Innovation Capitalism – The Need of the Hour

November 2013: The National Innovation Foundation, established by the Department of Science and Technology, Government of India, has recorded 175,000 innovation practices at the grassroot level in the last two years.

2nd century AD: The Chola Kings build a dam at Tiruchirapalli to check the flow of the Kaveri river and break it into multiple streams. The dam, popularly known as the ‘Grand Anicut’, is referred to as Kallanai (Kallu: stone and anai: dam) in Tamil. In 1830, two British engineers Arthur T. Cotton and his brother Frederick are mandated to cut sluices in the dam to allow the silt sediment to flow through. After cutting the dam, the brothers realise that the constituents of the dam comprise nothing more than a mass of rubbish, mud, stones and logs of wood. They are awestruck when they discover that this minimalist design has already been able to withstand about 1600 annual floods. The discovery gives rise to the term ‘The Madras/Cheap School of Engineering’. The lessons learnt from the Grand Anicut are successfully replicated by Arthur Cotton while creating four dams across the Godavari river.

Against this backdrop, one cannot help but wonder why India still lacks an equivalent of the Silicon Valley. It is, indeed, ironic that 40 per cent of start-ups in Silicon Valley are headed by Indian entrepreneurs (as highlighted by Eric Schmidt, Chairman, Google Inc., during his visit to India earlier this year).

To make the most of “innovation capitalism”, where people and small start-up companies with ideas are incentivised and individuals willing to experiment and create something new are encouraged, India needs a clearly defined “innovation agenda” that is inclusive in nature and backed by a sustainable ecosystem. India needs to leverage the unique “jugaad” mentality that is intrinsically associated with its citizens, who in the face of everyday problems and constraints have displayed resourcefulness, creativity and a problem-solving approach to find quick-fix solutions. The need of the hour is to translate those solutions to something scalable, sustainable and commercially or socially applicable in the context of the country’s requirements. To make this a reality, the various components of the ecosystem need to be nurtured and encouraged by all the relevant stakeholders.

Culture of Innovation: It is important to emphasise on the process that creates innovation rather than on innovation itself. At the same time, it would be imperative to acknowledge that innovation is essentially about experiments and success cannot be guaranteed. The phrase ‘stumble but get up’ needs to be imbibed in spirit from an early age and the Government needs to play a proactive role in fostering the innovation culture rather than provide subsidies. Empirical evidence has proved that culture feeds into attitudes, which in turn respond to the economic environment and incentives provided to those who dare to think differently. Apart from the success stories of Indians in Silicon Valley, it is also important to note the significant achievements of resident Indians in fields like telecom, IT and IT-enabled sectors as well as areas where there were opportunities to do things differently and produce value at the end. A culture of innovation where failure is not ridiculed, experimentation is encouraged, out-of-the box thinking is promoted and learning by doing becomes the norm will pave the way for replicating instances of successes that have been experienced in particular sectors in a more holistic manner.

Refresh the system of learning: While the concept of “jugaad” has attracted a lot of attention in conventional and social media of late, it is important to note that the current system of learning by ‘rote’ fundamentally challenges the creativity captured in jugaad. Curricula need to focus on solving local issues using local resources and universities need to evolve into springboards for ideation. Instead of being restricted to the laboratories, R&D spends need to be intensified in the university system. Specific goals could be set on short and mid-term bases to bridge the alarming gap in the number of PhDs, patents and papers between India and China or the United States.

Upgrade the legal environment: It is imperative that the Government plays its role as facilitator and brings about necessary regulatory changes to ease the process of both entry and exit. India will need a regulatory environment that allows start-ups to get off the block quickly and have access to seed money and venture financing among other things. At the same time it would need to ensure that small companies can exit at a minimal cost when the experiment does not meet its desired objectives. A case in point is the United States where if a start-up does not work, one can file for bankruptcy and start all over again.

Change the mindset: Directly Observed Treatment: Short course (DOTS) was originally developed in India by the Tuberculosis Research Centre, Chennai. It came to be known as “The Madras Study” and demonstrated the possibility of treating tuberculosis patients as outpatients under direct supervision. This was a significant shift from the conventional sanatoria model but was not approved due to lack of precedence. Ironically, it was only when the approach was adopted by many other countries and was endorsed by World Health Organisation that India decided to implement it. To leverage innovation capitalism, India cannot show the same mindset in shunning new ideas yet to be implemented elsewhere. It would also be important to acknowledge that not all ideas can translate into patentable and breakthrough innovations. Some would be social innovations like the Akshaya Patra initiative, which could have massive impact on society.

To sum up, innovation capitalism, which is encouraged by the Government and the cornerstone of which are change, flexibility and adaptability could be the missing link for India to leverage all its ingenuity to foster technological and economic development that is sustainable in nature.


4 thoughts on “Innovation Capitalism – The Need of the Hour

  1. “Against this backdrop, one cannot help but wonder why India still lacks an equivalent of the Silicon Valley. ” – The same question is asked by very many cities, who would all like to attract vibrant exciting growth potential, smart young people with a propensity to spend, etc.

    There are three key challenges facing cities who want this:

    firstly, as you’ve noticed, smart people gravitate towards centers of innovation, where other smart innovators have based themselves, so people are leaving (for example) India, and moving to Silicon Valley (further building SV’s reputation and deferring the potential for India to build a comparable center of innovation);

    secondly, access to capital – venture capital availability tends to follow the best ideas, which builds on my first point above.

    finally, successful innovative concepts are often bought up by larger successful companies, sometimes just to acquire talent (acqui-hiring), with the talent often then moving to ‘HQ’; many European start-ups have ‘disappeared’ as they were bought up by US-based tech companies (a few, like Spotify, have resisted the temptation to cash-in).

    How can cities respond?

    Places like London and Berlin have had some success with incentives (extrinsic and intrinsic) – tax benefits to encourage early-stage investment, and investment in creating innovation ‘hubs’ (making them places that people want to be).

    Perhaps the toughest part is creating the right local ‘vibe’ – that isn’t something you can just purchase; even investment in nice facilities (campus-style), though important, doesn’t guarantee a ‘vibe’; you can try to create the right conditions, but you need a ‘tipping point’ where people want to be near other like-minded people, and believe that they can jointly achieve something special. One thing that appears to connect innovation hubs is the existence of a vibrant social scene ( whether that be clubbing, coffee shops, Internet cafés, libraries, etc.). If cities can help innovators believe that their efforts will be rewarded (not just financially, but also fame), have enough patience to let a few ideas appear and nurture them, and give people belief that it is worthwhile staying local to further build their ideas, then an innovation hub can be possible.


  2. Thanks Matt! Great insights. Over the past few years, Bangalore, despite all the infrastructure related issues has been showing signs of evolving into an innovation hub. Hopefully there would be a few more examples from the other parts of the country soon.

    Thanks again!


  3. Hi Anirban – innovation is certainly the need at the moment .. and if we could build in compassion and not war, empathy for refugees et al .. we’d all be much better off and much happier.

    I see you signed up for the A-Z .. so this is just to say hi and hope to see you posting in April … cheers Hilary


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