Innovation and its Impediments in India

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At a recent Penn-sponsored conference, there was no shortage of words used to describe India’s innovation efforts. Exportable, one presenter said; sophisticated, essential, added others. But one particular descriptor echoed across the discussions: constrained.

With two days in Philadelphia and one at Wharton San Francisco, “India as a Pioneer of Innovation: Constraints and Opportunities” covered recent developments in business, law, public services, and urban planning in that nation.

“India is obviously this emerging economy,” says Ezekiel Emanuel, the University’s vice provost for global initiatives, who spearheaded the event. “Our goal was to capture what’s happening there right now: what the challenges are and why there are certain strengths.” Seven panel discussions and four keynote addresses attracted some 600 scholars, students, business leaders, and government officials to the bi-coastal proceedings.

It’s a timely topic, as India is now in the midst of what its political leaders call a “Decade of Innovations.” The government has set up a $1 billion fund and appointed more than 1,000 people to serve on innovation councils. These commitments underscore the huge expectations that have been placed on innovation in India.

“Our main challenge for the next couple of decades is to lift 400 to 500 million people out of poverty,” said keynote speaker Sam Pitroda, an adviser to the prime minister of India on public-information infrastructure and innovation who appeared at the conference via video link. “Without innovations, we really cannot deliver the kind of things we need to deliver to people at the bottom of the pyramid.”

The problem is that the world’s biggest brains have been “busy solving problems of the rich, who really don’t have problems to solve,” Pitroda said. “As a result, problems of the poor really don’t get the right kind of talent.” Yet creative solutions for those problems are crucial, he noted, not only in science and technology, but also in government, education, health, agriculture, and financial services.

India’s focus on “inclusive growth” has helped it pioneer low-cost solutions to pervasive challenges. Pitroda pointed to the $1,000 surgeries performed at Bangalore’s Narayana Hrudayalaya heart hospital—surgeries that cost up to $90,000 in the US—as an example of cost-constrained Indian advances that can be exported to other countries.

“The point is that conditions in India allow one to develop something for the local market that is also useful elsewhere,” Wharton adjunct professor of management Saikat Chaudhuri EAS’97 W’97 said in a panel presentation. Chaudhuri, who serves as executive director of the Mack Institute for Innovation Management, outlined several recent collaborations between Indian and foreign companies that resulted in portable electrocardiogram machines, improved car telematics systems, and new mobile-phone technology.

“India is part and parcel of a much larger phenomenon, which is the evolution of the global multi-national enterprise”—that is, farming out individual tasks to the places that do them best in order to “put together a global offering,” Chaudhuri added.

Yet a major hurdle continues to hamper the country’s best efforts to innovate. Panelist Vijay Mahajan, the founder and CEO of Basix Social Enterprise Group in India, described the “increasingly ineffective state” that owns and runs most of the country’s research and development centers. Only a small number of innovations ever reach the public due to lack of funding and industry connections, he said, yet “no amount of evidence of failure seems to convince the state that it should move out of that role.”

Panelist Tarun Khanna WG’95, a professor at Harvard Business School, put it simply: “The state is broken,” he said. “The question I want to pose is what do we do about this, other than bemoaning it?”

Khanna pointed to the Kumbh Mela, a mass Hindu pilgrimage held every third year in one of four rotating locations. In 2013 the event lasted 50 days and drew some 120 million people. India’s government set up a few roads, security measures, and basic rules—but entrepreneurs, corporations, and non-governmental organizations took charge of the rest.

“To me, that’s a model,” Khanna said. “It’s telling us how government and non-government entities can work together to compensate for some of these bigger institutional deficiencies we see everywhere.” He added that it’s “not appropriate” for entrepreneurs or businesses to “sit back and criticize the state. We have to find ways to work with the state, pressure it, catalyze it, and wake it up in simple ways to make things happen.”

Still, corporate innovation faces other barriers in the country, including cultural attitudes about commerce and social class. “Twenty years ago, being in business was not respectable in India,” Khanna said. “Now, making money is respectable only in certain sectors.

“The biggest constraint is that the innovation eco-system is not yet fully blossomed,” he added. “Society and the government’s attitudes toward innovation have softened … but it still has a long way to go. Unless we sort that out at a much deeper level of social acceptance, I don’t think we’re going to have any Silicon Valleys in India for a while.”

In his keynote address, Pitroda also acknowledged the need for an innovation “eco-system” in India, in which more citizens recognize the importance of new ideas and approaches. “Our innovation journey is just beginning,” he added. “These things take a long time.”

—Molly Petrilla C’06

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