The rise of innovation during the economic downturn
By Jean Marc Frangos, Managing Director for External Innovation, BT | 2010-09-30
Today at the World Economic Forum was a day focussed on economic outlook. Economists debated the probability of a double dip recession, and Chinese delegates outlined their role in avoiding financial disaster at the height of the 2008 financial crisis, by acting promptly and releasing a significant stimulus package which allowed China to absorb the downturn and get back into GDP growth faster than the rest of the planet. The debate was also about the rebalancing of global growth, which had been unsustainably fuelled by U.S. household credit before the crisis, and which is now, for 75%, coming from emerging countries.
Within this context, more than ever, innovation is seen as a crucial weapon to weather further economic hardship and minimise the effect of the next productivity crisis. But the question remains: how does one apply innovation optimally, “right-size” the innovation capacity, and “right-tune” it to the most promising areas. This was the subject of a session where Hari Bhartia, the co-chairman of Jubilant, a global leader in pharmaceutical development based in India, shared his insights on how innovation propelled a local family business in the 1980s into what it is today.
Hari first explained that India thirty years ago was not the striving global powerhouse it is today in IT and life sciences. It was a very regulated and protected market, mostly closed to global trade, with high taxes. Opening up happened in the 90s and brought a wind of panic, which forced many existing businesses to reinvent themselves rather than try and remain locked in the old model. How were they going to compete with western corporations, who had years of experience of competition and modern technology? Only by changing the rules of the game and innovating more aggressively than their new competitors.
Hari explained that the recipe for successful innovation lies in 3 principles:
• Relentlessly find and hire the best talent, irrespective of where they come from. Jubilant aggressively recruited the best scientists, sometimes bringing Indian expatriates back to the homeland.
• Tolerate failure, especially in R&D, where failed experiments and incomplete successes are steps paving discovery towards more significant breakthroughs.
• Create clusters, where universities, corporations and venture capitalists can form a self reinforcing circle by providing to each other the ingredients necessary to the industrialisation of innovation. These exist in the U.S., famously with Silicon Valley, but are also forming in Bangalore and other cities around the globe.