More Chronicles from Central India: The Holkar Connection

Every city or region has its pre-eminent heroes. In Bangalore where I used to live, it was clearly Kempe Gowda. The main bus stand, an important thoroughfare in the heart of the city, a hospital and now the airport are all named after him. In Chennai where I grew up, Annadurai was the clear favourite and his name adorned state-owned transport companies, an important relatively new locality of the city, the city’s most important road, and, yes, the international terminal of the airport (the domestic terminal is named after Kamaraj!). Here, in the Malwa region, and more specifically in Indore, Devi Ahilyabai Holkar has a dominant presence with her name on the university, a large market and, of course, the airport!

Manik Bagh Palace

The footprint of the Holkars is clearly visible in this region. And, everyone likes to have a Holkar connection. When I visited the office of the Commissioner of Excise and Service Tax, he showed me around with pride the Manik Bagh Palace, a heritage building where his office is located. This Palace was built in the 1930s by a German architect, Eckart Muthesius for the young Maharaja Yeshwant Rao Holkar who took office in May 1930. It was built in the European style of the time, and reportedly fitted with furniture, equipment and art works from Germany. Fortunately, the Excise department has made an effort to maintain the building well, and it still has a quiet elegance going back to those times. (The palace apparently came into the possession of the government following the abolition of privy purses in the 1970s).

Sukhniwas

Just down the road from IIM Indore, on the way to the airport, lies a sprawling complex of the Department of Atomic Energy call the Raja Ramanna Centre for Advanced Technology (RRCAT). The main entrance to the complex on the main road has tight security and doesn’t really let on that there is a large scientific complex inside. RRCAT was set up in the 1980s to house some of the laser physics and accelerator development work that was earlier being done in BARC, Mumbai.

I attended the RRCAT annual day soon after my arrival in Indore, and was quite amazed to see the scale of activity inside the complex. Those were early days in Indore and I wasn’t clued into the importance of the Holkar connection. But, yes, RRCAT has one as well. In the middle of the campus (and invisible from the road) is the picturesque Sukhniwas lake with a small “palace” on one edge. Frankly, “palace” appeared to be an exaggeration, the building looks like a large outhouse. But it was apparently a summer getaway for the Holkars, and the RRCAT officer who showed me around was proud of the Holkar connection! The senior BARC scientist who presided over the Foundation Day spoke about how they had their own lake unlike other institutions which tried to create artificial ones!

Rajwada

Young Indians (YI), the “junior” wing of CII, gave me a chance to visit another Holkar monument, Rajwada, in the heart of the city. Rajwada was originally built by the Holkars in Maratha style in the 18^th century. YI organized an event inside Rajwada with special permission from the Archaeology department in February. It was certainly a stunning backdrop for a morning concert given by Gautam Kale, a versatile musician from Indore.

DAVV

But the institution that has the most visible connection to the Holkar name is DAVV, or Devi Ahilya Vishwa Vidyalaya. The university (which started with the simple name of University of Indore) and I have something in common: we both turned 50 this year! In my short stay in Indore, thanks to the generosity of DAVV Vice Chancellor Dr. DP Singh, I have already participated in two events of the university. I gave a talk on 8 Steps to Innovation as a part of the University’s Golden Jubilee Lecture series in March, and I was a guest of honour at the Golden Jubilee Foundation Day last week.

DAVV is one of those typical Indian universities which not only has its own departments (focusing on postgraduate studies), but a whole lot of affiliated colleges (280 in the case of DAVV). The university is proud to be rated as an “A” grade university by NAAC, apparently the only university in Madhya Pradesh to enjoy this distinction.

The Governor of MP, Shri Ram Naresh Yadav, presided over the Golden Jubilee Foundation Day. Babuji, as he is popularly called, belongs to a more gentle and refined political world of yore. His heroes are still Gandhiji and Madan Mohan Malaviya and other leaders of our freedom struggle. I was impressed by his concern for the university and its people. He reads a lot, and he recounted with passion some of his ongoing efforts to have mistakes removed from history textbooks.

The university took the positive step of inviting former vice chancellors and rectors to the event, and this was particularly appreciated by the Governor. Incidentally, the Governor was quite emphatic that he didn’t want to be referred to with honorifics such as “Your Excellency.”

The evening of the Foundation Day featured an energetic ghazal concert by Ahmed Husain and Mohammed Husain. Both of them can’t be young, but the energy and enthusiasm they put into their singing would put several young people to shame. The audience (particularly the students) reciprocated in full measure with spontaneous applause and support.

Maheshwar

Indore has a number of sightseeing hotspots in its vicinity. I haven’t had much of a chance to check them out, but the first one I visited turned out to have a strong Holkar connection as well. Maheshwar is on the banks of the Narmada and was at one time the capital of the Holkar kingdom. It’s a pretty small town which still manages to retain some of its charm. 

I particularly liked the temple on the banks of the Narmada and looking across the wide expanse of water. So many of our rivers have become pale shadows of their past, that it’s really nice to see so much water and life along the river.

The Holkars still retain several connections with the town. The descendants of the royal family run a hotel and, more importantly, a weaving centre to keep alive the textile traditions of the region. We couldn’t visit the centre itself as it was closed, but we did manage to pick up a few things from their sales outlet!

Does IIM Indore have a Holkar Connection?

Does IIM Indore have a Holkar connection too? I thought we were not blessed till the people who run the Shiv Mandir on campus claimed to me the other day that the Mandir goes back to the Holkar era. For the record though, the sign next to the temple says it was built in 1972!

[The views expressed here are the personal views of the author.]

