Over the past few decades, India has become a global hub for back office services and software development’. This has created a common belief in the west that people from developing countries such as India are generally good as software developers.
As Indians too, we often wonder that why as a country we have not been able to produce to produce world class innovations like a Google or an Apple so far. What is lacking in the country that holds back innovation?
Dr Nirmalya Kumar, Professor of Marketing and Dr Phanish Puranam, Professor of Strategy at the London Business School say that a part of the answer lies in how we look at innovation.
They counter the view that the lack of innovation in India can be attributed to the education system and argue that if Indians were not capable of innovation or if the Indian education system was so much at fault, then Indian professionals educated in India would not have held positions of heading the Research and Development centres & Innovation labs in the west. Listening to a TED talk by Dr Kumar changed my perception of innovation. He brings up a very interesting aspect of innovation called ‘Invisible Innovation’.
What is innovation?
The term innovation is associated with generation of new ideas that stand out, creation of new products or design of breakthrough technologies that generate mass appeal, transcend technological barriers or have a phenomenal effect on the market or society.
Quoting economist Schumpeter’s definition of innovation
Innovation is the novelty in how value is being created and distributed.
Innovation could be about introducing new products & services for the end users, but it could also be about recombining existing ideas and applying them to solve new problems, finding new ways of introducing existing products, or novel ways of organising firms and industries.
Dr Kumar uses this broader conceptualization of innovation, to point out that the kind of innovation involving creation of new products wherein the beneficiaries of innovation are mainly the end users of the products is the ‘Visible Innovation’. In contrast to the visible innovation in the developed world, an ‘Invisible Innovation’ manifests in different forms in the developing countries.
Manifestations of Invisible Innovation
Innovation for businesses
Where global products are made in India and branded elsewhere.
GE products developed in India are exported globally. More than seven hundred Research and Development centres set up by multinationals in India are working on innovations for global products, which may be branded elsewhere and cater to consumers worldwide. Quality of innovation in India is the same as those in US as is evident from the fact that both US and Indian patents get similar number of forward citations.
Some companies outsource a major part of the product development work, value added and R&D services to India to come up with global products. HCL technologies developed two mission critical systems namely collision avoidance system and a system to aid landing in zero visibility for Boeing 787 Dreamliner.
This is about how a new product is manufactured, developed or how a certain service can be provided in a better manner, which ultimately brings about innovation in the product itself. The numerous BPO Call centres provide examples of process innovation.
This is a new way to organize work. An example is the global services delivery model in which tasks that were previously geographically collocated are taken up, broken into parts, send around the world where the expertise of the cost structure exists and then reintegrated.
The key takeaway is
If product for end users is the visible tip of the innovation iceberg, then India is well represented in invisible, large, submerged portion of the innovation iceberg.
Some larger implications are that if the least sophisticated tasks continue to be outsourced by the developed world, then at some stage the next level of tasks will need to be outsourced too.
If the Research and Development team is going to be in India and China, and also the markets for many of these products, then at some point of time the top management team will also need to be based out of India or China.
These are certainly encouraging signs!
However I believe that a much larger and wider scope for innovation in India still remains untapped. Presently in India, innovation is confined to some areas, or to some multinationals or Indian companies or is mostly attributed to will and determination of a select few individuals. Lack of proper policies, systems and incentives to support creativity and innovation often lead to excessive focus on quick fix solutions that are not sustainable and may not be in sync with long term context and vision.
The fact that professionals from India have successfully steered innovation outside the country, shows that Indians do not lack the capability or aptitude and given the right environment and eco system that is required to foster sustainable innovation, India can become a global hub for innovation just like it has become a global hub for back office services and software development.
Of course Indians are moving up the value chain, but it is mostly attributed to will and determination of a select few. We look forward to the times when innovations become a norm in the Indian society rather than remaining an exception.