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Q & A with Nirmalya Kumar and Phanish Puranam

History lauds the Indus Valley Civilization, the concept of zero and the decimal system, and we are repeatedly told in school about the progressive, fascinating superiority of the Indian civilization of yesteryear. So how has the West overtaken us in innovation?

Sons of the soil: Authors Phanish Puranam (right) and Niramalya Kumar. Photo: Tessa Oksamen

Kumar is professor of marketing, director of the Centre for Marketing at the London Business School, and Puranam is associate professor of strategic and international management there. In an email interview, Kumar and Puranam—also co-directors of the Aditya V. Birla India Centre at the London Business School—tell us of the intricacies of innovation in India. Edited excerpts:

Your book deals with the notion that ‘Indians don’t do innovation’. Is there any truth to it?

India Inside - The Emerging Innovation Challenge to the West: Harvard Business Review Press, 154 pages, 795

Why is product innovation in Indian companies relatively less than multinational companies?

This is broadly correct. But what our research shows is that this is more to do with incentives than competence. In other words, it is not the lack of technical skills that prevents Indian companies from engaging in product development for global markets (the caveat though is that in the future, talent will be constrained). Yes, understanding end consumers in the West while working out of India is challenging, but as the IT services success has shown us, distance can be managed. The real issue is incentives. Product innovation is expensive and risky. Because we all know of branded product companies like Apple, Microsoft or Intel, we tend to think being a branded product player is necessarily better. But this is a high-risk, high-return business. There are many companies that try, fail and fade into obscurity.

There’s a chapter that describes the journey from just providing services to doing full-fledged branded innovation. Why is it that large companies in India refrain from coming up with their own branded products?

In extension to what I said above, service delivery is lower risk, more predictable, and right now still showing opportunities for profitable growth. Given these conditions, if we were shareholders of Wipro, TCS or Infosys, why would we want them to pursue product innovation? We would of course want them to be innovative to stay ahead in their own industries, which is a different thing. Also, the organizational structures of these companies are not really geared towards maintaining deep talent in an area, making risky bets and knowing how to initiate and terminate such projects. Finally, entering branded product space themselves can convert their current clients into competitors!

What’s the relation between marketing and product innovation? Does the lower purchasing ability of developing economies have anything to do with innovation?

The tight budget constraint of hundreds of millions of Indian consumers forces companies to reimagine their solutions and ditch the junk DNA that accumulates in products over time. A new line of frugal engineered products and services are emerging out of India which are robust to harsh environmental conditions and only include must-have features. Subsequently, some of these products may find a global market with specific niches.

List a few obstacles to India’s growth in new product and services innovation.

First, whilst the IP (intellectual property) regime has made strides, multinational companies are still worried about protection of IP and this does stop some of them from seeing India as an innovation destination. Second, the venture capital industry is not well developed as it displays low appetite for risk, especially when it comes to funding new ventures and start-ups. Third, and most significantly, the mirage of mighty labour pools as demand for technically qualified people has failed to keep pace with what is needed for India becoming an innovation hub. This is forcing companies to backward integrate into education.

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