The
Bottlenecks to Innovation in India
Written
by Dr. Seshadri Kumar, 07 December, 2013; Published 25 February, 2014
Copyright © Dr. Seshadri Kumar. All Rights Reserved.
Disclaimer: All the opinions expressed in this article are
the opinions of Dr. Seshadri Kumar alone and should not be construed to mean
the opinions of any other person or organization, unless explicitly stated
otherwise in the article.
*********************************
Abstract
India
has long had a tradition of imitation rather than innovation; of not taking
risks; and, therefore, of rarely setting international touchstones of quality
and excellence. India needs to develop
an “innovation culture” if it needs to acquire the DNA to consistently excel in
leapfrog innovation rather than incremental innovation. Critical to such an innovation culture are
five factors: the encouragement and development of a questioning mindset by breaking
traditional Indian ideas of absolute, unquestioning obedience to teachers, parents,
and other authority figures; the development of higher education systems that
encourage students to do independent research work; stringent, merit-based
performance management structures; the emphasizing of Indian role models in
excellence and innovation; and a recognition by industry of the long-term
importance of leapfrog innovation in order that they may embrace the risks inherent
in such ventures and trade short-term for long-term thinking.
Introduction
McKinsey ran their Reimagining India Essay Contest last year, for which they accepted entries until 12 December 2013 and recently announced the winners. I was not one of the winners, but am presenting here the essay I submitted to their contest.
McKinsey ran their Reimagining India Essay Contest last year, for which they accepted entries until 12 December 2013 and recently announced the winners. I was not one of the winners, but am presenting here the essay I submitted to their contest.
They had three topics on which one could
write an essay. I chose the topic that
was presented thus:
How can “innovation capitalism” drive India’s technological and economic development?
How can “innovation capitalism” drive India’s technological and economic development?
“If the environment is
changing rapidly, then you want to bias your system toward change, flexibility,
and adaptability. You want to foster what I call “innovation capitalism” versus
“incumbency capitalism.” Incumbency capitalism relies on generous depreciation rules
that favor big established players, those who have the most capital and can pay
for $400 million plants. Innovation capitalism offers generous R&D tax
credits that favor start-ups, people with ideas, who are willing to experiment
and create.”
—Vinod Khosla, “How to Win at Leapfrog”
Consequently, I submitted an essay on what I saw as the
barriers to leapfrog innovation in India and how I believed they could be overcome. That essay is presented here. There was a word limit of 1000 words for the
essay.
Readers are cautioned that I come from an
engineering/scientific background and my approach to innovation and creativity
is naturally coloured by my experiences in the scientific world. In particular, I have rarely found
path-breaking, innovative work to be easy.
There is a lot of work (and attendant pain) involved. I mention this explicitly here because there
is (I state this in the essay below as well) a popular perception that
innovation (and especially leapfrog innovation) is simply “looking at the world
with different lenses” or other similar metaphors. I don’t believe it is that easy. Even if an initial insight comes so easily,
qualifying it so that it becomes a true innovation is a lot of work. That has been my experience.
My Essay
Entry for the Contest
Mr. Khosla is right that India needs to have a flexible, leapfrogging
model of innovation. But at a more
fundamental level, India lacks an innovation “culture” – and this mindset
problem makes it very hard for Indians to adopt the “innovation capitalism”
that Mr. Khosla alludes to. This must
first be tackled if Indians are to take advantage of innovation capitalism.
A word of caution is necessary in understanding what
innovation really connotes. It is a
popular misconception that innovation is merely looking at the world with
different “eyes,” such as the oft-cited example of using washing machines to
make lassi; and that it does not require deep knowledge or expertise. That is, indeed, true for the low-hanging
fruit, but for deeper and more lasting innovation, technical excellence is an
indispensable complement to creative thinking.
Innovation, at its core, is a practical enterprise. A new idea that never crosses the threshold
from academic curiosity to practical implementation does not meet the yardstick
of innovation. The role of industry in
fostering innovation is, therefore, critical.
