Innovation needs to be focused on leadership and governance: Baba Kalyani

Last week, I wrote about the fascinating story of Dr. A. Paulraj’s contribution to the MIMO technology, one of the key technologies providing the backbone of 4G telecom networks. Another speaker at the same DRDO seminar was Baba Kalyani, Chairman & Managing Director of Bharat Forge Ltd. (BFL). BFL is only now embracing R&D-driven innovation through initiatives such as a special MTech programme at IIT Bombay and a drive towards patented technologies of its own (Mr Kalyani mentioned that BFL has filed 8 patents in the recent past). But BFL has displayed an admirable level of innovation in other ways, and Baba Kalyani related that story to the audience.

Innovation at BFL

Baba Kalyani emphasized the the importance of focusing innovation on leadership and governance for lasting change and impact. While he clearly had his mind on national politics, he used his own example – the transformation of Bharat Forge from a small forging company near Pune to the largest forging company in the world – to make his point.

Mr. Kalyani described how BFL originally believed that its low labour costs gave it a competitive advantage. This low labour cost came from using a semi-skilled workforce that at one time might have been paid as little as Rs. 500 a month. However, for years, BFL struggled to make a mark in the export market because it was never able to reach the level of consistency that was expected by demanding customers. This hurt Baba Kalyani and his colleagues because they had a burning desire to be competitive in the international market.

A pithy comment by a Japanese consultant that consistent quality could never be obtained in a context where employees took so many breaks caused Baba Kalyani to re-think his whole approach to metal forming. In 1988, he moved BFL to an automated forging process after making major investments in hydraulic presses. And, he replaced his 2,500 strong blue collar workforce by a 700-member skilled white collar workforce through a voluntary retirement scheme. Today, employees earn not less than Rs. 30,000 a month, but BFL is the leader of the world forging industry. I liked a comment Mr. Kalyani made in this context: “A well-educated workforce allows you to scale up exponentially.”

Other innovative decisions taken by Baba Kalyani in transforming BFL included acquiring a forging company in England, and then selling off its assets while retaining only its order book; acquiring a specialized forging company in Germany in order to get closer to OEM customers and be involved in the design and development of forged components right at the time when a new vehicle is being designed (Source: Ramachandran & Mukherji, 2005).

Risk Mitigation

One of the questions put to Baba Kalyani was regarding the risks involved in making such a major transformation, and what risk mitigation strategy he had followed. (This question often comes up in classroom discussion as well when we discuss the powerful case on Bharat Forge written by my colleagues J. Ramachandran and Sourav Mukherji). From Baba Kalyani’s response, it appears that he did not have an explicit risk mitigation approach. But he was convinced that business could not be conducted as before if BFL were to achieve its dream of becoming a leader in the forging industry, and this conviction made him determined to pursue radical change.

Innovation in Public Governance

Baba Kalyani concluded by saying that radical innovations are needed in public institutions and political governance as well and that those are the areas in which innovation would deliver the most value. He emphasized the importance of accountability and execution – he lauded the new National Manufacturing Policy (NMP) that has (finally) acknowledged the importance of manufacturing to India’s future, but wondered aloud how manufacturing as a percentage of GDP could slip from 17% to 15% when the NMP seeks to take it past 20%!

Debate on Talent

One of the interesting debates in the seminar was on the subject of talent. Baba Kalyani expressed concern about the low employability levels of students from engineering and other colleges. While his own company worked closely with some colleges in Maharashtra to help them provide better quality education, this is inadequate to solve larger systemic problems. He appreciated the growth in the higher education system – in the early 1970s, there was just one engineering college in Pune, today there are 35 – but felt that there are serious challenges regarding the quality of output.

In fact, at the seminar, there was a consensus that the quality of higher education has declined over the years, though there wasn’t an equal degree of unanimity on what has caused this (Baba Kalyani hinted at too much political involvement in higher education, though he did not explicitly say so!).

Professor Anil Gupta argued that the work done by students would become more relevant and useful if industry would only take more interest in what they are doing. He pointed to the thousands of final year engineering projects that are done every year that never get put into practice.  He urged the audience to visit Techpedia, the portal he and his colleagues have created that has a huge database of final year projects done by students from all over India. He gave examples of student projects that could have major industry and social impact if only they were implemented.

Professor Gupta urged the creation of more challenge awards to excite our students and use their creativity and ingenuity to solve important problems.

