Implosion (5 page)

Jugaad can also mean fixing a bribe. ‘Is there a jugaad?’ suggests to a policeman that a payment is being offered to erase a traffic offence. It was used scathingly by a politician in 2012 to describe what he saw as the coalition government’s incompetence at ‘managing’ its continuation in power.
⁴
. The meaning has been extended to cover frugal or flexible ways of thinking and a whole range of innovative ideas. For example, farmers and fishermen send traders missed mobile phone calls as a signal that they need information on market prices (the caller cancels the call before the other party picks up, so does not have to pay).

When I started to write this book, I needed a new desk chair. I found a smart black mesh reclining model in one of the many shops that have sprung up haphazardly along M.G. Road, a busy highway and metro railway route between Delhi and the new satellite city of Gurgaon. ‘The base and arms come from China, the mesh back from Malaysia and the hydraulics and seat are from India,’ said G.S. Arora, the owner. ‘We put them together in our local factory – that’s jugaad, a cheaper chair. Go and buy a branded chair and you’ll pay twice as much’. He was proud of the way he cobbled together his chairs, visiting China and Malaysia to source the parts, while his mother managed the shop. His is just one of many companies across the world assembling components from various sources – the booming economy of southern China’s industrial coastal zones between Hong Kong, Shenzhen and Guangzhou was built in the 1980s doing just that, but he sees it as part of a national trait.

His price was just over Rs 9,000, so I went to Godrej & Boyce, one of India’s largest groups and the best known producer of office furniture, to compare prices. A similar branded chair was Rs 17,000 and would have taken a week or two to deliver, so I went back to M.G. Road and drove away with my jugaad chair. The finish could have been better – rough metal edges on the base needed filing smooth – but it was good value, even though Arora failed to send a mechanic to boost the gas pressure that controls the seat’s height adjustment. Someone told me that the height problem was caused by hot weather, and so it proved – when the winter came, the seat stopped sliding downwards. Chalta hai!

There are countless examples of more innovative jugaad-inspired design. In Rajasthan, a small thriving family business is producing handmade paper from elephants’ high-fibre dung.
⁵
A potter in Gujarat developed a low-cost refrigerator called Mitticool (
mitti
means earth) that is not made of metal and uses no electricity but cools with water seeping through the gadget’s clay walls.
⁶
In a rather upmarket version of the original jugaad vehicle, a farmer in Gujarat developed a small low-cost three-wheeler tractor called the Santi around a Royal Enfield Bullet motorbike, enabling him to replace his costly bullocks for a variety of tasks such as ploughing.
⁷

Anvar Alikhan, a senior corporate executive, points to jugaad’s roots in what he describes as ‘the austere, socialistic India of the 1970s, when we were deprived of everything, and had to make do with whatever we could’. Giving a personal example, he says, ‘When I was a teenager, I was shopping for my first music system and the only thing available was a very mediocre Philips system – which in any case was beyond my budget. So I finally bought an ingenious music system put together by an IIT engineer friend, which had its bass speaker placed inside an earthenware matka [terracotta pot]
.
The sound was terrific.’

People often joke that ‘it’s jugaad’ when they innovate to solve a problem. At Kipling jungle camp on the edge of Kanha National Park in the middle of India, I saw people burning leaves at the bottom of a freshly dug pit, prior to planting a tree. When I asked why, they replied, ‘To burn out the termites – it’s jugaad.’ Another day, a plumber said the same thing when he temporarily nailed a vice, which would normally be fixed on a work bench, into a tree trunk to hold pipes that he needed to bend.

Business in the DNA

This sort of basic industrial innovation comes more naturally to artisanal, farming and other production-oriented communities than to India’s mostly trading-based businessmen, according to Harish Damodaran, a business journalist who has studied the caste and regional origins of modern Indian business. He argues that conventionally organized production has never been part of the DNA of most of India’s business class because the people come from bazaar and trading backgrounds and not from manufacturing or laboratories.
⁸
While these businessmen have been adept at evolving sophisticated trading and financing arrangements, they are not instinctively attuned to assembly lines and machinery. Manual workers, however, in both rural and urban areas, have the ability to innovate, says Damodaran, though they ‘lacked the capital to convert any of their raw manufacturing innovations – jugaad – into reliable, marketable products’.

