677: Global by Design: Vijay Govindarajan on Building Better Innovations

0:27Welcome to the Strategy Skills Podcast, where strategy partners teach you the tools and techniques to solve mankind's greatest problems.

0:47Welcome to the Strategy Skills Podcast. I'm your host, Krista Farova, and this episode is brought to you by strategytraining.com. And if you have ever felt overlooked and important conversations. We have a gift for you. You can get five reasons why people ignore someone in a meeting and you can get it at firmsconsulting.com forward slash on the room. If you are building or considering to build a consulting practice, you can access episode one of how to build the consulting practice at firmsconsulting.com forward slash build. And if your goal is to strengthen your strategy skills, you can download the overall approach used in well-managed strategy studies at firmsconsulting.com forward slash overall approach.

1:32Finally, for those targeting firms like McKinsey and BCG or looking to change roles, you can access a proven winning resume example at firmsconsulting.com forward slash resume PDF. And today we have with us Vijay Govindarajan, known as VG, is widely regarded as one of the world's leading experts on strategy and innovation, topics we love on this podcast. VG, NYT and Wall Street Journal bestselling author is the Cox Distinguished Professor at Dartmouth College's Tech School of Business and the Marvin Bauer Fellow at Harvard Business School. He's the co-author of a new book, Global by Design. Welcome, Vijay.

2:20So great to have you with us. Thank you very much. Happy to be on the show. Vijay, I would love to start with overview of your career up until this moment. If you could take us through your journey. You know, I was born in a small town in India. And in my formative years, what I saw was lots and lots of problems. And our family had very few resources. If you have lots and lots of problems and you have very few resources, the only way you can solve your problem is through innovation. There is no other way. We can't throw money at the problem. We didn't have money. That is why I got really curious about this topic of innovation fairly early on in my life.

3:14then through some process of luck I got admission to Harvard Business School where I did my MBA and doctorate then I stayed on the Harvard Business School faculty and joined Tuck in 1984 so I have been at Tuck now for 42 years and in my entire career I have dedicated myself to understand everything I possibly can about innovation. And our new book, Global by Design, is an example of breakthrough innovation in emerging markets that can help rich countries as well. And I am really passionate about this topic of innovation. I have a LinkedIn where I write a weekly column on innovation. And the viewers of this show, if you want to follow my work on innovation, certainly you can follow me on LinkedIn, where I continue to write about new things I'm learning about innovation.

4:23Global Bay Design is a book, but my journey on innovation is a lifelong journey. And there is huge value in following weekly column because you're sharing what you're learning right now versus with the book. It is great account of what you have known then, but we are always learning something new. That is who I am. My wife always asks me, when am I going to retire? I tell her I will retire the day I stop learning and I haven't stop learning. I am actually 77 years old, and I'm not only 77, but I'm also a university professor at Dartmouth, and university professorship is the highest distinction a university can give to a faculty.

5:16That means I don't have to do any more innovation. I can just coast along. Yet four years ago, in the spring of 2022, I taught the first full-length MBA course on the metaverse. I shot 26 films using virtual reality camera, VR headsets on a magic carpet. They were taken to extraordinary places in India, met extraordinary people, had extraordinary conversations, all from the comforts of Hanover, New Hampshire. And why did I do it? I did it because in the year 2020, people were talking about the power of virtual reality, augmented reality, metaverse. So I asked myself, can I use those tools and do a pedagogical innovation?

6:09So I am very much committed to the topic of innovation. and that is why my LinkedIn post is a very good way for your viewers to follow my own journey and what I'm continuing to learn about innovation. Vijay, and can you take us back to a moment when you got accepted into Harvard and you realized my life is going to change? That is probably one of the most exciting moments in my life. I can still remember that so vividly. I grew up in a very small town. So for me, even applying to Harvard was a very big deal. And I didn't know whether I will get accepted. And I still remember April 1st, 1974, I received a letter, actually not a letter, but those days we used to call it a telegram.

