Managing a big bet: Dr. Ashwin Naik of Vaatsalya shares his experience

In the innovation leadership workshop I facilitated last month, we had a panel discussion on “Managing big bets”. During this discussion we got an opportunity to listen to Dr. Ashwin Naik, CEO, Vaatsalya, Dr. Ishwar Parulkar, Chief Systems Architect, Cisco and Jayesh Badani, CEO, Ideaken. Here is a summary of our discussion with Ashwin. I will summarize the other two discussions over the next few weeks.

Dr. Ashwin Naik (second from the left in the photo) is the Co-Founder and CEO of Vaatsalya, India’s largest hospital network catering to tier-II and tier-III towns. Started in 2005, Vaatsalya hospitals today are in 17 towns in Karnataka and Andhra Pradesh. He shared his experience from starting of the itch to scaling the business and his guiding philosophy in working through the challenges.

You can find the interview here.

The questions that got discussed were:

1. Where did the itch begin?

2. Did you see it as a big bet right from the beginning?

3. Did you visualize that you will be in 50 towns?

4. What happened in the early phase – say in the first six months or a year?

5. Did the image of who your customer is undergo any change? If so, what change?

6. What kinds of attributes do you use today to define your customer?

7. Why do you need to segment market in healthcare? Like you said, why can’t anybody be your customer?

8. What would be a couple of turning points in this journey?

9. How did you get local practitioners to join you in a place like Hubli?

10. What are your fears?

11. Vaatsalya has innovated on the business model. But once the business model is established, does Vaatsalya have to innovate?

12. How about innovation from the customer experience dimension – from the time customer enters to when he leaves after treatment?

13. Do you ever feel like quitting? How do you handle it?

14. What are your insights on building champions in the organization?

15. Suppose an idea comes from a housekeeper. How do you ensure it is not getting killed?

Mahatma Gandhi and Right to Experiment (RTE)

Mahatma Gandhi was a master experimenter. However, when we ask, “How good was he in building experimentation capacity?” the answer isn’t so obvious. To begin the exploration, it makes sense to start with the basic requirement of building experimentation capacity – Right to Experiment (RTE). It is about giving permission to others to perform experiments.

Why is right to experiment important? Experimentation is at the heart of innovation. If you want to foster a culture of innovation, you would need more people come up with ideas and the perform experiments to test various assumptions associated with the ideas. How did Gandhi view this in his Ashram? Let’s start with his first Ashram – Tolstoy Farm in South Africa.

Tolstoy Farm operated under strict rules. What to eat and what not to eat, what mode of transport to use to go outside the farm, what time to sleep etc. was already decided. The rule was that if are traveling outside the commune for an errand or shopping trip for the commune then you could travel by train, third class. However, if you are going out for personal reason, it had to be walking. Gandhi still had legal cases and used to walk 21 miles to visit Johannesburg.

In one incident a young man made fun of two girls at Tolstoy Farm. Gandhi ‘as a warning to every young man’ cut long hair of the two girls. Manilal, Gandhi’s son, was already a teenager. He hadn’t undergone any formal education. And he wasn’t permitted to either. In fact, in a letter written to Manilal from a prison in South Africa, Gandhi justifies his position. Gandhi writes, “I know too that you have sometimes felt that your education was being neglected. … I have been reading Emerson, Ruskin and Mazzini. I have also been reading the Upanishads. All confirm the view that education does not mean a knowledge of letters but it means character building”. Note that the person preaching this is himself educated in England. In the words of Gandhi’s biographer Louis Fischer, the letter effectively said, “Your life remains tied to mine; you cannot go your own way.” Manilal, in fact, wanted to become a lawyer or a doctor. In short, you had little scope of experimentation if you were at Tolstoy Farm. Gandhi was by then 40 years old.

Fast forward a decade and now Gandhi and his followers are living at Sabarmati Ashram. Gandhi writes about his wife Kasturbai, “Ba takes tea in spite of the fact that she lives with me. She also takes coffee. I would even lovingly prepare it for her.” So looks like there is some change in the attitude. Maganlal Gandhi was running a laboratory performing khadi experiments at the Ashram and reporting his findings at Young India newsletter. In fact, an open challenge was announced in 1919 for “the spinning wheel capable of turning out yarn five times the quantity turned by the common wheel”. The winner was to get Mr Rewashanker Jhaveri’s prize of Rs. 5000. Six entries were received from places like Baroda, Sialkot, Beneras etc.