He argues that the resulting divide has had huge implications for innovation in India. ‘Indian business innovation has been mostly restricted to marketing and finance, producing for example the hundi system (an indigenous discountable and negotiable bill of exchange enabling seamless movement of goods and money across the subcontinent), fatka (futures transactions rarely resulting in actual delivery of the underlying commodities), teji-mandi (put- and-call-option contracts), goladari (warehouse receipt financing) or even rotating savings-and-credit schemes like nidhis, kuries and chit funds.’

Damodaran’s article was pegged to Ranbaxy, a Delhi-based Indian pharmaceutical company, which developed Syniram, India’s first original drug, and was taken over in 2008 by Daiichi-Sankyo of Japan. Apart from this malaria treatment, the mainstream pharmaceutical industry, led by Ranbaxy, has mostly grown by developing generic variations of internationally patented drugs. There are a few other examples where Indian manufacturers have proved exceptions to the general lack of manufacturing innovation – almost all are in the auto industry. As Damodaran notes, all the machinery for rice mills and dairy products is imported.

The Jugaad Trap

India’s top managers now fear that the jugaad adulation has gone too far. Anand Mahindra, chairman of the Mumbai-based Mahindra Group, which is strongly focused on innovation, is worried that respect for jugaad and frugal engineering is being overdone. ‘Jugaad can be the death of us if we carry on extolling its virtues,’ he says.
⁹
‘It was a point on a trajectory of evolution, giving us technological confidence and self-esteem. That was okay in an economy of scarcity – making do without stuff we didn’t have because of shortages, but it is not an end in itself and it perpetuates a lack of self-esteem It is good to do brainstorming, asking how would we do this if we didn’t have what we have. But the rule in a California garage start-up is frugal innovation, so we need to be brutal and realize we didn’t invent this and move on, as they do in California to the frontiers of technology.’

Mahindra talks about the ‘jugaad trap’ of equating different ways of thinking with what used to be known as ‘appropriate technology’. This, he says, ‘is the most dangerous phrase ever invented – appropriate technology is an act of condescension and makes you think the consumer will make do with lower quality finish, features or aesthetics.’
¹⁰
That reminded me of the fashion for appropriate technology in the 1980s, when foreign companies would ship old production lines to India to make products ranging from cars to steelworks and pulp mills – and India would be grateful and inefficient.

Carlos Ghosn, head of Renault and Nissan, is credited with bringing the phrase ‘frugal engineering’ to India, where consultants and the media seized on it as a simple headline-grabbing concept. Ghosn was about to make a saloon car, the Logan, with the Mahindra group and was impressed, at the launch in 2006, that the procurement costs were 15 per cent below budget. ‘He asked me how we did it, and said we must be emulating “frugal engineering”,’ Anand Mahindra told me.
¹¹
(The two companies did not follow through on their joint venture plans. Like many other foreign companies’ entry products in the past 20 years, the Logan looked too boring for the price and did not meet the demands of India’s aspirational market. Mahindra relaunched it as the lower-priced Verito.)

The Nano Story

Ravi Kant, vice chairman and former managing director of Tata Motors, describes jugaad as a ‘quick and dirty solution to problems, not an ideal solution but one that works’. A juggaru, he says, is a person who has been able to do this. ‘It’s positive that he has done it, but negative that it may have been done through short cuts and not be ideal.’
¹²
He says that the tiny but spacious 624cc Tata Nano, launched as the world’s cheapest car in 2009 when he was Tata Motors’ managing director, is ‘an example of frugal engineering which reduces costs, but unlike jugaad, does not compromise on quality’.

