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In today’s fast-changing business environment, innovation is not just important but also essential for the survival and progress of any organisation. There are any number of examples of global giants that ruled the roost for years or decades but perished because they did not or could not adapt to change fast enough. Two of the most well-known case studies often cited by management experts are, of course, those of Nokia and Kodak. While the former did not see the tech world moving from hardware to software, the second did move from analog to digital but the transformation was not swift enough to keep the competitors from chipping away at its once-enviable market share.
If today Manappuram Finance boasts of an AUM of Rs 31,000 crore, over 5,000 branches all over India and 44,000 employees, it wouldn’t have been possible at all without that magic ingredient of business called innovation. Pawnbroking or lending against the security of household gold jewellery has been in existence for several decades in this country but a transformation was brought into the field by infusing professionalism, modern management practices and technology into the gold loan business, which was till then a traditional business dominated by pawnbrokers and moneylenders operating in lanes and bylanes spread across the country. Manappuram became the first corporate entity in the country to enter this business and turn it into an organised and professional field. This not only paved the way for the growth of one company but an entire sector. This brought about much-needed transparency to the business, which was till then riddled with complaints of malpractices. Today, there are many NBFCs that are following on the footsteps of Manappuram and private as well as public sector banks have also woken up to the immense potential of the gold loan business. Since then, to stay ahead in the intensely competitive business scenario, Manappuram has been adopting incremental innovations with the help of technology; products such as Online Gold Loan and Doorstep Gold Loan are two such examples of innovative products that are tailormade for the modern Net-savvy customer.
To progress and prosper, organisations have to continuously innovate and promote ‘intra-preneurship’. When things go smoothly, there is a tendency on the part of institutions to slip into a comfort zone and believe that their model is sustainable forever. But when a business is attractive, it is bound to attract competition. Also, when a competitor comes, he won’t just emulate but add some ‘plus’ to the product or service. It is this ‘plus’ that takes away the customer.
And whatever seems a relatively safe zone can turn out to be slippery, almost overnight. To tackle this challenge, companies need to set up a specialised cell to bring about innovations based on current developments. Also, every department has to be encouraged to be innovative in its functions.
For innovation to bloom, the soil needs to be right and the culture appropriate. I once headed a FICCI team that went to Israel to study the water management system there. They get very little rainfall but desalinate sea water and recycle even waste water. Since the land is barren, they employ ultra-modern agricultural techniques and are self-sufficient in most areas including food production. This is admirable, since they are always under threat because of the geo-political situation and constantly under air surveillance.
I was there for a week and used to go for evening walks in the beach. Once a couple of youngsters accosted me and greeted me with, ‘Hello, uncle’. I instantly knew they were Indians and they turned out to be final semester students of IIT Powai who were doing a project at a local college there. I asked them why Israel and not the US. They told me that it is the dream of any student to do a project in that country where innovation is a way of life. People always try to do things differently there. It has become part of their culture to constantly look for innovation.
Long ago, when I used to work as a banker in Chennai, I saw a different kind of innovation in raising and grooming children. Our branch was in Mint Street and our customers included members of the Gujarati community. I came to know that while celebrating children’s birthdays, they would accept small donations and with the pooled-in cash, they would buy blue chip shares in the name of the birthday boy or girl. The child would see how the share price goes up and down and watch the share’s worth swell and understand the value of money automatically.
In this century, innovations are mainly driven by information technology. And technology progresses in totally unpredictable ways such as Artificial Intelligence and Metaverse. In the financial field, a lot of innovative products have become the order of the day. Even the most ordinary individuals have learned to use the e-wallet. Currencies have progressed from physical to plastic to digital. These days, the digital nature of the transactions enable the lender to assess the creditworthiness and turnover of the customer. This has led to digital, round-the-clock lending.
Same is the case with any field. In medicine, complex surgeries are done by renowned experts sitting in another corner of the world, using robotics. In automobiles, they are coming up with driverless cars and intelligent cars. Innovation is now inevitable and an integral part of modern life.
Innovation happens more often in startups because these are the creations of individuals who are passionate about what they do. It is like a chess player who plays for hours but does not feel tired because he is passionate about the game. An entrepreneur is also similar in his ways to the chess player and tries different ways of doing a business until he finds the best method.
In large organisations, on the other hand, we create followers but it is not easy to create an innovative mindset in people, though it is not impossible. At Manappuram, we do have an internal group of people who keep their ears and eyes open to the latest technological innovations.
We are all slaves of customs and practices and creativity gets blunted as we get older. This is why, large firms nowadays identify good startups and promote them. The idea is to identify someone who is driven by sheer passion rather than bring together people and create formal think tanks. Another positive development is that the Central government now allows CSR funds to be used for innovation. The IIMs and the IITs now have a startup fund and even the Kerala government has an incubation cell.
India is fast becoming a global hub for unicorns and as Jeff Bezos, one of the greatest innovators the world has seen, once said, “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.”