Fast forward a couple of more decades and now the khadi movement had evolved into All India Village Industries Association (AIVIA). On December 30, 1938, Gandhi went to Wardha to inaugurate Magan Museum. Apart from khadi-related models, the exhibits included miniature models of various types of oil presses and contraptions used in paper making and oil-pressing and leather tanning industries. Gandhi said, “I would like you to regard the Magan Museum and the Udyog Bhawan not as the old curiosity shop, but as a living book for self-education and study”.

Looks like Gandhi’s view on RTE evolved. It started with no RTE at Tolstoy Farm to a couple of selected disciples experimenting at Sabarmati to a group experimenting at AIVIA. However, it never became his forte. I haven’t come across his concern that not enough people at his Ashram or in India are experimenting. But I could be wrong. Perhaps it is difficult to excel as a solver and a capacity builder at the same time. What do you think?

Sources:

Louis Fischer, The life of Mahatma Gandhi, HarperCollins, 2009.

D. G. Tendulkar, Mahatma: Life of M K Gandhi, volume 5 1938-1940, Govt of India.

Gandhi with microscope photo from wikipedia.org.

Design thinking vs TRIZ: A panel discussion

At the innovation leadership workshop I facilitated on July 5-6, we had a panel discussion on two creative problem solving methodologies – Design Thinking and TRIZ. For Design Thinking, we had Lakshman Pachineela Seshadri who is the Head of Innovation at SAP Global Delivery, Bangalore and also a visiting faculty at Hasso Plattner school of Design Thinking at Potsdam. On TRIZ we had Dr. Bala Ramadurai who is the co-founder of TRIZ Innovation India and an innovation consultant.

The questions that got discussed were as follows:

1. What is Design Thinking (DT)?

2. What is TRIZ?

3. Does TRIZ focus on problem solving or inventions?

4. Does Design Thinking give a view on how to identify a problem?

5. Does Design Thinking give any guidelines about what’s a good challenge?

6. Does TRIZ give a view on how to identify a problem?

7. How do we ensure that we are getting insights of relevance?

8. Is skill a pre-condition for Design Thinking?

Here are a couple of sample questions and partial answers. For more details, please see here.

Q: What is Design Thinking (DT)?

Lakshman: DT says that don’t go by the stated requirements, go beneath them, go and understand why they want it and how they use it. Suppose you look at how kids use a toothbrush, you will realize that it is different from how adults use it. Kids hold the brush with palms instead of just the fingers like adults. Observations like these create insights. These insights then lead to solutions like cushy and firm handles for kids’ toothbrush.

DT approach is different from the traditional market research based approach which relies on analysis and number crunching (left brain stuff). DT uses market data to zero on a particular problem area and then we go into the why and how of it.

Q: What is TRIZ?

Bala: My tryst with TRIZ started 5 years ago when I was working as a research scientist at GE. We were working on an ultrasound project. We were using the technology from medicine and applying it to aerospace in predicting part-life. We achieved in a 2 day workshop what could have taken us several months.

We were using a linear plot of intensity. We applied a TRIZ principle which says that what is 1-D becomes 2-D. We asked, “Why can’t we have 2 dimensions to it?” That turned out to be a patentable idea. Sounds so lame, so easy. What does your intuition tell you about our next step? 3-D - bingo! We looked at the hot-spots 3 dimensionally. That was our second patent. It took us just a day rather than 6 to 8 months. TRIZ gives several such patterns like “1-D to 2-D” which are called inventive principles.

For complete panel discussion, please see here.

Catalign Quarterly - June 2012

Catalign Quarterly is an attempt to put together insights relevant for fostering a culture of innovation in organizations. This is the third issue of the Quarterly.

Theme for this quarterly is “Design of strategy as if implementation matters”. If designing a good strategy is difficult then designing a strategy as if implementation matters is far more challenging. IBM’s ex-CEO Louis Gerstner expressed this well when he said, “It [IBM] had file drawers full of winning strategies. Yet, the company was frozen in place.”

In the first article we reflect on the 3 challenges in implementing a strategy as observed by Richard Rumelt. We explore an approach called "following the bright spots" in the second article. We summarize 3 of the lessons Sudhir Kumar learnt in implementing a strategy in Bihar. Finally I review a book "Understanding Michael Porter" by Joan Magretta.

