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‘Finding’ Innovation

In a highly competitive market, and one where market dynamics are changing faster than ever, innovation is the key to long-term sustainability and success. History has proven that companies that have a culture that encourages innovation stand a far better chance at sustaining their leadership position or emerging as market leaders.

1Harvey Firestone, an American businessman, and the founder of the Firestone Tire and Rubber Company once said, “Capital isn’t so important in business. Experience isn’t so important. You can get both these things. What is important is ideas. If you have ideas, you have the main asset you need, and there isn’t any limit to what you can do with your business and your life.”

Businesses recognize that. Most progressive businesses have put in place people, processes, resources, and investments and encourage a culture that fosters innovation.

Considering the fact that companies need to innovate faster than ever before, many companies now are also looking for absorbing innovation that is independently created outside their company. Smart companies recognize that they cannot hire all the smart people, and that smart and relevant innovation is also happening outside of their organization. Their efforts are therefore directed not just in innovating within the organization, but on engaging with innovations from outside as well.

By ‘outsourcing’ innovation, many leading companies have managed to minimize innovation costs and associated risks by as much as 60% to 90% while simultaneously reducing cycle times. In addition, they leverage tens to hundreds of times by internally investing the resultant savings. By engaging with innovators outside the organization, larger companies are able to look at a significantly larger pool of concepts and products, and thus are able to significantly reduce the cost of deploying innovative solutions and products for their businesses.

To enjoy the benefits of outsourcing innovation, the executives and the front-line should be on the lookout for the latest and most innovative technologies emerging across the globe and then figure out which ones they can leverage to derive the maximum synergy.

What is important is that you catch innovative companies’ young, i.e., when they are still in the startup or early-growth stage. Identifying and engaging with companies at an early stage has significant benefits for a large company, not just in monetary benefits, but also in being able to guide the product / concept design to best suit their own use case.

Larger companies who may not have the ability and bandwidth to scout for innovation independently can easily collaborate or partner with enablers in the entrepreneurial eco-system like accelerators, incubators, early-stage funds, and also the emerging online platforms that showcase startups and early-stage companies. Domain specific ‘hackathons’, mentoring clinics, and boot camps are some other ways in which larger companies can connect with relevant innovators.

Once the organization has identified which of these innovations fits into their scheme of things, there are 3 options before them:

  1. Acquire the company – in some situations for competitive reasons and to get a longer lead-time compared to competition it might make sense to acquire the company.
  2. Use the product – – sometimes it is worthwhile to simply use the product as an add-on or bolt on to the existing eco-system to provide a unique offering or enrichment to the existing solution.
  3. Partner with the company – This option involves jointly developing the product or innovation further, keeping in mind your specific requirement. This way, the innovation can be customized to suit your needs.

These are interesting times, particularly for software products. The pace and quality of innovation in India has gone up significantly. At iSPIRT, we have seen the quality of entrepreneurial talent, ideas and products, improve rapidly. We have quite a few global standard companies as witnessed by the global scale acquisitions, and the pace at which newer ideas are being introduced is very encouraging. It is also encouraging to note that a number of larger companies have already connected with us to get an early glimpse into innovations. The InTech50 event is a great initiative to showcase innovation to CIOs, product leaders and VC’s that provide the platform for the innovators to springboard.

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Why India needs to move beyond “Jugaad”.

Innovation is a result of an unaddressed problem.

TITLE (1)Contrary to general perception, design process strives to find the correct problems. Solution to these form the second half of the process and which has complete dependency on the earlier, yet is more celebrated.

A designer observes a given brief, studies it in the context and then identifies the problem(s). He finally calls upon his knowledge and experience to address these. Often enough, reaching out to experts. Later, he iterates solutions at various levels of implementation, progressively validating in the context.

In the case of jugaad, the journey to innovation travels in the opposite direction. The innovator is the user himself. He defines the brief after he has already pinpointed the problems, then makes do with his limited knowledge to address these. In ideal cases, this leads to innovations that are appropriate for his use, and exceptionally, a genius product to generalise.

Much like any heroic story, jugaad innovations are also widely acknowledged. While its solutions are obviously admirable, the process itself isn’t. I offer a few words of precaution in this context.

A step-by-step comparison between the two reveals the risk. At the initial stages, jugaad does a better job in understanding the context and the defining of problems as the user (/innovator) understands his problems better than anybody else. On the other hand, a designer uses his observation skills to relate to the persona of the user, ideally, becoming the user himself. But this ideal case is by-default in jugaad and unrealistic in design process.

However, at solution stage, design process has its advantages. Being better equipped, given the expertise of a designer and access to experts, it not only leads to more efficient solutions but also makes sure that these are appropriate in larger system. Jugaad however depends solely on knowledge and capability of the innovator. In exceptional cases, smart workarounds come out. But these are rare, and bound to fall short of a designer’s resources.

In cases when the solution itself requires lesser expertise, a bigger knowledge pool might be irrelevant. But it can again be a risky proposition to generalise such cases. And that is what we would be doing if we recognise “jugaad” as a parallel process.

However, as I earlier stated, finding the correct problem(s) is crucial, and jugaad is better equipped. A more inclusive process might be to involve users with designers during initial phases. This can lead to exciting results with juxtaposition of experienced users and resourceful designers in brainstorming solutions.

Jugaad by itself should only be looked upon as a desperate option rather than a process. India, being a country well equipped with resources and aiming to be a world-class innovation hub, should do well to encourage correct processes in this endeavour.

Guest Post Contributed by Sumit Dagar, Kriyate

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Microsoft Windows 10 needs more than an oil-change, it needs an overhaul.

The author extrapolates learnings from the last ten years of the Indian Automotive industry and makes the point that all things remaining equal, success in emerging markets depends largely on how premium a design feels in the hands and eyes of consumers. He suggests that Microsoft adopt a bold and fresh approach in the redesign of Windows 10.

I have been using Microsoft Windows since 1990, i.e. for over 25 years. I have also been associated with Windows beta programs and have had the chance to see a preview of Windows 95 way back in 1993.

Today, I use Windows 8 at work, at home, on my tablet and on my phone

You can read a little more about my interests here.

It’s evident that Windows 8 has not been the gushing success that Microsoft thought it would be with consumers i.e. people who have a choice of personal home and desktop computing platforms. Corporates in most cases do not have a choice but people do and I believe they have spoken by staying away from the platform.

My urgency for writing this article is the upcoming Windows 10 Preview that Microsoft is expected to show to the world on January 21st, 2015. And while I don’t expect them to turn their ship overnight, in the 6 – 9 months running up to their launch in mid to late 2015 I can only hope Microsoft can make some adjustments to its design keeping in mind the sensibilities of a billion Indians. And why just Indians? I think this can apply to a consumer in any part of the world.

I ran my own digital and web design team for 6 years in the mid – late 1990’s, a time when the closed Indian consumer market was just opening up to brands. It was an exciting time and it taught me that traditional “European and American” aesthetics do not always work for the vast majority of Indian consumers.

What follows below is my analysis of how Microsoft can learn from carmakers and their travails in tackling this hard-to-understand yet lucrative consumer market.

Doors and Windows: Yes. Cars and Windows: Yes.

I track the growing auto industry in India/Asia very closely because I love cars, motorbikes and driving in general. I’ve also read every decent car magazine that’s sold in India for the past 15 years. I’ve observed the Koreans, Germans, Czechs & Japanese come into this market to try and succeed. I have also observed how Indian auto manufacturers have tried to stay relevant and competitive in the face of impending competition.

