The consumer markets of India and China are widely viewed as a potential goldmine for companies and investors. These two markets are expected to triple over the current decade and by the end of 2020, are likely to be around US$10 trillion in size. Take away a few billions, or even a couple of trillions, and it would still be a huge opportunity for firms around the world. A newly-released book, The $10 Trillion Prize: Captivating the Newly Affluent in China and India, written by a quartet from Boston Consulting Group (BCG) aims to provide a window into the forces driving this new generation of consumers and discusses how companies can use this knowledge to their advantage to win not only in these two countries, but also in the rest of the world.

At a recent panel discussion on the book at the Indian Institute of Management, Bangalore (IIMB), co-author Michael J. Silverstein, who is one of the founders of BCG’s global consumer practice, and Abheek Singhi, leader of BCG’s India consumer practice, reiterated that this is an unprecedented opportunity in world history. The growth that China and India will see in the next 10 years is something that has never happened earlier in human history. “The secret [of success for companies] is to be able to identify the supply chains that allow for [the dissemination of] products at price points affordable for every segment,” said Silverstein.

Panelist Vinita Bali, managing director of Britannia Industries, noted that the huge absolute numbers in these markets mean that for every product category, and at every price point, there is a large base of consumers that can make doing business in the two nations worthwhile. “Companies who ignore these markets would be doing so at their own peril. And those who want to succeed here must be ready for the long haul. It takes a reasonably long time period to get the return on investment.” Singhi noted. “A half-hearted commitment is a recipe for disaster.”

While Singhi pointed to asset bubbles, political and social disharmony, bureaucracy and corruption, and environmental degradation and pollution as possible risk factors, panelist J. Ramachandran, professor of corporate strategy and policy at IIMB, suggested that “the central argument is the importance of education — How [India] as a nation [has] failed on the education front.” Pointing out that both the schooling and the higher education system in India are “broken and in a shambles,” Ramachandran said that the problems are a result of “policy issues.” Silverstein said that India is severely disadvantaged as compared to China in terms of its education system. “In India, education is under-funded, under-regulated and you tolerate 70% of primary schools being substandard. This is a matter of serious concern for India,” he noted. ”I believe that India is up to it. But it will require a change in behavior and a change in political capital.”

Another area where India is seen to be lagging behind China is in terms of excellence. “Excellence is a mindset and we don’t have enough of it,” Bali stated. “We tolerate a lot of nonsense and it permeates into a lot of what we think is acceptable.” Ramachandran added: “The clue to our future is how well we [strengthen] our education system. We must be unwilling to except less. That will drive the desire for excellence.”

In search of ways to engage disparate segments of employees to help improve the University of Pennsylvania Health System, chief medical officer and vice president Patrick J. Brennan turned to Wharton operations and information management professor Christian Terwiesch — and to the concept of innovation tournaments, which transform the challenge of coming up with unique ideas into a competition of sorts.

“I [wanted] to see if we could apply this to an organization with 16,000 employees,” Terwiesch said at a recent seminar given by Wharton’s Mack Center for Technological Innovation titled, “Learning from Failure in Innovation: Turning Setbacks into Advantages.” “We wanted to see what type of innovative challenges could come from this.”

In December 2011, Brennan and an executive committee started soliciting ideas for improvements — primarily in the area of patient services. Brennan said that in the past, ideas for innovations typically came during meetings with executives. “We wanted to engage the whole community and this seemed to be a good way to do it,” he noted.

Brennan, who compared the structure of the UPHS tournament to NCAA basketball’s “March Madness”, expected that the tournament might generate around 500 ideas, which a panel of judges would narrow down over the course of several weeks. “We called it Your Big Idea. We had high hopes,” Brennan stated, adding that the tournament was promoted to employees via the Internet and through signs posed around the hospital system. The tournament ultimately generated 1,739 ideas and had to be cut off after just four weeks because of the volume.

A committee whittled the long list down to 40 ideas. The teams or individuals behind those ideas were then asked to give 90-second pitches to the panel. From there, the field was narrowed to 10 finalists, who were each given four minutes to present their ideas to the judges.

Brennan and Terwiesch said the finalists received some training to hone their pitches. Terwiesch added that about a fifth of the ideas focused on patient amenities. A substantial number of the others were related to optimizing technology, improving the staff experience, patient and family centered care, and discharge planning.

