Shiv Kumar, head of ITC's international business division and Jerry Wind, the author of The Power of impossible Thinking analyse ITC's e-choupal concept on The Power of Impossible Thinking this weekend on CNBC to be telecast on Saturday May 21, 2005, at 10:30 pm, and repeat telecast on Sunday May 22, 2005, at 8:30 pm. Anchored by Anuradha Sengupta.
Previewed exclusively on domain-b.
Anuradha Sengupta: If you want to transform society, you need to take people along with you. The power of impossible thinking necessarily involves some amount of R&D of the mind. That's on Lessons In Excellence today. Jerry Wind will tell us how it is done and Shiv Kumar; head of ITC's international business division will share his experience of the ambitious e-chaupal concept. Thank you, Shiv Kumar, for joining us and Jerry., R&D of the mind - is that possible? How does one do that?
Jerry Wind: Well that is relatively simple. The idea is, because of the continuous changing environment, it's imperative for us to continuously experiment and we cannot just rest and continue what we have been doing in the past but continuously we have to experiment or we learn from natural experiments - what's happening around us. But it is critical due to the changing environment that we continuously engage in active experimentation.
Anuradha Sengupta: Do you buy into this?
Shiv Kumar: Yes absolutely. Unless you look at things very differently. If you continue doing things the same old way and there can be a whole lot of deficiency in the way you do things and -
Anuradha Sengupta: But how much of this having to look at things differently is it because you are pre-emptying or is it because you are reacting? Because we are going to get into the e-chaupal model and concept but that was a reaction to the fact that the market around you as an exporter of commodities and a buyer of agricultural commodities was changing, isn't it?
Shiv Kumar: Yes, the basic reason to start could be reaction; it could be many other things also. But the way you look at it differently means that it is not a reactive thinking. For example in e-chaupal, we were the buyer of commodities. If you have to reduce cost or improve quality, all that you could do if we were thinking in the old way was appoint commission agents in the mandi's who are better skilled or cut the transaction cost a little bit by improving transportation costs.
But nobody really though for decades altogether that transactions outside of this market ever existed. If a farmer was very small, he had to go to the market, he had to sell because that is the only economic way of doing things. That was the traditional way of thinking. When e-chaupal started, we said, "Think of it very differently."
Anuradha Sengupta: When you came up with this idea - you say that it could be a reaction. You are reacting to something but then you evolve completely new mental model of doing something. But when you came up with something that seems to be pretty radical, not now but in 2000 when you started it, it must have been. What was the reaction from the company, from the management, from people driving ITC?
Shiv Kumar: At one level, obviously when you say, "I want to put internet in the village and the farmer will look at it and transact", obviously the first reaction was, "Ok, can a farmer actually access internet?" and we remember in the 2000, even in the urban India that telecom did not fully take shape. But nonetheless after the model was fully explained. Mr. Deveshwar was the chairman…
Anuradha Sengupta: Did you look for a pilot?
Shiv Kumar: No. All that he initially asked for was to do a pilot. We said we would require about Rs50 lakh to do a pilot. But after looking at the whole idea he said, "I think it makes enormous sense. Why don't you take Rs10 crore and do a full-bloodied experiment? Lets give it a full try. You say because of problems like power and internet access, it is possible that six months later you will come back and say - It seems to be tough, why don't we give it up? But here take Rs10 crore, try it full blast and then possibly it will succeed because the inherent idea has some sort of sense." So that was how the whole thing started. Yes, there was some amount of scepticism to say that will this work? But at the same time if the resources are required to make it work, resource were also made available.
Anuradha Sengupta: How do you compare this scepticism with I am sure the skepticism you met in the villages themselves or was there no scepticism. There must have been because here was a concept that was completely new and technology that did not exist.
Shiv Kumar: When we went to the villagers saying that here is the computer, here you can access the price. If you like you can sell or you can go back to mandi's and sell. Firstly people wanted to know, "Can this really happen? Everything for free? What do we need to pay? Can computers actually give the prices that are actually prevailing in mandi's?" That level of scepticism did exist but as the people came in for training, for example when they understood that here is a value they can actually access, we kept aside two days of training for our sanchalaks and the computers as to how to actually access websites and all that - they learnt in two hours and said, "Ok, what next?"
Anuradha Sengupta: Ok, Jerry, any parallels to what Shiva has just outlined that they did?
Jerry Wind: I think what they have done is the right approach especially when you are grappling with a radical idea. When you want to educate the people and tell them what it is, there was no way they could implement this unless they educate the farmers and his own people. And the other one is some commitment to experiment wit this but this is a perfect example of the importance of experimentation. Had he not experimented with this, he still would have been in the old trading business.
Shiv Kumar: Absolutely and experimentation also carried on further to "How do you buy commodities better?" But the same channel that is put in place, we figured out and realised eventually that education can get into growing better crops, you can increase yields, supply the quality inputs and therefore you get much better productivity and therefore it is not just a transaction cost reduction but a much larger productivity improvement which is also possible. That is ongoing experimentation.
Anuradha Sengupta: Jerry, we have to close Lessons in Excellence, the series that we did in the past few weeks where we talked about the power of mental models and the power of impossible thinking. I want you to leave us with some of your final thoughts; some key take-away's from the concept.
Jerry Wind: Well, let me suggest three things and let me give you two examples with them. One of them - mental models are hard to see, but they have an enormous influence on everything that we see, the opportunities that we can capture and addressing the threats that we can feel and let me give you an example.
There is the famous study where you show a group of people, a film where there are basketball players throwing the ball to each other. And they asked the audience the number of times the players in white shirts throw the ball to each other. They count. In the middle of the screen where the video progresses there is a man dressed in a black gorilla suit walks through the stage, stands in the centre, pounds his chest and leaves the stage very slowly.
After they finished the video, we asked the people the number and typically people give you fairly accurate number of how many times people threw the ball. We also asked them how many times have you seen - what else have you seen? And typically 50 per cent of the people never see the gorilla. I repeated this video, which was designed by two researchers at the university among 100's of top executives, including hundreds of top executives of the world's largest global banks and others.
Universally we found that 50 per cent of the people did not see the gorilla. There is an incredible message here, if you can reflect on this for a minute, basically people are so obsessed focusing on a task that they miss the gorilla that walks in front of them. Now how many gorillas do we miss that are in front of us in terms of changing environment, changes in consumer behaviour, changes in technology, changes in competitive behaviour, changes in opportunities?
Anuradha Sengupta: Jerry Wind, I hope we managed to do a bit of that and if nothing else, recognize the fact that we have these mental models which we take for granted and don't isolate and manage to transform little bit of our lives if not. Thank you very much for doing this with us and thank you very much for watching Lessons in Excellence.
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