Knowledge Innovation Strategy

Kulkarni)

PART ONE

Basics of Knowledge Innovation Strategy

CHAPTER ONE

Systemic Knowledge Innovation

Strategy for a New World

‘Air conditioning in just 75% of the required power? Not possible!’ An expert engineer from another major air conditioning company replied.

All big air conditioning companies plainly refused this contract. Providing air conditioning to a complete resort, with that small available power, was not possible! Even though the resort was ready to pay a handsome price for the same, no company moved ahead to latch at it. Many big players were simply not ready to accept this challenge. Anantara Resort of Maldives was struggling to find a company that could solve their problem.

Finally a small company emerged from nowhere with no great history— it came ahead to take this challenge. Others advised them that it was not possible. Even researchers and businessmen cautioned them regarding the after-effects of failure. But Aquachill had different plans—they had different ideas. It takes more than innovation to make things happen.

‘Innovation is not merely idea + value, but it is the application of knowledge to change the world and deliver knowledge value’

—Gajanan Khot (CEO and MD of Aquachill)’

CREATING OPPORTUNITIES THROUGH SYSTEMIC KNOWLEDGE INNOVATION

Aquachill: Just a few years ago, a company with only a couple of employees and not a single major contract—no major customers, merely doing some air conditioner servicing work—is one of the most important knowledge and social value creators in the industry today. In spite of the presence of big players like Voltas and Blue Star, in spite of competition from various American and Japanese companies, and in spite of technology innovators crowding the space, Mr. Gajanan Khot (CEO and Chief Scientist) of Aquachill, acquired unique position of a knowledge value creator in the market. Today, the company is creating value through their pool of classic air-conditioning products and solutions for its customers, in more than two dozen countries. It is not important whether it is an attractive industry or not, and it is also not important whether there are more competitors ready to cut your throat. The most important thing is that, Aquachill created knowledge value in an area where no one else could sense attractive knowledge opportunities. Another compelling aspect of Aquachill is that, the company did not fight with organisations on the same knowledge ground. They did not care for competition—rather they created their own Uncontested Knowledge Space (UKS). They never tried to set their rules for competition, neither did they follow rules set by their competitors; but they set their own knowledge ground. They did not change the rules of the game, but they changed the complete game. They revolutionised the strategic paradigms of innovation in the air conditioning space.

‘It is not just an idea but it is the system, knowledge, and the environment, that created idea and allowed us to produce the impact. This associative learning made it possible for Aquachill to build knowledge-centric business innovation.’—Gajanan Khot (Founder and Chief Scientist—Aquachill).

While trendsetters and followers were driven by typical economic and competitive forces, he continued to work on finding the root-causes of the problem. His focus was on the holistic nature of the problem. The irony lies in the fact that, whilst an army of innovators in big organisations have been struggling to find solutions—while economy was passing through a real inquisitive phase, and a few governments were trying to come up with packages for saving businesses—some key innovators could solve difficult problems with simple answers. This is game-changing technology. Gajanan Khot transformed air conditioning service providing, from a mere service industry, to smart comforting solutions with intelligent energy management. While the world was striving for innovation, and people were running after ideas, Mr. Gajanan Khot continued to look for organic growth.

The crux of the matter is that, while researchers from well-equipped labs, with huge research funds, and big R&D teams, are struggling, some researchers with scanty resources and inadequate funding have dared to create sustainable knowledge value. How could they do that? What is the difference in them that, other so-called innovators could not achieve what small players like Aquachill could do again and again? This is the question which we have to foreground.. This is the question that is haunting corporations and governments, B-schools, management gurus, and research agencies. Here, in this book, we would like to take a crack at this problem with systematic analysis and systemic perspective. We will try to comprehend how these researchers with limited resources could identify the source of the problems, and build right solutions.

INNOVATION ... WHAT IS IT?

