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Lessons from the House of Tata on Technology and Innovation

There are increasing signs of breakthroughs that could provide disproportionate returns to Tata companies.

One question that I am asked frequently by companies that have launched innovation programmes is: “How do we sustain interest and commitment from employees across the company?” In other words, how do we keep up the momentum?

After attending the final presentations and awards ceremony of Tata Innovista 2015 recently, I realized the Tata group has found an answer.

This year, Tata Innovista, a “celebration of creation and innovation within the group”, had more than 2,700 teams participating from 65 companies across 18 countries. Thirty thousand people have participated in Innovista since it was started a decade ago. I don’t know where to look for comparative statistics, but it’s reasonable to assume that this is one of the largest corporate innovation events in the world.

Innovista is just one of the initiatives of the Tata Group Innovation Forum (TGIF), a group of CXOs across the Tata group that evangelizes innovation. Innoverse, another TGIF initiative, is a crowd-sourcing platform; 16 Tata companies are active participants; 685 problems were posted last year resulting in 45,000 ideas, 513,000 conversations and 2,400 ideas taken forward.

While the TGIF itself meets as per a calendar, it has a team working behind the scenes to keep up the momentum of these initiatives. This team is housed in group-wide Centres of Excellence like Tata Quality Management Services and Tata Management Training Centre.

Ratan Tata provided the initial impetus for all these initiatives. He set an example for the group through his close involvement with the development of the Nano, and other innovations like the Tata Swach and Ginger hotels. But his lasting influence may well be the creation of the TGIF under the leadership of Tata Sons Director R. Gopalakrishnan with the mandate of building an innovation culture in the group.

With Ratan Tata’s support in the background, Gopal has been the force behind TGIF. At this year’s Innovista, he was felicitated on the completion of 10 years of TGIF. In Gopal, we have the answer to the question I raised at the outset—a committed executive sponsor with an effective corporate support structure can make all the difference.

Gopal’s Takeaways

Gopal, who has passionately backed innovation activities over the last decade, had some interesting takeaways to share.

The first was to revel in stories, as these are the best ways to share the hope and meaning of human progress. I couldn’t agree more. This is why, inspired by the Heath brothers Chip and Dan, Vinay Dabholkar and I centred our book 8 Steps to Innovation: Going from Jugaad to Excellence (HarperCollins, 2013) around stories. Stories, and even myths at times, play a crucial role in overcoming the fear of failure, one of the biggest obstacles to innovation. One of the world’s most innovative companies, 3M, does this wonderfully well when it encourages storytelling about the hundreds of inventors within the company who went on to succeed at last in spite of failing many times on the way.

Revel in stories, as these are the best ways to share the hope and meaning of human progress.

The second was to focus on the innovation and not the innovator. Gopal gave the example of Tim Berners-Lee, considered one of the fathers of the World Wide Web (WWW), who has steadfastly refused to hog credit for the WWW, always insisting that many different people played a role. If Gopal was trying to point out that very few innovations are the outcome of a single person’s effort, it’s difficult to disagree with him. But, stories usually centre around individuals and not teams, so I wonder how to reconcile this insight with the first one.

Focus on the innovation and not the innovator

Gopal’s third point was that an idea is no innovation. In fact, according to Gopal, it is the struggle to nurture and deliver the idea that is innovation. This point again has strong resonance with what we have seen—the road to developing an idea, seeing whether it works, refining it, combining it with others, making the process as robust as possible and finally delivering value or benefit is at the heart of innovation. This is an important lesson for youngsters, in particular, who tend to find the creative process of ideation far more exciting than the rocky road to execution.

It is the struggle to nurture and deliver the idea that is innovation.

“Rely on the compass, not on the map” was Gopal’s final point. If you think about this carefully, you’ll see it’s quite profound. Innovation tends to be an evolutionary process, with many twists and turns. Traversing existing roads will result only in incremental change. Bigger impact will need trying out the road not taken, but you have to get the directionality right. This last point is particularly salient because, in the corporate context, an innovation that lacks alignment with corporate strategy is unlikely to reach fruition. This lesson seems to have been absorbed well in the Tata companies—I found a close fit between innovation and strategy in most of the innovations I saw.

