INNOVATION SPECIAL...CHANGING THE FACE OF INNOVATION IN INDIA

CHANGING THE FACE OF INNOVATION IN INDIA   Indian companies have historically been innovation slowpokes,  miserly with R&D expenses, but there are plenty of signs that a radical shift is underway If a Facebook or YouTube was created in India, at the time it was, it would have sputtered and collapsed. An innova tion by itself can be rendered ineffectual without the buzz and the nurturing cover of  an ecosystem.  “Success is determined by many factors -whether the ground is fertile  for innovation or whether the market is a lead-market or not,“ says Gopichand Katragadda, group chief technology officer, Tata Sons, as he begins to dissect India's innovation potential. Context is critical  in innovation. A lead-market, in innovation parlance, is the market for a product or service where the `diffusion process' for a successful innovation is fostered and expanded through a host of services. The GE veteran is now helping steer the $108.78 billion Tata Group  into a future heavily reliant on how well and how fast the Tata  companies innovate. As he completes a year in his new assignment  his mandate is clear. Tata Group chairman Cyrus Mistry has asked him to focus on innovations that can `impact at least a 100 million people and generate $ 100 million in profits.' The focus areas: energy and food security , consumer security , consumer electronics, factory and fleet analytics. The group is already closing in on a few breakthrough innovations in futuristic materials, in fuel-cells. Katragadda, or Gopi, as he is popularly known, isn't unduly worried about India's fall on the Global Innovation Index 2015 released last month. It's still raw as an index, he says. He also seems sanguine over India's miserable R&D spend at 0.8% of GDP (2014.) Government spending is three-fourth of Gross Expenditure for R&D (GERD); the Indian private sector accounts for a mere 20-25% and universities take 5%. Private industry is an evident research laggard. According to an ETIG analysis, R&D spends of Indian companies across sectors was a mere 0.52% of turnover in 2015. From here, private R&D expenditure is only bound to increase. It's a matter of evolution. “As a country we are still accepting products and services designed for other markets,“ explains Gopi. “When the Indian market starts demanding products unique to its needs then R&D will grow around it.“ Much of the research in R&D labs of multinationals in India -and there are over a 1,000 of them, employing 244,000 people -are geared for foreign markets.Gopi had headed GE's John F Welch Technology Centre in  Bengaluru. MS Unnikrishnan, MD and CEO of Thermax, who coincidentally , is also chasing a promising fuel-cell programme concurs on the societal and economic transition argument. “Innovation cannot be ahead of society, “ he says. Winds of Change There are signs, however, of a mindset change and a certain maturing of the Indian innovation situation. Rajan Wadhera, head of Mahindra Research Valley , is strenuously  creating in-house product development capabilities.  A new engineering centre is up in Detroit.  He is absolutely clear that with borrowed technology , Indian companies can only hope to increase market shares and that “in the long run, we need our own technologies for better profitability.“ A society in transition also throws up innovation opportunities. The Godrej Group has been in the forefront in `cocreating' products as it did with chotukool, a compact portable fridge; initially crafted with and for rural populations, now being adapted for urbanites. Sometimes, innovation can throw up quaint outcomes, especially when  inexplicable issues on affordability and aspirations collide. The Tata Nano,  a disruptive innovation, was expected to churn the market. It didn't. Aspirations -not wanting to be seen in a low-cost car -came in the way . The context issue, again. “The gap between affordability and people's aspirations is widening,“ says G Sunderraman, executive vice-president, Corporate Development and Innovation, Godrej & Boyce Mfg.Co. “Companies will have to innovate and bring to market `just-right' products“. India and Indian industry are clearly inching towards the change threshold. Some of the key drivers for innovation to happen -an innovation culture and a facilitating ecosystem -are falling in place. The signs are visible. India now has the fastest growing base of startups worldwide; around three or four startups are born each day and funding attracted is around $5 billion for 2015.