‘Call for Book Chapters’ for Bank performance measurement

 

Call for Book Chapters

Edited book

on

“Bank Performance Measurement at crossroad”

After the recent financial crisis, banks are seriously concerned about how to improve their performance measurement capabilities in light of changed economic and market conditions and new management requirements. New regulatory strictures, Capital requirements, new channels e.g. mobile phones are becoming more important in current era. Revenue growth continues to be difficult to achieve due to uncertain economic conditions, low interest rates. Banks are trying to manage costs better, deepen customer’s relationships, improve product mix and pricing decisions. These and other factors are causing banks to re-examine and improve the ways in which they measure and report true business performance.

The last 3 decades has seen a revolution in bank performance measurement. Traditional accounting based measures e.g. growth performance, ratio analysis have been principally replaced by Key Performance Indicators (KPIs), that focus on the financial as well as the non-financial, and frameworks such as the Balanced Scorecard. Throughout this period we have seen significant research on the performance measurement tools/technique, but the emerging need is concerned with accurately and globally accepted uniform set of performance measures that should be able to predict the actual performance of the business enterprise.

Performance measurement is at a crossroads. The traditional measures of bank performance found weak in predicting the business failure and global crises. This suggests that our understanding of this field is incomplete. From a practical perspective, we have the additional complication of a fast moving business environment with globalization, increasing reliance on international supply chains, emerging markets and high-speed internet connectivity, not to mention the new organizational structures this brings. For all the good intents of initiatives such as Sarbanes Oxley, performance measurement and management practice failed to prevent the recent banking crisis.

In this special edited book, our intent is to draw together studies at the leading edge of the use of performance measurement. We are interested in different settings, both within and across organizations, and the application of performance measurement in different sectors and cultures. Finally, we are interested in trends and developments especially when linked to sound theoretical underpinning. Priority will be given to empirical studies of real world situations and organizations and high quality theoretical papers that make a direct contribution to our understanding of the field.

The following is a list of topics of interests for this edited book, but is not to be considered exhaustive: -

·         Relevancy of ratio and growth based performance analysis in current scenario

·         Market based performance indicators: Stock market, EVA/MVA and decision making

·         Bankruptcy/Bank Failure prediction modeling: determinants, effects and causal relationship

·         Risk Analysis and its Modeling

·         Modeling of performance measurement approaches

·         ‘Balance Score Card’ non-financial performance measurement tool

·         DEA: Emerging issues

·         Bank performance: determinants, effects and causal relationship

·         Branch level performance: Emerging issues  

·         Appropriateness of CAMELS rating

·         Issues in Statistical, Econometrics, Index and aggregation based methodology for bank performance measurement

·         Service Quality Measurement

·         Managerial potentials measurement and its effect on bank’s financial performance

·         Basal accord: Futuristic issues and effects on bank performance

·         Economic condition, regulatory framework, strategic choices and bank performance

·         Proposed techniques, approaches and modeling for bank performance analysis

We expect that studies submitted will use a variety of approaches, theoretical lenses and methodologies, quasi- experimental and experimental research. We would particularly welcome studies that show longitudinal progress of performance measurement.

The editors will acknowledge receipt of the paper and then will first review the submissions for relevance to the special issue. Only high quality and selective manuscripts will find a place in this edited book.

Useful Guidelines for authors:

v  Authors are required to submit their full papers, not exceeding 8000 words, by only electronic submission in the form of a word file as an e-mail attachment to the editor at call4bookchapters@gmail.com

v  Authors should submit only original manuscripts for consideration for review and publication for the edited book. The authors should ensure that the article has not been submitted nor published elsewhere and they are also required to fill the copyright form send by us.

v  Manuscripts should be written in clear, concise and grammatically correct language. The entire manuscript, including references, should be typed 1.5 spaced and font size should be only 11.5. Leave one line space between two paragraphs.

v  Manuscript headings should be divided into two main and sub headings. Main heading should be in capital with font size 13 & bold and all sub-headings should be in capital with font size 12 & bold. In addition, all headings and sub headings should be numbered according to their main heading.

v  Each table/figure must have a title and should be numbered consecutively.

Guidelines for References

v  Relevant works must be cited in the reference list at the end of the paper in an alphabetical order. Authors are advised to include only those references which have been used in their paper. Some of the guidelines/examples for references are as follows.

Books:      

Gujarati, D (2003), “Basic Econometrics”, 4th edition, McGraw-Hill/Irwin.

