The surprise began when we were greeted by a kurta-clad Dr Kentaro Toyama, assistant managing director of MSR India. A Japanese-born American educated at Harvard and Yale, Kentaro left his cushy researcher position at Microsoft's Redmond headquarters to come to Bangalore in 2005 to start the Technology for Emerging Markets (TEM) unit, which he now leads.
TEM seeks to address the socio-economic needs and aspirations of people in emerging-market countries like India, where the majority of the population still lacks affordable access to computing technologies. TEM's work is closely aligned with Microsoft's Unlimited Potential Group, which I have written about in the past.
What impressed me most about TEM is its staff members' multidisciplinary backgrounds. In addition to computer scientists and engineers, TEM also includes experts in the areas of ethnography, sociology, political science, and development economics, all of which help Microsoft understand the social context of technology in emerging markets like India. For instance, we met with Aishwarya Ratan, an associate researcher trained as a development economist, who is exploring the delivery of financial services to poor and low-literate clients using mobile technologies. Another researcher, Nimmi Rangaswamy, who has a background in social anthropology, is conducting ethnographic research in urban slums to identify the socio-economic needs of micro-entrepreneurs there — many of which can be addressed with technology.
By leveraging its multidisciplinary talent, TEM has developed some amazing solutions designed for emerging and underserved markets, both in rural and urban environments. For example, it has developed the MultiPoint mouse, which allows a single computer to be shared by multiple children in developing nations. My personal favourite is Digital Green (which I nicknamed "American Idol for Farmers"), a Web 2.0 initiative which tapes progressive farmers to disseminate their best practices across agricultural communities. Digital Green just won the 2008 Stockholm Challenge Award in the Culture category.
Undoubtedly Microsoft is pioneering the R&D 2.0 model that I discussed in my last post — an organizational model that relies on anthropologists and development economists to first decipher the socio-cultural needs of users in emerging markets like India and then use these deep insights to develop appropriate technology solutions. And it's telling that Microsoft picked India as the epicentre of its global R&D transformation.
Indeed, the diversity of the complex Indian society and the scarcity of its multifaceted economy make India an ideal playground for piloting the R&D 2.0 model, a model that can help multinationals effectively serve emerging markets which are poised to power their future growth in decades to come.
Among tech multinationals, Microsoft clearly stands out with its multidisciplinary R&D approach that aims to tackle big societal challenges. Based on my interactions with Microsoft's top execs, here are some operating principles that I can offer to senior managers in other multinationals who wish to deploy the R&D 2.0 model in their own emerging market units like India:
1. Address societal needs, not narrow B2B or B2C needs. Like Microsoft, try to tackle big societal issues like illiteracy and deficient healthcare that afflict the masses in emerging markets like India, Brazil, and South Africa. Have development economists in your R&D team collaborate with engineers to devise cost-effective solutions for resolving these critical societal problems.
2. Leverage NGOs and grassroots entrepreneurs to scale up solutions. Once your multidisciplinary R&D team has invented a solution for a social problem (like lack of access to financial services), collaborate closely with local NGOs and micro-entrepreneurs to scale up that solution for the masses. Otherwise, the social impact of your invention will be limited.
3. Use anthropologists to link your formal business with the informal sector. The informal sector dominates emerging markets like Brazil and India (where it accounts for 90% of its total workforce). Yet this informal sector represents a huge potential market. To effectively penetrate this market, use social anthropologists who, as trusted brokers, can facilitate connections and interactions with prospective users in the informal sector.
4. Broker best practices across emerging markets and even developed nations. As Microsoft is doing, take best practices and solutions developed in India and replicate them across other emerging and even developed markets. For instance, California (which is slashing its education budget) can surely benefit from low-cost online literacy programs invented in India. And the Obama Administration could rein in skyrocketing US healthcare costs through the large-scale deployment of proven Indian solutions, like telemedicine, across America.
Has your own organization has implemented any of these R&D 2.0 principles? What experiences have you observed thus far?
]]>With most Western economies staying in the red through 2010, expect more Western firms to emulate GE and bet their organizations' future on emerging markets like China, India, and Brazil whose resilient economies keep growing. To enable this global expansion strategy, these multinationals are poised to dramatically beef up their R&D capabilities in developing nations.
While I am happy that Western CEOs are finally putting their money where their market mouth is by broadening their R&D footprint in emerging nations, I worry that they may not be investing in the right R&D model, and particularly not in the appropriate talent mix. Let me elaborate a bit.
In recent years, I have visited dozens of R&D labs of multinationals in India that are staffed with brilliant engineers and scientists, many of whom have PhDs in technical fields. They all represent version 1.0 of the global R&D model, still in practice, in which MNCs use low-cost but high-quality technical talent in emerging markets to crank out products and services that either get exported back to developed markets or are targeted to middle-class buyers in local markets.
But this 1.0 model will no longer be appropriate if MNCs like GE wish to cater their offerings to the 5 billion people who form the middle and the bottom of the economic pyramid in places like India, Brazil, and South Africa. Indeed, to effectively identify and address the explicit and unmet needs of the broader consumer base in emerging markets, I believe MNCs must adopt a new global innovation model. Let's call it global R&D 2.0.
This global R&D 2.0 strategy calls for a talent recalibration in MNCs' R&D labs in emerging markets. I suggest that multinationals, besides employing technically-oriented engineers and scientists, begin to staff their R&D units in developing nations like India with two other types of experts, namely:
Anthropologists and ethnographers. By having anthropologists study and interact with end-customers in their natural settings, Western firms can learn to tailor their business models and offerings to match users' socio-economic and cultural context. For example, Intel's People and Practices Research (PaPR) employs sociologists and ethnographers who spend months in emerging markets embedded in grassroots communities to identify the latent needs of local consumers. Dr Genevieve Bell, one of PaPR's anthropologists, traveled extensively across China and India observing people in their homes to find out how they use and what they want from technology. Her ethnographic insights shaped Intel's groundbreaking pricing models and partnership strategies for Chinese consumer market.
Development economists. Since the 5 billion people who form the middle and the bottom of economic pyramid earn very low incomes, they can't afford the expensive goods and services designed for (upper) middle-class consumers. Multinationals are reacting to this market reality by having their local R&D engineers design trimmed-down, low-end versions of their high-end products. But that's not enough. To effectively lure low-income buyers into procuring their low-end goods and services, multinationals need the help of development economists who can concoct creative pricing and financing mechanisms, such as microcredit schemes. For instance, Whirlpool is working with development economists at RTI International and the University of North Carolina to create new microfinance models that will enable Whirlpool to cost-effectively commercialize its appliances to millions of low-income households within emerging markets like India and Mexico.
To effectively carry out their global R&D 2.0 strategy, CEOs of multinationals must give themselves a target of staffing at least 40% of their R&D labs in emerging markets with sociologists and micro-economists by 2015. To promptly achieve this goal, MNCs need to cast their recruitment net a bit wider. In India, for example, in addition to hiring the cream of engineering students from the Indian Institutes of Technology (IITs), MNCs' local HR directors should also recruit bright graduates from reputed social sciences institutions like Jawaharlal Nehru University (JNU) in New Delhi.
Goldman Sachs predicts that the bulk of the global economic growth over the next three decades will occur in emerging markets like India, China, and Brazil. But multinationals can't capture this explosive growth unless they first upgrade their technically-skewed innovation model to a multidisciplinary R&D approach.
