Friday, October 16, 2015

Indian Aviation: Lifts & Drags

Indian Aviation is gaining global attention with the potential it holds. It is fastest growing and 3rd largest in absolute number of passenger growth. Billionaires growth rate of 20% indicates the potential for corporate aviation. The huge gap in flights per capita (4 times less than China and 40 times less than US) is another indicator of unrealised potential.

The 'Lift' that Indian Aviation is experiencing is more due to favourable econometric factors.
  • Growing GDP and GDP/capita
  • Income distribution moving towards to middle and high income groups
  • Young demographics and increasing working population
  • Increasing urbanisation
  • Downward trend in inflation adjusted travel cost due to competition driven efficiencies

However, story of Indian Aviation is also of missed opportunities. It missed out on using geographic advantage of India to become a major hub for East-West connectivity in 1990s. More than half of the revenues of foreign travel in & out of India is with foreign players rather than with Indian operators. India also lost out on becoming MRO hub to smaller countries in neighbourhood. India constitutes just about 1% of Global MRO market. 

The 'Drags' on the Indian Aviation are due to policy and structural issues.
  • High fuel cost compared to global prices due to taxes (excise, sales tax). Hence, airlines in India are saddled with higher fuel cost compared to their global counterparts.
  • 5/20 rule (International operations only after 5 years of domestic operations and 20 aircrafts fleet). This rule delayed the airlines in India spreading their wings globally. Only few large airlines operate internationally. And the rule stifles new entrants with ambitious growth plans. 
  • Unattractive incentives for route dispersal to remote and unprofitable hubs. 
  • Lack of low cost airports. Lack of alternate airports in busy hubs. For example, Bangalore is not allowed to have its old airport as an alternate airport for domestic LCC. 
  • High tax burden on MRO operations.
  • Inadequate FBOs for General Aviation.
  • Non Acceptance of Bio jet fuel for aviation. Biojet fuel can cut both costs and emissions. In addition, it will stimulate growth in biofuel segment which has links to rural economy.
The above issues stem from years of Govt. indifference to aviation. Aviation unfortunately has been considered transport of elite and its stimulating effect on economy has been ignored. Aviation can speed up the business exchange, goods movement, tourism and overall economic growth. Today commercial aviation caters to a middle class citizen for both leisure and business travel. 

Even if we were to take the corporate aviation which is used by business heads, it helps them save 20% of time compared to commercial airlines and enable them to visit remote places at their convenience. Thats a huge improvement in their productivity and connectivity which translates into faster decision making and business growth.

In India, Aviation is a major employer and supports 1.7 million jobs. Globally, aviation contributes to 3.5% of Global GDP, but in India it contributes just about 1.5%. The 'Lift' from the favourable econometric factors presents an opportunity to derive substantial economic benefit and create jobs provided the 'Drags' are addressed. Or else, it would again become another of many missed opportunities.

Data sources: Airbus, IATA, Frost & Sullivan

Sunday, August 30, 2015

Framework for Trans-national R&D strategy

Multinational companies generally tend to have R&D concentrated at their parent company location. Having a closed setup in one place has its obvious advantages in terms of better coordination, efficiency and information security. 

However, multinationals do want to break the mould and connect with and learn from broader ecosystem around the world. The approach though has been more or less ad-hoc,
  • captive centres to fulfill an offset obligation or for access to cost effective talent
  • sponsoring research in relevant areas 
Some multinationals just do it since other are doing the same. 

A more structured and strategic approach can not only deliver operational benefits but can also build competitive advantage. This blog post would highlight a strategic approach to R&D setup and partnerships in different regions of the world.

A regional R&D strategy would be aligned and in sync with corporate and R&D strategy of the company. And it would have following three objectives as its corner stones:
  • Leverage strengths of the geographic region
  • Provide advantage over competition
  • Build strategic relations/assets for the company in that region

To build the above strategy, a broad based research would be required covering various aspects of the given region. 

To analyse the research data and derive meaningful insights, one could use a matrix layout to analyse and rank on multiple criteria. The outcome of the analysis has to be actionable insights related to the three corner stones mentioned above.

However, a strategy is never complete with an executable plan. Following framework is a good tool to derive and communicate the action plan.

For many companies, decision for expanding R&D outside home location is driven by operational and obligational considerations. However, companies gain to benefit more by treating it as a strategic move and putting more thought and diligence behind it.

Sunday, August 9, 2015

Emerging Hyper-local Aggregation markets and startups

Aggregation model of business brings various sellers and buyers on a common platform. Flipkart, Snapdeal, Redbus, MakemyTrip and many more companies have since matured the aggregation model and grown in both valuations and scale of operations.

These aggregators sacrificed profitability to build market share. The nascent e-commerce market and sluggish economy only added to their woes. Soon the long term sustainability of aggregator model came under questioning. But interestingly, the aggregator model is only picking up pace, now in its new avtaar of Hyper-local Aggregation.

New startups have cropped up who are aggregating at the local level of a city or even a neighbourhood. Big Basket is delivering locally sourced groceries at one's doorstep. FoodPanda, TinyOwl, Delyver are delivering food from nearby restaurants. And new players like Grofers are delivering from your trusted shops in the neighbourhood. Then there is Practo who helps locate and rank doctors locally. SeekSherpa aggregates local people who provide tours with real local flavour.

The urban lifestyle is fuelling the demand for such hyper local aggregators. A typical urban consumer has disposable income but not time. They look for convenience and tend to buy experience. It's not the lack of demand but the poor service delivery which can hurt a hyper local aggregator startup. Cracks are already showing up; Cab drivers do not show up, Food orders get cancelled, Low quality vegetables delivered, not enough SKUs. 

Another area of concerns is scale. Can these hyper local aggregators scale up and become unicorns? Or would their growth stabilize at a smaller scale. Unlike Flipkart and likes, these startups are not nationwide. The only way to grow in scale is to replicate their business model in as many cities as possible.

Nevertheless, its encouraging to see new sprouts of economic activity at local levels and should be nurtured. And with creative offerings of these young startups, its certainly interesting times ahead for urban consumer.

Sunday, June 28, 2015

Business-model Innovation driven by Emerging Technologies

Business model innovation can disrupt markets over a short period. It can expand markets, reduce costs and even change the competition landscape.

Examples of business model innovation tends to be around clever bundling, pricing, consumer financing and sales channels. However, the purpose of this post is to highlight how emerging technologies have enabled business model innovation.

