Innovation in India: Where do we stand at the end of 2013?

As the new year approaches, its customary to review the year that has passed. Here is my take on where we stand on innovation at the end of 2013.

Positive Highlights of the Indian Innovation scenario in 2013

Innovation in the public/strategic sectors took two important strides. The first was the successful launch of the mission to Mars (Mangalyaan) which demonstrated India’s ability to undertake complex scientific and technological projects at low cost. The second was the initial operational clearance for the Tejas Light Combat Aircraft by the Indian Air Force.

The emergence of a new generation of Indian technology companies like Vigyanlabs, winner of the Nasscom Innovation Award in the Technological Innovation category for 2013 was another positive development. Vigyanlabs solves an important problem (high consumption of power by data centres) with a system solution that is backed by a US patent.

Some of the most important innovations took place in the political sphere. Two new entities demonstrated the potential for such innovation. The success of a young political party, the Aam Aadmi party, in the Delhi elections demonstrated the value of a grassroots approach to politics backed by creative use of the social media. In Bangalore, the Bangalore Political Action Committee B.PAC seeks to be a catalyst for “good politics” by supporting candidates with a clean record. B.PAC also trains aspiring politicians.

Another timely organizational innovation was the launch of the Indian Software Product Industry Round Table (iSPIRT), a think tank devoted to the promotion of India as a power in the software product industry. Two initiatives of iSPIRT – one to connect Indian product companies with the requirements of India’s large small and medium enterprise (SME) sector, and the other to create a vibrant market for acquisition of software product companies (“M& A Connect”) have shown the potential of efforts to close the gaps that hinder the emergence of a vibrant product ecosystem [Disclosure: I am associated with iSPIRT as a member of its Founders’ Circle.]

Market-driven innovation efforts by large multinational companies such as Renault (with the Duster) and Gillette (with the Guard) showed that some MNCs are coming to grips with what it takes to innovate for the Indian market. Yet, the overall MNC innovation scenario in India was mixed with some companies scaling down their efforts to use India as a base for emerging market innovation.

The Indian Industrial Innovation Scenario

2013 was a decidedly mixed year for industrial innovation in India. One of the mainstays of Indian industrial innovation, the transportation sector, had a poor year. Despite several efforts, Tata Motors was unable to revive the fortunes of the Nano, and sales remained muted. Mahindra’s earlier success in the SUV market with products like the Scorpio and XUV 500 was eclipsed by determined efforts by MNC automotive companies (Renault with the Duster, and Ford with Ecosport). By all reports, the initial results of Mahindra’s acquisition of Reva (India’s pioneering electric vehicle company) have not been great either with their first post-acquisition product, the E20 seeing only moderate success. Neither Tata nor Mahindra had successful launches during the year. In contrast, MNCs had several successful launches including Honda’s Amaze and the SUVs mentioned above.

Zydus Cadila successfully completed trials for what may become India’s first new chemical entity to reach the market. But the Indian pharmaceutical industry faced several setbacks as prominent companies came under the scanner of American and European regulators, and big names including Ranbaxy and Wockhardt faced regulatory action. Since, their ongoing operations in the bulk drugs (APIs) and generics space provide the cash to fund their innovation efforts, any setback to these businesses could have a long-term negative impact on the Indian pharmaceutical industry.

Traditional Indian business groups have begun to realize the importance of a more structured approach to innovation, but are struggling to evolve appropriate processes to do so. My co-author, Vinay Dabholkar and I received enquiries from such companies in different sectors, but few of them translated into specific assignments.

The Innovation Ecosystem

Reflecting India’s overall struggles with enhancing innovation output, India slipped two positions on the Insead/WIPO Global Innovation Index in 2013. India’s biggest weaknesses are in the institutional environment, and in higher education and R&D.

The latest available R&D statistics (pertaining to 2009-10, released on September 2013) show that India’s R&D expenditure as a proportion of GDP is static at around 0.88% since 2005-06. But, there are two important changes to note. The sectors accounting for the largest proportion of industrial R&D spending – pharma and transportation – continue to be the largest, but their share has come down to 27.7% and 14% respectively from 45% and 17% respectively earlier. This is a positive development as it shows other sectors increasing their R&D spend faster. The other interesting development is that private sector industry now accounts for 28.9% of all R&D expenditure and the entire industrial sector (private + public sector) for more than 34%.

One piece of good news is that the proposed Inclusive Innovation Fund has taken a step forward with an in-principle approval of the first tranche of funding. But the operational details still seem some distance away. It looks unlikely that the Fund will be put in place before the next general elections, and it remains to be seen whether the next government will see it through to fruition.

During the year, the Department of Scientific & Industrial Research re-jigged its schemes for supporting R&D by industry. New schemes include “Patent Acquisition and Collaborative Research and Technology Development” (PACE) and “Promoting Innovation in Individuals, Start-ups and MSMEs” (PRISM). As far as I can make out, the PRISM scheme is not too different from the TePP programme that was quite popular earlier. The PACE programme provides loans for companies to acquire patented technologies and then work on them further. In the past, the common problems of government support schemes included processing time, centralization in Delhi and inadequate scale. Let’s hope the government is able to address such issues this time.

Another useful development is the incorporation of innovation into the Results Framework with which the Performance Management Division of the Government of India measures the performance of government ministries and departments. This will hopefully result in a greater focus on innovation in the government.

Conclusion

2013 wasn’t a great year for innovation in India. Industrial innovation, in particular, seems to be at the crossroads. I hope that a focus on innovation will return once we have a new government in place later this year. 