Rely on the compass, not on the map

What’s Next?

Ever since open source software became successful, the social “bazaar” has emerged as an alternative to the corporate “cathedral” as far as innovation is concerned. Coupled with the explosion of information, and the wide dispersion of creative efforts across the globe, this has induced companies to open up their innovation processes. Some Tata companies have embraced this idea with Tata Consultancy Services (TCS), for example, having pursued the concept of a Co-Innovation Network (COIN). Tata Innoverse that I mentioned earlier already provides one possible platform for collaboration between group companies.

But, the strength of a group like the Tatas lies in the diversity of competencies and markets that it encompasses. Foreigners who visit India are struck by this even if we take it for granted. Some past Tata innovations—most notably the Tata Swach water filter—have demonstrated the power of such collaboration.

A big challenge is how to encourage collaboration between independently managed companies with their own stakeholder groups. Tata Chairman Cyrus Mistry referred to the importance of such collaboration in his concluding remarks. But my own sense is that the key to unleashing the next wave of innovation in the Tata group may lie in fostering such collaboration not only with other group companies but with the wider world.

Tata companies are on the cusp of a major jump in innovation. Earlier, “invisible” innovations in processes resulting in efficiency improvements were the mainstay of innovation. But there are increasing signs of technological breakthroughs that could provide disproportionate returns to Tata companies. Two big acquisitions that Ratan Tata made—Corus (now Tata Steel Europe) and Jaguar Land Rover—already possess the capability for such technological innovation. If they can be harnessed as role  models and mentors, the Tatas may well be able to set benchmarks for technological innovation just as they did for employee welfare a hundred years ago.

This article was written for FoundingFuel.

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The Future of India

Trends in the US could portend the challenges India will face.

independence-day-67aLike many people, I dislike long flights, particularly since my body does not deal well with jet lag. I therefore try to avoid visiting the United States more than once a year. But every time I visit that country, I remind myself how important it is to keep in touch with what is still the powerhouse of the global economy, for that enables a better understanding of India’s challenges in the years ahead.

This time, my visit spanned the whole country – a few hours in transit on the east coast, a day in the mid-west, two days each in Texas and California. My reflections suffer from one bias though: my visits were primarily to universities. Yet, speaking to academics helps understand some of the broad trends, even if these institutions tend to be more liberal than the rest of the country.

The Decline of the Middle Class

A distinctive feature of the United States in the 20th century was the emergence of a large middle class. But an equally striking feature of the early years of the 21st century has been the decline in living standards of this same middle class.

In his book Fault Line: How Hidden Fractures still threaten the World Economy, Raghuram Rajan spoke of the challenge of re-tooling the American blue collar worker for the new workplace. But, this is not a problem of factory workers alone.

While in the US, I realized that at least four of my 51- or 52-year-old IIT classmates don’t have full-time jobs anymore. Their opportunities have declined as the number of middle-to-senior managerial positions has shrunk. Further, many organizations prefer younger employees.

By the way, in case you thought that this trend is restricted to the US, think again – we see a similar nascent trend in Bengaluru, particularly in MNC subsidiaries.

The New Economy

The US continues to be a leader in engineering. I had a ride in a Tesla car, and I was really impressed by its smoothness and its ability to bridge the gap between an electric car and one based on the internal combustion engine. Universities like MIT and the University of Illinois at Urbana-Champaign continue their focus on core engineering and devices.

But, value added in manufacturing is on the decline, with even sophisticated design no longer enjoying a cachet. Hardware companies don’t count for much anymore – a friend in Silicon Valley was telling me that a company that designed a high tech drone with all possible bells and whistles gets valued at $200 million, while companies of the WhatsApp ilk are valued at multiple billion dollars. This change in value is reflected in the geography of the Valley itself.