Contributions to books:

Elson, D (1996), “Appraising Recent Developments in the World Market for Nimble Fingers” in Chhachhi and R Pittin (ed) Confronting State, Capital and Patriarchy (Basingstoke and London: Macmillan Press) 35-55.

Journal and other articles:

Helleiner, Eric (2006), “Reinterpreting Bretton Woods: International Development and the Neglected Origins of Embedded Liberalism”, Development and Change, 37(5): 943-967.

Conference papers:

Gupta, Vijaya (2006), “Non-Market Valuation of the Benefits of Environmental Quality of Powai Lake”, Mumbai, Ninth Biennial Conference of the International Society for Ecological Economics, 16-18 December, New Delhi.

Important Dates:

Submission of Paper: 31^st December, 2012

Communication of Acceptance of Final Paper: 15^th March, 2013

Proposed date of Final book Print: 30^th June, 2013

Editor:

Dr. Parveen Chauhan (Ph.d)

 

Economics of Festival

Paul Tollett, the man behind the giant, weekend-long music showcase festival All Points West, which is taking over Liberty State Park in Jersey City this coming weekend, has learned a bit about holding giant, weekend-long music showcase festivals in New York, and what can go wrong.
“We felt there were a lot of things we didn’t like about last year,” he told The New York Observer in an interview this week. “I walked around as a fan and stood in those lines, and when you go stand in that line, you get mad, and even if it’s me. I don’t want to wait. Who would want to have to go through that?”
Last year, he had 27,000 people “going through that” on Friday, 30,000 on the headlining day, Saturday, and 22,000 on Sunday. From the noise coming off the Internet, it might have been a million.
Last year, the fest’s debut featured two nights headlined by Radiohead and many other impressive bands, but also endless lines for food, pain-in-the-ass ferry and parking problems and what lots of people thought were draconian restrictions on beer drinkers (small, prisonlike drinking pen, five-beer maximum). “All Points Worst” was the festival’s most prominent epitaph on the Web.
Some sample threads on the festival’s official message board in the year since have read like a summer-camp burn-book: “Sneaking In,” “The Stages Should Face The Opposite Direction,”
“How dumb is this ‘green’ deal?” “All Points West Sux” and, of course, “Paul Tollett is a D-bag.”
Mr. Tollett might have been the main candidate to get it right: He’s the mastermind behind California’s Coachella Festival, after all. He oversees Goldenvoice, which produces some 300 shows a year, and along with AEG Live puts on APW, Coachella, Stagecoach, the New Orleans Jazz and Heritage Festival and Seattle’s Bumbershoot festival, among others. But with local grumps—that is to say, New Yorkers—he’s found that keeping an ear to the message boards is all-important.
“We read the message boards and the emails, and people complain or give advice,” he said. “Some of it is very negative. You can do everything right and there’s still 12 people for whom it’s the worst thing they’ve ever seen, but you watch and you can see what makes sense. Enough people have a problem and it might be a real problem.”
Mr. Tollett expects similar attendance numbers this year, but he says he’s ready for them.
“The first year of Coachella, we didn’t have any lines, but that’s only because we didn’t sell any tickets!”
In place of last year’s third stage (which produced more noise interference and confusing schedules) is a tent where comedians (among them Tim & Eric, Janeane Garofalo and Eugene Mirman), DJs, electronic acts and smaller bands will perform. The Renegade Craft Fair is also along for the ride.
The pain-in-the-ass trip should be relieved somewhat by public transit discounts. But the biggest test will be at the beer garden, which is going to be larger, with shorter waits, a shady location and views of the stages.
Of course, this is New York, and major bands come through all the time. It’s the specific location—“within sight of the Statue of Liberty and ground zero”—that provides its greatest attraction and also its greatest drawbacks: drinking restrictions on federal property, the security considerations that go along with holding the event at a prominent national site. Overnight camping? Forget it.
So you’ve got to put together one hell of a lineup.
Headliners this year include Tool, Coldplay and Jay-Z (a last-minute replacement for the Beastie Boys), and other performers include Echo & the Bunnymen, My Bloody Valentine, MSTRKRFT, the Black Keys, Fleet Foxes, Neko Case and more than 65 other artists.
What’s new this time around is a bit of pandering to New Yorkers, trying to brand the fest with local flavor peppered into each day, “with the Beastie Boys—and now Jay-Z is in there—and
Yeah Yeah Yeahs, Vampire Weekend, MGMT and all those bands. It’s very friendly to the area,” Mr. Tollett said.

