A recent visit to Mindtree with a group of Executive MBA students from the Georgetown-ESADE Global EMBA program (GEMBA) gave me a chance to revisit current thinking on innovation in the Indian IT services industry. (The pictures in this post are from our visit).
Mindtree had unusual origins. It was “born big,” when several stalwarts of the Indian IT industry left their former employees to strike out on their own. A big chunk of the founding team had its roots in Wipro, a company which was known to support a fair degree of independent initiative. The seniority of this group (Ashok Soota had been CEO of Wipro’s IT business for several years; Bagchi, Krishna Kumar and Janakiraman were all at senior levels too) and the others who joined them meant that they had to grow fast to be able to cover their own costs! Another unusual feature of Mindtree’s founding was the prominent role played by a private equity firm in bringing the group from Wipro together with another set of qualified founders from other companies.
Mindtree lived up to this unorthodox founding by trying to become a “different” company. They emphasized consulting and technology/intellectual property based differentiation at a time when others were seeking to expand their plain vanilla services rapidly. They tried to build a distinctive organizational culture by emphasizing organizational values in hiring and promotion decisions. They were proactive on the human resource management front with a focus on employee-friendly policies. They committed resources and managerial attention to knowledge management at a relatively early juncture of their evolution, and become one of the first companies to encourage the formation of communities of practice across the company.
While this got them attention from the media and from academics in business schools, over time it seems to me that the company has become more mainstream. The touchy-feely stuff is there, but is low key. The business portfolio is also more traditional, with its $435m revenue split among BFSI, high technology, travel and retail. A bold attempt to stake out a position in handset design is no longer spoken about. One manifestation of this is that the innovation activity at Mindtree has much in common with other IT services companies! (See my earlier post on Subroto Bagchi’s recent book for more on the changes at Mindtree).
Innovation at Mindtree
As in many other technology companies, Mindtree sees innovation as a strategic initiative that is overseen by the Chief Technology Officer (CTO). The company believes that innovation should be comprehensive, inclusive and purposeful (aligned to the business). At Mindtree, inclusiveness in innovation means not only participation from across the company, but also that idea generators will be given a chance to be involved in the execution of their ideas. (This is one dimension on which Mindtree retains its focus on the individual employee).
This involvement takes its most explicit form in the 5*50 program of Mindtree. This program was conceived as a means of building significant new businesses and revenue streams based on ideas from employees that could help Mindtree reach the magical $1 billion mark in revenues (currently $435 million). The original intention was to be able to build five such businesses, each with potential revenue of $50 million. In the first round, only one such business (Vm Unify Cloud Management Platform) got created. In the latest round, the company received over 50 proposals and 3 have been shortlisted. Idea generators for 5*50 proposals are expected to take ownership for their ideas.
Even before the first round of the 5*50 program, the seeds were sown when the company undertook the creation of Intelligent Video Surveillance Solutions with soft funding from a government support program (CSIR’s NMITLI). This program required collaboration with academia and research institutions and helped Mindtree understand the dynamics of such collaboration.
Mindtree’s 5*50 program is evolving. While earlier the fledgling business was sheltered within Mindtree, now the thinking is to give the team more “flesh in the game,” and make it operate more like a start-up with its staffing and operations de-linked from the parent company. Mindtree will provide mentorship, funds and infrastructure, but the hope is that reduced dependence on the company will create greater hunger for the business.
As a services company, Mindtree is constantly on the lookout for what it calls “value adds” for its customers. Customers are also open to partnerships that would help them do their own businesses better. Therefore, Mindtree minds (as Mindtree employees are called) are encouraged to scan, focus and act to identify and implement both continuous improvement and business transformation ideas that would help the client. The company conducts workshops to develop skills and techniques to help employees do this better. Generic “value adds” are categorized and put into a database for later re-use.
Mindtree’s communities of practice have grown with 85% of the workforce involved in the more than 50 active communities. The focus of these communities continues to be on learning and sharing. On an average, 2 face-to-face community events happen every day. (For a more extensive discussion of Mindtree’s Communities of Practice and the role they play in innovation, see our book 8 Steps to Innovation).
One of the popular events at Mindtree is Osmosis, the annual technical festival. This includes events like a Techathlon (a series of contests leading up to the identification of Techie of the year), a Tech Works contest (more than 400 “value add” ideas received this year), K-Safari (an opportunity to demonstrate and showcase proofs of concept) and several webinars. An interesting addition this year was an invitation to select start-ups to set up stalls at Osmosis – the rationale was that Mindtree needs to collaborate more with the rapidly growing start-up ecosystem.
Challenges in Building an Innovation Culture
Mindtree’s management believes that a major milestone is that the company has been able to develop independent thinking and move beyond executing just what the customer indicates as its needs.
In a discussion with Mindtree’s innovation management team, I found that the challenges faced by Mindtree are not very different from those of other companies. There are people with good ideas and capabilities, but they often don’t come forward. There are several good tech ideas but converting them into impactful business ideas continues to be difficult. A few significant success stories would help inspire others to take on the challenge of innovation.
Innovation at Mindtree is not incentive or reward-driven. While cash awards are given for publications and patents, value-adds are not explicitly rewarded. However, value-adds do figure indirectly in the KRAs of delivery and account managers.
The increasing power of digital collaboration tools provides an opportunity for software companies to collaborate with their clients in more explicit ways. Before we left Mindtree, we visited Digital Pumpkin, a studio designed to experiment in the retail space. Giant screens and hyper-reality provide the studio with a Star Trek feel. The studio seeks to connect the mobile phone to the store to enhance the retail experience. Mindtree’s designers are an enthusiastic bunch and they made the visit to Digital Pumpkin fun. But, I have seen similar set-ups in other IT services companies, and it remains to be seen how Mindtree is able to do something different with Digital Pumpkin.
The Indian IT services industry has become adept at incremental changes and improvements that help productivity or provide additional value to customers. But the big leap continues to elude most companies. The appetite to take big bets continues to be muted.
Mindtree’s emphasis on inclusiveness and focus on communities of practice are distinctive. Its also good to see it reaching out to the startup ecosystem. But, I hope they will be able to take the lead in blazing new trails for the software industry.
[The view expressed here are the individual views of the author].