How Simple Innovations Led Dell and Micromax to Success: Is Your Company Ready to Innovate?

The Fall of Giants and the Rise of Innovation

History has witnessed the fall of giants like IBM by a company founded by a dropout student. Yes, because of Dell, IBM had to finally sell their computer business, even though IBM was the biggest and first company to manufacture computers. Micromax Mobile, once a printer and IT hardware dealer, gave tough competition to companies like LG and Samsung for the second position in the mobile market after Nokia and is ready to list on the stock exchange.

Examples are many, but the reason is one: Innovation and Creativity. The innovative business model of Dell computers, providing customized computers as per customer demand, made IBM's computer business fall like a house of cards. Micromax's innovation of dual SIM mobile phones and longer battery mobiles for village people, where electricity comes for 1-2 hours, was a great hit. People could choose a cheaper calling card plan without buying a new phone or changing numbers and could use phones for a whole week without charging.

Now, is that rocket science? No, it's called simple innovations in product or business models. But the million-dollar question is, “How to create simple innovations like this?” Go ahead and post your opinions and questions here...!!

Thank you for starting this thread on business creativity and innovation. You shared the success story of the giants. I appreciate your effort to bring them together. I wish to learn how it is being implemented by small companies with lesser capital and hence a smaller customer base.

Creativity and Innovation in Small Firms

Creativity and innovation have their price. The cost of experimentation is higher for smaller firms. Please share if you have such cases. We all look forward to learning from your words.

Regards,
(Cite Contribution)

What a wonderful example of innovation and creativity! Yes, both companies, Dell and Micromax, have shown a path less traveled by other companies, but the trend is changing now. Many companies are now establishing their research labs so that they can provide opportunities for their employees to innovate and be creative.

Companies also often do not handle innovations properly. Sometimes it's a lack of trust, sometimes simple mismanagement, and most of the time, it's a lack of resources and financial capability of the company.

I know of a company where they purchased an employee's innovation. Initially, the employee was made the VP of the research section, but later, he was let go as some politics took place within the company.

I would certainly like to hear your point of view on how to create innovations like this so that members of this forum can take something substantial with them. No wonder we may come across a new innovation soon.

Best Regards,
Archna

Thank you for leading the discussion on "Innovation & Creativity." Innovation is not just about creating an idea but a sustainable idea that can be successfully converted into a commercial product, service, or solution. Innovation does not need to be expensive, but new startups and small companies should avoid research product development if it involves patenting. The reason is that patenting incurs significant costs in prototyping, launching, and promoting the product. Moreover, the patenting process can take years, making it unreliable to capitalize solely on patented products. It's crucial to distinguish innovation from research as they are distinct areas.

Small companies should focus on innovating their business model. Take the example of Micromax, which established an innovative business model by forming a team of 10-12 design engineers to design phones and outsourcing manufacturing to countries like Taiwan and Indonesia where production costs are lower. The mobiles are then assembled in regions like UP and Bihar where labor costs are minimal. This strategy allowed them to capture the market for affordable yet high-quality phones, surpassing Chinese-made mobiles. Similarly, Dell's success was attributed to rearranging computer configurations, essentially creating branded assembled computers.

How Midsize Companies Can Innovate Successfully

1. Identify customer pain points (similar to how Micromax and Dell addressed customer needs effectively).
2. Determine the budget, scope of work, and most importantly, the payback period of the innovation—from idea generation to actual profit realization.
3. Generate ideas using various thinking techniques like reverse thinking, random idea generation, critical thinking, parallel thinking, among others.
4. Conduct market research and focus groups to gauge customer reactions to the idea. Identify barriers to purchase, such as cost, quality, and profit margin expectations of channel partners and distributors.
5. Develop an innovative business model to bring your idea from concept to market. For instance, Infosys' global delivery model, conceptualized by Narayana Murthy, exemplified a cost-effective and innovative business model. Infosys, which started with just seven people, has grown to become a leading global company. These companies emphasize that innovation is essential before research. As a company expands, it should balance innovation and research to establish a strong market presence. Research helps in capturing high-end markets once the company generates sufficient profits from low-end and midsize markets.