Dr. Devi Shetty and Narayana Hrudayalaya: Revolutionising Cardiac Care

Dr. Devi Shetty enjoys a special place in the health care sector in India. At a young age, he made a reputation for himself as an outstanding heart surgeon at Bangalore’s Manipal Hospital. But he is now better known for his determination to create an alternate model of healthcare more suited to the needs of India.

Action is worth more than a thousand words. Over the last decade or more, Dr. Devi Shetty has created the Narayana Hrudayalaya (NH) complex in Bangalore to experiment with, and scale up, new ideas in health management. I have seen him on television a few times, but I had the first opportunity to hear him speak on innovation at the PDMA annual conference held at IIT Madras on December 16.

There are some core principles of how to reduce the cost of healthcare that have emerged from the experience of low-cost health pioneers like Aravind Eye Hospital. These include leveraging economies of scale, and disaggregating the entire surgical process so as to focus the doctor’s time on those steps that require the doctor’s expert intervention. But cardiac care seems to be too complex and risky to apply such principles. Or, is it?

I was curious to see what Dr. Devi Shetty would have to say….

[The following paragraphs are based on Dr. Devi Shetty’s talk]

Why India needs a different model of healthcare

On the one hand, the government spends only 1.1% of India’s GDP on healthcare, and 80% of national health bills are paid “out of pocket” by patients. On the other, the country has the capacity to do only 120,000 heart surgeries a year though there may be a medical need for upto 2 million. These are some of the hard facts of the healthcare sector in India.

But, India can do better. We have the largest number of doctors, the largest number of nurses and the largest number of US FDA-approved drug units outside the US.

Dr. Shetty and NH are not content with talking about such problems. They have proactively tried to address them. Some examples of what they have been able to do, and what they hope will be possible in the future:

Affordable Cardiac Surgeries

NH has been able to bring down the cost of heart surgery to the equivalent of USD 1,400 to 1,500. But their target is to bring this down to $800. This is thanks to scale – NH already does 30 heart surgeries per day and performs the largest number of kids’ heart surgeries in the world with children from 70+ countries being treated at NH.

NH is pioneering speciality hospitals that can be built at low cost. The idea is to build very functional hospitals rather than 5-star hospitals with marble floors and central air-conditioning. NH is partnering with India’s leading construction and engineering company, Larsen & Toubro, to pioneer this concept. The target is to build a 300 bed hospital for USD 6 million in 6 months. Their first effort in this direction cost USD 7 million and took 8.5 months to build at Mysore.

Another way of reducing cost is to reduce staffing. NH has developed, in collaboration with Stanford University, a 4 hour training curriculum to help the spouse of a patient take care of him after he is released from the Intensive Care Unit (ICU).

Low Cost, but with no compromise on quality

Indian hospitals typically use linen gowns and drapes for surgery. But, globally, special surgical disposable gowns and drapes are the norm. Existing companies were willing to supply these at Rs. 5,000 per surgery against the Rs. 2,000 that NH was willing to pay. NH encouraged a local entrepreneur to take up the manufacture of these surgical essentials. Today, Amaryllis manufactures these using locally available labour and supplies them at Rs. 850 to 900 per surgery. The company is in the process of getting international quality certification that will enable it to export these as well. [Readers familiar with the Aravind Eye Hospital story would remember that Aravind did something similar in the case of intro-ocular lenses.]

In the tradition of the partha system of accounting practiced by traditional business groups in India, NH tracks every penny. Using Oracle and SAP on the cloud, the hospital compiles a daily profit and loss statement that is available by 4 pm the next day. Using a medical analogy, Dr. Devi Shetty calls this “using accounting as a diagnostic tool rather than for performing a post mortem.” I am sure the pioneers of the balanced scorecard, Kaplan and Norton, would love this characterization.

Very much like Aravind Eye Hospital, the focus is on cutting costs but not sacrificing quality in any way. One in every two hundred patients in a US hospital is killed due to errors or medical negligence. NH is developing software-based patient management in an effort to use IT to avoid this in their hospitals. NH is also developing and using simulators to train nurses for critical care facilities.

Policy and Regulatory Intervention

But Dr. Shetty is not content with improving the care within his hospitals. He is actively involved in policy and regulatory changes that will advance his vision of good quality, low-cost healthcare.

Dr. Shetty conceptualized the Yeshaswini Microhealth Insurance programme that is today a Government of Karnataka initiative to provide low cost medical insurance to farmers in the state. They pay a monthly insurance premium that is as low as Rs. 5.

Dr. Shetty is fighting what he calls “pre-conceived notions of who can do what in surgery” which add to costs but not quality. He questions the wisdom of requiring a nurse with a BSc degree to hand over instruments during a surgery, pointing to a painting made by elephants in Thailand!

Going Beyond

With the belief that doctors who come from a deprived background are more likely to change the rules, he is running a programme called Udayer Pathey in which 2,000 kids from rural West Bengal are being mentored through their schooling in the hope that they will be able to qualify for admission to medical college.

Since women are more likely to use their earnings for the welfare of the family, NH consciously tries to employ women wherever it can. At one time, 90% of their employees were women.

Tailpiece

In his answer to a question from one of the participants, Dr. Shetty said there is no need for special inspiration to pursue his work – the fact that one woman dies every 10 minutes while giving birth to a child is inspiration enough. But for the rest of us who attended his talk, Dr. Devi Shetty should be a good inspiration to pursue affordable modes of solving Indian problems. 

Organizational ingenuity or systematic innovation: What is relevant in India?

“Organizational ingenuity or systematic innovation: What is relevant in the present Indian economic context?” – this was the  subject of a thought-provoking panel discussion I attended on December 14 at the third Indian Academy of Management (IAM) conference at IIM Ahmedabad.