Creating Collaborative Platforms for More Effective Innovation

One of my friends, Dr. Ardhendu Pathak, posed me an interesting question recently: how do we create structures and platforms that can make collaborative innovation easier, and more successful? Having interacted with individuals and institutions across the globe he was puzzled that as individuals we are not inferior to any other country, yet our innovation outcomes are often not on par!

This question resonated with me because it’s closely related to the question I posed in From Jugaad to Systematic Innovation: Why is it that though we have talented individuals, our country does not do well on innovation?

The Structure of Indian Industrial Innovation

Some historic context is helpful here. Post-independence, we imitated the Russian system of creating stand-alone R&D laboratories in different disciplines and application areas. Government directed funding towards these institutions which became part of large R&D systems such as the CSIR, DRDO, ICAR, ICMR, etc. 

These laboratories became rather disconnected islands of effort to build process and product technologies for use by industry. Technology transfer and commercialization remained a perennial problem – industry found the technologies developed incomplete and difficult to scale; and the laboratories felt industry was not supportive of their efforts. Universities remained outside the arena of innovation for industry.

Until the early 1990s, government funding for innovation was directed towards these national laboratories. In contrast, R&D by firms received little attention - the only government support for firm R&D was tax breaks, and some relaxations on import restrictions for firms whose R&D facilities were certified by the government.

After 1991, the government slowly changed its policies and tried to find ways of supporting industrial innovation in firms. But the first two programmes in this direction – HGT and PATSER – were both primarily directed towards helping firms absorb and scale-up technologies that had been created by the government R&D system.

The first recognition of the independent potential of firm R&D came with the creation of the Technology Development Board (TDB) around 1996. The TDB provided low-cost loans to firms to help them commercialise technologies without any insistence on the involvement of a government laboratory.

None of these programmes – HGT, PATSER and TDB – had a strategic focus. Instead they were all reactive, responding to applications received from firms or laboratories.

Vertically integrated programmes like the Space and Atomic Energy programmes had a different approach where they sought to do everything within their internal networks. They went outside only when they didn’t have the internal capabilities and even that was largely for execution – e.g. the atomic energy programme working with a large contractor like L&T.

Perhaps the first attempt at a large scale collaborative innovation programme was the Light Combat Aircraft (LCA) programme launched in the mid-1980s. While a separate agency (ADA) was set up to spearhead the development of the LCA, it was quickly realized that expertise in areas like avionics and composites simply didn’t exist within the government system and hence there was no option but to involve academic institutions like the IITs. But involvement with private industry was very limited.

Why Platforms are Needed

Today, it is widely accepted that no organization has all the knowledge it needs to innovate and compete successfully. Partnerships and open innovation initiatives are the order of the day. Companies create their own platforms – e.g. Procter & Gamble’s Connect & Develop – to reduce the friction involved and systematically reach out to a wide variety of potential partners.

At the national level, countries have realized that bringing together key players across academia and industry can help build competitiveness. Of course, such initiatives usually stop at the level of pre-competitive or generic technology development. Even the United States, historically a big votary of open competition in technology development, experimented with initiatives like the Sematech consortium.

The First National Collaborative Platform - NMITLI

The first large scale effort to bring all the relevant players – private industry, academic institutions and research laboratories together – and with a view to creating some distinctive strategic position for the country was the New Millennum India Technology Leadership Initiative (NMITLI) launched by Dr. Mashelkar under the umbrella of CSIR in 2000.

NMITLI was distinctive because it explicitly recognized that such collaboration may help India build a sustainable edge in some new technology areas. However, even NMITLI retained some of the traditional government funding structures – e.g. in a project, while the government/CSIR is willing to make an outright grant to a university or research institution, any funding to a company is again through a low interest loan. NMITLI has another distinctive feature – a project can be initiated either from a corporate proposal or through identification based on expert inputs or national consultation.

What has been the outcome of NMITLI? According to the NMITLI website, in the first 8 years (I was unable to find more recent data –will try to update) NMITLI supported 57 projects involving 80 industry partners, and 270 R&D groups. Outcomes included 100 international patents, and 150 papers in high impact journals. Prominent products include Biosuite (with TCS) and Drishtee, a 3D computational biology platform (with Strand Life Sciences). Some drugs and medical products are undergoing trials. Its not clear whether any project has been able to help India realize the dream of leadership in a particular industry or domain. But its clear that NMITLI has succeeded in bringing myriad academic and research institutions, and companies to the same table.

CAR: A Focused Innovation Platform

Perhaps the most focused innovation platform created was the Collaborative Automotive Research Programme (CAR) created by the office of the Principal Scientific Adviser to the Cabinet in 2003.

In January 2011, when I met Sajid Mubashir, the officer who coordinated the CAR programme, he explained that it came about in fortuitous circumstances. Dr R Chidambaram, Principal Scientific Adviser to GoI, played tennis with Capt Mohan Ram (TVS Motors) regularly. At a SIAM meeting, Mohan Ram and other automotive heads (curiously, most of them ex- GM R&D) – V Sumantran (then Tata Motors), Arvind Bharadwaj (Ashok Leyland) and Pawan Goenka (Mahindra) were musing about what was needed to take the automotive industry to the next level.

Dr. Chidambaram believed that funding the automotive sector would have good results because being a growing industry, there was a greater likelihood of technology getting commercialized. As a result, Dr. Chidambaram got interested in this (by virtue of being PSA) and tasked Sajid from TIFAC with finding out what they needed.

Six panels were formed, resulting in a 2005 Road Map covering 30 areas. These six panels had about 12 people each (that became the nucleus for a future network). During one year they met three times, culminating in a meeting at IIT Madras where the topics were narrowed down. The consensus was that the government should support the industry and bring in academia and research institutions to undertake pre-competitive research through a consortium approach.

