10.05.07
CK Prahlad Speech
I had no problem accepting this invitation at all. This is the best thing we can do in India, to respect and also show gratitude, not just to our parents, mother and father, but the teacher who makes us so. I am so happy that one place at least we remember teachers, and I told Hari, I will do it. It did not take any time at all. I hope for those of you who are young here, we are made by our parents and by our teachers, and therefore having gratitude for what we have received all through our lives is not a bad thing at all. So, with that, what I would like to do is to share with you how to become unique.
India is poised at very interesting crossroads. We have benchmarked ourselves. We have tried to be world class. I think that was a very critical part of the development of the last 10 years. Looking forward, we cannot just be as good as someone else, we need to become unique and highly differentiated from others. That is the next frontier for India and therefore I thought I will start by sharing how to go about doing this.
Is there a method that will allow us to think differently, to act differently and to be respected as the creators of the next practice and not those who can practice what others have already done? I do not have much interest in best practices, because if all of us benchmark each other, we will gravitate towards mediocrity in a hurry. What we really need to do is to ask what is the next practice, so we become the benchmark companies, benchmark institutions around the world. So, my goal today is going to be to talk about how to create next practices and what does it take for India to move forward, and I want to start with very, very simple principles.
The first principle is every time in India I get a simple question posed to me: “We do not have resources!”. So, I thought I will confront that question head on. Suppose we have two companies or two situations, A and B, which is very simple. One has no resources and high aspirations. Another has very high resources and low aspirations. I would like to ask the question, especially of management students. Would you choose A or B? Should I take it for granted that you are not constrained by resources? It is a very important issue. If you look at the essence of entrepreneurship, the motivation for innovation, it starts from A, not from B. B leads to status quo at best, it does not lead to innovation. Whether it is Bill Gates or Narayana Murthy, it makes no difference to me. They all start at A, and as the institution becomes large, our challenge is to find out how to keep the aspiration continuously ahead of resources.
In other words, creating a mismatch by design where aspirations are ahead of resources is fundamental to innovation and entrepreneurship, and that is true whether it is a university, that is true whether it is an institution. Symbiosis is a very good example of situation A, not B. You could not have done it if you had lots of resources. You had to bootstrap and therefore find creative ways to get global scope. So, principle #1 is I do not want any of you at any time, to say that India is resource constrained. We are not resource constrained, we are imagination constrained, and we have to make a distinction between the two.
Once you establish an aspiration level wanting to be a global leader, wanting to be No. 1, wanting to pursue excellence, then you can only do it one of two ways, leverage the resources that we have or alternatively change the game to your advantage. So, innovation in terms of better utilization of limited resources or change in the game to your advantage both come out of aspirations that are mismatched with the existing resources. That is principle #1, and that I think is what we need to focus on in India, and let us not complain about resources. If the Japanese had complained at the end of the war about resources or Germany, they would not have gotten anywhere. So, we have to recognize that resources is not the constraint, imagination is.
The second is we cannot go there from here. We cannot look at India today in 2007 and assume we can project or leave it to the economists……they can do it. If we want to create a new India, we have to imagine that new India first, and then we have to fold the future in. Strategy is about folding the future in, not extrapolating the past. In other words, the one liner, which I am happy to borrow from one of my good colleague, is: ‘What got you here will not get you there’, and I repeat, what got us here will not get us there. We have to start from a different starting point, and you cannot do that unless you imagine a different world and a different India, and therefore for us to be able to say, “I am going to fold the future in, one step at a time, one small building block at a time, but that is what is going to take me there.” So, the second principle is you cannot go from here to there in one shot, you have to take small steps, you can have clarity of the direction for the first two steps but not all the way.
If I go back to India’s own experience, in 1929, the Congress Party declared purna swaraj. None of us knew how to do it, but 17 years later the Brits were out. I do not see us declaring the equivalent of purna swaraj for the last 60 years. In other words, we need an overarching theme, but it does not mean we know exactly how to get there. We have to invent the means as we move along. So, I say it is never a straight line from here to there. We can take small steps, establish milestones, and each of one of those milestones can be clear and precise, but as we learn, as we consolidate, we can do very creative things.