The judges picked two ideas to implement. One is to have more kiosks around the hospital system — hopefully with interactive technological features — so patients could easily access information about the hospital and patient care. The other is called “My Penn Scheduler,” and will allow patients to have more access to scheduling appointments and other medical needs from home or from a portable device.

The ideas, Brennan noted, were not earth-shattering, but that was not the intention of the tournament. “We were focused on what would work,” he said. “Christian and I didn’t think the ideas were groundbreaking, but they would advance the organization in small ways, and the tournament really allowed the organization to coalesce around the idea of innovation and improvement.”

According to Brennan, many of the ideas that didn’t make the final cut will be circulated to the proper department heads, and he predicted that some, especially those that require relatively little money and time to put into practice, will eventually be implemented.

For his part, Terwiesch was most impressed by how many people participated — more than 5,000 of the 16,000 employees either submitted an idea, commented online about the ideas submitted or participated in the judging process. “I was particularly touched by how many people cared [about the] patients. This was not the next cancer vaccine, but we saw how many employees do have an interest in patient care.”

Just a few weeks ago, global credit rating agency Standard and Poor’s (S&P) released a study titled, “Will India be the first BRIC fallen angel?” The report suggests that India may become the first “BRIC” country (Brazil, Russia, India and China) to lose its investment grade rating. While it remains to be seen if India can escape this ignominy, the country has earned another dubious distinction: It ranks the lowest among the BRIC nations on the Global Innovation Index 2012.

This innovation index was released recently by the international business school INSEAD and the World Intellectual Property Organization (WIPO) along with the Confederation of Indian Industries (CII), Alcatel-Lucent and Booz & Co. The index ranks 141 countries on the basis of their innovation capabilities and results. Brazil, Russia and China were ranked 58^th, 51^st and 34^th respectively. India stands at the 64^th position, two notches below where the country landed last year.

According to the study, “The innovation front in India continues to be penalized by deficits in human capital and research; infrastructure and business sophistication, where it comes last among BRICs, and in knowledge and technology outputs, where it comes in ahead of Brazil only.” The report also notes that the BRIC countries need to invest further in their innovation capabilities to live up to their expected potential.

Vijay Govindarajan, a professor of international business at Dartmouth College and the first professor-in-residence and chief innovation consultant at General Electric, points out that innovation is critical to India’s future. He suggests that the government must provide seed capital to strengthen applications research and create incentives for universities, research labs and industry to collaborate. “Much is at stake if India does not move up on the Global Innovation Index,” Govindarajan says. “Without business model innovations, India cannot solve the problems for 90% of Indians. Such innovations can then be used to launch global strategies. This is the essence of reverse innovation [innovations adopted first in the developing world] — where India can lead.”

As part of the same report, India is ranked second (behind China) in the global innovation efficiency index. (The innovation efficiency index is the ratio of innovation input and innovation output.) Chandrajit Banerjee, director-general of CII notes that innovation efficiency is “a ratio and not a direct measure …. [This implies that] while India can produce innovation output best in the world when equal amounts of input are fed into its innovation ecosystem, it also needs to strengthen certain innovation drivers that will improve the situation.”

Gopichand Katragadda, managing director of General Electric’s John F. Welch Technology Center in Bangalore adds: “The results of the study point to the fact that, in India, the innovation ecosystem (input) is poor while the knowledge/creative output under the constraints is good. One interpretation of this is that we need better government measures on regulations, education and infrastructure to tap the demonstrated potential of talented people.”

According to Katragadda, if India does not get its act together on the innovation front, the country could lose the opportunity “to make this a century of Indian innovation, tapping into the brilliant technical minds of the region.”

High-tech garbage — broken computers, mobile phones, fax machines and so on — is a serious hazard. Much of it ends up in landfills and its components, which contain toxic chemicals, often contaminate groundwater and harm the environment. In Chile, a social enterprise named Recycla seems to have found a solution to this problem. Led by CEO Fernando Nilo Nunez, Recycla employs former prisoners to recycle components of high-tech waste and deliver them to potential buyers. Nilo Nunez discussed his organization’s innovative business model in an interview with Universia Knowledge@Wharton:

To read an edited transcript of the interview, click here.