The Hindu Business Line : Climbing the curve

The Indian IT industry is seen as a predominantly delivery-oriented one. What role does innovation play here, as against execution, and what metrics are used to index it? eWorld sounds out IT companies on the innovation ascent.

THAT India and Bangalore are driving innovation at global companies is well-known. Less well-known is how companies are keeping their people innovating in a primarily delivery-oriented industry culture.

eWorld spoke to large Indian R&D set-ups to see if they are really able to innovate `half-way across the globe' and how they keep individuals and teams motivated.

One indicator of innovation at a given location would be the number of patent applications but there is surely more as patents are about creating a unique intellectual property but translating that into a marketable product or service calls for innovation.

What, then are the metrics that index innovation?

The `innovation hallmark' is probably more often applied to products, services or business models that change the face of the industry radically or even create new industries.

It could also apply to new or better products or services whether by way of new features, the ability to make a market impact by reducing costs, or addressing a new market because of a change in approach or features.

Not all of this happens in one big leap as the every day application of the term `quantum leap' seems to imply. True innovations involve a lot of hard work where a number of small incremental improvements in a number of parallel processes suddenly make a significant change possible in one or more features, leading to a visible business impact. They are more like snowflakes — each light and insubstantial in itself — but with the potential to launch an avalanche of consequences.

As Bob Hoekstra, CEO, Philips Innovation Campus, says, "Innovation is a multi-functional activity and cannot be attributed to individuals. It typically comes out of product innovation teams, consisting of the marketing, product management, and development people. We also contribute at the component level: creative solutions to design an effective component, or new functionality at the component level."

TI India says innovation is about pushing the boundaries of technology. Says Biswadeep (Bobby) Mitra, CEO, "We are doing designs at TI India even as the process technologies are getting defined. That is hard — almost like changing pilots mid-air." "We are doing designs in 65 nm technology today and the reason that is an example of innovation is that the physical effects that come into force at that level of advanced technology really require physical innovation." It is high risk, as is all innovation, according to Mitra.

TI India is not looking to be a premier centre for TI worldwide but to be world class, he says. That means, TI India is not setting up to compete with other TI centres but with other companies — implying that innovation is driven by market competitiveness and not by headquarters-offshore centre relationships.

Infineon has India driving its software development — from the front seat. Surya S, Senior Vice-President and MD, and Head-Corporate Software, says the focus is not just on doing projects for delivering today's technologies. The company has its pre-development/research arm that looks out and works on technologies that will happen down the road. The team has a strong presence in India and the pre-development group reports directly to the company board in Germany. "This sits very high in the organisation and though the whole activity is worldwide, a good part of the team is in India."

Paul D. Keswick, executive vice-president, New Product Development, Engineering and IT, Cypress Semiconductor, says his company took the usual route of giving its India team easy projects initially which, when completed successfully, were upgraded to more complex projects that more frequently are handled from its Indian operations. The company now plans to expand its team in India and invest in a campus.

"We have centres of excellence in the IP space and India has such a centre for analog design. Engineers here are driving the effort for the whole company and pushing the state-of-the art Cypress design at India," he says.

Hoekstra of Philips Innovation Campus says in every product category that the Bangalore Campus is active intypically, after a few years, the centre contributes to product feature innovation and later to technology innovation (work on new products/features which are enabled by new technology) In every development group, worldover, most people are involved in implementation, delivery, and few people are actively engaged in the innovation stream. The same applies to Bangalore.

"We are a very typical R&D lab of Philips, though with less experience than our sister labs abroad in Europe and the US. So the most advanced stuff still comes from there. And innovation often comes from consumer and market intimacy, which is not so easy from India. Except when the innovation focuses on emerging market needs.''

Hoekstra says Philips has an India Business creation centre with all of Philips India contributing. Multifunctional teams at the company are addressing emerging market-specific opportunities and it is currently at the end of the business feasibility studies for four concepts, and has to decide if it should proceed to market.

The products/services are in the entertainment and healthcare domain. "Since July, we are in the pilot phase of DISHA, which brings modern diagnostic facilities (including ultrasound and X-ray) in a van to villages in Tamil Nadu. Doctors can see the scans through a telemedicine link and advise patients. The partners in this project are DHAN (an NGO), Apollo hospitals and ISRO (satellite link). Economic feasibility is investigated, to be able to scale all across India and other emerging countries."

Sarnoff says it defines innovation as getting products and services to market to make money for clients - a sharper narrower focus, as compared to the enormous quantities of basic research that behemoths like Philips do.