‘Innovation is not about solving, but it is about understanding the problem’, Dr. Ajay Kogta, a senior surgeon from a town Jalgaon, once mentioned to me. Here is a surgeon, who, after his super-specialisation in surgery, kept operating in small towns and villages, and made possible some surgeries, which even surgeons at big and well-equipped hospitals could not think of. ‘It is all about the courage to solve a problem’, he added.

Innovation is typically an idea that could create value for the stakeholders, preferably measurable value for the organisation and stakeholders. As your definition of stakeholder keeps narrowing, your innovation starts losing the edge of courage. In all this process, businesses start losing grasp of the system. Most of the times the team starts going away from the real problem. Ultimately, business becomes competition-centric and gets lost in the crowd of ‘innovation for competition paradigm’, and hence, loses innovative edge. This approach may result in patents, may result in products, may result in short-term business success, but fails to clear real life tests of sustainability. There is confusion between problem and competition, which has costed innovators and even business, fuelling their decline from great to average corporations.

Innovation goes beyond visible business opportunities. A small company, Ketan Exports and Ketan food products Pvt Ltd, from Pune, built their innovation edge with their knowledge association.

Ketan Food Products Pvt Ltd was established in 1993 by Satish Gandhi. He began a business of roasted chana (a special roasted chickpeas). Already there were many established players working in these types of food products in Mahabaleshwar and Pune region. When Satish Gandhi had seen machines used for dal processing—he associated knowledge of traditional roasted chana making, and new small innovations in processes. Ketan Food Products Pvt Ltd, with their frugal innovation based on indigenous design, built the automated chana-making machine, which was the first of its kind. This innovation helped them to maintain the taste of handpicked chanas, while increasing scalability of its production,

In 2000, Ketan food products Pvt Ltd got its first major order of 13.5 tonnes from UAE. There was no looking back after that. They developed the first ever automated quality check of raw material. Ketan food products Pvt Ltd, after an exhaustive study, finalised 36 parameters for quality checking of raw material, including temperature, weight, size, weather, projections, etc. They associated these parameters, and developed an automated quality check mechanism to separate non-breakable chana from raw material. This effective raw material selection, prior to processing, helped them to improve the quality of material and efficiency. Today, Ketan Food Products Pvt Ltd is a world leader in production and export of roasted chana, exporting roasted chana to more than 30 countries, including Singapore, USA, UAE, and all major countries in the Middle East and South East Asia. Today, Ketan Food Products Pvt Ltd produces more than one dozen types of roasted chana, including yellow roasted chana, black and yellow roasted chana, roasted gran split, skinless chana, and they have plans to add six more types of roasted chana / roasted chickpeas to their production. Thus, association of small opportunities in knowledge space allowed Ketan Food Products Pvt Ltd to create value in a niche area, where hardly anyone could see any business opportunity. They created an opportunity beyond traditional chana making, and beyond traditionally expensive health foods.

Innovation never differentiates between technologies—it has no attachment to a particular way of doing things. Generally, it is expected from innovation to create value through idea that is not obvious. Secondly, the created value is expected to deliver some impact. Impact needs to be delivered on the value front, where value may include social, business, economic, or even psychological value. Innovation is generally focused on some pressing problem or an impending issue. It is sometimes even about using existing resources intelligibly and strategically. Right from innovation of simple traffic signals to some of the complex learning and medical decision-making solutions, the innovations are built around some problem. The problem is typically an obstacle that causes some pain

It is not exactly about a structured or an unstructured approach; it is not about the number of researchers and their research qualifications, it is not even about patents and ability to fight legal battles—but it is more about the innovation potential and knowledge. It is about knowledge-building abilities and understanding the problem. The only way to innovate is to stop innovating just for the sake of innovation, and focussing on the problem on a broader canvas.