I trust that my insights on Research & Innovation address your query. Please share your feedback.

Thank you,

Sarang
Forscher Consultancy

Dear Archana, thank you for advancing the discussion on "Innovation & Creativity." As I have previously mentioned in my response to (Cite Contribution)'s Query, let me reiterate that Innovation & Creativity are separate from Research.

Steps Involved in Research

1. Setting up the scope and research plan.
2. Conducting background research on the topic through online research papers, journals in the library, etc. This step helps in understanding the existing research levels on a particular topic. For instance, if my research topic is cancer medicine, I would assess the extent of research done, such as the development of nano-medicine. My task would then involve studying the effects of nano-medicine on body cells under various conditions and reporting the results. Subsequently, I would publish my work and continue the research, allowing others to build upon it.
3. Conducting experiments and validating results.
4. Engaging in discussions and drawing conclusions.
5. Publishing the work, and so on.

I have explained the steps involved in Innovation & Creativity in my response to (Cite Contribution)'s Query.

Barriers to Innovation

Regarding your concern, what you mentioned falls under "Barriers to Innovation." There are numerous barriers, especially in India, where people often exhibit a rigid mindset towards change. Some of these barriers include:

- Belief in Innovation
- Patience
- Investment
- Teamwork

While there are more barriers, let's focus on the aspect you highlighted, which is office politics. It is essential to acknowledge that office politics exist, much like corruption in government offices. The reasons behind office politics may vary, stemming from personal issues or individuals with questionable motives. There are two main reasons for this:

1. Lack of clarity regarding one's role in the research project and how it can benefit them financially and professionally. If individuals understood the importance of their role, targeting the VP would risk project failure and jeopardize their own prospects. Therefore, as an Innovation mentor, your primary tasks are to:

- Identify barriers to Innovation, in this case, office politics.
- Address these barriers by clarifying roles and prospects to those engaging in politics or by reassigning them to other responsibilities safely. Alternatively, consider appointing a new VP known for fostering collaboration. Once you identify the barriers, multiple solutions can be explored. Forscher Consultancy has developed a model on Implementation theory, which I will share soon. This model can provide insights into successful implementation strategies.

I trust this addresses your query. Your feedback is welcome.

Thank you,

Sarang Forscher Consultancy

I disagree a bit with your definition of research. In my experience and knowledge, the research and development department in many companies also works on new innovations apart from conducting research.

Role of Research and Development Departments

A research and development department is responsible for innovations in design, products, and style. This department is accountable for creating innovative new products to keep companies a step ahead of the competition. Many companies also rely on the research and development department, or R&D Department, to improve existing consumer products and explore new ways of producing them.

Companies thrive and succeed by creating innovative products, increasing company profits, and utilizing cost-efficient methods. A research and development department is primarily responsible for ensuring that these goals are met. This is an especially important function in the fields of manufacturing and pharmaceuticals but can be applied to virtually any industry.

Hence, R&D involves innovation as well.

Understanding Office Politics

Moreover, office politics is not just a phrase anymore and typically not another name for corruption. Office politics is a major concern in many private companies. As defined by Wikipedia, it is "the use of one's individual or assigned power within an employing organization for the purpose of obtaining advantages beyond one's legitimate authority. Those advantages may include access to tangible assets or intangible benefits such as status or pseudo-authority that influence the behavior of others. Both individuals and groups may engage in office politics. Office politics has also been described as "simply how power gets worked out on a practical, day-to-day basis."

Best Regards,
Archna

I think there is a bit of misinterpretation of my message. My purpose in saying to separate research from innovation was in regards to (Cite Contribution)'s statement: "Creativity and innovation have their price. The cost of experimentation is higher for smaller firms. Please share if you have such cases. We all would look forward to learning from your words."