7:08I got a telegram saying, admit it to Harvard Business School. This was a day before fax machines. This was a day before cell phones and so on and so forth. I got a telegram which said, admit it to Harvard Business School. I was so excited. But then I looked at the date. It was April 1st. So I wanted to be sure this is a legitimate telegram and telegrams in India are usually delivered by the post office. So I went to my local post office and asked them, did this telegram come from outside India or did it come from a place inside India? And the post office manager told me it actually originated in the same place where you live.

8:01I was crestfallen because a lot of people in my small town knew I was applying. So I thought somebody did an April Fool's joke on me. And I was so sad. And exactly 10 days after I received the telegram, I got a letter in the mail, which said, following our telegram, we want to tell you, you got admitted to Harvard Business School. and I was so excited, but I was kind of unusual, admit, to have at business school because I grew up in this small town and in my class, for instance, there were five Indians. The other four went to the best private schools in India, went to Indian Institute of Technology, which is the premier engineering college, whereas I grew up in a tiny place, went to a local school, which is so bad, and attended college there.

9:01So I was a very unusual admit for Harvard Business School. And I still remember, I had so much difficulty in the first few months, because speaking in class wasn't something I'm used to. I was a vegetarian at that time, I continue to be a vegetarian. And those days, and I'm talking about mid 70s, vegetarian food wasn't that popular in the US. So I was eating toast for breakfast, lunch and dinner. That's the only thing I could find as vegetarian. I was physically sick. And I was falling behind in studies because Harvard Business School uses case method. I was using the case method and talking in class and putting my opinion for public scrutiny.

9:49I was absolutely convinced I was an admissions error. And I don't know how many times I thought of dropping out of Harvard Business School saying, you know, I was happy in India, I was doing well in India. Here I am finding myself so difficult academically, but also socially. Because in India, I grew up in a small town with small town values. For instance, I believe that you don't have any relationship until you marry her. Whereas here, people are doing all kinds of crazy things in my dorm. I said, why did I even come to this place? But then the dean at Harvard Business School, when I went to see him, he told me, there is a reason why we admit students.

10:36We see something in you. Just stay with the program. You will be fine. I'm so happy he encouraged me to stay because four years later, I joined the Harvard Business School faculty. And all my journey subsequently is I really want to Harvard Business School. It was a life-changing experience. Thanks for asking me about it, because it took me back on a memory lane of how much that four-year education meant for me. Of course, and it is so challenging. How long did it take before you could have something more healthy than a toast for lunch, Breakfast, Andina.

11:43want to say something ordinary. I have to say something extraordinary. And extraordinary thoughts didn't come to my mind. So I told him, I'm not speaking in class. He asked me, are you part of a study group? I said, no, I am preparing the cases myself. And it took me a long time to read a case, analyze the case. I was spending a whole night preparing the case. He said, your first problem is you are not part of a study group. So he called somebody in my section and said, you got to take VG into your study group. And that was an eye opening experience, because I could test my ideas with a small group before I come to the class.

12:29And my study group members are still my best friends. We met every day at 10pm for two years, and they continue to way, my friend. Then I told him, I haven't eaten a proper meal for two months. I have been eating toast. And he asked me, what kind of food do you eat? I said, I was staying with my parents. My mom cooks vegetarian meals. And, you know, we don't even eat salads in India. So I was only eating her food. He said, I don't know what South Indian vegetarian looks like, but let me call the chef from my cafeteria. So he called the chef and said, this guy wants South Indian vegetarian meal.

13:12Can you give something to him? And the chef said, I have no idea what South Indian vegetarian is. I taught him by the case method. So I showed him a few dishes he can prepare. And so he then prepared it for me. And surprise, surprise, once a month, the dishes he prepared for me came in the main menu for everybody. So somehow Harvard Business School solved my challenges. People think of Harvard Business School as a competitive place. It is, but it is also a compassionate place. And I have the compassion and how they helped me to cope with all the challenges that I faced. I'm so glad that you went to speak to Dean and that Dean was so helpful.