Indian Creativity can have Global Impact: Dr. Paulraj & MIMO Technology

Last week I participated in a fascinating seminar on “Nurturing, Managing and Institutionalising Innovation” organized by DRDO. Among other things, this seminar only reinforced my sense that….

Indians are no less creative than others…

Every time I listen to Professor Anil Gupta, he provides fresh evidence that people in our country have a wealth of clever ideas. People in Meghalaya place shelves at different heights above their stoves to cure wood and make other creative uses of waste heat; a class one student in Tamil Nadu wondered why the suction mechanism in the soles of his shoes could not be used to clean the floor, resulting in his becoming India’s youngest patent holder; a school student in Delhi designed a suitcase trolley that can be converted into a chair when you have to wait in a railway station or bus stand; and an IIT Kanpur student has designed a wheelchair that can go up and down stairs (see the picture below). We have hundreds of such instances of individual creative ingenuity at its best, cutting across region, gender, and age.

Anilji’s talk reiterated what I have always felt – creativity, per se, is not a problem in India.

But is such creativity directed towards the right problems?

My collaboration with Vinay Dabholkar in the last couple of years has highlighted the importance of directing this creativity towards working on the right problems if innovation in India is to have more impact. In the organizational context, we have suggested building “challenge books” so that creative energy is directed towards solving the “right” problems.

Of course, this could happen serendipitously as well. In such a situation, the challenge is to recognize the value of the idea you have spawned, and find ways of taking that idea forward.

Impactful Innovation: Dr. Arogyaswami Paulraj and MIMO

A talk by Dr. A. Paulraj at the DRDO seminar highlighted the importance of recognizing the value of “simple” ideas and pursuing them till others recognize their value. (Dr. Paulraj’s experience also illustrates once again that Indians ca n be among the most creative people in the world!)

Dr. Paulraj has had a fascinating career – born in Pollachi in Tamil Nadu, he started his career with the Indian Navy. Almost 40 years ago, he built a sonar system for the Navy that was recognized among the world’s best sonar systems. Later, he founded a DRDO lab (the Centre for Artificial Intelligence and Robotics) and the Central Research Laboratory at Bharat Electronics Ltd.

For most people, these achievements would have been good enough for one life! But, in the early 1990s, Dr. Paulraj embarked on a new career as a professor at Stanford University and made some fundamental contributions to modern wireless communications that led to his being awarded the prestigious Alexander GrahamBell award of the IEEE. 

Two companies he founded (later sold to Intel and Broadcom respectively) were an integral part of this journey.

Dr.Paulraj’s most impactful idea was related to MIMO (multiple input multiple output), a wireless technology that is at the heart of many modern telecommunication systems including core 4G and 4G Wimax. According to wikipedia, “multiple-input and multiple-output, or MIMO, is the use of multiple antennas at both the transmitter and receiver to improve communication performance. It is one of several forms of smart antenna technology. MIMO technology has attracted attention in wireless communications, because it offers significant increases in data throughput and link range without additional bandwidth or increased transmit power. It achieves this goal by spreading the same total transmit power over the antennas to achieve an array gain that improves the spectral efficiency (more bits per second per hertz of bandwidth) or to achieve a diversity gain that improves the link reliability (reduced fading).”

Dr. Paulraj’s Persistence

Dr. Paulraj described how, when he first proposed the idea, it was questioned by others as it went against extant paradigms in the field. In fact, when Stanford University first invited major wireless companies for a discussion on possible licensing of the technology, there were no takers as the companies believed the technology wouldn’t work. But Dr. Paulraj persevered with the idea, and built his own start-up to demonstrate its potential. It took close to 10 years for Iospan, the company he founded, to establish the commercial viability of this technology. Vinay often talks about the intense experimentation that is needed to take an idea to a demo (or proof of concept) , and then from concept to the market. In this case, that process took about ten years.

What was particularly fascinating was how Dr. Paulraj, a newcomer to the field, could make a major breakthrough within a few years of entering the field. This demonstrates the power of coming into a field without pre-conceived notions or being seeped in existing paradigms – you can think differently and originally, and question existing dogmas and the so-called “received view.” But it certainly requires a high level of self-confidence and self-belief to do so!

Can such innovation be done in India?

Dr. Paulraj wondered aloud whether what he has accomplished in the United States in the last two decades could have been done in India. In a quick evaluation of the Indian innovation ecosystem, he said that India is well placed on 3 dimensions – access to global knowledge on par with the rest of the world; a large volume of talent; and increasing government support. He was particularly appreciative of the talent available in India, and said that in his second start-up (Beecem) MTechs from the Indian Institute of Science working out of Bangalore were able to do as well as PhDs from the top universities in the United States.