For more information click here

Source:.http://observer.com/2009/07/the-new-festival-economics/

Brack obama and indian economy

During the presidential debates, Indians bemoaned the lack of candidates' interest in India. In the upper levels of the Indian government there was relief. In his second term, Obama will have many challenges facing him. The India relationship is not among them.

With New Delhi embracing economic reforms again after years, an improvement in the bilateral investment climate is something PM would pitch for with the US. In his first term, Obama's economic instincts have been less than laudable. Publicly and privately' Indians have rued the protectionist tendencies in US.


Indians are hoping that with a sinking economy, Obama will develop more economic sense. But his anti-outsourcing mantra has been an electoral winner and Obama is unlikely to let go of that.

That won't be good news for Indian companies looking for a greater space in the US. This also means that H1-B visas and L-1 visas will remain a significant issue between India and the US. Strategically, India would want clarity on the US "pivot" to Asia and how Obama will put meat into that policy. In West Asia, India, no lover of military action, wants the US to directly deal with the Iranian leadership to resolve the nuclear issue.

comments are welcome 

Swami Vivekananda Vs Dawood Ibrahim (Nightingale Vs crow)

Speaking at the Ojaswini felicitation programme here to honour leading women from various fields, Gadkari said, "The IQ of both Swami Vivekananda and Dawood Ibrahim would be similar, but their direction in life is so different. One used his intelligence for destructive purpose, to damage society and humanity with the spread of crime and terror while there was the other used his intelligence for the benefit of society. His thoughts remain an inspiration for the nation.''

Congress Party on Monday took potshots at BJP President Nitin Gadkari over his controversial remark (comparison of the intelligence quotient level of Swami Vivekanand and Dawood Ibrahim) and said what reply would the main opposition party give if somebody compares Nitin Gadkari's excellence with 26/11 Mumbai terror attacks accused Ajmal Kasab
"I think so this is the bankruptcy of Gadkari's mind. What is the justification of comparison of Saint Swami Vivekananda to underworld don Dawood Ibrahim? If somebody will ask Gadkari tomorrow or will compare Gadkari's mind of excellence with Kasab what reply will the BJP give," said Congress leader Jagdambika Pal.

In this regards the students of BBA 3rd (OITM, Hisar) express their views. They think Nitin Gadkari has made non-mistake in comparing the Swami Vivekananda and Dawood Ibrahim IQ level. Gadkari compare only their high IQ level that lead them to their final distinction. People know them not for their IQ level but for their role play in society. The actual meaning of this statement should be "someone uses his or her intellect in the right way it is like Vivekananda, in the wrong way it is like Dawood".


 In conclusion, the final fault is in the media, that have created this news. if Gadkari made a mistake than why we compare Nightingale and crow. Because both are same in color and both are birds.



comments are welcomed:
  

Protect your bank account for online banking or online shopping

For years, nearly anyone who is online has shopped through a web browser. And now nearly 3 out of 4 internet users do some banking online. And while banks and retailers have gotten better at protecting your private financial information, online criminals have gotten savvier at stealing it.

As we prepare for the holiday season, we thought we’d review a few smart tactics to make sure that the only one who is spending your money is you.

1. Make sure your PC is patched and protected.
This is a standard piece of advice we always share but it’s especially crucial for people who rely on their PC for their financial transactions. Keep your PC updated with the latest system, application and security software. Our free Health Check makes this easy. With an updated and protected PC, you’ll avoid more than 99% of the trouble you might face online.

2. Go directly to the site
When you’re shopping online, it’s always best to stick to retailers you know and trust. Go to the site directly and search there. Avoid clicking on links in your email to go to a store or your bank so you don’t end up at a scam site. If your bank contacts you with a problem, go to the site on your own, or just pick up the phone and give them a call.

3. Look for the “s” in “https:”.
Only enter your information in if you see that extra “s” in your URL. It stands for secured and it’s an extra layer of protection that keeps your account information private.

4. Shop and bank when you’re secure.
Only shop when you know you’re on a network and a PC that’s protected. A computer in an Internet cafe may have a keylogger that tracks your credit card number or password. An open “free Wi-Fi” network, may be convenient. But it’s also risky for shopping or banking. If you use your smartphone or tablet to shop or bank, make sure you have security software on it that includes anti-theft protection that will you allow you to deactivate your device if you lose it. That way when you lose your phone you don’t lose control of your money.