]]>Indeed, I do hope that the new Congress-led Indian government will swiftly deal with the growing disparity between the so-called BIMARU and TAKK states. Let me explain.
It's very fashionable for policy-makers in New Delhi to claim that if India can maintain a growth rate of 6-8% in coming decades, its per capita income growth could double every ten years or so. Unfortunately, this wealth creation is not uniformly generated, nor distributed, across all Indian states. Less-developed North Indian states such as Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh (collectively known as BIMARU) are clocking lower single-digit growth rates, whereas the dynamic economies of South Indian states of Tamil Nadu, Andhra Pradesh, Karnataka, and Kerala (or TAKK for short) are growing by leaps and bounds.
It will be over-simplistic to assign BIMARU states' low growth rates to their backward economic policies which, some claim, are less progressive than those pursued by TAKK states like Karnataka, whose capital — Bangalore — has emerged as Asia's high-tech Mecca, attracting tons of multinationals. In reality, BIMARU states like Rajasthan and even Bihar have lately been stepping up efforts to attract foreign investors. Sadly though, BIMARU state governments' noble initiatives are akin to Sisyphean tasks because these states' exploding demographic growth tends to rapidly eat into any economic gains achieved by these regions.
Let me elaborate on this point a bit. India's population is expected to increase from 1.15 billion today to 1.5 billion well before 2030 — surpassing China's. But as Nandan Nilekani, co-chairman of Infosys Technologies, eloquently pointed out in a recent talk at Judge Business School, 50% of India's future population growth will occur in underdeveloped BIMARU states, while more affluent TAKK states will account for just 12.6% of India's demographic growth. As a result, one can expect the "prosperity quotient" (total wealth created in a state divided by its total population) of BIMARU states to lag farther and farther behind that of TAKK regions in coming decades. That's a worrisome trend.
Why? Because with one worker in four in the world expected to be an Indian by 2020, there is a nearly 50% chance that worker will be living in a BIMARU state. What economic opportunities are we going to create for these young Indians in the North? Unless the BIMARU governments dramatically boost the job-creating potential of their states, the young North Indian population — whose median age will be just twenty-six by 2025 — will feel left out of India's overall economic development. Worse, they may become targets for recruitment by extremist groups who indulge in violent anti-social activities.
It's therefore in the interest of the new administration in New Delhi to immediately start working with the BIMARU state governments to identify ways to bridge the widening prosperity gap between Northern and Southern India which, if unaddressed, could lead to heightened social tension in the coming decade. Here are three straightforward solutions to jumpstart these collaboration efforts:
1. Boost literacy rates — especially among girls and women. Whereas TAKK states like Kerala clock a 90% literacy rate, analphabetism is nearly 50% in BIMARU states. More worrisome is the gender gap: in Bihar, for instance, the male literacy rate is almost double the female literacy rate. Given the proven correlation between girls' education and sustainable economic development, BIMARU governments should boost their states' female literacy rate. How? By tapping non-traditional literacy programs such as Google.org-sponsored PlanetRead and TCS' Adult Literacy Program that have successfully been deployed across TAKK states. And by partnering with Microsoft's Unlimited Potential group which has developed low-cost computer literacy solutions like the Multipoint Mouse, BIMARU states can dramatically improve their large, young workforce's digital proficiency.
2. Massively invest in infrastructure. India needs to invest at least $1.5 trillion investment in infrastructure in coming decade to stay globally competitive, and a big chunk of that will need to be channeled into BIMARU states, which desperately need to upgrade their
roads, ports, airports, highways, and telecommunication infrastructure. To help BIMARU states attract more foreign infrastructure investments, the New Delhi-based administration needs to delegate more foreign investment approval authority to local governments in BIMARU regions so they can speed up the decision-making process, which today takes years. And if the new central government can reduce the interstate disharmony in the Indian tax system, interstate trade between BIMARU and TAKK regions can dramatically increase on the back of improved infrastructure connecting the North and South.
3. Integrate BIMARU and TAKK states into National Innovation Networks. In addition to traditional commerce, it's also vital that BIMARU and TAKK regions engage in "knowledge trade." To drive interstate idea exchange, BIMARU politicians must encourage investors and corporations from wealthier TAKK regions to help scale up grassroots innovations developed by rural entrepreneurs in their states. The incoming federal government should play its part in building these National Innovation Networks. How about assigning a new mandate to the National Knowledge Commission — to act as a 'broker' (facilitator) that enables interstate idea exchange through online knowledge portals?
China is paying a heavy price for its two-speed development policies that saw its coastal regions' economies soar while China's hinterland remained impoverished. To avoid a similar dichotomy within the Indian economy, which will have disastrous social consequences, the new federal government in New Delhi must get to work immediately to bridge the widening economic — as well as knowledge — gap between its North and South states.
]]>Here's my answer: by building a National Innovation Network (NIN) — a dynamic web of public-private partnerships that broker (facilitate) connections between grassroots entrepreneurs and large corporations. If through the NIN these resourceful firms can gain access to grassroots inventions, they can finance the transformation (scaling-up) of these bite-size inventions into large-scale offerings aimed at a broader audience.
How would a NIN function in practice? Let's look at Microsoft and Marico, two visionary firms that are brokering and scaling up grassroots inventions all across the Indian market.
The Technology for Emerging Markets group within Microsoft Research India is running a project called Digital Green, which video-tapes agricultural best practices invented by farmers in one village and disseminates them across other rural communities. Microsoft has partnered with NGOs to adapt the video-taped information and best practices to fit the needs of a particular local community. By propagating a YouTube-style social-networking and peer-learning dynamic across Indian villages, Microsoft is eager to help Indian farmers adopt each others' best practices, thus improving overall agricultural performance across the country.
Marico, one of India's most successful consumer goods suppliers, is also keen to scale up grassroots Indian inventions into national success stories. Its visionary CEO Harsh Mariwala is eager to leverage Marico's extensive value chain as a platform to scale up grassroots entrepreneurs' inventions. For example, when Marico learned about a coconut-tree climbing device invented by a farmer in the southern Indian state of Kerala, it partnered with India's Coconut Development Board and the National Innovation Foundation to transform this prototype into a commercially-viable machine. Marico then tapped its nation-wide logistics network to distribute the machine to its hundreds of coconut oil suppliers, who all increased their supply chain efficiencies with the use of the machine.
I strongly encourage the CEOs of Indian corporations and MNCs to emulate Microsoft and Marico and partner with institutions like the National Innovation Foundation to broker, finance, and transform grassroots inventions into large-scale solutions for the broader Indian community. How about shifting 50% of your R&D budget towards building up the skills and contacts needed to effectively play the roles of Transformers and Brokers (facilitators) in India's budding National Innovation Network?
I also hope that the incoming Indian government (to be elected soon) will do its part in facilitating the construction of such a National Innovation Network. It's time for politicians in New Delhi to start building National Knowledge Highways that digitally integrate disparate states and create a sense of national unity. For instance, the federal government could encourage entrepreneur-rich Indian states like Gujarat, Karnataka, and Tamil Nadu to set up online portals where they can showcase and share their regions' grassroots inventions with poorer states like Bihar and Orissa. Such a move would help curb the widening gap between knowledge-rich and knowledge-poor Indian regions.
The World Bank estimates that if India could cross-pollinate its local inventions nationwide through such knowledge portals, it could increase its GDP growth by several points. Against the backdrop of a deepening global economic recession, that's a big enough incentive for both Indian CEOs and policy-makers to invest in a National Innovation Network! The clock is ticking...