Is it really possible to try and draw a parallel between Windows 8/8.1 and foreign carmakers in tackling the Indian consumer? I believe there is because just as people have personal preferences in choosing their next car, they also have preferences when it comes to devices. The two are not that different if you think about it.

Windows 8 & METRO: Why it was needed

I totally get why Windows 8 was what it was. Microsoft needed a differentiator in the tablet/touch market and Windows 8 allowed them to try and have a crack at the iPad. It was a huge risk and as it happened, one that failed.

For those who don’t know, Windows 8 was Microsoft’s attempt to try and make the traditional desktop and newer touch worlds coexist at the same time. In addition, Windows 8 also incorporated the Metro design language, a flat design language that relied more on typography, function and content, and less on graphics.

Unfortunately, Microsoft wasn’t able to attract enough consumers to embrace and use Windows 8. And while one may argue that the Windows 8 numbers (350 million now?) are high enough, we also know that a large part of this is in the corporate/enterprise space where customers really don’t have an option.

I’ve spent many hours at IT supermarkets and have seen the lack of interest amongst shoppers in the Windows Laptops on display from the big OEM’s: HP, Dell, Lenovo, Acer…and so on. And while these OEM’s do not make bad PC’s, the Windows 8 screens and interfaces are just unable to excite even a casual shopper to stop and take a look.

But, before I offer any suggestions, let me elaborate on Indian market demographics and the overall positive sentiment that exists for Microsoft.

Why India should matter

India as a market should matter to Microsoft.

Almost every Indian I know has a friend or relative working at Microsoft Redmond. Bill Gates, and now Satya Nadella, are role models for many an Indian parent and child and the Microsoft story is an exciting one. Many markets in Indian cities and small towns have huge signboards that advertise courses in MCSE/IT Administration, Word, Excel, MS Office, and SQL Server. I’d estimate that more than half of the software engineers in this country work on .NET, C#, ASP and so on. Most SME’s in this country run Windows Server and Microsoft Office. Nearly everyone I know has used Windows at some point in time in their careers. Overall, India is bursting with positive energy for Microsoft as a company.

But, India is also a market where costs are an issue for mainstream computing products. MacBook’s and iPhones cost twice as much here and are a complete rip-off in my opinion. And because volumes aren’t high, I doubt if Apple will ever want to, or be able to drive costs down.

That leaves Chromebooks. The half-PC’s that aren’t really PC’s for anything other than light browsing and some media consumption. You NEED to be connected to make Chromebooks work well which is a problem because not only are data plans expensive in India, connectivity by and large is downright horrible. (And yes I know that Chromebooks can sort-of work offline but…)

India also does NOT yet have a popular BYOD (Bring Your Own Device) culture at the workplace. This further increases the likelihood that many professional workers use company-provided Windows devices and MSOffice in their places of work.

So, you have expensive MacBook’s/iPhones on the one hand AND Chromebooks crippled by poor connectivity on the other. In this kind of market, could there be anything more important for Microsoft than Windows 10 to ride this perfect storm of opportunity?

In short, no. But they HAVE to get it right.

Let’s take a few examples of hits and misses from the automotive industry in India.

Skoda & VW

In the mid to late 1990’s, Skoda, a small and relatively unknown Czech carmaker was greeted with sales success here in India with its maiden model, the Octavia. This surprised many as Skoda cars are perceived as ‘cheap’ in Europe and were known to have after-sales issues that exist even today. But somehow Skoda did great by any standards and probably even exceeded its own targets.

Skoda succeeded here because Indians fell in love with their designs, AND, the relative affordability of buying into a European brand. It was only natural that Volkswagen, Skoda’s parent company, followed suit some years after, hoping to match if not exceed the success of its junior brand. The Skoda Octavia now started competing with the VW Jetta. The Skoda Superb with the VW Passat.

Needless to say, the numbers were less than encouraging for VW. What made it even more difficult to digest was the fact that every model they launched was qualitatively superior if not similar to their Skoda counterpart. After all, these cars shared common components and relied on a global pool of high quality suppliers.

What was the problem?

The answer lay in the design. VW’s design was far from inspiring for Indian tastes. While dark grey dashboards, steering wheels & interior upholstery are actually seen as cool and avant-garde in Europe AND in some cases even represented as premium (e.g. BMW M3/M5), these design elements do NOT excite the Indian consumer in any way.

Skoda sold better here because Skoda’s car are generally prettier than their VW counterparts. They have edgier styling with chrome accented bodywork, wood-panels and chrome linings on the steering and dash together with rich beige two-tone interior upholstery. And Indians lap this stuff up. Looks work. It can make you feel like a thousand bucks when you park your new car next to your neighbours’.

Of course there are aberrations to this success story (like the Skoda Fabia and Skoda Yeti, both oddball designs), but I’ll leave that aside for a future article maybe.

Fast forward to today. VW cars sold in India now have chrome body accents, wood-panelled dashboards and more visually appealing looks and their sales numbers are back to where they should be. It’s the little things that make a design look and feel premium, and VW had to bear the ignominy of low sales till such time they figured out the Indian consumer.

A few years is a long and costly affair in the automotive Industry. Heads roll, CEO’s change, blame is apportioned and everybody walks away bruised. All things remaining equal, consumers expect good looking and well-designed products. To draw a parallel, Metro and Flat UI’s may work for the digitally-evolved set, just like dark-grey works great on a BMW M3, but it doesn’t and never will work for most of the Indian consumers.

I’m a little concerned because as recently as last week, I saw some leaks on the to-be-announced Windows 10 Consumer Preview with more of the modern and minimalist.

Hyundai: Appealing Designs.

Unlike the conservative Japanese, the Koreans are naturally flashier with their design sensibilities. Every Hyundai car that has been launched in India to compete with the entrenched Maruti-Suzuki (Japanese) has been very successful. And it’s because Hyundai designs them to be stylish, with chrome bits outside and in, gorgeous dashboards and upholstery. Hyundai also manages to give more kit at same or lower prices. They really figure out the best combination of looks, features and price.

My personal opinion is that Japanese cars are better engineered than the Koreans. But, the Koreans are able to keep up by launching spicier designs of feature-loaded models at similar or lower price points.

Sometimes good design can hide an averagely engineered product which Windows 8 is not.

And sometimes good design is required even when the product is cheap. The next example about the Tata Nano is one such case about how NOT to do it.

The Tata Nano. Cheap is good. Cheap-Looking not so.

The Tata Nano was designed to be the cheapest car on Indian roads by one of the country’s largest conglomerates: Tata Sons. In fact, the global press hailed the Tata Nano as the cheapest petrol-engined 4-door, 4-seater car in the world which it probably was.

A noble cause. It should have worked. It had everything going for it.

The Nano was/is a great piece of frugal engineering BUT it failed to capture the imagination of the Indian consumer because it came across as cheap and built to a price. (Conversely, Tata later launched a real beauty of a multi-utility-van (MUV) called the Tata Aria, but blew it because it priced it over its rivals.)

I’ve been tracking recent attempts by Microsoft at the cheap end of the tablet market with its near-zero Windows 8 licensing policies. But cheap, like the Tata Nano, doesn’t always work unless it’s backed up by attractive and premium design.

