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The Innovation Highway

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CIOL Bureau
Updated On
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Sanjay

Anandaram

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What

began with R&D and strategy has moved to the third, and probably the most

important phase in the history of innovation in the Indian IT industry-products.

However, the most effective combination of products, R&D and strategy would

bring out the best in innovation from India.    

Innovation isn't the

first thing that one associates with the Indian IT. The Indian IT industry has

set new benchmarks in services and delivery. It's all about low cost and high

quality and a strong talent pool. But, innovation, we are not quite there.

Indian IT companies

have indeed been innovative, but unfortunately we have not been able to showcase

this innovative trait of Indian IT companies to the world. Innovation might be a

revelation to many of our readers but innovation is the path to growth and

sustenance and we are already on track.

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What is innovation?

There are various definitions but they all point to one thing-innovation is a

process by which an invention, which is the creation of something new, becomes

commercially adopted. Put simply, innovation is the commercially viable form of

any creation. It cannot be separated from the market conditions in which it is

adopted. As Dean Kamen, the well known inventor who holds over 150 patents on

things like the Segway Human Transporter, shoebox sized dialysis machine, a

stair climbing wheelchair, and a portable water purification system says,

“...(if) you figured out how to get the Internet to a 100 times as many people

without tampering with bandwidth...that would be innovation...In some cases,

inventions prohibit innovation because we're so caught up in playing with

technology, we forget the fact that it was supposed to be important.”

Looking back at

Indian IT over the last two decades or so, one can see that it has had its share

of innovation, though in phases. I would like to characterize the different

phases of innovation in the IT industry in India under two categories: (i)

Engineering-based R&D and (ii) Strategy-based R&D. Let's take a closer

look at each of these to understand these categories better.

Pre 1991



Engineering-based R&D innovation: This phase occurred naturally in the

decade before 1991. This was the time when India was still a tightly controlled

economy. Indian companies did not have to worry about international competition

(IBM, for one, had been asked to leave the country in 1977) but had to deal with

high duties and restrictions, capital scarcity and high costs, License Raj, poor

connectivity (physical and electronic) and price-conscious Indian customers who

were not particularly updated with international trends.

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This set of

conditions forced many Indian startups to focus on R&D engineering

innovation to meet business imperatives. Both had strong R&D groups (not

least because of the tax benefits that such expenses entailed), had professional

executive teams with a strong understanding of technology and an entrepreneurial

mindset. These startups had no choice but to be innovative. While there were

many young entrepreneurial ventures that emerged to take advantage of the

opportunity, the rise of HCL and Wipro, two successful companies from this era,

illustrate this phase of innovation. 

HCL launched Motorola

microprocessor-based commercial computers with ROM-based compilers and undertook

bespoke application development for its customers due to shortage of talent and

unavailability of custom packages. It developed innovative programs including

menu-based screens (remember, we're talking of the pre-Windows era) and

application development accelerators for an entirely new segment, the small and

medium businesses (SMB)-an innovative approach to a market. Later, HCL used its

expertise in UNIX to offer multi-processor UNIX-based systems to its customers.

Post 1991



Strategy-based innovation: The opening up of the economy in 1991 ushered in

the era of globalization. International technology companies entered India

offering the latest in technology, products and brands. Indian companies were

exposed to the global market for the first time. Indian companies faced

formidable competition from global players. While many Indian companies bit the

dust, the innovative ones took advantage of the new scenario and survived.

Clearly, given the constraints of capital, marketing, lack of international

experience among other things, R&D engineering-based innovation could not be

the only recipe for success for Indian companies on the international stage. So,

companies like Infosys decided to be innovative in their strategy. This was

reflected in their business model, hiring and retention plans, marketing and

management policies.

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Since inception,

Infosys was focused on servicing the application development needs of

international customers. It was, therefore, well placed to take advantage of the

opportunity thrown open by globalization. Innovation occurred on several

dimensions-remote delivery of software services; globally distributed 24x7

software development and support; innovative mechanisms in human resources and

corporate governance to gain credibility and develop brand equity that helped in

hiring, winning customers, leveraging customer and partner relationships to

create domain knowledge and capabilities (eg software development for Reebok

that played a role in the creation of Yantra) and listing in the India stock

market and Nasdaq.

In some cases, inventions

prohibit innovation because we're so caught up in playing with

technology, we forget the fact that it was supposed to be important

2005 onwards



The next phase: It is interesting to note that the above-mentioned companies

were most innovative when they were either small or faced with apparently

adverse market conditions. Today, for the first time in many years, India is on

the brink of an innovation explosion. There are several small companies across

the length and breadth of the country that have developed world-class products

today. And, there are several more entrepreneurs who are brimming with great

ideas.

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For the first time,

there is a large availability of global class talent, capital and partnership

possibilities. India is a well-recognized emerging market today. Indian IT is a

global brand. And there are strong linkages between India and the innovation hub

of the world, the Silicon Valley. There is increased association with other hubs

like Israel and Taiwan, and these relationships are getting stronger by the day.

The rapid cross-sectoral growth of the domestic Indian market is throwing up

huge opportunities for delivering technology-driven solutions in consumer and

enterprise markets. Indian academic institutes are setting up incubators for

nurturing innovative startups. Worldclass, IT-enabled legal, accounting, and

advisory services are available out of India today.

The concept of

innovation has changed considerably over the years now. The likes of Infosys and

Wipro have not only redefined innovation, but have also raised the bar

significantly. Innovation is no longer confined to R&D and engineering, or

strategy. Successful innovative companies emerging from India will have to

concoct creativity with R&D engineering and strategy. Other enabling

conditions exist and will only get better.

Already, a large

number of Indian companies have risen to the challenge and are delivering on

this promise in areas ranging from telecom software to business process

management to the use of cell phone technologies for consumer and business

purposes to healthcare and process automation. Industry associations like

Nasscom are working to get these companies to the domestic and international

platforms. I believe the opportunities ahead for Indian innovation is

unprecedented. And I believe that innovation will happen in the smaller Indian

companies that are unknown today, which could emerge to be the HCLs, Wipros and

Infosys of tomorrow.

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The opportunities are

plenty; the only binding is our imagination and the lack of ability and desire

to innovate. Paraphrasing Shakespeare “...the fault lies not in our stars but

in ourselves...” All that is required is for Indian entrepreneurs to seize the

moment and make the best of the innovative environment in India.

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