Are you in­no­vat­ing enough to sur­vive the new nor­mal- is your think­ing and ac­tion non-lin­ear? What is your R&D ori­en­ta­tion? The an­swers to these and re­lated ques­tions un­rav­els an or­gan­i­sa­tion’s in­no­va­tion quo­tient

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Andy Grove wrote that cou­ple of decades back, but it beau­ti­fully, in a nut­shell, de­fines the state of IT in­dus­try at this point in time. The tra­di­tional IT out­sourc­ing mod­els are ag­ing and los­ing sheen by the day and its time to re-in­vent IT with fo­cused in­no­va­tion strate­gies to stay in the race. The com­put­ing in­dus­try is on the cusp of things. Many com­pa­nies are strug­gling to make up for the lost growth and rev­enues as the in­dus­try by and large was caught in a dis­rup­tive nexus of forces that has man­i­fested in an al­pha­bet soup of ab­bre­vi­a­tions – rang­ing from IoT to SDN et al. Let’s go to the core ques­tion: What ails growth? Be­yond the slug­gish econ­omy, it’s the lack of in­no­va­tion that’s slow­ing down things. EV­ERY­ONE RIDES THE IN­NO­VA­TION BAND­WAGON Most tech­nol­ogy lead­ers you meet to­day lip syncs ‘In-

“Not only has the ba­sis of com­put­ing changed, the ba­sis of com­pe­ti­tion has changed too” – An­drew S. Grove in Only the Para­noid Sur­vive

no­va­tion’. But very lit­tle is said about what are they in­no­vat­ing? or How is it man­i­fest­ing at ground zero? Par­tic­u­larly, when you look at an in­dus­try like IT out­sourc­ing, in which ev­ery ven­dor has a global sourc­ing model- but at the end of the day, it’s a model each one strug­gles to dif­fer­en­ti­ate.

So if you ask the IT ser­vice providers- what is your In­no­va­tion Quo­tient (IQ), the chances are you might not get a lu­cid an­swer- be­cause most of the jobs they do are still lin­ear. But sadly, the IT out­sourcers here in this part of the world are mea­sured only based on their stock and quar­terly per­for­mance and many fail to look at pa­ram­e­ters like in what ways they have in­no­vated IT or­ga­ni­za­tions with their ser­vices or how much they invested in R&D or cre­at­ing CoEs and stuff like that.

But now the time has come wherein IT or­ga­ni­za­tions are de­mand­ing more in­no­va­tion from ser­vices providers, hence it is im­per­a­tive they raise their bar by pro­vid­ing ‘In­no­va­tion Bench­marks’ in or­der to tran­si­tion to the next or­bit. That leads to the crit­i­cal ques­tion: Are In­dian IT Out­sourcers pre­pared for this change?

The an­swer is by and large a very fudgy one you get. For in­stance, I asked a lead­ing IT in­dus­try CEO this ques­tion, and he gave a typ­i­cal re­ply: “The an­swer to your ques­tion is a ‘Yes’ and ‘No’. I left it with that, as prob­ing fur­ther will only yield such ‘po­lit­i­cally cor­rect’ am­bigu­ous an­swers.

All said and done this process of in­no­va­tion the in­dus­try has been talk­ing for years. And if you look at the IT in­dus­try, the only way in­no­va­tion can come about is non-lin­ear in­no­va­tion- wherein the em­pha­sis is more on IP, prod­ucts, plat­forms, ser­vice ex­cel­lence et al as against the ‘time and ma­te­rial’ model. But we need to ac­cept the fact that IT ser­vices in In­dia is still mired in lin­ear­ity and it will take a while for non-lin­ear­ity to kick in and ev­ery com­pany’s dream is to grow its non-lin­ear rev­enues.


