New patenting norms may put India's software innovation into sleep mode

Patenting of software applications could virtually become impossible in the country if the draft guidelines on computer-related innovation come into force. The rules, the first ever for software applications in the country, were recently issued by the patent office and mandate each new software to be "machine-specific" and packaged with "new hardware" to qualify for a licence. Technology experts argue the guidelines defeat the very objective of most software applications - to be hardware agnostic and interoperable.

Also, implementing such a premise for software patenting may force Indian companies to file for patents abroad and adversely affect multinational technology companies' India plans.

Ron Somers, president of the US-India Business Council, goes so far as to say that the guidelines are not only inconsistent with major patenting jurisdictions like the European Union, the US and Japan but run contradictory to India's own international trade obligations. "We note that the guidelines may implicate the WTO (World Trade Organization) agreement on Trade-Related Aspects of Intellectual  Property Rights (TRIPs)," he told the Indian Patent Office in a signed letter, reviewed by Business Standard.

It is imperative for high-value services and products to be patented. This protects the 'idea' against theft, besides acting as a crucial differentiator in an industry that is becoming highly competitive, say experts. "The software ecosystem in the country is just about taking off right now and such guidelines could scuttle it in its infancy," said Vipin Aggarwal, chair of the Business Software Alliance's (BSA's) India committee for 2013.

Industry associations like BSA and Nasscom, along with companies like TCS, have put in representations before the Controller General of Patents Designs and Trademarks, calling the guidelines "restrictive" and a "hindrance" to the patent regime in India.

There has been a steep increase in filing for patents in the country over the past couple of years - about 9,000 a year as of 2011.

Patents related to electronic and telecom products have also seen a significant jump. Scores of technology start-ups getting born each day are finding a lot of interest from angel investors and venture capital funds, too. According to Nasscom statistics, "the number of patents filed by Indian IT organisations grew at an annual rate of 78 per cent over the past three years and the cumulative patent filing by top three Indian IT companies increased to 858 in 2012 from 150 in 2009".

Seeking amends, Nasscom said in its representation that the "no-new-hardware-no patent" approach, if adopted, would render all software-based innovations non-patentable. "This will not only erode the competitiveness of companies with primary business in India but, over a period, discourage innovative activities from being carried out in India." Most Indian companies were already obtaining patent protection for their products in the US and EU jurisdictions, it added. "The patent ecosystem in India should nurture the software industry by adopting a receptive approach to establish a culture of innovation."

BSA is of the view that the norms would have a "deleterious effect on the emerging software sector in India, as well as on investment in the country from multinational software companies." Allowing patents for hardware but not software encourages development and implementation in hardware instead of software. "So, it is strange to encourage old technology and not a new one - the very opposite of the purpose of the patent system."

An official of the Indian Patent Office said the guidelines had been prepared in line with the recommendations of Parliament's standing committee. However, it had received feedback on the rules from various bodies and would "review" the concerns. According to experts, the guidelines do not appear to be consistent with TRIPs' Article 27.1, which relates to the patentability of computer-related inventions and says patents shall be available for inventions in all fields of technology, assuming they satisfy the other criteria for patentability, such as novelty, inventive step and industrial application.

However, an IPR expert points out that most companies are perturbed with the term computer programme "per se" used in the draft guidelines and, though they may not violate the agreement, the suggested rules add to the existing ambiguity around patenting software applications in India. The Indian IT industry had seen a rapid growth over the past decade and a balanced approach to patentability of computer-implemented inventions, in line with the practice in other major patenting jurisdictions, would further boost growth, especially in software, said Somers in his remark.

"We encourage further thought to be given to the guidelines and India's obligations with respect to Article 27 of the TRIPs agreement."

Frugal innovations to keep India healthy

From a smart medicine pack that keeps a tab on a person taking tuberculosis medicines to technology that identifies the right blood vessel for an intra-venous procedure, innovations are now coming in small packages.

 

And research competitions are challenging these “Edisons of tomorrow” — students, scientists and entrepreneurs — by encouraging them to think-up novel solutions in healthcare.

 

Prototype development

Take the ‘Grand Challenges in Tuberculosis Control’ programme for instance. Winners get $30,000 as a grant for six months to develop a prototype. And those who scale this challenge get $100,000 each to integrate the innovation into India’s healthcare system.

The TB-control challenge, an initiative from IKP Knowledge Park, has the US Agency for International Development and the Bill and Melinda Gates Foundation, as partners.

Big innovations are required and will continue, but the idea here is to open opportunities for effective, high-volume and low-cost solutions, says Gopichand Katragadda, Chairman and Managing Director of GE India Technology Centre (GE-ITC). GE’s Edison Challenge gives the winner a Rs 10-lakh grant, and the runner-up, Rs 5 lakh.

 

Exposure to market

The challenge gives university research an exposure to market needs, as perceived by the industry, he says, adding that GE would be open to absorbing an innovation that “fits the bill.”

Globally, such initiatives are not unknown. In fact, the Breakthrough Prize in Life Sciences, collectively founded by Facebook founder Mark Zuckerberg and Google co-founder Sergey Brin, among others, also looks to russel up the excitement around science and research.

One of the 15 recipients of IKP’s first round of funding for TB-control solutions is Bill Thies, a researcher with Microsoft Research India. His team’s innovation helps ensure that a patient takes the TB medicine regularly and without the direct supervision mandated in the Government-run system.

The innovation involves giving numbers, hidden behind the pills in a strip of TB medicines. On taking the medicine, a four-digit code is revealed to the patient, who has to combine it with a six-digit number printed on the pack and give a missed phone call to that number. And this gets captured at the monitoring end.

TB control falters, since patients default on taking their medicines regularly. Thies’ team’s innovation seeks to plug this gap. The grant money goes to Innovators in Health, a non-profit organisation in Bihar that partners and co-evaluates the initiative, says Thies.

In the GE Edison challenge, this year’s winner was a mobile application to diagnose skin cancer and related abnormalities from IIT (Kharagpur). And last year’s runner-up, Vellore Institute of Technology’s VeinLoc (blood-vessel detector), has taken the innovation a step further, by applying for a patent.

The five-year Edison challenge encourages awardees to continue interacting with mentors at GE — a no mean exposure — since GE’s centre at Bangalore is its largest multidisciplinary research, development and engineering centre outside the US.

 

Intellectual property

Explaining the academia-industry misfit, Katragadda says universities are flush with funds, but are not tied to deliverables and market insight. Besides, there are trust issues between universities and the industry on matters such as intellectual property.

The Edison challenge looks to bridge the gap, by including interactions with technology resource persons and angel investors, to awaken researchers to market-place realities.

Africa's first start-up bus hits the road

Imagine a bus, jam-packed with uber-geeks from different countries, taking on a four-day brainstorming marathon across Southern Africa.

Well, imagine no more because it has just become a reality.

 

Founded by Elias Bizannes in 2010, StartupBus is a voluntarily run programme by entrepreneurs for entrepreneurs who are devoted to problem-solving around the world through technology.

StartupBus has completed several journeys throughout Europe and the US since 2010, and now for the first time it has touched African soil, completing 1,500 miles from Zimbabwe to South Africa.

"I'm very excited about StartupBus Africa because the growth potential of Africa is enormous and we have had a huge interest," says Fabian-Carlos Guhl, co-conductor of StartupBus.

More than 200 people applied and from them only 30 entrepreneurs were chosen - the ones with the most proven track record - along with 10 mentors.

'In Africa, for Africa'

The organisers believe an initiative like StartupBus can really flourish in Africa - a continent that is in the midst of a technological revolution.

StartupBus co-conductor Chris Pruijsen explains why the bus is oiling the wheels of creativity

While most business opportunities for satisfying basic needs have been exhausted in Europe, Africa is still thirsty for solutions to all kinds of problems, such as access to healthcare, education and electricity.

And, according to StartupBus co-conductor Chris Pruijsen, mobile technology is where most of the answers lie.

"We can do a lot more here with mobile technology than we could in Europe. In Europe people just don't use their mobile phones in the same way as here."

He adds that it is not about the West coming to solve Africa's problems, but about "the innovation that we do together - Africans and people from the West, in Africa and for the African continent".

'Tangible demo'

StartupBus Africa 2013 began its journey in Harare and stopped over in Johannesburg and Bloemfontein, before finishing up in Cape Town.

In each of these cities local industry experts were invited to take part in the activity, creating a tech hub where thoughts and ideas could be exchanged in order to add local flavour to the experience.

