Saturday, February 20, 2010

Contexts of innovation

Kishore Kumar on his blog titled "The Great Indian Innovation Deficit" lists a number of technologies and asks the question "How many of these software technologies were invented by Indian companies?" And he names TCS, Infosys, Wipro, Cognizant and HCL.  I get asked that question very often. I posted a comment on Kishore's post (it hasn't appeared on his blog yet). Here it is for the benefit of others. I would welcome a discussion on the topic.  

I think the answer lies in the context. There are many kinds of innovation worth looking at. There is technology innovation, product innovation, service delivery innovation, process innovation, social innovation and variants of these. I could give an example of each. Within these there are disruptive innovation and incremental innovation. In some contexts, grassroots innovation is relevant. Most people relate well to innovation in the context of product and technology innovation. Again people tend to attach more value to disruptive innovation than incremental innovation obviously for the transformational impact in the quality of life, profits or efficiencies.
The kind of innovation the Indian companies mentioned bring is disruptive service delivery innovation...which is quite different from Kishore's examples. What innovations the Indian companies he mentions have contributed to?
Well, it was the Indian companies who first disrupted the software development life cycle/ process and project management per se. They broke it down to logical pieces by criticality, by value, by risk, by phases, by skill, by scale, by tasks and leveraged communication technology, geo-locational cost/benefits to execute/build them and reassemble the finished product i.e. software. In fact, it was process innovation of the service delivery process.

How do we know it was disruptive? It transformed how custom software is made and it ate into incumbents market share. By 2000, IBM. EDS, Accenture realised what they are losing business to Indian companies. They replicated the Indian models for themselves. By middle of 2005, for example, one in six of all IBMers worldwide was in India as part of the global delivery model. Accenture and EDS also followed suit through otheir own investments or through acquisition. What many people do not know is that all the latter companies use offshoring extensively but their clients do not realise that as it isn't openly talked about.

So first of all I am not sure, if we are making the right comparisons here. Secondly are there technology innovations within the service model of Indian companies? I believe there are ... there are technology based accelerators and components that these companies use to deliver services, to shorten cycle times, to re-use code and achieve faster diagnostics and so on. Many of these accelerators/components are patent pending or patented already. And you won't see them advertised because they are not very valuable outside the operating environment.

Why don't these companies make products - that's not their business model. Can they make products - possibly they can. For example, it's like asking can Samsung make Digital watches or Game consoles - they possibly can (may be they already have). Will they - thats a business decision.

Having said that, Indian companies are making products now. Why didn't they do that earlier? They didn't have the ecosystem for it before. Innovation needs an ecosystem - a network of investors, mentors, specialists, lab support, prototype support, testing facilities, an intellectual property framework, and so on. These facilities didn't exist before. India just had the talent. Let me know if this was helpful. I have couple of examples of new products here on this blog.
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