A survey of 26 Indian companies by the CII and ITC published last week has found that “most Indian companies are not engaged in sustainable and inclusive innovations”. Typically India may not be known for innovations, but given the huge challenges before it in the coming years, it may have little choice but to develop innovative capabilities in certain areas, it adds.
Subroto Bagchi, Chairman of IT services company Mindtree, says people often tend to confuse innovation with invention. Thomas Edison’s light bulb is a great invention but “that doesn’t make him a great innovator”. In today’s context, innovation is about the creation of new economic value with breakthrough ideas that will be widely adopted. Classic examples of all three are Apple and Google.
Bagchi says innovation usually happens when you intensely love something, and gives the example of musicians such as Bach, Beethoven or A.R. Rahman; “Rahman continues to innovate because he loves music, and not the technology behind it. Rahman is who he is not because he has created a veena or an electronic synthesiser… even if he doesn’t have these instruments woh balti ulti karke bajayega (he will play on the top of an upturned bucket)… he is so intensely in love with music.”
The same is true of Steve Jobs, who did what he did because he was intensely in love with calligraphy. Or the Aravind Eye Hospital, where some doctors felt strongly about needless blindness. Or the Grameen Bank, where Muhammad Yunus got the idea of giving small loans to the poor without collateral or paperwork because he felt strongly about rural folk. “But we fail to innovate substantially in India because we have only engineering capacity and not such intense thoughts or feelings.” Engineering capability, he adds, comes from the left or analytical part of the brain. “While the analytical or logical part is necessary, innovation happens from creative or right-brain activity.” The former can’t replace the latter; “to put it crudely, any number of spasms cannot be a substitute for being pregnant. You have to first conceive to get a baby!” At either Aravind Eye Hospital or Grameen, “no business plan would have justified what they did”.
On why India is yet to see a Google or Apple, TCS Vice-Chairman S. Ramadorai says it is perhaps because we have “a rote-based learning system, are generally a risk-averse society, preferring comfort zones, tend to be hierarchical and respectful socially to break out of well-trodden paths.” Another factor could be fatigue — both physical (poor nutrition, pollution, cramped spaces) and mental (historical baggage, dwelling in past glories). But then these attributes are also true of other Asian countries, which are way ahead of us in innovation.
Rishikesha T. Krishnan, Professor of Corporate Strategy and Policy at the Indian Institute of Management - Bangalore, attributes the low level of innovation to “Indian companies failing to put in place a systematic process of innovation. Instead they rely on ad hoc processes like jugaad.”
He thinks there are several reasons why we haven’t seen a Google or Apple emerge from India, “We tend to play safe and pursue well-trodden paths rather than embrace experimentation. Our younger generation does not have enough exposure to diverse influences, experiences, and the real problems people face. Also, we are unable to scale-up businesses rapidly enough because it’s not easy to get early-stage funding."
Cheap and Cheerful
But at the end of the day, says Bagchi, innovation requires “huge capital risk, you can’t do cheap and cheerful stuff… the garage has been over-romanticised”. Giving the example of a semiconductor, a drug discovery or a new auto model, he says that common to all three is the fact that it takes anywhere from $700 million to $1 billion to come out with a new product. “Even more important, you can’t get success with just one attempt; you have to take a risk five, six, or even 10 times. This means that for one right model, you will have to write off five to seven models. When you see one success, the money that has been written off is not talked about.”
Winds of change
But are things changing? Yes, they are, say both Ramadorai and Bagchi. The former is an optimist and says many young US-educated Indians are returning to start their own ventures, which might turn out to be the “future Googles”. Krishnan says the change is not “fast enough”.
The survey report says that what is heartening is that the promise of sustainable and inclusive innovation comes from start-ups and social enterprises, because “they are more flexible, have higher risk-taking capabilities and are driven by passion”.
Bagchi agrees; innovation is happening in India in the not-for-profit sector, and in literature and the performing arts related to the right brain. “In the last 15-20 years there has been a huge upsurge in Indian literature, cinema and music which have global appeal and relevance.”
