Let us chase the Indian business unicorn. This will perhaps unravel the secrets of the unicorn, yielding a fresh perspective over the correlation between innovation and the success of Indian business unicorns. Let us start by reiterating our understanding of a business unicorn. A unicorn is a startup which has achieved a valuation of 1 Billion USD.
We shall analyze three cases of Indian Business Unicorns namely Pine Labs, Hike and Freshworks in order to extract the link of innovation to supernormal growth. Are they unicorns because they have innovation embedded in their business model? Or, are there multiple product and customer focused innovations which give them a remarkable competitive edge resulting in super normal growth?
Pine Labs: A Story of Strategic Innovation
Let us examine Pine Labs. Frankly, if we were not examining the correlation of unicorns with innovation, I would have never inquired into Pine Labs, since the company is hardly in the news and merely surfaces in the list of unicorns. Pine Labs, a Card Payment Acceptance Solutions company provides POS solutions to 85000 retailers. The story of innovation in Pine Labs begins with Strategic Innovation. Transcending the boundary of payment acceptance, Pine Labs has gone beyond into customer acquisition and engagement in POS (Point of Sale). The different value chain innovations formulated and executed by Pine Labs in POS are Instant EMI, Instant discounts, Cashback programs, Loyalty solutions, gift solutions, E-wallet, and dynamic currency conversion. Thus, Pine Labs has created new value for its customers through value chain innovations targeted at an enhanced value to the customer, in order to satisfy a diverse range of payment related to customer needs. There also seems to be a fusion of POS payments with POS promotions.
Apart from impacting customer value, POS payment innovations also create a new customer experience. POS payment problems have been an innovation hotspot for a long time. Collections have been a major problem for companies, and, sales representatives have had to make repeat visits to retail customers, as well as consumers for the purpose of collection. Any significant innovation which reduces or solves this problem will be lapped up by the market. Coupling these product innovations with value chain innovations and marketing innovations makes Pine Labs a unicorn.
This leads us to the inference that there are at least 3 innovations that underlie the emergence of a unicorn. The momentum created by one innovation is insufficient, and, multiple innovations are necessary to result in a synergistic creation of new customer value which is the sine qua non of a unicorn.
In Quotes “There are at least 3 innovations that underlie the emergence of a unicorn. The momentum created by one innovation is insufficient, and, multiple innovations are necessary to result in a synergistic creation of new customer value which is the sine qua non of a unicorn.”
Hike: A journey of Transformational Innovations
Now let us examine Hike, the youngest Indian Unicorn. It started as an instant messaging platform, and thereafter, evolved into the social platform. The transformational innovations integrated into Hike are Digital payments, games, and cab booking. The launch of the Hike Wallet has resulted in 10 million transactions, consisting of 70% recharging transactions, 10% blue packet transactions and 10% UPI transactions. Blue Packet Transactions refers to money embedded in a blue packet and sent to an individual or a group. It renders the outlook of an electronic envelops for a certain amount of money. Thus, there is an element of newness as well as the new value for the customer which results in its classification as an innovation.
Hike has integrated services such as news and cab booking under the services category. UPI is yet another innovation integrated into its app and enables the bank to bank money transfer. Therefore, a wide range of customer needs is being satisfied through the integration of instant messaging, digital payments, and, services onto the social platform. Thus, the customer can switchover from having different apps for messaging, digital payments and services to a single app, which integrates all the three customer requirements into one app. This is innovation through fusion, a technique of innovation.
On evolving the specific examples of innovation deployed by Hike into the generic understanding of the dynamics of innovation, we can infer that multiple product innovations for satisfying a range of customer needs are the sine qua non of Hike as the youngest Indian unicorn.
Now, we learn a great deal from this unicorn in terms of innovation and rate of growth. Product innovations on the basis of clusters of customer needs result in rapid organizational growth and valuation. Needless to say, single product innovation is insufficient to create the momentum required for the emergence of a unicorn. Multiple product innovations are essential to creating the required rate of growth for the emergence of a unicorn.
However, there seems to be a catch in this sequence of the rapid growth of Hike. Product innovations need to translate into business model innovation. In the case of Hike, the translation of product innovations into business model innovation is delayed. This is going to act as a stumbling block for the youngest unicorn in India’s stable.
Freshworks: A Tale of Product Innovation
Now, let us examine the case of ”Freshworks”, an Indian Unicorn in the domain of business software. It started in 2010, and, functions on the SaaS (Software as a Service) model for business organizations, and is chiefly in the space of customer engagement. It started in the work domain of customer support with a product called Freshdesk. However, its subsequent strategic innovations have been in the domains of IT Service Management (ITSM), Sales and Marketing.
Rapid product innovations radiating from Freshdesk in customer support to Freshservice in IT service management to Fresh sales in Sales to Freshping in web monitoring indicate the product innovation journey of Freshworks. Subsequently, Freshworks was engaged in the process of integrating AI, Machine Learning and Bots into these products. These product innovations have enabled Freshworks to penetrate geographically dispersed markets such as the US, Australia, New Zealand, and Europe, thereby enabling it to develop a global footprint. The company has leveraged cloud computing to develop a bundle of cloud products, which has enabled an annual growth rate of 50-100%.
The growth dynamics unleashed by innovation
A high rate of innovation translates into a high growth rate for the organization. Continuous leveraging of technology shifts gives the company technological leadership, resulting in a competitive advantage for the firm. A technology shift can be an opportunity or a threat. Companies that adopt technology shift faster than their competition reap the benefits in terms of growth, or, they tend to stagnate and risk decline. Freshworks has been continuously adopting Technology Shifts such as Cloud computing, Artificial Intelligence, Machine Learning, and BOTS, thereby generating product innovations which combined with innovations in marketing and customer engagement have resulted in its evolution into a unicorn.
The pattern of innovation across the aforementioned organizations is that a single innovation is insufficient to create the growth momentum required to be a unicorn. It has to be coupled with innovations in strategy, marketing, and customer engagement.
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