Indian development work is not just for the giants but is a workable model for small nimble companies as well and Sarnoff says its projects with the US defence establishments often lead to nuggets of knowledge that can be put to innovative use for clients. "Development work at India is on projects for appliances and internal R&D, with technology groups ranging from vision and software engineering to niche electrical, analog and digital designers and researchers," according to Tim Mitchell, Head, Sarnoff India.

Cypress' India design teams have earned over 40 US patents and published technical papers, says Keswick. In addition, the company offers multiple benefits to its employees so they can work on leading-edge designs and have solid ownership of these projects.

Companies vary in their innovation strategies and policies. Witness Sarnoff: "Innovation is just what we do. It is embedded in our culture and we have no specific policy," says Mitchell.

TI says it does not distinguish between delivery and innovation as the latter needs to be in every aspect of every person's work. Mitra, while declining to share the corporate innovation policy, says TI feels it important to see that innovation and execution are not seen as mutually exclusive. "We do not distinguish between innovation and execution, between thinkers and do-ers - there are innovation opportunities in everything. Innovation and execution should be tied at the hip." Teams in India do lead the way in developing products, however, according to him.

Consider how different is the Philips approach, which has a formal organised structure to differentiate the creative and implementation phases. "There is a time to innovate and there is a time to focus on delivery. These are clearly kept separate," says Hoekstra.

Philips has a Technology and Innovation Management function that orchestrates innovation activities - organising `Innovation Day' for internal consumption, as according to Hoekstra, it is exposure to new developments in adjacent domains that stimulates new ideas. Technology innovations are highlighted through a technology symposium.

"Most Philips divisions have a technology management function, which tracks new developments and identifies potential innovation possibilities, as input for the Business Creation Process. Friday afternoon `feet on the table' or `green field sessions' of teams of people are often very creative," he says.

Infineon's employees get to submit ideas that are evaluated by a high-level committee and positive contributions are rewarded monetarily as well as by their being empowered to work on it. Informal reward and recognition is an important process, since the environment and a positive feedback loop will be better appreciated by employees.

Taking the feedback loop to its logical conclusion is Sarnoff, which calls time allocation to specific projects as seed funding - basically letting employees pet projects as Google does (see box). An innovative idea has to have technological as well as business articulation before an individual will be encouraged to spend reporting time on a project or idea, says Mitchell. Sarnoff evaluates where an idea is on its S-curve of innovation and the internal focus is to push it up the curve - for greater business benefits.

Importantly, it is not afraid to use ideas from elsewhere - says Mitchell. That is, not only does Sarnoff leverage strengths across the organisation, to bring lateral thinking to a problem, but it also does not hesitate to buy it from outside if relevant or necessary.

Another relevant indicator of innovativeness is the extent to which an organisation is networked with technology institutes and research and academic bodies.

At the end of it all, companies need to come back to some basic questions such as: How does an organisation drive innovation - through rewards or by empowering people from the bottom-up? Are employees encouraged to rate the company on its innovation-friendliness? Is there a feedback loop from the employee to the top management?

And there's also the fact that one's loss is another's gain. If organisations become bloated, reliant too much on delivery work, reduce incentives for employees to innovate, or are too large, unwieldy and expensive, there is not just loss of competitive advantage for themselves, but a significant and emerging market opportunity for outsourced R&D outfits to offer innovation on tap, as it were.

`Few walls between code writers and cheque writers'

GOOGLE, with 4,200 people, is facing competition from large and small companies looking to get a bite of its search traffic business and the company needs to keep innovating to stay ahead.

The company has an internal mailing list where anybody who wants to can post an idea and engineers get one day in a week to work on their own projects.

The top management holds open office hours when they listen to ideas and decide which ones are worth pursuing and which aren't. Google's professed goal is to provide a much higher level of service than just search to all those who seek information.

With the stated objective of possibly being the only company in the world that wants people to leave its Web site as early as possible (providing relevant and satisfactory answers fast) the company says it is focussed on delivering the best user experience possible. It is now looking to enable search of as yet uncharted areas. By stating that it is possible to be serious without a suit, Google says it is focussed on providing work that is a challenge and a challenge that is fun.

Google says it emphasises team achievements as well as individual accomplishments. "Ideas are traded, tested and put into practice with an alacrity that can be dizzying. Meetings that would take hours elsewhere are frequently little more than a conversation in line for lunch and few walls separate those who write the code from those who write the cheques." The company also has innovated in compensation — It has a Founders' Award — a rich bonus for exceptional contribution from employees. The first two bonuses, awarded earlier this year, reportedly totalled $12 million in stock (to keep the interest and the innovation going).

Picture by Bijoy Ghosh

priya@thehindu.co.in

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