So, one of the questions that we need to ask ourselves is how do you run a marathon and a 400 meters dash at a time. We need to get a sense of urgency. We need to have a sense of stamina towards where we want to go, that means in the 400-meter dash, the speed is important, stamina with the goal is equally important, so we have to have overarching goals, and we have to have the stamina. So, I say we can spend a lot of time in the management of the country, in public policy, in our educational institutions doing what I call the tactical blocking and tackling. That is important. You have to do it, but that is not going to change our lives, that is not going to change India. What is going to change is a new focus on opportunities based on aspirations greater than resources, folding the future in, imagining a different future, and certainly focuses on next practices, not a dependence on best practices.
In other words, going there is about thinking differently, not being just efficient. We have to be efficient, but we have to be different, and that is the interesting part and that is also the hard part. How do we think differently? So, all these three principles are based on developing a distinct point of view about opportunities, and I say India has to develop disruptive business models. We cannot play the game by other people’s rules, we have to invent our own rules, and that is the way. In other words, do not feel sorry for General Motors, they can take care of themselves. Do not feel sorry for IBM, they can take care of themselves. Our job is to disrupt global business models that have been built. Do not feel sorry for Michigan and Harvard, they can take care of themselves. Your job is to create a new educational model that we will have to copy. That is the job. In other words, how do we use new approaches to disrupt the known existing business models, whether it is in education, whether it is in healthcare, or whether it is in delivery of telecommunication services. That should be our goal, and that is what we have to learn.
So, you can ask me what does disruptive business model mean? I say five criteria are critical to understand what disruptive business models mean. 1. Does it radically alter the economics of the industry? 2. Does it maintain and improve functionality? It is not just about lower cost, it is about improving functionality. In fact both of them go together if you know what to do. 3. Does it make it difficult for incumbents to react? In other words, you do not want other people to be able to copy what you have done rapidly. You want to make it difficult for them, because they have to forget what they have learnt and they have to readjust their asset base in order to compete with you and therefore make it difficult for them. 4. Is it sustainable? Is it based on logical internally consistent business principles? 5. Does it enlarge the size of the market? Those are just five simple questions, and you can say is it happening in India?
I do believe it is happening in India. Let me give you. Does it radically alter the economics of the industry. That is called the budget airlines. Has it changed traffic here in this country? You do not have to go very far, just go to Pune airport. I remember a time when this place was so sleepy, you had two flights. Has it opened up a hinterland? The answer is yes. For 50 years, we only operated with 40 airports. To give you an idea, Kanpur did not have air service. We have 440 airstrips around the country. Now you can ask the question, why do we have 440 airstrips and only 40 are functional? Does it maintain and improve functionality.
Today, I would argue the Indian IT industry and ITES industry, especially the BPO industry has fundamentally improved quality for the western companies. By being able to do offsite and onsite, we have created a methodology for improving quality, not just lower cost, and that is going to remain a fundamental change in the way the industry works and that is true also for generics, which has made it very difficult for incumbents who depend on patents to compete, and today in the United States any drug coming of patent, three years from now, the stock price starts going down right away, because everybody knows in three years, there will be five Indian companies competing for that market with generics. Is it sustainable?
You look at single sachets and every kirana shop that you can go, you can get anything from ketchup to pickles to aspirin to shampoo to soap. We have fundamentally created a new way of dealing with poor people who want world class quality at affordable prices. They can get Pantene, they can get Sunsilk just like you and I can but at the price that they can afford, one serve at a time, and if you enlarge the size of the market, you already are at 180 million or 160 million depending on what number you look at, and you think you will have 500 million consumers for cell phones, that makes it the largest market in the world next only to China or pretty close to China.