I don't deny many companies' R&D producing innovative products, nor am I against having R&D, but my point is R&D for a small company might be expensive, so they need to separate innovation from R&D. The following explanation of R&D and Innovation may clear your idea:

R&D: Research and Development involves investment in discovering new technology and increasing the capacity of a firm. It could involve technological innovation or improvements in human capital. It usually requires a willingness to forego current profit to invest. Successful research and development may lead to innovative new products. There is no guarantee that Research & Development will be successful. You could spend billions of pounds researching an alternative to oil, but it may fail.

Innovation: Innovation involves improving the method of working/producing goods. Often it will involve better technology or better methods of working. Innovation may be the result of Research & Development. But innovation could also be a 'brainwave' – a Eureka moment where someone has a good idea to improve working practices. So, they are quite similar. One difference is that innovation may not require a substantial investment of time or money.

If Micromax invested in long battery research, then by the time they would have launched the product, the phone generation would have gone to the next level, or their competitors would have captured the China mobile market. So, they simply developed a concept to address customer pain and bought batteries from Taiwan. So, it's pure innovation without R&D. Innovation in the business model, innovation in product. If R&D is more technical, while innovation is broad and covers business model, social impact, and much more.

My purpose in comparing office politics with corruption in government offices is merely to convey that when you identify barriers to innovation, consider "office politics" as the most obvious barrier, as we consider corruption for government offices.

I hope I cleared the miscommunication well. I appreciate your positive criticism of my post and expect more inputs for more knowledge exchange.

Thanks,

Regards, Sarang Forscher Consultancy

Dear Sarang, thank you for the clarification, and I really like the way you explained innovation and R&D here. However, I still believe that any kind of innovation requires a lot of research, even if it is a small idea in a small firm like Micro Max. It surely would have required some kind of research without which the battery could not have been developed.

Furthermore, development in R&D, in layman's language, means improvement upon the best current thing available. So, Micromax made batteries as a development to the current batteries in the market. They did not innovate or create a new product that could replace batteries.

Please correct me if I'm wrong. Do you have more examples of innovation where R&D has not been utilized at all?

Looking forward to your inputs.

Regards, Archna (my name is spelled Archna) :)

Dear Archna, I apologize for misspelling your name. Regarding the Micromax example, those guys did not develop batteries. They bought them from Taiwan. What they must have done is market research to understand loopholes in the existing market and make small design changes in the phone model. I am sure it did not cost them a lot. Therefore, there was no significant research and development needed as the batteries were already available in the Taiwan market.

The Dell Case

If you still feel this is not a perfect example, let's consider the Dell case. Dell started the company when he was a student. He identified the customer pain point: customers were saying they didn't need so many features in a computer, yet they had to pay for them. So, he bought an IBM computer, opened it, studied its circuit, and then purchased spare parts like the motherboard, memory cards, etc., from local vendors to assemble them into affordable computers based on customer preferences. Additionally, he implemented the "Direct to Dell" marketing concept, allowing customers to buy Dell products exclusively from the company, saving on third-party commissions and offering discounted prices. This is a good example of pure innovation in product and business model without heavy reliance on R&D.

Examples of Pure Innovation

There are many examples of pure innovation. Take multiplexes, for instance, with better environments, more screens in one place, improved sound, and picture quality. Do Cinemax or Inox have R&D? No, they implement innovative concepts. The high-definition sound and picture equipment they use are purchased from technologically developed nations. Therefore, small companies should define innovation as improving the method of working or producing goods. This can be achieved by following the innovation steps I mentioned in my first reply to Cite Contribution's query. I hope we can now proceed to the discussion on how to carry out innovation without investing heavily in R&D. Looking forward to your and the readers' input.

Regards,
Sarang

Forscher Consultancy

Friends, this looks like an innovative discussion. The way the discussion was proceeding triggered me to do some R&D by not investing anything but my time and energy. I googled certain words like innovation, creativity, etc., to understand them in detail.

What I perceived is that Ms. Archna is right that all innovations require R&D, and I think Mr. Sarang is emphasizing the importance of investments in R&D. I was also puzzled for quite some time...

There was information on Wikipedia. It says that all breakthrough innovations require a lot of investment before bringing them to the market. There are also incremental innovations which we bring using our experiences; these innovations are more related to processes.

