VG: Vijay Govindarajan VG: Very Good

Heartfelt thanks to Harvard Business Review Press and MYRA for organising the VG Masterclass here in Mysuru. Thanks to Dr Shalini Urs and Prof Dr Vijay Govindarajan for all your wisdom. You guys are real visionaries. You can see beyond what we can think.

Buy books authored by VG, Reverse Innovation, Beyond the idea or pre-order The Three box Solution here.

VG’s aim is to

impact the broader world.

He is excited about his new book and plans a 6-week online course to go along with it. This would help with both structure and smart implementation.

VG is an authority on strategy and innovation. Click here for more about VG. Hear VG speaks about three box solution here.

The strategy is not about celebrating the past. The strategy is not about the present either. The strategy is about the leadership of tomorrow/future.

Adapting to change is innovation.

Hence,

strategy = innovation.

VG found inspiration of the three box solution in ancient scriptures. The holy trinity of Brahma Vishnu and Maheshwara, are responsible for all creation, sustenance and destruction. They are married to Saraswati, Laxmi and Parvati. You need knowledge for creation, wealth for sustenance and power for destruction.

VG proposes using three box solution based on the same system.

Box 1, Box 2 and Box 3.

Box 1 is about saving the present. Box two is about selectively forgetting the past. And Box 3 is about creating the future.

100 years ago, 6 of the top ten universities were German. Today there is no German university in the top ten. Why? Why have the US Universities taken over?

• Adaptive Curriculum
• Control over Alumni

VG often asks this to any organisation he meets:

Name three projects you are working on which will make you a future leader.

Organisations always concentrate on box 1, protecting the present. The strategy is all about box 2 and 3.

What will make you the industry leader in 2025? What do you need to do today to be that? We need to allocate resources across these three boxes.

The tools and execution methodologies are different for each box.

MIT has put its course online. It has gone a step further by conducting the same exam for its in-house students as online students and award the same certification to both.

Future is now!

For box 1, we have clear signals and there are linear changes in the industry. The improvement is incremental.

For box 2 and 3, we have weak signals, non-linear changes in the industry. Generally, these are breakthrough innovations which leapfrog the entire industry.

The internet was a box 3 innovation. Mahindra Scorpio was. GE $100 ECG machine was. Narayana Hrudalaya $3000 open heart surgery is. Tata Nano is.

These breakthroughs convert the non-consumers into consumers.

The per capita income of US is $50,000 and India is $1,500. Hence, these consumers demand more for their buck.

Case-study of the $100 ECG machine developed by GE for India.

The traditional ECG machine GE makes costs $20,000 weighs around 240 Kg and needs pure power. This is relevant for only the top 10% of the Indian market. A rural patient can neither afford the $200 per scan nor can he travel to the health centre which has this machine.

Non-consumers have exactly the same problems as the consumers.

They are waiting on the sidelines for us to give them a value offering.

2 billion of the 7 billion on earth have the purchasing power. The challenge is to convert the remaining 5 billion into consumers. Out of this, 1 billion non-consumers are in India.

The new ECG machine developed runs on batteries(750 scans per charge), costs $100 for the equipment, has just two buttons, green and red and has a running cost of 10 cents per scan. A small video.

A rule of thumb VG proposes is 10% solution for urban India and a 1% solution for rural India, compared to the US.

Box 3 is about creating the market.

VG then shared the example of high jump as a track and field event.

Box 1 is about performance improvement, all you think of is to be the best at scissors. Box 3 is about changing the technique of jumping.

Box 1 is about closing the performance gap. Examples include 6-sigma, lean manufacturing, TQM, Operational excellence, ERP etc

Box 2&3 are about possibility gap, opportunity gap, innovation gap. It is about next practices.

VG then narrated the evolution of Grameen bank started by Nobel laureate Mohammed Younus. The revolution of micro-finance, in a groups of 9 peers and loans as low as $25 per head. Grameen bank has 99% recovery rate and a low interest of 10% per annum.

They are now targeting beggars. What started as a 10 beggars experiment, has touched more than 5,00,000 of them. It converted them into door-to-door salesmen. half of them have become full-time salesmen, others have stuck to their core competency!

We need to allocate time and resources for all three boxes. The 21st century is the innovation century. India is waiting to consume. Come up with relevant offerings.

Does everything work in India? No. But we need to take satisfaction in the things that do work.