Over time, there has been a northward shift in the centre of gravity of corporate activity, in the direction of San Francisco. Chip companies in the southern part of the Valley are passé.  Youngsters prefer to live in San Francisco even though they don’t get to spend much time there if they work in Mountain View-based Google, the northern edge of the southern part of the Valley. The geographic shift also represents the difference in skillsets required by social media and other emerging consumer-centric startups. This shift in value is visible in India too – just check out the sky high valuations of India’s e-commerce companies. According to a recent article in Business Standard, Flipkart is more valuable than Tata Steel or Mahindra & Mahindra!

It’s not clear how long the best and brightest of the United States will work in hard engineering if the money is chasing e-commerce and social media!

It’s not clear how long the best and brightest will work in hard engineering if the money is chasing e-commerce

Change in the Nature of Work

It’s time we thought seriously about the future of work and society. While in Silicon Valley, I caught sight of the Google driverless car prototype on multiple occasions. The grapevine has it that the prototype works well, and only regulatory issues can delay its commercialization. Driverless vehicles will change transportation completely. Car ownership will decline, while public transportation will get a boost. Though driverless vehicles on India’s chaotic roads may seem utopian, just imagine their impact on the employment of drivers.

India is ramping up for a foray into manufacturing just as manufacturing is on the cusp of major changes. Automation is accelerating, and China has the largest number of robots in the world. As automation spreads, routine jobs that require limited skill levels will go to lowest cost locations. And, companies are smart enough to compute the overall costs, and not focus on wages alone. Overall costs factor in labour productivity and the efficiency of logistics as well as the regulatory environment. India will struggle to be competitive when these overall costs are taken into account even if we improve our skill levels.

India is ramping up for a foray into manufacturing just as manufacturing is on the cusp of major changes.

Winner-takes-all Economics

The decline in the middle class reflects another important shift – income distributions are veering farther away from “normal”. While in the Valley, I attended an interesting talk by Sanjiv Das, a professor at Santa Clara University, in which he emphasized how few things in the world are distributed in the favourite “normal distribution” of our statistics professors. While the internet may be democratic in terms of access, it has only accentuated winner-takes-all economics.

All these changes in wealth and income distribution combined with changes in the nature of work don’t bode well for India. India may create the largest workforce in the world, but what if such a large workforce is not required?

India may create the largest workforce in the world, but what if such a large workforce is not required?

Winner-takes-all economics is spreading in a way to the broader society as well with income and wealth inequalities deepening. At the same time, governments are unable to manage social welfare systems efficiently. While the resultant tensions may be manageable in the small, wealthy countries of Europe where minimum living standards are already high, it’s not clear how countries like ours will manage these issues.

Public-private gaps are visible in US infrastructure as well. I was struck by how the freeways and public roads in the Bay Area are not in the best shape while private buildings get fancier and new dwelling units appear in hitherto low-density areas like along the sides of El Camino Real, the north-south artery through Northern California. This uncannily reminds one of India.

Monopolies and winner-takes-all trends are active in the non-internet world as well. While Starbucks Coffee outlets dot the US landscape, I was amused to find that other outlets including hotel coffee shops also now serve Starbucks coffee and proudly advertise so. Starbucks is practically the only coffee brand on offer now!

But, even Google has its Limits…

In all of this, it’s good to see the Americans retain their sense of humour. I particularly liked one hoarding in front of a church in Silicon Valley: “Google can’t satisfy every search.” I hope we can retain our sense of humour too!

Reblogged from FoundingFuel

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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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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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“Potential of Software Products from India” – Insights from an interview with Prof. Rishikesha T Krishnan, IIM Bangalore

In an interview with Govindraj Ethiraj on the changing paradigm of the Indian software industry, Professor Rishikesha T Krishnan, IIM, Bangalore, talks about how the software industry is getting transformed from a services oriented model to creating successful products. He cites FusionCharts as a great example of finding a niche market and moving to the cloud as an efficient mechanism to deliver and service customers.