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A lesson coated with turmeric: What the 140-year old BSE can teach us about innovation

Platform play is a de-facto vision and road map for most product companies today. It stems from the proven model of controlling information between demand and supply and finding multiple arbitrage in between.

Last Updated: May 30, 2020, 01.15 PM IST
Today, BSE enjoys the privilege of being the exchange with one of the highest number of listed companies in the world.
By Sreeraman Thiagarajan

A couple of decades ago, buying and selling shares meant you needed two things - financial acumen in capital markets and importantly, a healthy vocal cord to participate in ‘open outcry’ at the pit inside a stock exchange. Now there’s an app for it. But how we came here is an interesting lesson in innovation and platform play.

Platform play is a de-facto vision and road map for most product companies today. It stems from the proven model of controlling information between demand and supply and finding multiple arbitrage in between. Ecommerce websites, job portals, stock exchanges, app stores, music streaming apps, commodity trade portals, are great examples of platform play.

But rarely have we seen incumbents build a platform or marketplace, and if they do so, they accrue the wrath of supply side players and status quo loving old timers, who don’t mind losing an eye, as long as their opponent loses both.

The past few weeks as been telling in terms of how incumbents hate change, especially changes that are powered by technology and pushes the rules and boundaries of business. Inox is disgruntled at movie producers for skipping the theatrical window and releasing the movie directly on Video OTT.

Post office did not invent email, they were complacent and myopic about the line of work they were in. It is not delivering letters, but relaying information between sender and receiver. Telecoms did not invent instant messaging - they were happy with charging a premium for MMS only to concede the entire messaging play to OTTs. And now even voice and video calls are fast becoming internet driven, and again, none of those apps and services were built by telcos.

There are hundreds of Kodak moments where incumbents failed to innovate and someone else served it cold for them, but even then, instead of adopting to survive, there will always be a league of deniers and nay sayers who want to cling on to status quo, even if it means their extinction. Consider these two scenarios:

Haldi (turmeric) and Sugar traders in South Maharashtra are disgruntled about e-market places and trading portals now in play.

eNAM, an argi commodity trading portal by Ministry of Agriculture, GOI, saw a record transaction in Maharashtra to a tune of Rs. 16 crores, from total traded volume of 28,167 quintals of turmeric this month. This was due to lockdown, which lead to farmers flocking the eNAM portal as a last ray of hope. Till date, the authorities attribute that the platform has not taken off due to resistance of traders. a privately-owned portal that facilitates sugar trade for traders of all size is getting bouquets and brickbats in equal measure from incumbents. The portal doesn’t alienate anyone from joining or trading, but human resistance to change is a powerful gravitational force for marketplaces to take off. Even Amazon experiences this, pan-India traders union decided to stage protests against its chief Jeff Bezos during his visit to India in January this year.

The new tweaks in Essential Commodities Act announced this week aims to facilitate better e-trade and reduce mandi and conventional trade routes for farmers. Farmers and traders not adopting to the new will risk insolvency.

It doesn’t matter whether the new agenda is set by the state or a private entity; the urge to resist adopting to anything new is triggered by the fear of the unknown. But when incumbents can win the confidence of stakeholders, it can witness remarkable growth for all parties concerned and increase in trading velocity. BSE acts is a prime example - a one trick pony product that went to be a comprehensive platform.

Bombay Stock Exchange was founded at the end of 18th century, but before that, a bunch of people were buying and selling shares under a banyan tree in avenues near Bombay port. By 1874, they got roof above their head and erstwhile BSE came to be. After another 80 years, they were the first to be recognised by the Government.

But interestingly, it took nearly 25 years after man went to moon for BSE to modernize the trade. Traditionally you had to be in person at BSE trading floors, and yell from the pulpit to make a trade. In 1995, they did away with the open outcry floor trading exchange and switched to an automated, screen-based trading platform called BSE On-Line Trading (BOLT). This was just around the time when SEBI introduced demat account to do away with paper or physical holding of capital instruments.

Today, BSE enjoys the privilege of being the exchange with one of the highest number of listed companies in the world. BSE listed companies market cap is above Rs 100 lakh crores. But the admirable part is how anyone from a small-time home maker to a large institutional trader have a level playing field to participate in a capital markets through BSE without leaving their home or work desk.

Imagine their growth vectors if, for every share trade, you had to be there, and bidding was as much as your financial acumen as that of your vocal strengths to outbid a next guy. There were nay sayers and fear mongers in 1995 too, but they overcame it. BSE out innovated themselves. The floor on which traders used to once scream (the pit) to bid, is now a convention hall at the iconic BSE towers at Dalal street. The walls are adorned with pictures of their 140 years history and innovation.

Innovate to lead or adopt to survive. Be complacent and risk being extinct.

The writer is co-founder and CEO of Agrahyah Technologies and
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of

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