As in other cases, TIFAC decided to make all government contributions through the institutions, and as grants. Finally four areas were narrowed down. The common demand driver for technology underlying these themes was fuel-saving. Various dimensions of fuel-saving were identified – size (smaller cars); light-weighting (could give upto 20% reduction in fuel consumption) with a focus on new materials and processes in steel and aluminium, not magnesium; engine improvement; electronics; fleet management; alternate fuels (including electric drive vehicles and hybrids but not hydrogen or fuel cells that were seen as too far out).

Under CAR, about Rs. 35 crores was spent on 10 consortium projects. About one fourth to one third of the project budget went to the lead institution; the lead institution was the conduit for the funding of other dimensions of the project. The lead institution could commission work (e.g. prototypes, machinery, etc. at the companies) and pay for this.

Three out of the ten projects have seen commercial outcomes. But there is a widespread consensus that the CAR platform helped industry and academia understand each other better, and this will provide a basis for future collaborative work.

So, we have at least two examples of collaborative platforms, both of which have achieved some positive results.

The Future of Collaborative Innovation Platforms in India

In recent years, there have been new efforts to create innovation platforms. Perhaps the most ambitious is the Department of Biotechnology’s BIRAP. The Unique ID project, Aadhaar, has provided opportunities for a host of new applications to ride on top of it, thus creating a platform of a different type.

In the US, one finds a number of industry-sponsored consortia, often centered around a few key academic institutions. However, industry associations and trade bodies in India have not taken any such initiatives as far as I know.

India needs such platforms to help exchange information more easily, and to smoothen out transfer of technology and commercialization. One area crying out for such a platform is assistive devices and technologies for the disabled. There are hundreds of projects across the country trying to build such low-cost devices, yet few of them are commercialized or diffused. Building a national platform to bring together and support these disjointed efforts could help India take much better care of people with disabilities and even aspire to be the world leader in this area.

There are several new colleges and technology institutions across the country, keen to collaborate with industry and contribute to technology development. The creation of some new platforms could guide and direct these efforts to more productive outcomes, and help address the problem that Ardhendu identified.

(The views expressed here are the personal views of the author.)

McKinsey Global Institute Report on What India Should do...

The McKinsey Global Institute (MGI) is a think-tank set up by the consulting firm to look at broader issues, usually outside the firm and at the level of the economy. MGI rose to prominence in India in 2001 when they presented to then Prime Minister Vajpayee a report on how India could achieve 10% growth. I found that report interesting enough to organize a small internal workshop at IIM Bangalore in early 2002 where we debated the report. At that time, MGI’s prescription was that India needed to focus on raising productivity in the modern sectors of the economy where differentials between India and the best in the world were very high. I wrote a critique of that report in EPW.

So, I was excited when I recently received a new MGI report titled “From Poverty to Empowerment: India’s imperative for jobs, growth and effective services.” Interestingly, the report itself has created hardly a ripple and has not received much attention in the Indian media, having been completely submerged under the deluge of election-related news. That’s a pity, because the report has some interesting insights. What I also found fascinating is how MGI’s views have evolved over time, and become much more sensitive to the Indian context and debates within the country.

The Report

Measurement of poverty is a tricky matter and we have seen several debates triggered by the politics of measurement. While traditional measures have tended to be simple ones based on either income or calorific consumption, there is general recognition that a more multi-dimensional measure would be helpful.

MGI has tried to create its own measure to fill this need, by replacing the poverty line with an empowerment line. According to MGI, to be “economically empowered” is to be able to meet basic needs of food, energy, drinking water, sanitation, healthcare, education and social security at an acceptable level (p. 36).

MGI’s adoption of such a measure is somewhat surprising because it is people like Amartya Sen, usually not the darling of “capitalist” consulting firms, who have been the pioneers of such thinking! Sen has been a major proponent of every individual being entitled to a certain minimum quality of life and dignity!

What is alarming is that by this criterion, as many as 56% of our people (680 million people) lack empowerment. MGI’s calculation is that the average consumption expenditure for a minimum standard of living in India meeting these eight basic needs is Rs. 1544 per person in 2011-12 prices. For a typical 5-member family, that works out to a family expenditure of Rs. 7720. MGI’s estimate is that Government (central and state) spent Rs. 390 per capita on these 8 needs but only Rs. 208 reached each individual (p. 39). The resultant empowerment line of 1336 per capita is 1.5 times the official poverty line (p. 39)

The report estimates that a big reduction in empowerment gap came about between 2005 and 2012, a period of rapid economic growth. 74% of this came from income increases, and 26% from government programs.

The overall empowerment gap is estimated at about $69B. I was relieved when I saw this figure – it doesn’t seem all that high when you think that India’s software exports are about twice this figure and that this is the rough topline of the Aditya Birla group, one of our top industrial groups. I know we can’t just redistribute wealth, but the gap can be bridged with just the wealth of some of our rich industrialists!

Some Interesting Observations

Embedded in this report are some interesting observations:

• India has a missing female work force:  “40% of India’s women in the age group 25-54 were economically active compared to 88% in China” (p. 48).
• The unorganized sector is where the jobs are being created but its productivity is one-fifth that of the organized sector. [I wonder what are the implications of this for the Wal-mart vs. Kirana store debate!]
• MNREGA has increased rural incomes but reduced construction sector productivity! (p. 50). Interestingly, the MGI report refrains from any criticism of MNREGA and in fact when it talks of the lack of safety nets, it looks like being mildly supportive!
• Lack of skills is a critical issue – at the extreme, only 1% of workers in Bihar have received skills training (p. 51).
• India has poor agricultural yield – only half that of China (p. 52).India’s problems in agriculture arise from focusing spending on input subsidies rather than on technology and knowledge diffusion.

The report suggests a more nuanced look at poverty by breaking up the poor into those who have just escaped (but who are still “vulnerable.”), those who are excluded, and those who are impoverished. 