]]>So we visited all major Indian cities — New Delhi, Mumbai, Bangalore, Chennai — in a whirlwind tour and interacted with dozens of both large corporations as well as grassroots entrepreneurs who have developed and launched cutting-edge products, services, and even business models. In coming weeks, I will be posting here insights gleaned from these fascinating encounters.
What struck us most during this field trip is that most Indian innovators — both large and small — are now single-mindedly targeting the rural market, which accounts for 70% of India's population. For instance, we visited the Rural Technology and Business Incubator (RTBI) at IIT-Chennai, which functions under the chairmanship of Prof. Ashok Jhunjhunwala. RTBI's mission is to design, pilot and incubate business ventures with a specifically rural focus. One start-up that got hatched by RTBI is DesiCrew, a rural Business Process Outsourcing company, which sets up IT-enabled service centers in rural areas to employ and train local people to meet the back-office demands of regional clients.
Interestingly, Jaideep and I also discovered that many grassroots Indian innovators are farmers and villagers who have devised creative solutions to address their basic needs for food, shelter, and sanitation. For instance, Mansukh Prajapati, a potter and clay baker from the state of Gujarat has devised Mitti Cool, an ingenious refrigerator made entirely from terracotta (clay) that keeps water cool and fruits, vegetables and milk fresh for days — and yet doesn't use a single watt of electricity.
Mansukh isn't an exception. The Honeybee Network, which is part of the National Innovation Foundation, which supports grassroots innovations in India, has compiled a database of 10,000 inventions pioneered by rural entrepreneurs like Mansukh.
I strongly believe that the only way India can sustain its long-term economic growth is by unleashing and harnessing the creativity of its grassroots entrepreneurs, especially in rural areas. But here is the challenge: these grassroots inventions don't scale up. Indeed, most rural innovation initiatives such as DesiCrew and grassroots inventions like Mitti Cool, however impressive they may be, are sadly limited in their impact to a local or regional market of a few hundred customers, and end up employing no more than a dozen workers in the local community. What is missing is a mechanism to cross-pollinate and scale up these bright ideas among India's 250-million-strong agricultural community which lives scattered across more than 600,000 villages.
How can India unleash a rising innovation tide that lifts all its rural boats? I have a few ideas — which I will share in my next post. But first, I want to hear from you. What do you think?
]]>I was expecting to see the entire Indian population in high spirit, celebrating this historic moment for India making it big in the global art scene. Instead, the reaction back home was mixed. While the Prime Minister and the President of India congratulated the Indian technicians and Rahman for winning 3 golden statues, several Indian artists and filmmakers contended that India shouldn't feel too exuberant . . . because Slumdog was not really an Indian movie! They pointed to the fact that the film's screenwriter, producer, and director were all British. But surprisingly, they didn't mention that Slumdog is based on a book authored by Indian diplomat Vikas Swarup, and uses an exclusively Indian cast, and was entirely shot in India.
I believe that the debate on whether Slumdog Millionaire is really an 'Indian' film is irrelevant. It is an India-themed movie with a universal message of love ultimately triumphing over adversity - a message that conquered the hearts a global audience.
What Slumdog's parochial critics fail to grasp is that India's creative influence is expanding far beyond the Indian market, and is finding a receptive global audience. Capitalizing on this evolving trend, visionary Bollywood producers have begun forging alliances with Hollywood heavy-hitters to co-produce global blockbusters that fuse Western and Eastern talent and capital.
For instance, Reliance Big Entertainment, which is part of a very large Indian conglomerate, has struck a flurry of deals with Steven Spielberg's DreamWorks and the production companies of Brad Pitt, Julia Roberts, Will Smith, and Tom Hanks. As a result, regional film industries (Hollywood, Bollywood, and the British film sector) are increasingly intertwined and being integrated into what I call Global Innovation Networks - in which ideas, talent, and capital from multiple creative hotspots are being fused together to produce high-quality films for a global audience.
Welcome to Globalization 2.0 of the film industry, a new era in which multicultural movies will be entirely designed and produced from scratch with trans-national webs of talent for a global audience.
Global Innovation Networks will rewrite the rules (and roles, to be precise!) of the game in the film industry. Indeed, instead of relying on a single country's creative input, these global ecosystems weave together the talent and expertise of specialized players emanating from around the world who assume four value-adding roles:
Inventor. The Inventor role is typically played by the original scriptwriter or book author who creates the plot and characters of the film before its shooting even begins. The film's original music composer(s) also assume this inventive role. Author Vikas Swarup and musician AR Rahman were the Indian Inventors of Slumdog's success.
Transformer. This role is assumed by a variety of people, from the screenwriter who adapts a book for the screen to the actors who transform abstract characters into real-life personas. But the Chief Transformer is the director, who orchestrates and integrates all the creative elements of his crew into a coherent movie. In Slumdog's case, British scriptwriter Simon Beaufoy, who adapted Swarup's book for the screen, was a key Transformer, but he wouldn't have won his Oscar without the transformational skills of the entirely Indian cast and Danny Boyle's directorial mastery.
Financier. The movie producer(s) typically assume(s) this role. While Slumdog was entirely funded by UK-based Film4 and Celador, it's likely that global movies spawned by Global Innovation Networks will be financed by multiple production houses spanning different regions.
Broker. This strategic role is assumed by cross-cultural intermediaries and facilitators who bridge cultural and/or business differences across regional markets that form Global Innovation Networks. They could be local casting agencies or regional distributors. It was Fox Searchlight that (after buying the movie's distribution rights from Warner Brothers) daringly brokered an unproven Slumdog's access to the US, the world's largest movie market, where it made a big splash.
India's future success in cooperating and winning in the $2.5 trillion global creative industry depends on Bollywood's ability to integrate itself into these Global Innovation Networks and successfully assume one or more of these four roles. Endowed with an open society able to easily assimilate and integrate with other cultures, India is best positioned to win in this new collaborative game given its multi-lingual, multi-religious, and pluralistic heritage.
Interestingly, while some in Bollywood still question the new rules of the game of the global film industry, Kollywood (the nickname for the South Indian movie industry) has already solidly plugged itself in. Take the example of just one upcoming Kollywood-based movie, Endhiran, that seamlessly integrates the talent and capital of inventors, transformers, financers, and brokers hailing from India, Hollywood, and Hong Kong.
Endhiran, which means 'robot' in Tamil, is based on novels written by renowned South Indian author Sujatha. Poised to become the costliest movie ever produced in India, this mega-film is being financed by Sun Pictures, which is part of a South Indian media conglomerate. The film features three superstars: Rajnikanth (a famous Tamilian actor with a global fan base, including in Japan), Amitabh Bachchan (a living Bollywood legend), and Aishwarya Rai, a glamorous Indian actress already familiar to Western audiences. While Kollywood-based S. Shankar is directing the film, he will heavily rely on the transformational technical talent of Hollywood maestros Mary E Vogt (who designed outfits for characters in Men In Black and Batman Returns) and Stan Winston Studio (which did animatronics for Predator, Jurassic Park, and Terminator). All stunts in Enthiran will be choreographed by Hong-Kong legend Yuen Woo Ping who handled stunts for Crouching Tiger, Hidden Dragon and The Matrix. Sun Pictures is already brokering a deal with HBO to release an English subtitled version of Endhiran in the West.