5. Check your accounts.
Try to limit your online shopping to one credit card, and make sure you check that account on a regular basis. Make it a weekly chore to check your account statement and your bank account. Then you’ll be ready to contact your institutions as soon as you notice a problem. The longer a criminal has access to your account, the more trouble they can do–of course.

With these few precautions, you can worry less about your security and more about what you’d actually like to buy.

 

 

Source:

Start Investing in Stocks -Tutorial

Companies need money to expand their business by setting up new branches, factories, hiring more workers etc. For that, they either borrow funds or raise money by allowing investors to purchase stock of their company.
By owning a share in the company, you own a part of the company and are entitled to a proportional share of profit. Though being a very small shareholder does not give you much say in the company’s functioning, as you buy more and more stock in it, you start having a greater say in its decisions.

Benefits of Investing in Stocks
Stocks offer an attractive risk-reward ratio, as long as you choose the right companies to invest in. Here are a few benefits you can enjoy by investing in stocks.
Dividends – A company’s profits are distributed among its shareholders in the form of dividends. Declared by the company’s board of directors, dividends are usually given in the form of cash but a few companies give it in the form of stock equal to the amount of your dividend.
You can choose to spend all your dividend money or reinvest it to make more money. DRIPs or dividend reinvestment plans automatically invest your dividend amount to purchase additional stock that can result in considerable growth of your wealth.
Increase in stock value – The value of the stock you have invested in can increase over a period of time, provided the company expands its business and increases it profits. But the value of your stock can also increase hugely through other corporate actions, like an offer to buy back stock or a merger announcement.
Liquidity – Another benefit of owning stocks is their high liquidity. In case of an emergency, you can make quick cash by selling your stocks easily through a stock broker or your online trading account.
Different Types of Stocks
There are thousands of companies that offer their stocks for purchase. Stocks can be broadly classified based on the company’s size, growth and the sector or industry it belongs to.

• Classification of stocks based on size – The value of a particular stock can depend on the company’s size or its market capitalization. The market cap of a company is calculated by multiplying its current share value by the total umber of its shares outstanding.


• Classification of stocks based on return expectations – Investing in the stocks of a growth company, with an above-average growth rate, will increase the growth potential of your portfolio, along with the risk involved in it. The stock of a ‘value’ company is traded at a rate that is lower than the market average. A cyclical company’s stock, as its name indicates, does not have a constant demand and keeps fluctuating throughout business cycles.


• Classification of stocks based on sector – Stocks can be further divided into a few broad sectors and industries. While the financial, healthcare and technology sectors tend to grow fast, sectors like consumer durables and utilities grow moderately. Most other sectors usually see cyclical growth and stock values change depending on the supply-demand equation and economic conditions.


• Common stocks and Preferred Stocks – Common stock usually refers to the stock owned by a majority of investors. Common stock holders are eligible for dividend income and also have a right to vote for choosing the board of directors. Preferred stock holders are given the first priority when it comes to dividend payment, which they receive consistently. However, they do not get the right to vote for major company decisions.


• Understanding Stock Prices

Stock prices are volatile and tend to change very often depending on the supply and demand of shares. Different stocks can be priced differently based on factors like expected profits and the company’s asset base. Consider the following terms to understand stock prices better.

• Price earning or P/E ratio – To get the P/E ratio, divide the current price of each share by earnings per share. But as stock earnings are not the same throughout, consider a share’s earnings in the past four quarters to get an accurate reflection of past earnings and a near estimate of the future earnings. Although you cannot decide to sell or buy shares based on the P/E ratio alone, you can determine if the stock is overpriced or underpriced.
• Price/sales ratio – The other aspect investors are concerned about when investing in stocks is the revenue that the company generates. Divide the stock price by the total sales per share for the past year to get the price/sales ratio.
• Price/book value ratio – Book value refers to the company’s total assets after removing its liabilities. You can calculate the P/B ratio by dividing the price per share by the book value per share. The book value per share can be obtained by dividing the total book value of the company by the number of outstanding shares.

Boosting research and development is key to driving the future of the Indian economy

Oct 24, 2012, 12.34PM IST

By NR Narayana Murthy, Chairman Emeritus, Infosys and Trustee, Infosys Science Foundation


India continues to enjoy the No. 1 position as the leading information technology, business outsourcing and consulting destination of the past two decades. In fact, the other emerging powerhouses of the BRIC nations are all hot destinations for future investments.