The bus covered 1,500 miles across Southern Africa, starting in Zimbabwe and finishing in South Africa

On day one, competitors - or "buspreneurs" - had to pitch themselves to the rest of the group by making their individual experience and expertise known.

The bus was comprised of designers, developers and business experts. Once they had mingled and found skill overlaps, they formed teams of four or five members.

 

Over four days on the bus, each team had to identify and solve an existing, local problem by using technology - coding and collaborating as they travelled from one city to the next.

"We need a tangible demo at the end - a product that is actually marketable, testable and potentially even investor ready," says co-conductor Chris Pruijsen.

A lasting difference?

One of this year's competitors, Benedikt Wahler, and his team created an app called Greenback.

As Mr Wahler explains it, every time you donate money, view an advert on the app or make a purchase at participating sponsors, "you generate Greenbacks - points that will turn into energy hours for African families".

By doing the little things you do everyday - like shopping, booking a flight or using public transport - you can make a difference, he says.

"Buspreneurs" work as they travel and have to make use of what little workspace is available

Another start-up called Bribed created an app that pinpoints and aggregates the accepted amount to be paid for bribes within a certain area in order to avoid people being ripped off by officials.

At the end of the road trip, each team had to pitch their start-up idea to a panel of judges and investors, but there was no prize nor was there any guarantee that their start-ups would gain funding or investor interest.

So will the apps being created actually make a lasting difference?

Mr Pruijsen insists that the important thing about StartupBus is not the longevity of the apps being created, but that "everyone is in it to make a really good product and for the experience of building".

Mr Guhl adds that the real difference is what entrepreneurs take back to their communities once they get off the bus.

"They go back into the local communities in more than 15 countries and they bring back what they learnt on the bus in order to improve the lives of their people and become change makers."

Google Glass update lets users wink and take photos

 

Google said the wink feature could have various potential uses in future

Google has introduced a new feature to its Google Glass, which allows users to take a photo with a "wink of the eye".

Google said the feature was faster than the camera button or the voice action and works even when the display is off.

The update to Google Glass, dubbed version XE12, also adds a screen lock feature and the ability to upload and share videos on YouTube.

Technology firms have been keen to capture the wearable gadgets market, seen by many as a key growth area.

Google said the wink feature in its Glass could have various other uses in the future.

"Imagine a day where you're riding in the back of a cab and you just wink at the meter to pay," the firm said in a blogpost.

"You wink at a pair of shoes in a shop window and your size is shipped to your door. You wink at a cookbook recipe and the instructions appear right in front of you - hands-free, no mess, no fuss," it added.

Privacy concerns

The launch of Google Glass was accompanied with concerns over its impact on privacy. The worries were triggered by its potential to gather images, video and other data about almost anything a user sees.

Some have argued that privacy will be "impossible" if Google Glass and similar products become widely used.

Analysts said the ability to take a photo by just winking an eye would make it very difficult for people being photographed to notice that someone had taken a picture of them.

"It is a remarkable progress of technology and the possibilities of innovation around it limitless," Manoj Menon, managing director of consulting firm Frost & Sullivan.

"However, it comes with new issues that we need to understand, not least the worries over security and privacy.

Firms have introduced a range of products in the wearable technology sector in recent months

"There needs to be discussion about how, and in what environments, gadgets like these can be used openly," he said.

Mr Menon added that as the technology behind these gadgets matures and companies push more for their mainstream adaption, regulations were likely to come into place "to govern their usage".

Potential growth

The wearable technology market is expected to see robust growth in the coming years.

However, analysts differ over the potential size of the market.

According to Juniper Research, the sector is expected to have annual sales of $19bn (£11.9bn) by 2018, up from $1.4bn this year.

Analysts at the bank Credit Suisse have been more upbeat and have suggested a figure of $50bn figure by the same date.

Research firm Gartner has been more cautious about its predictions. It has said it expects $10bn sales for 2016. But one of its analysts suggested the sector would grow more quickly if businesses decided to equip their workers with such technology.

Growing competition

A Japanese firm has showcased glasses that can translate menus

Google Glass is one of a number of wearable gadgets that have been launched by firms as they compete to take a a major share of the growing market.

In October, Nike launched its second generation wristband, Fuelband, which helps users track their physical activity.

In September, Samsung unveiled a smartwatch, Galaxy Gear, that can be used for voice calls and run apps.

Also in September, Japanese mobile operator NTT Docomo demonstrated glasses that can translate a menu by projecting an image of translated text over unfamiliar characters.

Earlier this year, US-based Heapsylon said it was developing sensor-equipped socks that would help their owners monitor their balance while walking or running.

Meanwhile, Chinese firm Shanda, has unveiled the Geak Ring - a finger-worn device that can unlock a user's smartphone or pass data to others

Aggressive tax policies sending ‘wrong signals’, says Kiran Karnik

A good article on the challenges of the Indian IT Industry

 

The Centre’s policies and adverse attitude towards IT/telecom companies are turning out to be counter productive for the sector. Besides, issues such as taxation and frequent industry-government conflicts are sending out wrong signals, said Kiran Karnik on the sidelines of a CII conference.

Karnik, the former President of IT industry body Nasscom, is now a member of the Scientific Advisory Council to the Prime Minister and the National Innovation Council.

The whole “attitude” of the Government has turned “aggressive”. It has taken on corporates over taxation-related issues, imposing heavy penalties. This has not just hampered the industry but also strained its relationship with the Government, Karnik said.

“Government policies, to me, have been very counter productive. They have been more on how much revenues come to the Government. That’s now what the Government is all about. It’s about benefiting the people,” he said.

Referring to the IT-Telecom sector, he said, “Instead of now saying, how do I promote this industry, it is now how do I milk it?”

 

Taxation

Karnik said the Government’s aggression over issues related to taxation has “very definitely” sent out “wrong signals”.

“…Very definitely. The Government has to put in place a fair tax policy. But the general perception shared across the board (by both multinationals and small companies) is that they are very aggressive…” he said.

Significantly, the sufferers of the Government’s overdrive are not the “predatory wolves” or those who have the wherewithal to challenge the I-T Department’s tax calculations in a court of law. Rather, it is the smaller companies that lack resources for such a fight, pointed out Karnik.

 

Nokia tax case

Citing the Nokia tax issue as a case in point, Karnik maintained that it is a perfect example of mishandling the situation. Nokia’s Chennai factory, once considered a show-piece unit, is now facing possible closure if the tax issues are not resolved.

The I-T Department has said in court that the company owes it Rs 21,153 crore (including penalites).

“May be the demand (made by the I-T Department) is justified. But the manner in which they (the I-T Department) went about it and the timing is absolute disaster…” he said, adding that “the only alternative” -- if the issue remains unresolved – would be “to close the factory”.

“Suppose something happens, do you think anyone will come here (for hardware manufacturing) with this sort of example…” he asked.

 

Change in attitude

According to Karnik, the problem arose with the Government viewing the industry as a mature sector that could stand on its feet.

Following the various crises, including the scams and scathing CAG reports, the bureaucracy and the Government seem to be “backing off” from supporting the sector.

Pointing out the difference in attitude, Karnik cited the example of The Philippines which has gone out of its way to woo IT investments.

“The point is, every country around the world supports the winner. You have a potential winner and you back that. Why don’t we see that here is a sector (IT) in India that can lead the way,” he asked.

Romesh Wadhwani: The Renaissance Man

Award: Distinguished Non-Resident Philanthropist
Romesh Wadhwani
Age: 66
Why He Won: For creating institutional frameworks for entrepreneurship in India. The Wadhwani Foundation has created a resource network for young entrepreneurs to dip into and is working to get policy bottlenecks removed.
His Trigger: He wanted to focus on key issues like job creation.
His Mission: His Foundation aims to help create 15,000 to 20,000 startups, and half-a-million new jobs by 2022 and skill 5 million people.
His Action Plan: His model is based on leveraging financial resources from stakeholders —institutes, government, corporates—in the 10:90 ratio (Foundation:stakeholders).
His Next Move: To strengthen existing initiatives; work with government agencies to ease the process of setting up startups; improve the innovation grant environment and convince governments to include startups in their procurement policy.