  • A good case in point is Insurance. Connected Vehicle technologies have allowed insurers to provide custom insurance solutions based on vehicle usage and driving patterns/behaviour. 

  • IoT (Internet of Things) and Data Analytics are driving Product to Service model. Companies are now connecting to their product remotely and selling the service delivered by the product. For example, iBot Inc ( is working with water purifier makers to sell pure drinking water.

  • The traditional manufacturing business model of scale and specialisation is bound to lose its competitive edge to 3D printing. 3D printing technologies can manufacture far more intricate and variety of shapes (Eg: bionic designs), and allow manufacturing to be more decentralised, democratized and viable at small scale. 

  • Recently, many technologies have emerged to reduce the size of video and CAD files without compromising the quality. These lightweight media technologies can now enable more cloud hosted and remote delivery business models. For example, specialized training (involving virtual simulation and walk-through) can move out from specially equipped facilities to remote portable devices.

  • Emerging mobile technologies are disrupting the website based business models. Today consumers spend far more time on their smartphones and apps. But that's not the only reason why e-commerce companies are betting on mobile platforms. Mobile platforms bring more engaging technologies like searching that coveted dress with just its picture, indoor navigation and assistance in a store, virtual reality based envisioning tools and others. 

R&D and Engg. tend to focus more on product and process innovation. Business model innovation is more strategic and needs top leadership commitment. Hence, new entrants and small companies are often ahead in implementing it while large players struggle with internal approvals and bureaucracy. 

Sunday, May 3, 2015

Startups and Corporates: How Goliaths are shaking hands with Davids

Big corporates have realised the need to engage with start-ups for various reasons:
  • Access to new technologies to feed into R&D pipeline
  • Access to solutions for improving operations and product differentiation
  • Find new B2B customers and catch them young.
  • Talent attraction and retention
  • Attractive investment ROIs
  • ‘Speed To Innovation’ 
Engaging with start-ups has its own challenges. The expectations of startups and their timelines are vastly different from those of established companies. The traditional partnership or vendor-supplier models do not fit here. Following are the emerging engagement models:

Incubator: This model is used by corporates to engage with early stage start-ups. The start-ups have an idea, skillset to execute and a working prototype in some cases. Companies incubate the start-ups if the ideas are relevant to the business and provide funds, resources and mentors (both business and technical). The engagement duration is long, about 2-4 years. The successful start-up is either acquired or the start-up team is acqui-hired. This model is more popular with investor communities and industry bodies.

Accelerator: This model is used to engage with later stage start-ups. These start-ups would have a working product/solution and a customer base. An accelerator is a 5-6 months structured program in which start-ups are given space, facilities (equipment, internet, food etc..), funding, mentorship and access to customers. Towards the end of the time-bound program, the corporate has to select the startups and decide on how to leverage/assimilate the outcome. If start-ups adapt their product to corporate's needs (also called pivoting), then they are invested in. A graduation day marks the end of the program and the start-ups are showcased in front of the industry and investor community.  

Partnerships: The above models are structured programs. However, corporates can choose to go for a flexible and open model. The start-up community is regularly scanned in areas relevant to the company. Relevant start-ups are reached out to for further discussions and partnership. In this model, compared to the earlier two models, there is limited opportunity to mould the start-ups to suit corporate needs. The model works fine if the start-ups are potential product/service providers to the corporate.

Strategic Investments: Some start-ups are matured, of high value with high potential to impact the corporate's industry. These start-ups do not need the incubation or acceleration. These are companies of future. Corporates make large investment and pick up equity in them so to enjoy high rate of return and also to remain plugged-in in their development and exercise influence. Also, it lends prestige and visibility as corporates are seen as technology leaders who are thinking ahead.

The start-up ecosystem is highly dynamic and belies the standards/norms that big corporates are used to. Engaging start-ups demands resources and time of the organisation. With start-up ecosystem expanding by leaps and bounds, the huge money pouring in and skyrocketing valuations, no corporate can ignore it. The corporates who have been running structured engagements are open to sharing their experience and resources. The newcomes need to leverage the same while formulating their approach.

Tuesday, March 31, 2015

Startups and Corporates: How Davids are raising stakes for Goliaths

This post is a precursor to the next one 'Startups and Corporates: How Goliaths are shaking hands with Davids'. 

Democratisation of Research & Product Development

Earlier, New Product Development used to be expensive and hence only big corporates with deep pockets and research agencies were the main R&D centres. With time, new R&D areas and inexpensive ways of working emerged, allowing a person to access and work on cutting edge technologies from comfort of his/her home.

  • Software simulations reduced cost and time. One can simulate a complete physical system and run countless simulations at no incremental cost. 
  • Software itself became driver for new inventions. Hardware coded functionalities gave way to software coded functionalities. Eg: Software defined radio
  • Fabrication became inexpensive with 3D printing. No need for elaborate setup of lathe, 5 axes milling machines etc. One can now order Metal/Plastic printed parts over internet and get them delivered at the doorstep. Going forward even electronics will be 3D printed.
  • Open Source has revolutionized access to high end technology. From hardware to software, open source has made them inexpensive and readily available. Eg: Arduino, Raspberry Pi, OpenCV, Octave etc. (visit for various open source hardware)

With above developments, R&D is no longer an exclusive club. It is now open and democratised allowing anyone and everyone to participate. For instance, in the field of Augmented Reality, alongside big brand devices like Google Glass, MS HoloLens and Epson Moverio, there are also devices from Start-ups like Oculus, Magic Leap, InfinityAR, Meta, i2i and others.  

Technology start-ups have mushroomed who are developing new products alongside corporates. And there is no dearth of Angel & VC money to scale them up. 

Splintering/Unbundling of Value Chain

Large organisations cover large segments of value chain. And organisations tend to integrate vertically or horizontally to grow. With size, comes the rigidity and constraints. Large organisations are slow in closing performance gaps and addressing new market opportunities. And these become white spaces for startups to enter. Potentially, a large segment of value chain can be split into small segments, each being served by a start-up. This trend is visible in several industries. A good example is logistics industry where the value chain has been splintered by several start-ups. Refer

Another example is Home Delivery for food items. Delivery at door step is a segment of value chain which is integral part of PizzaHut, Dominos etc. They have long advertised their home delivery to differentiate themselves. But start-ups have emerged in this segment alone, collecting the food packets from the restaurants and delivering it to doorsteps of the customer. The value chain segment of food preparation and its delivery has been split into two and competition just got tougher. 

Further, start-ups generally go after high margin and high growth business. Which naturally puts the squeeze on the high-margin value segments of large organisations. 