As Kollywood and Bollywood fully integrate themselves into the nascent Global Innovation Networks, expect more movies with an Indian background and a global appeal to regularly contend for (and win) Oscars, following the pioneering precedent set by Slumdog Millionaire.
Recently, Indian Prime Minister Manmohan Singh stated that India is projected to provide 500 million workers -- a quarter of the world's total work force -- within a decade. Indeed, by 2020, the average working age is projected to be 60+ in both US and Europe, 45 in China, and merely 29 in India!
But Mr. Singh was quick to point out that without proper education and training, the majority of these potential workers won't be "employable" by either public or private sector firms. In a country where half of the 1.1 billion population today is below 25, Indian politicians are finally waking up to the employability and talent challenges facing the Indian youth.
India's explosive economic growth is fueling demand across industries, ranging from IT to manufacturing to retail, for a huge number of skilled professionals. Unfortunately, while India produces over 3 million graduates each year, the percentage of those graduates that are employable by the industry is fairly low. Two studies, one by McKinsey & Company and another by Duke University, showed that fewer than 25% of the 500,000 engineers graduating in India are of comparable quality to the 70,000 engineers produced in the US -- and therefore "employable" by the industry.
Aware of this challenge, the Indian government is collaborating with the National Knowledge Commission to unleash the country's human potential by, for instance, opening more IITs and IIMs and imparting "soft skills" to young workers. Unfortunately most of these initiatives take a quantitative approach that merely aims to improve the supply-side of the Indian labor market. I personally think that the issue (and therefore the solution) lies on the demand-side, and requires a qualitative solution as well.
Why? Because employability is only half the problem. Even if they do find qualified workers, companies can't take their Indian employees' loyalty for granted: attrition rates in Western IT providers' Indian offices run as high as 50%, due to lack of engagement by their employees. In a global workforce study conducted by Towers Perrin, a whopping 56% of Indian employees said that they feel disengaged at work - the highest percentage among all countries surveyed. These disgruntled Indian employees feel a big disconnect between their personal aspirations and their day-to-day professional activities.
This disconnect results from the fact that while young Indians are attending colleges (let alone high schools) neither their parents nor the educational institutions pay attention to their individual talents and career aspirations, and help tie them to the skills needed to be successful in an organization. This paucity of attention later results in high employee attrition which hurts Indian industries' ability to sustain growth and build globally competitive and adaptable workforce.
However resourceful it might be, the Indian government can't afford to take a top-down approach to igniting and coaching the minds of the 550 million-strong Indian youth. It needs to enroll the help of creative entrepreneurs worldwide to accomplish that mighty goal.
Fortunately, some entrepreneurs are already responding to this call. Take Dr. Ravishankar (Ravi) Gundlapalli, whom I recently met in San Francisco. After 12 years of working as a supply chain professional (Ravi has a Ph.D. in Fluid Mechanics), Ravi decided to become an entrepreneur in the education sector with a global mission. Ravi told me that his passion for teaching and education goes back to his own high school days in Chennai, when he learned Tamil to teach mathematics and physics to his fellow students from Southeast Asia who had difficulty understanding concepts taught in English at school.
Ravi's extensive field research in India with individual students, colleges, employers, and trade associations shows that most of the 3 million graduates that India produces each year are not receiving adequate career-based education and orientation. So Ravi is launching a new startup, Turning Point Global (TPG), which aims to address the employability and talent management issues faced by the Indian economy.
TPG's vision is to "ignite the Indian students' minds" with career planning and career success principles that are aligned with the students' own genius and career aspirations. By engaging with Indian students while they are still in college, TPG plans to make them career-ready by the time they embark on their first job, armed with relevant functional, behavioral, and career success skills. TPG has many other innovative ideas to ensure that these students continue to maintain clarity of self and clarity of career, and in the process help reduce employee disengagement and attrition in the industry.
Ravi also told me about former president of India Dr. A. P. J. Abdul Kalam and Prof. Sudershan Acharya's Lead India 2020 youth national movement, and how his vision for TPG is synergistic with that of Dr. Kalam's, which is to ignite the minds of 550 million youth of India and transform them into employable human resources with strong leadership and human values.
I was moved when Ravi described how he is currently "igniting" the mind of a blind but super-bright Indian student, whom he met through Lead India 2020. This blind student received a youth leadership and outstanding scholarship award from Dr. Kalam himself. Ravi is coaching this blind student to fulfill his life-long dream: get into MIT to study computer science, and then return to India to start a software company, along the lines of N. R. Narayana Murthy, founder of Infosys.
I am very impressed by Ravi's genuine interest in tackling India's human capital deficiencies. I am hoping that more Indian and Western entrepreneurs will join him in providing career-ignition and career-building solutions for college students and young professionals in India. If they are successful, as Dr. Abdul Kalam predicted, "the ignited 550 million youth of India will make the most powerful resource on the earth, above the earth and under the earth -- and no force on earth can stop them."
]]>Congratulations on winning a hard-fought, well-deserved presidential election!
Unfortunately, you won't enjoy a long honeymoon period as the US desperately needs your visionary leadership to pull itself out of the economic quagmire it is being dragged into. Just last week, US unemployment reached a 14-year high of 6.5% and the stock market shed 929 points within two days.
The only way we can reboot the ailing US economy is through increased innovation. You seem to agree. Your electoral platform calls for doubling federal funding for basic research and making the current R&D tax credit permanent. You also want to invest $150 billion over 10 years to develop green technologies and create jobs.
But here is some bad news: merely cutting R&D taxes and pumping more dollars into big national research projects just won't make America more competitive. Actually, the very notion of linking innovation and national competitiveness is an outdated mental model that harks back to the Cold War, when the US embarked on an innovation arms race with its then-rival USSR, galvanized by the Soviet Union's launch of Sputnik in 1957.
Unfortunately, you will be entering into the White House in 2009, not in 1959. Back in the 50s, America dominated the world economy, and the US could afford to rely exclusively on local R&D talent to innovate for a relatively-insular US market. But today, the share of the US in the global tech economy is shrinking, with emerging nations like Brazil, India, and China expected to contribute more than 50% of the global economic growth in coming decades. Welcome to the post-American world, as Newsweek editor Fareed Zakaria calls it.
Unlike the 50s when the world was divided by the Manichean Cold War mindset, this post-American world will be economically more integrated and culturally more interconnected. Need evidence? Just check your kids' Facebook buddy list: I bet their online friends are spread out across all continents! The operative word today and in the future will and should be "cooperation," not competition. Your innovation agenda for the US should reflect this huge mindset shift.
As a multicultural person, you are keenly aware that in today's interdependent world, there is nothing "exceptional' about US issues that require innovative solutions to be developed by America on its own. The US energy problem is the same as the Chinese energy problem; we have one global energy problem to overcome. There is no separate US healthcare issue and Indian healthcare issue; we have one global healthcare issue to overcome. In the post-American world, the US needs allies worldwide, especially India and China, to tackle the pressing socio-economic issues that affect both Americans and citizens worldwide.
How can you imbue this spirit of "inclusive exceptionalism" in the US innovation agenda? By first getting American policy-makers and citizens to recognize that in the nascent multi-polar world order, (national) knowledge no longer confers power, but (global) knowledge-networking is the new source of power. Let me elaborate a bit...
