by Rica Bhattacharyya | ET Bureau | 02 February 2016 |
India should create a world-class reverse innovation lab, with the central government allocating a significant sum to start such a facility, says Vijay Govindrajan, Coxe Distinguished Professor at Dartmouth's Tuck School of Business and a Marvin Bower Fellow at Harvard Business School.
In an interview to ET's Rica Bhattacharyya, the New York Times and Wall Street Journal best-selling author and expert on strategy and innovation says the purpose is not just to provide a space where entrepreneurs can come but also venture money and more importantly management expertise. Edited excerpts:
What are the biggest hurdles to innovation for startups in India?
The entrepreneurship focus here is right but we have to take a look at the steps that we take to reach that goal.
What is missing to me is strategies in place for that to happen. Entrepreneurship and new businesses just don't happen by itself. It is less to do with individual capability, which means that there is nothing inherently wrong with Indians whether they can or cannot innovate.
It is the same Indians who innovate when they go abroad, but they don't innovate here, so what is really missing is incentive, capital and institutional infrastructure. If you put those in place, I don't see any reasons why it can't spur innovation here.
How do you view Indian 'jugaad' vis-a-vis high technology?
Indian startups need to focus on high-tech innovation and not jugaad. Jugaad would be a mistake and I think we have taken the train off the track with this jugaad innovation concept.
We need the latest technology, not old technology, to solve our problems. A term like jugaad puts the emphasis on the wrong place. What is wrong with jugaad is that to solve big complicated problems you can't say that I will make do with what we have. We have to invest in research and development.
If you have to bring the cost down, you have to put the latest technology. In the US, the government produces a lot of big research and it benefits a lot of entrepreneurs, or the basic research is taking place in the big universities and the entrepreneurs benefit from it. In India we don't have that culture of fundamental research in universities.
What role should the government play in spurring innovation?
If I was advising Narendra Modi I would say, 'why don't we create a world-class reverse innovation laboratory where the central government allocates some significant sum to start that lab', and the purpose is not just to provide a space where entrepreneurs can come but also to give venture money and more importantly give management expertise.
Most of the problems in startups are in the initial phases where they have to take an idea work through all the unknowns and uncertainties. That is the step where they fail. That's where we can give real management expertise.
It is almost like an incubation lab where you can have a national competition and say we are going to choose 25 big ideas and whoever has an idea can submit a proposal and you pick the top 25...and bring the team with each one of these ideas.
Some of the teams could be from large companies like Tatas, Mahindras...you bring the team for one or two years, they work inside this reverse innovation lab where they will get the resources but most importantly expertise to incubate the idea...if you do that I think you can kick-start entrepreneurship and startups much better.
What are the execution challenges in reverse innovation in India where majority of the companies are family controlled?
The biggest execution challenge is that these are companies with tremendous amount of history and success over a long period of time, be it Tatas, Murugappa Group, TVS, Birlas, Mahindras.
When you have such a long history of success, innovation requires change and change becomes difficult in a company with a long history of success because it makes you believe what you have done in the past is correct. Therefore, they want to maintain status quo. They don't want to change and that is probably the biggest challenge.
The family ownership in these groups has an advantage but is also a liability. The biggest advantage is patient capital, they can take long-term bets. The bad side is they have the biggest forgetting problem because if you want to innovate you have to forget. If you can't forget you can't learn new things.
Family orientation brings a lot of lethargy and those are the reasons why they struggle (in reverse innovation). I am not underestimating the difficulties of these companies, but when I talk to them I tell them these are the traps into which you could fall.