In next post, the ways an organisation can address above challenges will be discussed. Stay tuned...

Tuesday, February 24, 2015

Innovation Multiplier: Building on other Innovation & Invention Bricks

Innovation multiplier is something quite obvious to me. Yet, I am writing on this because I have seen several ideas and prototypes which do not leverage this simple concept.

Many attempts at Innovation start with the technology or concept with which the idea owner is comfortable with. He/she ignores what is state of art in both technology and does not incorporate the same. As a result, the demonstrator or MVP fails to 'Wow' the audience and investors.
For instance, an idea around Augmented Reality using cameras which use the older technology of depth sensing. It constrained the form factor and the quality of the results. 
A solution deployment proposal still leveraging the big black server boxes when the small and sleek computer sticks would suffice.

Same goes for business approach as well. Ideas built on older business assumptions are bound to have average market success and find poor traction with investors. For instance, a detailed proposal on a B2B solution attempting to build an industry data standard for entry barrier. But today when the data can be easily converted into different formats and shared across platforms, creating a data standard would be a futile exercise.

An innovation should leverage all the leading (state of the art) technological and business developments. Even if the underlying technology bricks are yet to mature. Technologies are maturing very fast today, especially when their is a specific business application. And in worst case, its always easy to scale down on technology rather than scaling up.

Tuesday, December 30, 2014

Frugal Discovery mode to decode Emerging markets

In general, companies take a linear approach to launch new products and services. First comes the market research, then the forecasts, then the product R&D followed by a big-bang launch. This approach works fine for existing markets. But when it comes to emerging markets, such approach fails to deliver. And history is replete with such examples:
  • IBM PCjr (IBM much hyped PC for consumer market which failed on cost and features)
  • Apple Newton (Big bang launch of a product ahead of its time. With features for which market was not ready then.)
  • HP's Kitty Hawk (Designed for emerging PDA market which collapsed. Meanwhile, missed out on huge market of video gaming systems)
  • Premier Smokeless Cigarettes (Launched when smoke was considered a major health risk, but the taste/flavor was rejected by the users)

The common thread in above and similar examples is that
  1. Companies wade into uncharted territories solely based on their research & forecasts. Their efforts give them the confidence that they have figured out the unknowable/uncertain emerging market. 
  2. And they put huge money, resources and execution capacity behind the launch. This big bet launch gives them little financial room later to turn back and correct course. The managers leading the launch also hurt their credibility.

For uncharted territories, the suggested approach is to use a Discovery mode for the first point above and combine it with Frugal approach to address the second point.

The framework below explains when the Frugal Discovery mode is relevant.

The Discovery mode is required when:
  • Customers do not know what they want. The need is yet to be created/perceived.
  • A company is not sure what customers want. Though the company may rely on its market forecasts. But the actual use may be out of their research radar.
It takes time for consumers to warm up to new product/service features. And to better understand their own needs w.r.t. to given product/service. Discovery mode allows exploration and learning to both company and its customers. 

And being Frugal in discovery mode helps to:
  • Conserve resources for second or even third attempt at getting the product strategy right. Companies tend to do the opposite by opening the full tap and going gung-ho with full scale implementation in the first attempt.
  • In discovery mode, iterations may happen even in commercialization phase on product design and manufacturing capacity. And since such iterations are later in product development lifecycle, they are going to be costly. Hence, it helps to be frugal from the beginning.
Be frugal, make limited prototypes, test market and iterate. Customers will also learn what they actually want and new customer segments might emerge. 

Many companies are now looking beyond their traditional markets towards emerging markets to drive growth. And to do that, they would need to move beyond the traditional approach of big bang launches with know-it-all attitude to a more humble, frugal and discoverer approach.  

Sunday, November 16, 2014

Organisational-level Strategies towards New/Emerging markets & Disruptive products

In the last post, several organisational-level constraints were discussed which impede entering new/emerging markets and launch of disruptive products. In this post, the strategies to overcome these constraints are discussed. There is no one-size-fits-all and each strategy caters to specific conditions and challenges. These conditions and challenges can be both Market based or Operations based.

And the strategy would constitute designing an organisation which best fits the given Market & Operational conditions.

Strategy: Acquire & Maintain Autonomy

This strategy implies acquiring the target organisation (which offers a potential disruptive product for an emerging market). And to keep this organisation insulated from the influence of parent organisation's systems and processes. This strategy will be suitable in following conditions:

Market conditions:

  • If the target customers are going to be different from existing customer base. 
  • If the initial market size is going to be much lower than that of existing offerings.

Operational conditions: 

  • If the cost structure are going to be different. Especially, if the margins are going to be lower.
  • The technical inclination & competencies to develop the product are not available internally.
  • The product development process is different from that of parent organisation.

Strategy: Spin-out and give Autonomy

This strategy is similar to above with a difference that the external organisation is a spin-out rather than an acquisition.

The market conditions for this strategy remains same as that mentioned for the previous acquisition strategy. An external autonomous organisation is suitable to address a different market size and customers.

With regards to operational aspects, this strategy is applicable if the disruptive product is being developed in-house. But the operational conditions required to deliver the product are in contrast with that of organisation's.
  • The cost structure and margins are going to be different from that of existing products.
  • The product development process needs to be different from that of parent organisation.

Strategy: Ring-fencing  to create an Unit inside Parent Organisation

This strategy implies creating a near-autonomous organisational unit in the parent organisation. This unit will derive its resources from parent organisation but will have operational independence.

The strategy works if the target market conditions are going to be a close match to that of parent's organisation.

  • The target customers for the disruptive product are a close match to existing customer base. 
  • The initial market size is not going to differ much from that of existing offerings.

Ring-fencing is required to address the differences in following operational conditions from that of parent organisation.

  • The cost structure is going to be different. Especially when the margins are going to be lower.
  • The required product development process is different from that of parent organisation.
It of less consequence whether the product idea is in-house or externally acquired.

Another variant of above strategy is Ring-fencing to create an Unit inside a Function

If there is not much difference in operational aspects, then creating a near-autonomous unit inside a function is good enough to address the difference in market conditions.

In case, if the disruptive product is an offshoot of core products of the organisation, has similar cost structure, but has a different target market. In such a case, creating a focused marketing and sales team will be enough to enter the new market.

Strategy: Acquire & Integrate

This strategy is safe to use if an external disruptive product idea requires similar operational conditions and market conditions as that of parent organisation.

Various strategies are summarized below in a framework.
The y-axis refers to Market aspects like Target customers, Market size etc.
The x-axis refers to Operational aspects like Cost Structures, Technical competencies, Product Development process etc..

