The IIT Bombay alumni network constitutes arguably the cream of talent in the country, which has a track record of producing some of the brightest and most successful entrepreneurs in our country. It is therefore fitting that is dedicating this special issue to the area of Entrepreneurship and Innovation.
The importance of entrepreneurship in our country today cannot be over-emphasised. We have a very large youth population waiting to be gainfully employed; large sections of the society still remain economically backward, while the overall environment being resource constrained is marred with social conflict and strife. Entrepreneurship and Innovation are the life-blood for successful business, which, as the late Professor Sumantra Ghoshal used to say, is a force for good. As alumni of a premier institution, with a successful track record notwithstanding, we have a responsibility to do more.
India has enormous unfulfilled demand in what may be called emerging middle class market, i.e. people just coming out of poverty. These people need fulfillment of basic needs (housing, health-care, etc) at a cost that is roughly 10% of international cost. If you can achieve that, the opportunities are immense.
Understandably, the subject draws a significant proportion of our attention in the organisation I head. I have captured below some learnings based on our experience of working with Entrepreneurs. I will use an example where my colleagues from ISB worked on a project in the area of providing affordable housing to illustrate the points I am making.
- The Idea is not important – Execution is:There is a tendency among many young entrepreneurs to get bogged down with getting a great idea, or in perfecting the idea that they already have. The idea almost never remains in its original form once you hit the market. In fact, it often changes quite dramatically. The trick is to hit the ground running early and iteratively improve your product. We first considered affordable housing as a concept of high rise low cost homes in a faraway location, to reduce costs. After doing market segmentation, and looking at who can afford to buy such homes, we changed the concept completely to focus on homes near unorganised industrial areas.
- Look beyond internet start-ups: The most amount of entrepreneurial activity seems to be in this one space. But there are many more fields that have a crying need for innovation and entrepreneurship. Certainly use technology – but do so innovatively to address market needs. India has enormous unfulfilled demand in what may be called emerging middle class market, i.e. people just coming out of poverty. These people need fulfillment of basic needs (housing, health-care, etc) at a cost that is roughly 10% of international cost. If you can achieve that, the opportunities are immense.
- Listen to the market: Another pit-fall we often notice is that entrepreneurs get too emotionally attached to their product. Yours may be the best product in the world – but if it doesn’t serve your customer’s needs, it is not of much use. So continuously adapt your product strategy to market reality. We first thought that poor will be happy to live in flats, but most such people have a very strong emotional need to own land. We, therefore, changed our model to give people small single family homes with their own land.
- Identify barriers and overcome them: The market pays you only to solve problems. The more insurmountable that the problem may seem, the greater the rewards for solving it. It was generally felt that land near urban areas would be too expensive, but land near unorganised manufacturing areas is not expensive. Mortgage finance is usually not available for such people, as the perceived cost of recovering money is thought to be high. We worked with their employers to arrange deduction of EMI at source to reduce cost of collection, and to give comfort to the lender that the borrower is employed.
- Address risk perception of lenders: People who wish to buy small affordable homes at Rs 3 to 5 lakhs do not have the capital to buy the homes. Developers and lenders also see such projects as risky and unprofitable. We worked with both, potential developers and financiers, showing them detailed market segmentation, feedback from home buyers and their employers, and worked on marketing and sales strategies. Once the lenders were convinced of the profitability, they were willing to offer finance to the project at very competitive costs.
- Scale up: In a country like India, to have an impact, one needs to achieve scale. We initially started with building about 300 homes. Once those were sold at an attractive profit, we codified that detailed knowledge into a manual which could be used to cookie cut other developments. Now over 1,000 such homes are being built, and thousands more can be built.
So, the lessons were – develop a concept quickly, take a beta version to market and test it out, adapt quickly, and leave your ego and love for the product aside. Think end to end (design, manufacturing, sales, maintenance, use, and most important, scale), not just about the product.
The market pays you only to solve problems. The more insurmountable that the problem may seem, the greater the rewards for solving it.
After several years of mentoring and working with our alumni start-ups alone, we at the ISB are taking steps to implement some of our learning to support the broader entrepreneurship community. We will set up a Design Thinking focused incubator that can help entrepreneurs translate their ideas around people’s needs, and where all enablers such as technology, processes, organisation, etc. are aligned to meet people’s needs most effectively. For any education institution, the greatest joy is to give flight to alumni dreams.
For any education institution, the greatest joy is to give flight to alumni dreams.