14:04And it made such a huge difference in your life because if you dropped out, it would have been a completely different journey. You still would have been incredibly successful, but I'm so glad that it all worked out. Yeah, in a way, what he told me was he could actually buy a year ticket and send me back to India. That's not a problem. if you are so miserable I can buy you an air ticket and you can go back to India but there is a reason why we admitted you we see every student and what they can bring so let me hear your issues and we can work together to find a solution and therefore in future if we admit someone like you we know what to do to prepare that student so it was a very thoughtful on the part of the dean to do that.

14:58Do you remember the first time you spoke in class? Yes, and it was the most terrifying experience because in India, we are not supposed to speak up in class. We are supposed to just take down what the professor says and then repeat it in the exam. Saying something in front of 90 students was a terrifying experience. And I spoke in a marketing class. And immediately what I said, people started to attack and say, I disagree with VG. And I was nervous. People are disagreeing in public with what I'm saying. Then I have to build the courage to explain the logic behind my statement. I remember after the first class I spoke, a couple of students came to me at the end of class and said, VG, that was a brilliant analysis you did.

16:02And you were able to defend it so well. And I did not have the confidence to believe that I was saying something meaningful. But when others tell me that was brilliant, I said maybe I was underestimating my own capabilities. So maybe I need to get the courage to speak up more. But it was a very difficult first class. And I think that's what Harvard Business School does. Bit by bit, piece by piece, they build your confidence. and once you graduate you feel like you can do just about anything. That is incredible. That is so important for young people to be in an environment when someone is building their confidence and not breaking it down.

16:53What was it like to transition from being a student at Harvard to being a faculty? I think the biggest change from a student to a faculty is being a student. I understood how bright my classmates were, how smart my classmates were. Therefore, when I made a transition to the faculty, I told myself, I can become a great faculty only if I respected my students. So when I walk into the class, even today, I say there are 60 students sitting in my class. They are as smart or even smarter collectively than me. And when you go into class respecting students, that means I want to hear what they say. I pay attention to what students are saying, even though I obviously have done research.

17:53I know more about the case I am teaching these students. There are 60 of them and Mark. And they've spent two hours the previous evening analyzing the case. Therefore, it is very interesting. Almost in every class, I learn something. I learn from my students. So the biggest takeaway for me as a faculty is I must respect my students. And this is so critical. There is not enough respect right now in the world towards other humans. When a person feels respect, they perform differently, especially if it is a professor-student relationships. What were some things that surprised you when you started teaching?

18:38I think I consider teaching to be a learned art. So when I still remember the first time I taught at Harvard Business School, I asked somebody to videotape my class because I wanted to see how I presented myself in class. And it was an eye-opening experience for me because in the videotape I saw, I will say the profit of this company are going up, but I am putting my thumb down. So that videotape, I watched that videotape I don't know how many times. and I realized my body language and what I was saying wasn't synchronized. Many times I missed students because I was focused on one side of the classroom.

19:31I missed students who were raising their hands on the other side. I also realized that I could have asked some interesting questions when students said something which I couldn't think of at that moment. but when I was watching the videotape, I say, I wish I had asked this question and probed the students more. So I realized I must videotape my entire course and start to write down everything I could have done better in that session. What questions could I have asked? Once I did that once, I had such a wealth of insights. Next time when I taught the same course, it went exceptionally well. It is incredibly powerful to video record yourself and now it's so easy because we all have cell phones.

20:23You can record yourself multiple times a day if you wanted to. So interesting to learn about your journey. Could you maybe tell us about once you already became a teacher, what was a very challenging experience and how did you overcome it? I think the biggest challenge that academics face is we are rewarded for publishing articles in peer-reviewed academic journals. Therefore, many of the youngsters focus so heavily on publishing in these peer-reviewed academic journals, which are somewhat narrow, that they never develop the capability to talk to managers. So the biggest learning for me as an academic was I am in a business school.

21:15I must talk to business people. And I started doing that fairly early on in my career. And what I found was these executives are very smart and they are living in the real world. Therefore, when I started interacting with them, I understood what the problems that they are facing. then I say how can I use my research skills to solve those problems and once I solved them the executives were interested in hearing my findings because my findings were based on the problems they were facing so I think this bridge between theory and practice between academics and practitioners, that is a bridge most academics don't make.