MacBook’s and iPhones are gorgeous to look at and experience. But, so are the lower-end Android phones. And even though in my opinion they (the low-end Android phones) are poorly engineered devices at best, they do more than enough to keep the cash registers ringing.

I hope Microsoft can learn a lesson from the above.

Gorgeous does work.

Switching for a brief moment to Windows Phone.

I’m a huge advocate of the Lumia 730 and Lumia 530. I am almost sure that a few of my employees were convinced by me to get them. But, recently, two of them upgraded their phones to Xiaomi Redmi Note 4’s last week. This phone retails for the same price as the Lumia 535 in India (Rs. 9500 approx.). BUT, one look at its gorgeous 5” screen, beautiful wallpaper with its silky smooth swipe animations and you know right away this was something special.

This phone had me at hello!

The overall product, the screen clarity, speed, navigation and animations feel buttery smooth and awesome. These Xiaomi phones are not running stock Android, BUT, a gorgeous skin made by their manufacturer Xiaomi (dubiously known as the Chinese iPhone maker).

And while these phone may not have the same build quality of a Lumia, they appeal to consumers to whip out their wallets and buy. (BTW, one of my colleagues returned his Xiaomi handset just yesterday because the USB charging port came loose within a day or purchase.)

Gorgeous does work AND it does get products off the shelves.

While we are on Android phones, let me add that the much hyped material-design influenced Android One has failed in India for more reasons than one. I can only guess that flat-design may have had something to do with it, in addition to not-so-friendly business terms from Google.

Design tips for Microsoft Windows 10 Consumer

So, taking a cue from the Indian automotive industry, I’m going to try and suggest ways in which Microsoft can make Windows 10 a huge hit with consumers not just in India, but worldwide.

1. Staid, Sober, Scandinavian, and Minimalist does NOT work here

Boring, dull, flat and minimalist designs do NOT appeal to Indian consumers. Ever been to an Indian wedding? Noticed the explosion of colour and senses. This IS what we are about as a nation of a billion people. We like designs that are a bit Over-The-Top with a bit of bling and kitsch thrown in.

We don’t live in homes with wooden floors, white walls and Ikea furniture. Well maybe some do, but those are the minority and they buy expensive iPhones and Macs to begin with.

We are an aspirational people and our consumer choices are a reflection of our individual and social perceptions.

And Microsoft, please don’t expect and wait for third-party developers to skin the OS in case it lacks ZING out-of-the-box. No Stardock Modernmix can solve this problem.

2. Don’t listen only to the people in Windows 10 Preview.

It should be evident to Microsoft that the 1.5 million people, myself included, who are a part of Windows 10 Preview will probably buy it anyway! But do these 1.5 million represent that 1 billion Windows users? No Microsoft. They don’t.

I shudder when I see comments from some folks in the Windows Insider Program about how Microsoft should leave Metro untouched because it is so awesome. Come on! This strategy may work for enterprise users but will not fly with consumers.

For every person that is vocal about embracing Metro, Metro Apps & the Windows 8 Start Screen, there are 10 others who stay silent.

3. Be bold Microsoft.

Computing and graphic power has been getting progressively cheaper. And yet, UX’s have been getting flatter and less graphically intensive. And while some people love flat and modern and I can completely respect that, it doesn’t do it for me.

Have Microsoft/Intel learnt nothing from the Film and Television industry?

TVs improve to accommodate better quality content and content providers continue to improve the quality of their sitcoms, movies and sports coverage. It’s a symbiotic relationship that improves business for both. And yet, as the personal computing landscape has gotten cheaper, faster and more powerful processors, the UI’s have reverted back to being flat. This is one trend I will never fully comprehend.

I fear the real problem lies with today’s UX designers. Design is cyclical and for the last few years it has been flat and functional. If you are a hip and happening UX/UI designer today, you WILL shun gradients, textures, shadows and three-dimensional effects in favour of large typography, whitespace and minimalism. But I believe the two worlds CAN co-exist and these designers must be pushed to their creative limits to turn out something spectacular.

The designers at Microsoft are working on what might be the last major version of Windows. And to think Windows 10 Consumer should have an Office or OneDrive inspired UI would be poor judgement on Microsoft’s part. I use the aforementioned products to get work done. Is it too much for me to ask not to be reminded of work when I’m setting my morning alarm or watching a movie? Must my watch resemble a fitness band? Please…

So, Microsoft:

FIRSTLY, the goal for your design team has to be to make customers stop in their tracks when they see a gorgeous Windows 10 PC Screen on display. The attention span of an end-user needs to be captured at the initial user interface or else you have lost them no matter what amazing functionality you build into the platform.

SECONDLY, don’t ONLY dish out a flat user-interface! I realise you must do this for Enterprise customers but don’t stop there. Give every user a SECOND option that is the complete opposite i.e. lustworthy – put in the bells and whistles – the textures, silky smooth animations and navigation. After all, you’ve tried the flat UI approach and the world has answered. You’ve got nothing to lose and everything to gain.

If you can do the above, you will take the discussion away from ecosystems AND focus it back on a gorgeous product called Windows 10 staring at consumers on market shelves later this year.

Yes, I DO want my yet-to-be-purchased i7 quad-core NVidia-powered hybrid to shimmer and ripple with each buttery smooth swipe and click.

And no, I do NOT want Windows 10 Consumer to be like my Kindle. I already have one and it puts me to sleep every night…yawn.

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Is your product vitamin, pain killer or vaccine?

2014 has been a year of great momentum for software products in India and its going north in 2015. As the momentum picks up, thought of sharing some thoughts on a thumb rule that we can apply for products that we plan to build

Picking the medical analogy, the one way of classifying where your product fits in would be when you answer if your product is a vitamin, pain killer or vaccine – and how you innovate around them.

vitaminvaacine

Pain killers

The must haves are the pain killers, you can’t survive without drugs that cures fever or other painful diseases. In software products area, an equivalent is the automation software that will help you bill your customers, keep your accounts, communicate through emails, build professional or personal network etc. These are very basic, been there for a while and there is always market for these products. But the challenge with these products is that you are not the first one building it and you have tons of competitive products. A funny example I came across when a team mentioned they are building a product for traffic problem that exists in Bangalore, but the how part was not convincing enough to believe it can solve the problem. While the problem is clearly understood, and is a pain, the pain killer solution is key.

Often referred as commodity market, the only success factor here is “how” you solve the problems in a different way, leveraging latest technologies such as mobile, cloud or internet of things. Value of such products, in order to be successful, needs significant go-to-market investment. Nevertheless, if you have found the right product – market fit, there is still scope for this as everyone needs these products, as there is no question “why you need these products”, as long as you can differentiate and sell.

Vitamin

The nice to haves are vitamins, we all know that. You will agree that to sell vitamins, you really need to first establish “why you need that product”.  We do see the benefits, but we can live without it. Analytics and big data products are good examples of vitamins analogy. It would certainly help for your data driven decision making, but you need to convince someone a lot as he or she is already getting the insights in different forms, maybe through a good team that he or she has. But like how we get addicted to some vitamins, you can tend to get addicted to software products that can help businesses or life better. Also over a period of time, vitamins become pain killers as we can’t live without them. A good example for me is Google or Mobile phones or ipads. We have lived without google or mobile phones few years back, but they are no more an option. Ipads is still a vitamin, but still sells very well.

Vitamins need a different kind of expertise in your sales and go to market organization. You need experts to sell these solutions. They really need to uncover the invisible need that the buyer would have and offcourse your product needs to fulfill their aspirations by educating them. Vitamins can be sold at a very premium price if we can convince the customers.

