch, a senior editor of HBR who was invited to attend one of the LIG programs in October 2007).

LIG program is a brainchild of Susan Peters, GE’s VP of executive development and Daniel Henson, then CMO. Before attending the LIG, the senior managers at a business would assess their team’s success in creating a climate supportive for innovation. The assessment would generate an innovation dashboard that would be used during the program. During the program there would be talks by external gurus as well as internal role models. A large amount of time – about 15 to 20 hours – was set aside for breakout sessions. What happens during these breakouts?

During the first breakout on the morning of day one, the Power Gen team guessed and the learned their actual team scores for the 360 degree review of their growth values. This triggered a reassessment of almost every aspect of their business. Some of the questions that got raised by the team were: “We’re not as good at anticipating major trends as we ought to be”, “Is solar a good place to be?” or “Renewable energy, clean coal, nuclear – all are going to be policy dependent. Are we good at this?” The reassessment continued in this manner throughout the four days.

The reflections generated insights – may be the old rules don’t always apply; may be limits on carbon emissions and tax incentives for clean, renewable power matter more. That sparked a conversation about GE’s ability to understand and influence government policies. Managers agreed that it was deficient and that beefing it was therefore a priority. In the next breakout session the Power Gen managers talked soberly about the state of their core. Unless the operations are strengthened it is difficult to free up time for innovative thinking.

At another breakout session the team assessed their innovation portfolio by putting each project in one of the three boxes, a framework created by Prof. Vijay Govindarajan: incremental (aimed at strengthening the core), adjacencies (taking existing technologies to new markets or taking new technologies to its existing markets), nonlinear shifts (discontinuous shifts in technology or markets with radically new products or business models).

The final LIG session involved the reports to Immelt. Power Gen team led by Bolze talked about their biggest takeways from the program, their 10-year projection of revenues (from $13 billion to $40 billion with renewables’ share going from 30% to 50%), and a vision statement – “Powering the world responsibly”. They committed themselves to strengthening the core. They confessed they needed to get better at looking around the corners to spot nonlinear shifts. They listed the capabilities they needed to build: regulatory expertise, faster product development, creating emerging-markets products “in country for country”. They vowed to lighten up a bit and become more playful, a characteristic of innovative companies. As they spoke Immelt asked questions and shared observations.

Within a few weeks after the LIG session Steve Bolze, as required, sent a commitment letter to Immelt, laying out the measures his team would take to increase the pace of organic growth. Such a letter becomes a living contract between Immelt and the team.

image source: ge.com

Managing innovation: story of Tesco India

Last week I got an opportunity to listen to Sandeep Dhar, CEO of Tesco Hindustan Service Centre (HSC) on how Tesco India manages innovation at CII Innovation Forum. Tesco is the third largest retailer in the world by revenue and the second largest in terms of profits. Tesco HSC is responsible for standardizing all back-office processes impacting Tesco business globally and it currently employs 4000 associates. Sandeep demonstrated with examples how Tesco has made innovation an every day practice. How is it different from other places? Let’s see in this article.

Idea qualification: At Tesco, like everywhere else, every idea needs to have a business case which typically means cost saving for an idea from HSC. However, at Tesco, it needs to meet two additional criteria: One, it should improve or maintain customer experience. Two, it should simplify or at least maintain employee work complexity. Several ideas end up getting dropped for not meeting these criteria.

Continuous improvement track: Small ideas are taken seriously at Tesco. In fact, if an idea can reduce average time taken to handle a customer at the TIL by one second, it saves the company 2 million pounds a year in UK alone. How to keep people motivated for doing continuous improvement? At Tesco HSC this is ensured by how the team KPI or SLAs are set. For example, there is a team in India which receives calls when particular equipment like a refrigerator or air-conditioning unit is malfunctioning. Team’s job is to call the relevant vendor of the town and the vendor would send people to the Tesco store for servicing. Typical KPIs of such call-centric team would be percentage of calls serviced in 90 seconds, percentage calls tracked to closure etc. With these metric the improvements would be directed towards improving the efficiency of handling calls. They deliver limited value. Tesco changed the KPI of the team to “reduce the amount of money Tesco spends on maintenance”. With this the orientation of the team changed. They started looking into the reasons for equipment failures, some of the early warning and on preventive maintenance measures. Two years after this change the maintenance budget has come down by 40 percent.

Another team in India is responsible for making payments for the traffic violations of the truck drivers carrying Tesco supplies. Typical KPI would be timely payment of the fine and the accuracy of the payment. This KPI was changed to “figure out ways to reduce the fine”. One of the team members visited the traffic authority web site and found out a mechanism to challenge the fines. He and a couple of his colleagues started looking into the data and started challenging the fines selectively. At times the challenge would be successful, at times it wouldn’t. Then the team went one step further and analyzed the reasons for the traffic violations. They identified some commonly made mistakes and sent the information to the drivers. They were able to identify drivers who were more prone to making traffic violations.

Problem solving track: This is the track where the businesses are asked to share some of their chronic problems. Tesco India sets up cross functional teams to work on them. One such problem was related to Tesco’s online website. Tesco is world’s largest e-grocer. The web site has a favorites list which currently includes all the items a customer had shopped in the past. The drawback of this mechanism was that the favorites list becomes very long and inconvenient for the shopper. A Tesco India team worked with IISc experts and came up with a statistical algorithm that predicts what a shopper might be shopping on a day. For example, if you have purchased 3 gallons of milk on Monday, it would not show milk in favorites on Tuesday. But it may show it on Friday. This has resulted in reducing the favorites list to one third of the original size. This has been piloted and going into production.

In-store work experience: All managers in India go through Tesco Week in Store Together (TWIST) program whenever they visit a country with Tesco stores. For Sandeep a TWIST a year is mandatory. He said if he doesn’t spend a week working the store, his KPI goes down by a notch. When Sandeep spends a week in the store, he may spend a day at check-out counter, another day stacking products, third day he may be doing stock count, on the fourth day he may be going out with the delivery van.

Retail test lab: In 2007, Tesco HSC established retail test lab where recreated all hardware environments that exists in different Tesco stores. For example, sales counters and handheld devices etc. When IT develops a software it is tested in this simulated environment which improves the reliability of the deployment.