But we cannot rest on our laurels. It is imperative that we strive to become the finest research hub the world has ever seen. We can achieve this distinction by investing in our schools - the places where future generations will develop the skills and resources that will drive our country's economic growth.
The Royal Society's seminal 2011 report, 'Knowledge, Networks and Nations: Global Scientific Collaboration in the 21st Century' , states that even in the difficult economic times we now face, national governments need to maintain investment in their science base "in order to secure economic prosperity, tap into new sources of innovation and growth, and sustain vital connections across the global research landscape."
Currently, a mere 0.25% of India's GDP is spent on research & development. The government proposes to step this up to 2% of GDP, with half of that amount coming from private industry and half from the public sector. While admirable in its intentions, the goal falls short. Israel, for example, spends 6% of its GDP on scientific research. Switzerland and Sweden both spend 4% of their GDPs on research, and even China is approaching 2%.
India is in danger of falling behind other nations in the race to build an advanced, 21century economy. True, the country has increased its expenditures on education as a percentage of GDP to 4% during the 2011-12 school year from 3.3% in 2004-05 . But compared to the other BRIC countries, we need to do more. Brazil, for instance, spends some 5.7% of its GDP on education. Smaller developing nations like Ethiopia spend 4.7%, and even Botswana spends 7.8% of its GDP on education, according to the World Bank.
Make no mistake: India needs a sustainable pipeline of scientific research. To build this pipeline, it is imperative to have strong investments in education . A population grounded in the sciences will strengthen our industries and government. Our nation will have homegrown minds working on the myriad problems facing society and improving the lives of everyone. The responsibility for this task lies not just with government but with private industry, schools, families and individuals.
I encourage young scientists and students to consider careers in research - whether in corporate laboratories or academic institutions. In the private sector , my colleagues and i set up the Infosys Science Foundation (ISF), a not-for-profit trust, to promote scientific research in India. The ISF has set up a series of public lectures by the winners of the Infosys Prize that we hope will kindle a spark of interest in young minds. We hope also to make role models of the Infosys Prize winners - the Sachin Tendulkars of science, if you will - that youngsters will want to follow.
The high point of our year is when we award the Infosys Prize to honour the outstanding achievements of researchers and scientists in the fields of engineering and computer science , humanities, life sciences, mathematics, physical sciences and social sciences. The Infosys Prize highlights the impact research has had on areas important to India's growth.
One of our recent winners, Professor Kalyanmoy Deb, was honoured for his work in engineering and computer science. His research has led to advances in the areas of non-linear constraints , decision uncertainty, programming and numerical methods, computational efficiency of large-scale problems and optimisation algorithms.
His work has profound implications on a range of practical ideas - from how the financial markets operate to how we can find sources of fuel in the future. The winner of the Infosys Prize in life sciences, Dr Imran Siddiqui, worked on clonal seed formation in plants that has significant implications for agriculture, especially in the developing world. The work of our winners is meaningful, impactful and inspiring.
As you can see, my colleagues and i are doing what we can to help bring about this transformation in the corporate sector. But there are many steps that India's universities can take that will focus our students on scientific research. First and foremost is to give top-notch researchers scholarships , grants and interestfree loans to make their work financially worthwhile.
Universities can also bridge the gap of communication and interaction between researchers here and abroad. Let's make it known that scientific research is a global pursuit benefiting the global community. Plus, schools can ensure that the research conducted by their students is measured by and meets global standards. Finally, i call on the media to devote attention and airtime to profiling India's top researchers and scientists, and their work.
Can you imagine giving the same attention to our country's great scientists as we do to our sports and movie stars? Scientific gains and a booming economy go hand in hand. We're at a crossroads in this country . How we move forward at this very moment in our history will determine the success of this nation and whether we lead the world well into the next century. 

Source: the economic time

 

Is Banking’s Future in the Cloud?