Sunday, October 5, 2014

Organisation-level constraints on entering New/Emerging markets & launching Disruptive products

An organisation may have several new disruptive product and service ideas. But what matters is how the organisation takes those ideas forward. There are examples where an organisation was first to come up with an idea. But it was some other company which recognized the potential and invested in its development and market launch. As you may be aware, the digital camera was first invented in Kodak!

Why does it happen that a successful organisation which has a great portfolio of products ideas, lose out to others who arrive late in market with similar products. Is it because of the people in that successful organisation or the processes or the culture or because of its customers?

__Existing product/service offerings defines an organisation in terms of the cost structure, profit margins, market size and customer segments. Any organisation cannot change its cost structure overnight, especially to one with lower overheads and thinner margins. Hence, there is a tendency to support product ideas which promise higher margins and are in line with existing cost structure.

__Similarly, when it comes to taking market feedback for product ideas, the sales and marketing personnel reach out to existing customer base. Though the product ideas may be more suitable for an entirely different and emerging market. Since, the existing offerings serve as a reference, an organisation expects the market size of a new idea to be at least as large as that of existing offerings. Smaller markets are not considered as they may not fulfill the desired growth rates of the organisation. 

Hence, when it comes to investing in new products/services, an organisation operates in confines of its cost structure, product margins and customer base. These are organisation level characteristics, independent of people working in it. Product/service ideas which serve existing customers and promise higher margins get support while other ideas starve for resources. 

However, there are ways to influence an organisation and to work-around (or break) its organisation level confines to launch disruptive products and enter new markets. Will discuss the same in upcoming posts. until then.. bye...

Saturday, August 16, 2014

Delivering Breakthrough Innovation: Selecting customers for feedback and launch

The series of posts on "Delivering Breakthrough Innovation" are based on my experience. And in this post, I would like to talk about the challenge one finds in the marketplace when introducing innovative products/services. 

If you believe that overcoming organisation's internal skepticism & resistance for a breakthrough idea is all it takes to introduce an innovation in market. Wait, till you step in the market! One would find that the internal skepticism also reflects in external world. This shouldn't come as a surprise, because internal industry and market experts have the same mental map as the customers. And hence, they mirror the customer behavior and expectations. 

Customers too are engrossed in their day to day operations and would not imagine something disruptive in their way of working. In a B2B scenario, the customer like any another company, would have their silos, with each functional head expecting incremental improvements in their areas. Hence, level of internal resistance can be a good indicator of resistance to be expected in marketplace. 

So, one needs to be realist and not expect their innovative product/service to be an instant hit in market. At the same time, one should not get discouraged due to initial skepticism and kill the idea prematurely. Following are the pitfalls to be avoided when going to market:

___The management will insist on early feedback from customers before further investment in the idea. But all customers are not alike. Some are conservative and others are progressive, commonly know as 'Early Adopters' and 'Laggards'.
  • If progressive customers are known, feedback should be taken from them. 
  • If progressive customers are not identifiable, then customer feedback should come from a reasonable sample size. This lowers the risk of a conservative feedback. 
  • Also, as mentioned in previous posts, a prototype helps to get objective customer feedback. Even a conservative customer though skeptical, would still be forced to be objective in evaluating it. 

___Some disruptive innovations may require customer trials for further improvement and benefit assessment. While selecting a launch customer for trials, it must be ensured that the customer has reasonable interest in the idea and will give necessary support during trials. Also, the customer can be incentivised in terms of foreground IP sharing or concessions rates going further.

For success of a disruptive innovation, managing externally (market feedback and launch) is as important as managing internally (internal buy-in and development).

Saturday, June 14, 2014

Monitoring Shifts in Related Value Networks and Beyond

A value network constitutes the chain from suppliers to the ultimate customer which serve a specific set of customer needs. A simple example would be of value network of Flash memory sticks. The participants in this value network and their products serve low and portable memory storage needs of the customers. Another example would be value network of long range aircrafts which serve long distance mobility needs of people.

For a given value network there are related value networks which share some common traits. For instance, value networks related to Flash memory are portable computing, desktop computing and mainframe computing. A company may serve more than one value network by different product range.

A company tends to be occupied with shifts in its own value network to compete and survive in the marketplace. The shifts in related value networks and beyond get ignored. As a result, companies are caught off-guard when shifts in other value networks transform their own backyard.
Taking the popular disk drive example where the 3.5in drives in  mini-computers value network entered as game-changer in the desktop computing value network.
Taking the portable music player example which was serving mobile music value network. The portable music players were wiped out when the smartphones from mobile calling value network added multimedia capabilities.

In present times, a company needs to monitor shifts/changes in related value networks and beyond. For instance, an aircraft manufacturer can monitor shifts in value networks of regional, short haul, long haul, business, hobby, cargo and even beyond like space travel, surface transport etc.

While monitoring the various value networks, its important to investigate in various dimensions:
  • Can a emerging product/technology in other value network impact my value network?
  • Can a changing business model in other value network be applied to my value network?
  • Can my product/service fit in other value network as well?
The investigation will reveal both threats and opportunities for a company outside its value network.

Saturday, May 10, 2014

Delivering Breakthrough Innovation: Buy-in & Investment challenge

The last post dealt with execution challenge of an innovative idea. For execution, management buy-in and investment are required. The selection process for investment is a formalized process in many companies. And there lies the risk. Many innovative ideas slip through the cracks when they start their journey down this formalized process. It happens because the investment process is focused on delivering certainty. Innovative ideas are by nature have uncertainty associated with them. They struggle against the "certainty and no-risk" seeking comments like the following: 

Show me the money!: Revenues, cost estimates, business case, profitability, IRR are common in investment and capital budgeting decisions. Answering above questions is easy for a sustaining project which is based on existing technology, business model and market. But a disruptive idea can be different on all the three areas. Since there is no precedence, much of the time is lost in collecting data and figures. Due to uncertainty and non-precedence, the numbers are easy to challenge and hence more data is demanded. Instead of working to mature the idea, the team is caught is spiral of more data, more questions, hence more data. Some good ideas just die a slow death on a PowerPoint presentation.

My customers never mentioned about this problem!: Many companies institute a discipline of "listen to your customers". Customers are asked about their problems, a list is made based on the feedback and circulated to relevant internal departments for further action. If the innovative idea does not answer any problem in the list, then there is a slim chance of any support for the idea. One forgets that the list is just explicit needs of customers. Innovative ideas generally cater to implicit needs, or an unexplored opportunity.