 

While painkillers take care of the visible need, vitamins have to discover the invisible needs

productInvisibleneed

As you build products that fall in the vitamin category, it would be great to see the end vision of these products, and if they can eventually create a new category that can get into a pain killer or vaccine.

Vaccine

They are preventive; they address solutions to problems that exist today or likely to arise in the future. They are must haves, but they get into territory of unsolved problems, so if you have a solution that solves an unsolved problem or even prevents the problem to occur, they would fall into this category. Vaccines type products are real innovations – as they are needed and they can help businesses or improve life.

Business networks are a great example of vaccines, as they remove the hurdles of problems such as intercompany reconciliation or payments by cheques. Knowing your customer is great problem that exists and you want to sell the right product/services, at the right time and at right price based on what customers are seeking. If you understand the customer better, it’s a no brainer that your revenue is going to increase. Next generation customer engagement solutions are a good bet, which personally can fall into the vaccine bucket.  I was super impressed by the Health care cloud mobile products developed by Lifeplot, and many of their products certainly fall into the vaccine category as they can prevent diseases at an affordable cost.

While vaccines are game changers, they also need certain degree of convincing to sell, as the problem is not obvious to many.  One example for me in software products is digital commerce such as web and mobile. There is a huge opportunity to tap into selling in these channels and having products to support them. But it still needs to convince the buyers, as certain level of education is required for this.

Criteria Pain Killer Vitamin Vaccine 
Need Must have – Visible Nice to have – invisible Must have – Visible
Problem statement Well defined Need to be explained In certain cases defined but needs education
Main value prop to sell How its solved Why its needed How its solved and sometimes why its needed 
Sales approach Non Experts but with clear differentiators for product – market fit and lot of investment Experts required to explain value with lot of investment More education required, and once convinced less investment
Revenue and Pricing Standard Premium Standard 
Examples ERP, Emails Analytics, Messenger Business Network, Digital Commerce

 

So where does your product fit in – is it a pain killer, vitamin or vaccine ? 

 

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Can India Arrest the Slide in its Innovation Ranking?

Over the last few years, the Global Innovation Index (GII) compiled annually by INSEAD, WIPO and Cornell University has become the most commonly accepted global indicator of nations’ innovation performance. So, there has been much angst in India over the last couple of weeks once it emerged that India has fallen 10 places in the last year from 66 to 76. 

About the Global Innovation Index

I have written about the GII in this blog before. Just by way of reminder, the GII measures national innovation performance by looking at a whole set of variables related to both innovation input and output. The innovation input index is a function of institutions, human capital and research, infrastructure, market sophistication and business sophistication. The output index considers knowledge and technology outputs as well as creative outputs.

My main reservation about the way this index is computed is that some of the variables are general business climate variables and not specific to innovation per se. I also wonder whether there is a degree of double counting in the index – at the minimum, I suspect some of the variables they measure are strongly correlated with each other.

But the good thing about the GII is that it has now fallen into a pattern, is fairly stable in the way it is compiled year after year, and therefore should give us a sense of broad trends even if the exact score computed is not sacrosanct.

Why are we slipping?

To see why we are slipping, I took a closer look at the scores of India vis-à-vis China. As the two “emerging market” giants, the world often sees China and India as competitors (though we all know, of course, that China has been ahead of India in the economic sweepstakes). And, to make it even juicier, China’s rank on the GII has been improving unlike ours which has been steadily declining!

There is not much difference in scores between India and China as far as institutions are concerned and this has been the case for the last few years. Not surprisingly, China scores much better than India on infrastructure, but many of the infrastructure variables captured in the GII are broad ones like electricity output and logistics performance, and we know that India has a long way to go on these parameters. So, there is no great surprise here.

On market sophistication (credit, investment, trade and competition), India has actually pulled marginally ahead of China in GII 2014, though we trailed China last year. Many of the parameters that go into this metric are again broad ones that would go into any competitiveness study and are not specific to innovation.

On business sophistication (knowledge workers, innovation linkages, knowledge absorption), China is ahead, but the gap has declined marginally from 2013 to 2014. That’s a good sign, and India is even ahead of China on a couple of sub parameters that add up to this score – state of cluster development and joint venture/strategic alliance deals.

Then, where is the slippage and is it a cause for concern?

Yes there is a concern, because the most serious gaps between India and China are on two critical parameters that are linked intimately to innovation: the input parameter relating to human capital and research, and the output parameter relating to knowledge and technology outputs.

Though we keep emphasizing the importance of leveraging the demographic dividend, and both education and skill development have been flagged for some years now as critical issues, India’s Achilles heel continues to be what is represented by the Human Capital and Research (HCR) parameter of GII.

We are behind China on every single component of this parameter. The three main constituents of HCR are (school) education, tertiary education and research and development. On both (school) education and R&D, the gap between India and China is widening fast. Only in tertiary education is the gap narrowing, and that is because of recent improvements in India’s Gross Enrolment Ratio.

School Education

This assessment of (school) education is corroborated by reports like the Annual Survey of Education (ASER). ASER 2013 shows that while the percentage of children out of school has declined, the percentage of children in Standard V who can read a Standard II text has also declined from 52.9% to 47% between 2009 and 2013. While there have been noteworthy efforts to improve school education including the government’s Sarva Shiksha Abhiyaan (which can take some credit for the improvement in school enrolments) and private efforts like that of the Azim Premji Foundation on the quality side, clearly we have a long way to go before we can ensure a foundation of good schooling to our kids.

Research and Development

The R&D issue is more tricky. India’s R&D intensity has remained stubbornly range-bound between 0.9% and 1% for the last two decades. We pride ourselves on our ability to make do with less as exemplified by the achievements of the Space programme in the public sector, and that of automotive and pharmaceutical companies in the private sector. Yet, our adverse trade balance and poor standing in high technology industries (except for a small number of honorable exceptions) show that we have been unable to develop the sophisticated technological capabilities needed to hold our own in global markets.

There is a “chicken and egg” problem here – some firms don’t invest in R&D because they don’t have the right people to do R&D. And, in those companies where they do have the right people, the top management does not have the confidence to put enough resources behind the team. Either way, firms fail to develop a sound R&D and innovation capability.

Given these problems, it is not surprising that India lags on knowledge and technology output as well.

I have my doubts about the GII’s methodology in calculating the other output parameter – creative outputs. GII shows a huge swing from 2013 to 2014 on this parameter with India well ahead with respect to China last year, yet lagging China significantly in 2014. Since a country’s creative outputs can’t change that rapidly, I am inclined to just ignore this parameter.

Conclusion

I am not too optimistic about India reversing this downward trend in GII quickly. Some of the announcements by the new government will help enhance economic institutions, investments and infrastructure if they are pursued seriously. But, it is not clear how and when the slide in human capital and research (as measured by the GII) will be arrested. Some of my pet ideas in this direction are in the slide below.

[The views expressed here are the personal views of the author.]
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Life-transforming lessons from “The Matrix”

I still remember the feeling of being blown away by “The Matrix“. The movie had stunning visual effects. But more remarkably, it helped connect several dots in my head that have evolved into life-transforming mantras:

Do not try and bend the spoon. That’s impossible. Instead… only try to realize the truth. There is no spoon

Many of us lead our lives with bags of things that we believe impossible to achieve – spoons that we cannot bend. The spoon may be the aspiration to be an Olympic athlete, climb Mt Everest, run for the president’s office, or as common as a resolution to resist the urge to overeat, read a book every moth, blog regularly or make time to connect with old friends. We are often limited by our own ambition and tenacity. There is no such thing as an unattainable goal. The trick is to realize that the constraints that limit us from realizing our full potential may only exist in our mind.

