India’s Invisible Innovation: Affecting India’s Business and Economic Milieu in the Future

Can India become a global hub for innovation? Ekta Gupta endeavors to answer this question as a reflection to Nirmalya Kumar’s TED talk on India’s Invisible Innovation.

Source: www.entrepreneurshipinabox.com
Source: http://www.entrepreneurshipinabox.com

‘Innovation is novelty in how value is created and distributed’ as defined by the famous economist Schumpeter. Thomas Friedman in his book, “The World Is Flat,” said, that it is innovation that will keep the West ahead of the developing world, with the more sophisticated, innovative tasks being done in the developed world, and the drudgework being done in the developing world. In the Indian context with respect to the increasing flight of white-collar jobs to India from the developed world, the important question is, will India go from being a favored destination for software services and back office services to a destination for innovation?

When this question was asked to several executives, their response was negative, as they believed Indians could not be creative. The particular perspective on innovation, accepted by these executives and also by the world at large is of innovation for end users. This is known as ‘visible innovation’. On examining the level of corporate innovation in various cities, it was observed that the head of majority of R&D centers or innovation labs of various multinational companies were Indians, educated in India itself. This introduced the perspective that the beneficiaries of innovation are not to be restricted to end users as is usualy supposed. This gives a broader meaning to innovation – the concept of ‘Invisible Innovation’, where India is well-represented. The four forms of invisible innovation in India are:

  • Innovation for Business Customers; wherein, the R&D and innovation of the new product or service is all done in India, but is branded under the name of the MNC which is not Indian. Thus, what is visible to the end user is not where it is developed but the name under which it is sold. Over 750 R&D centers have been opened in India by different MNCs showing the worth of innovative population working in India for development of new products or services sold globally. The data also shows that the number of forward citations of a patent filed out of a U.S. R&D subsidiary is identical to the number of forward citations of a patent filed by an Indian subsidiary of the same company within that company. This highlights the fact that there is no difference between the quality of patent filed between the center in different countries.
  • Outsourcing Innovation; wherein foreign companies contract Indian companies to do a major part of their product development work for their global products which are going to be sold to the entire world. For example, in the pharma industry, a lot of the molecules are being developed, a major part of which is sent to India. XCL Technologies developed two of the mission critical systems for the new Boeing 787 Dreamliner; one to avoid collisions in the sky, and other to allow landing in zero visibility. But the ultimate users of Boeing 787 will never know the actual developers of this invisible innovation.
  • Process Innovation; which deals with the process to create/develop/manufacture a new product and not the new product itself. It is of this new process of innovation that new products are generated. For example, the advent of call centers in India. It’s only in India that youth has opted for working in call centers as a choice rather than a last resort. These educated enthusiasts then attach their creativity and expand this sector through innovative processes such as predictive modeling. Thus, it is the injection of intelligence to a process, which for long time was considered dead in the west, which has revived the sector.
  • Management Innovation; which is about new and novel ways to organize work. The most significant innovation to come out of India has been the global delivery model which allows you to take previously geographically core-located tasks, break them up into parts, send them around the world where the expertise and the cost structure exists, and then specify the means for reintegrating them. Without this, there would not have been any of the other invisible innovations today.

 

Thus, if a product for end users is the visible tip of the innovation iceberg, India is well represented in the invisible, large, submerged portion of the innovation iceberg.

While circumstances vary throughout the cities and regions, India, overall is not an easy place to do business. Although efforts to provide incentives and support innovation have suffered from a lack of strategic and integrating vision in the past, there are increasing moves towards overarching innovation policies with the work of the National Knowledge Commission, and later the National Innovation Council. For the first time, there is a dedicated section on innovation in the Twelfth Five Year Plan. This Plan calls for a multiplying of private sector R&D spend as a proportion of GDP by 2017. This private sector innovation has shown a challenging environment for business in India. This is important because innovation is inherently a speculative activity. Government needs to help foster an environment where the risks of innovating are reduced and the rewards maximized. Nonetheless, India continues to attract greater investment in R&D by multinational companies, as despite the challenges of the business environment, the pull of India’s talent pool remains strong.[1]

However I believe that a much larger and wider scope for innovation in India still remains untapped. Presently in India, innovation is limited to some capacities, 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 a long term context and vision. The fact that professionals from India have successfully driven 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 nurture 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. India has the youngest growing population in the world. This demographic dividend is incredible, but paradoxically, there’s also the mirage of mighty labor pools. Indian institutes and educational system are incapable of producing students in the quantity and quality needed to keep this innovation engine going. Hence, the need of the hour is to improve the education system of the country to be able to utilize the innovative minds of the budding youth population and expand their creative thinking. This is lacking in the Indian education system. Further, once the right potential is tapped efficiently, the time will come when innovation will become a norm in the Indian society rather than remaining an exception.

Ekta Gupta is a Student at The Jindal Global Law School, Haryana

[1] Kirsten Bound, Ian Thornton, “Our Frugal Future: Lessons From India’s Innovation System” (July 2012), Nesta.

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