Innovation Nation: Why Narayana Murthy Is Only Half-Right About Lack Of Innovation

Rajeev Srinivasan suggests that by re-inventing some aspects of education, we can create innovators and entrepreneurs in India, especially now that the stigma of self-employment has diminished.

When one of the doyens of the Indian IT industry speaks up, people listen. Thus when N R Narayana Murthy, the storied founder of Infosys, said there had been no innovation in India since independence (I paraphrase), he got a lot of people thinking. I have read a couple of responses, one by Professor Subhash Kak, an old friend and a polymath: a brilliant computer scientist, an expert in the RgVeda, and a published poet.

Professor Kak made a point I agree with fully: the Indian education system at the college level is deficient. He said, politely, that the universities were not designed for world-class excellence, but just to train students. I’d go one step further and say that our entire British-designed education system was intended to stifle all independent thought and produce coolies for their Empire. Intriguingly, as Kak notes, we had world-class ideas coming from Srinivasa Ramanujam and C V Raman and the Boses when we were under the imperial yoke; but virtually none after 1947.

I think Narayana Murthy erred in speaking about innovations in the first place. Universities do not create innovations, they generally only create inventions. It is up to commercial entities to take these inventions (or others) to market and make a success of them. Unless an idea is viable in the marketplace, it doesn’t deserve to be called an innovation: it is only an idea or an invention or a pipe-dream.

So what Murthy really meant, and he is right, is that there have been very few world-class inventions and ideas coming out of Indian R&D centers. On the other hand, Indians are indeed innovating, but it’s not in product innovation: it’s in process innovation, service innovation, and business model innovation.

Thus, the entire generic pharma industry has shown great capability in process innovation. Also, Aravind Eye Care and Narayana Hrudayalaya have innovated to extract the greatest value out of scarce resources like surgeons. Aravind has also done product innovation by designing and making its own contact lenses and surgical sutures, which they export to many countries. Their service innovation comes in reaching out to remote villages through tele-medicine and first-level screening before rural patients are brought to the main hospital, where a paramedic ‘owns’ them, and looks after them.

There are small but interesting process innovations galore. One is the process of cleaning up after a banana leaf meal in Kerala (the vegetarian treat is a staple at Hindu weddings). It used to be a labor-intensive and messy affair. Then somebody had the bright idea of serving the meals on long rolls of newsprint. This has the great virtue that you can neatly roll up the newsprint, leaves, food waste and all, and it’s biodegradable and easily recycled. Clever idea.

There have been good business model innovations, too: for instance, the discovery of Kerala fishermen that by using their cellphones out at sea, they could divert to the fishing port where their catch would get the best price, as well as remove intermediaries from the picture, thus improving their profit as well as reducing the price paid by the end customer.

So the question goes back to whether fundamental discoveries or inventions have been spilling out of Indian universities such as the IITs and NITs. One easy metric is citations, the other is IPR (including patents, copyrights and other mechanisms). It is true that these institutions have not excelled. I can recall only one truly outstanding result: a prime-factoring algorithm from IIT Kanpur if I remember right, which has an impact on public key-private key encryption systems.

Why? There is something toxic about our education system. Most of the normal universities have no autonomy, and are subject to the whims of politicians and bureaucrats. Besides, there is not even the self-confidence that the professors and graduate students are capable of breakthrough ideas: they are content to copy, reproduce, and validate discoveries others have made. And even more tellingly, there seems to be no sense that industry and academia should work together. Add to this the structure of official R&D funds, which flow to government labs – and not to universities – and there is a complete disconnect among the factors that drive innovation.

In comparison, the best universities in the West, for instance Stanford, see a convergence of all three. Government funds for R&D come to the university’s labs. Any intellectual property produced there can be licensed by faculty and students to go off and start companies; successful spin-off companies in turn engage the labs to do more directed research, and may provide significant funding as well. That entire nexus is missing in India.

Aravind Eye Hospital – An example for process innovation in India

Perhaps the key missing ingredient is marketing. There is no concept of who the customer is, what their pressing needs are, and how to make something of value for them, not to mention the means to distribute the product to them. A lot of the work done is in effect academic, intended only for publishing papers. Compare this to the most successful Indian development work, what comes out of ISRO – and I emphasize it is development not research, engineering and not science – and it is good because it takes into account the needs of its B2B customers.

In these days of very high-cost science (for instance particle accelerators or drug development that cost billions) India’s core competence is in engineering, in particular frugal engineering. If Indians can re-design products from scratch by removing unnecessary functionality and making it appropriate to the needs of the customer base, that will lead to a greater probability of success, and thus be an innovation. One example (although it was not an Indian design) was the old Nokia 1100 phone, a smash hit. Another is the Indian re-design of the ECG machine, in GE’s Bangalore labs. The Mars Orbiter is another.

This is where the role of incubators and accelerators come into the picture. In fact, the accelerator model may be a fundamental improvement in education as well. The idea is that you take an entrepreneur with a good idea, and put them in a high-pressure environment with a bunch of others in the same situation. They have to quickly produce a product, and while they are doing that, they are taught just enough about business (a micro-MBA, if you will, including the basics of accounting and finance and marketing) that should enable them to create and execute a business plan.

They are guided by mentors including subject matter and domain experts, and exposed to angel investors. Ideally, during the brief period that they are in the accelerator, say a few months, they get skilled at being an entrepreneur. And at least some of those who go through this experience actually will succeed.

As part of the broad #MakeInIndia program, there are new incubators coming up, and I have observed some of them. In an environment where the ecosystem of a Stanford or an MIT is not available – no PR experts, no patent lawyers, no venture capitalists – it is possible to provide connections to all that through an incubator. In a way, this can compensate for the skewed education system. I think in engineering curricula, we teach too much engineering; in business schools, the curricula is oriented too much towards MNCs. I studied calculus for ten semesters, and then never again used it in my entire work life. But if you learn to be an entrepreneur, to take risks, to persist in the face of failure, you may innovate later, if not now.

There is also one other sea change: the social perception of entrepreneurship and innovation. Narayana Murthy and his cohort are responsible for this to a great extent. It is now socially acceptable to have a spouse or child who is an entrepreneur. And there are a number of examples of innovators making fortunes. Thus a new generation of innovators may arise in India, but that may not be from the universities.

Related: Read Rajeev Srinivasan’s series on innovation.