In the latest ranking of 143 economies, India slipped 10 notches on the 2014 Global Innovation Index (GII)—the only one among the BRICS (Brazil, Russia, India, China and South Africa) economies to see a decline. India’s fall from 66 to 76 raises the question if its companies lack the innovation DNA even though the country is known for its skilled talent.

Encourage people to think

Deepa Mani, assistant professor, Information Systems group, ISB

Mani spots three issues he has come across in his conversations with entrepreneurs and executives. “First, are we able to measure the different types of innovation that are happening in Indian firms? Often, we focus on product and business model innovation that is more easily measurable to the exclusion of process or procedural innovations," she says.

Second, both organizations and individuals require autonomy, flexibility and customer or business-oriented thinking that is not possible in traditional organizations that are systemic, standardized and process oriented. Innovation is a break from processes and that thinking is simply not encouraged in traditional organizations or even earlier, by our education systems. Finally, you need access to risk capital, mentorship and linkages between academia, industry and government, explains Mani.

“In India, we rarely have conversations between these groups as in the West. As a result, nobody learns or grows in the best manner," Mani says.

The government should push for changes in the ecosystem, including training teachers. “Our education system is very different from that in Europe. We emphasize academic rigour over creativity and independent thinking that are integral to the education systems there," says Mani.

“For things to change, the government, academia and India Inc. all need to work together to encourage people to try new things and provide the risk capital and mentorship for such efforts. A large proportion of innovations in India are incremental innovations or process innovations. Not to trivialize these efforts, but we should see more fundamental product and business model innovations like Facebook, WhatsApp, etc.," points out Mani.

Innovation must be nurtured

Richard Rekhy, chief executive officer, KPMG India

India has traditionally been known for its labour arbitrage. However, this doesn’t seem to last too long and the only way India can retain the competitive advantage is through innovation. Though India is touted as an entrepreneurial country, we are not an entirely innovative one. Only 1% or less of gross domestic product is being invested in innovation," says Rekhy.

Rekhy says Indian companies do not lack the innovation DNA, but it has to be nurtured. He cites the example of India launching its first rocket to Mars at a much lower cost compared with the US.

“A majority of India’s weaknesses arise from the absence of an encouraging ecosystem that fuels innovation. There is really nothing much that supports innovation in India. Despite the current decade being called India’s decade of innovation, India has been ranked at the bottom of the list of 25 countries in terms of its intellectual property (IP) environment," Rekhy says.

Although India has not been great at fundamental research, innovation is going on at the Indian Institutes of Technology and Indian Institutes of Management which may not be captured in the indices, he said.

Indians are known to be inherently innovative through re-engineering, he says. “Innovations in India are often so-called social innovations, which means that a company not only tries to increase its profitability and create growth, but also looks to find solutions for social needs. Constant experiments are being made to generate water and energy in the most cost effective manner," Rekhy points out.

He suggests that for emerging markets like India, disruptive innovations where existing products and services do not fulfil customer needs will be important to propel growth.

Begin at the student level

Adil Malia, group president—HR, Essar Group

Innovation essentially means a break from established patterns. Fundamentally, we as a society, are very pattern-driven and slow in adopting new norms," says Malia. “This is the root of lack of innovation in our country."

There are three critical things that are responsible for the level of innovation in India today, says Malia. First, the stress on research here is not as much as in foreign universities. The number of people who register for research is much lower. “That is because even institutions do not encourage research in students. The focus is on structured learning and linear logic, which come in the way of thinking out of the box," says Malia.

Second, given the type of the Indian economy (service-based), most students are focused on career-based and structured learning which will give them better job prospects but not necessarily learning for the sake of knowledge, says Maila.

Third, at the level of companies, other than pharma and life sciences, companies do not spend much on innovation due to the reluctance to stray away from an established norm of doing business. Innovation needs to be made a norm, just like how total quality management and ISO were mandated for establishing quality standards in Indian companies, he says.

Malia says fostering innovation needs to begin at the student level. Abroad, students are encouraged to pursue liberal arts along with math and science courses, and this leads to fresh thinking that can be a starting point for our students here. Also, Indian firms need to have a dedicated team to focus on innovation, and incentivizing innovation is a good starting point, says Malia.

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