22:06And I say, that has been something I've cemented. All the books that I've written, all the articles that I've written are highly practical, including the new book, The Global Bay Design, because the book starts with problems real managers are facing in real world. Definitely very practical. You can take specific things from the book that you can implement. You can ask yourself the right questions, think in a different way. 100 % agree with you. For someone who will read the book, what are the key things you want them to take away from the book? You see, Global by Design is follow-up on my work 20 years ago called reverse innovation.

22:50and 20 years ago I came up with this idea that innovation does not have to start from a rich country like the US and then go to a poor country like India. That's how we always thought of innovation. Historically we thought you innovate in a rich country like the US and sell those products in a poor country like India. Reverse innovation is about reversing that logic. Innovate in a poor country like India and sell those products in a rich country like the US. I introduced this concept 20 years ago, reverse innovation. Global by design is reverse innovation 2.0. By that I mean, I was fortunate to meet this professor of mechanical engineering at MIT called Amos Winter.

23:49And that meeting itself is quite an accident. And what I quickly found was Amos Winter was actually practicing reverse innovation as a mechanical engineer. Then I said, maybe reverse innovation has two angles. I was coming at it as a business strategy professor. Gamos Winter was coming at it as an engineering professor. We said reverse innovation 2.0 is integrating engineering science with strategy. That integration is what we wrote about in Global by Design. So the main message of the book is if you want to do reverse innovation, you must have multiple perspectives. Strategy lens integrated with engineering science.

24:44That is the main message. 100%. What about innovation that you believed strongly early on in your career that later on you completely changed how you look at it? I have totally focused on innovation throughout my career. And fairly early on, I came up with a framework called three box solution. Three box solution is my framework for innovation. What that says is there is box one, which is your core business. So if you're General Motors, your core business is internal combustion driven gasoline powered automobiles. The box two, box three is the new business, which could be self-driving cars. And as General Motors, you have to manage all the three boxes simultaneously.

25:36You must improve the efficiency in internal combustion driven gasoline powered automobiles, which is your box one, and simultaneously create this box three, which is self-driving cars. That has been my guiding framework. Reverse innovation is an example of box three. So it is just an example of box three. So I say global-based design is a subset of my bigger framework, which is three-box solution. And I have been learning about three-box solution for the last maybe 45 years. I've learned a lot about how companies can simultaneously manage efficiency and exploration together. So that has been really my journey.

26:27And Global Bay Design is an example of Box 3. As you were writing the book, were there moments where you and your co-author disagreed on something in terms of how you wanted to present it in the book? I and Emos have a lot of disagreements. And it is our disagreements which led to a stronger book because he is coming at the whole thing as an engineering professor. I was coming at it as a strategy professor. And therefore, our perspectives were different. And because they were different, we had different views on the same questions. and we can disagree but have respect for each other. Therefore, those disagreements led to, ah, maybe sometimes he's right.

27:20Sometimes I'm right. Sometimes both are right. And that led to a much stronger book because I was only looking at reverse innovation as a strategy professor. Innovation requires engineering things. These are physical products. You've got to engineer things. And therefore, I think I would not call it disagreements as well as multiple perspectives by which we created something even better. Yes, different perspectives make a huge difference when creating something. In the book, you write about be a tempered dreamer. And you write that recognizing what you can't do is just as valuable as freeing your mind to imagine what you can do.

28:05and that you need to reframe a problem outside your expertise so your skills apply to a piece of it. I think that's a very, very useful way to think about how you can deliver more value versus spread yourself to areas where you don't have expertise. Can you talk more about this to our listeners so they grasp fully and can implement it? Not that they cannot grasp based on what even I mentioned, based on what you wrote in the book, because they're very, very smart, but it always helps to have extra details. I think tempered dreamer is a very important idea because we want people to be dreamers, but we don't want them to be delusional because you can dream and say, I'm going to solve the fire in the volcano, but that is such an unrealistic dream.

