The Hindu Business Line : `Forget, borrow, learn'

`Google, Apple, Motorola have a good job of innovation. J&J and GE have consistently done a good job; even NYT has been able to reinvent itself nicely. As for Indian companies, I would put the Tatas and Reliance in the group.'

Prof Vijay Govindarajan

Vijay Govindarajan, known popularly as VG, is a gregarious man with a booming laugh. As Earl C. Daum 1924 Professor of International Business at Tuck School, among the top business schools in the US, the title of `management guru' sits lightly on him.

With a host of professional credits to his name, including a ranking among the top five most respected executive coach on strategy by Forbes, VG was in India recently for the launch of his book, already on the bestseller list: `10 Rules for Strategic Innovators, From Idea to Execution'.

Strategy, he says, is not about protecting existing competitive advantage but about finding the next advantage. His and Chris Trimble's book documents research based on a study of 10 companies and looks at how established corporations can execute breakthrough strategies that address tomorrow's business realities. The book outlines how the venerable New York Times newspaper went digital, how it burnt its fingers and then ultimately came on top with a new business model.

A graduate from Annamalai University, VG completed his CA in India (awarded the President's gold medal for the first rank), taught for a while at IIM Ahmedabad in the late '70s before going on to earn his doctorate from the Harvard Business School.

VG, recently in India with a team of managers from some of the top global corporations to give them an exposure to a developing market, spoke to The New Manager. Excerpts from the interview:

What are the main takeaways from your book?

There are three main strands. The first one is that breakthrough innovation is necessary for companies, even for survival. For example, Apple would have died if it had not reinvented itself through movie making in Pixar. Or through iPod. The heart of success for companies in the long-term is some sort of innovation in a fundamental way.

Point two: In these kinds of breakthrough innovations, idea is just a starting point. It's the easier part in some sense. Execution is the tough part, it's long drawn out, it's boring and not as romantic as conceiving an idea and it's a tough battle. ITC's eChoupal was an idea that originated in 1999; it took them two-three years to come up with a workable model. Point number three, execution. It involves three challenges: forget, borrow and learn. What we mean is when New York Times launches NYT Digital, they have to forget the success formula of the NYT.

Because there are some key assumptions made on how a successful newspaper is run, and you have to selectively forget that. We make a number of recommendations as to how to help an organisation forget.

The second challenge is that breakthrough innovations will not survive unless they borrow some critical assets from the established company. We talk about how you design an organisation that can help in this borrowing process - in some sense, forgetting involves separation and borrowing involves bringing them together so how do you cope with this paradox? The third challenge is the learning challenge.

At the time when you launch a new business — for example in 1995 when NYT launched NYT digital, it was in the entrepreneurial space where answers were not known. You don't even know your customers, what revenue model to follow, what features will customers pay for or the cost of developing those features, what will competitors do?

Nothing is known. So, you are entering an unknown space and you can't resolve the unknowns by analysis of facts. So, the key challenge of the learning process is how do you resolve those unknowns fast enough to come to a workable model.

We say that the person with the best ideas may not win, but the person who learns the fastest wins.

So, we have several recommendations on how do you build an organisation that learns fast: so, forget, borrow, learn is the theme of the book.

But, were companies willing to share critical data with you, some of which could be competitive advantage?

During those five years of research, we actually gave feedback to companies as we collected the data, did analysis and gave them feedback; we also did cross-case analysis and they would also bring in executives who were not part of the interview process to listen to what we would say about the company.

We were just holding a mirror saying this is what we observed and they obviously saw value in it otherwise they would not have collaborated. They would not have given access. We did not study only successful companies, we studied unsuccessful ones as well, that means they were showing the dirty laundry to us. We signed a non-disclosure agreement that we would not disclose any information.

We do 15 hours of interviews and from all those transcripts we usually develop a case. For NYT, we developed a 30-page case, which describes what we saw; there is no analysis. We send this to the company and ask them if it contains confidential information; they can cut it out or correct inaccuracies.

Very rarely have companies have asked us to take anything out. Once they approve the descriptive report, then the analysis is completely ours. That is our interpretation of the facts.

They see the benefit; we are writing about things which happened in the past, most of the instances we teach the case to the MBA students; the CEO of NYT came to class several time to see how the case plays.

What about `The Big Idea' of companies? Do you say that it will be overtaken by technological innovation?

My feeling is that clearly there is a role for technology in changing business models. But we say business model innovation is going to be the key. For example, eChoupal is a business model innovation, there is no new technology there. It has used known technologies and leveraged it in an imaginative way.

Those innovations will keep continuing. In a way, as we begin to address issues of emerging markets technology will be of less importance than business model innovations. You can use less sophisticated technologies. So in emerging markets, business innovations can be the driving force.

Business model innovation is when you are changing the strategy itself, that's when the forget-borrow-learn becomes problematic.

Which companies do you say have transcended this cycle of forget-borrow-learn very well?

Among the technological companies, I would say Google, Apple, Motorola, eBay, Yahoo!, they've done a good job, in a broader way, I would say J&J, GE, have consistently done a good job, while even NYT has been able to reinvent itself quite nicely.

What about Indian companies?

I would put the Tatas and Reliance in the group. Of course, the info-tech companies like the Infosys and Wipros continue to renew themselves out of necessity and have been forced to rethink their strategies.

Even the Birla group, in their commodities segment and ITC would be the kind of companies I would consider.

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