Chapter Two

Principle One

Seek Opportunity in Adversity

It has done me good to be somewhat parched by the heat and drenched by the rain of life.

—Henry Wadsworth Longfellow

In the late 1980s, Tulsi Tanti moved to Surat, in the Indian state of Gujarat, to set up a textile unit. Like other entrepreneurs in India, Tanti found himself faced with infrastructural bottlenecks. The biggest of these was the power supply. Expensive and unpredictable, power proved a major barrier to growth. His profit margins were only around 5 percent, while energy accounted for a staggering 40 to 50 percent of total operating costs.

Instead of giving in to this problem, Tanti focused on finding a solution to it. He began to experiment with various types of boilers. He looked at different kinds of power generators. He tried out different combinations of boilers and generators. And then he realized that all these were, in one way or another, dependent on fuel, gas, or oil. So he thought, “Why not find a solution that doesn't require fuel?” This launched him on a search for an alternative source of power that was both reliable and sustainable.

In 1990, he invested in two wind turbines to supply electricity to his textile unit. It soon became clear that this was the solution he had been looking for. Now he had a power supply that was literally harnessed from thin air. After the initial investment in the turbines was recovered, his operating costs would be low and predictable. The “fuel” came at no cost. And there was plenty of it.

With time, Tanti began to see the wider implications of his solution. Wind had the potential to power more than just Indian textile factories. It could meet the global demand for a steady supply of affordable energy: 44 percent of 1.2 billion Indians live outside the electricity grid, and worldwide more than 1,400 million people lack access to electricity.1 Tanti saw this huge challenge as a vast untapped opportunity. So he set out to capture this opportunity by creating Suzlon Energy in 1995.

“As an entrepreneur,” says Tanti, “I firmly believe that at the heart of every challenge lies an opportunity. Entrepreneurs are a league of people who are able to turn obstacles into profitable solutions.”2 This statement pretty much captures the essence of the resilient mindset that drives jugaad innovation.

Today Suzlon is the world's fifth largest wind energy solution provider. The company employs more than thirteen thousand people and provides a full spectrum of wind power solutions in over thirty countries on six continents. In the space of two decades, Tanti has gone from being dependent on an erratic and expensive supply of energy to creating—through innovation—a plentiful supply of it for millions worldwide.

Reflecting on this astounding growth, Tanti says: “The journey called Suzlon, embarked upon sixteen years ago, was my solution to an obstacle. The beginnings were humble, and the odds were against me, but my dreams were big. And when dreams are pursued with conviction and fortitude, they not only become a reality, they are a force that guides you and shapes your life and those of the people around you.”

Jugaad innovators like Tulsi Tanti are adept at taking on the arduous challenges that emerging markets pose and reframing them as opportunities to learn, innovate, and grow. These innovators respond to even the most adverse circumstances by demonstrating resilience, ingenuity, and an aptitude for risk. Seeking opportunity in adversity is often the first and most critical of the six principles that jugaad innovators have to apply. After all, jugaad innovators face adversity from the very beginning of their innovation journeys; if they are unable to apply the principle of seeking opportunity in adversity at the outset, they will be unlikely to move on to discover and apply the other five principles of jugaad.

A resilient jugaad mindset can also enable Western executives to systematically turn adversity into an opportunity for innovation and growth. In this chapter, we show how Western organizations can unlearn practices that worked in a bygone era of relative predictability and find new ways to succeed in a future of adversity and constant change. But first we explore why and how jugaad entrepreneurs seek opportunity in adversity.

A Harsh Environment Nurtures Resilience

Entrepreneurs and managers in emerging economies face adversity at every turn. Take India as a case in point. Even starting a business there is a daunting task. Doing so takes an average of 165 days (compared to 9 in the United States). Securing the necessary licenses to construct a simple warehouse is complex, time consuming, and costly, involving 34 procedures over 227 days and costing 1,631 percent of the country's per-capita income.3 Running a business is even harder. Property rights are often unclear or hard to ascertain, so acquiring land is fraught with difficulties. Labor laws are restrictive or complex or both, and can be a minefield to navigate. Due to India's federal structure, there are currently 47 national laws and 157 state regulations that directly affect India's labor market.4 Hiring and firing of workers presents its own challenges. New taxes may be instituted and applied at any time.

On top of all this bureaucracy, political upheavals are a fact of life. A local government with a policy favoring business may fall overnight and be replaced by another that favors agriculture over industry. Land that was granted to a company to set up a factory may be confiscated and returned to the original owners or fall under litigation. Court cases are expensive and drag on for years, often with no clear resolution in sight.

But perhaps there is no greater challenge to starting a business in India than its poor infrastructure. Jugaad entrepreneurs in India—as in other emerging markets like China, Africa, and Brazil—do not have access to many of the basic things that are taken for granted in the West. Roads can be poor, heavily congested, or nonexistent (40 percent of India's villages do not have access to all-weather roads).5 Education and training systems are patchy, so skilled personnel are hard to come by. Health care services are scant, and workers who get sick may stay out of work for long periods.6

Emerging markets like India also face acute shortages of resources: natural, human, and financial. It can be hard to raise capital. Banks are typically conservative, and venture capital and angel investor networks are underdeveloped. As a result, jugaad innovators cannot afford to invest in capital-intensive equipment. Jugaad innovators also typically serve a market that is economically deprived: 80 percent of Indians live on less than $2 a day; 26 percent of Brazilians live below the poverty line; 230 million African households are unbanked—that is, they do not have a bank account; and nearly 40 percent of rural Chinese can't afford basic medical treatment.7, 8, 9 (The extent of scarcity in emerging markets is so dire that how innovators respond to it constitutes the second principle of jugaad—do more with less—which we discuss in Chapter Three.)

Trying to operate in such a harsh environment could drain the energies of even the toughest business person. Yet jugaad innovators are unfazed by the reality that surrounds them. Indeed, it is this very harshness that gives them their particularly resilient mindset. Extreme external circumstances seem to heighten their internal resolve to succeed. As with Tulsi Tanti, rather than becoming passive victims of current circumstances, jugaad innovators are driven to take charge of events and steer them in a direction of their own choosing. For them, adversity exists largely in the mind.

Dr. Thomas Müller, a psychologist who specializes in crisis management, observes that in a crisis some people simply attempt to go back to how things were before. In the process, they make compromises for the sake of security. Others, however, withstand the pressure and ask themselves, “If I go one step further, what's the opportunity to be exploited?”10 Jugaad entrepreneurs belong to this second category. When confronted with adversity, they don't retrench but embrace the difficulties and learn from the experience.

Armed with resilience, perseverance, and a willingness to learn, jugaad innovators strive to respond to the harsh world they face and find opportunities for growth and expansion in it. In doing so, they are able to create a better world, not just for themselves but also for their communities.

Reframing the Half-Empty Glass as Half Full

Jugaad innovators find opportunity in adversity in three ways: reframing challenges as opportunities for growth, making constraints work for them, and constantly adapting to a changing environment by improvising solutions to challenges they face along the way. In this section, we examine each of these strategies and look at specific examples of each.

The first and perhaps most important strategy of jugaad innovators is reframing—that is, changing the lens through which they perceive the situation they face. Jugaad innovators perceive and interpret the world differently from the rest of us.11 Their ability to reframe means they are likely to see the glass half full even when everyone else sees it as half empty. Indeed, one may think of jugaad innovators as modern-day...