The Nano has indeed often been praised as an example of low-cost manufacturing, but its price was made possible partly by substantial state government loans, tax subsidies, and other state government concessions that were initially agreed for a site at Singur in West Bengal.
¹³
The terms were later matched and even improved, when Tata moved the factory to Gujarat
¹⁴
after the Singur site became a trailblazer for violent social and political protests against the use of rich agricultural land for industry. Tata also cut costs, and the eventual price, by squeezing component suppliers’ profit margins.

The vehicle development story is well told in a Tata-promoted book,
Small Wonder: The Making of the Nano.
¹⁵
It tracks the excitement of the car’s evolution, watched over by Ratan Tata, whose interest in design and cars led him to be more personally involved in Tata Motors than most other companies in the group when he was chairman of Tata Sons from 1991 to the end of 2012. He encouraged revolutionary ideas for the Nano that were eventually abandoned, such as having a plastic body and no doors, and assembling the car at small franchised workshops around the country.

Eventually, the car, though stylish, did not break significant new ground. It made manufacturing savings by being very small – 10ft long and just over 5ft wide – and by cutting a four-cylinder engine from an earlier Tata car, the Indica, in half. It has three nuts instead of four on tiny wheels, and one large windscreen wiper instead of two. The tail-gate does not open, so access to luggage and the radiator is from behind the rear seats, as is the all-aluminium rear engine that can only be accessed by unscrewing six butterfly nuts and lifting off the cover.
¹⁶
These economies made frugal engineering an end in itself,
¹⁷
whereas many engineers would argue that it should be used to develop new ideas at a low cost. (Tata Motors now has more interesting plans for car bodies made of composite materials
¹⁸
along with other innovations, but that is for the future.)

Sadly, the Nano turned out to be a misguided concept and the launch, which was staged as a mega media event, was preceded for several years by a grossly overdone worldwide public relations blitz. There was even a pop-star-style unveiling of the ‘Peoples’ Car’ at Delhi’s biennial auto show in January 2008.
¹⁹
The extent of the unreal hype was illustrated by a blog on the
Financial Times
website written by Suhel Seth, a Delhi-based television pundit who runs a brand marketing company and has been an adviser to some Tata companies. He wrote excitedly about ‘the launch of a million possibilities’ under the headline ‘Why India Needs a Nano’. He wrongly, as later events showed, described it as ‘a vehicle for Indian aspirations’ and one that was ‘a car for the people’.
²⁰
He claimed that it would be seen ‘with awe and pride’, and had ‘many firsts’ to its credit. ‘From a marketing perspective, it has already gone into the lexicon of India’s people and the fact that Tata called it a people’s car is even more suggestive of the transfer of ownership of the brand from a company to its users: the people,’ wrote Seth. Rarely has the
FT
been so far removed from reality.
²¹
I wrote a rejoinder to Seth’s article on my ‘Riding the Elephant’ blog headlined ‘Tata’s “One-Lakh” Nano: Let’s Cool the Hype’ which appeared on FT.com alongside his piece
.

Cost increases meant that Tata could only sell a very basic no-frills version (without air conditioning) at the ‘one lakh car’ (Rs 100,000) price that Ratan Tata originally promised, so the slogan became a marketing drag. Aspirational Indian families, who Tata dreamed of upgrading from unsafe overloaded scooters, did not want to own the world’s cheapest product. Many would not have had space to park it near their homes in cramped narrow streets.

Production of the Nano was initially held up because of the move from West Bengal to Gujarat. The launch had to be delayed and Ravi Kant and his team had the monumental task of setting up a temporary production line at another Tata plant in five months. ‘That was a nightmare. I don’t think any auto company in the world has done that,’ says Kant. Output recovered after a new factory was established in Gujarat, but the combination of the price, customer apathy and slow production build-up (plus some electrical fires in the cars) meant that only 175,000 were sold in the first two years compared with a production capacity of 250,000 a year. Later, the Nano was revamped with stylish colour schemes and a bigger engine with the aim of becoming an iconic low-priced car that would appeal to the middle class, not mass buyers.