Vulnerable are above the poverty line but below the empowerment line. Using this classification, 30% of the population of urban India is vulnerable.

Such segmentation should be useful as it helps identify the needs and priorities of different groups. While health (40%) and food (19%) together account for almost 60% of the empowerment gap overall, housing is the second largest gap in urban India.

Other Perspectives of the Report

Another measure that the MGI report looks at is access to basic essential services. It estimates nationwide access deprivation at 46% (p. 54)

Access deprivation score (ADS) is used to characterize availability of services in each district. ADS is based on access to 6 services. National ADS is 46%. Most deprived districts are in Bihar and UP.

India’s 9 megacities are “community services deprived” (p. 94) and fall short of being the least deprived agglomerations.

The MGI report suggests that states have districts fitting different archetypes and therefore need different policies for different different districts. I don’t think we see much of this thinking in most states except for declaration of “most backward” districts. Is it time for states to take a more nuanced approach to development within themselves?

The Recommendations

The MGI report recommendations are a mixed bag. They sometimes re-trace existing dogma. They occasionally embrace new ideas. To drive the creation of millions of jobs, the report advocates reforms along predictable lines – cut red tape, improve infrastructure, remove tax distortions, etc.

But I was relieved to see the report refrains from motherhood statements like “enhance competition” that were commonplace in the earlier MGI report.

The four main recommendations are:

• Creation of 110-115m non-farm jobs [nothing new, I guess]
• Increase agricultural yield [easy to say, seems difficult to do]
• Double public spending to expand access to services [I was surprised by this one]
• Increase effectiveness of public spending – best states achieve about 75%

While correctly observing that growth is required to fund public provision of services [for an interesting exposition of this dynamic, see Sanjaya Baru’s The Accidental Prime Minister], the report observes that public spending is the key for the bottom-most layer.

At the same time, there is need for better governance to ensure that the resources invested reach the people they are intended for.

While the report calls for increasing level of investment, there is no specific reference to FDI. Are they just being cautious? Not wanting to take a position? Or just assuming that FDI is inevitable? That’s not clear!

A few things I found interesting about their recommendations:

• They call for the creation of 70-100 job creation engines – “industrial clusters, tourism circuits, food processing parks” (p. 123). There’s nothing new about industrial clusters and food processing parks, so it’s not clear what is distinctive about their recommendations and how they will suddenly do magic.
• I like the recommendation to create a vibrant set of “emerging cities” (p. 127) – the report shows how, compared to China, India lacks intermediate sized dynamic cities. Economic history shows the importance of cities in economic development. While former President Kalam’s dream of PURA is attractive, I have always had my doubts regarding the economic viability of it!
• The report is quite neutral about the new land acquisition laws (p. 136) of which industry associations were quite critical, preferring to wait and watch!
• While agreeing that labour reforms are necessary (the report quotes an OECD study that India has the  second most protective set of laws for workmen), the report calls for labour reforms to be accompanied by greater job security and even suggests unemployment insurance.
• Another interesting suggestion from the report is why not use MNREGA funds for skill development?

The report refrains from being doctrinaire and instead advocates learning from best practices. You might recall my posts on the Amartya Sen – Jagdish Bhagawati debate some months ago. The report takes a middle path saying that both in-kind transfers and cash transfers can work. It proposes a contingency model – where choice depends on context – the report even suggests that the Public Distribution System (PDS) can be reformed using technology.

Tailpiece

A cynical way of looking at this report is that MGI has hedged its bets, and its report allows it to go along with whoever wins the next election. But, to be fair, I think this report has some new insights, and could facilitate some useful debates on what the country should do next.

[All data quoted here is from the report. The comments and views expressed here are personal.]

Allowing Indian Science to Flower and Bloom

In a recent article in the prestigious journal Nature, Mathai Joseph and Andrew Robinson make a passionate call to “Free Indian Science” in order to allow it to flower and bloom. (Regular readers of this blog might remember Mathai Joseph from a review I wrote of his book.) Their core argument is that Indian science has not lived up to its potential (e.g. after independence, no Nobel prize has ever awarded to an Indian scientist working in India) and that the reason for this is the excessive bureaucratization of science – scientists are promoted on the basis of years in service rather than scientific accomplishments; funding is subject to unreasonable bureaucratic restrictions; and mobility is limited. They call for creating an independent funding agency with government money but outside government control, rotation of administrative roles, cross-institutional research groups, and rejuvenating science in Indian universities.

Too Broad a Brush?

Joseph and Robinson have used a broad brush to paint their picture of Indian science and, in the process, missed some nuances. My guess is that individual scientists working in theoretical domains have done well, even if they haven’t won a Nobel. I could point to at least two – Ashoke Sen (see picture above), a string theorist, who is regarded among the best in the world (he won the new Fundamental Physics prize instituted by a Russian billionaire in 2012), and Manindra Agrawal (see picture below), a computer scientist who, working with two of his students, created the first deterministic algorithm to determine whether a number is a prime in polynomial time, leading to his being awarded the Godel prize and the Fulkerson prize among others. The long arms of scientific bureaucracy couldn’t prevent either Ashoke or Manindra from doing their best!

Is Funding an Issue?

Joseph (see picture above) and Robinson (see picture below) acknowledge that funding is not the issue though they can’t resist criticizing the government for failing to raise the spending on R&D above the magic mark of 1% of GDP. The fact is that thanks to the influence of the scientific establishment and people like CNR Rao in particular, Indian science has no shortage of funds. I have heard stories of officials from government agencies camping at the IITs and the Indian Institute of Science (IISc) in the last quarter of the year literally begging professors to submit proposals.