It does not match with my yearly performance targets!: The investment process in general requires commitment from an internal customer who would industrialize/market the idea. An innovative idea will get blocked if it does not fit with the performance targets of the internal customer. In spite of obvious long term potential of an idea, the yearly targets influence the investment decisions. 

Not sure if it can work in real conditions!: As part of the formalized process, the experts will be called in, and questions will be raised on how a solution/idea would perform in actual operational conditions. And as one would expect, the disruptive idea/solution will not have all the answers. The formalized process in general do not provide room for "we will resolve the issues as we go along". Every issue needs to be resolved today! If not, come back with more information for the next meeting.

Formalized process for investment are important in an organisation to ensure that capital is efficiently allocated. Unfortunately, an organisation tend to use this formalized process as a single hammer for every type of nail.

Some organisations have woke up to the need of providing alternate channels for innovative and disruptive ideas, keeping them separate from the sustaining projects.

Friday, March 7, 2014

Delivering Breakthrough Innovation: The Execution Challenge

My earlier two posts dealt with zeroing on a potential break-through idea with the feedback from customers and experts. And believe me when I say that you have come just a quarter of the way. Still there is a long road ahead of execution and implementation. More disruptive the idea, more challenging is its execution.

But why is execution of a disruptive innovation so difficult, especially in established companies? The answer lies in organisation and processes of the company which is performance driven and focused on incremental growth in the boundaries set by the market conditions.

In other words, participating in execution of disruptive innovation is not part of any KPI of a manager and in many cases works against the existing KPIs. Consider following execution elements and the challenges: 
  • Detail solution design and development: Any disruptive idea typically requires a cross-functional team and external expertise. However, R&D and Engineering team are busy with projects for improving existing product. They cannot spare the manpower. And working with external experts raises IP & confidentiality issues.
  • Procurement of hardware/services for development: The procurement team is focused on cost reduction and applies the same process. The suppliers need to be registered and meet the criteria. They want competing quotes and negotiation for any procurement. Whereas you want to work with a designated supplier who is agile and understands your requirements without asking for a 50 page specification document. 
  • Production: The production plan is frozen for the year. There is no availability of machines and skilled manpower to work on your product. 
  • Customer discussion and feedback: Marketing team is busy with promoting existing products. Salesmen are busy with hitting their targets and have no time to discuss ideas with customers.

In nutshell, the organisational processes are designed for what they do best, to build on the past performance and efficiently earn the daily bread and butter for the company. Disruptive innovation is antithesis to what they are designed to do.

A certain organisational support is required to handle disruptive innovation. It would be wrong to rely just on an individual leadership and charisma.

The organisational support can come in following ways:
  •        Empowered team for Innovation with access to top management.
  •        Designated coordinators from each functional dept.
  •        Faster procurement channels
  •        Flexibility in pursuing external partnerships with start-ups, academics and other companies.
  •        A dedicated budget and regular review via say roadshows.

With the organisational support in place, next comes the team. The team may constitute of persons from diverse industry backgrounds and in-house experts. The common behavioural aspects are self-driven, open to new ideas and ability to perform in uncertain environment.

The organisational support and a good team are the foundation to manage and execute disruptive innovation. However, there is no formula for the execution itself. It can be chaotic, iterative, going back and forth, working-around, re-work etc. At the same time it would require painstaking attention to detail, documenting experiment results and mundane project planning & management.

So do you still think Innovation is glamorous and exciting?? J

Tuesday, December 31, 2013

Delivering Breakthrough Innovation - Where to Start? Ans: New Technologies

In the previous blog post, we discussed the vision of ideal world as the starting point. In this blogpost, we will discuss how an emerging technology can be a starting point.

For the start, one needs to keep an eye out for emerging technologies. There are several ways to do it like having subscriptions of relevant magazines, visiting demo days of corporate accelerators etc.

The next step would be to explore the application of an emerging technology relevant to your business. This would require knowledge of the company's products/services.

Once an application areas is defined, the next step is to investigate technical feasibility and create a mock-up/demo to communicate the idea. Its important to note that to adopt an emerging technology for a given application, it may need to be combined with some other technologies as well. It would be wrong to assume that a technology in isolation can be the whole solution.

The next step is to present the idea with a mock-up/demo to the customers/stakeholders and get their feedback. One can argue that customers should be involved earlier when discussing the area of application. But then there is a risk that the idea would be shot down prematurely. Customers or experts are good at pointing out that why something won't work. The response one can get will be 'things are already being managed well and hence the change is not required', 'something of this sort is already happening', 'users may not accept the change', 'I can't see the real benefit' etc.

Its only when there is a demo in front, the minds of customers or experts get triggered to think how the idea might be useful. Also, the ideas start flowing from them on how to improve it further.

With a stakeholder/customer buy-in , its time to move on to implementation.

Since, we are talking about approaching breakthrough innovation via emerging technologies, often the expertise in an emerging technology will be found absent in the organisation. One would need to tap into external expertise which might be present with an academic institution or a company or an expert. Hence, external partnerships become critical in this approach. An open innovation network not only helps companies to keep abreast with emerging technologies but also find experts to adapt and develop them. 

Friday, November 29, 2013

Delivering Breakthrough Innovation - Where to Start? Ans: Vision of Ideal World

In this and subsequent blogpost, several starting points of an Innovation will be discussed. These starting points are not related to interesting stories that you might have heard which include a napkin, a coffee table or a beer. Instead they are more tangible which would tell a professional where and how to start innovating. In any large organisation, the success of Innovation program is measured by innovations delivered and impact on triple bottom line. All the hot air and talk surrounding innovation is inconsequential if it doesn’t translate into concrete deliverables.

For the professionals tasked with delivering breakthrough innovation, following is a good starting point:

The Vision of ideal world
With some knowledge of the overall business ecosystem in which the company operates in, it’s possible to paint a picture of an ideal world. Some examples could be ‘Door-to-Door mobility’ for a automotive company, ‘Non-intrusive security’ for a security systems company, 'Green Buildings' etc.

A vision too broad will not help. It should deal with a manageable part of business like inbound supply chain, a specific area of customer concern, a green product/service etc.

Next step is to validate the vision with experts. I would emphasize the word ‘experts’. The objective assessment of experts helps to identify weakness in the vision and forces one to improve it and plug the gaps.

