How Smart Companies Localize

If you want to democratize decision-making, you have to be dictatorial about data, says Mohanbir Sawhney. You need to centralize your data, and decentralize your execution

Founding Fuel

In part one of the interview with the co-founders at Founding Fuel, Mohanbir Sawhney, renowned Kellogg professor, spoke about the Asian revolution in e-commerce. In this second and concluding part, he focuses on how smart organizations are using the power of collaborative technologies to create a marketplace of ideas inside their firm.

Q. When you spoke about China, you referred to how the successful digital businesses there had understood their local context. Yet one of the things that we've often heard is that digital businesses are about the winner takes all - or at least most - phenomenon, where there is one model that everybody rides on. Is that true in the emerging market context, given the wide disparity in languages and different cultural preferences in every state?

A. There are language differences, regional differences, but this is not very different from what I was talking to the folks at Microsoft in London the other day. They were complaining that the subsidiaries do not get enough localized campaigns. They operate with a one-size-fit-all approach. The recommendation is that: think global, act local. So you have platforms that are standardized and cut across, but you have content and specific messaging that is localized for audiences. So if I was running an e-commerce business in multiple languages, I would make sure that the databases, platforms and my back-end were integrated, but the specific content and execution can be highly localized.

If you want to democratize decision-making, you have to be dictatorial about data. You need to centralize your data, and decentralize your execution. That's how you can get the best of both worlds. You can be responsive, agile and customized at the front-end, yet gain the benefits of scale and competitive advantage at the back-end because of a centralized database and platforms. So it is a hybrid approach: the back-end is consolidated, but the front-end is customized.

If you want to democratize decision-making, you have to be dictatorial about data.

Q. What can India do to leverage new technologies like connected devices, drones, sensors to really benefit the common man? Are there significant benefits we can derive from deploying these new technologies?

A. Absolutely. But we should not start from the technology or the device, but from the problem itself. Let's look at three cases: agriculture, health and financial services. Now in agriculture I can get better information on my soil, crop, weather information and relevant information from sensors embedded in the soil, which can be used to give farmers better advice on irrigation practices, fertilizing, harvest - that would be a concrete way to use the mobility of the internet to empower farmers. Similarly, in financial services that are using the idea of extreme mobility and correspondence banking and e-commerce to provide banking services to the un-banked. I think that sector by sector, a combination of these technologies will provide some breakthrough solutions. In healthcare, we could create hub-and-spoke models [where] the hub hospitals in metros can do remote diagnosis for the satellite hospitals in rural areas.

There are ways in which many of these problems can be solved using a combination of smartphones, broadband, internet of things (IoT), cloud-based services. But I think sometimes we forgot that technology is an enabler. So we should be working backwards from some of the most pressing problems, be it electricity or poverty, to frame technological solutions to solve these problems.

Q. How have organizations adapted their cultures to integrate into the networked economy?

A. There is an interesting reversal that is going on. If you look to about 15-20 years ago, technology used to waterfall from enterprises into the consumer market. A good example of this would be Blackberry smartphones and computers. However, now in the world of social media and networking, the consumers are ahead of enterprises. We have now started incorporating the idea of social networking and collaborating into the enterprise much more lately than the consumer space. The ability to change the nature of work, to make work inherently collaborative and team-oriented and to use the internal teams to create a collective body of knowledge is important. Crowdsourcing inside the organization is a fundamentally interesting phenomenon.

For example, in an engineering firm with thousands of engineers solving problems, the chances are that what one engineer is solving the other may look at and solve. Anybody can ask a question, and it is propagated across the entire organization. It is like creating a marketplace for expertise.

Ebay had done something very interesting that they called a LinkedIn for analytics. They created a platform that allowed people to share the analytics model that they had created with other people within the company. They would take the models, develop them further and share it with others. These sorts of ideas like collaborative technologies and social networks will transform the nature of the organization. There is a formal organizational structure that will not change, but there is an informal organizational structure that can be overlaid on top, which does not respect boundaries and silos, and allows people to align around passion, opportunities and interests and not around function variables. I see the rise of the collaborative enterprise, the social enterprise, almost what Facebook would look like, if it were a company.

