Gandhigiri for sustainable growth

Economic Times, September 30, 2010

Innovation at leading Indian companies suggests that inclusive growth

policies are beginning to have the desired effect in rural areas and
on the urban poor. But much more is required from the government and
industry.

In two days, we will celebrate the 141st birth anniversary of Mahatma

Gandhi. It is only appropriate that we consider how his life's core
principles relate to our own economic times.

Historian Ramachandra Guha has described Gandhi as the single most

important influence on the environmental movement in the country.

His assertion, "the Earth has enough for everyone's need, but not for
anyone's greed" has been repeatedly invoked by environmentalists. He
made an equally-prescient statement, "It took Britain half the
resources of the planet to achieve (their) prosperity.

How many planets will a country like India require?" These Gandhian
ideas go to the heart of concerns about the sustainability of economic
growth in the world in general, and India in particular.

We are now at a juncture on the road to growth where we face two choices.

The first is unconstrained economic growth that enables us to race

ahead to the future, but with significant downsides such as weakened
long-term economic security and well-being due to non-renewable
resource constraints, climate change and environmental damage.

The other path is sustainable growth, which is the use of

sustainability-based innovations to develop products and services,
business models and platforms, and infrastructure.

Sustainable Growth 1.0, 2.0, 3.0

In the June 2010 issue of Harvard Business Review, Prof C K Prahalad
made one of his last contributions to management thought by
introducing, with his co-author R A Mashelkar, the notion of Gandhian
innovation.

These are business innovations that embody two core principles that
Gandhi lived by: affordability and environmental sustainability.

We can add a third core principle in Gandhi's philosophy: freedom from

authoritarian control and a general distrust of the central authority.
Sustainable growth can be considered Gandhian growth because its
business innovations are rooted in these three principles.

As illustrated below, the mid-1980s to the mid-1990s in India may be

described as Sustainable Growth 1.0. In this period, the easing of
many government controls led to business, technology and policy
innovations that initiated decentralised growth in the economy.

These changes, although partially implemented, illustrate the first

core Gandhian principle: decentralised control. The adoption of these
innovations then exploded in the next decade, 1995-2005, and resulted
in a boom in economic growth.

This decade also planted the seeds for innovation that initiated
inclusive growth by making products and services more affordable to
the vast majority of Indians.

In turn, Sustainable Growth 2.0's rapid expansion will likely be the

decade 2005-2015 in which we are halfway through, fuelled especially
by business innovations that target bottom of the pyramid. It,
therefore, illustrates the second core Gandhian principle,
affordability, and has now become the national agenda.

Our research of innovation at leading Indian companies - including

Hindustan Unilever, ITC, Larsen & Toubro, Novartis and Sanofi-Aventis
- suggests that inclusive growth is now rapidly reaching millions of
consumers in rural areas and the urban poor.

These innovations span consumer products, procurement, infrastructure

construction skills and healthcare, and use a variety of business
models to make them scaleable.

They may be considered as 'next-practices' platforms, because of their

ability to scale across markets and regions.

These companies are also well-positioned to extend their innovations

to Sustainable Growth 3.0, which may be described as eco-friendly
growth.

In this phase, innovations from previous phases get even more deeply
embedded in business practice, and also result in eco-friendly
innovations being deployed.

Leading companies such as Cadbury, Cosmos Ignite, Future Group,

Mahindra & Mahindra and Wipro are implementing next-practices platform
innovations that span sustainable farming, energy-efficient lighting
for the poor, consumer recycling through retail, eco-friendly
construction and transportation, and energy-efficient IT,
respectively.

These 10 companies are the tip of the eco-innovation iceberg, and

illustrate Gandhi's third core principle of environmental
sustainability.

It is encouraging that the government is finally putting together some

of the policy pieces required for accelerating Sustainable Growth 3.0.

These include measures such as the carbon tax on coal to fund clean
energy, the perform, achieve and trade (PAT) mandate for
energy-intensive facilities to reduce energy consumption, the National
Solar Mission to implement 20 gw of solar power by 2022 and several
other initiatives announced earlier this year. But the devil, as
always, is in the implementation of these policies.

There is much more that needs to be done. As Nandan Nilekani points

out in his book, Imagining India, sustainable growth will be more
effective when there is greater local control and clearer property
rights over local environmental and energy resources.

When it happens, it will represent a deepening linkage of the Gandhian

principles of decentralised controls and affordable access with that
of environmental sustainability. Sustainable Growth 3.0 is then likely
to escalate rapidly in mid-2010s to mid-2020s.

Drivers of successful change

Market demand is a greater driver of new behaviours than regulations,
especially if the latter are poorly enforced. For Sustainable Growth
3.0 to accelerate, eco-friendly growth needs to be viewed as a
business opportunity, rather than merely a reduction in risk from
non-compliance.