India has science and technology cooperation agreements with several countries from the OECD. Historically, these were funded primarily by the foreign partner. Today, with the partners facing a funding crunch, the Indian government has taken over many of these finding obligations. This is another sign that India is not short of research funds.

If not, where is the problem?

The problems lie elsewhere. Globally, science operates through peer review, whether it is funding or acceptance of papers for publication. In India, though the government tries to use similar mechanisms to give out money, these peer review systems don't work well. Most of the funding tends to be "captured" by scientists from a limited set of influential, government-funded institutions. Historically, this was inevitable as India had a limited number of experts in each area and these were largely based in these marquee institutions. But while higher education in India is rapidly shifting to the large number of private universities set up in the last two decades, these are largely un-represented in the funding agencies’ review mechanisms and in the funds they give out. One reason is that they have not established their own credibility, the other is that the government tends to be suspicious of them in much the same way that the government is suspicious of private industry. It is not clear how this will change even if funding happens from an independent agency.

While Joseph and Robinson may be right about the evils of bureaucratization, the more potent evils are in a different arena. Even good institutions like the IITs and IISc lack an efficient and competent internal administrative system. I recently met a young faculty member who had a handsome start-up grant and access to government funding but finally threw up his hands and emigrated because of the huge number of obstacles to procuring the equipment he needed. Those who stay and wait lose out on productivity unless they are theorists and don't need equipment or laboratories. The system is particularly slow if you need a complex collection of equipment. This is one of the reasons that professors don't take on large projects that involve product or system development.

The situation is different and worse in the (public) university system. Rather than seeing a project as a matter of pride, the administrative system sees it as a source of rents. Several university professors have told me that they don't take on externally-funded projects because they have to constantly hang around university officials to be able to spend the money that has been granted to them. Given these problems within institutions, I wouldn’t expect to see a sudden boom in scientific output even if the government were to create a separate funding agency outside its immediate control.

Instead, the Indian science system, whether it be in government-funded research laboratories or universities, needs a new cadre of administrators who have some understanding of science and can promote it in a meaningful way. Professionalization of science management and administrative roles has not been given the attention it deserves.

Are charismatic leaders the solution?

Though Joseph and Robinson lament the absence of towering personalities like Bhabha at the helm, I have a different view. A certain democratization has happened in Indian science that is good for the country in the long run. Today, Indian science has a large number of competent scientists who have gone through the hoops of the Indian system (for example, competed with thousands of others to enter the portals of an IIT or IISc), done their PhDs at the best universities in the world or India, and then committed to working in India. Many in this category are today becoming leaders of scientific and academic institutions. They command respect because they have reached where they have due to their own talent and hard work, and they have demonstrated the ability to succeed in the tough environment that is India. 

I am thinking of people like VijayRaghavan of NCBS (now Secretary of the DBT, see picture above) or Sathyamurthy of IISER Mohali (see picture below). These quiet leaders are creating the right environment for research in their institutions, outside the spotlight. May their tribe increase.

Xerox Research Center India: High Potential Late Entrant to MNC R&D in India

Xerox is a legendary company that not only created the modern dry process for paper copying, but then continued to dominate that industry for a couple of decades. Strictly speaking though the “Xerox” process was created by Chester Carlson who then sold the technology and patent rights to the founders of the company that later took on the name of its core technology.

There are a few noteworthy things about Xerox that often feature in my teaching:

• A number of leading companies of the time including IBM failed to see the value of Chester Carlson’s patents and declined the offer to buy the patent rights. Beauty is in the eyes of the beholder!

• Through a combination of technology advancement and building a strong patent wall, Xerox managed to keep competitors at bay for almost 20 years, a feat that is almost impossible in today’s world of rapid technological change.

• Xerox started losing its stranglehold on the industry when it was disrupted by a set of enterprising Japanese companies including Ricoh and Canon. They leveraged their competence in building copiers with a small physical footprint (ideal for space-starved Japan) to create a new market for small copiers in the United States. By selling small, reliable, economically-priced copiers they avoided a direct confrontation with Xerox that dominated the large corporate copier market with machines leased to central administrative offices backed by a strong service network. As often happens in such disruptions, Xerox was unable to respond to this because its leasing model tied it down.

• One of the big ironies of Xerox’s loss to the Japanese copier companies was that Xerox’s own affiliate in Japan, Fuji Xerox, was a pioneer of the small copier technology that was so cleverly exploited by Canon and Ricoh. Yet, in Xerox, as was typical of many large multinational enterprises at that time, technology flowed only one way, from parent to subsidiary, and the company realized the value of its own assets too late!

Xerox Today

Xerox today is a very different company from what it was in the past. I knew that they had moved away from the core copying business to digital documentation at some stage, but wasn’t aware of their present business mix till recently. Thanks to the acquisition of ACS, an IT-services business focused on the US transportation and healthcare businesses (medical record processing; parking systems; transportation fleet management, etc.), Xerox has moved away from its legacy business. More than that, it has successfully avoided the ignominy faced by its Rochester twin, Kodak (which had to file for bankruptcy). IT services accounts for about 60% of Xerox’s topline.

Innovation at Xerox

Xerox figures in innovation lore for an important reason that I didn’t write about in the opening section – its Palo Alto Research Center (PARC) was the source of a number of technologies that have changed the IT and computing industries. George Pake, one of the PARC founders, predicted an “office of the future” in 1975 that bears an uncanny resemblance to what an office looks like today. The Graphic User Interface (GUI) was invented at PARC; Bob Metcalfe, one of the inventors of the Ethernet worked at PARC too. Laser printing technology was another major PARC invention.

Unfortunately, PARC also features as the most prominent example of a company research center whose output was exploited by everyone except its corporate parent! As is well known, Steve Jobs was an important beneficiary of PARC’s pioneering work!

