In an article of yours titled "Polycentric Innovation: A New Mandate for Multinationals," you talk about "de-Westernizing" global business models as an approach for encouraging innovations for emerging markets. What is this concept of polycentric innovation, and how is it relevant for today's economic environment?
If you look at the concept of globalization in the last four decades, most companies that claim to be global companies are organized in a very ethnocentric fashion. If you look at top car companies in Detroit, they may have their sales and marketing operations and factories worldwide. But the decision making power at the top level comes from the headquarters, which are typically based in US or European cities. I believe, if you really want to succeed in these emerging markets, then you have to shift more decision making power to these emerging markets. You need to find a mechanism, a polycentric organization mode, where you start creating new hubs of decision-making.
One company that is practicing this polycentric innovation is CISCO with its Global Center of East (GCE) headquarters in Bangalore. The GCE acts as a de facto second headquarters, and CISCO can now initiate an entire R&D project end to end, and commercialize it and manage it as well. That I think is polycentric innovation.
Compared to China, how does India fare in terms of innovation?
I think the difference between the Chinese and Indian innovation models is very simple. The Chinese innovation model is top-down and Indian innovation model is very bottom-up. This is due to the difference in political systems in both the countries.
Let's look at one sector, energy. If you look at the way China is going after renewable energy, it's not just a few megawatts of solar power but gigawatts of solar power. Size matters in China and a lot of their big projects are driven by government. In India, if you take solar energy it's very interesting. The first batch of entrepreneurs who got into solar lantern business are all small-scale entrepreneurs. SELCO Solar Pvt. Ltd, a Bangalore-based company which distributes solar energy to rural areas is one such example.
In China the role of the state is very big and the innovations led in China require a clear direction, where you have a proven innovation and you basically say you want to scale it up. But when you are trying to pilot new ideas, top-down is a bad idea. Bottom-up allows you to experiment and you can have thousands of experimentation all across the country and the best one will win. It is a Darwinian system of picking a winner.
Next: Radjou's top five Indian innovations