1. 3 Challenges in implementing a strategy

2. Following the bright spots and its implications for designing a strategy

3. 3 lessons from implementing a strategy from Sudhir Kumar’s experience in Bihar

4. “Understanding Michael Porter” by Joan Magretta: A book review

I would like to thank Prof. Rishikesha T. Krishnan for the discussions on this topic.

Theme for the Sept 2012 quarterly is: Building experimentation capacity.

“Understanding Michael Porter” by Joan Magretta: A book review

Why I read the book: I got interested in “Understanding Michael Porter” by Joan Magretta when I read following remark of Porter in an interview which is an excerpt from the book. Porter said, “I used to think that most strategy problems arose from limited or faulty data, or poor analysis of industry or competition. But the more I have worked in this field, I have come to appreciate that some of the most significant barriers [of designing & implementing a good strategy] come from the many hidden biases embedded in internal systems, organizational structures and decision-making processes.” I thought here is an opportunity to understand Porter’s view on what is beyond “analysis” part of strategy. After all, Porter is the most cited author in business and economics according to Wikipedia. So, there were two questions in mind while reading the book. One, “What is the essence of Porter’s work on business strategy?” and the second, “What does Porter say about – design of strategy as if implementation matter?” I felt that the book did a great job in answering the first question in a simple and concise manner. On the second question, the book mostly remains silent.

Here are two things I liked most and one thing I found really surprising from the book. Let me begin with the things I liked.

Competing to be the best vs unique: In 1999, Westin Hotels and Resorts introduced its branded “Heavenly Bed” after investing tens of millions of dollars in testing mattresses, pillows and bed linens. Rivals didn’t leave much time in jumping the bandwagon. Hilton introduced Serenity Bed, Marriott -Revive Collection, Hyatt – Hyatt Grant Bed etc. Soon it resulted in a bloody Bed War. The consumer was the winner. However, how much the hotel industry benefited is debatable. Porter says that “Competing to be the best” leads to competitive convergence. Over time, all rivals begin to look alike. A much better thing to do is “competing to be unique”. And how do you do it?

Dual emphasis on value proposition and tailored value-chain: There are two sides to the strategy equation. One is what customers see different in you – the value proposition. The other, what you do differently in creating the value – the value chain. For example, for Southwest Airlines, the lowest cost is what its customers see and value. How does Southwest do it? By tailoring its value chain. For example, one of things it needs to minimize is gate turnaround time. That means draining the lavatories fast. To do this, it needs to hook up an equipment to service channels. This interfered with other activities. So Southwest got Boeing to reposition the service panel in new 737-300. That is tailoring the value chain – zooming in on the price and/or cost drivers and performing the activities differently or performing different activities to achieve the same goal.

Now, about the thing I found surprising:

Underlying economic model: What is the right goal for strategy? According to Porter, it is Return on Invested Capital (ROIC). I am sure it is a great goal. However, that’s not how Mark Zuckerberg or Steve Jobs looked at it when they started their companies. They were passionate about doing something – building a PC or a social network and they did it. In laying out the framework, Porter emphasizes how “rigorously grounded the framework is in economic principles”. Ironically, he makes strong assumptions about how rational the decision maker “ought to be”. That makes the underlying economic model shaky as human decision making is subjected to systematic errors of judgment or biases. So I feel Porter’s framework is like a chair designed for ultra-smooth surface and then used on a wobbly surface.

Overall, I enjoyed the book, found it useful and would strongly recommend it to anyone who wishes to get an overview of Porter’s work on business strategy.

Photo sources: wikipedia.org (Porter's photo), barnesandnoble.com (book cover)

What is “change by being”? Stories of Ramana Maharshi and Eckhart Tolle

‘Change by doing’ doesn’t require much of selling. Whether it is a salt march, a war or the creation of Facebook, the act triggers a change process – sometimes quite massive. In contrast, ‘change by being’ is relatively less understood. Many people may not even consider it as a legitimate approach for change. And yet, I believe ‘change by being’ is just as powerful an approach as ‘change by doing’ if not more in bringing about a change. What is ‘change by being’? Let’s get a glimpse of it through 2 short stories of Ramana Maharshi and Eckhart Tolle.