September 12th, 2012 | 0 Comments

The buzz on cloud computing is growing louder, leaving bank chief information officers—and the boards they report to—to examine whether cloud computing is a good fit for their banks. Broadly defined, it is the storage and management of data, which can then be accessed from virtually anywhere—on the road, from your home or from the office—via the web. According to Tom Garcia, CEO of InfoSight, Inc., an IT security firm based in Miami Lakes, Florida, the cloud is “really in its infancy” but “growing exponentially.” While regulators seem to be approaching cloud like any other vendor-provided service, a lot of bankers today are taking a wait and see approach, wondering, “Am I going to open up Pandora’s box with an examiner if I do this?” explains Garcia.
Atlanta-based SunTrust Banks, a $178.2-billion institution, is one banking company that is already on the cloud, using a private cloud that is unique to the company for customer relationship management software that allows the company to keep track of sales leads. Anil Cheriyan, SunTrust’s chief information officer, says the board of directors is actively engaged in a discussion about cloud computing, and SunTrust sees benefits in cost savings, efficiencies and flexibility. “The speed and agility [cloud computing] provides is of significant benefit,” he says, and it “clearly enables us to get our products and services to market much quicker.” He declined to describe the exact cost savings as those numbers vary.
Due to its ability to expand and contract quickly based on usage, Garcia adds that banks can see “great economies in cost savings” with cloud—as high as 40 percent for applications like hosted email over a traditional in-house solution.
SunTrust has been steadily increasing oversight of vendor-provided services in general since the financial crisis began in 2008, Cheriyan says, so cloud computing has not directly resulted in any increases in oversight.
“We’ve taken that task of increased oversight anyway,’’ states Cheriyan, and continue to be “more and more aggressive [in terms of] how our data is protected.”
BNC Bancorp’s Bank of North Carolina, a $2.4-billion institution based in High Point, North Carolina, is at a fork in the road when it comes to the cloud, says Michael Bryan, the bank’s chief information officer. The bank outsources 90 percent of its core and ancillary systems already, and he feels good about cloud computing for core systems, seeing several benefits, particularly from a business continuity aspect in regards to disaster recovery. With cloud, if something happens to Bank of North Carolina’s operations center, “all I have to do is restore an Internet connection.”  As it is now, Bryan has to “spend more money” to acquire and maintain hardware. However, benefits found in cost, time and continuity are, to Bryan, not worth the loss of control if there is a security breach. Cloud vendors are not going to take on liability, “So if something goes wrong there; it’s up to you. Well, you don’t have any control over it,” Bryan says. “How do I explain that to my regulator?”
Once the security issues are worked out, Bryan sees tremendous opportunity. “Life would be a lot simpler,’’ he says.
SunTrust’s Cheriyan shares some of Bryan’s security concerns, and won’t trust everything to the cloud. “I wouldn’t trust our bank data on the public cloud at all,” he says. While SunTrust’s directors and management might read about exciting developments in the retail space, “You certainly have to weigh that against all the security concerns and manage core banking systems on much more secure environments.”
Due to the higher levels of regulation required in the financial industry, public cloud adoption rates will be slower. Can the benefits outweigh the risks? In areas like human resources and customer relations management Garcia believes so, and cautions that retail banks that hesitate to take advantage of the cloud may do so at their peril.
As the cloud industry grows, bankers’ trust in it—and their need for a competitive edge—could evolve. Can bank boards eventually trust their data to the public cloud?  In the world of technology, Cheriyan says, “Never say never.”



Source:http://www.bankdirector.com   on  02/11/2012

Low-Cost Innovation: Waves Of Change From India?

By: Parvathy V.K.   Date: 30 August 2012

About The Author

MBA student from the Cochin University of Science & Technology in Kerala, India. Diploma in Banking

Parvathy V.K.,       EconomyWatch Contributor

           

READER SUBMISSION – Nearly two years after the Indian government declared that this was the Indian “Decade of Innovation,” the country is now emerging as one of the world’s hotbeds for low-cost and frugal ideas. Can India continue on its vision of innovation; and what can the rest of the world learn from this era?

India's Low-Cost Innovations: Changing The Lives, And Fates Of Its People?
Photo Credit: procsilas - Flickr

What does it mean for Indians today to live in our so-called “Decade of Innovation”?
For a start, our government has a vision to turn the nation into one of the most powerful economies in the world; but Indians still have to equip ourselves with better ideas and greater potential in order to turn this vision into reality.
In addition, while India today is generally regarded as an innovation hub, we still need to further develop our culture of innovation so to ensure inclusive growth in this envisioned economic scenario.

