If you are in a commodity market, it’s your fault

May 26, 2015 / 0 Comment
April 16, 2012

This appeared in the First Post on April 16, 2012. Click here to see the original.

Imagine a seminar on innovation where the featured case studies are on ball bearings and a rural information service. I attended just such a seminar recently and that is where I heard the line which is the title of this piece. Allow me to tell you more about this.

I had done a short program at IMD, Lausanne, Switzerland, a decade ago. So that makes me an alumnus of that school too. Its rather nice because you get invited to some good learning sessions, thanks to a pretty active Alumni Association.

At the seminar, a Professor from IMD, Dr Bill Fischer, was talking about the process of innovation. And he is the one who said: “If you are in a commodity market, its your fault”.

Think about it. Isn’t it so true? Everything is a commodity, until someone comes along and decides to differentiate it. And often there are brand managers who turn their brands into commodities.

Who would have thought that a brand of industrial adhesives would be one of the most awarded brands in the country? Who would have thought that computers would become a commodity sold on price and arcane specifications?

Reuters spotted an opportunity in providing information to farmers in India. As a paid service. Over the mobile phone. The service is called Reuters Market Light and provides information on weather and mandi prices. As well as tips on farming. It is a totally customised service. Farmers don’t just get a dump of lots of data. They get prices of mandisthat are close to them and for the crop that they grow.

They get weather updates for their area. And along with the information, they get advice on what they should do to combat the expected weather conditions. Or how to fight the latest pests harming their crops. They are told about government schemes that could benefit them. And the names of the officials in their area that they need to contact.

Reuters estimates that over a million farmers have already benefitted from the service, which is delivered to them over SMS.

And various studies have already shown that users of the service benefit by better prices, less price dispersion across mandis, less losses due to weather and pests. All this without a fancy app. Just a regular SMS update. All for Rs 90 per month.

The case study on ball bearings was also inspiring. The company, NRB Bearings, decided to drift away from its technology collaborator and instead compete with them in the global market. They have succeeded by being more customer focused than their competitors. “Our engineers are our most customer focused employees”, said the President of NRB Bearings, Ms Harshbeena Sahney Zaveri.

These case studies made me quite philosophical. Clearly there are no innovative categories or innovative brands. Just innovative people. And these people can be innovative about anything.

We often think of innovation as a method of creating new products. But India’s best innovations are actually process innovations. Nothing works smoothly here and so smart people find short cuts. We call them jugaad. Management professors would call them process innovations. Or business model innovations.

The seminar I attended, took away one of the last excuses for not being innovative. That my product category does not allow for innovation. Now we will have to be innovative at least for thinking up a new excuse.


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