29:01So tempered dreamer is you have to think big. That's where you get innovation. But think big within the realm of possibility. That's where you temper it. That doesn't mean it kills creativity. You still want to be highly creative, but you don't want to feel like a failure. Get frustrated. Therefore, tempered dreamer essentially says, yes, think big, but understand your own capabilities. understand the capabilities that you can accumulate and make sure that the dream is realizable. So that's the idea behind tempered dreamer. Therefore, many times I need to ask myself question about what I know and what I do not know.

29:47And what I do not know, I must be humble to learn from somebody else. I think tempered dreamer is a good concept to run one's life. And it is also a good concept for global by design. VG, given that we are speaking about innovation today, I cannot not ask you about what you think about AI, automation, all the changes that are happening in the world. What would be your recommendation on how our listeners should think about it and prepare themselves to be of value three years down the road, five years down the road, even 10? I think AI is the most disruptive force we have seen. And the real question is not AI or humans.

30:36The real question is how you blend the two. There is a big difference between intelligence and judgment. Intelligence is not the same thing as judgment. In fact, in my life, I have met a lot of intelligent people whose judgment I don't trust. Artificial intelligence is about intelligence. That is why it is called artificial intelligence. It is not called artificial judgment. Artificial intelligence can enhance intelligence. But judgment is very human. So artificial intelligence For instance in global by design Can generate multiple options To solve a problem It is very good at processing Lots of data and very quickly Give you 100 options But which option Do you choose is judgment And how you Sell your recommendation to the company That is judgment How you persuade people How you understand the politics That AI cannot do So I would say AI can augment human creativity.

31:53It can take human creativity to the next level. Therefore, everybody must use AI. But remember, AI doesn't substitute thinking. AI doesn't substitute judgment. AI should be an enabler for innovation. So use AI to augment human creativity. even accelerate and amplify human creativity. Therefore, it's a very important role, humans plus machines, is how the world is going to advance. VG, and have you noticed differences in how students think, perform, speak, the quality of the judgment before AI, and now that AI is used quite heavily even by students? In some ways, before AI, the students had to process a lot of the information themselves.

32:52Therefore, they were busy in analyzing data. Therefore, the time for judgment was much less. Today, in fact, I encourage my students to use AI to analyze the case before class. I always tell them when you read a case first don't use any AI just write down your own analysis then take the same assignment questions for the case and put it in a Gen AI model and see what it says and then refine your analysis and then come to class I find the quality of judgment has gone up and I also tell my students, please note, I am also using AI myself. So if you only look at AI and came to class, you will have something to say, but it will be superficial because I've also used assignment questions on AI.

33:59I know what it says. Therefore, I come to class with 20 more penetrating questions and therefore unless you've done your own thinking, you may not be able to answer my questions. Therefore, the students use AI, but they also think on their own and then integrate it. I find the quality of judgment has gone up. That is very good news. It's interesting because my concern, and I wonder if you're sharing the same concern, is that... Yeah, it's a very exciting time to be a professor, I would say. I agree. It's definitely an exciting time to be alive. and to be a professor, definitely. Are you noticing any cognitive declines?

34:39That would happen. The cognitive decline, I call it cognitive surrender, is when they substitute thinking for AI. And therefore, the way I teach doesn't allow that because I use the Socratic method. I am not giving them knowledge because if all that I'm doing in class is giving them intelligence, then they can use AI because it can do the same thing. Then you cognitively surrender to AI and you are not doing any thinking. Whereas in my class, it is always Socratic method. It is always discussion oriented. Therefore, by just looking at AI, they will not be able to meaningfully engage in my class.

35:31Therefore, I have personally not seen it because I've changed what I teach and how I teach. I think it is very important for professors to change what they teach and how they teach it. Because you cannot teach today the same course, the same way you taught before Gen AI. and your students are very lucky to have you because you're thinking so deeply about it and how you can help them in the most effective way the next question i wanted to ask you going back to the book in the book you wrote that early aviators many of our listeners will know the story how many people lost a lot trying to figure out how to fly a plane and it often ended in a very sad way, injury or worse.