It was the afternoon of January 25, 2012. Most researchers and faculty members at the National Centre for Biological Sciences (NCBS) in Bangalore had gathered at the sun-lit colonnade to hear Romesh Wadhwani speak. The billionaire entrepreneur was there with his wife Kathy to inaugurate a new research centre named after his late mother Shanta Wadhwani. He made a brief address—he explained why he was investing in the centre that would pursue world-class research, an area in which India didn’t have much to talk about. After that, he pressed a key to remotely unveil the plaque. But it didn’t work. He turned to his hosts and softly said: “This is where you should be using an Apple [computer].”

He brought it up later again, only to realise that, as government institutions, many places like NCBS are bound by government rules, sometimes archaic and impractical. Buying an Apple computer for official work is unthinkable for the most part.

Wadhwani, after nearly a decade of intense philanthropic work in India, has come to appreciate this constraint. Which is why a small part of the endowment to the Shanta Wadhwani Centre is used for some seemingly trivial purposes, such as allowing a researcher to fly a foreign airline (Indian institutions can only reimburse Air India tickets) or paying for some technical lab work—like getting a genetic mouse model made in Germany—in foreign currency.

For a centre that is trying to do cutting-edge work in cardiac hypertrophy and brain development disorders, collaborating with global counterparts is the name of the game where even a tiny, but enabling, travel grant can make a huge difference.

The Shanta Wadhwani Centre may be the newest, and hence the smallest, initiative in the Wadhwani Foundation’s pantheon of programmes, but it epitomises Romesh’s style of philanthropy: Getting the microscopic and the telescopic view in one shot. “He is a renaissance man; it’s amazing how he can span the level of abstraction, from the big picture to nuts and bolts,” says K Srikrishna, executive director of National Entrepreneurship Network (NEN). A 10-year-old initiative of the Wadhwani Foundation, NEN is now entering its next decadal phase where it hopes to be a force multiplier in entrepreneurship.

The Sure Thing
Soon after Wadhwani entered the world’s rich club, primarily on the back of selling Aspect Development to i2 Technologies in 1999, he set up Wadhwani Foundation. He wanted to make sure he gave away a significant part of his wealth to help people in emerging economies where there is no well-established pattern or culture of philanthropy. At a time when biomedical research, education and health care were philanthropists’ favourites all over the world, he chose two new themes—job creation and economic acceleration—with focus on scale and the highest possible impact.

When you create a job, you help a person for life, you help their family and its succeeding generation for life, he says. “Other philanthropic activities are important but they don’t necessarily translate into lifelong value,” says Wadhwani.

In 2003, when NEN was started, no college or university in India had any entrepreneurship programme. Today, more than 500 of them have it and are part of NEN, which has created entrepreneurship clubs in 350 of them. Nearly 3,000 faculty members have been trained—1,300 in the last one year alone—and a mentor resource network of 3,500 successful businesspersons and venture capitalists exists to provide free consultation in 30 cities.


Wadhwani is most passionate about the entrepreneurship initiatives, though four other programmes—skill development, mainstreaming disabled, innovation and research and Indo-US policy—have been taking shape under the foundation. “Every country has found that the best way to create jobs is to create entrepreneurs who will start and grow companies,” he says.

If you can fulfil potential job opportunities then you help companies grow; these, in turn, will create more new jobs, he believes. Über entrepreneurial philosophy, one could say; first-hand-experience, he’d counter. A serial entrepreneur who has probably created more than 40,000 jobs in his career of more than 30 years, his laser-like focus on employment is understandable. India does have a crisis: Only 15 million jobs have been created in the country in the past seven years.

Under a skills development initiative, his Foundation is aiming to skill 5 million people in 10 years. The math is being done accordingly, from choosing skills that will add up to that number to selecting partners who have their skin in the game.

“He has an amazing level of drive and focus, which he also brings to philanthropy. He is very clear about what he wants to achieve,” says younger brother Sunil Wadhwani. As a co-founder of Mastek, which morphed into iGate Global Solutions, Sunil is a force to reckon with in the entrepreneurship world. As a child, he recalls, Romesh was extremely driven by outcomes, even in the toddler years when he underwent a series of surgical procedures for polio. “Sometimes he would run a high fever, but always topped his class,” says Sunil.

Often, Romesh turns a raconteur to inspire his team. In October, when he was in India, he told NEN employees that even though by most measures he is a successful individual, creating a reasonably good number of jobs in his career, what NEN could achieve is way beyond his own accomplishments.

Two years ago, Wadhwani signed The Giving Pledge that Bill Gates and Warren Buffett have been championing. But that is more for learning the best practices from other philanthropists. The Pledge requires the rich to commit 50 percent of their wealth, but Wadhwani and Kathy had already committed more than 80 percent to philanthropy much earlier.

Devil is in the Detail
It would be a mistake to consider the large numbers of startups and jobs his Foundation talks of as aspirational. Wadhwani has put excruciating details in place to ensure that they don’t remain aspirational. For instance, three years ago, the Foundation was directly able to trace 200 startups to NEN. Last year, it was 700, and this year the Foundation expects to list 1,200 to 1,500 startups as a result of its entrepreneurship initiative. If this growth continues, then it’s not hard to imagine that 10,000 to 20,000 companies will be formed by 2022. As for jobs, each startup creates six direct jobs and five indirect ones. By that count, even if 15,000 startups are formed, some half a million jobs will be created.

But for things that are not measurable, says Srikrishna, Wadhwani is willing to take a nuanced view. If five guys in a Durgapur entrepreneurship cell get placed in TCS due to leadership skills and not an engineering degree, is that an NEN impact? It would be fair to say NEN is the precursor to what Peter Thiel, billionaire tech investor, is doing with Thiel Fellowship or what third-generation venture capitalist Tim Draper at Draper Fisher Jurvetson is doing with University of Heroes for student entrepreneurship in California, US. Apart from other things, one big difference is that while Thiel and Draper are directly putting money in the student startups, Wadhwani wants to steer clear of seed funding. He doesn’t want the Foundation to be picking winners or losers as that would damage its neutrality. “People will start playing political games and position themselves to get the seed grant,” he says.

Yet, he recognises that risk capital for startups is scarce in India. He is relying on a tested US model, where under the Small Business Innovation Research programme, 13 US government agencies gave seed grants to startups. This, over the decades, has been the most catalytic contributor to America’s innovation and entrepreneurship system. Wadhwani thinks if Indian PSUs and ministries gave away even 1 to 2 percent of their annual budget as innovation grants to startups, thousands of companies could be funded. The Foundation has written a white paper on this and is going to circulate it among all government agencies.

It is not money alone that fuels entrepreneurship. India’s tortuous labour laws, which he believes prevent Indian non-IT companies from scaling up, and the absence of a market place, nip many startups in the bud. Through NEN programmes and in his own interaction with the government, he has been raising awareness about this.

The revenue department doesn’t audit your books before your taxes are paid. The same logic must be applied to entrepreneurs, he says. “Give them the benefit of the doubt; do not treat them as if they are criminals and need to be checked out before they’ve started,” he says. Because of this attitude, it takes weeks and months for a company, again non-IT, to be incorporated.

Regulations should follow entrepreneurship, and so should the marketplace, as has been demonstrated by the US and Israel. Since 30 percent of actual purchases are made by the central and the state governments, he would like to convince them that they keep aside 10 to 20 percent of procurement for startups.

An equal amount of detailing has gone into developing skills as well. Once the skill is identified, the Foundation swings into action to build technology delivery platforms, train project managers, make best practices playbook and stitch partnerships. The Foundation chose nursing as one such area, as India will need more than 2 million nursing aides over the next 10 years. It is collaborating with Narayana Health, which had already developed a nursing curriculum, to convert classroom courses into online courses that large and medium hospitals and village clinics can use.

The next channel for the Foundation is schools. Working with the Union ministry of human resource and development and the state governments of Haryana and Himachal Pradesh, the Foundation has rolled out a best practices programme in four occupations in 40 schools that impact 15,000 students. Discussions are on with Karnataka and Bihar for similar exercises.

In one of his pursuits, Wadhwani has been holding discussions with Union minister Kapil Sibal about setting up community colleges for skills development, and laying down the framework for what these colleges would mean for India. The government has finally committed to setting up 200 of them. Wadhwani says if the government fulfils its commitment, rolls out physical infrastructure for these colleges, and recruits the right kind of faculty and teachers, his Foundation will fund the entire knowledge infrastructure, including the technology platform that would integrate online and classroom learning in these colleges. It would also provide the connectivity between community colleges and the employer community—a key link that would ensure students are rightly placed and the colleges are skilling for the right kind of jobs.

