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these checks and policies. You see a country like China growing phenomenally, where the role of government is very different. Suppose there's abuild-ing standing in the way of constructing an Olympic stadium, they will go ahead and destroy the building even if it has historical significance whereas in Indiait's never going to happen, no one will allow a factory to come up in the place of a3,000-year-old building. This helps preserve the history and culture of the nation. To that extent, it's good, butitpains me to see roadblocks when a company is trying to innovate, because really we oughttobe celcbrating it.
Several times, a company perceives an innovative product and puts its sweat, blood and tears into creating and developing it, but when the final product reaches the consumer, itfails.Wheredoorganisations stumble?
If it fails when it reaches the consumer then I would say that the company probably didn't test and understand the consumer's needs and expectations. That's usually the case when R&D designs a product and hands it over to manufacturing, which in turn makes it and passes it on to marketing. Naturally, there is a problem here as there is a disconnect between what the customer needs and what's been designed. That happens in companies where there are thick walls between departments and alack of communication. Comp anie s that start from the market and ask the customer what they want and consequently designs something to that end, the probability of their success goes up. Innovation never comes with a 100 per cent guarantee because that's the nature of the game, but at least you can improve your odds of success. Itis an experiment with unknown outcomes. Even with the Nano, on the day it was announced, it was an exciting ex-
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In that case, should consumer feedback and research be the drivers that direct the course of innovation in an organisation?
You should do research, but sometimes market research canbchighlymislcading. Customers are notorious in not knowing what they want, so you have to find other ways to resolve the uncertainty. To that end, a firm can do a test market in asmall geographical area before a full-scale launch, thereby containing risk. A company must always look at less expensive ways to get its answer. And only when reasonably confident, should it spend more money.
What makes cult brands like Apple's iPod, iPhone, or say, a Harley Davidson? Is it innovation all the way, or is there something more to it? Very much innovation. But innovation not in the product or technology sense. Take the iPod, it is not a new product because digital music existed before that. It's merely a handheld hard drive. But there is an imaginative way it is put together. Just look at the rotating dial on it with which one can control volume, go to the next song, and what's more, you're taking the entire music library with you when you're on the move. That's a remarkable ingenious move as opposed to other digital music devices. Then the iTunes was just as imaginative, because essentially Steve Jobs attacked the CD market, allowingpeoploto buy the songs they like, pricing each song at 99 cents.
Similarly, Sony walkman changed the rules because before that people thought the radio was dead. Another thing about innovation is that you don't do it once and then stop. For instance, Steve Jobs first came out with the iPod, then the iPod Nano, and now the iPhone. He's constantly changing the rules just like he changed the rules in movie-making and personal computers.
India is at the helm of change whether it's dealing with mergers and acquisitions or stock marketf luctuations.Are Indian companies equipped for this? There is no choice, if we don't handle the change we're dead in the water. The Indian economy has opened up and there's no going back on that. That means that if you're not willing to change, the multinational with the bigger resource base will come in and exploit the market. The M&A activity is abig opportunity for Indian companies. Not only is the dollar getting weak but Indian companies are making more money here. Soifyoureally innovative and make money like the Tatas or Reliance your opportunity to go abroad goes up and assets can be bought cheap. I think that's the best way to go global.
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What are the biggest barriers within companies that want to innovate?
There are three big barriers. First is not encouraging employees to give ideas. Second, the lack of risk-taking attitude in organisations. And last, limited cross-functional and cross-business unit collaboration.
How do companies overcome these problems?
This is really alcadership challenge. That said, there are companies in India that arc doing a good job when it comes to innovating. The big innovations that have taken place are from visionary leaders likeNarayana Murthy. We need people like him, who put in place decisions that impact the company and the country for30 years. Newer companies such as Infosys, Wipro and TCS operate differently because they attract a different type of employees and even the leaders they hire encourage ideas from employees. A casein pointis Infosys. When the company makes any major strategic decision, it first presents it before the "voice of the youth"—a select group of employees who criticise the plan. Also, these days even family-run businesses are evolving. The next generation acts very differently, in a way that is beneficial for an enterprise. In fact, despite a change needed in the political process in India, the heirs of politicians act differently from their parents.
