India should encourage low-cost innovations: Gururaj Deshpande

New Delhi: Gururaj ‘Desh’ Deshpande , an adviser to US President Barack Obama on innovation and entrepreneurship, said in an interview that more attention should be paid to low-cost innovation in India. The founder of Sycamore Networks also set up the Deshpande Center for Technological Innovation at the Massachusetts Institute of Technology (MIT), besides heading non-governmental organization Akshaya Patra, which was started a decade ago as an initiative to feed school children in Bangalore. Deshpande spoke about building innovative ecosystems for social empowerment in India. Edited excerpts:

 

What is the role of governance in making the environment conducive for innovative entrepreneurship? 

 

You have to create the culture of innovation. When you experiment, only a few will succeed. It will promote innovation, the penalty of failure should be small. In the US, if you start a company, and it doesn’t work, you can file for bankruptcy and start over. In fact, if you are a failure, you are valued higher because it is like being a (veteran) soldier in a war. In India, we need to clean up the legal environment. At present, if a company fails, there are investors, creditors etc., and it is not easy to walk away. Since entrepreneurs need to give a lot of personal guarantees, when they fail it is very hard for him to start something else. We need that. That’s part of a maturing economy.

To build a company, you need a good idea, a good entrepreneur, a good mentor and easy access to capital. Effective governance would be in reducing the friction in these four aspects. The only mistake the government can commit is that when they come up (for) money, they start picking who to fund and who to not fund. Government officers are not in the business of figuring out who wins or who loses. They should be in the business of encouraging innovation. In India, all four aspects are there, but a lot needs to be done.

What is the type of innovation required in India to meet social challenges given the fiscal constraints?

Typically, people relate innovation to hardware/software, little start-ups in basements. Sometimes innovations are profound technological breakthroughs which are patentable—the kind we do at the centre in the Massachusetts Institute of Technology—but other times it is social innovation. This might not be a breakthrough or a patentable innovation but, like Akshaya Patra, social innovations cannot be undermined. MIT is a powerhouse of innovation but if I ask them to replicate something like Akshaya Patra, they will come up with a $5 meal and think it is very affordable. Because they don’t have the Indian context. So, there is a space for social innovation and then there is technological innovation and we need them both.

Do you think the regulatory environment in India fosters innovation?

The regulatory ecosystem for innovation is a work in progress. It is evolving. I graduated from IIT (Indian Institute of Technology) Madras in computer science in the 1970s but had never seen a computer before. The first wave of innovation was when IT companies were set up in India to solve international problems. The next wave is here now when companies in India choose a problem to solve and then they innovate accordingly. So, that is a very different approach to innovation. A lot more patentable ideas are required. Where India will shine is low-cost innovation and skill set that will drive everything. So the solutions that people come up with—telecom, health etc.—will have a level of innovation that cannot be ignored globally.

I had two of MIT’s presidents visit India recently. It is very clear that if MIT does not observe what is happening in India, the US will miss the bus. They will be sitting in a bubble and coming up with solutions like a $5 meal and thinking it is a good solution, while people in India will be running away with 12 cents a meal. As long as you have an innovative culture—not all may work—but government policies should encourage a lot of this activity. The government should be in the business of letting a lot of people innovative.

In the past year, several patent cases have gone against multinational companies. Do you think India’s patent laws are hostile?

Encouraging patents is a good thing, particularly in global competition. I think China now has more patents than the US. First, the government has to encourage innovation that is relevant to the Indian context and then patents should be encouraged. It should not be the other way round.

The number of patents in a country cannot be a measure of innovation, otherwise every university professor will get patents but it won’t solve any problems.

Is it right to say that in the US, India has acquired an image of not respecting patents?

Actually, they trust India a lot more than they trust China right now.

That does not say much.

That is the nature of the developing market. The only time you will start seeing courts and patent laws in India is when there is enough innovation within India. When Indian companies will spend a lot of money (on research and development) and start getting patents, then the law will start protecting these patents automatically. It is not happening right now because there is not enough innovation. Or at least there are not enough patentable innovations. Right now, people don’t need huge innovations to get into business. In fact, globally, businessmen are jealous of entrepreneurs in India because they don’t need to come up with profound ideas to start a company. Examples like Red Bus (a bus ticketing site) are big ideas, but are not patentable. It is not that we don’t need patents, but it will just take time. Once you do 10 Red Buses, you will need something little bit more profound. It is a question of maturing economy.

Mindtree bets on crowd-sourcing of business ideas to drive growth

Software exporter Mindtree is betting on internal crowd-sourcing of business ideas as it chases growth and seeks to stay in sync with the evolving technology needs of enterprises.

With the outsourcing industry confronted with rapid technology changes and exacting customers, the $437 million ( 2,750 crore) company has turned to its more than 12,000 employees to come up with innovative solutions. So far, it has commercially launched two service offerings based on ideas proposed by employees.

 Two years ago, when it first started doing it in a formal way, the company generated 120 ideas and shortlisted one, which it then estimated had the potential to generate sales of $ 50 million over five years. This year, it hopes to get some 200 ideas and shortlist 2-3 of them.

"Our customers are not only looking for services, but solutions and proactive value-add from us. We felt Mindtree has reached a certain level of maturity and it is time for us to create a platform to meet such aspirations," said Srinivasan Janakiraman, president and chief technology officer, Mindtree.

The crowd-sourcing initiative came about after the success of an employee's idea that led to a solution centered around a digital video surveillance product to help analyse digital video streams from multiple cameras to search for patterns.

 "There was a shift from analog to digital, and we wanted to ride that change," said Sharmila Saha, technology evangelist at Mindtree and originator of the idea. The success of the digital surveillance product prompted Mindtree to launch a formal process to crowd-source ideas from employees in 2011. It was called the 5/50 programme, referring to the idea's potential to garner $50 million in sales in five years.

"The real test happens when these ideas get rolled out," said Sharad Sharma, software product evangelist, angel investor and a former Yahoo! India R&D chief. Today, the digital surveillance solution has over 15 customers in the domestic and overseas markets. So far, its application has primarily been in security but Mindtree is now looking at extending it to the retail industry where there is a lot of interest in consumer behaviour.

"The employees are not just idea-givers. They should have the potential to translate it to a business," said Janakiraman.

To incentivise employees, Mindtree has instituted a reward mechanism where the employee stands to earn ten to twenty times the variable pay if the idea can be converted to a successful revenue-earning business. The employee formulates a business plan with the help of the chief strategy officer and the team and nurtures it into a business, like any entrepreneur would.

A cloud management and security software VMUnify - the result of an employee's idea from 2011 - won two customers last quarter after its launch six months ago. Mindtree expects both the cloud and the digital surveillance software to break even in the next year.

Industry body Nasscom said that more companies will look internally to generate fresh ideas.

"Clients are asking what more can you deliver and service providers often look within the organisation for new ideas. We hope to see more and more of this," said Nasscom president Som Mittal.