It’s a gargantuan effort, and open-ended at that. To put it in perspective, what constitutes one sub-stream for the Foundation is the entire business for Coursera or Udacity, the much-popular MOOCs (massively open online courses) that are aiding, if not disrupting, university systems across the world.

The ROI trap
Was Peter Buffett, son of billionaire philanthropist Warren Buffett, right when he created a storm by writing in The New York Times that with business-minded people getting into philanthropy, business principles are becoming essential elements to philanthropy? Buffett said people have begun asking for ROI (return on investment).

Wadhwani says the business thinking he applies to philanthropy is about setting very clear objectives and outcomes that he has to measure. “I don’t measure ROI. If I invest $100 million, create 10,000 startups, a few more thousand jobs and several other indirect jobs, I have no way to measure what the ROI is. What were the other influences in that person’s life that caused them to form companies, succeed and create jobs?” he asks.

How staff engineers drive innovation at Maruti Suzuki

To get the best output, employees at the senior and top management levels should be thoroughly involved in the process — this is Maruti Suzuki India’s mantra. The carmaker believes in an open door policy to boost the spirit of innovation among young recruits.

Maruti, which launched operations in the early 1980s, completes 30 years on December 14. It has 110 patents (around 20 in the production line alone), and most of these have been developed by its young engineers. Many more patents are on the way.

 

The company has over 1,000 engineers, several of whom are working on such projects.

“The idea behind such initiatives is to encourage engineers to go for innovation and encourage out-of-the-box thinking,” M.M. Singh, COO-Production, told Business Line.

“Many engineers nowadays do not want to join a manufacturing company thinking they will end up doing the same thing every day. But, we have bust that myth.”

 

Trip to Japan

Singh, who joined Maruti as a technician in the painting department, said one of his biggest achievements is the involvement of young engineers in the company. For example, labour union leaders are being sent to Japan for a week, where they get to meet Suzuki Motor Chairman Osamu Suzuki.

Once in a while new recruits are sent to Japan (to the parent company) for idea exchange and to learn new processes that can be adopted here.

Singh said engineers are being given the freedom to innovate on the shop floor or the assembly lines or to apply “anything they have learnt from their colleges” that could be new for the company or the industry.

“The result has been good, and many products, such as robotics that are used in our plants, are made by the engineers and are patented. We just provide these young engineers with materials and whatever investment is required,” he added.

The machines at Maruti’s plants include automated multi-level parking for the produced cars, welded planks for eliminating operator fatigue and automation, such as host casting, vehicle testing and calibration.

“Technology upgradation is one subject that has given us a lot of mileage.

 

Setting an example

Even Ratan Tata (in the early 1990s) once came to see our plant to see how the Japanese culture (in terms of production) can be adopted in India,” Singh recalled, adding that many companies in India and globally have started to follow the Total Quality Management system, better known as TQM. But, Maruti follows its own (Suzuki’s) system, which is different from others, he added.

As part of its sustainability programmes, factories of the company follow a ‘zero exit’ programme, which means there is no wastage.

“It is not only environment-friendly, but also ensures that waste from our factories go to different industries, such as cement and steel,” Singh explained.

Technopark, Brussels join hands

Technopark’s Technology Business Incubator (TBI) has joined hands with the Incubation Centre Arsenaal Brussels (ICAB) to provide better exposure and collaboration opportunities for start-up companies in the ICT sector.

 

A memorandum of understanding was signed by P.H. Kurien, Principal Secretary, IT; K.C. Chandrasekharan Nair, Chief Financial Officer, Technopark-TBI; and Julien Meganck, president, ICAB; in the presence of Belgium’s Princess Astrid of Belgium and Celine Fremault, Minister of Economy Brussels, in Chennai on Thursday. A 300-member trade delegation from Belgium led by Princess Astrid was in India last week to boost trade and investment ties between the two countries.

The MoU will facilitate exchanges and cooperation between Belgium and Indian SMEs, enabling them to establish businesses in both regions. It will also promote business development and technical collaboration. The Technopark TBI has offered free office space from three to six months to the Brussels companies that wish to do business with India on a reciprocal basis. They will guide these companies with practical cooperation plans and priority will be given to companies that are directly recommended by ICAB.

 

The co-incubation tie up was announced at a press conference here on Saturday by Mr. Nair and Jean Vereecken, Managing Director, ICAB.

 

Mr. Nair said the co-incubation pact would help SMEs from Kerala to expand at a faster pace. “This is a win-win situation for start-up companies here, especially those interested in the European market. Apart from free office space provided by the ICAB, they can also reach out to countries across Europe,” he said. “T-TBI and ICAB will also arrange for networking meetings and promote each other’s activities in their respective regions,” he said.

Four Scions to Watch Out For

John Paul JoyExecutive Director, Joyalukkas
For John Paul Joy, inspiration was always right across the dinner table. In less than 25 years his father Joy Alukkas (No. 99) had built a $2 billion business, based in the UAE, which straddled jewellery, money exchange, air charter and malls. “My father would talk and discuss his ambition… I thoroughly enjoyed listening to him and that is what inspired me,” he says in an emailed reply to Forbes India. Even while pursuing his MBA from Manipal University, John would take every opportunity to visit retail outlets of Joyalukkas and make rounds of company offices.

The 28-year-old formally joined the family business in 2007 and is now the executive director overseeing the Middle East, Singapore and London operations of the group. He focuses on the group’s flagship jewellery business. “I’m currently working towards growing the jewellery retail chain from a 90-showroom chain to a 100-showroom chain by end of 2014. Today we have a customer base of over 10 million and my objective is to first retain this client base and then keep growing this to a much larger base.”

With father Joy Alukkas already announcing his intention to hang up his boots by 2015 and “hand over everything to my son”, John knows his task is cut out.

Rohan Murty Executive Assistant to Chairman, Infosys
It’s entirely possible that NR Narayana Murthy (No. 37) meant every word when he said he wanted his son Rohan Murty (30) to join the chairman’s office simply because he himself would become more effective. After all, he had taken on a task that many in the industry acknowledged was difficult to pull off: Make Infosys what it used to be—a fast-growth, high-margin business. The papers made references to Steve Jobs’s second coming at Apple.

Yet, Rohan Murty tagging along with him struck a discordant note, not least because the senior Murthy has always professed that founders’ children will never enter Infosys. What’s worse, there were attempts to make Rohan Infosys vice president in the following months —a move that rankled company watchers. It was a sad way to begin one’s career, especially for someone with Rohan’s academic background—a degree in computer science from Cornell, a PhD from Harvard, and a string of fellowships from Siebel Scholars to Harvard Society of Fellows. He is also involved with the Murty Classical Library of India, which funds translations of Indian classics to English—a reflection of his interest in philosophy, history and the classics.

After his PhD and his marriage to Lakshmi Venu, daughter of Mallika and Venu Srinivasan (of TVS and Amalgamations Group), Rohan started helping his father with his venture fund Catamaran. After Murthy’s move to Infosys, Rohan followed him. One Infosys executive describes him as “very thorough, very data-driven, and very likeable”.

While there are theories about whether and how his role within Infosys will expand, no one’s sure if he’ll continue in the firm once Murthy leaves. But one thing’s clear: Investors and analysts are likely to be more forgiving if Infosys regains a good measure of its past glory and performance.

Adar Poonawalla
Executive Director, Serum Institute of India
Cyrus Poonawalla (No. 16) is known as much for his expensive tastes—vintage cars, classic paintings, prize race horses—as for the wealth he made by selling low-priced vaccines across the world. His son Adar (32) inherited many of these traits: He loves fast cars and horses, and flies in a private jet.

In the business, though, Adar has shown much more aggression than his father. He led Serum Institute’s entry into new markets such as Russia, Argentina and Nigeria, restructured the company and stepped on the gas with revenues. While Cyrus was sentimental when it came to his employees—even when they made mistakes—Adar is more businesslike about firing people.

The youthful aggression apart, Adar has imbibed much from his father, with whom he has been working closely since he finished his university education from the UK. Cyrus says: “His style is fairly similar to mine as he joined me at an early age, when I was able to incorporate certain values and certain principles in him that we as a family-run business use every day. So far this has been very successful. For example, knowing what proposals to pursue and what to drop, being thorough and going into detail and not just scratching the surface—a CEO should be able to question any department on the spot and provide a solution.”