About the IAM

IAM is the Indian affiliate of the Academy of Management (AoM) – a forum that brings together leading scholars in management covering areas such as Organizational Behaviour, Human Resource Management and Strategy. The AoM brings together thousands of scholars in its annual conferences held every August in North America and publishes some of the leading journals in the field. The IAM has been in existence only for the last 5-6 years, and this was the third IAM (biennial) conference. IAM is gathering momentum with a record number of participants at this year’s conference expertly put together by Professor Neharika Vohra and her team at IIM Ahmedabad. Good to see research picking up steam in India!!

 Backdrop to the Panel

While creativity and innovation have tended to hyped up in recent years and associated with “larger-than-life” figures like Steve Jobs, it’s good to see parallel efforts to recognize less demonstrative but perhaps no less important forms of change. One manifestation of this has been the interest in bricolage. [Wikipedia].

In the Indian context, bricolage has been popular in the form of jugaad, loosely translated as “creative improvisation” which stresses solving problems within resource constraints. All of us in India are familiar with such Jugaad solutions as the washing machine adapted to make large quantities of lassi or the truck knocked together using local materials on Indian farms.

 Organizational Ingenuity

But, I wasn’t familiar with the notion of organizational ingenuity till Rangapriya Kannan Narasimhan (Priya) from the University of San Diego invited me to be a part of this IAM panel. The panel itself appears to have been sparked off by a “Call for Papers” for a special issue of Organization Studies by Joe Lampel and Israel Drori a couple of years ago.

 Organizational ingenuity refers to the phenomenon of managers trying to solve problems under organizational constraints of lack of resources or authority. Organizational ingenuity is a creative response to organizational barriers and is thus closely related to organizational change.

Is this new?

Interest in these non-formal processes of change is not new. One of the most insightful writers on organizations, Karl Weick, wrote a paper titled “Improvisation as a Mindset for Organizational Analysis” in the journal Organization Science 15 years ago where he investigated the pre-conditions required for organizational improvisation to happen, drawing an analogy from improvisation in jazz music. [As an aside, it’s not clear to me why we need another concept in the form of organizational ingenuity – how is it different from improvisation?]

More recently, Radjou, Prabhu and Ahuja focused on the problem of large organizations getting too bureaucratic and slow, and urged companies to adopt more informal and intrapreneurial processes such as “Jugaad innovation.”

The Panel on Organizational Ingenuity vs Systematic Innovation

Unfortunately, Israel Drori couldn’t make it to the panel. Priya introduced his ideas on organizational ingenuity and then asked me to speak. I made the following key points:

• India doesn’t do well on global innovation surveys. One of the main reasons for this is that Indian organizations have demonstrated a limited capacity to innovate on a consistent basis.
• While in the context of a large MNC, the barrier to innovation may be overly-restrictive processes and delays caused by multiple layers of decision-making, Indian firms suffer from a different problem – they tend to use ad hoc innovation processes such as Jugaad rather than structured processes that could facilitate a smoother and more consistent stream of innovation.

• I gave several examples of Indian organizations – Bajaj, Titan, Aravind Eye Hospital – to explain how such systematic innovation processes help Indian organizations meet the needs of Indian users effectively.
• I ended by pointing out that multinationals are beginning to get their act together by using their more structured innovation processes to address specific needs of the Indian market (e.g. Gillette).
• I concluded by saying that Indian companies could potentially lose out if they don’t quickly embrace a new paradigm of innovation.

Pushkar Jha’s Perspective on the Role of Ingenuity

Newcastle University Professor Pushkar Jha brought a different lens to look at the ingenuity vs. systematic innovation debate. Using poverty alleviation programmes as his context, he made several interesting points. The lack of success of poverty alleviation programmes is not due to lack of resources alone. The beneficiaries may be willing to engage with such programmes but may lack the ability to do so. This ability constraint could be cultural, but there could be other reasons too.  

Pushkar is evolving a framework to understand when ingenuity is likely to lead, and when systematic innovation is likely to be predominant. He argued that systematic innovation requires a stable environment and more stringent pre-conditions. His focus is on the role of what he calls “boundary spanning related resourcing constraints” which seems to refer to the costs and difficulties of coordination across organizational boundaries.

Some Concluding Thoughts

Pushkar’s thought process reminded me strongly of the debates we have seen in the “Bottom-of-the-Pyramid” movement. The emphasis of BoP 2.0 on co-creation with the community and embeddedness of solutions is intended to address the ability challenge that Pushkar refers to. In fact, the BoP 2.0 paradigm pays a lot of attention to training and education of the beneficiary community as an intergral part of greater acceptance and diffusion of new solutions.

 Systematic innovation in companies can be traced back to the German dye industry in the 19^th century. This suggests that systematic innovation grew in the west much before the more stable environment we see today. In fact, I wonder what dimensions of stability are relevant here.

Is it possible that systematic innovation is a function of time and maturity and not the environment alone? Or is there a cultural element to it? Sociologists seem to inherently distrustful of cultural theories….

The LCA Tejas Milestone: Cause for Celebration, but also Food for Thought

On December 20, Defence Minister AK Anthony will preside over an important milestone in the evolution of India’s technological capabilities – the induction of Tejas, the indigenously-developed Light Combat Aircraft into the Indian Air Force. Though the Tejas has not yet received Final Operational Clearance from the Air Force (that is expected sometime next year), the Initial Operational Clearance now granted will allow for the first few aircraft to be handed over to the Air Force, and for Air Force (rather than test) pilots to be trained on the aircraft.

Tejas has undergone 2,400 test flights since 2001, but 450 in the last year alone. The doubling of test flights came after Defence Minister AK Anthony threw his weight behind quick induction of the aircraft into the Air Force and set a deadline for completion of testing. Prior to that, according to press reports, the ADA/DRDO were being very cautious, worried that an accident would irretrievably set back the programme. There were also coordination and resourcing issues.