The consuming middle-class and low-cost producing talent in international players -- especially Brazil, Russia, India, and China -- are propelling the US companies into a new global ecosystem called Global Innovation Networks. In this emerging collaborative market structure, global demand for innovation will fluidly match worldwide -- not just US -- supply. The blossoming Global Innovation Network model hinges on what Warren Buffet calls "true trade": not just exporting products and services but also importing ideas and talent.
To ensure that America runs a surplus in the true trade of Global Innovation Networks, you need to promulgate an innovation agenda that expands US' ability to successfully cast the four Global Innovation Network roles:
1) Inventor. You must recommend efforts to expand the US talent base to support not just product invention but also the creation of new business processes, services, and even business models. Imagine how Six-Sigma-trained physicians can improve patient scheduling processes in hospitals -- or how teachers with financial skills can devise an innovative model to attract private capital into rural educational programs. And while building these local capabilities, US workers must also learn to collaborate with inventors worldwide.
2) Transformer. You propose to set up a fund for innovative manufacturing firms. But US manufacturers' real success will hinge on their ability to transform globally sourced inventions into final products -- and transform these products into successful sales. With services now accounting for nearly 80% of the US GDP, US manufacturers and retailers need to be trained on how to drive "service innovation" in order to acquire and retain their customers both in the US and international markets. Position the post-industrial US society for success in the global services economy by shifting some of your planned hard sciences research funding into the emerging field of "service science."
3) Financier. Promote the global deployment of US capital into the four specialized Innovation Network roles -- and attract foreign capital into the same roles played by US firms. This explicitly means shifting the financing by VCs and mutual funds away from just focusing on startups and vertically integrated invention-to-innovation firms. For instance, you should finance the training of US-based Inventors and Transformers in the ways of development economics so they can devise creative schemes like microfinance to tie the poorer consumers in Africa and Latin America into Global Innovation Networks - which is exactly what Microsoft is doing in India.
4) Broker. You should call for the establishment of Brokers: organizations that facilitate and accelerate the invention-to-innovation cycles by linking Inventors, Transformers, and Financiers worldwide. These Brokers could even be co-located with -- and form the core of -- existing innovation clusters like Silicon Valley and the North Carolina Research Triangle. One example of a Broker is The Indus Entrepreneurs (TiE), which connects VC firms in Silicon Valley with Indian startups.
Global Innovation Networks represent the rising tide that lifts all boats, bringing benefits to all companies and regions involved. Let me pick one country, India, to illustrate this point. IBM employs hundreds of inventive PhDs in Bangalore who work jointly with its US-based consultants to co-invent and co-transform innovative solutions for IBM clients worldwide. Similarly, Indian IT outsourcer TCS finances and brokers inventive R&D projects at MIT and in Silicon Valley, which are transformed into client value by TCS's American consultants. If only you could strengthen the budding US-India Innovation Networks, the world's largest and the world's oldest democracies can jointly innovate solutions for major global issues such as water scarcity, healthcare, and oil shortage.
Now, let's talk policy. As the next US president, how can you bootstrap these Innovation Networks? Unfortunately, you just can't legislate their adoption by passing a law in the US Congress. Like democracy, innovation needs to be cultivated at the grassroots level. I encourage you to work with state and local governments to adopt globally-minded innovation-led economic development policies. They can learn from California, which has a head start on that front. Indeed, under the guidance of the Bay Area Council Economic Institute, Californian lawmakers are contemplating ways to recast Silicon Valley as a broker of Global Innovation Networks - by facilitating linkages between inventive Bay Area startups and universities and global Financiers and Transformers.
Rather than promoting a "national" innovation agenda, or setting up a fancy but useless National Innovation Foundation, you should facilitate US states' bottom-up integration into Global Innovation Networks by: a) improving immigration law to allow unrestrained "brain circulation" between the US and partner countries, and b) signing science and technology cooperation deals with talent-rich countries like Brazil, China, and India. That way, ship-builders in Maine will be able to team up with MIT nanomaterials scientists and resourceful Chinese logistics providers to invent energy-efficient cargo ships. And creative startups in the Midwest can link up with Brazilian bio-fuel experts to transform ethanol into a sustainable energy source for America.
I am proud of your desire to emulate Mahatma Gandhi, who was committed to creating positive change in the world by bringing people together peacefully. Gandhi famously said: "Interdependence is and ought to be as much the ideal of man as self-sufficiency." I am confident that, under your presidency, you will infuse America with that new spirit of interdependence by solidly anchoring the US in emerging Global Innovation Networks.
Sincerely,
Navi Radjou
Not surprisingly, Indian IT vendors are multiplying initiatives to cope with this downturn. Firms like Wipro have set up dedicated business units to penetrate emerging Indian and Middle Eastern markets. Others like Infosys are attempting to lessen their exposure to the financial services sector by foraying into other sectors like manufacturing.
But Indian IT vendors are aware that their Western rivals like IBM, Accenture, and Capgemini are also adopting the same survival techniques. They recognize that the only way they can sustain their global competitiveness is by moving up the value chain, and investing more in innovation.
Rather than merely mimicking their Western rivals' insular innovation strategies - i.e., increased R&D spending, patent filing, etc. -- some Indian vendors are trying out new innovation approaches designed for the 21st century, built around partnering and collaboration. Let me describe the collaborative innovation models embraced by two Indian tech providers: TCS and Satyam.
TCS is Asiaí's largest IT services provider and the most exposed to the financial services sector, from which it derives more than 40% of its total revenues. Eager to innovate faster, better, and cheaper, TCS is revamping its decades-old innovation model.
TCSís corporate R&D unit is India's oldest. Yet, instead of relying exclusively on in-house R&D capabilities, TCS is striving to comprehensively meet clients' business innovation needs by tapping external innovation capabilities. How? By brokering clients' access to the cutting-edge invention and transformation services available in TCS' newly formed Co-Innovation Network (COIN) -- global innovation ecosystems composed of academic labs, startups, business process experts, VC firms, large ISVs, and lead users. The COIN program is overseen by TCSís CTO Ananth Krishnan.
For instance, to effectively meet its aircraft manufacturing clients' need to build fuel-efficient high-tech jets, TCS has partnered with aircraft design firm Hindustan Aeronautics Limited (HAL) to coinvent and cotransform environmentally friendly engineering solutions that use lightweight yet resilient nanomaterials. Coincidentally, HAL recently cut a deal with Boeing to bring $1 billion of aerospace manufacturing work to India, capitalizing on the burgeoning US-Indian science and technology partnerships.
To address cost-conscious clients' urge to compress the time-to-value of IT engagements, Krishnan told me that he is now taking his collaborative innovation model to the next-level by customizing the COIN to meet individual user needs. For instance, TCS has partnered with a large US consumer goods company to overlay its Innovation Network on top of a client's own network, so that both companies can cross-broker access to each otherís technology partners -- swelling the talent pool and capital accessible to both firms as they co-develop breakthrough solutions.
TCS' rival Satyam is also eager to enable its clients' business transformation by forming innovation ecosystems. However, as Venky Rao, the SVP in charge of innovation and leadership enablement, points outs, Satyam decided to seed its ecosystem from the inside-out, by unleashing the entrepreneurial talent of its 50,000 employees.