Rishabh Mariwala
Founder, Soap Opera N More
Children of business families, if they don’t land a job in their family-owned firms straight out of college, tend to work outside for a few years before staking their claim. Rishabh Mariwala’s journey took a slightly different course. After graduating from the Frank G Zarb School of Business, Hofstra University in New York, he joined his family business as operations manager of Kaya Skin Clinic, Marico’s venture into the services sector.

After three years with Kaya, in 2011, Rishabh decided to start something of his own—but not without the privileges of being the scion of a family that’s worth $1.45 billion. His business of hand crafted soaps was funded by his father, Harsh Mariwala (No. 44), and the products were designed by his mother Archana.

Yet, this move is not without precedents. In 2011, his elder sister moved out of Marico to pursue research in sociology. His father had started Marico in 1987 by spinning consumer products out of Bombay Oils. Rather than learning the trade in bits and pieces, this exposed Rishabh to the whole range—and gave him a sense of what it means to build something from scratch. One of the reasons he could do this with relative ease is because his father has been driving Marico towards becoming a family-owned but professionally-managed firm. Marico’s nine-member board has just two family members, and the individual businesses are run by professional CEOs.

NIIST, private firm to tie up for business

The National Institute for Interdisciplinary Science and Technology (NIIST), a constituent laboratory of the Council for Scientific and Industrial Research (CSIR) here, is planning to enter into an agreement with CSIR-Tech, a private limited company, to commercialise the technologies developed by the institute in various areas.

 

Set up in 2011 to promote entrepreneurship among Indian scientists, the company facilitates technology transactions and creates spin-off business by forging partnerships with scientists, inventors, entrepreneurs, business people, and investors.

 

Under the terms of the proposed agreement, CSIR-Tech will look at the existing technologies and Intellectual Property (IP) opportunities at CSIR-NIIST and identify business opportunities. The company will display the marketable knowhow on its database to attract potential partners and investors. CSIR-Tech will also assist in licensing the technologies and creating start-up enterprises. The company has concluded agreements with 12 CSIR laboratories and is working on eight more deeds.

 

Amitabh Shrivastava, CEO, CSIR-Tech, toldThe Hinduon Monday that the scheme permitted CSIR laboratories to invest knowledge base as equity in the enterprise or spin-off. He said it facilitated mobility of researchers between industry and the scientific establishment. “As one of the most productive laboratories in the CSIR network, NIIST offers the scope for identifying technologies that can be commercialised,” he said.

 

R.S. Praveen Raj, Scientist (IPR and Technology Transfer) at NIIST, said the agreement would let scientists at the institute have an equity stake in scientific enterprises or spin-offs. This, he said, would empower them to benefit from commercialisation of technologies developed by them. “The mechanism has effectively promoted scientific entrepreneurship in countries like the US,” he said.

He said the general memorandum of understanding between NIIST and CSIR-Tech would be signed soon. This, he added, would be followed up by separate agreements once the potential technologies were identified.

India stands to gain from GE's digital business ramp-up, says John G Rice

MUMBAI: Jack Welch, the former CEO of General Electric, didn't come to India in the late 1980s to
sell outsourcing. He had jet engines and plastics on his mind. But meetings with  top Indian  government advisors and CEOs quickly convinced him about India's invaluable  status as a low-cost, offshore destination for outsourced services. A series of  decisions led to the creation of Gecis (today's Genpact) and the rest, as they say, is  history.

Today, GE is also unrecognisable from the company Jack Welch ran in the late 1980s. From an  industrial infrastructure powerhouse, it became a financial services giant in  the boom years of 2002-2008 and is now on the threshold of another big change, a  revolution in complex algorithms, sensors and communication that will make  machines smarter and trigger big productivity gains. GE still makes those big machines that require millions of dollars of investment such as the wind and gas
turbines  the jet engines that power the A380s and medical equipment which fight and  detect cancer. But in the coming years, these machines will become smarter, be  able to talk to each other and provide massive amounts of data for GE analysts  to pore through and detect possible problems and dangers.

The industrial internet, or big data, is GE's  next big bet and India, which benefitted immensely from a GE-led foray into  outsourcing in the late 1980s, may get a big part to play in this transformation.

 

John G Rice, vice chairman and president and CEO of GE global growth and  operations, says
complex software and sensors that improve a machine's  performance will be big  business for the company in the coming years.

 "GE is a software giant, we already are. It is embedded in our business, people don't notice it," Rice
says. "The opportunity this unlocks is enormous. Because in the past we were just squeezing productivity out of an engine, such as lower noise, higher fuel efficiency etc. Now, that is certainly very valuable but a relatively small piece of the whole system. Now, we are starting  to get into the rest of the system. Think about the downtime on a big pipeline if one compressor goes down."

So, what is industrial internet, or the internet of all things? And why is it so important for GE? Every year GE produces jet engines, gas turbines and other industrial equipment that find a  place in many infrastructure . GE wind turbines power windmills and GE built locomotives ferry goods on
railtracks around the world.GE has also developed software and sensors  that monitor their performance on a real time basis. Mountains of data stream are streamed from these machines every day and it helps GE analysts and managers  track performance, predict problems and suggest solutions.

"For 15 years, we have been developing sensors and tech to monitor equipment performance
in situ," says Rice. We have 250 sensors in gas turbine streaming data back, we monitor 1,800 around
the world every day. We are understanding every vibration, heat, and we can see an incipient failure or problem before people on the ground can see it. That's all software."

For example, GE is a big producer of jet engines. Tracking its performance can help engineers understand potential problems and vulnerabilities and suggest solutions before something catastrophic happens. "I see a,b, c, d and e that means f is going to happen. You have to stop this machine, and go do something before f happens."

But predicting itself will only get you thus far. GE wants to go beyond that and suggest recovery solutions. For instance, how do you get a replace ,how do you get a replacement aircraft quickly enough if one has to be grounded due to an engine inspection. It is soon going to introduce an application for the aviation industry that will check air traffic patterns, weather and wind patterns and suggest the amount of fuel that should be used in an aircraft.

"Over the years, we have created a company of almost 10,000 software engineers. If you look at the world software companies, we would be in the top 20 in terms of size," ..

So what is in it for India? Rice says India's software engineers are already  working on many of the complex algorithms used to transmit and analyse data. GE could increase its investment in R&D facilities and hire more software engineers as demand grows for its digital business.

"In terms of software engineers, India has to be one of the top five places, globally. We already do some of the work in Bangalore where we have a huge research facility," Rice says.

GE has just invested about $200 million in a facility in Pune, which will combine manufacturing of all its business divisions under one roof. Since some businesses are not so big to have a standalone plant, this facility will provide space and skilled workforce. This model facility will soon be taken worldwide and adapted to other conditions.

The investment comes at a time when India's governance is being severely criticised for its slow pace of execution and failure in taking decisions. Rice says he won't single India out as most developing countries have similar problems. "You play the hand that you are dealt in a country like this. We want to move faster, but we are not going anywhere."

For India's software engineering community and start-ups that mine data, GE's digital business ramp-up could be a huge opportunity both in terms of employment and business deals.

 

A guerrilla attempt in film financing

Back in the 1980s, Malayali filmmaker John Abraham and his Odessa Collective team went around villages in Kerala asking for money to make a ‘people’s film’. They entertained villagers with music, street plays and skits. In return, thousands of people chipped in small sums of money, bought food for John and his team and took care of their stay.

 

The result was the 1986 cult film Amma Ariyaan. The film broke all conventions of film-making, distribution and exhibition. Made in the pre-internet era, it was the first crowd-funded South Indian movie.

 

Today, a group of creative people are in the process of making the first crowd-funded Malayalam movie with online contributions. “Oraalpokkam has no producer in the conventional sense,” Sanalkumar Sasidharan, who directs the film, told Business Line. “The money will come from people who are fascinated with our project and who trust us.” Oraalpokkam (meaning ‘as tall as a man’ in Malayalam; but Sanalkumar translates it as ‘six-feet high’) will be a 90-minute movie that will trace the travels and travails — internal and external — of one partner after a couple splits up.

 

Kazhcha Film Forum has tied up with Springr (www.springr.me), which is a ‘crowd-funding platform and community-building tool for creative projects and ideas’ for sourcing funds for the film. Springr promises to help creative people ‘access funding beyond official channels by talking directly to consumers, fans, peers and like-minded strangers.’ Those fascinated with the film idea can go to the Springr website and make a funding commitment. Those paying more than Rs 25,000 will have a unique way of redeeming their investment — they will get the internet rights of the film. They can screen the film and keep a half of the proceeds for themselves.