He gives the example of Tara Thiagarajan, who is using neuroscience to predict or predetermine which rural microfinance recipient is likely to become an entrepreneur. And Selco’s Harish Hande, who is customising solar power to suit the individual needs and pockets of vegetable vendors, cobblers and so on. Hopeful that such innovations in the social sector will have a huge multiplier effect, and eventually create great economic value, Bagchi says, “In the social and creative sectors we are far ahead of industry because these sectors are able to take a longer view of time, and innovation requires time. I am hopeful because the social sector is trying to solve local problems by adopting an entrepreneurial approach and then scaling up.”
On the CII-ITC survey blaming lack of innovation on the hierarchical approach in Indian companies, where seniors do not encourage new ideas, Ramadorai says IT companies have been lucky as they are largely “flat” structured. “Despite being large organisations, often with a global footprint, IT companies deign to be democratic.” For instance, TCS has a dynamic social platform called Knome that allows a unit head to converse with a trainee and people across departments to share experiences and knowledge. Through these interactions, “experts” have been identified from the edges of the organisation. “Innovative ideas are expressed and collaboration improves these ideas,” he says.
He recalls how Tata Motors CEO Karl Slym once met with some TCS employees, many of them customers of Tata Motors, and received 357 ideas! Slym was highly impressed. The Tata Group allows innovation exchanges through several platforms, one being an innovation competition called Innovista with a special award category called “Dare to Try” that recognises ideas that were tried but failed. “Such practices are changing the innovation environment in India.”
But, adds Ramadorai, traditional Indian companies do maintain hierarchies. Whether it’s University research departments or public sector — and even some private — companies, the lack of agility and the bureaucratic processes hamper change, and hence innovation.
The survey has noted that efficiency and conservation measures are insufficient to save India from the catastrophic consequences of ecological disasters. Creating employment opportunities for a 500-million strong workforce in the next 30 years and pulling some 400 million people out of poverty, besides providing sanitation facilities to almost a billion people are challenges that stare us in the face.
To this observation Ramadorai says that while innovation is important, sometimes its importance can be overemphasised and “operational efficiency and effectiveness” discounted. “But the application of better solutions that meet new requirements, inarticulate needs, or existing market needs is also innovation. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. While efficiency and conservation may not be sufficient to save India from a catastrophe, they are essential while we identify the additional innovations, enablers and boosts that will.”
TCS has innovated by focusing on solutions for the SME (small and medium-size enterprises) sector. So have the Indian FMCGs by launching sachets, and telecom companies with prepaid cards. “We need to help create the appropriate environment where questions are asked and will lead to the next innovation.”
Averse to capital risk, failure
Mindtree Chairman Subroto Bagchi says for great innovation to happen “billions of dollars will have to be written off and somebody has to have the appetite for it.” In the US and other developed countries, such efforts are backed by the venture capital industry which, in turn, is backed by large institutional funds. “So Stanford or Princeton [universities] will literally have $100 billion in banks; they’d put $60-70 billion in predictable investments and take risk with the remaining $30-40 billion by giving it to venture capitalists, which will put it in 20 ideas of which 18 bomb, but two are hits and give huge returns.” Also, in India, there is a huge social stigma attached to failure; “we forget how much coal Madame [Marie] Curie burnt before she found radioactive material and paid the price with her own life.”
Also, he says, we talk of diversity but are not really diverse compared to Nordic, or other European countries or the US. “There the diversity is at the thought level and difference of opinion is welcome. Typically, in India there isn’t adequate harvesting of experience from large-scale failures and success. In other cultures, from every institutional failure people see the capacity to make new progress.”
Lack of industry-academia interaction is another bane. “Ram Sriram met the two scruffy Google youngsters in the room of a Stanford Professor, who said the youngsters had a great idea on a search engine. Sriram couldn’t understand the concept but took out his chequebook and asked, ‘In whose name do you need the cheque?’ And they didn’t even have a bank account!”
The rest may be history, but Sriram had the confidence because the recommendation came from a professor he trusted. “Here the industry, academia and the mindset are to blame. A student enters an institution to get a job, and we industry people do campus hiring so our job is done.” Bagchi also rues the lack of respect for research in India. “IISc-Bangalore is the only Indian institution among the world’s top 100. Harvard, Stanford, Princeton are all 100 years old. But if you open an engineering college in paddy fields, you won’t get innovation from there!”
(This article was published on October 24, 2013)
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