Consider an example from the old days when a human being must have imagined using a wooden stick as a lever to roll heavy stuff from one place to another. His/her brain must have conducted research and experiments before realizing that a longer stick is more useful than the smaller ones. Later, we called it a 'Lever'... and with further research and scientific innovations - the use of 'force,' fulcrum, etc., developed many concepts in this area.

Secondly, even if we take Dell as an example, the innovator has conducted research in terms of finding the market, understanding it, and researching IBM circuits, how they can be assembled, what costs are associated (otherwise, why should people buy it), available products in markets, etc. Without research, how could he do all this? Maybe he has not invested heavily in this, but yes, there has to be some research which may not be highly systematic and scientific research (the research method Mr. Sarang explained earlier).

Thirdly, if we talk about innovations in terms of processes, say HR processes, for example. If an HR manager has an innovative idea for enhancing or changing any process, there would be some research to be done like where the market is, what the pros & cons of the new process are on its employees, etc. It is another thing that our conscious mind may not consider and use a systematic way of scientific research, but we do research primarily (with investment or without investment is the secondary thing).

Please critique it and give your views.

By the way, well discussed by the members, more views are welcomed.

Regards,
Rahul

I appreciate your time spent exploring more about Research & Innovation. I understand Innovation & R&D are closely related terms, and my biggest concern is that only Indian companies have intertwined them so much that they sound the same. However, if companies can differentiate them by not limiting Innovation to just R&D, it would greatly benefit our companies, much like companies in Western countries.

In the case of Dell, it was a study of how circuits work, so studying and R&D are different. It's like studying "how an engine works" in thermodynamics; that doesn't mean we have conducted R&D on the engine. R&D had already been done, and we are studying its workings. The same applies to Dell; they studied how circuits work. (I hope this does not spark a new debate on studying and Research). Additionally, I don't believe market research is part of the R&D department. Therefore, I can clearly separate market research from R&D. As you mentioned, "it was not systematic and scientific research," then it is not related to R&D, as R&D is all about systematic and scientific research.

Yes, market study/market research is part of Innovation, but again, I don't think you need an R&D lab to conduct market research. Innovation is more about improving ways of doing the same thing or finding new ways of doing the same thing in any area, not just limited to R&D. That is why the topic of discussion is "Business Innovation, A Success Path of Dell, Micromax. Is your company on the same path?"

My point is that Innovation in the business model can lead to success in the market; don't rely solely on R&D to produce innovative products. Consider the case of malls, where "all shops under one roof" is an innovative business model. I would be interested to know which companies' R&D has generated this concept. If only R&D can bring Innovation, we can have Innovation in business processes, HR, marketing, and everything we do, only if we understand the difference between R&D and Innovation. Otherwise, you will end up spending all your Innovation Initiative money in R&D and come out with a high-tech product like IBM laptops, whose market share will soon be taken over by Dell's innovative business model. So, are we ready to expand Innovation beyond R&D?

Regards,
Sarang
Forscher Consultancy

Dear Sarang,

Thanks. Of course, if we delve into the nitty-gritty of words like study and research, the discussion will be longer... (I don’t mind that, but right now I am not able to due to some constraints). Still, I will think upon this and may reply later or separately. I understand from your reply that for you "R&D" means systematic and scientific methods (as per your explanation)... but what I said was any "research," it may not be defined by systematic boundaries. (Please refer to all three examples I gave in my previous post). So, our differences in understanding of the same word seem to be based on our definitions. This is a normal human process.

As you said, "Yes, market study/market research is part of innovation, but again, I don’t think you need an R&D lab to carry out market research." I feel there is a difference in the notions of R&D - here in this topic, I considered all forms of R&D, and you seem to be fixed only on the labs (like scientific and technology labs). (Though there are market research labs as well).

Anyway, I feel that as per your definition of R&D, not all innovations require R&D. As per my current thoughts, "Research" is "research," and innovations eventually tend to go through the research process. For this, you can consider my example about innovating HR processes (according to your definition of research - no research is done there, and as per me, the human brain will do some form of research which may not be articulated).

