Read Write Web has an interesting article on the state of innovation in India. I agree with most of what the author says in terms of transition over last ten years. Within the context of technology businesses, which is what the article focuses on, I am not sure of whether concept arbitrage theme (which is where all of internet and mobile businesses are put in the article) is what will remain dominant over 2008 and beyond. Few reasons:
– Mobile will come into stronger play. We are seeing early signs of traction in companies with local innovation, and I think that momentum will become far more evident in 2008
– On the internet, the early pickings of concept arbitrage are gone. While one can still borrow concepts from other parts of the world, those concepts haven’t been huge successes in their host geographies. And hence, the entire model will be revisited and localized heavily. Local search is an example.
In our own polls at venturewoods, entrepreneurs seem to be exhibiting a high degree of optimism that this indeed is the direction we are headed in. The hot areas as per that poll are local language Internet, mobile data services, Ecommerce/Mcommerce, online financial services, digital entertainment and online education – most of these areas are very high on the localization axis (due to infrastructure, regulation, and local content orientation).
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Indian startups do face systemic hurdles but a couple of big hits should be enough to catch people’s imagination and solve the people and funding problem forever – there are strong signs that 2008 might be that year and if it is then this is when we start.
So, is the debate on what track innovation should take?
Simple. It’s got to center around economics and nothing else.
Since labor cost advantage is shrinking fast, managements expect CIOs to act more like CFOs and deliver ROI from any new application. CIOs hence want the building blocks to further the management’s vision of innovation in line of business (LOB), not some pre-canned, costly, vendor-driven notion of innovation that we’ve had so far.
Drive innovation initiatives around latest trends, business model changes, channel optimization, product improvement needs of the customer. In an age where Delta Airlines CEO goes to head Red Hat, we can well imagine his needs. Instead of scoffing at the asymmetry of that change, let’s just spot an innovation opportunity there – to make his life simple at the new place. Soon there could be more of Red Hat type boards that choose Airline stewards to run open source businesses for good enough reasons.
So here’s my take – Futuristic innovation has to be reductionist and should trend towards making business applications industry agnostic.
I look at this talent issue this way. Lets say your funding problem is solved, senior management problem is solved, market traction problem is solved and everything else is solved except one – you have to do with talent available in India today. Can you then create an OS which can compete with Windows ? Can you create a search engine 50% (maybe 30%) as powerful as Google?
From what I know or understand, the answer is no. We have created minor things here and there but the talent pool is too young/inexperienced compared to valley/US to seriously challenge them purely on innovation.
I find this talk of under 30 innovation a bit misleading. Real innovation does not happen in a vaccum. Its when you have guys in a community who have been coding for 30 years with the same passion that you see youngsters below 30 coming up with real innovation.
With all due respect to author of that article i fail to understand what he is trying to imply here .
“Access to Intellectual Capital. Yes the world is flat; access to intellectual capital is not an issue any more.”
is he talking about access to Intellectual capital as in people involved in Product development i don’t see it happening . its rare to see that people from SFO joining a Startup in Gurgaon . world is not that flat yet and the recent drop in Stock price of Adobe immedialtely after Shantanu Narayen become CEO shows that masses are still not comfortable with Indian at helm. this is more strong in Startup .
“Innovative ideas spread like wildfire through Blogs, Social Networks, Skype, etc.”
here he is talking about availability of Early adopter . well its true but . i haven’t seen an Indian venture successfully leveraging it . with the possible exception of Zoho.
something which never fail to surprise me is how easily folks falls to the temptation of taking a business case and applying it to india . Economic,social , demographic on every count india is far more fragmented than US .
Problem is that most of the time each fragment of this market is not big enough to make a highly scalable business.[ A precondition for VC investment ] . India is a country with a Million Market niches of Dozen user each , what everyone is looking for is a dozen market niches of Million users each ” CATCH 22 ??
Here is an article from sunday economic times, by Bill Davidow in which he says “One area I am very optimistic will accelerate next year is early stage venture investing.” ( http://economictimes.indiatimes.com/BizNext_Gen-next/By_invitation_Bill_Davidow/articleshow/2661507.cms )
I believe its a parallel observation of the same trend that entrepreneurship scene in India is changing from concept arbitrage to innovation (and most of the ‘real’ innovation effort will obviously be in an early stage in 2008).