36:19But you mentioned that testing so many variables at once was basically not working, did not enable those innovators to figure out what worked and what did not. And basically you said that they had tendency to design, make, then try to fly entire planes all at the same time. So I wanted to ask you to speak more about this idea so our listeners can see how they can apply to whatever work they are doing right now? This ability to break the work they are doing into pieces. Even before they break their work into pieces, the very first thing is to understand the problems of the customer, independent of the solution.

37:05You have to understand what is the problem you are trying to solve, independent of the solution. That's the starting point. Once you understood the problem, then you think of what is the solution. And the solution can't be tested as a whole. So you break the solution into distinct parts and say, what is the most critical part? I must test first. Test it. Learn. Perfect. Then the next part. The next part. And finally, you put it together. because if you are designing a rocket to go to the moon, you can't just test the rocket as a whole. You have to test different parts of that rocket. This is what the Wright brothers did when they innovated the airplane.

37:54They didn't test an airplane all at once. They said there are several components to flying. Let's test the most critical component first, learn, adjust, and move on. So that's a very important principle. Run innovation as a marathon race, as a series of 400 meters. And every 400 meters gives you an opportunity to test and then pivot. What would be your recommendation on understanding what people need versus what they want and just generally understanding the market better so that you can design something that actually is a very good product market fit? That is the most important thing. We need to understand what the customer's needs are.

38:44And the best way to understand is not to ask the customer what you want, because they may not be even able to articulate it. Therefore, I say the best way to do it is ethnographic research. You go and live with the customer, maybe for a month, observe the customer, maybe take some videotape of the customer's behavior, Maybe do some focus groups. You have to immerse yourself in the customer's lives. And through ethnographic research, deep observation, you deduce what the problems are. So very important. Definitely. Is there something about the book that you wanted me to ask you about and I didn't?

39:26Now it will be a great time to share. The one question you didn't ask is, how come I and Amos Winter joined together to write this book? Because I am a business school professor. I rarely interact with engineering students or engineering faculty. Very quickly, what happened was 15 years ago, I got an invitation from Amos Winter at MIT to come and speak to MIT students on reverse innovation. And I was a bit surprised because I am not usually invited by engineering college, but when MIT invites, you go. So I went. And after my talk, I had lunch with Amos Winter and asked him, how come he invited me?

40:18And then he told me how he actually did reverse innovation without knowing that there is a word like for poor people in Africa for$200, but the wheelchair had performance of an$8 ,000 wheelchair that is sold in the US. Then somebody told him, hey, there is a professor, Vijay Govindarajan, who has written a book on reverse innovation. You should read it. So he read the book, and then he said he can actually bring that wheelchair innovation into the U.S. and sell in the U.S. So he actually started a company. And that's how he came to know. And that accidental meeting led to this wonderful book because I didn't understand that there is an engineering perspective to the same problem.

41:10So I would say, I want your readers to know perspective is very important. Try to understand the needs from multiple perspectives, customers, manufacturers, etc. similarly approach innovation from multiple disciplines, mathematics, physics, chemistry, engineering, business. They all need to come together. Vijay, thank you so much. I really enjoyed our discussion today. Where can listeners again learn more about you, buy your books, anything you want to share? Thank you very much. It's been a great conversation. Again, our book will be available on major retailers like Amazon. Hopefully your viewers can get it.

41:52But I will also encourage your viewers to follow me on my LinkedIn page. I have an influencer status, so I don't even have to accept someone if they request connection. People can just follow me. And I continue to write about this great topic of innovation and hope to some of your viewers will find it worthwhile to follow me on LinkedIn. And thank you so much for this conversation. Really enjoyed our time together. And for everyone listening, the book is called Global by Design. And our sponsor today is strategytraining.com. If you want some gifts from us, you can get the overall approach used in well-managed strategy studies at firmsconsulting.com forward slash overall approach.

42:35If you are building or considering to build a consulting practice, whether it is your own firm or you are part of a big firm, you can access episode one of how to build a consulting practice at firmsconsulting.com forward slash build. And if you are currently updating your resume, regardless of your level of seniority, we have a very good template we love to use with our clients and you can get it at firmsconsulting.com forward slash resume PDF. Thank you so much for tuning in and I'm looking forward to connect with you all next time.

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