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Friday, August 9, 2013

INNOVATION SPECIAL ...............Generation Shift


 Generation Shift 

Innovation happens in two situations —either you’re desperate or you’re inspired says Soumitra Dutta, Dean, Cornell Management School
Excerpts:
In the technology space, we see leaders like Microsoft, Dell, Blackberry falling behind. The leaders of the 1990s and 2000s are now playing catch up. What happened?
It is very difficult for companies to maintain leadership across technologies in sectors with fast product development or fast technology development cycles. Research shows that companies rarely succeed in becoming leaders in the next generation unless they somehow succeed in creating a situation where they can have a focus on radical innovation. Most companies are designed for efficiency and operations. But when you have major technology disruptions, they find it extremely difficult to react.
Some, like Apple, have made the change….
Very few. The companies that have successfully made the shift somehow have either created a separate company that focuses on that opportunity or one that is very active in gathering market intelligence. A company will succeed if it tries to understand trends and then makes quick bets in terms of which ones to adopt. Very few companies make that transition successfully. Some, like Microsoft, are still surviving well because they've got a tremendous cash flow. Microsoft has it from its Office products. The company is trying very hard to make the next generational shift, whether it is Internet, either desktop-based or mobile-based, but it's not clear whether it's succeeding.
Is Michael Dell doing a courageous thing?
Michael Dell is making a bet, but financially, it is a very conservative bet. The fast-growing segments are the new ones, but there are still people who provide products for traditional sectors. The bet is that Dell can still be a leader in the stock market and they might be looking at some leadership position, maybe in the tablet market, in peripherals. The value of the company is in the customer base it has and the relationships. The bet it is really making right now is that it can be the preferred supplier to large corporates. Will it change the industry? I don't think so. Dell changed the industry at some point but today the industry is moving towards mobile Internet. Will Dell be the leader in mobile Internet? Most likely not. It'll be a player but not the leader.
Why are the innovations flowing from the smaller companies, not the larger ones?
Innovations happen in large companies but the system kills them. The reality is that if you have a very different idea, it'll not be able to survive; the legacy pressure is too high. Suppose in the media business tomorrow, someone comes and says that we'll move to the digital version. There'll be a tremendous number of people saying it will not work, we already have a system. I'm not saying that it's wrong. The system we have works very well for what it was designed. When we have a design for A, don't expect it to do B. The challenge is that people take an organisational design optimized for A, how can you also do B and how do you migrate from A to B in a seamless manner. That migration has been extremely difficult for most people.
Why are companies struggling with social media?
Social media is not about technology. It's a way of working, a way of collaborating, about more real-time interaction. It is about some values, it's about some basic principles of organisation, and those are often not aligned. Most organisations are not willing to change that much, like being a real-time organisation, being open. So if we don't actually believe in the fundamental values of openness, of globalisation, of transparency, of real-time, of collaboration, social Media doesn't work. What do you do with social media if you don't want to share information? What do you do with social media if you don't want to interact with your customers or with your people in a really transparent manner? You don't want feedback. Social media is not very useful as a one-way tool.
What is in the American University system that allows for ventures like Facebook to come up?
It happens in America more than the other countries because there are more role models. Why did Mark Zuckerberg want to build a company? He wanted to beat Bill Gates. There is a notion that if some one else can do it, I can do it and I can do it better than them. And that is a very important thing. That is also happening in India now. If you have good role models, then the next generation is inspired. So what you need for creating businesses is inspiration. Innovation happens in two situations - either you're desperate, or you're inspired. In America, you have more inspiration. You do things not because teacher tells you but because you see someone else doing it. What is happening in America is that the average age at which people are starting companies is going down dramatically. The last 10 years, it has gone from 35 to now 25. Now it's becoming even younger.
Why hasn't a Facebook come out of India?
The Internet sector in India is not yet fully developed. The proportion of the people that have access to the Net, the infrastructure on payment, is yet to be developed. As a result, the market for doing these things is much smaller and there are too many barriers to innovating. It's not good enough to have people who just want to do it. You need to have the infrastructure support. As the market becomes bigger, it will happen.
How long do you think it will take to develop a Silicon Valley-like entrepreneurship ecosystem in India?
I think you're seeing bits of it but to develop the whole thing requires much more. Many countries tried to copy the Silicon Valley model and they haven't succeeded. It is because you need many different elements to copy it properly. You need a top research university. India doesn't have a top research university, that's the reality. India has very good students but the research university is still lacking. You need a university of the level of Stanford or MIT to make that happen, you don't have that. You need talents of different kinds and America attracts talent from all over the world. India still doesn't attract talent from all over the world. We've got great Indians, which is good. But do Indians actually understand the Japanese mindset, the Chinese mindset? We don't actually understand the world as much. It's good that we understand India perhaps, but we don't have the diversity necessarily in the talent. Diversity is very important. So I think if we look at capital, we have an initial starting up of capital in venture capital. It is no way as developed as in the West. There are a lot structural issues still impeding the development of innovation ecosystem in India but having said that, the promise is there.
The gap between the top B-schools in India and the rest is huge. How do the others catch up?
It's not just in B-schools, education itself is a challenge in India. Those in the top bracket are good, but the rest aren't. There needs to be more focus on investment in research, towards creating centres for excellence, not a proliferation of colleges which are out to make money. The focus has to be on excellence, understanding local needs by partnering with industry, by trying to come to solutions that business wants. We have to do more to improve the education system and make it uniformly good.
Vinod Mahanta and Shirsha Thakur CDET130419


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