Dr. Paulraj’s assessment of the challenge areas for innovation in India echoed what we have found in our own work – culture, openness, teamwork, rewards, and role models. He was particularly critical of the research culture in the higher education system (he mentioned that though thousands of PhD theses have been written in the MIMO area of which he is a pioneer, only around 5 of them are from India). Industry’s ability to both do sophisticated innovation as well as take it to the market is limited. And though there is more finance and risk  funding available than before, it is still inadequate for serious technology ventures. He related how the early funding of his two start-ups (Iospan Wireless, Beceem Communivations) involved as much as $100 million in each round, sums of money that would be almost impossible to raise in India.

India has no presence in critical areas.

Dr. Paulraj made a point that we continue to import several of what he called “mass market” technologies (I would prefer to call them sophisticated technologies that underlie most modern industrial infrastructure) like civil jets, telecommunication, computers and precision instruments. (Pharma is the only comparable area where we have a local capability of our own.) While we created a strong technology base in telecommunications in the 1980s, we failed to build on this. As a result, while we were well ahead of China in telecommunications at that time, today we are nowhere while China has firms like Huwaei that are becoming increasingly dominant in the telecom equipment space.

For Dr. Paulraj, a telling sign of India’s abdication in these critical areas was his experience at a premier trade show, the Consumer Electronics Show at Las Vegas, earlier this month. Among the participants in the exhibition were more than 2000 Chinese companies, more than a thousand from the United States, around 800 from Europe, even 3-4 from Vietnam, but not a single firm from India!

Dr. Paulraj concluded by saying that we need willpower and imagination to change this scenario. It seems to me that we also need to build our creative confidence so that the Paulrajs living among us have the confidence to push their ideas forward overcoming all odds.

May 2013 be the year for Systematic Innovation in India

If 2012 saw a lot of buzz in India about Jugaad thanks to the Radjou/Prabhu/Ahuja bestseller, I am really hoping that 2013 will restore the balance towards systematic innovation. Indian companies need systematic innovation more than they realize because their challenges are different from the ones that multinationals face.

Why are Indian Companies afraid of Systematic Innovation?

Among Indian entrepreneurs, even in large business houses, the fear of systematic innovation is that it will hamper them from being opportunistic, and prevent them from being agile and quick. They point to multinationals who lose out to nimble local competitors, such as a Nokia being eclipsed by a Samsung.

But I wonder whether it’s fair to attribute the travails of large multinationals to their systematic innovation processes. It’s well known that as companies become large, they tend to become more focused on predictability and efficiency than on disruption or innovation. They tend to get more obsessed with “what analysts will say” than what is right for their company. And, they tend to get more bogged down by the “dominant logic” of what made them successful in the past rather than what will help them succeed in the future.

There are several recent examples that corroborate these observations: Nokia had developed touch screen phones well before the Apple iPad made them the “next big thing.” Kodak, which recently filed for bankruptcy, was one of the pioneers of digital photography technology but allowed other companies to take over that space. These examples suggest that risk aversion and “prediction disability” (and not systematic innovation processes!) prevented these otherwise iconic companies from capitalizing on their innovations.

Once you go even slightly higher up the technology ladder, systematic innovation becomes inevitable for success. Consider any of the companies that I wrote about in the last year – 3M, possibly the most innovative company of all times; IBM, still a powerhouse of innovation with more than 6,500 US patents granted in calendar 2012; or Cisco, one of the first multinationals to create a world class product end-to-end from India. Or Indian companies like Titan, whose disciplined efforts to build innovation capabilities ground up from the shopfloor have resulted in huge savings of time and precious metals; and Eureka Forbes, whose efforts to commercialize the best technologies in water purification have resulted in Amrit, a process that tackles even bio-organisms. None of these companies could have achieved even a fraction of these results without following systematic approaches to innovation.

I believe that systematic innovation has got a bad press because it has been confused with the dynamics of decision-making in large organizations. A clearer understanding of what systematic innovation is, and what it’s not, should establish why embracing systematic innovation will help rather than hinder innovation.

What Systematic Innovation Is…

An approach to innovation that enhances the number of ideas being generated and considered so as to improve the odds of innovation success. [Research shows that it often takes more than 300 ideas to result in one successful product.]