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We are very connected people, and I always say Indians are built for the Internet. We love to gossip, and it better be free. So, Internet is perfectly Indian. The disruptive business model goes on one step further. How many of you know a company called Moser Baer? What are they doing? One of the largest problems or the biggest problems that the movie industry or software industry faces in the world is piracy. All the western models of dealing with piracy is legal action and prosecution, and their bilateral negotiations with China and everybody else. These guys are starting a process by saying we are so efficient, we can give you a DVD with full-blown movie for Rs. 38; if you have a pirated copy, it costs you Rs. 50. So now they are asking the pirate to come and join them as a distribution channel. This is what I call disruptive industries. It is starting in the southern part of India as a pilot. Imagine what it will do if you go to China and disrupt the piracy there. We are talking about a $40 billion opportunity worldwide. This is what I call disruptive business models. Do not take legal action. Make it uninteresting for you to be involved in piracy. Does that make sense?
NIIT management education at a fraction of the MBA cost, may be I should not be saying this in Symbiosis, but they already have formed a consortium with five or six IIMs to provide faculty on tap using new technology at a fraction of the cost. They are already doing it with ICICI in financial services. Reliance fresh produce at 40% less than the local kirana shop. By creating efficiencies in the back end, you can dramatically alter the cost structures in this country. Now, none of the three have become reality yet, but this is the kind of thinking that creates disruptive business models, and it is all happening across India.
The only thing is Indians do not recognize they are innovating. I find it very fascinating. You need somebody else from the outside to come and say you are really innovating, take some credit for it, so if you look at the first-order generalization, all of them used advanced technology. This is very counterintuitive. For 50 years in this country, we used to assume we need appropriate technology. Appropriate was a code word for old-type technology. For a change, we are saying India needs the most advanced technology at affordable prices. That is a totally different statement. I need the same cellphone that rich folks have. It is called Nokia or Motorola, maybe less features, maybe it does not have a camera yet, but very soon we will get a camera also for the same price. In other words, do not underestimate the use of technology to create disruptive business models.
Secondly, we need scale. The good news in India is, this is a large country, and if you can convert at least 800 million people into active consumers, this will be the largest single market in the world. That is our goal. It is not to say we do not have cash. It is our job to find how to convert them into consumers. Market development is our task, not serving an existing market. We have to create this market. Logistics is a huge issue in India, whether it is the co-chain or it is just the movement of products and services. It is not just roads and ports and airports, it is information. Information is critical for logistics. We have to substitute lack of investment capacity through collaborative capacity. By coming together as multiple institutions, we can dramatically reduce the cost and the investment that is required. We do not have to do everything ourselves.
When I was last week in Pune University where I was fortunate to address a large group, I basically said you can take Pune University and within a two-mile radius, you can have every technology in the world that you want. You cannot sit in Pune and not exploit it, and that is the most interesting thing for me, whether it is by plan, by design, by default, it does not matter. That is the asset that has been created, and let us exploit the asset. Leveraging unique assets and more importantly all of us starting by saying price minus profit must be equal to cost, not cost plus profit must be equal to price. This is a fundamentally different way to think. I want to start with the consumer and affordability, and then say I need to make money, therefore what should be the challenge cost at which I should produce world class products and services, sooner we come to this conclusion that faster the country will grow and faster our companies will grow, and faster our universities will grow.
So, what does it mean? If you look at the biggest and new opportunities that we have in the world, India’s asset is a large market in the bottom of the pyramid. Indian middle class, there is a global trend which says emerging consumer and technological breakthroughs that make it possible for new business model to flourish, and therefore if we can crack the problem here, we have a global opportunity. The fundamental message is succeed in India, and you can succeed in the rest of the world. This is the most competitive market increasingly. Hong Kong used to be tough, but India is becoming a very tough market to crack, and if you can succeed here, you will succeed in a lot of other places. If you can make money at 40 to 50 paise per wireless minute, you can make a lot of money in the US, believe me.
