Innovation has improved living standards in India: GE report
PremiumMost Indian executives say the country is a better place to live than it was 10 years ago because of innovation
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Mumbai: Is India a better place to live because of innovation? A majority of Indian executives believe so, according to the fourth edition of the GE Global Innovation Barometer.
About 91% perceive innovation as a positive force, and agree that people in their country live better today than 10 years ago because of the impact of innovation—higher than the global average of 80%.
Indian executives, the report said, have recognised the need to encourage creative behaviour and disruptive processes in business to innovate successfully, with 81% agreeing that innovations need to be low-cost and serve a specific market need.
Examples would include the “bottom of the pyramid" products like the Jaipur Foot, low-cost innovations in healthcare such as those from Aravind Eye Hospital, and the Nano car from the Tata group, India’s largest industrial house by market capitalisation, that was priced at ₹ 1 lakh when launched in 2009.
“Necessity is the mother of invention and we in India are compelled to innovate just to go about in our daily lives. The approach to innovation therefore in India is unique because it is driven by creating commercial value, that too at very aggressive price points," says Banmali Agrawala, president and chief executive officer at GE South Asia.
There is no one-size-fits-all strategy for making innovation work, he said in an emailed response, adding that each company and every industry is different and there are unique changes from one business to another, within industries and by company size.
For instance, in 2008, GE Healthcare pioneered a backpack electrocardiogram (ECG) machine for remote areas in India, making it the world’s first ultra-portable ECG machine.
It was designed to cater to villages, which are power-deficient. This battery-operated device, once charged, can take at least 100 ECG readings. Weighing only 1.1 kg, it costs about ₹ 45,000-50,000 while the cost of regular ECG machines in the market ranges between ₹ 7 lakh and ₹ 10 lakh.
In 2010, Godrej & Boyce Mfg Co. Ltd introduced the ChotuKool, a mini-refrigerator made for rural India that doesn’t have a compressor. It actually opens from top, runs on batteries, and weighs only 7.8 kg, running on a cooling chip and a fan similar to those used to cool computers. It consumes half the power consumed by regular refrigerators at half the price of regular refrigertors at ₹ 3,250.
Piramal Water Ltd’s for-profit venture operates a franchise called Sarvajal which has set up water ATMs. It is a cloud-managed solar-powered cashless vending ecosystem that enables clean drinking water 24 hours a day. It dispenses water for as low as 30 paise per litre.
Dismiss them as the so-called jugaad of Indians, or call them innovations, but they give people not only “value for money", but also “value for many", as R.A. Mashelkar, currently chairperson of India’s National Innovation Foundation, put it during his TED talk in November 2009.
India is fast emerging as the focal point for such innovations that stress on affordability, giving rise to the trend of reverse innovation, found a lot in the field of medicine.
“This (reverse innovation) happens in instances where innovations are required at low cost in developing countries where expenditures can be a constraint. In these cases, reverse innovation can be used to solve the same problem that would occur in developed economies, but at a much lower cost, and with much higher margins," said Ganapathy Subramanian, vice president of design and new applications, SAP Labs India.
Given this trend, many global corporations are turning to India to find answers to some of the challenges of the developing world.
“For global businesses, two factors killing their ability to innovate are the lack of talent and skills (57%) and the struggle to define effective business models (60%). Executives expect policymakers to ease tensions on the local and international talent market so they can incubate a competitive workforce, and are shifting internal priorities and processes to change their business models. In fact, emerging markets are most open to disrupting their business models," the GE report said.
For example, Philips India Ltd, in its innovation campus in Bangalore, designed a low-cost portable ultra-sound scanner for India initially, which was produced at a fraction of the cost of imported ones. Now it is being used in markets such as Germany.
Despite the focus on low-cost innovation, almost 36% executives find it difficult to come up with disruptive ideas and even if they do, 40% of them feel the inability to scale it up, according to the report.
Adil Malia, human resources head of the Essar Group, says the main reason for slow levels of innovation in a growing economy like India’s is that the innovation has not become a function in itself.
“Innovation needs to be made a norm in corporate score cards. It needs a kind of impetus that TQM (Total Quality Management), Quality Circles and ISO were provided a few years ago," says he.
The GE report also noted that in the last one year, executives have been moving quickly to evolve their business models and make them “disruption ready".
In 2013, the survey revealed high levels of anxiety among executives: they were unsure of how to navigate a highly competitive and fast-paced globalized innovation environment. In 2014, however, executives are moving from anxiety to action.
Moreover, technology plays a critical role in the success of innovation.
About 70% of respondents believe that Big Data is critical to optimizing business efficiency and analytics and data science are fields of rapidly growing interest.
“In fact, 47% of companies increased their big data and analytics capabilities in the last year and 69% of those report increased value in the innovation process," the GE report said.
Innovation, say industry experts, requires an understanding of customers and anticipating market evolutions besides attracting and retaining skilled individuals and prioritizing longer-term innovation goals over shorter-term financial objectives.
To be sure, companies are investing considerable resources into their innovation journey.
Philips has a centre in Bangalore with 2,500 people, which is focused on product development globally. The Tata Group has a Tata Group Innovation Forum and the Aditya Birla Group is also leading its innovation wing through the Aditya Birla Science and Technology Co.Ltd, located in Taloja, near Mumbai.
However, despite all the strides, India still ranks low in innovation. It slipped 10 notches on the Global Innovation Index (GII), the only one among the BRICS (Brazil, Russia, India, China and SouthAfrica) economies that slid in the rankings of countries based on their innovation capabilities.
Yet, the GE report said that India’s framework for innovation is perceived quite positively by executives from other markets with 46% saying that India has developed a framework conducive to innovation. However, Indian executives’ self-evaluation of their overall framework for innovation is slightly higher than this, with 56% reporting India has developed an innovation-conducive environment this year.
A collaborative approach to innovations may only help matters. About 86% of the executives surveyed by GE believe that with innovation increasingly becoming a global game, merging and combining talents, ideas, insights and resources across the world is the only way to be successfully innovative.
Companies, the report added, are increasingly eager to work together on research, development, and production to advance competitive advantage.
“We are witnessing the rise of the global brain, where experts from outside are brought in, as knowledge is shared across industries and geographies," the GE report said.
“The democratization of technology is enabling a growing new generation of entrepreneurs who need partners to help them scale. Already 59% of businesses use open source innovation, involving partners such as entrepreneurs, to develop new ideas."
The critical issue, though, is the need for companies to strike a balance between focusing on profitability and driving innovation.
A majority of executives, the GE report said, are still protective of their core business while innovating, but nearly a third are willing to risk an impact on their primary revenue streams for the sake of invention.
“Companies are increasingly eager to work together on research, development, and production and, in fact, 77% report the risks associated with collaboration are worth taking," the report concluded.
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