Greater, structured connections with users/customers and other stakeholders to help align innovation with market needs. [Remember my article on why the Tata Ace was much more successful than the Tata Nano?]

A focus on experimentation and testing to check out assumptions, refine and reinforce ideas, and make innovations more robust and scalable. [Remember the motto of IDEO, the leading design firm: “Enlightened trial & error succeeds over the planning of the lone genius.” With enhanced user aspirations, the “integrity” of any innovation as reflected in the experience of the user is essential to innovation success. Innovation is much more than ideation, it is about execution to provide sustained benefits to users/customers. When a company like Apple puts an inadequately tested map utility on its latest iPhone, or Tata Motors fails to address safety issues adequately in pre-launch testing as appeared to happen with the Nano, an otherwise high potential innovation loses its sheen. As does an e-commerce site when it doesn’t support all browsers!]

Leveraging the power of many rather than depending on the intelligence of the few. [Open source software development has demonstrated the power of harnessing the wider community in product development. Open source methods are now being extended to challenging domains such as drug development. And companies like P&G and Eureka Forbes have shown that open innovation can be a source of unusual ideas.]

And What its not...

Systematic innovation does not necessarily mean huge investments in R&D. In fact, studies have repeatedly shown that the most effective innovators are not those who spend the most on R&D. As consulting firm Booz showed in their 2006 innovation report, effective innovators excel at processes like ideation, project selection, and commercialization, all part of the systematic innovation process!

Systematic innovation does not mean doing basic research or trying to pioneer new technologies. Firms like Titan Industries have shown that systematic innovation works very effectively even with improvements in traditional jewellery manufacturing processes.

Systematic innovation does not necessarily mean long drawn innovation cycles. Effective innovators find low-cost and quick ways of experimenting that help them test ideas and assumptions rapidly. They try to do what A.G. Lafley calls “Doing the last experiment first” – test the assumptions that will have a critical bearing on innovation success or failure early so as to avoid going down tracks that lead to nowhere.

2013: The Year of Systematic Innovation?

Indian companies need to embrace systematic innovation so as to capitalize on their innate abilities of intuition and market sensing. Vinay Dabholkar and I hope that 2013 will be the year for systematic innovation in India. May systematic innovation go viral! Our own contribution towards this will be released soon - watch this space for more details!

Policy-makers can influence climate for innovation: Dr. MK Bhan at DBT

Dr. Maharaj Kishan Bhan, who recently retired after an extended term as Secretary of India’s Department of Biotechnology, has shown that a determined and empathetic policy-maker can create a difference through policies and programmes, even in India’s apparently “difficult-to-change” bureaucratic environment.

While there is some controversy over whether the famous anthropologist Margaret Mead ever said “Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever does,” in Dr. Bhan’s case we can safely say that here is one individual who has made a sustained effort to enhance the stature and quality of biotechnology in India.

DBT’s Good Track Record

Of course, he was lucky to start with. Among scientific departments, the DBT already had a good track record of supporting innovation and changing its innovation strategy to match the evolution of the field in India. In the 1980s, the DBT supported creation of infrastructure and research capabilities by sponsoring the formation of biotech departments in leading universities such as Madurai Kamaraj University and Jawaharlal Nehru University. In the 1990s, it actively supported academic research programmes, and set up new research institutions, thereby further strengthening the research base in what continues to be a very research-intensive industry. Dr. Bhan stepped in at the right time by focusing on industrial research and commercialization, and creating the foundation for a strong industrial base in biotechnology.

Dr. Bhan’s Leadership Style

Unfortunately, I haven’t had the privilege of getting to know Dr. Bhan personally, but I did have the opportunity to interact with him in a professional matter, and that gave me some first-hand experience of his leadership style. In 2008, my colleague Professor K. Kumar, and I were awarded the task of reviewing the DBT’s flagship SBIRI programme and suggesting ways in which the effectiveness of the programme could be enhanced. While our early interactions were with his colleagues in the Department, we made an extended presentation of our recommendations to Dr. Bhan. I was impressed by the seriousness with which he received our comments, his in-depth knowledge of how similar programmes work in other countries, and his openness to our recommendations. He also had a gentle way of involving his colleagues from the department in the discussion including the FA (Financial Advisor) and I could see from the nature of discussion that he had created a collegial atmosphere for discussion and debate in the DBT, something quite unusual in the corridors of power in Delhi.

