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56 Business
2 Firms’ embrace of outsiders is boosting
businesses like Tongal, a marketplace for
creative video work used by multinationals
including Lululemon, a Canadian athletic-
wear firm, and Lego, a Danish toy company.
Its new creator registrations were five
times higher in March than in February,
and monthly activity rose by 150%. Topcod-
er, which provides on-demand tech talent,
has also seen a surge.
But the defining feature of the latest in-
novation revolution is breakneck speed.
Companies are being forced to raise their
corporate metabolism and overcome
“analysis paralysis”, an affliction caused by
top managers having pored over the same
Facebook in India
Jiostrategic
A punt on a different sort of e-commerce
umours of india’s debt-sodden
Rfirms receiving a cash infusion from
a foreign buyer swirl regularly, but rarely
become reality. With the country in
lockdown and oil prices crashing, wor-
ries have grown that the most touted
such investment—the $15bn purchase of
20% of Reliance Industries’ refining arm
by Saudi Aramco, the kingdom’s oil
colossus—may be delayed or cancelled.
That deal had been seen as a way to ease
the pressure from loans used to build
Reliance’s Jio telecoms arm: concerns
that it was under strain certainly did not
help as Reliance’s share price tumbled by
more than 40% between mid-February
and mid-March amid pandemic panic.
But all is not lost for the Indian conglom- The real deal
erate—thanks to Mark Zuckerberg.
On April 22nd Facebook agreed to buy
9.9% of Jio for $5.7bn. With the swipe of a
pen, Reliance has a new financial cush-
ion and, possibly, a partner for trans-
forming Indian business. For Mr Zucker-
berg’s social network, the bet is
one-tenth of its rapidly expanding pool
of cash, placed on an intriguing market.
The deal’s value lies in the crossover
between the hold each partner has on
aspects of India. Since its launch in 2016
Jio has crushed domestic competition in
mobile telecoms with ultra-low prices.
With 388m users, and funds from Face-
book, it is much better placed than rivals
to invest in 5g technology.
Reliance also controls a vast retail
empire, with11,300 stores from groceries
to electronics and fashion, including
joint ventures with well-known foreign
brands. So far, margins have been thin,
but the individual components are seen
as pieces in an incomplete platform that,
with Jio, could compete with Amazon
irrelevant case studies at business school.
In a recent briefing consultants at Bain
urged companies to throw out old data, test
quickly and often, and assume you will be
in testing mode for some time to come.
Confronted with the sudden closures of
its primary distribution channel to restau-
rants and institutions, Sysco, a big Ameri-
can food-distribution firm, built an entire-
ly new supply chain and billing system to
serve grocery stores in less than a week.
Long-delayed initiatives have suddenly
been rolled out at scale overnight. A global its Chinese online offering grew by triple
standards body converted one of its main
customer offerings from in-person to on-
line in two weeks, says a person close to it.
and Flipkart (owned by Walmart).
In a quieter way, Facebook has built a
formidable presence in India through
WhatsApp, which has over 400m users
there (and has helped link locked-down
Indians to food supplies). In February,
after a long struggle, tentative approval
was granted for WhatsApp to handle
payments in India. If unfettered by bu-
reaucratic hurdles, it is expected quickly
to become among the largest payment-
processors in the country, with all the
data that comes with it.
The combined efforts of WhatsApp
and Jio, said Reliance’s boss, Mukesh
Ambani, would enable India’s 30m Ki-
rana stores (small neighbourhood shops)
to become critical components of e-
commerce, able to receive orders and
offer quick delivery—in contrast to the
online-shopping business model that
has made many local shops elsewhere in
the world obsolete. It may be the deal’s
biggest selling point.
The Economist April 25th 2020
The crisis has emboldened managers to
move faster and to try out risky new ideas
on larger groups of customers. As the boss
of a Fortune 500 firm recently put it, “We
are learning more by testing than [from]
months spent [with] analysts and endless
meetings.” Despite a worldwide retail
apocalypse, Nike saw global internet sales
of its sporting goods rise by over a third in
the three months to February, thanks to a
deft digital pivot inspired by its early co-
vid-19 experience in China. Revenues from
digits in January and February, year on
year, as consumers shared workouts
through WeChat and other social media. Its
sweat-inducing masterclass is being
streamed more than 800,000 times a week
on YouTube.
The desire for speed is reflected in the
performance of firms that make 3d-print-
ing equipment, which slashes the time
from prototype to final product and, by re-
placing faraway suppliers with nearby 3d
contractors, speeds up distribution. hp is
accelerating the roll-out of “3das a service”,
which allows customers to pay just for
what they print rather than purchasing the
pricey kit and supplies. Early customers in-
clude Wallbox, which makes electric-vehi-
cle chargers, and hipp Medical, which
makes tools for orthopaedists and dentists.
Companies are also experimenting
with new distribution channels. With
workers scarce and customers happier to
get a delivery from a machine rather than a
human these days, automated deliveries
have been embraced by Chinese e-com-
merce giants such as Alibaba, jd.com and
Meituan. Edward Tse of Gao Feng, a consul-
tancy, believes that autonomous delivery
will be widespread within 12-18 months,
much faster than he previously thought
possible. Zipline, a Californian startup that
is already delivering blood and medical
samples by drone in Africa, now wants to
do the same with coronavirus samples in
America. Google has expanded the use of
its Wing drones to deliver medicines and
other necessities in rural Virginia.
Weighed down by legacy assets and pro-
tected by oligopolistic profits, many big
firms are not natural innovators. Most cor-
porations that have them relegate geekyin-
novationistas to skunk works that besuited
types steer from the c-suite. In quiet, pre-
dictable times this command-and-control
approach to innovation works fine, says
Darrell Rigby of Bain. And, adds Gary Ha-
mel of the London Business School, “In a
small crisis power moves to the centre.”
But, he reflects, in a big one “it moves to the
periphery”. It may stay there for a while
after the pandemic passes. 7
Correction: Last week we said that ByteDance had
over 100m users in each of China and America. We
confused America with all of the West, where the
Chinese firm does have that many fans. Sorry.