So, let us look at the opportunities in India. The market is very large, would you agree? It is very poor, that is the interesting part. It is not just having one billion people, but a lot of people are very poor. It is highly distributed. 70% of India still lives in villages. There is a tremendous paucity of resources. You can take any resource. We do not have enough doctors, we do not have enough capital, we do not have enough plans, we do not have enough roads, you can hear the litany all the time. Total cost to consumer is different from the cost of product or service. I find it interesting, I go to an Indian village, and they are willing to pay Rs. 15 for one copy or one page. Now you can ask the question, in the city it is only Rs. 3 or Rs. 4, why is it Rs. 15 in the village and the people are willing to pay. Why? Because if you want to go to the city, spend a whole day, take the bus, eat there, and hope that the copying machine there is working, it costs Rs. 150, and I am willing to pay Rs. 15.
In other words, poor people in India are making very clever economic choices. Now what is the real problem? The real cost is totally different from just what they pay for copying, which may be Rs. 3. The real cost of going to the city and making a copy is probably Rs. 100. If you also take foregone wages assuming he or she has a job, now it may be Rs. 500. So, the real question for me is how do you deal with this issue in a creative and constructive fashion. Therefore, western models will not work. None of the western models were created to deal with those six issues. You have to find out a way, therefore there is a huge motivation for creating new solutions and innovation in India, so I say it is very simple.
If it is a large volume, then we have to have scalable solutions. When last week, I was told that Pune University has 540,000 students, give or take some, because at that level 10000 here or there makes no difference, so you do not have to count very carefully. So, I ask myself. We used to think Michigan is a large school, and it is a very large university by American standards. We have 45000 to 50000 students, and then we are one of the biggest universities in the United States, in other words, we have scale, now whether we have the same depth is a different question, but we have scale. The question is how do you elaborate scale? We have distributed and poor access. So, how do you get remote diagnostics and remote delivery. Can you deliver high quality education remotely or do you have to have students sitting in classes with a teacher in front. Can you have a virtual teacher? Interesting question. Can I have a virtual professor, virtual doctor, virtual everything.
Resource scarcity means leverage, affordability means 150th the cost of what is available in the west, not 5% or 10% less, but 150th or 100th the cost, and finally cost of time to the customer means we cannot let people come and wait, we have to serve immediately. I also say the poor in this country deserve world class. Do not compromise. World class is what we have to give them, no different from the rich. If you want to do that, I want to go back, price minus profit must be designed for cost, not cost plus profit equal to price. Now I know this, it is easy for me to say it is nonnegotiable.
What I want you to see is just look around you, you see nothing but opportunities. India is full of opportunities. You do not have to do market research, you have to just think differently. Make it affordable, and you will find tremendous opportunities, so I want you to think. You cannot do it unless you start with what I call as innovation sandbox. You have to incorporate the constraints in this country into your thinking. The sandbox forces you to do it. I want universal access. I want the rich and the poor to have the same thing, urban and rural to have the same thing, India and globe to have the same thing. That means, universal access must be one of the preconditions for us to innovate. Scale is one of the preconditions. Fascinating thing for me in India is civil societies and NGOs do an extraordinary amount of experimentation and great work, but very few of them are scalable. So, we need to get global scale.
New price performance levels, which we just talked about and world class quality. If you say I can innovate within that sandbox, not outside it, we will have an extraordinary opportunity. So, I am going to just talk about three in the healthcare area because everybody can relate to it, you do not have to be a business person to relate. One of it is Jaipur foot. All of you have heard of it? How much does it cost? It is free. You give a donation if you can afford to. They have no debt. They are very successful, world class, 16000 prosthetics given last year. Narayana Hrudayalaya in Bangalore does 7500 cardiac surgeries including pediatric cardiac care where the size of the heart of a one-day or two-day old baby is as small as a grape, and they do arterial switch with higher or better outcomes than in the United States. Aravind Eye Hospital’s record of both during the surgery and postsurgery complications is better than anything in the UK.
