Fixes and Frugal Benefits - Implosion: India's Tryst with Reality - page 12

gional origins of modern Indian business. He argues that conventionally organized produc-
tion has never been part of the DNA of most of India's business class because the people
come from bazaar and trading backgrounds and not from manufacturing or laboratories. 8
While these businessmen have been adept at evolving sophisticated trading and financing
arrangements, they are not instinctively attuned to assembly lines and machinery. Manual
workers, however, in both rural and urban areas, have the ability to innovate, says Damod-
aran, though they 'lacked the capital to convert any of their raw manufacturing innovations
- jugaad - into reliable, marketable products'.
He argues that the resulting divide has had huge implications for innovation in India.
'Indian business innovation has been mostly restricted to marketing and finance, producing
for example the hundi system (an indigenous discountable and negotiable bill of exchange
enabling seamless movement of goods and money across the subcontinent), fatka (futures
transactions rarely resulting in actual delivery of the underlying commodities), teji-mandi
(put- and-call-option contracts), goladari (warehouse receipt financing) or even rotating
savings-and-credit schemes like nidhis, kuries and chit funds.'
Damodaran's article was pegged to Ranbaxy, a Delhi-based Indian pharmaceutical com-
pany, which developed Syniram, India's first original drug, and was taken over in 2008 by
Daiichi-Sankyo of Japan. Apart from this malaria treatment, the mainstream pharmaceutic-
al industry, led by Ranbaxy, has mostly grown by developing generic variations of interna-
tionally patented drugs. There are a few other examples where Indian manufacturers have
proved exceptions to the general lack of manufacturing innovation - almost all are in the
auto industry. As Damodaran notes, all the machinery for rice mills and dairy products is
imported.
The Jugaad Trap
India's top managers now fear that the jugaad adulation has gone too far. Anand Mahindra,
chairman of the Mumbai-based Mahindra Group, which is strongly focused on innovation,
is worried that respect for jugaad and frugal engineering is being overdone. 'Jugaad can be
the death of us if we carry on extolling its virtues,' he says. 9 ' It was a point on a trajectory
of evolution, giving us technological confidence and self-esteem. That was okay in an eco-
nomy of scarcity - making do without stuff we didn't have because of shortages, but it is
not an end in itself and it perpetuates a lack of self-esteem It is good to do brainstorming,
asking how would we do this if we didn't have what we have. But the rule in a California
garage start-up is frugal innovation, so we need to be brutal and realize we didn't invent
this and move on, as they do in California to the frontiers of technology.'