Today, like other large companies, Xerox has a network of R&D and innovation centers across the globe. 

As a company, Xerox has more than 60,000 patent grants since inception!

Xerox Research Center India

Xerox Research Center India (XRCI) is a relatively recent addition to the Xerox network and is only a few years old (it was started in 2010). It’s the first Xerox research center in an “emerging market.”

I recently had the privilege of giving the keynote at XRCI Open 2014, the first major innovation event organized by XRCI.

 XRCI is small by Bangalore R&D centre standards, but has a focused team of high quality researchers. I found ex-professors from the IITs, PhDs from top US schools, and some people with considerable experience from other MNC R&D centres in the group. XRCI is led by Manish Gupta, a respected figure in IT R&D in India who spent much of his professional career at IBM. Manish led the IBM Research Centre in India till a couple of years ago.

I liked XRCI’s efforts to reach out to the academic community at this event. They had professors from a variety of institutions like IISc, IIIT Delhi, IIT Madras and IIT Kharagpur, apart from students from all over. The posters represented the work of both the academic and Xerox communities, thereby promoting cross-fertilisation of ideas.

A distinctive feature of XRCI is that they have 3 ethnographers on their rolls. I am not sure of the origins of this, but apparently thanks to its interest in work practice research, globally Xerox has embraced ethnography as an important element in its approach to innovation. And I am really happy to see XRCI following this trend.

Apart from my session, I attended an interesting panel on “Smart Cities” – the gap between the chaos of our cities and the ideal smart city of a slick power point presentation is so large that I sometimes wonder about the relevance of such panels. But, I suppose it is exactly this chaos that provides the opportunity to bring intelligence into managing things better.

Areas of Work at XRCI

 Analytics, big data, and crowd computing are some of the big buzz words at XRCI. Mirroring some of the priorities at Xerox, XRCI applies these approaches in multiple areas including healthcare, transportation, education and customer care.

Healthcare is being transformed by IT, but there are also big opportunities. According to some estimates, the value of healthcare fraud exceeds $70 Billion. IT can help reduce this. Quality can also improve – tech evangelist Vinod Khosla predicts that 80% of healthcare can be handled better by software. These are obviously great opportunities for an IT and analytics driven R&D centre such as XRCI.

Researchers at XRCI are working with their US colleagues on non-contact diagnostics through video. The objective is to see under the skin and into the body using near infra-red waves. A combination of Physics and Biology then enables measurement of some essential body parameters. XRCI has a neonatal collaboration with Manipal hospital to do “thermal videos” of infants to check their respiratory performance and temperature. Similarly, there is the potential to detect breast cancer through thermal means instead of using mammograms.

Another area is decision support for clinicians. XRCI is working on stroke severity prediction. An accurate prediction can not only save lives, it can help in optimum use of scarce hospital resources. Prediction is currently at the 80-90% accuracy level, and the effort is to improve it further.

Other current areas of interest at XRCI include traffic flows, and related issues like mobility demand and optimization of public transport; workflow automation applications in banking; and bridging the paper digital divide in education by working on SPOC based solutions for engineering education. For the “official” version of what XRCI does, visit their site.

The XRCI Opportunity

Overall, I found a quest to combine local needs with global applications. Most MNC R&D subsidiaries in India (see my earlier posts on IBM, Cisco, Bell Labs India) have found that if you want to do interesting stuff based on working with the Indian ecosystem, it helps if you work on problems that also have global relevance – that gets greater buy-in from the business and makes commercialization easier. Manish is using his experience with IBM to bring in this kind of thinking early at XRCI, and this bodes well for the future of XRCI. By the standards of other MNCs, Xerox may be a late entrant as far as setting up R&D in India is concerned, but it has the opportunity to make quick impact! 

Healthcare Innovation: Insights from the MART Conference

Last week, I wrote about the MART conference on innovation in emerging markets. One session I really liked was on healthcare innovation. Kavita Narayan who worked earlier with the Hospital Corporation of America but now works with Public Health Foundation of India (PHFI) moderated the panel energetically and well. The other panelists were Ranjit Shahani (Novartis), Vikram Damodaran (GE) and Ravi Kaushik (until recently with GE, now with Baxter).

Some contrasts came through well. A Nobel prize winning scientist from Sweden is promoting the use of his latest “perfect” catheter. It costs 20 euros, and works better than any existing one. He wants it to be used in India. The catch is that a catheter in India costs just one euro – underlining once again that even healthcare innovation has to be contextual and appropriate!

In contrast, PHFI has a new swasthya slate that can be taken to a patient’s door and communicate and store data through a mobile or android platform. It covers parameters related to key diseases and can be used by frontline health workers. Not only should this be a good diagnostic tool, it should ensure data integrity, and collection of relevant data for future epidemiological studies.

Novartis’ Argoya Parivar

Ranjit Shahani made a couple of interesting points. The first is that emerging markets should be called converging markets because they are now too important and central to be called “emerging.” The other one was about an integrative health project started by Novartis called Arogya Parivar that has both CSR and business elements to it.  

I particularly liked a chart Shahani showed where five levels on the individual/family income pyramid were linked to 5 different business approaches for Novartis in descending order of income: (1) a business-led approach with normal profitability; (2) a business-led approach with moderate profitability; (3) a shared value social venture; (4) a zero profit venture like an anti-malaria initiative; and (5) a completely philanthropic approach at the bottom of the pyramid.

Arogya Parivar today covers 10 states and 42 million people. Arogya Parivar has now spread to Kenya, Vietnam and Indonesia with appropriate modifications

A cute insight from Shahani’s talk – he put a non-Indian expat as head of the Arogya Parivar project based on CK Prahalad’s advice. In his two years, this energetic Frenchman went to every corner of India. He wasn’t explicit about this, but the argument seems to be that an Indian would not have gone deep into the field!