Let me illustrate the point with the narrative that I heard from the man himself – Mark Inglis. Mark is an accomplished mountaineer, researcher, winemaker and motivational speaker who hails from New Zealand. In 1982, when 23 year old Mark lost both his feet to frost bite, scaling Mt. Everest seemed impossible. But Mark overcame his worst fears and physical limitations by sheer determination. He designed his own prosthetics and trained hard for 24 years to pursue his seemingly unattainable dream. In 2006, Mark became the world’s first double amputee to scale Mt. Everest.

While very few of us may possess the kind of grit that enabled Mark to overcome the odds, it’s quite interesting to note that we were all blessed with that same indomitable spirit as a child. Not caring about the length of his or her arms, an infant will persistently try to grab the moon. As we grow older, our experiences shape the matrix of constraints around us and we stop shooting for seemingly unattainable goals.

Unplug yourself from this system. Freeing your mind is the first step to unlocking this potential. Knowledge and training will do the trick.

In the book Outliers, author Malcolm Gladwell says that it takes roughly ten thousand hours of practice to achieve mastery in any field. Zach Hambrick, associate professor of psychology at Michigan State University, notes that his research does not support “the egalitarian view that anyone who is sufficiently motivated can become a master.” Kaufman, however, made the most convincing argument by taking the middle ground. “Everyone can’t be a genius in everything,” he says. “But I’m coming around to the idea that every single person has the potential for genius in something.”

But finding true passion and aptitude for an adult is far from easy, let alone a child having to figure it out without any guidance or inspiration. Interestingly, as I was drafting this post, I came across a related LinkedIn post by Sir. Richard Branson titled “The importance of encouraging children to shoot for the moon“. It is a very inspiring story of Barbara who witnessed the launch of the world’s first privately-funded spacecraft to carry astronauts to space at the age of 11. The road-trip her parents took to the Mojave desert to witness the space shuttle launch sparked her life’s passion for aerospace. Ten years of inspiration and perspiration later, she is now a student at MIT and interns at Virgin Galactic.

The best thing we can do for ourselves and for our next generation is to keep reminding that there is no spoon (that cannot be bent).

Photo Credit (Creative Commons)

Guest Post by Mohit Garg, Co-Founder, MindTickle

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Anuj Tandon Talks about “How Rolocules is Using Games to Build Personal Bonds” #iSPIRT Event – Conclave for India as ProductNation

We recently had 11 disruptive startups that made a presentation to the Hon. IT Minister, Ravi Shankar Prasad. The first presentation was made by Anuj Tandon of Rolocules. You can access the presentation made by Anuj here

Anuj Tandon Talks about “How Rolocules is Using Games to Build Personal Bonds” #iSPIRT Event from iSPIRT // ProductNation on Vimeo.

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Platform Thinking: How To Get Startup Ideas

How does one find new startup ideas?

Every business is built around solving a customer pain. Solving a customer pain creates value which in turn, if successfully harnessed, can be monetized. Platforms, in particular, connect demand and supply to solve customer pain on both sides.

Platform Thinking And Startup Ideas

One of the patterns for new startup ideas, that I often see in platforms, is the following:

Match an unmonetized/unvalued surplus with an unsatisfied scarcity. 

This requires a unique combination of two factors:

1) Unmonetized/unvalued surplus: This implies that there is some form of surplus which cannot be monetized at the moment. However, given the opportunity, the owners would want to monetize it. A similar dynamic exists for surplus that isn’t currently valued by an audience/market (e.g. a person’s creativity).

2) Unsatisfied scarcity: The second important factor is scarcity. More specifically, scarcity that isn’t currently optimally satisfied. There might be solutions to the scarcity but none of them are optimal enough.

startup-ideasA good balance of both factors is required. If the scarcity is already being addressed, there may not be any need for a new solution. If the surplus is already monetized, it may be difficult for the producer to engage with more means of monetizing the surplus.

Hence, both aspects are equally important for the platform to exist. Also, depending on which of the two aspects is stronger, the seeding of the platform may start either with tapping the demand or with harnessing the surplus.

At the very outset, let me clarify that this is one of many different patterns for finding new startup ideas. Even among platforms, many different form of patterns exist.

Understanding Surplus And Scarcity

Surplus may exist in various forms. It may be a surplus of time, attention, money, physical commodities. Let’s look at a few examples below:

AirBnB: 

A surplus of accommodation in a particular location during a certain time period

MEETS

A scarcity of accommodation in that same location during the same time period.

Amazon Mechanical Turk, TaskRabbit: 

A surplus of time to perform certain tasks

MEETS

A scarcity of time to perform those same tasks.

KickStarter, IndieGoGo: 

A surplus of investable capital

MEETS

A scarcity of capital

SkillShare: 

A surplus of niche skills and talents

MEETS

A scarcity of niche skills

Quora: 

A surplus of knowledge on a niche topic

MEETS

A scarcity of knowledge on the same topic

Zilok, Rentoid, Neighborrow:

A surplus of physical items

MEETS

A scarcity of those same physical items

YouTube: 

A surplus of niche creativity

MEETS

A scarcity of niche entertainment

This model isn’t limited to online networks alone. Offline spaces also allow this model if you can achieve concentration of supply within a limited physical space. Coworking spaces like The Hub are an example of such a model, matching a surplus of office space with those in need of one.

A Final Note On Platform Ideas

For a given idea,

1. Identify the commodity that’s being traded, a target segment where a surplus exists and a segment with a scarcity

Again, surplus and scarcity that are currently not being utilized or satisfied are likely to come on board much faster.

2. Determine degree of overlap between the two target segments to allow the transfer to occur

Since scarcity and surplus need to be matched, there should be a high level of overlap between the two sides. Hence, it often helps to start by targeting a micro-market which provides a good concentration of demand and supply.

3. Determine factors based on which the two sides will be matched

The matching needs to be determined based on certain factors to ensure that the scarcity and surplus successfully satisfy each other. Quora determines matches through an “Ask To Answer” feature which surfaces the users most likely to have an answer to a certain question based on their history of answers on that topic. AirBnB matches accommodation surplus with scarcity based on time (exact dates) and location (exact place).

In summary,

Match an unmonetized surplus with an unsatisfied scarcity. 

This article was first featured on Sangeet’s blog, Platform Thinking (http://platformed.info). Platform Thinking has been ranked among the top blogs for startups, globally, by the Harvard Business School Centre for Entrepreneurship

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Disruptive Innovation Revisited

Disruption and disruptive innovation have been in the spotlight of late. The guru of disruptive innovation, Clayton Christensen, and his famous theory were put under the scanner in a highly critical if somewhat flippant recent piece by Jill Lepore in the New Yorker. Just a few weeks earlier, the New York Times carried a provocative article titled “Business School, Disrupted,” that examined the potential of MOOCs to change management education and chronicled the troubled efforts of arguably the world’s strongest business school brand, Harvard Business School, to embrace MOOCs.

Is the problem with disruptive innovation or innovation itself?

