Innovation - An Indian Perspective
WHAT ROLE CAN INDIA PLAY IN THIS ERA OF INNOVATION?

Interview with Arindam Banerjee

India can play a role in using innovation to build large, successful multinational companies. To do so companies in India will have to dominate in one or two segments with products that are clearly identified as theirs.

Interview by -  Pradip Sinha,
Associate Consultant,
ICMR (IBS Center for Management Research).

Arindam Banerji

Arindam Banerji is a scientist and entrepreneur in the Silicon Valley. He took the usual route of going from the IITs, through a PhD in the US, to finally working in Sundry Research Labs. Some day, he plans to return to India, but for now, as time permits, he writes on various geopolitical issues.

• Innovation implies a kind of leadership, that will hoist some of the best companies from just being competitive in niche markets to broad household names.

• Innovation is an attitude, that must be inculcated in our students-the attitude to believe that they can change the world with their ideas.

How critical is innovation for survival in the 21st century?

Innovation has always been critical -it was critical in the last century and will remain so, this century too. Countries like the US and Germany drove innovation in large parts in the last century - India has a chance to take this leadership position this century.

We must realize that political and economic conditions change. The same conditions that attract a lot of price-differential based work to India, may see it go to other countries in the future for exactly the same reasons.

Depending upon cheap labor is not a long-term strategy for countries like India. In fact, just last week, talking to some Indian executives of outsourcing companies, I heard them complain about price-differentials for work done in India becoming consistently thinner. Remember, Mexico has seen a lot of its automobile component manufacturing move to countries like China, Brazil, and now India and it was the unquestioned price differential leader for such outsourcing only a decade ago. The price- differential based industries have a tendency to move elsewhere.

So, the question is - what option does a nation have?

The answer lies in looking at another analogy. Look at the technology to make commercial grade jet engines. The basic technology for jet engines was invented in 1930, and realized operationally by the late 1930s. So, it is a technology that has been available at least for 60 odd years, if not more. But, how many countries can produce jet engines commercially today?

Very few-the reason- countries like the US, UK, France have built on the base innovation that makes it impossible for any country to catch up and produce jet engines, without huge investments. Essentially, they have managed to procure an unfair advantage, that very few countries can take away from them. This shows you the long-term nature of innovation.

Countries like the UK, US, France, Russia and others have long held on to the jet engine manufacturing industry and it is not moving away any time soon. This is a critical lesson for this century too.

Innovation based industries and intellectual property based industries can be held on to. This is true even in the software industry, for example, a company like BEA openly claims (in news.com) that it does all its key architectural work and intellectual property creation in the US itself. Oracle, with its productized intellectual property in databases, will be one of the strongest players in databases for a long time to come. Now consider what will happen if IBM's services arms move some of its operations to Mangalore and Bhubaneshwar, what price advantage will Infosys, then enjoy?

For countries, as well as companies, long-term survival and sustained growth comes only through innovation. Innovation is the unfair advantage that countries, as well as companies need to grow over a long-term.

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