Also, the experts feedback mark the beginning of the journey from ‘Vision to Idea’. As one explores the vision further with experts, one would come to know that:
  •        Some parts of the vision have already been implemented.
  •        Some parts of the vision are already being looked into.
  •        Some parts of the vision are too far from the business perimeter of a company.

The above parts, though attractive, may have to be dropped. As a result, the unique actionable part of the vision which is relevant to a company would constitute the innovative idea. This innovative idea, apart from drawing on a bigger vision, would also constitute a business case and indicators of potential impact on business. This should get the first buy-in to move forward.

One would be tempted to assume that the next step would be to detail a business and operating plan. However, for a breakthrough innovation, there is uncertainty and hardly any precedence to compare with. Market research and pricing becomes difficult in such cases. An alternate approach is needed for dealing with breakthrough innovative ideas with high uncertainty levels. This alternate approach is prototyping. Quick and low-cost prototypes which are able to demonstrate and communicate the benefits are much more powerful than huge Word and Excel documents.

Building a prototypes generates valuable insights: 
  • Costing: While building a prototype, one gets to know how much a full blown solution may cost.  
  • Technological risks: Any technology risks are made visible early in product development.
  • Customer feedback: Customer feedback is more objective and elaborate on a prototype rather than a paper concept.
  • Market potential: With demonstration of prototypes to customers and experts, one could gauge the benefits accrued and hence size the market.
  • Risk sharing launch customer: A forward-looking customer may agree to try out the proposed product/service and share the risk in its development.
The ‘How’ (how the idea will be implemented) and ‘Why’ (a detailed business case backed with research) becomes evident with a prototype. With a green signal from the management, the next stage is to implement and deliver.

To conclude, a good starting point of breakthrough innovation is to paint a vision. Also, for breakthrough ideas, prototyping is key to resolve various uncertainties. 
On the soft side, perseverance is key. Some expert feedback can be discouraging, but key is to persevere and find the Gold.  

Sunday, September 29, 2013

Market Sentiments at odds with Statistics. Case of Economic service life of aircrafts.

Recently I came across an interesting conflict. A serious debate has been going on whether Economic Service life of Civil Aircrafts are under pressure.

Proponents of debates cite recent developments and experts view to say that Economic service life of aircraft is reducing. And opponents are citing statistics to refute the claims. That makes the debate all more interesting.

Let's quickly look at what proponents are saying:
  • Aircraft values have fallen significantly for many older aircraft over the last two to three years.  John McCormack , Ernst and Young, 2012
  • The widening gap between the physical life of the aircraft and the assumptions made in respect of life and value in financiers' calculations is a growing concern. Airline Business 2012
  • Another trend is for younger aircraft to be parted out and sold for spares as this provides greater value than as an aircraft in operation. PWC 2013
  • … despite the large availability of used aircraft in the secondary market, many airlines have begun to lease new aircraft from lessors ……made older aircraft harder to sell/lease, increasing their availability and reducing their values... Aircraft Monitor 2012
  • ….. aircraft lessors basing their lease rates for new jets on the assumption they will have an economic life of 25 years, when 15 years might be more realistic… Aviation Week MRO Forum, Dallas 2012
There are several explanations offered to support the aforesaid trend. Customers are now preferring new aircrafts to attract customers. Also, on the supply side, it is alleged that there are too much new aircrafts production from OEMs. ECA (Export Credit Agency) support new aircraft manufacturing in home countries. In addition, they give credit support for the sale of new aircrafts to developing countries which were earlier a second hand market. Coupled with technology advancements in new aircrafts which lower cash operating costs for airlines, the overall effect is downward pressure on the residual values of the older aircraft and the second hand market. Also, the changes in regulation related to safety, noise and emissions are driving up the demand of new aircrafts.

However, the opponents point out that statistics tell a different story. 

Both positions are well supported, but then how does one clarify the dichotomy. There is no straight answer, but following observations may help shed some light:
- The world economy has been going through a slump for past 5 years which has put pressure on aviation industry as a whole and consequently on second hand market.
- The statistics from a leading aircraft leasing company do show higher retirement near 15 year life but not significant to shift the average over 45 years.
- Early aircraft retirements are a more recent phenomena. Many LCC carriers have adopted this approach to acquire fuel efficient and brand new aircrafts to attract customers. 

It might be too early to say whether there is a long-term fundamental shift in aircraft economics or a short-term trend. However, the issue can have far reaching consequences on the industry and hence warrants attention and close tab on developments.

Sunday, August 4, 2013

Move up the Business Value Chain? Or Create the most Value in the Chain?

Several companies who compete on cost are tired of it. Hence, they strive to move up the business value chain with an aim to differentiate themselves from competition and improve their margins. This is evident across industry sectors. Several IT companies who compete on cost for back-end subcontracted work are trying to build capabilities up the value chain like Enterprise and Management consulting. Manufacturing companies as well are looking for ways to build high-value products rather than being suppliers for it. The encouragement for moving up the business value chain also comes from Govt. industry and trade bodies.

Is moving up the value chain the only way out from fighting on cost? Or is there an alternate way where you can add much value in the chain without changing your position? Consider aviation industry for example. Fuel savings have become a much important lever for airlines to make profits and stay in business. And who contributes the maximum to fuel savings today? Its not the aircraft manufacturers, but the engine suppliers. Most of the increase in fuel efficiency in recent times is attributed to technology advances in engines. Hence, engine suppliers are contributing much value in aviation value chain without changing their position in it. Needless to say, it does increase their bargaining power.

Even in other industries its not very difficult to see whereby players in middle of the chain can add value. For instance, in Automotive, as the whole industry move towards electric cars, the battery suppliers will have the opportunity to play the most value adding role by providing batteries with high energy density and other important characteristics.

Opportunities can also be created rather than waiting for market conditions to create them. For instance, engineering suppliers can seek to be more than a subcontractor for low-end engineering work. They can provide niche skills and rapid prototyping capabilities which can be leveraged by their customers to try out new ideas and innovate. By doing so, they can also benefit by being part of growing Open Innovation trend.

Hence, the opportunities to escape the price-war and provide differentiated offerings may not be that far up in the value chain.

Sunday, May 26, 2013

Opportunities at the Intersections: Aviation and Agriculture

There are several alternate perspectives which one could leverage to seek out new business opportunities in an industry. One such alternative perspective that was experimented with was to explore the intersections between the focus industry and a distinctly different industry. The focus industry was aviation and the distinct industry was agriculture. While exploring the intersections between the two industries, several opportunity areas worth exploring became apparent. I would discuss some of the briefly:

Weather Predictions
Weather is as important to agriculture as it is to aviation. Both industries require improved weather predictions. Data and numerical weather modelling drives the weather predictions today. Satellite data has some limitations. For instance, they cannot provide for upper air data and more localized data. The weather data collected on-board the aircraft is now being leveraged to provide the upper air data to Meteorological agencies (Refer AMDAR program, ) . This improves weather modelling which helps agriculture as well.
Also, the sensors on passing aircrafts can provide localised weather data on the regions below which can improve weather advisories for agriculture.