 

“In terms of funding, ours is a guerilla attempt,” Sanalkumar says. “Oraalpokkam will be a low-budget movie, with just Rs 35 lakh as the cost,” he said. “The creative people associated with the film will not take fees,” he said.

 

Crowd-funding (Wikipedia defines it as the collective effort of individuals who network and pool their money, usually via internet, to support efforts initiated by other people or organisations) of movie-making is gradually picking up in India. Until recently, it confined itself to documentaries, mainly for public interest. Many environmental documentaries have been made with the help of this platform. However, because of their high cost and complex nature, feature films could not attract crowd-funds.

 

Chennai-based poet-activist Meena Kandasamy will don the female lead role in Oraalpokkam while actor and filmmaker Prakash Bare will be the male lead.

Indian entrepreneurs have potential to build next Google: Eric Schmidt

India’s entrepreneurial innovators have the potential to build the “next Google” if the country “plays its cards right” and ensures Internet access for millions of its citizens, Google’s executive chairman Eric Schmidt has said.

 

In an essay written for the book ‘Reimagining India: Unlocking The Potential of Asia’s Next Superpower’ edited by global consulting firm McKinsey, Schmidt dubbed India “an Internet laggard” saying he feels Internet in the country today is like where it was in America in about 1994 — four years before Google was even born.

 

He said India must increase its Internet penetration across towns and cities, a move that will have a positive impact on its economy and society.

The former Google CEO said he witnessed the creative potential of India’s people all around him in Silicon Valley where India-born entrepreneurs account for 40% of start-ups.

“Just think what will happen when India’s entrepreneurial innovators are able to create great global companies without leaving their country. They will change the world. Hundreds of large firms focused on the Internet will be founded and will succeed by focusing purely on Indian consumers, Indian taste, Indian style, Indian sports.”

 

“Can anyone of those companies ultimately become the next Google? Of course.” “That may not happen for quite a few years. But if India plays its cards right, we will soon see Indian engineers and small businesses tackling Indian problems first, then exporting the solutions that work best,” Schmidt said.

 

With a total population of 1.2 billion, India has over 600 million mobile-phone users but only about 150 million people regularly connect to the Internet.

 

In 2011, India’s Internet penetration rate was 11%, “far below” that of developed nations where penetration rates average 70%. India’s Internet penetration rate is less than a third of China’s penetration ratio of 38% and less than half of those in developing countries, which average 24%.

“By any reasonable definition, India is an Internet laggard... In spite of its well deserved reputation as one of the world’s leading IT and software development hubs, India is far from being the connected society many foreigners imagine,” Schmidt said.

 

The number of India’s broadband users, 20 million, is even smaller, Schmidt said however adding that India is on the cusp of a connectivity revolution.

“I believe India has the chance to leapfrog its current connectivity challenges, bring Internet access to a majority of its citizens — and even raise its penetration ratio to 60 or 70% within the next 5-10 years,” he said.

Perspective Plan aimed at putting sheen back on Kerala Development Model

Interview with K.M. Chandrasekhar, Vice-Chairman, Kerala Planning Board

Kerala Perspective Plan 2030, drafted by the State’s Planning Board, is aimed at attaining development parameters of high-income counties over a two-decade period. The board claims KPP 2030 represents a “move away from traditional planning processes to outcome-based strategic planning.”

The draft plan has been formulated in consultation with policy-makers, administrators, academicians, NGOs, civil society members, and public and private enterprises. Creation of a knowledge-based economy is claimed to be central to the plan. And, productively using the huge remittances sent in by Keralites overseas (over Rs 60,000 crores last year alone) is a huge challenge.

In an interview to Business Line, State Planning Board Vice-Chairman K.M. Chandrasekhar discusses the vision behind the plan. Excerpts:

What is the rationale behind the Kerala Perspective Plan?

Kerala’s achievements in terms of Human Development indicators such as education, health, and demographic features have been globally acknowledged. Kerala has undergone the first stage of economic transition from primary to non-primary sector. The second stage of structural transformation is characterised by intra-sectoral restructuring from low to high value added activities.

In 2010, Kerala’s per capita GSDP (gross State domestic product), in 2005 PPP dollars, was about $4763, which is equivalent to the lower middle-income category as per the World Bank classification. However, growth has not been accompanied by the structural transformations in terms of GSDP. The Kerala economy seems to be trapped in low value adding activities.

If Kerala continues on the business-as-usual path, the scenario for 2030 looks grim. A major growth challenge is to pull the economy out of the vicious cycle of low productivity, poor quality, high unemployment and social and environmental degradation to a virtuous circle of high-quality growth.

The challenge is to increase competitiveness and productivity by reforming the investment climate through infrastructure reforms. Kerala needs to reconsider its development strategy in order to gain considerable autonomy in growth and become a major player in the national and global economy.

The Kerala development model has already lost its sheen. How will the perspective plan bring back its glory?

The core idea is to carry forward the Kerala development model to position Kerala in the international market in the case of health and education (human capital). Necessarily, this will upgrade human capital to grow at that level, accelerating Kerala growth and benefiting its people.

Kerala’s healthcare system had until recently been known for its public-funded, low-cost hospitals and primary health centres. This has now largely been replaced by a high-cost private healthcare system. What is the plan going to do to strengthen the public system?

KPP 2030 specifically emphasises the role of public investment in the health sector. According to the Plan, public investment in health sector is the basic requirement for sustainable development. It is proposed in this document that public sector investment in the health sector must increase up to 5 per cent as a proportion of GSDP by 2030.

This target can be reached in a phased manner. In the current Five-Year Plan of 2012-17, the government can target to spend around 1-2 per cent of its GDP on healthcare. This can be increased to 2-3 per cent in 2017-21, to 3-4 per cent in 2022-26 and finally 4-5per cent in 2027-31.

‘Emigrants as development partners’ is a lofty ideal, but how can this be put into practice?

The Perspective Plan suggests special funds such as Infrastructure Development Fund, Kerala Fund etc to be formed by mobilising resources from Non-Resident Keralites. These funds will exclusively focus on developing infrastructure and institutions which will enable implementation of the KPP 2030. The strategies suggested in KPP 2030 will be converted into suitable projects at the stage of implementation in due course.

In a State where the LDF and UDF administrations alternate every five years, wouldn’t the continuity be lost as each has its own approach to development?

This is a Perspective Plan for the State. It will be linked with Five Year Plans and will be implemented for the progress of the State. The fact that it is being put up for public comment is in itself indicative of the government’s desire to build a consensus on the board future development strategy.

What makes Israel with just eight million people, an innovation hub

The presence of thousands of startups, and more engineers per capita than anywhere else in the world, makes Israel a natural hub for innovation.

Best known for defence- and - military-inspired technologies, entrepreneurs across the nation are now focussed on building the next generation of healthcare applications. Helped by government support, societal acceptance and the presence of large numbers of multinationals eager to buy innovative technology from startups, Israeli companies are building a wide range of products and services.

Using artificial intelligence and digital technology, they are creating applications for diagnostics, tools for the visually, physically and mentally challenged as well as products that can improve farm output. "Many visually disabled people are old people who don't care about smartphones," said Yonatan Wexler, vice president for research and development at OrCam, a startup launched in 2010 by Amnon Shashua, a computer science professor at Hebrew University.

Using technology developed by Shashua, Wexler and another faculty member, Shai Shalev-Shwartz, they have created a device that can be clipped onto spectacles, making it possible for a blind person to read, find an item, catch a bus or cross the road. "For us the issue of innovation is not a hobby. It is basically about who we are and what our economy is built on," said Avi Hasson, chief scientist at the ministry of economy. "This was a country selling oranges to the world and not high tech. We have now decided to build our economy around the knowledge industries." Currently half of all Israeli exports come from the technology industry.

So, what is Israel's "secret sauce" that has made it a global startup hub? Experts said the "bottom up" approach of the government to fund innovative projects is unique in the world of early-stage research and development funding. For India's nascent startup ecosystem, the Israeli experience offers several valuable lessons.

Israel's research and development expenditure account for approximately 5% of the country's $260 billion (Rs16 lakh crore) GDP, higher than any other western country. This excludes the spending on defence R&D. The office of the chief scientist has a budget of $450 million (Rs2,800 crore)annually and always co-invests along with the private sector. "We do not try to replace the private sector, but rather complement it; we like risky projects," said Hasson, who worked as general partner at Gemini Israel Funds.  Typical grants are in the range of $30,000 to $6 million (Rs18 lakh to Rs37 crore).