GE Healthcare & Emerging Markets

Vikram Damodaran of GE pointed out that most healthcare revenues come from 2.5 billion people and the other 4.5 billion people in the world don’t have access to healthcare or are badly under-served. But emerging markets have rapidly become an important part of the healthcare business landscape. GE Healthcare is now an $18B business, and 50% of this business comes from outside the original “triad” of North America, Western Europe and Japan.

GE’s program to expand its healthcare to non-traditional areas is now under the banner of Healthyimagination, a program that involves a $6 Billion commitment. But globalization of GE’s healthcare footprint started 17 years ago with the creation of distribution outposts. The company soon realised that was not enough. So, they moved towards localization – an example of this is the 300,000 square feet of supply chain created in Bangalore. But it didn’t take too long to find that there are limits to the costs that can be squeezed out through supply chain improvements.

An important milestone in the next phase was the successful “In China for China” (ICFC) programme that GE ran from 2001-06. Vikram explained how this was particularly successful in China. As part of the country’s planning process, each region / town/ village was allotted quotas of medical equipment in physical terms - e.g. one MR scanner. This was funded by the government, with no explicit cap on affordability. As a result each geography tended to buy what he described as the “biggest, meanest” machine. I imagine this must have suited GE’s product portfolio of large, powerful health equipment. This program has now been modified as “In Country for Country” to facilitate transfer to other countries.

Getting innovation right for emerging markets was a learning process. The interpretation feature in sophisticated scanners was initially removed from low-end scanners, but the company later realized that this feature would be more important in low-end scanners as they are often used by relatively unsophisticated users like General Practitioners.

Vikram expressed the view that India is a dynamic and entrepreneurial market as far as healthcare is concerned. In the US, an MR scanner is used for 9-10 cases per day, and a scan costs $1,500. In India, a scanner is used for 70 cases a day, the per scan cost could therefore be as low as $150 given the competition between providers. A dynamic market like India could be the crucible for the next round of healthcare innovation.

The Importance of Training

Kavita asked Vikram a question about the need for training. Vikram’s answer: put intelligence into the device instead, as in the case of GE’s new baby warmer where an attendant has only to worry about an alarm ringing or the ultrasound scan plane coaching assistant that helps a novice locate the scan plane. The other alternative is partnerships – GE works with an NGO called Eastmeetswest that oversees device use.

“We must be doing something right”

Ravi Kaushik, now with Baxter, injected an optimistic note into the discussion by pointing out that India’s Flipkart hit the $1 B mark in 6 years, a shorter time than it took Amazon to reach the same landmark. Hamid Karzai’s daughter had her baby delivery at Fortis Gurgaon and Karzai was quoted in the press as trusting the warm healthcare in India. Ravi’s conclusion was that “We must be doing something right.”

Barriers to healthcare innovation in India

The three panelists had distinctive perspectives on this question.

Shahani of Novartis had a predictable answer. His number 1 barrier to healthcare innovation in India is the absence of an ecosystem for intellectual property rights. He pointed out that Novartis has set up its new research centre for malaria, dengue and TB in Singapore and not in India. He particularly pinpointed the absence of data protection, leading to a situation where anyone can use the data generated in clinical trials in India.

Vikram Damodaran underlined the absence of conducive manufacturing policies. Building devices out of India is often expensive. He also pointed to a gap in the education system – there is no university that has both a good engineering school and a medical school working together. (I recall that IIT Kharagpur wanted to set up a medical school some years ago, but this got stuck in some bureaucratic and regulatory maze. I wonder what happened to that plan, and whether it is still on the cards…)

Ravi put his finger on weak academia-industry interaction and the absence of venture capital and incubators. He asked a provocative question: Why is all the funding available coming from Omidyar or the Gates foundation? Why don’t we have funds from India?

When will Universal Healthcare be achieved in India?

Kavita referred to a recent PHFI Universal healthcare report, and asked whether it can be achieved by 2020? If not by 2030?

Vikram’s view was that the Infant Mortality Rate and the Maternal Mortality Rate will come down rapidly. Cardiac screening will increase. He felt that there is a need for a comprehensive patient registry to track diversity of cancers.

Ravi thought that people put up with problems for years without taking remedial action Instead, patients have to take more responsibility for their own health.

Shahani pointed out that in spite of all the controversy around Glivec, only a very small number of patients in India pay for it while thousands get it free.

Ayush and Western Medicine

During the course of the healthcare panel, there was an interesting discussion about Indian traditional and western medicine. The audience had several adherents of holistic well-being who spoke in favour of ayush remedies. The usual debate of whether ayush should be subject to the same criteria, testing/reliability as used for western medicine came up. Vikram advocated standardization of Ayush even if it is not subject to the same standards of testing. Apparently, there have been some efforts in this direction in China.

[The summaries of different views here are as I remember them. I am responsible for any errors in reporting. Any comments on the views expressed here are the personal observations of the author.]

Innovation in Emerging Markets: Insights from MART Rural Conference

Though there has been so much interest in innovation in, and for, emerging markets, conferences on this subject rarely go below the surface and get into the challenges involved in detail. So, I must give all credit to Pradeep Kashyap, founder and head of MART Rural (a consultancy and think-tank that started with a focus on rural marketing and has now become a specialist on innovation for rural markets) for putting together one of these rare conferences on March 7, 2014 at the India Habitat Centre in New Delhi.

Some Key Insights

Speakers at the conference identified important insights, challenges and questions in innovation for emerging markets:

• Scaling is perhaps the largest unsolved problem. It’s not the same as replicating a pilot. Major resource commitment from top management is required. Pradeep Kashyap had an interesting way of capturing the futility of doing one pilot after another: “Can you have a pilot without a plane?.” Arvind Chinchure echoed a widely held view that scaling up involves partnering with government.