Though Lepore’s article is ostensibly targeted at disruptive innovation, her grouse seems to be with innovation itself. She chronicles how “progress” used to be the ideal, till the notion of “progress” got discredited because of the many negatives that came along with it (atom bombs, for instance). Today, innovation has become the holy grail even though innovation can result in several unanticipated negative consequences.

As someone who has beaten the innovation drum for close to 2 decades now, I have to admit that some of this criticism is justified. The word innovation is used quite indiscriminately these days because it’s the “in thing.” I remember grimacing when I once read a report on the Indian BPO industry that gushingly identified picking up and dropping employees at home as the most important innovation of the industry! But, many people are sensitized to this debate – whenever I try to define innovation in my class these days, we end up having a lively discussion about the difference between improvement and innovation. I must admit that in keeping with the times, and reflecting the importance of small changes in most business contexts, my own definition of innovation has become much broader over time (see below)!

Innovation can be criticized on several counts including a propensity to create needs that are not fundamental, being wasteful of resources, and, at times, acting as a smokescreen for other less desirable activities. The best example of this last one is the success of the pharmaceutical industry in justifying high prices for drugs in the name of innovation, when some studies have shown that what really pushes up the price of drugs is the marketing activities undertaken by these companies (that these marketing practices are often far from kosher is another dimension of this story!).

Lepore’s criticism

But Lepore’s main target is disruptive innovation. Much of her criticism is targeted at the process of Christensen’s theory-building. She cites examples from Christensen’s own work to try to establish that disruptive innovation is not based on strong empirical evidence. She faults it for not being predictive, pointing out that Clayton Christensen predicted that the iPhone would not be successful! She accuses Christensen of picking and choosing data to suit his theory, and suggests that the cases he cites don’t take alternative explanations into account.

Some of this criticism may be unjustified. As far as I can make out, there is no “theory” of disruptive innovation. It’s an interesting concept, particularly when it is contrasted with “sustaining” innovation (for a review of disruptive innovation, see my earlier post. Incidentally, this is the post on my blog that has the highest number of hits!). Christensen advanced the concept of disruptive innovation as an explanation for why several successful companies failed.

In fact, disruptive innovation can be subject to legitimate criticism, but not along the lines of many of Lepore’s arguments. Christensen sees disruptive innovation as a new way of doing things that is often inferior to the existing way, but one which advances rapidly thereafter, so much so that it can overtake the sustaining innovation trajectory at some point. One of the difficulties I have always found is identifying which (potentially) disruptive innovation will actually succeed and which will fizzle out.

Which disruption will succeed?

MOOCs is a good example. Plain vanilla online learning has been around for some time, and the demise of education as we know it has been predicted for the last 15 years. But, the first phase of online learning proved to be a complement to conventional education rather than a substitute. It’s only in the last few years that the improvement in streaming technologies and the huge increase in the availability of low-cost internet bandwidth have resulted in the take-off of MOOCs. Interestingly, MOOCs are still dependent on the teacher, only you now see her in video streamed from the MOOCs site.

However, even today, the jury is out as to whether MOOCs will replace classroom education. MOOCs seem to work well for self-motivated adult learners but there are many aspects of education that can’t be achieved through MOOCs such as socialization, working in groups, and values.

Lepore is critical of the way people tend to see disruption lurking everywhere. But, there are two reasons why disruption has become a part of our everyday lexicon. The first is that the internet has been a trigger for disruption in different industries and product categories. Particularly where the product itself is digitisable (books, movies, photos, music, etc.), the internet has clearly acted as a force for disruption. The second is related to cost and reach. The focus on reaching out to price-sensitive “unserved” or “under-served” markets (the so-called “bottom of the pyramid”) has led to people trying to discover ways of delivering products and services shorn of frills, and at the lowest cost possible. This has inevitably led to attempts to “disrupt” markets in the way that Christensen suggests. But, though this sounds easy, it’s not so in practice as several efforts have shown (see, for example, my earlier post on chotukool).

Tailpiece: What can we learn from this episode?

There may be a lesson for would-be management gurus from the Christensen experience. He has become an easy target because he appears to be a “one-trick pony,” known for disruptive innovation and nothing else. Contrast this with Michael Porter (5-forces framework, generic competitive strategies, competitive advantage of nations, clusters, CSR and shared value) and CK Prahalad (strategic intent, core competence, bottom of the pyramid) and you realize the difference. Both Prahalad and Porter moved on to other ideas, and such portfolio diversification made their reputations less vulnerable to sniper fire!

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Before you innovate, get out of your comfort zone

I had the pleasure of speaking to a batch of about 130 students, startup aspirants, product developers last week at the Innovate Delhi event. I was teamed up with Rajat Garg, of SocialappsHQ, and a heavy-weight with facts, numbers, trends, valley companies and slides. We were to cover “opportunity hypothesis’ broadly – how does a startup get an idea; validate the idea; build a demo/prototype and how the idea evolves into a business. Rajat and I spoke the night before (having him as a co-conspirator for the TIE Indian Internet Day event helped) and we decided to put on a joint session rather than one followed by another. Rajat would put up some slides, covering the theoretical framework and I would lead a workshop type session engaging the audience around their observations.

As I reached the venue a bit early (surprising since I had a long drive from Gurgaon to Okhla) I had some more time to gather my thoughts and think about what/how I would try to communicate. On a hunch, I decided to move around the hall (library converted to a training hall, with cameras, voice recorders and lots of other gizmos that only professors at Stanford can afford to have 🙂 and observe the batch to find some ideas that I could build on.

innovate delhi teams
As I went around the hall, some patterns started to form. Most of the folks were in blue jeans – the de-facto dress for the generation. About 20% of them had Apple laptops and the rest windows (similar to trends in India) but nearly all of them had squeaky clean covers – no personalization, no stickers proclaiming their love for free world! Nearly all of them had their laptop chargers plugged in (though it was an hour prep session and most laptops were fully charged). Though it was a hot day and so many bodies made it a wee bit sticky, all of the attendees were glued to their desk/seats even though the assignment was to think and come up with ideas on “marriage apps”. And the most critical observation of all, nearly all of them were glued into their course workbook; and the FB page setup for the event.

And then it struck me – this was a typical group of young Indian professionals, who love to “conform”. They all had been good students, mostly good kids, folks who would describe themselves as “being different” but would completely fit into a “stereotypical” definition of an IT/tech product persona. They were all living in their comfort zones – not ready to push their own limits, not expressing their yet-to-be-formed personalities, safe in the middle-of-the-road lives they were living. As I looked further to validate these assumptions new patterns emerged. Only 2 out of 130 had brought along tablets as their primary device. Nearly all of them had smartphones but very few were working on the FB page/course app on their phones? Few were taking pictures of the class and tweeting.

innovate delhi 2I had found my core argument for the day – I was going to challenge the group to think of their own personalities, experiences, behaviours. I was going to inspire them to reflect on who they are, and who they want to be and how they would differentiate themselves first before thinking of great, differentiated, innovative products that they would design, develop and bring into the world. I would show them how living (and using) on the edge of technology is almost a pre-requisite to pushing the boundary further; how great ideas evolve from personal needs and small advances which turn into big stories cause as the follower crowd discovers the same challenges when their use graduates and are happy to use the solutions the leaders have created.