The Importance of Rapid Test Cycles

The Tejas experience underlines the importance of quick and rapid test cycles. However powerful computer simulations may be, testing in real conditions is where, as they say, the rubber meets the road. Faster trials mean quicker learning and faster development. In an earlier post, I commented on the challenges inherent in developing complex technological products like fighter aircraft and tanks in India and this was one of the points I mentioned: inadequate number and frequency of experimentation and testing cycles.  I identified five other reasons why we struggle in these projects: (1) overly-exacting specifications; (2) lack of clarity regarding what local development means; (3) lack of technological competence in advanced technologies; (4) design/development and production gaps; and (5) lack of tacit knowledge.

Fear of Failure & The Importance of Champions

But the fear of failure indicated by the ADA/DRDO points to another reality that is often hinted at: pro-import lobbies within the Air Force and the political establishment are ready to do all they can to prevent the emergence of local competition, and would therefore jump on any failure to try to close a project. So, unless local development has a champion at the highest level, it’s difficult for programme managers to mobilise the confidence and resources needed to make advanced technology work. (If you read 8 Steps toInnovation, you’ll remember the pivotal role that George Fernandes played in making the Konkan Railway a reality).

More “Fundamental” Issues

A recent letter from Dr. Satish Chandra to Current Science raises another interesting set of issues. Dr. Satish Chandra heads the Structures division at the National Aerospace Laboratories here in Bangalore. In this capacity, he has been a key player in NAL’s efforts to design and develop new aircraft. NAL has had some success. The two-seater Hansa demonstrated NAL’s capability to take a development project almost all the way to the market (“almost” because Hansa is yet to be commercialized). The Saras Light Transport aircraft flew, but has struggled with weight problems and appears to have lacked the resources and support to go through the rapid improvement cycles that are required to make its “weight loss programme” successful. NAL has been the crusader to develop an Indian 70-seater aircraft, but the programme is yet to get a complete buy-in from policy makers.

In Satish’s letter to Current Science, he stresses that the views expressed are in his personal capacity but they are no doubt based on his experience at NAL! He makes the following key points: Given the current stage of economic development of India, and our national priorities, should we be focusing on basic science research or on technology development to solve our myriad problems? He alludes to a caste system in the scientific establishment where anything applied is seen as not rigorous, and where higher levels of abstraction are equated with higher intrinsic value. He points out that our current structures and processes are inimical to advanced technology development.

Reflections on Dr Satish Chandra’s Letter

Reading Satish’s letter, I was reminded of an interesting book evocatively titled Smash Innovation by Gopichand Katragadda, who currently heads the Jack Welch Technology Centre of General Electric in Bangalore. Gopi points out how India has suffered from a division between hand and mind since historical times. In From Jugaad to Systematic Innovation, I argued that the tendency to put brainwork on a higher pedestal than physical work has come in the way of industrial innovation.

The lack of a strong industrial research culture in India may have led to the misperception that applied research lacks rigour. But good products and technologies have to work in a wide variety of use situations and conditions, and have to be robust and consistent in their performance. This involves extensive simulation and testing. Cost considerations lead to pressures for continuous improvement in materials and reduction in weight. Industrial research and development, particularly in high technology areas is very challenging indeed!

From what I have seen in my own life from watching two industrial researchers (my father and my wife) at close quarters, I am completely convinced that creating good high technology products is every bit as rigorous and demanding as basic research.

The Way to Go

I continue to believe that one of the problems with the commercialization of Indian industrial research and development (at least in the public sector) is the separation of research and design from production and sale. The LCA, for example, was designed by ADA, but will be manufactured by HAL. Technology and product development under the roof of an industrial enterprise is likely to bring in a stronger user perspective, and commercial considerations would hasten testing and development. New models of development would also emerge.

Consider Embraer, the Brazilian aircraft company. It started pretty much like a design bureau, and then went on to manufacture aircraft under licence. But it broke away from that paradigm to become one of the world leaders in Regional jets, and in the process developed new models of sharing risk with key suppliers. As I told a conference of HR heads of Defence Public Sector Units in Bangalore last week, my dream is that Indian defence technology companies follow the Embraer path and become leaders in their respective domains.

Beyond Jugaad: A Monthly Column in Businessline

I just completed a year of writing a monthly column titled Beyond Jugaad in The Hindu Businessline. I enjoyed writing this column covering a wide variety of topics in the broad area of strategy and innovation. Here is a bird's eye view of the columns I wrote during 2013 with links to all of them.

Mass Movement Needed for Better Governance (December 2013) Link

The Five Myths of Frugal Innovation (November 2013) Link

Will Air Asia and Tata –SIA Succeed? (October 2013) Link

What does it take for MNCs to succeed in India? (September 2013) Link

Does India need Innovation? (August 2013) Link

India continues to grapple with the challenges of new drug development (July 2013) Link

Ranbaxy: The Fall of an Icon (June 2013) Link

Getting Value out of Innovation (May 2013) Link

Indian Companies need to embrace Open Innovation (April 2013) Link

For Tech Innovators, Internationalisation is key to survival (March 2013) Link

Making ‘In India for India’ Work (February 2013) Link

Indian Firms need to find own pivots to overcome competition (January 2013) Link 

MadRat Games: Combining Learning and Fun

We in India have a strange relationship with our own languages. We enjoy telling visitors about their diversity and richness (I must have shown an Indian currency note which lists all the constitution-recognised languages dozens of times), but the typical middle class, urban Indian uses English as the stepping stone to success. 

While most people in “our” generation at least learnt our own languages (even if we don’t read and write in them every day), today’s kids have often grown up with English alone. I remember reading a fascinating article by Ramachandra Guha some years ago where he predicted the end of the bilingual scholar. We can see that happening before our eyes.

