Traveling ticketless by train in India is not uncommon. In fact, traveling so in local trains is a matter of pride and adventure for many. After all, the likelihood of getting caught is low. Even so, some time ago, an insurance scheme was launched – surreptitiously one presumes – for ticketless travelers. By paying a small monthly premium, if caught, the penalty for ticketless travel would be paid by the insurer and the traveler was free to continue his/her travel (ticketless, presumably). This might well be an apocryphal story but it illustrates the infinite capacity of the Indian mind to “opportunistically” innovate or invoke Jugaad (a term that’s since become fashionable internationally). Another common example is the case of washing machines being used to churn milk to make butter in rural Punjab. There are scores of examples of such Jugaad innovations but hardly any for what one might call Systematic Innovation, which is typically the source of major innovations on a sustained basis.
Why is that the case? Rishikesha Krishnan, Professor of Corporate Strategy and Policy and Jamuna Raghavan Chair Professor of Entrepreneurship at the Indian Institute of Management, Bangalore has attempted to answer this in his recent slim book From Jugaad to Systematic Innovation – The challenge for India. While there have been umpteen studies on Innovation in India including several pop-books on examples of breakthrough innovation in India, this is perhaps the first book that lists the critical ingredients required to generate sustained innovation.
For instance, the book looks at socio-cultural barriers to innovation (e.g. hierarchical structures and a non-questioning education system) and examines the policy required to foster a culture of innovation. It makes a set of detailed recommendations that policymakers would do good to read. In spite of the so-called lack of innovation, India grows. It is said that the country grows at night while the government sleeps! And this is exemplified by the growth of the Indian IT industry that grew before the government understood what it was.
The policy has a huge impact and the appropriate implementation of policy even more so. For example, thanks to policy there’s just one Indian technology company Tejas Networks competing in the Indian telecom equipment market, the world’s fastest growing one. Tejas is all of about $150m in size after 10 years while Chinese competitors like Huawei (supported by the Chinese government) will do over $3billion this year in India. The only other player, Indian state-owned, ITI is deep in the red. Thanks to policy, there were till very recently no Indian private sector companies catering to Indian defense needs and India is the world’s largest importer of defense equipment. The role that defense has played in the development of an innovation culture in the US, Israel and even China cannot be understated. Even so, Indian companies are taking baby steps in partnership with international companies. India produces the world’s largest number of movies and yet there’s no homegrown technology (including special effects, equipment etc). India is a world leader in remote sensing satellite technology and yet this and other technologies developed by the state-funded labs are not commercialized because of the architecture of these labs and thanks to serious policy flaws.
Socio-cultural barriers to innovation are not just an Indian thing – fear of failure and the social acceptance of failure – but rather an Asian phenomenon or even a non-American one. Yet, Korea and Japan are innovative countries, far more than India. China today, credit to policy, is investing huge sums in R&D, education and in developing home-grown technologies. Policy, including laws and bureaucratic hurdles, is therefore more critical an area for reform. Economic growth, liberalization, and globalization will address the issue of socio-cultural barriers by enabling the private sector creation of a friendly ecosystem.
The presence of a market governed by laws (for example, taxation, setting up and exiting companies) is an important area as well. Over the past 19 odd years, India has cautiously shed its socialist trappings and decided to embrace market capitalism. The results are there to see. In addition, India is slowly moving towards a single market governed by a single taxation system for goods and services. For innovation to flourish in a friendly policy environment, an enabling infrastructure must also be present. In an energy deficient and impoverished country like India, shouldn’t there by serious policy measures actively promoting the development of clean technologies? Shouldn’t small and medium companies be encouraged by means of access to capital and markets? For those interested in seeing systematic innovation in India, it is important to appreciate the role and impact of the policy. This book makes a good case for such policy changes.