And therefore, as Rajat opened his talk with the big concepts around finding an idea; finding a space that has some tailwinds, taking risks etc and set the stage for some curiosity, I found the means to engage with the audience with these questions:

  1. If the fashion trends for the day are colored trousers (yellow, green, orange), why are 90% of you in blue jeans?
  2. Why don’t I see any art, stickers, graffiti, pictures of any laptops?
  3. Why don’t I see folks using tablets when we all know that tablet volumes have crossed laptops this year
  4. Why did folks prefer to sit at their desks than take their laptops out into the terrace with a lovely garden view for the ideating exercise

But most importantly, could they think of pushing the boundary of any tech usage when they were not living on the edge themselves, when their own habits were on the trailing edge?

Needless to say, the rest of the talk was fun, interactive and stimulating. Rajat had some great slides – internet & mobility trends, numbers and wisdom from the trenches. I was able to co-relate those slides into how folks should use that information into their own “opportunity hypothesis”.

innovate delhi3As I look back at the end of the week, I find myself thinking again about the ‘conformity” of our post-independence indian culture; the regimentation of our education system and our social expectations that we need to break first before disruptive, revolutionary innovators and entrepreneurs will emerge. Hope this brief note makes you think a bit about yourself!

 

 

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A 10-Point Agenda to Support Technology-driven Innovation

With a new government at the helm, this is the time for wish-lists and advice as to how it can make a major impact. Here’s my two pennies worth on what should be the government’s priorities if it wants to promote technology-driven innovation and entrepreneurship.

Ease of Doing Business

India routinely does badly on the World Bank’s survey on ease of doing business. But, from talking to entrepreneurs, I get the sense that setting up a new services business is fairly straightforward, that’s why we see so many new service businesses springing up all the time. While there is always scope for improving the time taken to set up a service business, the real issue is with manufacturing businesses.

Most of the barriers to set up a new factory are at the state level, but the central government could help by creating a blueprint for a genuine single window approval system (possibly by studying the relatively more efficient states) and diffusing it to other states. Perhaps the centre can even incentivize states to adopt such a system (through a special grant?).

Availability of stable power is another important framework condition to encourage entrepreneurship in manufacturing as few entrepreneurs can afford to invest in large gensets for a fledgling enterprise.

Finally, while ease of setting up a business is important, ease of closing a business is equally salient. That’s an area for immediate attention.

Strengthen support for technology development

India’s success in services has obscured the fact that we are slipping backwards in several technology areas. In both more mature areas like electronics as well as important new areas like nanotechnology and new energy technologies, India is far away from being a serious player.

Over time, the government’s support programmes for technology development by industry have stagnated, and in some cases withered away. The only exception has been in Biotechnology where a robust set of support programmes is in place thanks to the initiatives of Dr. MK Bhan when he was Secretary of the Department of Biotechnology (DBT). [See my earlier post on Dr. Bhan’s initiatives at DBT.]

Some features of the DBT’s initiatives are (1) close involvement of industry in the design of support programmes; (2) willingness to support small firms with outright grants for genuinely innovative technology development efforts; (3) a variety of schemes tailored to meet the size and needs of different biotech enterprises; (4) a strong delivery mechanism (a separate Section 25 company) to execute the programmes. These could either be replicated in other sectors, or the Department of Science and Technology charged with rolling out large horizontal programmes along these lines.

There is an urgent need to start at least ten national collaborative R&D platforms involving industry, academia and research institutions to support technology development and commercialization in areas of critical importance to the country. Previous experiences such as the NMITLI programme of CSIR and the CAR programme of the office of the Scientific Advisor to the Cabinet can be drawn upon to design effective collaborative programmes. [See my earlier post on collaborative R&D programmes.]

Public procurement plays an important role in government support for local technology development. Government should give short-term preferential procurement to products based on local technology, developed specifically for Indian needs, which have been granted Indian patents. And, it should play a proactive role in helping local firms meet pre-qualification norms rather than using such norms to prevent local firms from participating in government tenders.

Promote Application-oriented Research in Academia

There is frequent criticism that Indian academia is too theoretical and lacks an application focus. Not enough research is done, and whatever research there is tends to be esoteric and abstract. Genuine application often involves crossing disciplinary boundaries, but Indian academia works within tight disciplinary silos. Yet, we also know that innovation in frontier areas has its seeds in academic research.

A first important step would be to recognize the importance of application-oriented research in Indian academia. The most prestigious science awards in India are the Bhatnagar awards, but these are based on research alone. I hear that there is a committee to set up a similar set of awards for translational research (this is the term in vogue for application-oriented work), this needs to be expedited and efforts made to find really outstanding people to be the first recipients of the awards.

Application-oriented criteria like patents, technology transfer/commercialization need to be included in the faculty evaluation process at our top institutions with some fungibility between these criteria and publication-related criteria.

At least 2 -3 positions of Professors of Practice need to be created in each department in an IIT or NIT which can be used to attract researchers from industry on either a fulltime or adjunct basis. The criteria for appointment of these professors of practice need to be different from those applicable to regular faculty appointments with a greater focus on application and commercialization. These professors of practice will also hopefully act as a bridge between the institution and industry, and enhance communication between the two.

Faculty should be encouraged to get involved in start-ups, either directly or as mentors. All restrictions on such activity should be removed. Strengthening of faculty evaluation processes within institutions will help dispel any concerns of faculty members pursuing commercial interests at the expense of their academic commitments.

Joint appointments need to be encouraged to promote inter-disciplinary work. Inter-disciplinary academic programmes and research projects can also help.

Inter-disciplinary work can also cross institutional boundaries. A couple of existing programmes catalyzed by Dr. Bhan show how this can happen – (1) the Stanford India Biodesign Programme brought Stanford Design School, All India Institute of Medical Sciences and IIT Delhi together to create a new generation of designers of biomedical equipment, and a whole slew of new products; (2) the IISc-St. John’s Glue project brought together India’s leading science institution and a leading centre for medical research. Though located in the same city, these two premier institutions hardly used to interact with each other. Such glue programmes/ projects are particularly relevant to our country since we have a large number of high quality specialized institutions but a small number of high quality multi-disciplinary universities.

Some institutions have already set up tinkering labs to enable students to experiment in a non-formal setting. The government should give a one-time grant to the top 50 technology institutions to set up such labs.

Summary: The Ten Point Agenda

 

[The views expressed here are the personal views of the author. Some of these ideas have been expressed before in different forms by others, and I thank everyone who has contributed.]

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Ideas are NOT dime a dozen! At least good ones! Building an Innovation Culture! #ThinkBig

Ideas are dime a dozen! It’s all in the execution!

So goes the popular wisdom. Indian start-ups and accelerators keep talking about identifying problems and solving them. True. There are great companies like redBus.in that were built using this approach. However, there are other great companies like Twitter that were not born out of any urgent problems that people had. They developed a short-form, real-time, instant broadcast mechanism that found a thousand uses such as having quick conversations, fighting for freedom around the world, and distributing links to articles, pictures, etc,. Such is the power of ideas that go in directions you never even anticipated. The main point is that ideas are important whether they address well defined problems or someone thinks “Wouldn’t it be nice if….”. They may all lead to innovation that helps start ups scale quickly!


I had written about  this subject almost two years ago in two articles here,  in the same forum – Is your company dependent on Innovation? Grow the right Culture First! The rest will take care of itself! and  Is Software Innovation an Art or a Science? It’s Artful Science or Scientific Art! . Since then, the Indian product ecosystem has come a long way and has seen examples of great exits happening because of innovation. It may be time to enumerate different steps that start-ups could take to make sure they are building an Innovation Culture.