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Move beyond tech innovations
Vijay Govindrajan needs no introduction. He's ranked as one of the top 10 business school
professors in executive education by BusinessWeek. While Forbes rates him as one of the top five
most-respected executive coaches on strategy, The London Times has put him on its list of the
top 50 management thinkers. The Professor of International Business at the Tuck School and
founding director of Tuck's Center for Global Leadership, Govindrajan sees a substantial
change in how Indian companies are looking at innovation as a key growth driver.
On a recent visit to Mumbai, he spoke to Byravee Iyer on how some of the challenges that
companies face on this front can be overcome. Edited excerpts:
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area! shame that we have one or two politicians who hold up projects that are strategic not only for the company, but also the nation. Nano is a watershed, not because it is a new product, but because for the first time it has shown the world that India canbealeader in innovation. India has usually been looked upon for its cost arbitrage — which may still be true — but the Nano showed the world that India can be an innovator, too.
I'mnot saying that companies run circles around people and acquire land. Here everything was done properly and ethically. This is also going to have a negative impact on the state government because in some sense if you block apro-ject like this, who in their right state would go into a state like this. In fact, I think if there is a problem in India, it's not that our direction is wrong, it's just that there are too many speed bumps on the way. The pace is what needs to be accelerated.
So is it the government that really makes or breaks our forward march?
It is really the government that gets in the way. The sectors where we have made a lot of progress like IT are the ones in which the government had no role. We have so much promise, if only we could be lead by entrepreneurs , I think the growth wouldbc phenomenal. That said.I do also see onebenefit of
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Therefore, change is in the wind, and I hope, it will accelerate and we change faster.
In a lot of companies, the innovation process is mostly about the R&D team coming up with breakthrough ideas — it takes place within the four walls of the company. Isn't that a constrained approach to innovation? Is there a better way to do it? R&D shouldn't be viewed as the only way innovation happens. That wouldbc cons training because the R&D dollars we spend is nowhere near what developed countries like Germany and the US do. So while tech-
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nology is certainly a source for innovation, we don't have to pioneer new technologies. Instead, we can take available technology and see how we can innovate the product or business model. Thus, the better approachfor Indian companies is to think about innovation more broadly rather than restricting it to technology innovation. It'sbeen proven thatyou can take existing technologies and come out with an entirely new business system. A good example of that would be Southwest Airlines, a very innovative airline, but they don't havcanynew technologies. So
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that's really the kind of mindset Indian companies need to adopt — to innovate without having to spend alot of money.
What's your take on the processes versus innovation debate? Some argue that processes like Six Sigma often come in the way of creativity or innovation.
Innovation comes in all kinds of flavours. Six Sigma is areal-ly disciplined process wherein you innovate incrementally. I think that has lot of potential and must be encouraged. But the Six Sigmaprocess does not work when vou don't have
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enough fundamental innovation. If you take TataMotors, one way to innovate is to make its existing cars better, but on the other hand, the $2,000 Nano is a fundamental innovation. That will not happen with Six Sigma.
Since you spoke about Tata Motors, how do you see the Sin-gur row?
It's quite discouraging when we become our worst enemy. In some sense, here is a company which is setting global standards in innovation, yet there are people who, for personal reasons, create stumbling blocks. I personally think it's
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periment no doubt, but it came with a lot of unknown outcomes. You don't know whether technologically it is possible, whether there will be customers for it. Therefore, to that extent, the business plan that you prepare is just nothing but guess work. It's not the person with the best business plan who wins, but the one who learns fastest. Someone may have an inferior plan, but if he learns fast, he canprobably can overtake. It's the learning that is critical.
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