So, there is something we have to learn. It is happening in India, it is not somewhere else. The complexity of the task, of course in case of Jaipur foot, if your prosthetic does not work, you will not die, you can throw it out and get a new one. Eye surgery is a little bit more difficult. You can lose your eyesight. In the case of Hrudayalaya, it is very clear, if the doctor messes up, you are dead, so even knowledge intensity or capital intensity or complexity and risk, I want you to see that there is a whole range of opportunities. All of them are being done in India at world class levels. So, our general health is a mess, but there are nuggets and islands of extraordinary innovation, so I could describe the mess. You all know it, I know it, there is no point. I want to focus on the nuggets of excellence, so we can replicate and multiply rather than constantly complain about the quality of bad care that all of us get.
So, if you look at what they did, they innovated in pricing, patient acquisition strategies, they are highly specialized, for example in Aravind, each doctor does 2000 to 2500 surgeries per year. The average in the nation is about 250 per year. So, who is going to learn more rapidly every complication conceivable in eye surgery? A young doctor going to Aravind or going to a general hospital. It is very clear, is it not? So, you want to think about specialization, capital intensity and talent leverage. In other words, once you have defined what the sandbox is, you can create multiple innovations inside. So, how do we start immersing ourselves in the Indian life? Not in the cities, but Indian life in general.
In fact, I cannot be in Pune and not remember what Tilak is supposed to have said to Gandhi. You do not understand India, go around for a year, then you will understand her. India lives in the villages even today. India’s population at Gandhi’s time in 1935 was 280 million people. We have 280 million well poor people today, that means the whole country that Gandhi knew is now totally poor. Now we are one billion people, but 300 million people are in abject poverty. That is the reality, so how do we understand the Indian consumer? How do you get these insights on what they want, what they will pay for, what will make their life different? How do you develop the broad specifications for the sandbox or the constraints that we cannot violate as managers. How do you build a core delivery system and then how do you build all the collateral around it, everybody can help you win. So whether it is the core delivery system or building university relationships, local government and federal relationships, civil society relationships, and at the same time building sister institutions. All of them is part of the ecosystem, and that is why Pune is so exciting for me. The ecosystem exists here. We just have to recognize it, and that is the most interesting thing. So, can we create an expanded view of innovation.
How many of you know of a company called Su-Kam. What do they do? They do inverters, that is obvious. Do they do inverters differently from everybody else in the world? Inverters and UPS is old technology. Would you all agree? The reason I am using Su-Kam as a starting point is they are doubling in revenues, they went from Rs. 250 crores to Rs. 500 crores this year. They use remote diagnostics, so somebody sitting in Delhi can monitor what has happened to our installation in Tanzania every 10 seconds. That is the first time anywhere in the world. They took the physical product, connected it with sensors, embedded intelligence, connectivity for remote delivery of services, and database and analytics, so over a period of time they can say whichever installations are likely to fail through predictive modelling and mathematics. Is it the same product that we started with or have you changed the nature of the product through sensors, connectivity, IT, and intelligence. Is it a different business today? Anyway, they are the only one in the world who can do it. It is interesting, large companies like GE are also in this business. They are small, but just wait and see what it does.
So, if that is their thinking process, can we apply this in Pune? You have to talk about the auto industry. I said, let us look at the auto industry. How many of you believe you can sell a car today, which is not energy efficient or which does not look at sustainable development. Can we make the car intelligent? Can we start looking at the car as a node in a worldwide web, always connected. In Pune, you are stuck in traffic for so long. It would be nice if you are totally connected with the rest of the world. At least, you can get some work done, or at least listen to good music, not only the music that you have in your CD but music from anywhere in the world? How do you then manage the global supply chain, and then how do you create car X at may be one lakh or two lakhs or three lakhs?
So this is the starting point of starting to look at innovation sandbox and within that I am just going to focus on embedded software networks because we have all the capabilities available right here in this city and in India. For those of you who do not know what this is, this is a map of India (referring to a slide). All the auto and ancillary industry is in three locations primarily. One in Noida area (Delhi-Noida), Pune-Mumbai (primarily Pune), and certainly in Chennai. The interesting thing is if I look at where the IT knowledge is, it also happens to be the same place. There is no place in the world where IT knowledge, domain knowledge of auto industry, auto ancillary, and automotive all of them co-exist in the same location. It is not in Toyota City, I know for sure it is not in Detroit, neither it is in Frankfurt. We are sitting on a gold mine to fundamentally change the nature of the auto industry.
