Apr 18, 2010

From Jugaad to Systematic Innovation

I read the book "From Jugaad to Systematic Innovation" by Prof Rishikesha T. Krishnan of IIM Bangalore

The recent slowdown necessitated the need for Indian companies to innovate. This meant doing things beautifully, at lower costs, without hurting the environment being self sustainable in terms of revenue and consumer support simultaneously. 

Prof. Rishikesha's book takes us to a journey of innovation systems, comparing with those in China, benchmarked against the US. The book is study of what is innovation really, how does it help to be innovative, why India fails to create world class innovation and most importantly what needs to be done so that we are innovative.

Innovation is introduced to begin with. Innovation is different from invention. Innovation is developing something new over explored or unexplored space, commercialize it, make a strong product or service, creating tribes or communities of people who yearn to use it and be big. Innovation is something like Henry Ford making most of the operational capacities by using assembly lines rather than doing fundamental research on internal combustion engines. An innovative society always looks for advancement and defies status quo. Efficient deployment of known technology and best practices needs product and process innovation. Also with greater complexity individual inventor working in silos is rare and undo-able. What is needed is vision for innovation, ability to take risks in newer technologies and more tolerance for failures. Failures taken as a sign of genuine efforts which didn't commercialize well. 

The factors which influence Industrial innovation are investigated later. The Industrial revolution and setting up of universities and firms in Europe are explained. However the period of renaissance and the fights against dogmas in arts, politics, sciences and religions should have also been given due space. These socio-cultural events resulted in a new thinking class in Europe which definitely helped independent thinking and paved way for innovation. Also the tradition of education and research, of open minds and discussions which was centered in Universities of Europe, where a lot of  world class research in Physics, Chemistry and Mathematics took place should have been mentioned. The examples of XEROX and AT&T Bell Labs have been presented to explain the emergence of Mouse Based User Interface and transistor. Both of them caused a revolution in popularizing computers. Also the role of wars in driving innovation is explained with the examples of gunpowder, armor, various kinds of guns, game theory(not mentioned), the Manhattan Project, PERT/CPM Techniques, Operations Management, radar and canons. The role of visionaries in education(Dean Fred Truman), Law(The Bayh-Dole Act in the USA), Politics(Taiwan's Industrial Research Institute(ITRI)), Good accreditation schemes for Universities (The U.K. Research Assessment Exercise) are presented. Incentives, inputs and capacity are the factors necessary for a firm to innovate. The problem of bringing products to market soon rather than bringing them at par with world quality and premium cost, which was a challenge in the initial years of Indian Industries still remains a problem because of the soaring demands for goods with the liberalized economy. 

The author then puts us on test. We are compared on three indexes. Unfortunately India fails to make a mark on all, UNCTAD's Innovation Capacity Index, Economist Intelligence Unit Innovation Study and Georgia Tech's High Tech Indicators. Other indicators such as the Human Development Index and the number of patents filed from India are also examined. We lag behind our neighbor and country having the similar size and population, China. The Indian Pharmaceutical sector is found to be the most innovative, and the Center for Industrial Research a good innovator, in-spite of being in the Public Sector. 

The author examines the causes of this failure to innovate in the next chapter. After Independence the Government of India invested heavily in public infrastructure schemes which consumed foreign technologies. The technology was imported from Russia due to the proximity. Government had its presence in most of the fields and was a provider rather than a supervisor. Even in the fields which had private ownership, the aim was to produce and grow rather than innovate and grow. Because of the entry barrier foreign firms licensed their technologies to Indian companies. The only strategy the Indian Companies had was to prevent others from entering the markets, there was no incentive to improve the productivity. The latter is also attributed to the supply of low cost labor. The Pharma companies had to innovate because of the threat to their business model due to the patent laws and the nature of business. Post liberalization it was imperative that the Indian companies innovate. But there were still psudo-monopolies and they had so much growth and demand that scaling up to the demand was challenging enough. The software industry is presented as a process and operations innovator rather than products innovator. For the software firms services was a natural choice because it needed less investment, the competition was less and there was a pool of educated Indians. As a strategy the Indian software players deiced to invest the returns in education charity rather than in Venture Capitals funding software start-ups which would be in conflicting interest. The mindset of Indians as uncooperative, brahmanical, and giving undue importance to brain work is presented as a hindrance to innovation. Which holds true, with the respect for manual, hard work and respect for the fairer sex. 

To end what things need to be done are discussed. The onus has to be on new, innovative, technology driven firms. Also the existing firms should be given an innovation boost so that they scale up and realize their full potential. Also the government undertaking which have done great work should be set as separate private companies similar in lines with Lenovo in China. Also the government ministries must be made more answerable, lean and focussed towards a goal of driving innovation in all sectors of Indian Industry. 

To sum it all, the author tells us the need for a process and system of innovation rather than the short lived patch like Jugaad, we all like to work with. A systematically innovative society can help us realize many dreams our leaders envisage for us. 

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