Culture Of Innovation

The National Knowledge Commission (NKC) has defined innovation as “a process by which varying degrees of measurable value enhancement is planned and achieved, in any commercial activity.”
According to the NKC, this “process” may be “a breakthrough or incremental; and it may occur systematically in a company or sporadically.” The criteria for this includes:- Introducing new or improved goods or services and/or
- Implementing new or improved operational process and/or
- Implementing new or improved organizational or managerial processes, “in order to improve market share, competitiveness and quality, while reducing cost.”
The benefits of innovation are simple: not only does it inherently creates economic value and new jobs, but it also develops a culture of entrepreneurship among citizens.
As such, innovation in India is not seen as an end in itself, but rather a means to productivity, growth and higher living standards.
Innovation is also seen as way to accelerate our economic growth, and to make economic growth more inclusive and environmentally sustainable.
Related: "Frugal Innovation" Now Key Indian Economic Strategy
Related: Indian Technological Entrepreneurship - At Street Level in Mumbai

Low-Cost Innovation – A Bottom Of The Pyramid (BOP) Perspective

Due to the nature of India’s economy, low-cost frugal innovations have emerged as the primary drivers of innovation in the country. Generally, some of the major reasons that have facilitated increasing innovative activities in India include:

• The existence of an open society
• An environment that allows for experimentation
• The availability of a young population
• Full and free competition in the private sector
• A large education capacity with several high quality institutions like the IITs.
• Technology base
• Democracy
• Broad based network of Government supported research and development laboratories with multi disciplinary expertise
• WTO compliant intellectual property laws accompanied by increasing foreign investment in research and development.

But, the human resource in the country has led Indians to generate ideas at lower costs. The middle and lower class population, which we generally categorize as the rural population, are bringing out their ideas that are affordable and eco friendly to redesign the conventional product development and marketing techniques.Major companies in India are also focusing on the previously untapped segment of the market. They see a better business opportunity in catering to the needs of the bottom of the pyramid (BOP), who are the largest, but poorest socio-economic group in India.
The BOP is also the group who traditionally cannot adapt to technological advancements due to its higher cost. With the advent of low-cost innovations, the hope is that they too can enjoy the benefits of innovative and affordable products and services.
Management Guru C.K.Prahlad, laying the frame work for the BOP market argued that “sustainable product innovations initiated in tier 4, and promoted through consumer education, will not only positively influence the choices of people at the BOP, but may ultimately reshape the way Americans and others in Tier 1 live.”
Prahlad outlined 12 principles of innovation for the BOP markets:

• Create a new price performance envelope.
• Creatively blend existing technologies with the new technologies;
• Ensure that the solutions developed are scalable and transferable across countries;
• Use minimum resources;
• Develop the product on the basis of functionality and not just of form;
• Process innovations to address logistics constraints; 
• Deskill the work content;
• Educate customers;
• Ensure that products will work in hostile environments;
• Ensure research on interfaces – this is critical;
• Design methods to make innovation reach the user; and
• Focus on the broad architecture of the system.

These principles have lead many local users in India’s rural areas to come up with inventions that are not only innovative and useful, but also less expensive than the solutions available in the market. The grass root innovations are generally environment friendly and are sustainable to the available infrastructure. In the words of Mr. Robert D.Hormats, “ideas from all sources must be allowed to compete and those that succeed must be fairly rewarded.”

Driving Low-Cost Innovation

Cost is a major factor that has been reflected in the price of a product. An innovation becomes affordable only when it can be made available to its customers at a reasonable rate.
The high-middle-low income categorizations of customers have been made by the companies with an objective of putting the best strategy in practice and thus obtaining the targeted customer group easily.
The high or luxurious category of customers is not price sensitive. The companies have already realized the need for considering the middle and low income group of customers. In many product areas where these segments were inaccessible due to higher cost are now rewriting the scenario. Products are made available at suitable designs and lesser cost and thus the standard of living of these groups increase.
The conventional formula of lesser cost = cheaper quality is redefined and it has opened up more business opportunities and a scope for economic growth. In fact, the label of ‘low cost innovation’ limits its customers to a particular category of users. The psychological barriers restrict the customers from buying a product labeled ‘low cost’ even though the customers cannot afford to buy the higher priced version of the same product.
Hence, greater care should be taken by the producers of the low cost innovations in marketing the product.  In the words of   C.K.Prahalad “the primary lesson is learning to ‘do more with less’.
Related: Disruptive Innovation: Fuelling The Growth Of Emerging Markets : Javier Santiso
Related: Indian Entrepreneurship Challenges Caste System

Examples Of India’s Approach To Low-Cost Innovation

Aakash Tablet PC – The World’s Cheapest Tablet PC

The Aakash is an initiative of the Government of India, in joint venture with the British company Datawind.inc. The initial price set for the tablet PC was set at $35 but in India, the Government of India has also decided charged RS.1750 ($31.44) per unit instead.
The reason for developing this product at such a cheap rate is to increase the computer literacy in India, with an aim to link 25000 colleges and 400 universities in an E-learning program.

