Incubate or perish
By Probir Roy | 12 Nov 2002
Comparative advantage creates sustainable value in the country of operation, basically where a nation’s primary assets are intellectual property and human capital, unlike competitive advantage that creates value in the sponsoring nation. Today we have a credible and internationally acknowledged stock of knowledge resources that allow us to compete effectively in any country across the world.
It’s comforting to know that 20 per cent of Microsoft’s engineering department comprises people of Indian origin. Yet the challenge for India Inc in the software arena is to consciously build brands, whether they are services, products, productised services or even quasi products (like domain-specific reusable components) that clearly impact the world. This is what ought to be leveraged and projected worldwide.
While doing so our policymakers would be well advised to tread carefully when creating a unique, viable and robust India Inc brand proposition in today’s high-clutter, me-too market. India’s share of the global IT services and IT-enabled services (ITES) is about 1 per cent, compared with its share of handicrafts which is marginally higher at 1.6 per cent, tourism at 0.25 per cent and finished gems and jewellery at 55 per cent.
Kerala is successful in articulating such a brand identity, not around being the preferred global destination for ITES, but for upmarket tourists. Its brand proposition as ‘God’s Own Country’ is well poised to become a common enough refrain about physical and mental invigoration brought about by the calming backwaters, herbs and aromas of Kerala. Certainly a longer-term comparative advantage.
Consider Nasscom’s India Inc brand-building exercise, in which the software association is reported to be investing $300,000. That’s such a measly amount compared to what others are investing to in their image building efforts — Pakistan ($10 million), China ($100 million) and Israel ($100 million).
The role to play
I advocate an innovative role for Nasscom over the next few years. Let brand-building be left to other means. It needs to innovate along these two lines:
(a) Marshalling and closely collaborating with special interest groups within and outside the immediate IT sector — including emerging sub-sectors, such as nano-technologies, embedded systems and software, genomics, micro-electronics, smart governance, pharma research and development, biosciences, photonics, and content development (multimedia, gaming, animation and filmed entertainment). In essence, wherever IT is an enabler or driver. Since some special interest areas like animation, smart cards and ITES are keen to carve out their own niche, Nasscom will have to adopt a loose yet federalist approach to these legitimate aspirations, and be a benign mentor to others.
(b) Facilitating a technology innovation ecosystem comprising a network of public and private firms, research centres, universities, consultants, government agencies, and non-governmental organisations, which can tap into the growing stock of global knowledge, assimilate and adapt it to local needs and create new knowledge and technology. Several low-key yet successful initiatives in the private sector have validated the need and success of such collaborative ecosystems. The Kanwal Rekhi Institute of Information Technology, run under the aegis of IIT-Bombay and IndiaCo, a Pune-based ‘entrepreneur accelerator,’ are two good examples where this is being done, albeit on a small scale.
The much-publicised Indian government and MIT Media Lab Asia project “to facilitate the invention, refinement and deployment of innovations to benefit all sectors of Indian society,” as Nicholas Negroponte put it, is yet to replicate its Americas success (Computer Clubhouse Network and ncos), and may have lost its place to South Korea.
The National Innovation Foundation, run by the Council of Scientific and Industrial Research, is an Indian government initiative with similar intent — fostering innovation and creativity in science and technology with an ultimate go-to-market proposition. All told, there would be a group of about 100 incubatees with these guardian organisations, when the actual need and potential for a country this size is 10 times that.
Compare the Indian experience with that of Malaysia, which has learnt to successfully harness the innovative powers of entrepreneurs in areas as diverse as tele-health, smart schools, and e-governance, making available innovative debt financing and an infrastructure ecosystem under the aegis of a $420-million corpus operated by the Multimedia Development Corporation. Universities and other institutions of higher learning in and around the designated 50-km knowledge super-corridor of Kuala Lumpur facilitate this ecosystem.
In Singapore Kent Ridge Digital Labs has turned out to be Asia’s leading technology incubator, having promoted a dozen successful companies and 100 patents to its credit all within the space of four years.
In the US, collaborative nurturing and incubation in the early 1980s led to the growth of about 1,300 biotech companies, which today employ more people than the toy and sporting industry put together. The benefits are clear for all to see. More than 250 million people worldwide have been helped by 130 biotech products and vaccines approved by the Federal Drug Administration.
And, there are about more than 350 more biotech drug products and vaccines in different phases of clinical trials targeting such diseases as various cancers, Alzheimer’s, cardiac ailments, diabetes, allergic asthma, multiple sclerosis, Hodgkin’s, Aids and rheumatoid arthritis. With the first draft of the human genome now mapped out, one can expect a secondary boom in entrepreneurial and incubation activities this time around pharmacogenomics.
Collaborate and cooperate
It is acknowledged that the reason for the technology innovation and invention boom in the US, specially along route 495 on that country’s east coast and routes 128 and 101 on its west coast, was due to healthy collaboration and cooperation between federal labs like NIH, NASA and DARPA, and private sector engineers and scientists working in premier academic and research institutions.
Some may argue that this symbiotic relationship, coupled with a robust patent system ensuring equal intellectual-property justice, has been instrumental in producing the likes of Jerome Lemelson, far and away the most prolific inventor of the 20th century, with more than 500 patents, and Thomas Edison.
Israel, with a population as small as that of Bangalore city, is a nation state excelling in steady state creation of technology IPs. It has about 100 venture capital firms that have been responsible for more than 120 companies being listed on Nasdaq, many of them household names like ICQ, CheckPoint and Vocaltec.
These things are possible despite the unfavourable technology transfer regime between governments and the private sector. The private sector finds it easier to hire away bright scientists and engineers from government labs than to have to deal with complex patenting and licensing issues with such labs. Hence the need for a smoother technology transfer process.
While worldwide total venture investment this year will be a fifth of what it was in 2000, software and Internet investments continue to attract 50 percent of these funds. Reminding one of what Andy Kessler, former technology analyst at Morgan Stanley, said: “...technology has no clue whether we are in a bull or bear market, boom or recession. It just marches ahead.”
Roy has 16 years’ experience in information technology. He was vice-president (technology) at Star TV, South Asia; chief operating officer, Euro RSCG Interactive, the world’s No 1 Interactive and e-consulting company; and chief technology officer, Euro RSCG Advertising, India and Middle East. He has also worked with the United Nations, Vienna, and the Department of Atomic Energy, India. He can be contacted at: email@example.com