Ficci tag 2014

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FICCI TAG 2014 Theme Presentation Driving Growth through Innovation

FICCI TAG 2014

Theme PresentationDriving Growth through InnovationPrashant Agarwal Joint Managing Director, Wazir Advisors 18th November 2014

#Discussion Points1. Innovation The essence of business3. Ways to kick-start innovation in our industry2. Strategic transformation of Textile & Garment manufacturing

#Discussion Points1. Innovation The essence of business3. Ways to kick-start innovation in our industry2. Strategic transformation of Textile & Garment manufacturing

#INNOVATION [nven]the introduction of new things, ideas or ways of doing somethingInnovation is A new way of doing things that is commercializedMichael PorterEconomist and Management GuruInnovation = Invention + Commercialization

#Different types of InnovationProductNew product to solve consumers problems or for their benefitProcessHigh productivity, lower costs, service value deliveryStrategyChallenging existing industry methods of creating customer value for new needs, add value, create new markets, new customer groupsDesi Avatar: JugaadThe gutsy art of overcoming harsh constraints by improvising an effective solution using limited resources Harvard Business Review

#Giants of one time which did not evolve with time have vanished into thin air

Innovation for manufacturers is NOT an option

1857-2003

Once the 2nd largest steel producer in USA

1972-1984

Pioneer in analogue & digital imaging consumer products

1867-2004

US video game company credited with evolution of modern video game industry

#Innovation for manufacturers is NOT an optionThe innovative companies are the ones which have changed the course of market directions over the years

#Successful Companies have Innovation in their DNASome Examples in Textile sector

Turning our unique know how and new ideas into innovative high performance fibre-based materials. Our Approach: Inclusive Innovation. DuPont is working inclusively with others to find innovative, science-enabled solutions to some of the worlds biggest challenges.

Constant innovation in everything we do is essential for our long term financial success. Enhancing Life for Global Consumers with the World's Most Innovative Fabric-Based, Market-Driven Solutions.

As reflected in our brand statement, "Human Chemistry, Human Solutions," and with a basis in technological innovations, we are conducting R&D to realize sustainable business growth and creating new businesses globally with the aims of enriching peoples lives and contributing to social development. with an ample product portfolio and a commitment to continuous innovation and technological advancement of its weaving machines.

#Discussion Points1. Innovation The essence of business3. Ways to kick-start innovation in our industry2. Strategic transformation of Textile & Garment manufacturing

#Shift in Production and Consumption basesTextile & clothing production as well as consumption were mainly happening in developed countries till 80sProduction and Consumption

#Shift in Production and Consumption basesThen eastern countries started emerging as major manufacturers and roles got segregatedProductionConsumption

#One of the main reasons behind this shift was high increase in labour cost. In addition, high utility costs and overheads lead to unviability of manufacturing basic products in these countries

Asia had the presence of strong raw material base to support production in addition to lower cost. Hence, it emerged as an alternative manufacturing destination.Reasons for this shift< $ 0.5~ $ 1

#Today the largest textile and apparel exporters are in AsiaExport values (2013, in US$ bn.)

#CountryExports value (2013)Major manufactured categoriesItalyUS$ 36 billionHigh-end suiting fabrics, premium shirting fabrics, fast fashion, Value added woven garments, textile machineryGermanyUS$ 35 billionTechnical textiles, textile machinery, fast fashion, Value added garmentsFranceUS$ 16 billionTechnical textiles, textile machinery, high fashion dresses and ensembles, textile machineryJapanUS$ 9 billionPerformance fibers, yarn and fabrics; high end denim, other technical textile productsHowever, production is not totally dead in western worldActually, manufacturing has only changed its faceWhile Asian countries are manufacturing basic products; developed nations are focusing exclusively on high-end, high-technology, value added or INNOVATIVE products

#Several large T&C companies still produce in these countries

Turnover: US$ 8 bnJapanAramid Fibres Carbon Fibers & CompositesPerformance Fabrics

Airbag Yarns

Tire reinforcement

Technical fabrics

Acoustic Non woven

Flame retardant non woven

Filtration Fabric

KevlarFiltration & Separation fabricMedical fabrics

Glass fiber reinforce-ment

Medical nonwovens

Liquid filtration

Turnover: US$ 2 bnNetherlandsTurnover: US$ 2 bnGermanyTurnover: US$ 36 bnUSATurnover: US$ 2 bnFinland

#Businesses look for growth and profitsThe Strategic ShiftA simple financial statementSalesB. ExpensesC. Profit (A-B)A company in basic product like cotton yarn, power loom fabric, t-shirts etc.A company in innovative product line e.g. technical textilesFocus on expenses to maintain profitsLimited growth because of cost undercutting by competitionDepends on expense management (approx. 6 - 8%)More expenditure on R&D and market developmentGrowth depends on how you help grow the marketBetter profitability(approx. 15 - 20%)

#Discussion Points1. Innovation The essence of business3. Ways to kick-start innovation in our industry2. Strategic transformation of Textile & Garment manufacturing

#What leads to innovation?

#4 pronged approach for industryFundsFunds are usually the initial point of innovation process

Companys deploying funds are the ones reaping benefits later on

Leading innovative players spend 2 to 3% of their revenue on R&D

But, funding is never of the utmost importance. Kaizen process itself is a small, gradual improvement, without significant money commitmentSteve Jobs, perhaps the greatest innovator of recent times, once said When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it.

#4 pronged approach for industryOrganizations visionOr the inner drive to innovate for excellence A key ingredient

The same is true for individuals (or even a country) as well. The greatest of innovations are not only outcome of an organizational effort; individuals sometime outpace the industry and commercialize their inventions which no body ever thought of.Organizations visionChinese president Hu Jintao said capacity for independent innovation core of our national development strategy

#4 pronged approach for industryExploring newavenuesExploring new avenuesMarket growth and profitability in traditional products is limited

Focusing on areas hereto unexplored is important for entities to realize a niche for themselves.

This niche can beA productA processA technologyA marketA strategy

Blue Ocean strategy:Create uncontested market spaceMake the competition irrelevantCreate and capture new demandBreak the value-cost trade offOrganizations vision

#4 pronged approach for industryGrooming the innovatorsExploring newavenuesGrooming the innovatorsMost important!

There are specialized institutes globally which train in innovation and innovate themselves, a concept which is yet to find large acceptance in India

Organizations vision

#Thank you for your attention!

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