Sustainable Growth 2.0's lessons are instructive: inclusive growth

took off because companies realised it was a great opportunity to do
well financially by expanding markets while simultaneously doing good
to society.

There is another big driver of change that Gandhi used masterfully,

which proponents of Sustainable Growth 3.0 could do well to emulate.

It is the creation of an identity around the intended change that the

average Indian could easily relate to during the Independence
movements.

It represented a fearless Indian throwing off a colonial yoke and was

created through symbols such as the charkha and the lifting of sea
salt at Dandi, new words and phrases such as satyagraha and Quit
India, and by anchoring in values such as ahimsa that define our
heritage.

Perhaps we should take a leaf out of the Mahatma's notebook to locate

where to search for such an identity. He did not believe that,
traditionally, distinct spheres of life - such as economics, nature,
personal health and habits, and society - should be kept separate in
pursuing his work.

Instead, he sought to integrate them into his way of being and doing.
There is a sphere we have overlooked until now in this essay. It is
our own enduring Indian culture.

More precisely, it is our ancient worldview found in the Upanishads

relating humanity to nature, which transcends Hinduism itself and is
secular in its outlook. It was the foundation of the Mahatma's life
and guided his every action.

We can begin with an idea that the Mahatma considered a mahavakya

(great saying) in the Upanishads. It occurs in the very beginning of
the Isa Upanishad, Tena tyaktena bhunjitha.

It is the identity of a steward for this world, rather than an owner

who could do as he pleases with it. Its extended meaning, "renounce
ownership of the world and enjoy", embodied Gandhi's life.

Ultimately, sustainable growth is about growth through stewardship and

conservation of society, nature and its resources. This view has been
an integral part of our culture for over 3,000 years.

It is reflected in our innate thriftiness in everyday life, which

Gandhi again exemplified through the many stories of his frugality.

It is also evident in the numerous professions that make a living out

of recycling and reuse, such as the local kabadiwala on every street.

However, as our culture becomes more oriented to acquisition,

especially in a rapidly-growing economy, we risk letting go of these
habits that have served us well in the past.

There is another analogy we can draw from the Upanishads regarding

unconstrained and sustainable growth. In Katha Upanishad, the god of
death Yama tells the boy Nachiketas of the two paths that lie before
us: the path of pleasure (preyas) and the path of preference (sreyas).

The former is sweet initially but soon turns to poison. The latter is
like poison initially but then turns to nectar that provides sustained
joy.

Yama also compares this path to walking on the edge of a razor

(ksurasya dhara), but it gets easier as we progress on it.
This search for a greater path of conduct in life occurs throughout
the Upanishads. Sustainable growth is like this greater path:
difficult initially, but good for the world and good for the business
enterprises that stay with it.

The sages who composed the Upanishads over two millennia ago were
visionaries like Gandhi. We can learn something enduring from them,
and from this more recent Mahatma.

While many leading Indian companies are making a good start, we need
to build a broader base of support to scale these efforts throughout
Indian businesses and consumers.

By tapping into the sense of stewardship and conservation already

embedded in our national culture, we can build a national identity
around this greater path of sustainable growth.

Inclusive Growth Innovations

Pureit (Hindustan Unilever)

Consumer products for mass consumer
Range of products to enable safe drinking water by protecting from
water-borne diseases

e-Choupal (ITC)
Rural markets
Procurement services, rural distribution of goods and services,
financial services (insurance & credit) and rural retail stores

Construction skills training (Larsen & Toubro)

Underprivileged youth
Increase training and employability of youth in construction jobs
through training institutes

Arogya Parivar (Novartis)

Health services for the poor
Promote healthcare among the rural poor through direct education

Prayas (Sanofi-Aventis)
Health services for the poor
Promote healthcare among the rural poor by training medical practitioners

Eco-Friendly Innovations

Sustainable cocoa farming (Cadbury)

Coconut farmers
Use of cocoa as an intercrop between coconut or arecanut in
otherwise-unused land

The Great Exchange (Future Group)

Retail customers
Encourage customers to return unused items in several categories in
exchange for coupons

MightyLight (Cosmos Ignite)

Poor in rural and urban areas
Solar LED lighting and micro-energy for domestic use among the poor

Mahindra Reva (Mahindra & Mahindra)

Automotive customers
Electric vehicle technology, including electric drive train, through
majority stake in Reva

Wipro Green PC (Wipro)

Computing customers
RoHS-compliant, Energy Star rating 5, ranked #2 green electronics
brand globally by Greenpeace

Name of innovation (name of company), targeted market & innovation

description These are illustrative innovations considered in-depth by
the authors. Many of these companies have several innovations across a
variety of categories spanning both inclusive and eco-friendly growth