Posted by: qmaxim | June 26, 2010

Innovation or de-risking ?

There has been increasing emphasis on innovation, newspapers and magazines are full of articles on how innovation is important in the development of the economy, nations and organizations. If one were to go by the patent applications  filed/ awarded in the recent times   we can say that India is making significant progress.   I have been  attending events / courses and reading about innovation in the recent times.

Recently, CII (confederation of Indian industry) and govt. of Karnataka organized two day India innovation event in Bengaluru. Number of stalwarts  from software companies , high technology companies, entrepreneurs   and govt. functionaries addressed  the event. Infosys CEO Mr. Kris Gopalakrishnan was the chairman for the event.

I have some observations on innovation which I would like to share.

Innovation means different things to different people with no agreed common definition. Generally understood meaning is that of a concept/ idea which has been has become commercially  successful.

Big innovations can take off only when supporting ecosystems / circumstances are sufficiently favorable. For example, software global delivery model pioneered by Infosys and others took off only when  cost of data / voice communication fell dramatically due to  surplus capacity becoming  available as a consequence of  dot com burst. In fact concept of  outsourcing was proposed initially by consulting firm McKinsey & GE was the first of the  few companies to begin outsourcing. It took many years for this concept to take off until the ecosystem was sufficiently developed.

In many cases, before a  new concept finds acceptance steep barrier of some sort has to be overcome.  For example, people in the US  developed confidence in India / Indians as  software development source only after  millennium bugs was fixed by army of programmers from India.  Interestingly, not many people in U.S. were prepared to learn these old (& sometimes arcane) programming languages and operating systems.

Software / process innovation is relatively easier & faster to do as compared to hardware or physical one. Indian telcos come out with competing scheme  within 2 weeks of competitors’  introducing a new calling scheme. Though many companies have as many as 100 million customers, theoretically  it is possible to offer a unique scheme for a single individual. On the other hand, developing a innovative hand held device takes many months if not years. Also, cost of failure of non-physical innovation is much lower as compared to physical one.

In most cases,  companies do real innovation on products  which are already successful only when pushed to the wall by the competitors. For example, there was no real competition for upgrading the Windows XP system. This resulted in Windows  Vista being  a damp squib  even after several years in development, beta testing, limited release, etc. On the other hand, when Microsoft was playing catch up in the gaming device market it was more innovative and met with higher level of success.

It is possible to leverage  a successful existing product / process to develop new product/ process. This can be successful to an extent. However, there comes a time when one has to make a clean break from this leverage. Microsoft’s  porting of Windows to hand held and mobile devices is an example. In  spite of being in the market for  several years it is loosing market share rapidly to  assault by the newcomers namely Google’s Android and Apple iPhone systems. This is a tricky judgment call for most companies.

For a highly successful innovation to happen  there has to be  at least one overwhelming driver. Main driver for America’s Appollo 13 mission to moon  was the former USSR launching Sputnik.

Some highly successful innovative  systems go on for years and even decades. Russian space  systems is one such example. Essentially, it has remained the same for decades except for the upgrading of the  computer system.

Innovation can thrive only in an environment in which when a certain level of risk taking is encouraged and  there is tolerance of failures. Too much de-risking,  and criticism  can kill innovation. There has been articles in the press about this happening in NASA due to the reasons cited above. Though the NASA’s current  launch vehicle systems are being phased out there won’t be any substitute for several years.

Finally, innovation is an iterative process, in most cases success happens only after several failures. It is not Eureka moment as it is made out to be. However, systematic methods of doing innovation can increase the success rates.

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