Dr. Bhan on Innovation

For someone who spent most of his career as a pediatrician at the All India Institute of Medical Science (AIIMS), Dr. Bhan showed considerable insight into the challenges of industrial innovation. I had the good fortune of listening to him at the IKMC Knowledge Exchange organized by the IKP Knowledge Park in November 2011.

In his talk at the IKMC 2011, Dr. Bhan identified several obstacles to innovation in India: (1) a reluctance to experiment – he gave the example of the Integrated Child Development Scheme (ICDS) that is known not to work well, but very few alternatives have ever been tried out; (2) the talent pool is not diverse enough for product innovation (“we don’t need scientists alone”); (3) there are poor flows of knowledge (not enough bi-directional flows); (4) there is fragmentation in government which prevents integrated policy-making (he asked why are there separate biotech and pharma departments?); and (5) people are talking at each other (he asked how often have the technical people in the scientific ministries spoken to the FAs and explained to them the nature of their work? – in Dr. Bhan’s case, as I explained above in the context of our SBIRI review, he is clearly a man who tried to practice what he preached!).

Action Orientation

Dr. Bhan’s preference for action and change, and unwillingness to accept the inevitability of government ineffectiveness or inefficiency came through in several other observations he made on the occasion. Dr. Bhan called for a second freedom struggle, a need to make things hassle-free. “Demand drives innovation” – he called for a policy to create demand. He called for deep engagement, a sense of urgency, accountability, agility, and transparency. Very much the kind of sentiments that are dominating civil society’s moves on various social fronts today, only this came from a senior government official!

DBT Initiatives under Dr. Bhan

Under Dr. Bhan’s leadership, the DBT has pioneered a number of exciting initiatives like the Small Business Innovation Research Initiative (SBIRI) and the Biotech Industry Partnership Programme (BIPP), etc. which have the potential to change the innovation landscape in the biotech industry. The DBT has set up a separate non-profit company, the Biotech Industry Research Assistance Council (BIRAC) which is the DBT’s window to emerging biotech companies. The DBT’s initiatives cover the whole spectrum of innovation from ideation to scaling-up to commercialization. DBT typically provides 30-50% of the funding required for discovery-led innovation under these programmes. While the funding is in the form of outright grants to small companies, in the case of large companies the support can be in the form of low interest loans as well. (A typical DBT programme announcement is shown below).

The DBT programmes increasingly incorporate a sensitivity to industry needs (the latest ideation support programme is deliberately designed for quick decisions – critical to take ideas forward) but retain some essential checks and balances (DSIR recognition is a pre-requisite for many industry support programmes, but firms located in a recognized incubator are exempted from this requirement, presumably because the incubator has exercised due diligence in hosting the company).

The DBT’s slew of programmes cutting across size of company and stage of innovation remind me very much of the extensive portfolio of programmes of the Office of the Chief Scientist of the Government of Israel. These programmes contributed towards making Israel a Start-Up Nation, and we hope DBT’s programmes can achieve the same for Indian biotechnology.

In the contemporary sprit of open innovation, Dr. Bhan has been a great supporter of collaborative programmes with a wide variety of carefully selected agencies, and in bringing different institutions together. Some of the significant programmes launched include (1) the Stanford India BioDesign programme that I wrote about in my last blog ; (2) the DBT Centre at IIT Madras Research Park which is providing a platform for eye hospitals to collaborate – DBT has created 80 positions there; (3) the IISc – St John’s “glue grant” that encourages collaboration between these two institutions that in spite of being in the same city probably had little interaction earlier; (4) the Wellcome Trust and DBT initiative on affordable healthcare; and (5) the grand challenges programme launched in collaboration with the Gates Foundation and Canada.

Larger Cross-Sector Diffusion & Impact?

While the results of all the initiatives of Dr. Bhan will take some years to be visible, Dr. Bhan has laid a sound foundation for a research-driven biotech industry. One thing I find surprising is that Dr. Bhan’s initiatives have not been emulated by other ministries and departments of the government of India. Rather than remain “vertical” policies of the DBT, many of these should become “horizontal” and sector agnostic, and available to all R&D-intensive parts of the economy. In this context, it is unfortunate that the Department of Scientific & Industrial Research, the government department charged with the task of supporting industrial research in the country has chosen to limit its ambit to playing a supportive role for the activities of the CSIR. The learning from the DBT’s “innovation sandbox” should be diffused for the benefit of the rest of the economy.