The Hindu Business Line : Any hole in the wall here?

THERE'S a long queue, watched lazily by a sleepy guard, resting his chin on the butt of a rather antique looking rifle. I take covert peeks at those around me, but no one notices my scrutiny - they are a motley lot, harried housewives en route to school, office goers making a frantic dash at lunchtime, and a bunch of college kids. What unites them is their urgent need for money, and they keep a close eye on the body language of the customers inside the cubicle, which would tell them that their turn at the ATM is imminent. It brings home to me their utter comfort with technology; yet, taking money from a "hole-in-the-wall" is a relatively new ritual in India.

I should know - in my first job in Citibank, I was in charge of the branch which installed the first ATM in India. And as we tried to seduce our customers into opting for a man-machine interaction away from the people-intensive teller system, the challenges of innovation diffusion were brought home to me first hand. (It also brought home to me, first hand, the speed at which a bank balance can dwindle through the swiping of a card - a hole-in-the-pocket syndrome if you will, but that is another story). So many services we now take for granted were then still figments out of science fiction: credit cards among them. The concept of using a piece of plastic to access your money was exciting to a few - for most, it was a scary feeling. To get people to even try it, we had to take pains to explain the security process, the control systems that would prevent bank accounts from being tapped by hackers (another term which was yet to enter the daily lexicon).

The early adopters, yuppies with a perpetual thirst for spending money, adapted to it the fastest. Most others saw it as a solution for emergencies - a sudden hospital visit perhaps (third-party medical insurance was another concept yet to materialise), or an unexpected trip out of town (more unlikely - where will you get tickets from? Rail and air bookings were made aeons beforehand, unlike today's jet-setting days enabled by apex and a surplus in seat capacity). The prospect of being stuck without money, and the difficulties faced in delaying gratification were also new to the Indian culture. Common sense, born of strongly middle-class thrift ethics, demanded that you went to the bank to withdraw money on a periodic basis - as for sudden wants - well, what was planning all about? It's difficult now, isn't it, to flashback and reflect on a period of relative austerity and fiscal discipline?

Yet, many customers found it reassuring that if you did get caught without cash, you could take this exciting new approach to top up your wallet. And since Citibank's minimum balance in those days (and its branch locations, for that matter), meant it catered to a distinctly elitist segment, the ATM also branded your banking experience with the indubitably classy cachet of technological superiority: "It's quite amazing, my dear - just put in this card and these crisp new notes come fluttering out - no more queues with grumpy tellers and boring bank timings, you know. What, your bank doesn't have one?"

And that was just to persuade them to take their money out. Getting people to use the ATM to put money in was even tougher. The system in those days meant you dropped your cheque or cash in, filled in your counterfoil and got a confirmation later. That was far too daring for customers reared on pay-in-slip books with the comforting blue stamp that confirmed the money had been dunked in. For those uncomfortable with the "dehumanised" transaction, we pointed to the phone that would connect them to a help desk if necessary. For the paranoid - worried about fraud or theft - we pointed reassuringly to the security camera that promised to keep track of any shady goings-on. Transactions, therefore, were heavily skewed towards withdrawals in the early days. That was over 18 years ago. Nearly two decades of hard work on overcoming consumer worries about using a new technology ... by almost any tenet of marketing wisdom, Citibank, as the `first mover', should have built up an impregnable position in ATMs.

Yet, today, I stand in front of an ICICI ATM. The options available to me in the ATM are manifold - I can even use the ATM to do a bit of philanthropy. But the reason why I shifted my allegiance, at least for the ATM, is simply the ubiquity of the ICICI network. They are dotted all around the country, and I find them punctuating every route of mine with their reassuring presence. I simply will not get caught off guard if I have an ICICI card in my pocket, and that itself is of value to me. In two decades, the ATM has moved from being a curiosity to a hygiene factor. No longer can a bank afford not to provide one. In service innovation terms, banks have now to reduce variability in the transactions - and as technology is no longer the stumbling block, the important variable is availability.

At one level, the spread of ATMs in India offers a classic case study in innovation diffusion and acceptance. Look at the cultural and socio-economic factors in play at the time of introduction, and the dramatic changes that ensued post-liberalisation, and you can see how the resistance to using a "hole-in-the-wall" was eroded ... to the point where the non-existence of an ATM is unimaginable to big chunks of the younger population in urban India. At another level, it also offers a peek into the contrasting impact of two innovation strategies: that of Citibank which first brought in these technological and conceptual changes - and the Indian banks which came in later, overcoming their own internal resistances to change, to create an ATM network that is now spread across the entire Indian landscape. It makes you wonder - what is "innovation"? If it is just newness to a market, then sure, Citibank was the original innovator. Or is it newness to a group of customers? In which case, it is ICICI and other Indian banks that allowed this to percolate from an elitist offering to a democratised must-have.

Constantinos Markides, professor of strategic and international management, London Business School, elaborates on this paradox when he examines first movers or `colonisers' as he calls them, who innovate, and the "fast-second" players or "consolidators" who establish and grow the nascent market. This dichotomy between `exploration' and `exploitation' is a theme that has fascinated both academics and managers.

So when should you choose which strategy? Is there a choice at all, or is it hardwired into an organisation's DNA? It is true that the two approaches demand different organisational strengths. Colonisers need to have the ability to churn out a stream of new products or services, while consolidators needs to have operational and cost reduction skills, and the resources to reach the mass market. The decision also depends on the imperatives of the market. In India, with a huge mass market, being a fast-second can be a smart option for those who lack the skill-sets to be colonisers. Watch the colonisers do the creating, and then move in for the kill. Making the right decision depends on an understanding of the innovation itself - how it will play out in the marketplace, and equally important, clarity on how the organisation's competencies dovetail with its growth strategy. Either way, it isn't simple. But then, growth never is.

(The writer is a Chennai-based management consultant. Karate-gy is the proprietary name for strategic exercises conducted by Paradigm Management Knowhow.)

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