So, what I would like you to think about is what would happen if you took the already available automotive domain knowledge, manufacturing quality, small batch, low cost, and add to it the capacity for embedded intelligence. Would it fundamentally change the industry? But it is not enough if you just did embedded software just like the healthcare issue. How to make the cars carbon neutral, how to think about alternate fuels, how to get new materials, financing, global manufacturing. There are multiple innovations that are required. I just want to focus on new materials, because this time I just went and looked at Tata Chemicals, and they have a small group of people working on nanotechnology. So, I just said let us look at nanotechnology. This is a car. There is nothing in the car that will not be impacted by nanotechnology 15 years from now. The question for me is how much of energy is going into collaboration in Pune around nanotechnology between the University of Pune, Tata Chemicals, National Chemical Laboratories, and a whole variety of groups. Is it important for us to be ahead of the curve? The answer is yes, so I would like to leave you with that thought. If you can do it, the cars that you will build will not only be cheap, but will be different.
How many of you would like to buy a car with a scratch-resistant paint? Would you pay a bit more money? How many of you would like to buy a car where it has self-healing dents? You can do it today. Materials with memory, so if you just hit it and get a dent, then it heals itself. You think it will be useful on Pune roads, because every time I get into a car, I check the number of dents. That either tells you the driver is somewhat dangerous, or the route that I am taking is also dangerous, so I have to check. So, in other words, how can India build this innovation ecosystem, and I am going to just give you one example, which I think is quite interesting.
How many of you have heard of the diabetes insurance scheme that ICICI has started? How many of you think it is happening for the first time in the world. What would the story be in this country before, if you are a diabetic, it is called a preexisting condition. What are the chances you will get insurance? Zero. So, you take people who have diabetes and then say I am going to give you insurance. That is the first time. It has some other principles involved, so I am just going to give a brief background on what happened, because I was quite involved in thinking through how to create this product, and that came out of the CEO forum that Mr. Athavale talked about, because chronic disability like diabetes is a very different kind of disease from getting an infection. For infection, you take medicines for seven days and hopefully you are okay, but diabetes you have to live for 30 years and it is a silent killer. It is silent, you do not see any conditions, so people have to learn how to live, you can have problems with your kidney, or you have cardiac problems, or you can lose your lung, so housing, healthcare, food, mobility, all of them are problems. You have to live with diabetes, you cannot say I am sick. It is one of those metabolic conditions you have to live with.
Second is you have to live a full life. For 30 years or 40 years of your life, you do not want somebody to say do not do this, do not do that, two or three days it is okay. If everybody says do not do this, what are you going to do? Probably try to do it, so whether it is travel, entertainment, safety, connectivity, we have to break down the traditional industry boundaries. That is the start. We have to start by saying that we need new business models, we want investment capacity, collaborative capacity, or we want to look at innovations. So, what did we do? We said type II diabetes creates kidney, cardiovascular, eye, and amputational problems. India has a market share of 40 million known diabetics, one of the largest in the world, it is likely to go up. So, we do not have a problem with the size of the market. The problem is do we know how many cardiovascular beds we need in any region of this country to take care of the diabetics in that area. We have no clue. Do we know how many people are required to do prosthetics or eye care? We do not.
Second, you need to continuously diagnose, you have to take a test, and you have to take medication for the rest of your life. This is not an episodic illness. This is a lifestyle illness. Then, you have to have compliance. You cannot deal with this disease by saying every day I am going to eat puranpoli, is that the famous thing here, or jalebis, and then I am going to deal with diabetes, it is a lifestyle issue. Finally, you need affordable insurance, because with all this you may still require kidney dialysis. Most people cannot afford it, so how do you create affordable insurance and then you need a delivery infrastructure. So, this was the starting point.