Precision Agriculture
Its the latest agricultural method to maximize crop yield. The method relies on remote sensing data to monitor crops conditions. Unmanned aircrafts are being deployed in some regions for the purpose and the crop imagery is being used to determine conditions like crop-stress, ready for harvesting, water scarcity etc. (Eg: ) . Further opportunities may lie in using imagery from commercial flying aircrafts on a large scale.

High value produce
To improve the income and livelihood for farmers, they are encouraged to grow high value crops. One of the such crops are bio-fuel cultivars from which bio-jet fuel can be derived. We consider only sustainable bio-fuel crops which can grow in dry and waste land and hence do not compete with food crops. Eg: Jatropha, Castor, Eucalyptus. As per IATA, aviation bio-fuel is a US$100bil plus business opportunity.

The emphasis in this blog post is not on the above three areas as such but on the perspective to explore linkages between industries to identify opportunity areas. 

Sunday, April 21, 2013

Urbanisation Megatrend & its Impacts

The global proportion of urban population rose dramatically from 29% in 1950, to 49% in 2005. It is projected to rise to 60% (4.9 billion) by 2030.

Its in the middle of 2009, when the number of people living in urban areas (3.42 billion) had surpassed the number living in rural areas (3.41 billion).

However, there is a glaring disparity in urbanisation levels throughout the world as shown below.

% of Population in Urban Areas

Broadly, developed countires have more urbanisation levels than the developing and least developed countries. Urbanisation tends to increase with economic development and urban areas become major economic centres. For instance, the Mumbai megacity contributes 5% of India's GDP and its GDP is expected to grow five folds in next 20 years.

Urbanisation megatrend imposes challenges in both urban and rural settings.


As urban centres expands, the stress on civic infrastructure would increase, be it water, sewage, electricity or roads. Infrastructure of several sities are already stretched. City authories are banking on a combination of sensor network and information technologies to deliver 'Smart City' to cope with the demands.
Mobility, a key to vibrant and functioning city, is also being relooked with emphasis on multi-modal integration and sustainable transport strategies.

In addition to reactive approaches, proactive approach in terms of urban planning is also gaining importance. Urban planners and city agencies are getting together to plan controlled and sustainable expansion of cities. In recent times, city suburbs are far better planned than before. For instance, urban planners go for polycentric development with a theme for each centre. And for each centre, urban planners may go for mixed use (co-locating resdential and employment centres). Urban planning for each city is customised and there is no universal formula yet.

As urban areas become economic centres, more and more efforts will be invested in preserving their capacity of economic growth.


Rural may sound the poor cousin of urban in all the talk about urbanisation. However, ignoring rural would be a costly mistake. Rural economies will continue to serve our basic neccessities of food and clothing. Urban migration is aready posing a serious challenge to rural economies. One cannot stop migration, but one must ensure that rural areas continue to grow in spite of migration. Capacity building, technology driven practices and right produce are some of the intervention areas. For instance, the focus in developing countries like India would be more on mechanisation and improved agricultural practices to improve productivity. In addition, to improve revenue capability, the focus would be more on cash crops (including bio-fuel crops) and output quality (which could be bought by food processors at high prices).

Fate of both urban and rural economies are interconnected by demand and supply. If one goes down, it will drag down the another. Urbanisation is affecting both. Care must be taken that we do not pre-occupy ourselves with Urban issues that we lose sight of rural challenges.

Monday, January 28, 2013

Customer Behaviour & Social Media

In a recent market study, I came across an interesting phenomenon related to customer behaviour and social media. It was observed that customers were more vocal on social media. Extreme statements were made by customers on twitter, facebook etc. However, during interviews, the responses were more controlled and mild.

One possbile explanation of this behaviour is that customers are always connected to social media. Hence, they post (or vent out) their feelings soon after their experience. Over time, the strong feelings associated with an experience subside and later customer interviews seldom elicit strong reactions.

Its important to take note of  this behaviour. The feedback on social media is rich in customer feelings and hence an important source of consumer feedback to a company's products and services.

Sunday, December 16, 2012

Leveraging The Big Data

The term 'Big Data' refers to huge amount of data (in Terabytes or even in Petabytes) that a company has access to. It not only refers to stored data but also the data which is being continuously streamed in through various sensors and other data collection points. However, 'Big Data' doesn't represents this huge data but the opportunity that it holds.

Big data has moved from a concept to reality because:
  • Information technologies has made it possible to extract (from database, image, audio, video, sensors etc..), manage and process the data without significant latency.
  • Advances in data analysis like machine learning algorithms which can provide predictive intelligence and pattern analysis to mine unstructured data.

Everyone now understands the Big Data and the value it holds. The challenge lies in dealing with it. There are two approaches to leverage the Big Data:
  1. Start with the problem statement: Define the need or problem statement first and then work backwards to identify the analysis and data required. This approach works when there is clear understanding of the business need. If some of the data required to meet the business need is not available, efforts are made to collect that data or redefine the business need.
  2. Dig for Gold: Executives are not always clear what can be done out of the big data. In that case, the suggested approach is to play with the data and derive some sense out of it. While experimenting by combining the data and applying algorithms, one gathers insight and increases the chances of finding the 'Gold'.
One can argue in favour of either of the approaches. However, success of both the approaches hinges on the 'Data Scientist'. It is an emerging profile with the required skillset in applying maths, statistics and algorithms to the data and spotting patterns, trends. A data scientist also acts as the bridge between the Executive who understands the business need and a database engineer. Companies are increasing relying on a data scientists to make sense of the unwieldy data sets in their organisation.

Big Data is the new gold mine for organisations. And tools are techniques are evolving to effectively mine it. Though organisations realise that they cannot ignore it, not everyone really knows where exactly the gold lies. Irrespective of the approach taken, perseverance and experimentation are key to unlock the value in big data.   

Sunday, October 28, 2012

Open Innovation Ecosystem

Open Innovation has become quite popular in recent years. Organisations have realised that they need to leverage the capabilities outside the organisation to build innovative & competitive operations, products and services. Companies have realised that great ideas can come from outside, distinctive resources and capabilities may lie outside and even sharing internal resources with external players can unlock greater potential. Increasingly, companies are working on partnerships with academic insititutions, start-ups, investors, government agencies, companies and individuals.  

