The 39th consecutively successful mission of the Polar Satellite Launch Vehicle (PSLV) on June 23, 2017, was a red letter day for India’s space programme as the rocket put into orbit 31 satellites together, a world first, at a fraction of the cost other countries with such launch capabilities have incurred so far. The same spirit for overcoming what seemed a stiff challenge was shown by Maruti and its team of engineers when asked by its parent, Suzuki, to develop a compact utility vehicle on its own. Within three years of the challenge, Maruti conceptualised, designed, developed, validated and launched the Vitara Brezza, which has become the market leader—once again, at a fraction of the cost a car company in the developed countries would have incurred.
Let us turn to another story. No one gave Aadhaar a chance of succeeding when it was launched by then prime minister Manmohan Singh and UPA chairperson Sonia Gandhi on September 29, 2010, with the stated aim to provide an identity to the common man, especially the deprived section of the population, who could then use this identification to start the process of joining the mainstream by opening bank accounts, etc. Today, the present government claims that more than 99% of India’s population is covered by Aadhaar, the largest such system in the world. It is already beginning to revolutionise the delivery of welfare services to the poor.
The final story I tell here has its beginnings in 1997, when India’s telecom rates were among the highest in the world at nearly `16 per minute. That was the year when the government launched privatisation of the sector and set up Trai as an independent regulator. Today, 20 years later, through innovative products like pre-paid cards, or business models like outsourcing of all non-core operations in a highly competitive industry, we can make calls which are practically free and use the world’s lowest-priced data services, the cost of which has fallen from over `1,000 per GB to less than `10.
Why have I brought these three dramatically different examples of Indian innovation and ingenuity coupled with local capabilities and competitiveness together? Because the world and India sit at the cusp of a fundamental shift in the industrial and services landscape, a shift that will shape the economies and competitiveness of countries for decades to come, a shift that is being shaped by the three building blocks illustrated by these three examples.
In the last 150 years, there have been several such transformational shifts impacting economies. The first was the onset of industrial production in 19th century which transformed the economics of manufacturing. This was followed by mass manufacturing in the first half of the 20th century, which, once again, transformed the economics of how goods were produced and made them affordable for the masses. This, in turn, was refined by the advent of low-cost manufacturing supply-chains in the last decades of the 20th century. We are on the threshold of the next revolution of cost-price equation for goods and services, driven by the integration of the ‘physical’ with the ‘digital’. It has the potential to, once again, fundamentally reshape the global industrial landscape.
Companies are leveraging this physical-digital integration into fundamentally rethink ways to design products/services and serve their customers. Product companies are moving away from selling an asset as a one-time transaction to selling ‘performance’ as an ongoing revenue stream by exploiting the power of data on performance of their machines and connectivity. This is called ‘servitisation’ and examples in traditionally asset-heavy industries already abound—from Rolls Royce aero-engines to John Deere tractors, that are loaded with sensors and digital connections are used to develop value-added services. Shared car platform like Ola or shared tractors platform like Tringo that has been launched by Mahindra are examples of such innovative business models of, selling products as services in India.
Service companies are also leveraging this by developing what can be termed as ‘mass services’, which can be defined as the process of packaging services into discrete consumption units that can be priced and delivered at affordable prices to hundreds of millions of consumers. Service units can be minutes of talk time, a plane ride, visit to a doctor, TV serial episode, or on-line training modules, and so on. Integrating physical and digital ‘stacks’ and packaging these services for one-time consumption (service units) can lead to productivity gain of 10-100x. Banks and telecom companies, e-learning companies and health services companies like Practo connecting over 100,000 doctors and 25 million users with offerings of e-appointments, tele-medicine, online medicine deliveries, electronic health records and lab tests, are examples of this new revolution.
Knowingly or unknowingly, India has put in place capabilities which make up the three core building blocks, not just to survive but thrive in this new industrial revolution. The first is design/engineering innovation capabilities, demonstrated by the lowest-cost rocket launcher that can launch 31 satellies or even by the Vitara Brezza.
The second is the Aadhaar and the related ecosystem of applications like e-KYC, DigiLocker, e-signature and BHIM (a national payments gateway) that not just connects nearly every Indian but has the potential to fundamentally reshape the cost of delivering services to them. Finally, we have ubiquitous connectivity with the lowest data prices in the world. As we enter 2018, in a world that is on the cusp of profound change, our New-Year’s resolution should be to aspire to be one of the global leaders in the servitisation revolution and grab, in the first half of 21st century, India’s place in the sun, just as the UK did in the 19th century with industrial revolution, the US did in the first half of the 20th century with mass manufacturing, and China did in the second half with low-cost manufacturing.