But I don’t think everyone is happy about that. I was recently in Pune, and met an old friend Jayaram Chengalur who works at the National Centre for Radio Astronomy. Jayaram has taken the courageous step of educating his kids in a Marathi medium school. (By the way Jayaram’s “mother tongue” is Malayalam, but his wife is from Maharashtra, and living in Pune, they decided to let their kids soak in the Marathi language.) I am sure there are several others who are keen to retain some Indian linguistic heritage.

Most people would not, I imagine, be willing to go so far as to emulate what Jayaram has done. But, they would be happy to encourage their kids to learn one or more Indian languages if there were fun ways of doing so. That’s why I was delighted to get introduced to MadRat Games through its co-founder Madhumita Halder.

MadRat Games

Madhumita and I were co-speakers at a recent event organized by the FICCI Ladies Organisation  (FLO) at Hyderabad. Madhumita and I are at the centre of the picture below.

MadRat Games is a company that makes board games, some of which have been adapted to the mobile phone and tablet. Their flagship game is Aksharit, a Scrabble-type word-building game, originally designed for Hindi, but now available in a number of other Indian languages.

Being designed in Indian languages, MadRat games not only offer the opportunity for urban English-speaking kids to connect with India’s rich linguistic heritage but also for kids from different linguistic backgrounds to have fun in their own local languages.

Aksharit is also available in a mobile version on the Symbian platform. (That doesn’t seem to be the right platform now, I hope they are adapting it to the current popular platforms).

Aksharit’s design goes back almost a decade to a project undertaken by MadRat co-founder Manuj Dhariwal as a B.Des. student at IIT Guwahati in 2004. Manuj’s brother Rajat (the third co-founder) and Madhumita were classmates in Computer Science at IIT Bombay. While Rajat did his Masters at CMU, and Madhimita worked for an animation company, both wanted to work in a more creative environment and joined the Rishi Valley School as teachers. [As an aside, the Krishnamurti Foundation of India (KFI) Schools have provided such a haven to many such youngsters over the years. I hope someone will one day document the contribution of the KFI schools to school education in India.]

The Rishi Valley experience brought home to Madhumita and Rajat how important it is to focus on the “how” of learning rather than the “what” of learning. Learning can (and should) be fun. This is particularly important while teaching kids. Several organizations have responded to this need (in India I can think of Akshara Foundation, Pratham Books, the Agastya Foundation…). After four years at Rishi Valley, they decided to join forces with Manuj to make Aksharit a commercial product. MadRat Games was born.

Distinctive Features of MadRat Games

There are several things I liked about MadRat Games:

• They have created a wide range of games in a short time, at attractive price points;
• They have a range of games rated for different age groups as per international practice;
• They have used a wide variety of distribution modes, online stores being one of their most important channels;
• They have been quite business-savvy in riding waves (remember the “Pain Wave Waste” framework of 8 Steps to Innovation). E.g. they have a whole set of games centered on the popular Indian cartoon character Chhota Bheem;
• They focus on fun and learning at the same time;
• They seem to be able to transcend technologies and platforms, though they remain predominantly a board game company.

Madhumita gave a practical demonstration of their understanding of how kids learn when she conducted a short workshop for the FLO members during our session. In this, she took them through the process of doing simple experiments with paper that could explain some basic science concepts. Quite impressive!

The Next Generation of Indian Entrepreneurs

A few weeks ago, I attended the Bangalore launch of Reimagining India, the new book compiled by McKinsey & Company to urge the world not to give up on India just yet. At the launch event, InMobi founder (and former McKinsey consultant!) Naveen Tewari outlined his vision for how entrepreneurship is the force that will transform India. In From Jugaad to Systematic Innovation, I argued that we need a new generation of (tech-savvy) entrepreneurs to put innovation in India on a new trajectory. While there certainly has been a groundswell in favour of entrepreneurship in recent years, I keep wondering whether Indian entrepreneurship fulfil our aspirations and dreams.

An important challenge for Indian entrepreneurs and innovators is to take advantage of their familiarity with the local context. Language is one important aspect of that context. It’s useful to remember that many prominent Chinese companies (including giants like Lenovo) started off by addressing China-specific needs like Mandarin word-processors and DTP systems. I am glad to see MadRat Games exploiting such an advantage.

While much is made (often justifiably) of the importance of creating a supportive entrepreneurial ecosystem, I continue to believe that we underestimate the importance of our entrepreneurs having the right stimuli and experiences. In an earlier post, I wrote about how Steve Jobs was very much a product of his growing up experiences. I wonder whether MadRat Games would be the same if Madhumita and Rajat had not chosen to spend four years in the prime of life teaching young kids at Rishi Valley. We really must find a way of giving our youngsters a wide variety of experiences that will trigger their imagination in ways that reading and formal education will never be able to do.

How does India view invention, and how do we compare with the rest of the world?

In a recent issue, Time magazine had an interesting story on the “Spirit of Invention” that explored attitudes towards invention across “mature” (developed) and emerging (developing economies). The survey addressed middle class consumers, broad elites and business decision makers. India was one of the 17 countries surveyed.

Considering the number of path-breaking inventions that happened during the first part of the 20^th century (antibiotics, transistors, jet engines, radar, lasers to name just a few), one thing I found surprising about this poll is that respondents across countries saw the post-1980s digital revolution as the most inventive period. The mobile phone and the internet seem to cast a big shadow over everything else, but I wonder how things will appear when people look back 100 years from now!

My interest in this story was to understand perceptions of invention in India, as this will help us understand the Indian environment for innovation better. Luckily, apart from the Time story, Qualcomm (the sponsor of the study) has also placed online more details of the data collected.