Innovation is more than just productivity and creativity management. One of the senior directors and promoters of Ansec Systems Pvt Ltd., a Pune-based human resourcing and management company, Mr Muraly mentioned, In our human resourcing, every innovation is knowledge-based. Hence results are assessed with reference to organisation, and social and political systems associated with an organisation. Traditional, structured, and well-managed approach is further refined with agile knowledge building in our case. We have to deliver structured innovations in an unstructured environment, and hence, it demands continuous learning’. He demonstrated some of their very simple staffing and management innovations; those delivered results for them for years, and created value for stakeholders.

We often hear about technical innovations, management innovations, process innovations, and strategic innovations. What could be innovation in human resourcing? I always used to wonder. When we had a very close and detailed discussion with Mr Muraly, we realised that these were more of strategic systemic innovations (SSI). The innovations range from innovative approach to simple identification of the most appropriate candidate/person for the task at hand, to decision of the right group of persons, with reference to environment and task. Further, the innovations at Ansec are also about training and putting the right person at the right position, and about assigning him/her the most suitable job. It is also about associating right resources. Ansec transformed human resourcing into intelligent resource allocation, and knowledge-building services. They reinvented human resourcing with insightful association. Innovations in these areas allowed Ansec to take a big leap, and capture about 80% market in the Pune area.

The competitive world, changing environment, and dynamic scenarios, pose new challenges in front of managements and in organisation building. More and more value creation opportunities, and new technical innovations in relevant areas, definitely offer some ground for organisations to breathe in the competitive environment. But the need of sustainability and sustainable value creation can never be denied. Systemic, and co-operative learning can help to overcome some of the pressing issues related to sustainability. Value based innovation (VBI) is the innovation, with its focus on creating more value, reducing cost, and providing more for less. It can be defined as the innovation that focuses on creating immediate or short-term value for the customer, without considering its systemic impact or sustainability. In this case, the focus is on perceived value and not the system. The powerful concept of value-based innovation tries to strike balance between value and innovation. But it is not enough to build sustainable foundations necessary for building excellent organisations, with the ability to deliver sustainable value. Value-based innovation is indirectly driven by competition.

WhatsApp and Facebook, are addressing the problems of social networking through their unique way of easy connectivity. They are allowing individuals to express themselves within their groups, and subsequently create numerous knowledge-building opportunities. The knowledge about systemic social context and human psychology has played a key role in these innovations. LinkedIn, on the other hand, took the same concept to connect professionals. These innovations are inherently based on associative value creation. Soon, many such applications would be crowding the space.

This chapter introduces a novel concept of Systemic Knowledge Innovation (SKI), and builds a strong systemic framework for strategic management, organisation development, and organisation building. The organisational innovation has focused on processes and products, while SKI is about innovating the fundamental knowledge, to create sustainable value. This is more inward looking, and keeps track of interdependencies and intra-dependencies. Building an uncontested knowledge space remains the core theme for organisations, which builds the ability to deliver value for years. This is rather an embracing shift from strategies, based on competitive forces, to those based on systemic knowledge forces. Here, forces may not be the right word, since nothing is forced; rather, it is an organic knowledge evolution. Quantalase—an organisation of the eminent scientist, Dr DD Bhawalkar, who retired as the director of CAT (Centre for Advanced Technologies)—is trying to offer innovative laser-based solutions in the Indian context. From simple techniques, the organisation has evolved and delivered products which are most relevant to Indian scenario. The organisation has always associated technology with market needs. They have produced indigenised innovative laser products for healthcare and medical domains.

