The Hindu Business Line : Awakening a child's curiosity in you

NINE years ago I was invited to talk to the senior managers of a prominent business group and share with them some of the ideas that had emerged at a CEO's forum, which we had organised. The focus of the lively debate was on how one could develop a shelf of new business projects even before beginning a planning stage for such projects.

Till the late `80s, most successful Indian organisations had followed one of the three potentially fruitful avenues for growth — more growth in the same business or category, diversification based on technical collaboration/import substitution opportunity and taking whatever licences you could get from Delhi.

Few had taken the trouble to look at what the organisation was capable of doing and consider carefully a match between resources and opportunities. Fewer still had gone a step further to look for what the consumer of the future might like to have as novel products and services. This could suggest a lack of entrepreneurial drive and confidence or a genuine absence of a competitive advantage. Alternatively, it would certainly imply lack of imagination and willingness to explore untrodden territory.

The logic of business is `lower the risks, lower the rewards'. However, this was not so during the pre-`90s era in India, when almost everyone thought of an ideal business as one with low-risk, or no-risk option with an assured income. Just as the pensioner expected 15 per cent return every year as a right on his savings, so did the entrepreneur who saw an assured minimum level of profits — say, enough to pay a 25 to 30 per cent dividend on his original investment, as an attractive state of life. Thus the notion of either risk-related return or opportunity cost of capital seldom entered the picture. Unlike in the US, the traded portion of shares outstanding was inevitably a minority. The market price as a signalling mechanism was muted — or at any rate not treated as relevant by the so-called promoter family or his group. Under these conditions, very few felt the compulsion to expand and grow the enterprise just to survive.

This group that I met had some interest in considering new avenues for business afresh and so I hazarded a view that we could sense such product or service opportunities if we kept our eyes and ears open to those vague intimations and caught the as-yet-unamplified `weak signals' from the world outside. One example I gave then was drinking water as a branded and saleable product. It appeared even in 1994 that in the next decade this could be a boom industry. "Oh, come on!" I hear you saying, "anyone could have thought of that!" The fact is that new ideas such as this seem far-fetched at the time but very obvious later. Let's dig a little deeper into this example.

How would we have established a market size for bottled water, a decade ago? Sure, some brands such as Bisleri had been around for a while but what would you have said was the potential? There was really no means of finding this out. One could hardly afford to make the kind of mistake which many rich multinationals made, taking a 300 million middle class figure at face value. We might then have forecast, at a simple calculation of one rupee worth of water a day per person, a potential of Rs 300 million per day or over Rs 10,000 crore a year!

Clearly, scarcity of drinking water was a growing concern and well known too. But so was the very short public memory. Every year come monsoon season, we seem to forget the dry and parched days of summer, which now seems to extend from end February to nearly October. So, of course, everyone got used to the idea of paying over the odds for water for household use. What was not so readily apparent was the rapidly worsening quality of drinking water which could lead to serious and tangible consequences, namely, medical bills for treatment, especially of children and the aged, for all sorts of water-borne diseases that crowded urban centres in particular are so notorious for.

Therefore, there has been a huge spurt in the demand for safe drinking water in the past five years leading to all kinds of issues of poor quality products and downright cheating by some. As not all can afford to buy water at Rs 12 a litre, various alternatives have sprung up such as refillable bulk containers of 20 or 25 litres and small pouch packs for the traveller where the price drops to about a rupee a litre or less. If a cheaper and surer way could be devised for delivering potable water to all (such as, say, an easy-to-use and low-cost treatment plant) at about 20 paise a litre, then obviously the market might well be far larger than even the currently estimated Rs1,200crore-plus.

Some recent reports refer to the branded and bottled segment of this market as the fastest growing FMCG business in India. My point thus is that if one were alive to weak signals one could have foreseen such an opportunity market even as far back as 1994.

The interesting question to ask therefore is: What in the next five to 10 years might emerge as a new and widely-used product, offering a large business/marketing opportunity? To answer this question one needs something of the insatiable curiosity of a journalist with wide-ranging interests, coupled with the unbiased looking and the appetite for learning of a child. But why a child? Let me explain.

There are two significant requirements, in my view, in order to ensure that you actually do get to receive the weak signals. One of them is keeping your antennae always alert and fully tuned. Philosophers would call this `choiceless awareness' but what it really means in practice is to keep your eyes and ears open and attentive (even to your own wandering attention). And above all, we must refrain from premature evaluation. `Ah, that's no good. Won't work in India', is the familiar and frequent response, of the worldly-wise person who considers himself a hard headed realist, to a new idea. But in listening to weak signals (as in brainstorming) one must keep the censor away — but keep the sensor alive! This is a not mere play on words. Do it and see for yourself.

The second — and equally important — factor to note is not to worry about success or hit rates of one's observations. Not every observation or piece of information develops into a usable idea, let alone a profitable one. Here again, remember how many castles the child happily builds on the sand — only to see them washed away. She doesn't care so long as there are no applauding adults to give her comment and feedback. Forget mistakes and the stigma that we have attached to them all our lives — thirty or forty years of it, or more! Each mistake is just another opportunity to reflect and to learn, check our reasoning and the critical but inaccurate assumptions that we made.

It is obviously a long way from weak signals to product definition, estimation of its demand potential and the building of a business case for a new venture. We as managers are quite familiar, I believe, with those steps. What we are less at home with, however, given our search for certainty and predictability in business, is the completely open-ended process of listening to, detecting and receiving weak signals. Much noise might interfere, much irrelevance and static too might intrude, but our task as forward-looking thinkers in business is to keep the critic in ourselves in abeyance and awaken the child in us. We manage sometimes to do this when we indulge in our favourite pastimes during weekends. Now we need that freshness of mind during the week as well!

(The author is Director, Institute of Financial Management & Research, Chennai. Feedback can be sent to bleditor@thehindu.co.in.)

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