Satyam's grassroots "intrapreneurship" initiative is part of a larger corporate experiment to promote distributed leadership, by empowering Satyamís business units and support functions to operate as independent enterprises. As such, Satyam today boasts a loosely-coupled federation of 2,000 intrapreneurs - ranging from alliance managers to client engagement teams to HR execs. These intrepreneurs are called "full life cycle leaders" (FLCLs) as they are in charge of managing the growth of their "businesses" through their entire maturity curve.
Rao's group trains these FLCLs on how to effectively facilitate innovation within their autonomous teams. These teams are encouraged to seek and adopt best practices from other business units within Satyam as well as from outside industries. They are also trained on how to drive business model as well as process innovation, in addition to creating new products and services.
Having instilled an innovation culture at the grassroots level, backed by distributed leadership, Satyam has begun to engage its partners and customers into its innovation ecosystem to drive value co-creation.
TCS's COIN and Satyam's intrapreneurship programs lend evidence to the fact that seeding and nurturing ecosystems is becoming the competitive locus of the global IT services market. I believe that the winners in the post-recession tech era will excel in orchestrating customer-focused Innovation Networks, rather than managing internal R&D assets.
]]>Why is that? My reasoning is that most European nations still suffer from their colonial mindset and are reluctant to acknowledge India's ascendance as a knowledge superpower. Need evidence? In a BBC poll conducted in 2007, most Europeans said they view India as a backward country plagued with "poverty." However, most Americans (and East Asians) thought India to be a modern nation, high on development and technology.
In May 2008, I published an op-ed in Les Echos, France's leading business newspaper, arguing that the French government must ditch its industrial-era trading model with India, which is based on importing/exporting physical goods. Rather, France must learn to forge knowledge-based partnerships with talent-rich India by integrating both countries' scientific and engineering capabilities into Franco-Indian Innovation Networks.
Fast forward to October 2008: it seems like Europe is finally warming up to India. I just returned from a two-week trip to Europe where I noticed growing interest among European execs to harness India's innovation capacity. Sensing an opportunity, several European universities are setting an "India Center" that acts as a knowledge broker, which intermediates contacts among European and Indian companies, and disseminates their best practices across the nascent EU-India Innovation Networks.
For instance, at ESSEC, a leading French b-school, I met Prof. Ashok Som, who runs the India Research Center. He told me that although he set up the Center several years ago, it's only recently that leading French firms like Renault (which teamed with India's Bajaj Auto to produce a low-cost car that rivals Nano), L'Oreal, and LVMH are multiplying efforts to invest in the booming India market and leverage its brainpower.
Similarly, as they globalize, Indian companies are also approaching ESSEC to gain insights into the European market. That's why ESSEC teamed up with IIM-Ahmedabad to jointly run an executive program titled "Global Management Program on Luxury Management." This program trains Indian and European professionals on how to effectively capture a slice of the booming Indian luxury market, which is expected to zoom from $3.5 billion today to $30 billion by 2015. Prof. Som quipped that following ESSEC's lead, other French academic institutions like IEP and HEC are also ramping up their India-focused research and executive education programs.
After ESSEC, I crossed the English Channel to the UK to visit Cambridge University. There, the Judge Business School has recently inaugurated a Jawaharlal Nehru Professorship of Indian Business and Enterprise. The Professorship has been set up with a fund of £3.2 million, a contribution made by the Government of India to celebrate the centenary of former Prime Minister Jawaharlal Nehru's arrival at Trinity College in Cambridge, where he studied for a degree in natural sciences.
I met with Prof. Jaideep Prabhu, the inaugural holder of this Jawaharlal Nehru Professorship. In addition to teaching and conducting research on India-related topics, Prof. Prabhu will also oversee the Cambridge Centre for Indian Business (CCIB), which was formed as a result of a £550,000 contribution by the BP Group. The CCIB will initially focus on contemporary research themes relating to India in today's business environment such as a technology innovation, emerging global economies, the link between economic development and knowledge economy and entrepreneurship.
Prof. Prabhu explained that Cambridge is deeply committed to India, as evidenced by the Vice-Chancellor's two-week trip to India to meet with the cream of India's political and corporate worlds, as well as the Cambridge India Partnership, chaired by Dame Sandra Dawson, former dean of the Judge School.
I am quite impressed by Cambridge's attempt to lead the UK's efforts to shape scholarly and research-based collaborations with India. The timing couldn't be better. During my stay at Cambridge, the Financial Times reported day after day of gloomy news on the British economy, which is inexorably plunging into a long recession.
Yet, I reminded myself what Fareed Zakaria said in his excellent book The Post-American World about how in the early 20th century Great Britain, acknowledging the decline of its own empire, chose to accommodate to the rise of another superpower (America) rather than contest it. That was a strategic masterstroke. At the dawn of the 21st century, as its over-stretched economy recedes again, I believe Britain is again demonstrating its Anglo-Saxon pragmatism by engaging another rising power (India) into a win-win partnership.
Against this geopolitical backdrop, I expect academic institutions like ESSEC and Cambridge University to act as the knowledge brokers between the declining Europe and the rising India. In 1814, France established Europe's first Chair in Sanskrit, at the Collège de France, to broker Eastern philosophy to the West. A few decades later, Cambridge started welcoming its first Indian scholars and students. More than a century later, things are indeed coming back full circle!
]]>I began my talk by debunking the popular myth that the Indian market already boasts hundreds of millions of middle-class consumers lusting for Western goods and services. The Indian consumer base is far from being homogeneous and is divided into distinct classes. According to NCAER's data, India's truly rich and cosmopolitan middle-class is less than 10 million-strong. The actual "consuming middle class" is estimated to be about 150 million. These pragmatic consumers aren't necessarily enamored with glitzy foreign products. Rather, they rather seek to acquire goods and services that are simple to use and priced low.
I explained that the onus is therefore squarely on multinationals to adapt their innovation models to fit the Indian socio-economic context so they can produce and sell products and services that meet three criteria: a) they must be hassle-free, b) they must be sold at low-cost, c) they need to be produced in large volume. Case in point: Tata Motors' Nano. Nano doesn't boast all the bells and whistles of Western cars (the standard Nano offers no air conditioning!), but priced at $2,500, it has conquered the hearts of India's price-conscious consumers. Tata will initially produce 250,000 Nano units, and eventually ratchet it up to one million units within a few years.
I also showed how Indian companies like ICICI, Larsen & Toubro, and Asian Paints are exploiting technology differently than their Western peers. Instead of reinventing the technology wheel, the CIOs and CTOs in these Indian corporations transform and broker tech innovations across their global business networks. As such, these tech execs are redefining themselves as Chief Innovation Transformers and Chief Knowledge Brokers who are obsessed with accelerating value-extraction from emerging technologies.
I then went on to explain how Western firms can learn from Cisco, Nokia, and Microsoft, which are diligently de-Westernizing their business models to win in India in the long-term. These exemplars have completely localized their innovation value chains in India by building grassroots ecosystems (as Microsoft's Unlimited Potential program has done). And they are also shifting their decision-making power from the West to the East, as Cisco did by opening its second world headquarters in Bangalore.
I concluded my speech with a discussion on the geopolitical and public policy implications of India's rise as an innovation superpower. Western CEOs have realized that we are transitioning to a post-American tech economy and they are adapting their organizations to win in this multipolar tech world order. Unfortunately, most Western politicians still don't get that. They tend to view the rise of India (and China) as a threat to their economic supremacy.