There are also around 300 multinational companies in the country which are a big part of the ecosystem. Many of them, including Apple, Google, Intel, Microsoft, General Motors and GE, have set up research and development facilities to use the local talent and come up with breakthroughs.

"You have 20-year-old kids here; their education is not to follow instructions, but to lead and solve problems," said Yossi Matias, managing director of Google's Israel R&D centre and a top computer scientist. In June, Google bought Israeli mapping startup Waze for over $1 billion (about Rs6,200 crore).

In 2012, M&A deals involving Israeli and Israel-related companies were valued at $9.74 billion (Rs60,700 crore), an 88% increase from $5.2 billion (Rs 32,000 crore) in 2011, according to Israel's IVC Research Center  database. Besides acquisitions, many of these multinationals provide space for entrepreneurs to meet and help them to bootstrap their ideas. In 2012, six of the 10 largest acquisitions involved venturebacked targets.

 

Per capita, Israel has attracted over twice as much venture capital investment as the United States and 30 times more than all the members of the European Union  combined. An example of Israel's farsightedness is the fact that it set up a seed fund called Yozma more than two decades ago. Today, there are about 70 active venture capital funds in Israel, of which 14 are international.

Around 575 Israeli high-tech companies raised $1.92 billion (Rs12,000 crore) in 2012, a 10 % decrease from 2011 levels, but up 52% from 2010, according to IVC. The country's emphasis on education is manifested in its 57 colleges and eight universities which over the last 10 years have produced six Nobel Prize winners. Israel has 135 engineers, scientists and PhDs per 10,000 people in the work force, the highest in the world.

"All Israeli kids know that their mother will tell them, 'After all that we've done for you, is asking for one Nobel Prize really too much?'," said Yossi Vardi a serial entrepreneur who is most famous for being the first investor in ICQ—the first internet-wide instant messaging system which AOL acquired in 1998 for $400 million (Rs2,500 crore).

Seventy-one-year-old Vardi, who is regarded as the godfather of Israel's hi-tech industry is of the view that Israel's success as an innovation hub is not about technology alone. "This is a cultural phenomenon and the value system that kids learn," said Vardi, who has invested in 80 startups, of which 27 have failed. "In a society which does not tolerate failure, entrepreneurship cannot thrive there," said Vardi. "In Israel, if you have not failed, that is a sign of shame," said Amir Shevat, Google's developer relations program manager in Israel.

Community spaces are also made available for startups. One public library in Tel Aviv has been converted into a coworking space for startups. Instead of hotels, an old train station on the Jaffa-Jerusalem line has been restored by the municipality and hosts startup conferences.

Startups constantly network with top entrepreneurs, industry leaders and investors at coffee shops for advice, money and mentorship. "They are so open that you can just walk up to them and talk. I find this missing back at home," said Ronak Kumar Samantray cofounder of Hyderabad-based technology startup NowFloats, one of the finalists at a Tel Aviv startup competition.

"It is useful to be part of community and learn from the mistakes of other entrepreneurs," said Avner Warner, director of global economic development at Tel Aviv Municipality. "As a society, we respect people who work in a startup."

 

Hot startup Windward: The Tel Aviv way of keeping sea pirates at bay

Whenever a ship sails in any ocean of the world, Windward, a Tel Aviv-based startup, detects its location, speed and behaviour. In an office tucked away in a lane opposite the city's Great Synagogue, Windward looks at global vessel traffic drawn from commercial satellites as well as maritime data. It then automatically alerts its customers, mostly government authorities across the world, about illegal fishing or oil vessels and ships that engage in smuggling and other suspicious behaviour.

"Satellites until five years ago were like magic, only the United States had them," said Ami Daniel, 29-year-old cofounder and chief executive of Windward. "Satellite data stopped being the secret sauce of the government and started being commercialised, only recently."

A former naval officer, Daniel cofounded the company in 2010 along with colleague Matan Peled. MarInt, Windward's proprietary satellite-based maritime analytics system, maps global maritime activity based on data collected from various sources, including commercial satellites, open-source data bases and other sensors.

Fishing fleets annually lose $50 billion (about Rs3.1 lakh crore) due to depleted stocks, poor fishery management and little supervision.

The cumulative global loss of wealth over the past three decades is estimated at $2.2 trillion, according to World Bak report. Windward's technology said Daniel "allows its customers to focus on the small number of suspicious vessels, while ignoring the large number of wellbehaved vessels".

The startup, which has a team of 12, has received a total of $7 million (about Rs43 crore) in venture funding, including the latest round by venture capital firm Aleph announced this week. "In Windward, we see bright, blue ocean markets," said Eden Shochat, a general partner at Aleph.

Daniel believes the company's innovative technology will be able to provide a clear indication of crude oil origins and prevent oil thefts as well as help in search and rescue missions. Last December, it found a Russian fishing vessel drifting in the Sea of Japan, reportedly due to engine failure. The Japanese coast guard commenced a search and rescue mission and towed it to safety.

Windward processes over two million ship transmissions daily. The company expects to close this year with "multiple millions of US dollars in revenues" and post profits as well.

Emulate India's innovation in healthcare: Harvard study

HYDERABAD: In a rare case of heaping praise on India's healthcare, a study in Harvard Business Review (HBR) has urged the West to emulate India's economically viable healthcare facilities for its new-age innovation and cost-cutting techniques.

 

The study describes ultra-low costs and innovations in technology in Indian hospitals from constant experimentation, adaptation and necessity are pointing the way to move forward at a time when the global healthcare industry has been hit by the economic slowdown.

 

 

HBR, which is a wholly-owned subsidiary of Harvard University, reporting to Harvard Business School, published the study by authors Vijay Govindarajan and co-author Ravi Ramamurti, who hold key posts in top biz schools overseas, in its November 2013 issue.

 

The authors studied more than 40 hospitals practicing innovative strategies.

 

Nine among them, treating eye, heart, kidney, bones, cancer and maternity care, were selected for an in-depth study and were found to be providing world class healthcare at 95% lower costs compared to US hospitals.

 

"Necessity spawns innovation. Apollo Hospitals asked suppliers to shorten the length of sutures after it found that its doctors routinely discarded one-third of each suture," says Vijay Govindarajan, professor of International Business at Tuck School of Business at Dartmouth, Hanover, USA.

Many innovations, sparked by the need to overcome constraints in emerging markets have been highlighted.

 

While Aravind Eye Care has been picked for perfecting the manual small incision cataract surgery technique that requires less sophisticated equipment and less seasoned surgeons with cheaper lenses, Care hospital and other providers are said to be performing angioplasties by going in through the wrist, rather than the groin (which takes more time to heal).

 

The LV Prasad Eye Institute's (LVPEI) technology allowing a single cornea to be sliced and used for more than one transplant patient, has been the talking point in the research.

 

"If US hospitals often eliminate low-skill staff jobs to cut costs, which forces doctors to spend more time on routine tasks, Indian hospitals have taken task-shifting to a new level by creating low-cost healthcare workers at one end of the spectrum and highly focused specialists at the other," the survey says.

 

They said at Aravind, each doctor performs 1,000 to 1,400 eye surgeries annually compared to 400 by US doctors. Similarly, at Narayana Hrudalaya (NH), each surgeon performs 400 to 600 procedures annually compared to 100 to 200 by US surgeons.

 

Also, customizing healthcare to suit local conditions, doctors in India have pioneered the beating-heart method of surgery, by which they can operate without shutting down patient's hearts, the report says.

"US costs are much higher than they need to be, even after incorporating higher US salaries. The US uses doctors, equipment, and facilities much too inefficiently and there is waste all around. There is ample room to streamline processes and lower costs without lowering quality. They can learn a few things from the most innovative Indian hospitals," says Ramamurti, strategy director, Centre for Emerging Markets, D'Amore-McKim School of Business, Northeastern University, Boston.

 

Indian doctors earn anywhere from 20% to 74% of what their American counterparts do, the survey says.

 

The authors calculated the price of an open-heart surgery at NH after adjusting the salaries of NH doctors and other staff to match US levels. Even with the higher wages factored in; the cost was still only 4-18% of a comparable procedure in a US hospital.