Collaborative technologies and social networks will transform the nature of the organization

Q. We would like your perspective on the new model of innovation that is built around rapid prototyping, a lot more iterative. Do you see that as a phenomenon that is largely active in tech firms or will it percolate down to other industries too? Will this fundamentally change the innovation process inside organizations?

A. I don't think it is limited to tech firms at all. My co-author Sanjay Khosla who worked with me on our recent book, was at Kraft Worldwide, where they created category executive teams. These category executive teams were cross-functional, cross-geography teams that are assembled to find strategies for a particular category. This created a collaborative network that they created inside the company. This has to do with fundamental transformation of the organization and how they work and collaborate. Perhaps the technology needed is more intense because models are moving faster and cross functional teams are more of the norm.

Q. You must have studied many organizations where intrapreneurship is being addressed successfully through various approaches and models. What really are the conditions to make intrapreneurship successful inside corporations in today’s world?

A. Intrapreneurship or corporate innovation is alike a recipe that needs multiple ingredients and some secret sauce. Ingredients include structure, a home for innovative activities - particularly innovations that are not incremental or sustaining and that are tangential and outside the core business need an incubation organization that is separate from the business and report directly to the CEO. This is a home for ideas where they can incubate and develop ideas. Whirlpool has a Discovery Centre, which is like a centralized place where prototyping is done.

AT&T, for example, has the Emerging Devices Organization(EDO) which is charged specifically with bringing innovative ideas and technology into the market, without getting bogged down by the bureaucracy of AT&T, which has a core business to run.

Apart from structure, you also need protected funding. The problem with intrapreneurship is that it is funded in good times, but when things go south, then all the funding gets cut. So one needs to protect the funding. It's almost like creating an internal venture organization that has earmarked funds that are protected from business cycles, so that there is a resource available.

The problem with intrapreneurship is that it is only funded in good times

The third ingredient is the mobility of people. Very often the problem is that when you come up with an innovative idea, people don't want to let their good people go. The ability to poach people from within the company into these more innovative projects is really important, while reducing the friction of the movement of people. At the end of the day intrapreneurship requires the movement of ideas, talent and capital closest to where the opportunities are. All of this requires leadership, commitment and lead-by-example because it is very difficult to create intrapreneurship without first creating a culture for innovation. Culture for innovation is a place where people feel safe,where failure is celebrated and where the leadership actively challenges to go out and break things. These are some of the ingredients needed and which become even more important in some of the larger and complex companies that tend to have a strong flywheel effect and tend to perpetuate and preserve what they've been doing.

Intrapreneurship requires the movement of ideas, talent and capital closest to where the opportunities are.

Q. Is there anything different between the DNA of an entrepreneur and intrapreneur or are they genetically similar people?

A. I think there are some genetic differences and some genetic similarities. What's similar is that both take risks, are not afraid to go against the grain and work under adverse circumstances. The differences are, in an entrepreneur's case their problem is resources, attracting capital, attracting talent and making sure they can survive. In an intrapreneur's case, the important requirements are negotiation and political skills to navigate within the organization because, in theory, large companies have a lot of resources, but they have to be creative in getting momentum and alignment behind their initiative and to beg, borrow and steal resources and people. I think the idea of navigation and politics, making sure that you are aligning stakeholders and getting buy-in and skills is more important for intrapreneurs, as compared to an entrepreneur who doesn't have to deal with such internal issues. The political manoeuvring, building stakeholder coalition and alignment is the integral difference between the two.

[Corrections - The line "In healthcare, we could create hub-and-spoke models [where] the satellite hospitals are able to do diagnosis for the hub hospitals." was changed to - "In healthcare, we could create hub-and-spoke models [where] the hub hospitals in metros can do remote diagnosis for the satellite hospitals in rural areas."] 

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