India and Invention

Drivers and Barriers

Emerging countries like India ranked a good higher education system (29% for India) as more important than “a society that values creativity and ingenuity over wealth and financial gain” (23%) as the most important factor to foster inventiveness. In contrast, the corresponding scores for the US were 22% and 31% respectively. This could reflect both a stage of evolution theme as well as widespread current dissatisfaction with higher education in India.

While consumers from most countries saw a poor education system or lack of protection for inventors’ rights as the biggest barrier to invention, Indian consumers chose political instability as the biggest barrier to invention. Looks like the 2014 elections are looming large on people’s minds as, by international standards, we have seen stable government for well over a decade!

Like the rest of the world, Indians think (by a ratio of almost 4:1) that invention is a much more collaborative process than it was in the past. By a similar ratio, they also believe that collaboration leads to better inventions. This seems strange to me because, on the ground, India appears to see much less collaboration happening than elsewhere. Or, perhaps, there is a “saying-doing” gap?

Overall, emerging country respondents (including those from India) gave more importance to the role of national governments in facilitating invention than did respondents from mature economies (typically 60% vs. 40%; India was a tad higher than other emerging countries at 70%).

Inventors: Born or Made?

43% of Indian respondents (the highest among all the countries surveyed) felt that genuine inventions are rare (“once in a lifetime”) as opposed to happening everywhere In general, emerging countries felt more like India, and differently from developed nations on this score. Korea seems to have completely embraced the invention buzz: 95% of Korean respondents felt that invention is happening everywhere!.

Belief in the democratization of invention is generally significantly higher in mature economies than in emerging countries. Only 23% of respondents from India believed that “anyone can be an inventor” compared to 38% for the US and a breathtaking 68% for Korea. There is something fascinating happening in Korea that I still don’t fully understand – while the chaebol continue to dominate the economy, clearly the cache of the individual inventor has completely transformed in the last decade as a result of the digital and mobile revolutions!.

One piece of good news is that survey respondents generally felt that inventiveness can be learnt. India reflected this overall trend with only 23% of the consumer respondents saying that inventiveness is inherited and the other 77% saying that it can be learnt. But I wonder how this gels with the previous observation on the democratization of invention – if inventiveness can be learnt, then why can’t more Indians be inventors? The only way of explaining this is that Indians believe that external factors will prevent them from exercising their inventiveness.

An amazing 99% of consumers in Indonesia said that inventiveness can be learnt. I wonder where this comes from - is this just a general reflection of current optimism about the Indonesian economy?

Are you an inventor?

I was surprised that a greater proportion of Business decision makers in India see themselves as inventive compared to the emerging markets average – 67% vs 50%. I wonder where this number comes from. My guess is that it’s a reflection of the number of challenges that businesses in India have to overcome with the constant change in regulations and tax laws, and the increasing quantum of competition.

Korea offers some mind-boggling numbers on this same question of whether people see themselves as inventors. 94% of consumers, 89% of broad elites and 90% of business decision makers see themselves as inventors compared to the global average of 38, 43 and 46% respectively. The more I think about this, I wonder whether this is the “Samsung effect.” Samsung’s success in taking on Apple, a company often rated as the world’s most innovative, may have had a rub-off effect on the Korean people. How else do you explain such a big difference?

India has one of the highest scores on respect for inventors: 91% of consumer respondents (against 71% across all countries surveyed) believed that inventors are respected by society. On this score, the only country ahead of India is the UAE. Korea scores only 49% on this dimension. That’s puzzling, doesn’t seem to match the other data reported above.

One measure gives a critical insight into why India is not as inventive as we would like it to be: this is the set of responses related to critical attributes of an individual inventor. Only 17% of Indian respondents rated persistence as one of the top 10 attributes needed by an individual inventor. In contrast, most other countries rated this much higher (in the US, 50+%). Indian respondents rated imagination and ambition as much more important than persistence! Remember Edison’s comment on 1% inspiration and 99% perspiration? No wonder we don’t see Edisons from India!

Motivation for Invention

Emerging countries like China, India and Indonesia see social good as significantly more important than making money as a motivator for invention.

Some more food for thought: Respondents in China, Kenya and India see invention as important for society (95. 92 and 91% respectively) while only 56% of Korean respondents see invention as very important for society.

Patents

With the passage of the new Patents Act and efforts by Dr Mashelkar and others, you might have thought that patent awareness has improved in India. Think again! Indian consumers had one of the lowest awareness of patents (only Kenya and UAE below us) at 72% (against an average of 86%).

Amazingly, though, according to this survey, India has one of the best systems to protect inventor rights. In the consumer category, India had the highest score – 42% think that the country protects inventor rights well (against 18% for the US and 5% for Korea). Even among broad elites and business decision makers, the perception that India protects inventor rights well is among the highest of all countries. I just don’t know how to explain this as it conflicts with what most people tell us. At same time India also has the highest score (23%) of people (consumers) who believe that “an inventor’s hard work should not be protected from unauthorized use by others.” Somewhat bizarre!!

The Future of Invention in India

Indians are quite optimistic and confident about the future. 32% of Indian respondents voted for India as likely to be the most inventive country of the next century! In contrast, only 1% of American and 2% of Chinese respondents voted for India!! Not clear how we are going to achieve this if we fail to emphasise persistence as an individual trait.

What will it take for Indian companies to embrace Radical Innovation?

In our innovation management class , we recently heard an interesting presentation from a high profile IT services company that runs a large number of innovation initiatives. One of the most ambitious of these hopes to build five new 50 million USD businesses, based on employee suggestions, as a part of the company’s quest to reach the magical 1B USD mark. But, though many ideas have been proposed, so far, the company has found only one idea which it is confident will meet the 50m target. Small ideas with incremental impact, however, continue to be generated, and put into practice across the company with good results.