"The accomplishments of a handful of Indian hospitals, usually founded and managed by Indian doctors, is every bit as laudable. More important, they should be emulated by other hospitals," added Ramamurti.

Why Indian companies don’t innovate

A survey of 26 Indian companies by the CII and ITC published last week has found that “most Indian companies are not engaged in sustainable and inclusive innovations”. Typically India may not be known for innovations, but given the huge challenges before it in the coming years, it may have little choice but to develop innovative capabilities in certain areas, it adds.

Subroto Bagchi, Chairman of IT services company Mindtree, says people often tend to confuse innovation with invention. Thomas Edison’s light bulb is a great invention but “that doesn’t make him a great innovator”. In today’s context, innovation is about the creation of new economic value with breakthrough ideas that will be widely adopted. Classic examples of all three are Apple and Google.

Bagchi says innovation usually happens when you intensely love something, and gives the example of musicians such as Bach, Beethoven or A.R. Rahman; “Rahman continues to innovate because he loves music, and not the technology behind it. Rahman is who he is not because he has created a veena or an electronic synthesiser… even if he doesn’t have these instruments woh balti ulti karke bajayega (he will play on the top of an upturned bucket)… he is so intensely in love with music.”

The same is true of Steve Jobs, who did what he did because he was intensely in love with calligraphy. Or the Aravind Eye Hospital, where some doctors felt strongly about needless blindness. Or the Grameen Bank, where Muhammad Yunus got the idea of giving small loans to the poor without collateral or paperwork because he felt strongly about rural folk. “But we fail to innovate substantially in India because we have only engineering capacity and not such intense thoughts or feelings.” Engineering capability, he adds, comes from the left or analytical part of the brain. “While the analytical or logical part is necessary, innovation happens from creative or right-brain activity.” The former can’t replace the latter; “to put it crudely, any number of spasms cannot be a substitute for being pregnant. You have to first conceive to get a baby!” At either Aravind Eye Hospital or Grameen, “no business plan would have justified what they did”.

On why India is yet to see a Google or Apple, TCS Vice-Chairman S. Ramadorai says it is perhaps because we have “a rote-based learning system, are generally a risk-averse society, preferring comfort zones, tend to be hierarchical and respectful socially to break out of well-trodden paths.” Another factor could be fatigue — both physical (poor nutrition, pollution, cramped spaces) and mental (historical baggage, dwelling in past glories). But then these attributes are also true of other Asian countries, which are way ahead of us in innovation.

Rishikesha T. Krishnan, Professor of Corporate Strategy and Policy at the Indian Institute of Management - Bangalore, attributes the low level of innovation to “Indian companies failing to put in place a systematic process of innovation. Instead they rely on ad hoc processes like jugaad.”

He thinks there are several reasons why we haven’t seen a Google or Apple emerge from India, “We tend to play safe and pursue well-trodden paths rather than embrace experimentation. Our younger generation does not have enough exposure to diverse influences, experiences, and the real problems people face. Also, we are unable to scale-up businesses rapidly enough because it’s not easy to get early-stage funding."

Cheap and Cheerful

But at the end of the day, says Bagchi, innovation requires “huge capital risk, you can’t do cheap and cheerful stuff… the garage has been over-romanticised”. Giving the example of a semiconductor, a drug discovery or a new auto model, he says that common to all three is the fact that it takes anywhere from $700 million to $1 billion to come out with a new product. “Even more important, you can’t get success with just one attempt; you have to take a risk five, six, or even 10 times. This means that for one right model, you will have to write off five to seven models. When you see one success, the money that has been written off is not talked about.”

Winds of change

But are things changing? Yes, they are, say both Ramadorai and Bagchi. The former is an optimist and says many young US-educated Indians are returning to start their own ventures, which might turn out to be the “future Googles”. Krishnan says the change is not “fast enough”.

The survey report says that what is heartening is that the promise of sustainable and inclusive innovation comes from start-ups and social enterprises, because “they are more flexible, have higher risk-taking capabilities and are driven by passion”.

Bagchi agrees; innovation is happening in India in the not-for-profit sector, and in literature and the performing arts related to the right brain. “In the last 15-20 years there has been a huge upsurge in Indian literature, cinema and music which have global appeal and relevance.”

He gives the example of Tara Thiagarajan, who is using neuroscience to predict or predetermine which rural microfinance recipient is likely to become an entrepreneur. And Selco’s Harish Hande, who is customising solar power to suit the individual needs and pockets of vegetable vendors, cobblers and so on. Hopeful that such innovations in the social sector will have a huge multiplier effect, and eventually create great economic value, Bagchi says, “In the social and creative sectors we are far ahead of industry because these sectors are able to take a longer view of time, and innovation requires time. I am hopeful because the social sector is trying to solve local problems by adopting an entrepreneurial approach and then scaling up.”

On the CII-ITC survey blaming lack of innovation on the hierarchical approach in Indian companies, where seniors do not encourage new ideas, Ramadorai says IT companies have been lucky as they are largely “flat” structured. “Despite being large organisations, often with a global footprint, IT companies deign to be democratic.” For instance, TCS has a dynamic social platform called Knome that allows a unit head to converse with a trainee and people across departments to share experiences and knowledge. Through these interactions, “experts” have been identified from the edges of the organisation. “Innovative ideas are expressed and collaboration improves these ideas,” he says.

He recalls how Tata Motors CEO Karl Slym once met with some TCS employees, many of them customers of Tata Motors, and received 357 ideas! Slym was highly impressed. The Tata Group allows innovation exchanges through several platforms, one being an innovation competition called Innovista with a special award category called “Dare to Try” that recognises ideas that were tried but failed. “Such practices are changing the innovation environment in India.”

But, adds Ramadorai, traditional Indian companies do maintain hierarchies. Whether it’s University research departments or public sector — and even some private — companies, the lack of agility and the bureaucratic processes hamper change, and hence innovation.

The survey has noted that efficiency and conservation measures are insufficient to save India from the catastrophic consequences of ecological disasters. Creating employment opportunities for a 500-million strong workforce in the next 30 years and pulling some 400 million people out of poverty, besides providing sanitation facilities to almost a billion people are challenges that stare us in the face.

To this observation Ramadorai says that while innovation is important, sometimes its importance can be overemphasised and “operational efficiency and effectiveness” discounted. “But the application of better solutions that meet new requirements, inarticulate needs, or existing market needs is also innovation. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. While efficiency and conservation may not be sufficient to save India from a catastrophe, they are essential while we identify the additional innovations, enablers and boosts that will.”

TCS has innovated by focusing on solutions for the SME (small and medium-size enterprises) sector. So have the Indian FMCGs by launching sachets, and telecom companies with prepaid cards. “We need to help create the appropriate environment where questions are asked and will lead to the next innovation.”

Averse to capital risk, failure

Mindtree Chairman Subroto Bagchi says for great innovation to happen “billions of dollars will have to be written off and somebody has to have the appetite for it.” In the US and other developed countries, such efforts are backed by the venture capital industry which, in turn, is backed by large institutional funds. “So Stanford or Princeton [universities] will literally have $100 billion in banks; they’d put $60-70 billion in predictable investments and take risk with the remaining $30-40 billion by giving it to venture capitalists, which will put it in 20 ideas of which 18 bomb, but two are hits and give huge returns.” Also, in India, there is a huge social stigma attached to failure; “we forget how much coal Madame [Marie] Curie burnt before she found radioactive material and paid the price with her own life.”

Also, he says, we talk of diversity but are not really diverse compared to Nordic, or other European countries or the US. “There the diversity is at the thought level and difference of opinion is welcome. Typically, in India there isn’t adequate harvesting of experience from large-scale failures and success. In other cultures, from every institutional failure people see the capacity to make new progress.”

Lack of industry-academia interaction is another bane. “Ram Sriram met the two scruffy Google youngsters in the room of a Stanford Professor, who said the youngsters had a great idea on a search engine. Sriram couldn’t understand the concept but took out his chequebook and asked, ‘In whose name do you need the cheque?’ And they didn’t even have a bank account!”

 

The rest may be history, but Sriram had the confidence because the recommendation came from a professor he trusted. “Here the industry, academia and the mindset are to blame. A student enters an institution to get a job, and we industry people do campus hiring so our job is done.” Bagchi also rues the lack of respect for research in India. “IISc-Bangalore is the only Indian institution among the world’s top 100. Harvard, Stanford, Princeton are all 100 years old. But if you open an engineering college in paddy fields, you won’t get innovation from there!”