The Indian private sector has, indeed, allocated funds to
R&D for decades, but by and large this has been utilized in imitation
rather than innovation. For proof of the
same, consider that India did not have an indigenous automaker making cars with
home-grown technology until Tata unveiled the Indica in 1998.
This timidity has been in evidence in practically every
industry. My father, who was a chemistry
professor and industrial consultant, cited the example of an Indian company
that asked its engineers to develop the scaled-up design for a new chemical plant
on paper, for which my father had helped the company develop the chemistry in
the lab; at the last minute, the company developed cold feet, discarded the
indigenous design, and imported the entire plant from Switzerland.
There are five main reasons for this timidity. The first is a reluctance to question the
status quo. The second is a lack of
training in original thinking in higher educational institutions. The third is the legacy of decades of
socialism. The fourth is the lack of
Indian role models in technological innovation.
The fifth is a lack of understanding on how to address the risks
involved in innovation. Below I address
each of these.
1.
To innovate, one must be willing to ask both the
question of the curious learner – “why?” – as well as the question of the
disruptive thinker – “why not?” The
traditional problem in India is that, from kindergarten through PhD, one is
taught to never question the teacher, the guru – an attitude that stems from
ancient Hindu tradition. This has to
change.
2.
Much of what passes for research in Indian
universities is second-rate work. There
are, indeed, a few brilliant professors in Indian centres of excellence such as
the IITs or IISc. These professors use
graduate students to advance their research, but generally do not succeed in
inculcating in their students a spirit of independence and an ability to define
problems. These students find their way
into Indian industrial R&D and, while they can follow a pre-defined
research direction, they find it difficult to chart new paths – the activity
that is at the heart of innovation.
3.
In a capitalistic system, your job is never
secure – as a researcher, there is a push for you to stretch yourself to innovate
for the market, to take risks and prove yourself. In socialism, on the other hand, since annual
pay raises and regular promotions are more or less guaranteed with an “average”
level of performance, why put in the extra effort? Performance management strategies,
including giving appropriate pay for performance and delinking salaries from
politics, are necessary if Indian government agencies are to be more
innovative.
4.
There are only a few organizations such as Tata,
Aravind Eye Care, Narayana Hrudayalaya, and C-DAC that Indians can draw
inspiration from when looking for role models in technological innovation. Very often, Indian scientists and their
managers are hampered by the belief that they cannot do truly innovative work; that
real innovation can only happen in the west.
As India produces more innovation leaders, this problem will gradually
go away.
5.
Leapfrog innovation, by definition, is something
that has not been done before, and is not a “me-too” type of endeavour, where
some minor tweaks are done to an existing product or process. It is, therefore, inherently risky. Work involves time and hence money and so,
companies’ financial policies regarding R&D determine their attitude
towards leapfrog innovation – i.e., towards significant inputs of time and
money that don’t have guaranteed returns.
A good example of an organization that understands how to take risks is
the American company 3M – one of the world’s most innovative companies, known
for products like Post-ItTM. In
3M, while 85% of their researchers’ time is to be spent on clearly-defined
projects, with milestones, deliverables, and timelines, the remaining 15% is
their own, to work on whatever “blue-sky” projects that they can define, with
no questions asked, and no penalty for failure.
3M’s extraordinary success as an innovative company reflects the success
of this policy, and should inspire other companies to do the same.
The Indian system has changed since liberalization and the
arrival of MNC companies which have set up their R&D centres in India. This is a positive first step, since these
companies bring with them the culture of innovation that is part of their survival
DNA. However, the people who work in
these centres are still often recruited from the older school of thinking in
India, and it will take some time to change them and the innovation landscape
in India.
Indian industry leaders need to rise to the challenge and
build innovative organizations – organizations that value creativity, innovation,
and risk-taking – and reward excellence.
This involves grooming the right research leaders who can set the
example, allowing R&D scientists the freedom to explore that is the fount
of leapfrog innovation, and ruthlessly enforcing a meritocracy.