Then we said if this is where the starting point is we have to start with principles, the first principle is lifestyle diseases need effective management by individuals. You cannot do this without the individual being involved. Everybody’s situation is very different. Somebody can live in a place where he can take a walk every day for three miles. That is a good news of living close to the university. Just get into the university, it is a nice place, but in most cases, people cannot walk, so have a doctor to prescribe a routine that is unique to you, your condition, and by testing to find out how advanced the disease is. So, we may have five million people who are treated, but each one must be treated as unique, because there are no two people who are alike, if you want them to improve in their health.
Second, economic incentives are critical. If people have to change their lifestyles, you have to price based on behavior. If you follow all the rules, and you are keeping good control on your diabetes, then you know you are a lower risk for me. I have to show that appreciation by reducing the price. On the other hand, if you do not take good care of yourselves, I have to increase the premium because I do know that you represent a high risk. But, I have to tell you ahead of time I am going to increase the price if you do not comply. Is that fair? But no single company can serve this community. You need a collection of vendors in order to debt, that is why I say resources have to be global, but treatment has to be one at a time, very different from how we have looked at the world, one person at a time, behavior-based pricing and resources to deal with that one individual’s problem coming from all the various vendors.
So, that means this is not a financial insurance product, this is a health product. That means we need to have feedback and a support structure for diabetic patients at system hospital networks and very compliance-oriented pricing of insurance and access to doctors, medication, and testing. We need a common database, so that irrespective of which hospital you go to, you can get treated. What you are really saying is ICICI took the challenge, they created an ecosystem with two pharma companies, Wockhardt and Biocon, both big in diabetes treatment. Monitoring with Nicholas and J&J for all the strips that you have, diagnostic clinics, which are certified, Metropolis and Wellspring, and they went and made a deal with 75 gyms in 12 cities. So, you cannot say I do not have a place to walk. You can go to the gym and exercise. The next is to go to hospital networks and rural access, and this is what you probably heard, but there is a method and a logic to it.
What I find so satisfying personally is this was done from concept to launch in nine months. The insurance regulatory authority of India approved this in less than a month. I expected it to take two years, because what is the first question, who is doing it? Nobody else in the world is doing it. So if nobody else is doing it in the world, what should I do? Give you immediate approval or wait for someone else to do it. What is the typical response? How do you reduce your risk as a regulator? You wait to see somebody else do it. Right? But here it is exactly the opposite. The regulators took the attitude, this is a fundamentally different product. It is a health product, first time in the world, we have to approve it. It was approved in less than a month, and I have to say, this country can respond to creative ideas rapidly. I could not have believed we could do it in nine months. So, all the people who are involved, I want to salute and say, you have proven India can lead. That is what it is all about.
I find American Diabetes Association getting very excited, not because they are interested in insurance, they think this is a fundamentally new way of creating compliance and controlling the disease, so this is going to happen across the board. What did we do? We took a class of customers and actuarial data, i.e., the insurance perspective. We set one customer at a time, realtime behavioral data. Pricing based on segments, we said no, pricing must be based on compliance and behavior, of course economic incentive to stay healthy. Protection from catastrophic illness, yes, that is important, but help customers first improve their lifestyle, contain the disease, improve their health, and of course, in spite of all that, they get into trouble, we will cover you for everything from dialysis to cardiac care to whatever, including life, and customers are on their own, which is a typical insurance approach. We say no, customers get help, they get support, they get feedback, and they get periodic testing. So, premiums include continuous and periodic testing at certified locations. That is all part of the story.
So, the question is can we develop a new business opportunity in India and for the world? That is the question I want to leave you with, what I really think is our challenge. Can we develop a new business opportunity in India for the world, not just for India? In other words, we have borrowed from the rest of the world for 200 years, it is time for us to give back.
Abridged version of the speech given by Prof CK Prahlad on 17th Feb 07 at the Symbiosis Vishwabhavan, while interacting with SIBM students. Contributed by Vishal Javadekar
