Are you being served?

Great video here from a talk that Seth Godin gave at Google. His central premise is that the only way to bring products of lasting value to the market is "permission marketing." He defines this as "the privilege of marketing/selling to people who do not want to be marketed/sold to." Essentially, make a product that is worth talking about, that spreads virally, and that contains network efforts (he calls these "permission assets"). A great case in point is "Gmail" which grew mostly by word-of-mouth because their users saw so much value in the product.

It strikes me that this notion has yet to reach India. I'm amazed at the levels of intrusiveness that Indians put up with from marketing campaigns. Spam SMS messages, hundreds of pop-up windows on websites: direct marketing hell. In India, you can still shove a product down people's throat by sheer force of outbound marketing. Why is this the case? I'm guessing it's because direct marketing is a relatively recent phenomenon; its still a novelty for people. Consumers tend to be more credulous and less cynical about what they hear from direct marketing campaigns. I still get forwards from friends in India who think the notorious Nigerian email scams are for real. Maybe a backlash will begin in a few years, as consumers get jaded and the volume of intrusiveness increases to painful levels. Until then, I'm not sure that product quality will win against a carpet-bombing direct marketing strategy.

Place thumb here for your money

Interesting article in the Financial Times about Citigroup introducing fingerprint-based ATM's in India. From the article:

"The machines will recognise account holders' thumbprints, eliminating the need for a personal identification number, and will have colour-coded screen instructions and voiceovers to help guide them through transactions."

Seems like an interesting innovation that could be extended to other developing economies as well. How serious is Citigroup about this? The article goes on to say that Citigroup currently has two such ATM's installed (in Mumbai and Hyderabad) and plans to expand to "25-35 machines within 18 months." This seems like an extraordinarily low growth target! If the new systems is not going to be material to their operations in India even in two years, what's the big deal?

C.K. Prahalad first identified the "Fortune at the bottom of the Pyramid." It's far better to treat the world's poor as consumers to be served with specific, unique needs, not with paternalistic earnestness. There's a lot of innovation still to come in the financial sector for the "unbanked" population. Microcredit. Mobile payment systems. Stored-value ("prepaid") cards. What else?

The Indian Enterprise: Hot or not?

Conventional wisdom has it that the domestic enterprise software market should be shunned like the plague. After all, the argument goes, Indian enterprises don't place strategic value on IT, don't want to spend money on IT, are comfortable using pirated software and are too hide-bound to restructure their processes to make them more efficient. Besides, in a place where the relative costs of labor and capital often favor labor, why invest in automation and process efficiency?

The numbers seem to bear the cynics out: India, despite all the hype, is still a tiny market. According to IDC, the entire IT market in India in 2005 was $12.5 billion, with the bulk of that amount ($7.5 billion) going to hardware. Services accounted for $3.5 billion and packaged software just $1.5 billion. The software market is predicted to grow at a annual rate of about 20% over the next 5 years. At that growth rate, the entire software market will be less than $4 billion in 2010.

Hmm.. pretty gloomy stuff. So is there an opportunity? If I were to start an enterprise software company specifically for the Indian market, would I be mad, a decade ahead of my time, or both?

Yet another blog on innovation?

What is this blog about? Well you might ask: this blogosphere of ours is already thick with treatises on innovation. Virtual forests have been felled to explore this topic in every conceivable way and from every possible angle. Can anything, well, innovative, be said on innovation? Read on and decide for yourself.

Developing Innovation is dedicated to exploring software innovation in developing countries. I've been interested in technology adoption and software for a while. As an Indian, I've followed the technology outsourcing boom, and the creation of world class IT services companies such as Infosys and Satyam in the last decade. More recently, I've observed innovative software solutions developed in India for the local market. In many instances, the new technology is more advanced than that available in the US (e.g. in the areas of mobile and wireless). Yet, the vast majority of Indians remain unaware of technology and its potential to improve their lives. How to reconcile this "leapfrogging" adoption on one hand, and a complete lack of awareness on the other?

Is this an opportunity for software innovators to step into the breach? Or is India decades away from using technology in any broad-based manner? Are there similarities between India and other developing countries in the way technology can be built and used? Can those synergies be leveraged to go after ever-larger markets if your own market is too small for you to grow? The answer to all the questions, I believe, is a resounding YES. I think it is an opportunity: a very large opportunity. Here are a couple of reasons why (and I'll expand on these in future posts):

• High Growth: Emerging economies are undergoing higher rates of growth than they have in 50 years.
• Demographics: Developing countries are generally younger and more open to technological innovation.
• Greenfield Opportunity: Current software investment in most emerging economies is negligible.
• Local requirements: In many cases, the requirements for software products in the developing world are substantially different than those in the developed world. Not just product features, but also pricing and delivery models.