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Forbes Column 2009: India’s Innovation Gap

Posted on Friday, Feb 13th 2009

Here’s the first of a series of Forbes columns on Entrepreneurship and Innovation in India: India’s Innovation Gap.

In our previous discussion, we tackled Entrepreneurship and Innovation together, but I think they’re two separate issues. This article addresses that. And India needs to address both from a ecosystem/framework point of view.

Let’s continue the discussion. And I will continue synthesizing. The goal is to come up with actionable nuggets.

This segment is a part in the series : Forbes Column 2009

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Every column of yours Forbes (or may be Forbes itself) takes a lot of time to load.

Can you please put a copy of it here or some other site (dummy site of Forbes) which is fast?

Well, I am using Broadband from India and it is slow. But then, I never see such slow response time as I see at Forbes website.

Spandan Friday, February 13, 2009 at 11:21 AM PT

Considering India’s entrepreneurship ecosystem infancy factor, and the existing and unfortunate perception of the country from the industrialized world as a tech outsourcing mecca, as opposed to an innovative powerhouse (as it should be, based on its brainpower capacity) ; I am of the view that the main priority for India — if it aims to move away from the outsourcing routine and concentrate more in assuming a leading role on the global stage – is that of formulating effective twentyfirst century e-ecosystem strategies, focused on the creation of entrepreneurial awareness while instilling the spirit of enterprise into the psyche of the new generation. In this context, they should also direct their attention towards the exigency to change or catalyze an already underperforming e-ecosystem so that its instrumentality, as it relates to the fusion of entrepreneurship and innovation as one component, will be such that will allow it to function as a coherent entity. An entity in my view that continues performing only at minimal levels (when considering its leapfrogging capabilities ), and one that logically leads to restrictions on the creation and innovation front.

The 2009 ‘Doing Business Report’ noted that it takes 30 days to set up a business in India whereas in New Zealand one can operate a business within 24 hours. Insolvency procedure in India may take 10 years versus 1.3 in NZ. Infosys’s Subhash Dhar was quoted last week as saying ‘for Indian companies is still way easier to do business with a company in the U.S. than it is to do business today with another Indian state’ [NYT]. Clearly, the overall business environment in the country still needs modifications to facilitate better efficiency. The govt. should create….. actually let me rephrase that: the Indian govt. has an obligation and must create the right business conditions for the Indian entrepreneurship society to flourish based on the country’s fantastic supply of IT talent – which, and as I’m sure you are way more familiar then I am – it is simply outstanding. Past and present mainstream technologies have substantial talent oversupply in India, including the fact one can find a lot of people with natural abilities even on a cutting edge of the technology. The main question however, is whether the implementation of a number of current and new initiatives at the central and state levels aimed at stimulating entrepreneurship – will be adequate enough to fully support innovation, and more importantly, that the present and new policies are not based on a built-in concept of periodicity. That would be a serious mistake since first: systematicity is what’s required, and secondly – it will prove non-productive as it would significantly impede the possibility of aspiring entrepreneurs for self-actualization. I believe that while recognizing the fact the Indian society has progressively become an entrepreneur-friendly environment, the country’s policies so far have failed in advancing entrepreneurial flair by prioritizing outsourcing over e-ecosystem. And that has to change if they want to reward entrepreneurs or new ideas.

Furthermore, India must treat the e-entrepreneurship subject as a social phenomenon, given its economic impact in terms of wealth creation and prospects of fueling greater economic growth. Conceptually and in practice, a successful entrepreneurship ecosystem is the function of a combination of many factors, including a healthy and vibrant economic environment, education and incubation, individual motivation, access to early-stage finance etc. All these elements are based on the principal of capitalizing on the power of collaboration through introduction and dissemination of new methods and technology that if rightly executed will contribute to making India a fertile and prosperous ground. The point is that the ecosystem’s ability to perform rests in people’s hands. If we put our minds to it in terms of modifying the system, scale it up and more importantly – enrich it so that its dynamics improve and get perfected, the process will unavoidably yield growth and development.

Another point I noted from the Forbes column was the entrepreneurial mindset at this point in the country seems widespread and more significantly, the inclination to take it to a higher level remains quite active from indications of various elements including, the ability of the system itself getting progressively more commercialized via VCs, increased numbers of incubators, academic industry linkages and so forth. These and above-mentioned are all vital elements that if persistently pursued will divert India’s outsourcing addiction into creation and innovation and make the country lose once and for all the mentality “our brains are for sale.”

Ron Haruni Sunday, February 15, 2009 at 7:22 PM PT

[…] Sramana Mitra discusses on her latest Forbes column Innovation and Entrepreneurship in India. Here is my 2c on the subject. […]

India’s Enterpreneurship Ecosystem Tuesday, February 17, 2009 at 3:10 AM PT

Hi Sramana,

I always enjoy your articles. Outsourcing, technology and innovation are all big topics in my mind as well, so I had to really read this one. However, I did want to better understand the context of your current article ‘India’s Innovation Gap’. I assume that the gap is perceived wrt the West. However, my observation is that entrepreneurship is gaining momentum in India, while innovation could still be in question. Perhaps. the two are not linked neccesarily. The overall ecosystem is only beginning to develop now and hence it is really important for some leadership guidance. Infosys chief is still perhaps the only poster boy in India, whereas the US has several successful examples. He too, is a great example of enterprenuership as opposed to innovation since he capitalized on a business model, as opposed to creating something innovative. To my mind, some of the issues are following:

Capital focus: Most PE/VC have focused on growth stage or late stage investments and little focus has been on seed capital or early stage. Also, the capital has been directed to real estate, hospitality and other businesses as opposed to high tech businesses. So it’s kind of a chicken and egg situation there – lack of good companies or lack of available capital.
Indian technocrats: Indian technocrats do not believe in parting equity incase they are doing reasonably well and do not bring in the right kind of capital management expertise and hence suffer in the long run. Also, there is a potential mismatch in actual and perceived asset value.
Indian roots: Historically, indian soil has been home to service based companies as opposed to product companies.
lack of Infrastructure, need for modern education, talent migration: these are pretty self explanatory.

However, I am hopeful that we can overcome some of these issues if not neccesarily the gap. The gap, in my view, will remain for some more time to come. Also contrary to your view of how outsourcing has reduced enterprenuership or innovation, i believe that it has only encouraged it. That is a whole different topic though.

Long email, but this topic is very close to me and hence I like to debate it. Your thoughts will be helpful.

Best regards,
Amit

Amit Shanker Tuesday, February 17, 2009 at 12:32 PM PT

Sramana

Thanks for putting your thoughts on the topic. Your article actually inspired me to write my thoughts about the topic and I have put them in my blog. You can find them on http://sollerthoughts.co.uk/2009/02/23/entrepreneurship-innovation-in-india-root-cause-in-education-system/

Couple of points I mention it in my article are,

1. Need to look beyond IITs in India for Technology
2. Need to change the education system

I would welcome your thoughts on the same.

Regards
Swapnil

Swapnil Monday, February 23, 2009 at 9:57 AM PT
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