Wikipedia has an excellent definition of Innovation – Innovation is the application of better solutions that meet new requirements, in-articulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and, as a consequence, new, that “breaks into” the market or society. A definition consistent with these aspects would be the following: “An innovation is something original, new, and important in whatever field that breaks in to a market or society”.

Now you can see why software product companies need to build a culture of innovation. It is key for their differentiation; essential for raising investment money, attracting bright employees and building unique intellectual property.

So how do you exactly build a culture of innovation? Here are popularly recognized steps:

Articulate a Mission and a Vision for the company rather than just end-products – Pixar’s goals were to reinvent the animation industry. Facebook’s mission is to give people the power to share and make the world more open and connected.   Google’s mission is to organize the world’s information and make it universally accessible and useful. This does not mean that you encourage your employees to come in and do random things. It just sets up a framework to view existing and future products and draws the lines within which they can innovate.

Hire people who are curious in addition to having the capabilities you need –  Innovation cultures cannot be built with people to whom it’s just a job with a paycheck or people who have very narrow interests. Those kinds of people will do extremely well in services companies where a team needs such focused people on some narrow task as part of a larger team. Software product start up companies can afford only so many people and they may need to wear many hats especially at the start of the whole effort. So if you want to build an innovation culture, you need to hire people who have diverse interests and generally curious about many things. Innovation happens more often at the intersection of many interests than in a single focused discipline.

Encourage Ideas  – This sounds like a truism but it is one of the most difficult things to do in start up companies, especially with co-founders or management with strong personalities. The first time an idea from an employee is overruled or ignored may be the last time that employee speaks up with ideas again! The founders/CEO need to establish encouragement of new ideas from day 1 or it will be too late for this to happen.  It is easy to be busy with being busy in a start up company and not take the time or recognize new and good ideas as they come up in conversations and encourage them.

Encourage Autonomy – Encouraging autonomy is another way of encouraging new ideas. In fact it may be an even better one than soliciting them in company forums. Someone who is expected to produce results rather than dictated steps to get to the desired results may come up and implement new ideas themselves.  Accidental and autonomous innovation is just as good anything that goes through formal processes.

Recognize and Celebrate New Ideas – Public and private recognition of new ideas  is an essential step in the building of an innovation culture. Man does not live by monetary incentives alone and they may be the least important ones! Start up companies may not have a lot of money to pass around for new ideas, but you could have other incentives such as small stock option awards that motivate good employees even more.

Build a Culture where Failure is not a Stigma – The Anti-Portfolio pages of the VC Firm Bessemer Venture Partners is a great example of celebrating failure quite publicly! . It names the partners who, for whatever reason, passed on some investments that went on and made it big! The message they are conveying mainly is not that these people screwed up, but to encourage taking more risk! In a software product start up, public recognition of the fact that some people tried something, even if they failed, builds the confidence that it is OK to try new things. Fear of failure is something that stops many employees dead in their tracks and they keep new ideas to themselves.

Encourage Big Thinking and Small Experiments –  Start up companies cannot afford not to think big and may not be able to afford large experiments.  They can, however, encourage small experiments that can validate the big thinking. These experiments ought to be encouraged and employees given the time and encouragement to pursue them.

But innovation comes from people meeting up in the hallways or calling each other at 10:30 at night with a new idea, or because they realized something that shoots holes in how we’ve been thinking about a problem. – Steve Jobs

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Will the Revolution Happen?

Revolution is not an easy word to throw around. Those cheering for a software products revolution in India must look at the historical context.

Innovation Factory

So many countries and communities have tried to emulate the amazing startup culture that exists in the United States, specifically in the Silicon Valley. The Valley is not only a fountainhead of creation and innovation in computer technology but also of commercial execution and expansion. For those who have some interest in this phenomenon, the reasons are obvious. Few weeks ago, I came across the wonderful book about the Bell Labs, “Innovation Factory” and it gave this phenomenon yet another perspective.

The book traces the history of how a powerful team came together to solve a big problem for humanity and also monopolistic wealth creation. The Bell Labs, in the decades before and after the second world war, was pretty much where everything that is the basis of modern communication and computer technology was invented. From the transistor to satellite communication, from fiber optics to UNIX, the Bell Labs became a factory of sorts for innovation. The labs were manned and managed by some of the finest brains of the time, sourced from the best American universities. Together, they had an opportunity and to solve a great problem for humanity, how to bring people who lived far apart, closer. And in return they ran a near monopoly in telecommunications in the United States, protected by dubious patent laws.

This team in the Bell Labs was the precursor to the next revolution, the one that came a few decades later, when the action shifted to the West Coast and Stanford University, when William Shockley, the co-inventor of the transistor moved to the West Coast to setup his semiconductor venture. Almost all of the semi-conductor companies found in the silicon valley at that time were started by employees who left the Shockley venture. Soon semicondutors became cheap and the startup culture spread fast. This second revolution, was driven by teenage hobbyists who later founded billionaire empires. To help these hobbyists build empires, the mandarins of finance, the venture capitalists, were already there, bringing in their networks and money.

The Indian Context

When we compare this culture to the Indian culture of innovation and wealth creation, we find stark differences. Our telecom revolution, when it finally came, has become synonymous with crony capitalism and corruption. Instead of creating new technologies, we have created new business models, where our telecom tycoons have outsourced the technology and we are completely dependent on our neighbours for handsets, weakening our foreign trade balance and dependency on outside technology.

Our famed IITs are another dismal example how things can go completely wrong. Even as we praise the IITs for producing some of our brightest minds, we should also remember that they have failed miserably compared to their counterparts in other parts of the world to produce any volume of innovation.

Even as we are saddled with “third world” problems, our governance is stuck in the 19th century. The Bell Labs had access to a unified market which helped them scale quickly. Our big problems of housing, sanitation and healthcare are all fraught with legal and regulatory red-tape. The only recent example of wealth creation is that of the IT Service industry which was again, less of an organic phenomenon and more a beneficiary of globalisation and reducing cost of communications.

So when we talk of starting a software products revolution in India, we are in effect talking of replicating the American culture of high paced innovation and commercialization in India. But what we forget is that we lack any historical or cultural context to bring in this revolution. Just because we have a whole lot of software engineers, there is nothing to suggest that they will start innovating suddenly and recreate the decades of learning that is subtly passed on through culture and smalltalk.

E-Commerce Nation

This places where technology built by Indians has touched common people are in e-commerce, travel and classifieds. Here we have home-grown companies that have created technology solutions and enabled people to see the benefit of transacting online. Even though these are still not pure technology companies, a number of Indian software products are founded by employees of these early e-commerce companies.

But what is badly needed is a “breakout” success, but there is no guarantee how soon that can happen. We can only hope that one of these companies becomes very large and creates a “mothership” like Bell Labs that then becomes the fountainhead of a revolution.

The other thing to note is that these revolutions were brought about by a significant shift in technology that opened new avenues for communication and commerce and these opportunities were successfully monetized by companies that were closest to these innovations. Hence to bring in such a revolution, we must build engines that invent those paradigm shifting technologies.

The real problem in Indian product companies is not lead generation or sales, but building innovative technology. On top of it, most Indian software products lack good quality and are not designed to be inspiring, though this is slowly changing. The problem in this model is that we are now competing with the best in the world and time is running out. My guess is that the Indian company that breaks this mould of mediocre technology, quality and design will most likely be the Indian mothership.