My message to public policy officials: get real! The ongoing economic crisis is only going to accelerate the emergence of India and China as the next economic superpowers. When they do reemerge from the crisis, Western powers will desperately need access to both Asian giants' markets to reboot their local economies. I hope that policy-makers in US and Europe will shun populist protectionism and forge trans-national Innovation Networks with talent-rich India.
In that regard, I feel the US has a leg up on Europe when it comes to acknowledging and harnessing India's innovation potential. The recent US-India nuclear deal is going to turbocharge scientific and technical cooperation between both countries. And individual American states like California are already taking steps to tightly integrate their region with India's knowledge economy. Unfortunately Europe is stuck in a colonial mindset and is way behind the US in constructively engaging India (I will write more on Europe in my next post).
After my presentation, I fielded some very interesting questions from the audience. Here are two pertinent questions attendees asked and the answers I provided:
How will the global economic slowdown affect India's innovation potential? Paradoxically, I believe the deepening recession will force Western companies to outsource even more of their knowledge work to India as they desperately seek to streamline their cost structure. This is exactly what happened after 2000, once the dot-com bubble burst: IT outsourcing and Business Process Outsourcing (BPO) to India really took off. But this time around, I suspect we will see an exodus of high-end work to India, not just low-end BPO stuff. Expect ailing British banks to outsource their middle-office and equity research work to India's knowledge workers while Big Pharma farms out their clinical trials and even drug development to Indian contract partners. This will give a big boost to India's nascent Knowledge Process Outsourcing (KPO) market.
Who will broker and implement the US-India Innovation Networks? Definitely not the politicos in D.C. or in New Delhi. I believe the era of state-level alliances of the 20th century is over. In the 21th century, scientific and technical cooperation between any two countries will be driven by two key stakeholders: individual regions (think California in the US and the German Länders), and bi-cultural workers. You can call it "bottoms-up diplomacy!" Given their multicultural background, Indian Americans (a.k.a. Non Resident Indians (NRIs)) are extremely well-qualified to facilitate what Berkeley Professor AnnaLee Saxenian calls the "brain circulation between US and India." The first of wave of IT/BPO outsourcing to India was led by Indian execs working for large US companies; I expect the NRIs to equally shape the KPO partnerships between US and India.
But two firms - Marico and Microsoft -- are now approaching the BOP in India not as a commercial market, but as a creative source of innovation that can sustain their long-term growth in that region. These exemplars are unleashing, and harnessing, the creative potential of grassroots Indian entrepreneurs. In doing so, these vanguard firms are pioneering a new business model -- by integrating their business strategy with corporate citizenship goals in a coordinated effort.
Take Microsoft's Unlimited Potential (UP) program, set up 17 months ago. UP embodies Bill Gates' vision of "creative capitalism" -- i.e., doing well while doing good for the 5 billion people who make up the middle and bottom of the pyramid, by making technology's transformative power available to them. UP partners worldwide with influential community stakeholders -- businesses, governments, educators, and nongovernment organizations (NGOs) -- to co-create viable economic solutions for social ills like illiteracy and deficient healthcare from which their communities suffer.
In India, for instance, UP nurtures and facilitates grassroots Innovation Networks -- made up of local Inventors, Transformers, Brokers, and Financiers -- to co-develop and co-market innovative technology offerings that address the most pressing socioeconomic needs of underserved communities. For instance, Microsoft is co-inventing with IIT-Chennai Professor Ashok Jhunjhunwala wireless computing solutions for deployment in Indian villages.
UP also reaches out to external Transformers and Brokers to rapidly scale the deployment of jointly developed tech offerings. For example, UP worked closely with ICRISAT, an NGO, to set up Rural Knowledge Centres (RKCs) all across India. The RKCs aim to provide computer literacy and an array of IT-enabled services to Indian rural communities, with a special focus on empowering women in these areas.
Marico is another company that works closely with Indian grassroots innovators to co-develop and co-market solutions that enhance local communities' standards of living. Marico is one of the most innovative and well-respected Indian consumer goods firms.
In my last trip, I met with Marico's CEO Harsh Mariwalla, and am truly impressed by his philanthropic efforts to boost India's self-image as a world-class innovator.
Eager to give back to the society, Mariwalla set up Marico Innovation Foundation (MIF), with a charter to galvanize India's innovation capabilities at the very grassroots level. Chaired by Dr. RA Mashelkar, India's most prominent scientist, MIF seeks to identify and publicly recognize independent business and social entrepreneurs, especially in Indian villages.
The most creative entrepreneurs, and their noteworthy inventions, are showcased in a highly-publicized award program that MIF organizes each year. MIF also brokers these grassroots Inventors' access to Financiers like banks and VC firms, and to Transformers like the National Innovation Foundation, which can transform their promising inventions into large-scale commercial applications.
Here is the kicker: several of these social entrepreneurs rewarded by MIF are...illiterates. This goes to show that you don't need a fancy PhD to drive social innovation!
While other companies run similar social innovation award programs as a PR stunt, Marico has actually deployed some of these grassroots inventions within its own value chain, because they were deemed helpful in driving the firm's growth. For instance, Mariwalla told me about a farmer who had invented a "robot" that climbs up coconut trees to harvest coconuts. Such an invention is a godsend to the Indian agriculture sector which, plagued by a deepening labor shortage, is facing huge pressure to boost its productivity. So Marico partnered with India's Coconut Development Board and the National Innovation Foundation to transform this prototype into a commercially-viable machine. Marico then tapped its nation-wide logistics network to distribute the machine to its hundreds of coconut oil suppliers, who increased their supply chain efficiencies with the use of the machine.
Both Microsoft and Marico have realized what many zealous corporations still don't understand: you don't need to invent a solution for the socio-economic problems affecting BOP communities. The solution is already invented by social entrepreneurs in these communities. Rather than reinventing the wheel, firms should broker and finance the transformation (replication) of these grassroots inventions into large-scale applications for use across multiple communities worldwide.
Microsoft and Marico are shining examples that corporations can do well while doing good in the world. But to get there, corporations must stop treating BOP communities merely as markets, and learn to forge innovation network partnerships with them.
]]>I just published an extensive case study on ICICI Bank, India's largest private bank, and one of India's most tech-savvy and innovative firms. In this study, I explain how ICICI is cashing on huge market opportunities by harnessing two disruptive forces -- globalization and rapid technology evolution. The result? Today ICICI Bank boasts $19 billion in market cap and its assets are worth above $100 billion.
What's ICICI's secret? An uncanny ability to continually transform its financial products, operational processes, and customer-facing services by exploiting world-class technologies. Unlike most Western CEOs, Kamath believes that business and technology are intertwined and as such must be integrated into a coherent "business technology (BT)" strategy, which Kamath summarizes into a neat value equation: (People x Process)^Technology = Value.
Under Kamath's leadership, ICICI has invested heavily in a flexible and open IT infrastructure, which is unburdened with legacy systems (e.g., ICICI has no mainframes!) and can be maintained at one-tenth the cost of foreign banks.
But ICICI's competitive asset is its unique innovation model. Indeed, to keep up with his firm's escalating demand for tech-enabled business innovation, ICICI's CTO Pravir Vohra has instituted a global Innovation Network that speeds the discovery and deployment of promising technologies across ICICI's global organization.
Rather than inventing new technologies in-house from scratch, ICICI's CTO office brokers its global business units' access to a bevy of internal and external inventions, and helps swiftly transform them into business value for the entire group. As a result, ICICI has been able to rapidly ramp up its retail banking customer base to 30 million, enrolling a whopping 7.6 million new clients in 2006 alone. ICICI has also steadily expanded into 18 international markets including Singapore, Dubai, Russia, Germany, South Africa, UK, and the US.