Traditional approach of innovation, while trying to solve problems quickly, creates new problems. These problems lead to a few more problems, and the root issue remains unaddressed. Problems offer opportunities to solve. The problems can be about creating and distributing healthy food, it can be about traffic issues, it can be about greenhouse gas emission, it can even be about managing resources. There is always association among these apparently different-looking problems. Manoj Patil delivered innovative solutions to traffic problems as the deputy commissioner RTO Pune, where he analysed traffic needs intelligently. He mentioned his bottleneck-free approach—‘Do not look at the bottleneck—let us look at the whole bottle, and even areas beyond that. While other strategists are talking about bottlenecks, we have been working on regulating and empowering routes’. This is nothing but systemic approach. The problem can be solved in a number of ways, but the real solution can be built only after understanding the systemic nature of the problem. This chapter, while introducing this paradigm, will also talk about the challenges posed by the dynamic environment. The world is connected, and these are dependencies and togetherness; and it is all about exploiting togetherness and relatedness. Traditional innovators keep running after bottlenecks. The bottleneck-based approach is an outcome of a competitive mind-set. Here, one focuses on bottlenecks to move ahead, but one bottleneck leads to another, and so on.

UNDERSTAND KNOWLEDGE SPACE TO OVERCOME STRATEGIC CONTRADICTIONS

The market space is typically a realm of commercial world, while the knowledge space is a realm of the cognitive world. While market space is volatile, and largely deals with competitive and market forces, knowledge space is more sustainable, and deals with knowledge forces.

Aquachill could deliver the knowledge value, because it stopped working in traditional competitive space; it does not bother about the existing market space, or creating new market space. It began working in the knowledge space. The universe is composed of the competitive market space and the knowledge space. Knowledge space refers to the space related to knowledge, and association of problems. Most of the companies keep working in competitive market space, with focus on beating competition. Some companies go beyond, to talk about new market spaces. Very few companies dare to innovate knowledge, and build their own uncontested knowledge space. These companies do not bother about, whether games of opponents are known or not. This book devotes its major portion on how to create an uncontested knowledge space and to follow the Knowledge Innovation Strategy. It is supported by discussion about systemic pursuit of knowledge innovation. It is not important to just swim in the ocean, but what holds importance is to swim in the ocean together, associate with others, and deliver value. It is not just about more for less. More for less has become an extremely misleading terminology—actually, who does not want more for less? Everyone wants more talk time for less money, more miles and more frequent flyer points for less flying, more food for small amounts, and more enjoyment for less pennies. How many corporations became extinct in this hoard of more for less? K-Mart, Kingfisher Airlines, Worldcom, and many others, were victims of this more for less craze. Innovation is not just about more for less. More for less is an allied outcome of innovation. Hence, knowledge innovators like Gajanan Khot do not run after more for less, but focus on delivering knowledge value. The uncanny ability of these innovators to identify and build knowledge space is what creates the difference. Knowledge space, with reference to a problem, includes knowledge associated with the concerned problem.

The concept of knowledge space is explained below with a simple example:

Manifestations:

Water shortage in a region

Energy shortage in a region

Epidemic in a region

Diminishing food grain production

Resource crunch

Knowledge space for above manifestations:

Knowledge related to region and adjacent regions

Energy and water usage over the years, and pattern of usage

Type of epidemics and knowledge related to it

Anomalies in patterns and behaviours

Behaviour of resources

Different knowledge sources in a region

Systemic manifestations:

Urbanisation

Job Problems

Population distribution

Social unrest

Problem identified from above manifestations:

Water management and population explosion

Thus, the understanding of systemic manifestation and knowledge space can help organisations to understand the real problem.

SYSTEMIC KNOWLEDGE INNOVATION

What separates knowledge organisations from ordinary organisations is the ability to innovate knowledge. While ordinary organisations run for projects, trying to hoard customers, play value, and competitive tactics—knowledge organisations innovate knowledge, and expand knowledge horizons. They create new knowledge opportunities. Knowledge organisations fundamentally approach business in different ways, what we call Systemic Knowledge Innovation (SKI).

While value-based innovations try to create opportunities by identifying the space between alternative industries, SKI creates opportunities by empowering customers across the knowledge space. This, in turn, results in expanding knowledge boundaries. Value-centric approaches, as they are perceived and practiced, really restrict an organisation’s ability to deliver value beyond the given problem and known space. Hence, an organisation starts becoming the prisoner of their