From India, A New Model for Innovation

Navi Radjou explains the factors that make India different, and competitive, in Hong Kong on July 27, 2010. (3 min., 6 sec.)

HONG KONG, July 27, 2010 - The past decade has witnessed a seismic shift in patterns of global innovation, observes Navi Radjou, Executive Director of the Centre for India and Global Business at the Judge Business School at Cambridge University. He told the Asia Society Hong Kong Center that this development had led to enormous opportunities for businesses that could bring together developed and emerging markets by "co-mingling the Western and the Eastern innovation models."

Radjou described the innovation model of the 20th century as "ethnocentric," pointing out that "Much of the innovation driven by multinationals tended to happen close to their headquarters. As a result, the knowledge exchange between the West and the rest of the world has tended to flow in one direction." 

However, he said, "The past decade has witnessed a phenomenon known as 'polycentric' innovation—a diffusion of centers of innovation worldwide, and a resulting multi-directional flow of ideas, technology and development capability. Previously concentrated in developed markets such as northern America and Europe, research and development centers are now scattered across the globe as emerging markets such as India and China contribute their talent and technology to the development of simple, low-cost, high-value and high-volume innovations—or ‘Indovations'."

There are a number of factors behind this. "R&D tends to follow where the markets are. If you look at India, it's a country that promises to have a lot of potential not just in the short-term but over the next three to four decades." An additional incentive was the emergence of a large, consuming middle class in these countries. And, Radjou noted, "They also seek talent. And here again there is an amazing story, as a lot of the emerging markets like India and China will continue to have a relatively young working force."

However, there is a gap between the growth potential of these emerging markets and their ability to actually seize that potential. "Emerging markets won't emerge out of nowhere. You have to roll up your sleeves and actually shape these markets. That involves moving more R&D work into these emerging markets so you can come up with products and services that are really relevant for the local consumers."

For businesses seeking to enter the Indian market, Jawahar Kanjilal, Global Head of Emerging Markets at Ovi Life Tools, emphasized the importance of immersing oneself into the consumer's daily life. Noting that consumers in emerging markets have specific and different requirements from those in developed markets, Kanjilal cited as an example the key role mobile phones play in facilitating connectivity in India. "They have moved beyond being a fashion item or entertainment tool and are now being used very differently to the point where they are relevant to the daily lives and livelihood of consumers."

Kanjilal added, "If you are able to manage and harness diversity within the country, then you are able to create a framework by which you are able to export it into any other part of the world. From a content requirement perspective there are differences between China, India, and Indonesia, but in general the broad framework is the same."

Indeed, business opportunities in India are everywhere, according to Girija Pande, Chairman of Tata Consultancy Services, even though they are only transacting small amounts. "And where there is volume, there is money to be made at the bottom of the pyramid." He added, "Many Indovations have applicability in many parts of the world—some are in the emerging markets, some are in the developed markets."

Reported by Natali Pearson, Asia Society Hong Kong Center