Given this back drop, if we seek some an­swers on in­no­va­tion, a Strat­egy& study pro­vides some point­ers. Strat­egy& - part of PwC Net­work in its 2017 Global In­no­va­tion 1000 study said, “An­nual world­wide R&D spend­ing breaks through $700bn for the top 1000 cor­po­rate R&D spenders for the first time. Al­most 25% of ex­ec­u­tives sur­veyed re­ported hav­ing al­ready ex­pe­ri­enced some pres­sure to change how or where they con­duct in­no­va­tion. Ama­zon is the world’s largest cor­po­rate spender on R&D at over $16bn. Al­pha­bet sur­passes Ap­ple, ac­cord­ing to a global sur­vey of R&D ex­ec­u­tives, as the most in­no­va­tive com­pany and for the first time a Chi­nese com­pany, Alibaba joins the Top 10 most in­no­va­tive com­pa­nies list. An­nual world­wide cor­po­rate R&D spend­ing broke through $700bn in an­nual in­vest­ment, ac­cord­ing to an an­nual anal­y­sis of R&D spend­ing across 1000 global pub­lic com­pa­nies by PwC’s Strat­egy& study.”


In­no­vate or per­ish. The IT ser­vices com­pa­nies need to be pre­pared for this change. For in­stance, the above study fur­ther said that large multi-na­tional com­pa­nies re­port that they ex­pect the focus of their in­no­va­tion ef­forts and in­vest­ments to change sig­nif­i­cantly over the next decade – mov­ing to­ward a far greater em­pha­sis on riskier ini­tia­tives and break­through in­no­va­tions.

“It’s been a year of highs and lows for R&D. Record lev­els of in­vest­ment, next to un­prece­dented drops in

align­ment be­tween in­no­va­tion and busi­ness strate­gies. There’s no doubt that un­cer­tainty is caus­ing con­cern for medium and long-term plans, ir­re­spec­tive of whether pol­icy re­al­i­ties ac­tu­ally fol­low po­lit­i­cal rhetoric.” com­ments Barry Jaruzel­ski, Prin­ci­pal, PwC US, Strat­egy&.

“Al­though the goals and lev­els of in­vest­ment in cor­po­rate in­no­va­tion will likely not change if eco­nomic na­tion­al­ism con­tin­ues to de­velop, the global in­no­va­tion model would need to evolve. At many com­pa­nies, what is now a nim­ble, in­ter­de­pen­dent net­work may be­come a group of more au­ton­o­mous hubs, hir­ing spe­cial­ist tech­ni­cal tal­ent in lo­cal re­gional mar­kets and open­ing fu­ture R&D cen­ters in re­gional mar­kets. It could mean com­pa­nies los­ing ef­fi­ciency and tak­ing on higher costs if it is not man­aged ef­fec­tively,” adds Jaruzel­ski.

How­ever, there are some caveats. For in­stance, the study also men­tioned that 562 ex­ec­u­tive par­tic­i­pants, R&D lead­ers ex­pressed con­cerns about the grow­ing heat of rhetoric about eco­nomic na­tion­al­ism – and its po­ten­tial im­pact on where com­pa­nies in­vest in R&D how they con­duct in­no­va­tion.

Over­all, 52% of re­spon­dents say that a gen­eral move to­ward eco­nomic na­tion­al­ism will have a mod­er­ate or sig­nif­i­cant im­pact on their com­pa­nies’ R&D ef­forts. Ma­jor com­pa­nies have been con­duct­ing some R&D out­side their head­quar­ters coun­tries for decades. In 2015 it was de­ter­mined that 94% of ma­jor cor­po­ra­tions con­duct their R&D in mul­ti­ple coun­tries. But in­creas­ing at­ten­tion on reg­u­la­tions and poli­cies for visas, the la­bor move­ment, and the reg­u­la­tions gov­ern­ing the shar­ing of knowl­edge and tech­nol­ogy are caus­ing some com­pa­nies to ques­tion how sus­tain­able their integrated global in­no­va­tion net­works are.

Bot­tom-line: In an In­dian con­text, for those com­pa­nies strug­gling to put in an in­no­va­tion roadmap, the time is now for de­cod­ing the in­no­va­tion cliché and end my­opia by in­fus­ing more gran­u­lar­ity, ac­tion, and clar­ity in terms of in­no­va­tion in tan­gi­ble terms.

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