Tata Nano – The World’s Cheapest Car

Tata motors launched a 1 lakh rupee ($2500) car in 2009, which promised to revolutionise mobility for the Indian middle class. The car was good looking, fuel efficient, environment friendly and ultra low priced.
Despite all the hype however, unit sales of the Nano in January 2012 were just under 8,000, a monthly rate that would soak up a mere third of the company’s 250,000-unit annual production capacity. Delays due to the costly move of the Nano factory from Singur to Sanand (something outside the company’s control) and initial safety issues with the car did not help.
However, Ratan Tata, the chairman of Tata Motors, had it right when he acknowledged recently that mistakes were made in the marketing and distribution of the Nano. The company’s impressive value innovation was not matched by an equally creative delivery system.

Chotukool – A Low-Cost Refrigerator

Chotukool is a low cost cooling solution launched by the Indian conglomerate Godrej and Boyce with a price tag of RS.3700 ($66) – half the price of normal refrigerators. It is a portable, top opening unit, weighing only 7.8 kg.
The product has been co-designed with village women to assure its acceptability and is distributed by members of micro finance group. Chotukool uses high-end insulation to stay cool for 2-3 hours during power cuts. It consumes just 55 W power, which is nearly half the energy consumed by regular refrigerators. This refrigerator uses a cooling chip and a fan similar to those used in computers and can even function in batteries. Daily items like vegetables, juices, cold drinks and other beverages and milk products can be stored in it.
The quality and quantity of power accessible to rural India is very limited and hence effective refrigeration in rural areas can help people preserve food and to make lives a little better.

Tata-Indicom Nano Ganesh – A Mobile Way To Control Irrigation

The Nano Ganeseh will allow farmers to operate their irrigation pumps from remote locations without having to travel long distances to do so daily. The subscribers will be charged RS.2700 ($48) for the device, on top of the cost of purchasing a handset that offers lifetime validity. All the calls made to the pump by the Nano Ganesh will also be free. With the product, Farmers can now not only save on electricity cost, but also improve productivity and ensure better return on investment.

Vortex's Gramateller ATM – Solar Powered ATMs For Rural Areas

Vortex engineering, based in Chennai, has introduced a solar power ATM designed to reach out to rural areas with intermittent power supply.
Normally, banks do not find it viable to set up ATMs in such areas, due to the overall costs; but the Gramateller ATM costs just RS.2-3 lakhs ($3,500 - $5,300) to set up, compared to a conventional one (RS.5 lakhs or $8,900).
The biggest difference however comes in terms of running costs, where the vortex-made ATM requires just about RS.500 ($9) a month whereas an urban ATM goes up to RS.10000 ($180).

Tata Swach – Low-Cost Water Purifier

The Tata Swach costs less than RS.1000 ($18) and uses tiny silver particles to kill harmful germs that may lead to potentially deadly water borne diseases. It has a 9.5 litre capacity and can filter around 3000 litres of water before the cartridge needs to be replaced.
The goal of the product is to ensure that the rural population in India has access to safe drinking water.

Mahindra Yuvraj – Affordable Tractor For Farmers

Four out of five Indian farms are smaller than five acres (<2 hectares), and tractor size and cost means that only a small percentage of these farms are mechanized. Providing access to mechanization became the mandate for designing the Yuvraj 215, a 15 Horse Power tractor at a fraction of the cost of other tractors.
At the cost of RS. 181,000 ($3,250), the Yuvraj is making mechanization and a quantum leap in productivity possible for small farmers across India.

Steps For The Future

India needs to focus on the low cost innovation more effectively, trying to avoid the limitations that have been identified in due course.
Companies also have to formulate suitable strategies that can enhance the value as well as make it available to the targeted group within the shortest time possible. Better products and services at affordable rate can increase the standard of living, which in turn results in economic growth of the nation. Hence, keeping the cost lower and maintaining the quality higher will be a sign of positive shift in the growth curve.
By Paravathy V.K.
Parvathy V.K. is a MBA student from the Cochin University of Science & Technology in Kerala, India. Parvathy also hold a Diploma in Banking and Finance from the Indian Institute of Banking & Finance.



Source: EconomyWatch as on 03/11/2012