Ramana Maharshi: David Godman narrates the story of a “miserable, crabby” woman who visited Ramana Ashram during 1940s in one of his interviews. The story was narrated to him by Arthur Osborne’s daughter. During that time Osborne’s house at Tiruvannamalai was a place where foreigners who couldn’t find a place to stay would be put up. One evening a miserable, crabby woman was sent to Osborne’s place by Ashram folks. The next day she left for the Ashram after breakfast. When she came back for lunch she was radiant and glowing with happiness. Hosts were happy and curious to hear about the “transformation story”. However, the woman remained silent throughout the lunch. Finally, the hosts couldn’t resist it anymore and asked her, “What happened? What did Bhagwan do to you?” The woman was surprised. She said, “He didn’t do anything. He didn’t say anything to me. I just sat there the whole morning and then came back for lunch.”

Eckhart Tolle: Tolle narrates the story of one of his neighbours Ethel , a “middle aged, intelligent and highly educated” woman in the book “A New Earth”. One night at 11 o’clock Ethel wanted to see Tolle urgently. It was clear that she was under stress. She was trembling as she took out papers from a file and spread them on the sofa. Tolle says, “I looked at her with no thought and no judgment and listened in stillness without any mental commentary.” Ethel kept talking. She was worried about a dispute which arose after she had refused to pay service charges for the repairs at her house. Ethel kept talking for ten minutes and then suddenly stopped. Then she looked at Tolle and asked, “This isn’t important at all, is it?” Tolle said, “No, it isn’t”. She sat quietly for a few more minutes, picked up her papers and left. The next morning when she saw Tolle on the street, she asked, “What did you do to me? Last night was the first night in years that I slept well.”

Did both the stories involve a change? Yes. Did the stories involve an action? Almost no visible action from Ramana or Tolle. So, what is happening here? I don’t know. But I like Tolle’s approach – which begins with complete acceptance of the situation – without being judgmental about it. Perhaps this creates a mirror so clear that the other person sees herself and the futility of the conflict with utmost clarity. That leads to the change.

David Bohm calls a person like Ramana or Tolle “a catalyst” – a person who “makes possible certain action without itself taking part, but merely by being what it is.”

Can anyone become a catalyst by creating such a mirror? Eckhart feels that it needs practice. For most of us, the mirror is tinted – in fact, heavily tinted. With practice it can become clearer. I hope it is like building stamina.

Sources:

Tolle’s story is on page 175-176 of “A New Earth” by Eckhart Tolle.

“Catalyst” analogy of David Bohm is on page 173 of “The ending of time” which contains dialogues between David Bohm and Jiddu Krishnamurti.

3 Lessons in implementing a strategy from Sudhir Kumar’s experience in Bihar

Sudhir Kumar (SK) played a key role in turning Indian Railways around during 2004-2008. However, initial years in his tenure in Bihar were disastrous. He was shunted, frustrated and according one wise-old colleague accelerating towards martyrdom. What did the angry young man learn about implementing a strategy during this period? Let’s look at 3 lessons in this article.

1. First learn to survive: When SK was posted to Bihar as a fresh IAS officer, he wanted to “quickly sort out the whole world” – especially the corrupt system. He says, “While I was honest, I was also impolite, abrasive, and saw words like ‘compromise, adjustment or tact’ as signs of cowardice and weakness”. One of his first projects was to arrest the theft of electricity in Patna. He discovered that many prominent people were involved in the illegal activity. He began to go after the top honchos to send a strong message to the bad guys. Is it difficult to guess what happened next? SK was transferred to a different post. The system revolted in unison to make SK ineffective. SK learnt his first lesson: To accomplish a mission, first learn to survive in the position.

2. Empower the beneficiary: One of the assignments was to build wells for the poor. Initially, SK and team executed the project with remote control. All the decisions about selection of well site, their diameter, depth, material to be used were made sitting at the head quarter. The primary users of the well were not consulted at all. The scheme was a failure in terms of how useful these wells turned out to be. Later the approach was modified to empower the people on-the-ground in making these decisions. SK says, “As outsiders, our judgements would never be as good because we had limited data on ground realities.”

3. Start where you can easily make progress: In another project SK & team was to increase tax revenue by arresting tax evasion. One option was to attack the unorganized sector like spices or cashew nuts. However, in this category it was difficult to get authentic information. The other option was to look at organized sector categories like scooter, motorcycle and cellphone. In this category, the first sale at the point of origin was in white currency. SK started with the second option where computers could be used to maintain and track the data. It worked very well. Later on when SK worked with Lalu Prasad in Indian Railways this lesson was very useful.

Source:

“Changing tracks: Reinventing the spirit of Indian Railways” by Nilakant V. and Ramnarayan S, Collins Business, 2009, pp 29-34.

Sudhir Kumar’s photo is from IIM Indore site.