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!”

Start-up company to find new markets for handloom weavers

Aiming to infuse new life into Kerala's ailing handloom sector, where over 50,000 traditional weavers are struggling to survive, a company in the start-up village here has won a contract from the state government to support the sector by various measures, including finding new markets.

A key element of the project is to create a platform to connect the existing infrastructure and industry with the vast number of new generation fashion designing and arts graduates who are also looking for jobs, Raqib, one of the co-founders of the start-up, said.

Connecting traditional handloom weavers and young fashion graduates is a great concept. The government will extend all support for such innovative ventures, according to Principal Secretary (Industries) P H Kurien.

Shunning multinational jobs, youngsters-- Raqib Rasheed, Ashik Salim, Syamkrishnan P A, Anto D Akkara, Shehaz V B and Muhammad Junaid, started their start-up venture 'The Peoples Company' even before passing out of the College of Engineering in the state capital, which has now won the two-year contract, effective from July this year.

Under the contract, the start-up will integrate all weavers' societies into a single production system and create linkage between new generation fashion designers passing out of national institutes, and traditional weavers, with the larger goal of breathing fresh life into the industry.

"We were very actively involved in social causes even while at college. In May, towards the end of our course, we approached Additional Chief Secretary (Industries and Commerce) V Somasundaran with our blueprint for the revival of sick PSUs," Raqib said.

Impressed by the proposal, the Government gave the youngsters the two-year contract with the target of helping revitalise the handloom industry, keeping the weaver community as the major beneficiary, he said.

According to the plan, all products will be commissioned as per approved designs and market viability. Besides redoing and renovating the showrooms, the programme will also try to expand the market for handloom products.

"These youngsters could have had dream jobs in multi-national companies through campus placements, but they chose to attach themselves to a social cause. It signals a new revolution piloted by our enterprising youths," said Sanjay Vijayakumar, Chairman of the Start-up Village Board of Governors.

One of the most important initiatives of the government that has made ventures such as those of Raqib and his team possible is the landmark Student Entrepreneurship Policy (SEP) announced at the Emerging Kerala Global Connect in September last year.

A month after Startup Village was inaugurated as India's first telecom technology business incubator in April last year, four engineering graduates set up their data analytics company, Profoundis, at the new facility.

Fifteen months on, Profoundis has become the first Indian company to be chosen for Blackbox Connect, a unique accelerator programme designed to help non-US startups access the resources of Silicon Valley in the US and scale globally.

Profoundis CEO Arjun R Pillai and COO Jofin Joseph will travel to the US in the first week of October for a two-week immersion programme consisting of training workshops, seminars, networking opportunities and visits to major IT firms to familiarise themselves with the successful entrepreneurial and work culture of Silicon Valley.

"As a software products and services company, a chance to experience the world's biggest IT hub first hand is invaluable for us," said Arjun.

Profoundis' core product is a testimonial management system called iTestifyIt designed primarily for e-commerce website and other online selling portals.

Still in beta stage, it already has notched up more than 260 sign-ups. Clients for Profoundis' other web services range from telecom major Vodafone to a Finland-based NGO.

"We were the third company to be incubated at Start-up Village. Besides the obvious gains of infrastructure facilities, being here has given helped us connect to mentors, investors and customers," said Jofin.

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.