Excluding external talent seen as major deterrent to innovation
Business leaders say the tendency to reject suitable external solutions in favour of ideas generated internally is a major deterrent to innovation at companies
Mumbai: The tendency to reject suitable external solutions in favour of ideas generated internally is being seen as a major deterrent to innovation at companies.
“To innovate, chief executives need to realize the potential of more innovative personnel outside the company and collaborate with them, in addition to having an entrepreneurial mindset,” Ashita Aggarwal, professor and area head of marketing at the SP Jain Institute of Management Research (SPJIMR), said at the institute’s flagship event, the Business-Academia Conclave, on 20 January.
Aggarwal added that companies “are affected by the not-invented-here syndrome. Therefore, a CEO (chief executive officer) also needs to implement a non-hierarchical organizational structure which is not affected by the syndrome.”
At present, the innovation process is “slow and iterative” for large Indian companies, she said, presenting a research paper on “Open Innovation Next Practices,” co-written with Nilendra Pawar, associate professor of operations at SPJIMR, and C.S. Swaminathan, co-founder and director, Founding Fuel, an entrepreneurial media platform.
Aggarwal listed three broad objectives of the research paper, which are “to find ways for the corporate to innovate as a service provider to companies facing significant digital disruption, to leverage their corporate power to innovate and to bring entrepreneurial energy to the company”.
Highlighting the key lessons thrown up by a study of five large Indian companies—Wipro Ltd, Tata Sons Ltd, Future Group, the Mahindra Group and Marico Ltd, among others—Aggarwal singled out the importance of “defining a clear mandate and maintaining open channels of communication” between a large company and a start-up to ensure a successful innovation partnership.
Currently, a few Indian companies define their common intent through legal contracts that clearly define the sharing of risks, rewards, roles and responsibilities.
“Contracts would mitigate the expectation of immediate rewards if an investment has been made, in addition to pacifying start-ups who may feel intruded (on) in sharing solutions so closely with a large corporate having immense financial backing”, Aggarwal said.
Additionally, she encouraged larger companies to organize themselves into a federal structure, such as in the case of Mumbai-based conglomerate Mahindra Group.
“The Mahindra Group’s federal nature empowers the smaller units to explore concepts, make mistakes and learn from them such as the case of BabyOye.com (Nest Childcare Services Pvt Ltd) and FirstCry.com (BrainBees Solutions Pvt. Ltd),” said Aggarwal, terming failures provided the most important lessons in the quest for innovation.
Mahindra acquired BabyOye in early 2015, but decided to merge it with FirstCry in late 2016 after a prolonged downturn.
Meanwhile, Swaminathan of Founding Fuel said companies must set innovation goals in line with the larger strategic planning process, co-create solutions along with customers and focus on building a better relationship with them, like Wipro Ltd did.
Wipro had charted its route to innovation in July 2014 with the inception of Wipro Ventures, a $100-million venture fund, to invest in early- and mid-stage start-ups working in eight areas such as financial technology, machine learning and artificial intelligence, or AI.
Wipro has so far invested in 11 start-ups, scaled them up and took them to the market.