Can other CIOs/CTOs emulate Vohra's success as an Innovation Network broker? Yes. Here are Forrester's five suggestions to tech leaders eager to replicate ICICI's innovation capabilities in their own organization:
I am hoping that tech leaders will follow Vohra's lead in building dynamic Innovation Networks, so their business units seamlessly collaborate with internal and external partners to drive more innovation faster and cheaper. But to effectively orchestrate this fluid ecosystem, CIOs/CTOs must act less as inventive technologists and more as business-savvy strategists with strong innovation brokering skills.
]]>But I am afraid that if the next US President were to implement these policy recommendations, he will unleash a Cold-War-style innovation arms race that will nip global Innovation Networks -- the emerging market structure for collaborative innovation in our interdependent global knowledge economy -- in the bud.
Rather, I would recommend US federal and state administrations to implement the progressive recommendations put forward by California-based think-tanks like the Bay Area Council Economic Institute (BACEI). I just attended a BACEI-hosted seminar titled "A New Model for Driving 21st Century Economic Development," which explained to the Bay Area (which encompasses Silicon Valley) policy makers how to make their region succeed in emerging global Innovation Networks.
BACEI's cutting-edge economic development model suggests that in today's interconnected world, you no longer need to invent in order to innovate. Rather than assuming a single role as an R&D inventor as it famously did in the past, the Bay Area must now learn to broker and transform globally-sourced ideas, capital, and talent to meet innovation demand both locally and internationally.
How can California (or any other US state for that matter) become the shining beacon of global Innovation Networks? Among other things, by promoting private-public sector cooperation to train a new breed of multitalented US engineers and scientists who can collaborate with Inventors worldwide by assuming the three complimentary Innovation Network roles of:
Interestingly, famous US engineering institutions like Stanford, Berkeley, and MIT have already begun to produce such multi-disciplinary, world-aware innovation transformers and brokers. Early examples include Stanford's d-school, MIT's Sloan Fellows Program in Innovation and Global Leadership, and Berkeley's Information and Service Design program.
If BACEI's recommendations are implemented in California, and picked up by other US states, the US will out-innovate India and China by producing engineers and scientists of higher quality, and not in higher quantity (as the US did during the Cold War to compete with talent-rich Russia).
Unfortunately, Indian and Chinese politicians seem stuck in the 20th century economic development model, trying to out-produce each other uni-dimensional, hyper-specialized engineers and scientists who excel in one single role: the Inventor. They don't realize that in the nascent global Innovation Networks, knowledge (i.e., technology creation) isn't power; rather, brokering and transforming knowledge (i.e., tech application) will confer power.
I urge Indian politicians to revamp their science and engineering education curriculum - with the help of the National Knowledge Commission - to produce multidisciplinary engineers able to qualitatively compete as well as cooperate with the new breed of well-rounded engineers graduating from MIT, Stanford, and Berkeley.
Case in point: the Indian government is about to inaugurate 8 new Indian Institutes of Technology (IITs) and 7 new Indian Institutes of Management (IIMs), which will only further widen the communication gap between Indian technologists and managers. Instead, the government should combine these 8 IITs and 7 IIMs into 10 brand-new Indian Institutes of Technology Management (IITMs), which will train multidisciplinary engineers capable of brokering connections between Indian technology inventions and global business opportunities. And how about linking these IITMs with top-notch social sciences departments, like Jawaharlal Nehru University's, to produce "social engineers" who can harness technology innovations to drive economic growth in Indian villages?
Let me hear your thoughts: should India continue producing inventive technical specialists as it has done since the 50s, or shall it start generating multidisciplinary innovators with strong transformational and brokering skills?
In June 2005, India's current Prime Minister Dr. Manmohan Singh appointed Pitroda as head of NKC, a think-tank chartered with making policy recommendations for reforming India's education sector, R&D institutions, and intellectual property legislation in order to make India competitive in the global knowledge economy.
At the WEF event, Pitroda talked about ways to reform India's education system by giving its masses access to knowledge. Even if India's literacy rate is gradually improving, it remains stubbornly low (around 67%) compared to other BRIC countries like China (91%). Today, only 8% of young Indians enter college compared to 80% in South Korea. Without access to knowledge, the 200 million Indians expected to enter the workforce in the coming decade risk becoming non-employable due to lack of education.
Pitroda's comments on India's dismal track record on education and training poured cold water on optimistic data shared by McKinsey & Company at the WEF event. Their demographic projections showed that by 2050 India will boast the most productive dependency ratio (number of dependents divided by number of workers) among all emerging markets. By 2020, India is expected to account for a fourth of the world's total skilled workforce.
In theory, this optimistic data suggests that India's swelling young work force could become a much bigger draw for MNCs. Their CEOs may decide to move more knowledge-intensive activities like manufacturing and R&D work to a young and dynamic India, at the expense of a rapidly-aging China.
But that's just in theory! As Pitroda points out, India's young workforce is like rough diamond: it needs to be cut and polished before its hidden innovation talent can truly shine and command a premium price in the retail market (i.e., global labor market).
Realizing that the demographic clock is ticking, Pitroda and the NKC have recommended urgent educational reforms that target five variables: increased investments, accelerated deregulation, public-private partnerships (PPP), additional teachers, and new learning models.
Heeding NKC's recommendations, Dr. Singh's government has committed $65 billion to invest in new universities and training programs nationwide. The government recently approved the creation of eight new Indian Institutes of Technology. And the Prime Minister's office is collaborating with various ministries to deregulate the Indian education system so that, for instance, vice-chancellors can be appointed by their respective universities, and not by ministers.
But while the government needs to invest more in the education system and speed its deregulation, I believe that the private sector must also play its part. In particular, I recommend the Indian tech vendors like Infosys, Wipro, Satyam, and TCS beef up their corporate social responsibility (CSR) investments -- by contributing more to teacher training programs and new learning models. For example, to help address the shortage of math and science teachers in tier-2 and tier-3 Indian cities, TCS and Wipro can initiate a Transition to Teaching program (already adopted by vendors like IBM). Such a program will allow their most experienced employees to teach part-time or even full-time in their local communities.
Indian IT vendors must also partner with tech giants like Cisco, SAP, and Microsoft to develop and deploy new learning models for young Indian workers. For example, putting aside their professional rivalry, Satyam and Infosys can join forces with Microsoft's Unlimited Potential team to jointly create and implement e-learning solutions that deliver vocational training to Indian youths in urban cybercafés, or create community Internet kiosks in Indian villages.
The Indian tech sector needs to get its act together...and fast! Indeed, The Economist just downgraded India by two positions in its recent global IT industry competitiveness ranking, placing the blame on India's deteriorating human resources infrastructure. The Indian IT sector now globally ranks only #48 (with the US, Taiwan, and UK respectively occupying the top three slots).
To boost its global competitiveness, the Indian high-tech sector must seriously tackle the looming innovation talent shortage, in tight partnership with the federal and state governments. Otherwise, it's not just Bangalore, but the whole of India that risks becoming the backwater of the global innovation market. An Indian mind is too beautiful a thing to waste...
I am keen to read your own thoughts and suggestions on new educational mechanisms that could help unleash and fully harness India's creative capacity.
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