“Today it's a badge of honour to say ­ I am in a startup, “ points out Gopi. The culture bit therefore is happening. Many of the startups are engaged in solving immediate problems through technology integration. From app-led innovations, it's only a matter of time before these minds turn to challenges in food, water, and energy which alone is a $500 billion opportunity in India. The silent infiltration of the maker movement into India is also an indicator. It's a trend in which individuals or groups converge and fabricate products in maker spaces -a platform for tinkerers -which are equipped with CNC machines, CAD, 3-D printers allowing for  sharing of skills and rapid prototyping. Products crafted could be anything from robots to pieces of furniture. Several such Several such makerspaces such as Work Bench Projects in Bengaluru, Makers Asylum in Mumbai, Nuts and Boltz in Delhi  and Makers Loft in Kolkata are up and running. A Vijaysimha, CEO of OneBreath, found it difficult, even a couple of  years go, to get parts off-thetable or get a 3-D printed component while he crafted his affordable ventilator.In an earlier interaction, Vijaysimha recalled how he travelled to Guangdong in China and the Shenzen Electronic Group (SEG) Plaza for some made-to-order components; all made and delivered within a day.Makerspaces are a boon for innovators like him. While all of this is happening, the ease of doing business is also looking up. The linkages between business environment and R&D spends are obvious. “To drive R&D investments and not know what will happen to it, is a tough place to be in,“ says Gopi, apparently pleased with the steps taken to improve transparency lately .He points to the adding of 20 gigawatts of energy a year as a good augury; it had fallen to 3 gigawatts a few years ago. So, how is the Indian private sector driving and also preparing for the domestic innovation era? First, the innovation leadership issue has to be addressed squarely . In Thermax, the old ivory-tower sort of research has been banished and the head of R&D, a nuclear scientist, is privy to and is in the thick of all business decisions made. He also sits on the company's management council. “During the economic downturn, with top-line pressures, we maintained double digit bottom line purely because of innovation,“ says Unnikrishnan. Apart from product innovations, Thermax also dabbled in business model innovations. Its `energy & steam rental' business looks promising. As for Tata Group, Gopi is the first to assume charge as Group CTO and is fuelling innovation synergies amongst group companies. As a group, the Tata's R&D expenditure is at 2% of turnover; $2.6 Billion in 2013-14. Tata Group figures amongst the top 50 of Boston Consulting Group's Most Innovative Companies 2014. “It's also imperative to have a clear  innovation owner within a company ,“ explains K Ananth Krishnan, CTO, Tata Consultancy Services (TCS.) He chairs the TCS Corporate Technology Board and is also a member of the TCS Think Tank. There is no ambiguity on who is the innovation top dog at TCS. It's not easy . Nightmares recur.“What keeps me awake is the question -is there something we are missing, a trend likely to be pivotal,“ confesses Krishnan,  as he and his cohorts now endeavour to `re-imagine the future with the digital individual at the centre'.TCS is one of the jewels in the innovation crown of the Tata's -with 3,892 innovation projects chaperoned in the last decade. While the leadership issue can be addressed without much ado, it is crafting the innova tion system and process es that can be quite a challenge for companies. Google put forth a system of continuous innovation with its 70- 20-10 principle in the expectation that employees spend 70% of their time on the core job, 20% as part of some other team and 10% on ideas totally out of the ordinary .3M too encourages a companywide culture of innovation. Creating Dedicated Groups Several companies find merit in distinct, dedicated innovation groups, removed from day-to-day routine and hier archies. Multiple approaches exist. Tata Group, through itera tions, has settled for a hybrid of sorts; basically frameworks for separating disruptive and incremental innovations. Gopi has cobbled an elite tech group in Bengaluru with one-third of researchers drawn from Tata Sons and the remaining from various group companies. The rationale: “put a few good people on large problems; leverage the small size of the team with the comfort that if you hit upon something you have the backing of the entire Tata Group“. While the crack team is huddled in Bengaluru, Gopi also engages with CEOs identifying disruptive or breakthrough programmes within individual companies. Tata Steel, for instance, has developed graphene -a new material that conducts  heat and electricity with great efficiency, is nearly transparent and is 100 times stronger than steel by weight. “We have devised ways of producing graphene at costs that are far lower than anywhere in the world, “ reveals Gopi. But of course, innovation can from anywhere and from anyone. It's here that the Tata Innovista programme kicks in; a scheme for generating, selecting, rewarding, and scaling new ideas from wherever they originate. In 2015, Inno vista received 1580 `promising innovation' projects compared to a 101 in 2006. The top 60 of these are expected to deliver a financial benefit of around $1.1 billion annually . Over 135 collaborative projects