Perspectives

Can Digital Resolve the Paradox of Competing Agendas?

Digital is the future way of doing business, both at the individual business and the industry levels.  On one hand digital enterprises shall compete on innovative capabilities and on the other hand smart industries shall evolve, which will work in an integrated manner to create digital supply chains. Many traditional businesses are likely to become extinct and many industries shall undergo transformation. The focus of the discussion yet remains largely on economic parameters of top line, bottom line, profits, costs, ROI etc. Can it move beyond and solve some of the perennial problems of a developing nation like India?

The debate has to be much broader than what it currently is.

The problem of a developing nation like India is the vast gap between the top end and the low end of the pyramid, between the urban rich and the rural poor, between the haves and the have nots. With the existing business models, though there are attempts at addressing the untapped demand among the rural and urban low and middle income groups (LMIG), they can best be labelled as experiments and exceptions. Many such social experiments are being created in the healthcare sector and many such business experiments are being conducted in the FMCG and the banking sectors. Still, they are few and far between.

The phenomenon of wide gap is visible in wide variety of industries like consumer goods, FMCG, banking, media & entertainment etc. but more so in healthcare & education, which has an important (even if indirect) impact on the economic growth. Governance can be another non business area, which has so far scratched the surface only.

There are four issues associated with creating a viable business model for the untapped segments in a developing nation like India- affordability, accessibility, sustainability and profitability. These issues represent a paradox of competing agendas. Can digital help create a balance between economics, business, sociology and ecology? Can it create a business model to tap the potential at the bottom of the pyramid? Can it bring all inconclusiveness?

Let’s discuss in brief what these four competing agendas are.

Affordability

The economics does not work when the existing business models are tweaked and applied for addressing the needs of the LMIG. The traditional costs of corporate overheads, production, real estate and distribution logistics can be managed but just not enough to make them really affordable. And doing so and tapping the LMIG demand is not just CSR but pure business. The untapped opportunities can be huge.

Accessibility

Most of the new investments in healthcare and education (especially primary and secondary education) are concentrated in the urban locations, in and around bigger cities. A large part of the population does not even have access to these basic services. Apart from seeing accessibility from a user point of view, we should look at it from participation in employment point of view also. Is the fruit of economic growth reaching out to the millions of individual and small operators?

Sustainability

Enhancing the manufacturing base, more investment into computing etc. anything which enhances our carbon foot prints has an adverse impact on the ecology. What is being done with the waste, how is it recycled and where is it dumped has a long term impact on our planet. Can a huge demand be met without damaging the ecology further?

Profitability

It is a popular belief that addressing the above three needs impacts the profitability adversely. A business needs to recover costs of production, corporate expenses, marketing overheads, real-estate costs, transport & logistics expenses etc. which does not allow it to become affordable for most. Take for example banking, the cost of maintaining an account makes it difficult for the bank to profitably operate the no frills, zero balance accounts under the financial inclusiveness initiative. Similarly, taking healthcare and education to the LMIG and still remaining profitable is at best a dream.

Can digital, smart industries, smart cities, smart governance etc. address this paradoxical need of becoming affordable, accessible, sustainable and profitable, all at once?

This article is just an initiation of the debate; we shall bring more insights into the topic with further research and deliberations.

<Image courtesy of tigger11th at FreeDigitalPhotos.net>

2 Comments

2 Comments

  1. S R Balasubramanian

    March 20, 2015 at 5:44 pm

    I agree that innovative use of digital assets will be the differentiating factor for businesses. Increased emphasis on digitization, however may run in to the danger of mindless deployment of technology components under the assumption that more digitization would do the trick. It is not how much of technology we deploy but how well we deploy. A strong business sense, innovative thinking and good business acumen would be the driving factors both for making a success of business and for use of digital assets.

    • Kapil Dev Singh

      March 23, 2015 at 5:08 am

      Absolutely Bala. Simple technology can be used in ways, which can produce breakthrough results. Digitization does not always mean costly technology but rather it is the use of simple technology in creative ways.

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