An ecosystem with a sense of community is required to enable diverse players to engage and form productive relationships for Open Innovation. Efforts in this direction include establishing marketplaces to bring innovators and sponsors together, Eg: IX (Innovation Exchange). Building communities, expert's database and platform to exchange ideas, run competitions and fund projects like Innocentive, Nine Sigma etc. Then in software space, there are open source communities like Eclipse and others. 

More often, companies rely on personal one to one relationships for Open Innovation. While the future is many to many interactions; trust, governance and intellectual property are some of the issues that weigh down the the progress.

Sunday, September 30, 2012

First CSR, now CSV! Convergence of Business & Society

Earlier, corporations only concern was their business and competition. Society & Environment came into equation only in late 60's with rise of CSR (Corporate Social Responsiblity). CSR became important to corporations to comply with regulations, society's expectations and to preserve their reputation. Over the time, various approach to CSR came in practice. 

Philanthrophy emerged to be a widely used approach. It is simple to implement and does manage to grab a positive mind share of the public. However, it has hardly any operational or strategic connect to the business.

Another approach to CSR have been to forumulate internal regulations which a business complies with. This was done in order to insulate the business from any risks to brand image arising out of interfaces with external stakeholders like suppliers, distributors, customers, NGOs etc. The benefits were more in terms of avoidable costs of negative publicity and loss of brand equity.

Gradually, CSR's connect with Business strategy became more obvious as focus shifted to markets at 'Bottom of Pyramid'. Also, several business realised that CSR initaitves can lower the cost of externalities on their business. For instance, reducing carbon footrpint has direct benefits of reduced fuel costs and earned carbon credits. CSR became increasingly realised as imperative for building long-term sustainable and competitive business model.

However, business conditions continued to evolve.
  • Due to recession, capitalism as a whole became a target. Companies were accused of being greedy and in-sensitive to society.
  • Fundamental shifts took place in market conditions whice was fuelled and accelerated by social networking. Consumers now want empowerment and a say in building their product/service experience. Society is now more vocal about its expectations from businessess.
  • New products and services now require co-creation and collaboration among firms from diverse industries. Increasingly, we now talk about business ecosystems and working partnerships.
A response to these changing business conditions came in form of CSV ('Creating Shared Value' by Michael Porter & Mark Kramer). Though treated separately, it can also be considered as another evolved form of CSR. CSV attempts to remove any conflicts between business profits and society welfare by espousing innovative ways to enlarge the pool of economic and social value. For instance, a food company looking into improving productivity of farmers and agri supply chain can create a far better social benefits. The food company in turns gain by a strong inbound supply chain and increased sales volumes.

Most of the time, impact of Creating Shared Value on business benefits is not very obvious and hazzy. Certain amount of commitment and staying on the course is required till one gains clarity. And more than often, innovative approaches are required to identify and leverage the sweet spots where business and social benefits converge.

Wednesday, August 29, 2012

Industries of Tomorrow....

What would industries after 30 years look like? Similar to industries of today or radically different! We should explore possibility of radical changes because of slow but fundamental shifts happening around us. Lets discuss them:

Democratization of Design & Manufacturing: Product design is moving out of confines of R&D Dept with suppliers and customers participating in the process. Several Auto OEMs invite suppliers to design the car parts which are supplied by them. Customers are encouraged to give design suggestions. 3D printing will further make manufacturing available to masses and consequently design.    

Increasing Commercial Significance of Community Platforms: Platforms like Facebook, MySpace, Twitter have revolutionized the basic act of social interaction. As these community platforms gained wide acceptance, social media marketing became prevalent. Several start-ups broke into scene which provide a community platform for people with complimentary needs to interact and exchange services (Eg: On some platforms, the participants are both provider and consumer of the service (Eg:

Rise of Integrators: Developments in ICT have made it possible to integrate data from various sources, including real-time data, and run analytics. Now data is out of silos and available to derive intelligence and insights from it. This has led to new business models where firms integrate data and provide services like multi-modal trip planning, traffic simulations etc. Eg:, Mapunity

So what kind of industries and business models these shifts to democratization, community participation and integration will lead to? Some of the defining characteristics could be:

  • Society and Business will converge: Business will be primarily oriented towards addressing social and environmental needs.  
  • Orchestration by consumer: Industries will organize around consumer experience. Consumers will configure and design their experience and businesses around will adapt and serve accordingly.
It would not be a surprise if industries like healthcare and transportation cease to exist and industries of Well-being, Happiness, Mobility & Leisure emerge. Its exciting times ahead and we could witness a renaissance in industries.

Friday, July 20, 2012

Tracking the Evolution in HRM (Human Resource Management)

I am not an HR Practitioner and have always been on the other side or lets say, on the receiving side of HR. Recently, I was involved in a consultancy assignment related to setting up a high-tech center. Human Resource Management (HRM) was one of the key focus areas and we couldn't onboard an HR expert for the assignment. So, we went ahead and tracked the evolution of HRM (professional experience of team members helped) and the future.

From my study, evolution of HRM can be understood as three versions of approaches.

The HRM 1.0 can be characterized as a 'Policing' approach, where the focus was on controlling employees. Do's and Don’t's list was prescribed and enforced. Salaries and labor issues were the major HR tasks. This approach worked in the production environment of past which had an authoritarian work culture.

Then came Knowledge Workers and hence the HRM 2.0 approach of managing employees. Knowledge workers have specialized knowledge and were expected to work with less supervision and more self-motivation. Hence the rules of the game changed. It was now more bottom-up approach with focus on improving employee experience, talent attraction and retention. HR personnel work towards continuous education & learning, team building and managing expectations of knowledge workers. HRM 2.0 approach is widespread but has its share of criticism .

With changing times when Customer service and Innovation are becoming survival imperatives rather than a competitive advantage, a distinct approach is required. Hence the HRM 3.0, which is geared towards facilitating employee. It’s a top-down approach where the company's strategy and objectives are the starting point and HR process is aligned to it (as illustrated below).
The workforce is expected to thrive in an uncertain and dynamic environment, adopt new work practices, remain customer oriented and champion innovation. Such a workforce needs to be supported and facilitated to meet these expectations. HR function in an organisation would need to step out of the existing mould to engage such a workforce. HRM 3.0 is gaining ground and is highly relevant for high-tech and service industries.