Another very respected, fast-growing, IT services company has been very successful in getting employees to participate in its innovation programs. In FY 2012, 37% of this company’s employees submitted at least one idea; 14% of the ideas were implemented. This year, the impact of innovation is expected to cross a billion dollars. But most of this has come from “small ideas.” Breakthrough innovations have been largely elusive.

Of course, innovating in IT services where projects are tightly controlled and monitored by clients is not always easy. Innovation is possible only if the client is willing to try out new things. Nonetheless, it’s striking that both these companies which are otherwise rated very highly by clients and analysts have found it difficult to make big ticket or breakthrough innovations happen.   

A Challenge in Manufacturing Industries as well

We have seen a similar phenomenon in manufacturing industry. Shopfloor and process improvements under the rubric of kaizen, continuous improvement or total quality management (TQM) have made good progress in a wide variety of companies. As we mentioned in 8 Steps to Innovation, some members of the Indian National Suggestions Scheme Association (INSSAN) are comparable to the best in the world in terms of the number of suggestions generated per employee. But many of these companies have not been effective at high impact innovation.

Vinay Dabholkar and I frequently discuss this question: Why do companies in India struggle to be effective at big ticket / high impact innovation?

Why incremental innovation is relatively easy…

There are some obvious reasons why incremental innovation is relatively easy to adopt. Incremental ideas are usually easy to test. Decisions on acceptance and implementation are easy to decentralize because knowledge about the efficacy of the idea rests at lower levels in the organization. Incremental ideas usually don’t need large investments. Risk is low though rewards also vary from small to medium depending on the scope for implementation of the idea.

…..and more impactful innovation is hard

In contrast, high impact innovation requires large, relatively irreversible investments. While Indian companies have been good at bringing down the quantum of such investments through frugal approaches (see this interview with Pawan Goenka of Mahindra for some good examples), the fact is that investments can still be large in absolute terms. M&M spent Rs. 550 crores and 750 crores respectively on the development of the Scorpio and the XUV 500. The manufacturing investment needed to put such product innovations into production is even higher. Tata Motors’ Sanand plant with a capacity to produce 250,000 Nanos a year cost the company Rs. 2,000 crores while M&M spent Rs. 6,000 crores on its Chakan plant!

Is Creative confidence enough? How important is investment confidence?

In 8 Steps to Innovation, we argued that the advantage of innovation based on small ideas is that it builds creative confidence. But, for big ideas to succeed, creative confidence is not enough -  you also need investment confidence!

So far, wherever we have seen such investment confidence, it has been driven by conviction from the top. Ratan Tata put his personal prestige and authority behind the Nano because he believed such a car was needed, and that Tata Motors could produce it. Some of his confidence to make this investment must have come from the success of earlier products like the Indica (people laughed at the Indica as well, but Tata Motors made a success out of it). But, as I observed in one of my earlier posts, it is important that such a conviction does not mean ignoring or overlooking market needs.

Steve Jobs made such a mistake once with the Lisa, an over-engineered and overly expensive product that succeeded the Macintosh. But, he learnt well from that mistake, and was careful to keep things simple and easy-to-use after that.

How do we build Investment Confidence?

Top management confidence to back big ticket innovation projects is likely to be enhanced when they have a better feel for the market. It’s therefore very important for senior management to have first-hand exposure to the market, and to understand the likes and dislikes of important segments of customers. I get a sense that many Indian companies stay away from big ticket innovation because their top managements don’t have an intimate understanding of the market and hence lack conviction about what will work and what will not. (Remember that Steve Jobs and his team got over this problem by designing products for people like themselves!).

Second best is to have a trusted lieutenant who understands the market and technology well, and builds credibility over time. Even if Anand Mahindra doesn’t have first-hand knowledge of the Indian  automotive market, he knows he can depend on Pawan Goenka’s judgement and track record.

The R&D Challenge

Another reason for absence of support for big ticket innovation is top management’s lack of confidence in the R&D function. In many companies the R&D function just doesn’t enjoy credibility because, in the perception of the top management, it has failed to deliver what is required on time, and is not aligned with the marketplace.

Ask R&D, and you will hear a different story – inadequate resources, unreasonable expectations, and a preference for sourcing something proven from outside to doing things internally. Building internal R&D capabilities takes time and patience, and few companies have enjoyed sustained top management support in this regard. But there are exceptions like Tata Motors and Mahindra, and the results are there for all to see.

Few managers of R&D in India have a track record of developing successful products. So, bringing in an R&D head from outside who has experience of linking R&D to the market and a track record of delivery is one way of building the R&D function, particularly if the top management lacks R&D / deep domain expertise itself.

Risk Management

Better risk mitigation methods would help manage the risks of big ticket innovation better, and hence make taking big bets easier. Among these, I would underline techniques like the premortem, and early validation of any “leap of faith” assumptions inherent in the innovation (“doing the last experiment first”). Understanding of base rates (success rates of similar innovations in the past) helps avoid building unrealistic expectations.

When will Indian Companies embrace more radical innovation?

So far, few Indian companies have lost out because someone else disrupted their industry. This is partly because of the Industries in which they compete, and the fact that many of them have focused on India. But as the Indian market grows and becomes more attractive, and as more firms enter, they are more likely to be subject to such threats of disruption. As I noted in an earlier post, MNCs are increasingly looking for ways to make a big impact in the Indian market. As they do so, the risks of inaction will increase for Indian companies. Maybe it will take the risks of not innovating to be substantially higher for Indian companies to embrace more radical forms of innovation.