Please check your last paragraph - there you came back again with the definition of Research. Many concepts might have come from consumer buying behavior where behavior scientists have conducted a lot of research. You may say that the innovator has not done any research. I agree, based on your definition. As per me: My assumption is that our brain conducts research at a neurotic level which we may not be consciously aware of - one tends to do research.

I am not being rigid, and I think the discussion should flow further with examples, where we can also explore research-related concepts.

Going Ahead...

Further examples:

(1) White revolution - Anand: Varghese Kurian: No research as per you, but as per me, there was a huge understanding of socio-economic-political-cultural aspects.

(2) Gram Panchayat system: no R&D expenses, came from experience and understanding of society - Mr. Mohandas Karamchand Gandhi played a major role. (But they all had non-scientific research info based on their experience).

(3) Online purchasing (eBay, Amazon, etc.): Cutting supply chain costs for forward-integrating businesses and providing goods at cheaper rates.

Regards, Rahul

Dear Rahul, Thanks for adding your notes on research. Well, yes, if you go through quickly from the start of this thread, you will find I mentioned R&D as scientific research. I agree with your point that behavioral research and market research are part of innovation. In fact, focus group labs and psychological product testing labs are also there. Their primary goal is to see how customers react to innovative products and how old products can be improved in terms of product experience. For example, from TV to LCD and from LCD to plasma TV, you get a better and better experience.

How to Carry Out Innovation for Small Companies on a Small Budget?

Ok, let's include research in the innovation and proceed with the topic "How to carry out innovation for small companies on a small budget?" I hope that will make everyone comfortable with the discussion, be helpful to readers, and serve the primary objective of the discussion on "how to carry out innovation." I feel small companies should take the following steps:

1. **Innovation Group:** Form a group of 5-7 people who will be responsible for carrying out innovation in the company across all departments. Here, the team should be very diverse in terms of ages, experience, and background. The team should include employees from various departments like accounts, engineering, marketing, etc., with the sole reason to have free-flowing ideas that are not limited to the confines of engineering or marketing.

2. **Study System:** Analyze the existing structure of the business model and customer pain points with the service or product they are providing. You can conduct market and behavioral research to identify problem areas.

3. **Generating Ideas:** Once problem areas are identified, use different thinking methods like critical thinking, reverse thinking, random idea generation, parallel thinking, 6-Hats thinking, and various idea generation methods to come up with innovative ideas to address customer pain points and improve the existing business model.

4. **Innovation Payback:** Plot the innovation payback curve, total time versus budget curve for concept to market.

5. **Report Making:** Present the report to higher management and secure the budget.

6. **Work on Ideas:** Implement the concept and improve the product or service.

7. **Testing:** Conduct tests with focus groups and other methods. Update the concept with feedback and make further improvements to the product or service.

I believe there should be a dedicated person to oversee the entire innovation process, identifying barriers, and controlling costs for the smooth execution of innovation.

This is roughly based on my readings on innovation. Please share your opinion if you think innovation can be approached differently or if there are additional steps required in the above procedure. Looking forward to more knowledge exchange.

Regards, Sarang Forscher Consultancy

Dear Sarang, I read the steps you mentioned, and they are appreciable.

Points to Consider

- When you say a group of 5-7 people from diverse functions, the idea is good. I think there should be some mechanism to understand the dynamics of that group. From a behavioral science point of view, if the group's energy is constructive and ready to confront the problem, it can do wonders; otherwise, it may not yield good results.

- Secondly, idea generation shouldn't be limited to this group only. Innovative ideas can be found in any corner of the organization. How can we tap into them? For example, I think this group should have one or two representatives from each department. Once a pain area is identified, they can go back to their department, and small groups can be formed to work and generate more ideas for that issue. These ideas can then be brought back to the primary group (which you mentioned contains 5-7 members). For instance, the accounting department can take up these ideas, return to their department, and work on the costing of different ideas/designs. This means each representative goes back to their department for further idea generation. Here, the process will become a little lengthy, so technology can be useful.

Regards, Rahul