• Relevance is critical for innovation in emerging markets. As Pradeep Kashyap pointed out, rubber chappals replaced leather ones because rubber chappals could be washed after a day in the field without any problem. Of course, rubber chappals meet the affordability criterion as well.
• The innovation challenge in India is “75% of the functionality at 50% of the cost” – this is how Pradeep Kashyap described it.
• Innovation in India is still focused on solving basic problems. Tech-type innovators will come later. (Several speakers (including me!) referred to this).
• Along with relevance, social acceptability was emphasized. There was an interesting comment from a member of the audience: “People don’t have toilets, but have mobiles and are now moving into the internet. Isn’t that strange?” This led to a discussion on behavioral change & social context. Someone mentioned that constructing toilets in parts of rural India was not successful because open defecation gave women a chance to talk to each other and share concerns. Hence women don’t like closed toilets. Someone mentioned new toilet designs that retain the social interaction dimension!
• “Does innovation have to lead to income enhancement?” was an interesting question that was posed. This led to a discussion reminiscent of the Prahalad-Karnani debate. Pradeep Kashyap attributed e-choupal’s success to the fact that it enhanced incomes first; farmers then came and bought other things from ITC’s retail stores at the choupal. This discussion reminded me of Prahalad’s insightful comment that spending less is like earning more, so perhaps income enhancement per se does not have to be an outcome of innovation for emerging markets.
• David Wittenberg distinguished between opportunities (unvoiced needs) and problems (voiced needs). His view was that the big dollar opportunities are in the unvoiced needs. 

• But in my presentation, I put it differently by saying that what we are looking for is creative, context-relevant solutions for known needs, like Gillette’s Guard.

There was a vigorous discussion about jugaad with people predictably lined up on both sides of the debate. Proponents of structured innovation like Arvind Chinchure and Wittenberg (who makes his living from innovation consulting!) were skeptical about jugaad. Pradeep Kashyap thought that jugaad is important. I was glad to see a member of the audience raise the question of the definition of jugaad in the Radjou, Prabhu, Ahuja book and point out that their definition is very different from the way we colloquially understand the term in India. In fact, much of the debate on jugaad arises from the different connotations and definitions of the term!

Our Panel

I was on a panel with Preeti Shriniwas of RB (formerly called Reckitt Benckiser) and Nilesh Shah of the US embassy. Ranjan Malik of Erehwon was the moderator of our panel. Our brief was to look at innovation for emerging markets from a process perspective.

Preeti leads the open innovation team for RB in India. She focused on the consumer-centric innovation process at RB.  She told the story of RB’s Veet Hot Gel wax. It didn’t do well initially because people applied it too thick and didn’t use the spreader properly. Research revealed that that people preferred warm gels though the RB product did not need heating. Fortunately, RB found that heating did not reduce performance. So, they decided to go with familiarity, and not discourage people from using the wax after heating. This echoes the point about familiarity and behavioral context that was made earlier.

Preeti explained the open innovation model at RB as primarily a “Want – find – get” model that is used to fill gaps in RB’s knowledge pool. But, in the process, they sometimes come across serendipitous findings, and in these cases the model becomes a “find-want-get” process.

To me the most insightful part of Preeti’s contribution to the panel was her identification of the challenges to open innovation in India.  According to Preeti, the four main challenges are:

• Creating a steady in-flow of technologies as there are not enough proactive suppliers seeking out such partnerships
• Maintaining sustained levels of interest in suppliers/technology providers. Her experience is that many of them are not patient enough to go through the processes that a large multinational requires and want quick results. They tend to drop off if there are no immediate gains.
• Identifying the global relevance of local opportunistic ideas / innovation
• Lack of understanding and awareness of Intellectual Property & related legal arrangements leading to long delays. In one case, it took 6 months to a year just to sign a non-disclosure agreement.

For Nilesh Shah, innovation is all about the Silicon Valley breakthrough model.

I spoke about some of my current favorite examples including Bajaj Pulsar, Tata Nano, and Gillette Guard. I emphasized the importance of finding the right problems to work on, and suggested the “pain-wave-waste” model of 8 Steps to Innovation as a useful means of identifying these problems. I underlined the importance of market and consumer-centric innovation processes while contrasting the success of the Tata Ace to the relatively poor performance of the Tata Nano. I pointed out that successful innovators in emerging markets get immersed in the lives of users to understand how their needs can be met. In many cases, these needs are basic in nature, but existing solutions are not fulfilling these needs well. That’s where innovation comes in.

Postscript: Vigyanlabs Update

I wrote about Vigyanlabs about a year ago when the company was chosen for the Nasscom Innovation Award. I have been talking about his company frequently since then because they addressed an important problem (power consumption and greenhouse gas emission due to data centres) with a proprietary solution backed by a US patent.

So, it was great to meet Srinivas Varadarajan of Vigyanlabs again at the MART conference. Srinivas introduced me to his latest product – Intelligent Power Management (IPM) for the mobile phone, tablet, or laptop. It uses the same patented process (algorithm) as his product for data centers, but in this case it helps your battery last upto 50% extra after every charge. It’s sold in retail by Vigyanlabs’ partner, NCS Computech. For an MRP of Rs. 399, you get a scatch card with a key. The software itself is downloaded from the net, and is activated with the key. Not only has this created a new revenue stream for Vigyanlabs, it adds to the company’s credibility by giving an almost instant demonstration of what its software does. The company is now getting invitations from large users of batteries in the field to explore ways of extending the life of the battery after every charge!

[The MART conference had a very interesting healthcare panel. I’ll write about that next week.]

[The views expressed here are the personal views of the author.]