embedded in the system indicate growing synergies among Tata companies. The system is  indeed working. Collaborations, especially those of the industry-academia variant, are something  that Indian companies are struggling with. It just doesn't seem to happen. Co-innovation is vital. Unnikrishnan concedes that industry understands technology , not science. “How to create technologies from science is what we have to learn,“ he says. TCS boasts a best practice in innovation collaboration with its Co-innovation  Network (COIN) that spans the globe and embrace partners from entrepreneurs in residence, student communities, academic and research institutions to venture capitalists and startups. Krishnan says TCS earned its prima donna position in co-innovation by painstakingly building its own `ability to partner' over the years. The company has perfected a multistage model for academia engagement. Level one involves faculty visits and people exchanges, attending academic conferences and presenting papers. Fellowships and scholarships drive the process. Level two allows the company to gin gerly test the innovation waters with a partner through a small MoU. It may involve a small sum of money and a couple of researchers. This may re sult in a joint technical journal paper. Level three is serious stuff when wave lengths begin to match; it involves multi-million dollar funding. The inherent partnering capacity of TCS enables it go straight for the best in the world in a particular field; whether it's John Mitchell and his team at Stanford University on data privacy or the University of California, Berkeley , on personalised medicine. A couple of months ago, TCS even got into an esoteric area. It signed up with Royal College of Arts to setup a design innovation lab in London. The idea is to examine the confluence of design, technology and business, for joint patents. Patents or intellectual property (IP) issues are the other impediment to industry-academia partnerships. The trust factor crops up time and again. While background IP, which is the property of the originator, is easy to deal with, it is the creation of foreground or new IP that leads to issues. Krishnan says the urge to be selfish has to be cast aside by the partners. While partnering foreign institutions is relatively easy , Indian institutions continue to be difficult to deal with. Unnikrishnan recalls how it took him six months to merely sign a MoU with an Indian university. While difficult issues abound, the one that gains pre-eminence is the p erseverance required to take breakthrough or disruptive ideas to market. Self-doubt, at the individual and the company level invariably show up at the last mile. “Only a strong leadership with a deep desire to reshape the world can address this critical issue,“ says Gopi. “We are almost there.“ Time for Direct R&D Funding Tax breaks and varied concessions extended by government haven't really worked in stimulating innovation in the private sector the way it should have. Industry insiders and experts think it's about time for direct action. Of all the prevalent models, the Small Business Innovation Research (SBIR) programme of the US appears to be a favourite. It has helped SMEs draw upon their research potential and commercialise products to a degree of success. “An initiative of this type will till the soil in creating an Indian innovation ecosystem,“ says Gopichand Katragadda, chief CTO, Tata Sons.  “These are grants, not loans, in areas where risks are high.“ The SBIR has provided over $40 billion to research-intensive small  American business so far and engages over 450,000 engineers and scientists, veritably the largest concentration of STEM talent in the world. “It should be a clear and transparent milestone-driven award process, and this is crucial,“ insists Gopi. His apprehensions are legitimate given the proclivity of Indian programmes to get enmeshed in practices suspect. The SBIR awards are in three stages; around $150,000 over six months for feasibility studies or prototypes; around $1 million over 24 months for full development efforts. In the final commercialisation stage, the company is expected to pitch in with own funds with the government helping in attracting new funding and stakeholders. A sister initiative -the Small Business Technology Transfer (SBTR) facilitates joint research between SMEs and US research institutions. Some of the SBIR success stories include Qualcomm, Genzyme, iRobot and Symantec. Some of the most crucial parts of 3D printing technology were financed by SBIR (Z Corp, which emerged from MIT labs; later acquired by 3D Systems) way back in the early `90s. MS Unnikrishnan, MD and CEO of the Pune-based Thermax, also sees huge potential in Indian SMEs in triggering an innovation culture. In the recent past, he has mentored many with financial support and other resources in developing significant technologies. Today almost all of the company's membrane requirements come from an SME. Naren Karunakaran ET29OCT15