Do Standards and Specifications Spur or Hinder Innovation?

When we talk about innovation, we usually emphasise how important it is to understand user needs and requirements well. Contemporary innovation paradigms like design thinking require empathic understanding of user needs through immersion in users’ lives. Not only does such a process reduce risk by aligning innovation with what the user or customer is looking for, it also helps identify user needs that the user has not articulated, or peculiarities in the manner of use that have got internalized by users.

But, there is an additional complication to this picture. In many product categories, there are existing specifications that have become de facto standards, or, sometimes, standards laid down by government or regulatory bodies that have to be met. Do such specifications and standards help or hinder innovation?

Regulatory Requirements can help…. but, it’s important to get them right

Regulatory requirements can spur innovation. Perhaps the best example is in the environmental domain where tightening of pollution norms has resulted in better engine and exhaust technologies.

But, standards bodies can sometimes fall behind the curve and this could mean not setting tight enough specifications or not mandating rigorous enough tests and protocols to test new technologies. The story of Lithium-Ion batteries in Boeing’s Dreamliner is a case in point.

According to reports in the press, when Boeing went through certification of the Dreamliner, the US Federal Aviation Administration (FAA) did not have clear specifications and tests for such batteries as they had not been used before in commercial aircraft. The FAA therefore placed some “Special Conditions” as extra requirements for Lithium-Ion batteries – these included computer control to prevent over-charging, isolation of the battery in a separate enclosure, etc.

Around the same time, Boeing was itself part of a consortium of companies that was evolving new standards for testing Lithium-Ion batteries. This consortium ultimately came up with standards more stringent than the FAA’s special conditions, but Boeing’s Lithium-Ion batteries were not formally tested to these standards because the Dreamliner had already entered the FAA’s certification process.

Adoption of more stringent standards may have spared Boeing some of its subsequent travails with the Lithium-Ion batteries in the Dreamliner.

Large companies sometimes use the absence of standards as a way out of problems. Remember the efforts by Coke and Pepsi some years ago to escape the charges made by the Centre for Science & Environment regarding pesticide content in their soft drinks by pointing to the absence of BIS standards!

Standards, Specifications and Innovation for Emerging Markets

In an earlier post, I referred to the excellent talk by Dr V. Sumantran at the Nasscom Engineering Summit. One of the points he emphasized was that cost gets defined by the requirements, and hence it is important to define (and re-define) requirements carefully if you want to lower costs. He gave the example of the Indian low-cost Common Rail Direct Fuel Injection (CRDI) systems for automobiles that are specified quite differently from their more expensive European counterparts.

There is a growing if controversial view that the key to innovation for emerging markets is “good enough” products that meet essential needs but don’t go overboard in terms of what they offer. This view is driven by the fact that in many products a large proportion of the features and functionality are not used by most users, and that cutting these out can reduce costs. Companies like Mahindra & Mahindra have demonstrated that you can provide about 95% of the features and performance of advanced country products at a much lower price.

Kannan Lakshminarayan on the Tyranny of Existing Standards and Specifications

At the DSIR conference on “Accelerating technology innovation for inclusive and sustainable growth” held at New Delhi on November 7, Kannan Lakshminarayan of Fractal gave some fascinating examples from his experience in developing low cost and relevant products for the Indian market. The best known example he related is that of Vortex, the low-cost Automated Teller Machine specially designed for rural markets.

Vortex has a robust design, incorporates biometric authentication, consumes small amounts of power (just 50W; this is an essential requirement for rural applications where reliable power supply is a major challenge), does not require air conditioning, and can handle both fresh and soiled notes. But Vortex faced an uphill battle in getting accepted as it did not provide all the bells and whistles that the ATMs of established (read “large,” “MNC”!) suppliers did.

Kannan has also been part of the team that developed a spinning machine that reduced the minimum economic scale of spinning by a factor of 100. This machine focused on outcome indicators that are critical to the final product such as feel, fall and drape, but did not focus on traditional parameters like strength, uniformity and fineness that are no longer so critical because of changes in loom technology. Here, as far as I can make out, it was more a case of not meeting the de facto (commonly accepted) standards of the textile industry rather than a problem of regulated or mandated specifications.

Kannan’s third example came from the training domain. India is struggling to impart skills on a large scale to a new generation of people about to enter the workforce. One of the important skills taught in ITIs is welding. Kannan related how welding is traditionally taught in the same sequence as welding technologies were invented. But, this sequence means teaching the most complex methods first resulting in a very steep learning curve for students. Instead, the Aura MIG Training tool overcomes this problem by teaching the simplest (and most contemporary) method, MIG welding first. Ironically, MIG welding is not a part of the syllabus in most welding training programmes!

At the same DSIR conference there was a fascinating presentation by Professor Ashok Jhunjhunwala of IIT Madras on a new energy paradigm that could ensure uninterrupted power supply even within the present constraints of power generation. I didn’t understand all the technicalities, but one thing that struck me was the number of regulatory and standards changes his proposed solution would need. I just can’t see how all those will ever come about in a sector that is as regulated as power.

Conclusion

Because of the stakes involved, standard-setting is often an arena where various pulls and pressures are exerted. A senior manager at a leading auto component company was telling me today how in spite of the emission norms becoming more stringent for cars and many commercial vehicles, three-wheelers still remain outside the purview of new standards because the existing technologies can’t be upgraded to meet more stringent norms. New technologies that would enable more exacting standards would push up cost by 25 to 30% the cost of three-wheeler. The lobby for low-cost transportation makes sure that standards are not raised in a hurry even if that means that we as a society bear the cost of such externalities.

So, while standards can occasionally play a role in enhancing innovation, they can often be tools for maintaining the status quo and the interests of existing players.