Business Today

India's most innovative companies

Barriers to innovation remain, but the most innovative companies have realised that "innovation" is not just about developing new products and services but, more fundamentally, about discovering new ways to create value. A Business Today-Monitor Group study profiles the most innovative Indian firms.

Print Edition: April 20, 2008

Our business is innovation." That is a quote from the CEO of a pharmaceutical company (G.V. Prasad of Dr Reddy's Laboratories, for the curious), where innovation is, indeed, the core business.

But with costs soaring, the market place getting increasingly cluttered, and customers becoming more demanding, innovation is bound to become every company's single-most important business.

In India, where the investment in research & development (R&D) makes up a mere 0.8 per cent of the GDP (1.23 per cent for China), innovation is a relatively new concern-at least, in the private sector, which accounts for just a fifth of the total R&D spend.

What scares private enterprise away from R&D is, of course, the fact that returns don't just take a long while coming but sometimes don't come at all. Yet, the fact is, to compete in the new global economy, companies must constantly innovate in everything they do. The good news: Some of the companies in India have already adapted to the new reality, as the Monitor Group's lead article that follows reveals.

Besides, innovation isn't as complex or difficult as it is made out to be. In fact, innovation isn't invention. To shatter the myths that surround the subject of innovation, we invited Vijay Govindarajan, who is a professor at Tuck School of Business, author of best-seller 10 Rules for Strategic Innovators, and GE's newly appointed Chief Innovation Consultant, to write an article. Last but not the least, we profile the Most Innovative Companies-in the alphabetical order of their industries.

The state of innovation in India

Indian firms face both a domestic and a global environment that is more competitive than ever before. For years, these firms have focussed on reducing costs, increasing operational efficiencies, and targeting their products and services carefully at specific customer segments. Increasingly, however, that is not enough. To remain competitive in today's business world, every firm must make innovation a central pillar of its strategy for differentiation and growth. But how ready are Indian firms to make innovation an integral part of their growth strategies? To find the answer, Business Today and Monitor Group jointly surveyed more than 75 senior executives across sectors (nearly half of them through in-depth interviews) on their innovation-related attitudes, beliefs and practices. We also surveyed investors to find out how they view the state of innovation among Indian companies. The results show clearly that Indian firms recognise how critical innovation is to thriving (or even just surviving) in today's global market, and some have taken important steps towards building the kinds of leadership, strategy, systems, partnerships, and culture required for innovation. At the same time, senior executives also believe that their efforts to build truly innovative Indian firms confront significant constraints.

Many of our results are encouraging. More than 90 per cent of CEOs surveyed said that innovation is "very important" to achieving their organisations' goals and is an explicit part of their corporate strategies. Bharti Airtel, for one, has established the Future Factory- a "center of innovation" that aims to develop innovative applications specifically targeted at individual customer segments. Wipro has established an "Advisory Board" and "Innovation Council" to invest in and manage innovation projects. Tata Motors has initiated a "New Product Introduction" process that defines business processes for new products-tackling everything from understanding customer requirements to commercialisation, and everything in between.

The survey also revealed, however, that more than 73 per cent of CEOs are unsatisfied with the current level of innovation in their organisations. CEOs repeatedly said that their organisations had too many competing priorities, faced difficulty in cross-functional coordination, were overly focussed on short-term results, and faced resource constraints that make innovation difficult.

Interestingly, firms around the world routinely point to these same barriers to innovation. But those companies that lead the pack on innovation view it as a necessity rather than a choice-and fight to overcome these barriers. Google, for example, started as a search engine but realised that it had to do more than that or else risk falling behind some upstart company. Today, Google's leadership has ensured that innovation is an integral part of the company's strategy, systems, processes and culture. Marissa Mayer, Head, Google's Idea Factory, searches for the best ideas, talent and resources and then drives them to commercialisation. The result is visible to all: with remarkable products like AdSense, Google Earth, Google Checkout and Google Notebook, Google towers over its competitors.

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