October 26, 2008 1 Comment
I was recently asked to comment product innovation in India – i.e. the often-raised questions around why we haven’t seen extensive product-based innovation from Indian companies, what the challenges have been, and how that can change etc. I have given thought to this issue a few times in the past, and I’ve copy pasted some of my thoughts below.
Product innovation is a step in the life-cycle of an industry’s evolution that comes after significant maturity. Product innovation requires a complex interlinked talent pool (engineers, researchers, designers, managers, executives, lawyers etc), sufficient amount of risk capital, and proximity to the customer. None of these had achieved critical mass in India till a few years back, but this should happen soon (possibly with the exception of the ‘researchers’ category).
Moreover, the need for path-breaking innovation wasn’t very apparent in the past. Most consumer needs were best satisfied by taking concepts already invented elsewhere, and customizing those to the Indian landscape. This still continues to be the case – after all, what is the point of reinventing the wheel? The best returns to customers, investors and entrepreneurs still continue to be from these so-called incremental products. However, the zeal within a lot of Indian entrepreneurs, engineers and even investors for helping build some truly innovative products is tremendous.
However, there clearly are several encouraging success stories now in the product domain in India (especially wireless equipment and mobile apps), but I think there is still some ways to go for Indian products in the areas of:
- User interface: The UI of a large chunk Indian products and websites has a lot of catching up to do. There are obviously some notable exceptions though, and the situation will change as UI design talent availability in India improves. The core of the IT ecosystem in India has been composed of teams working on outsourced or off-shored work, and in the past, the UI design work was typically not done in India, which propagated the dearth of UI design talent in India.
- Product management and customer focus: Most products and services built in India in the past were targeted at a Western/foreign customer. Innovation is an exercises that is intricately intertwined with customer input and feedback, and becomes an order of magnitude harder if the innovator is removed from the customer.
- Focus on quality
- Research-based Innovation
We are now seeing some decent products coming out of Indian startups. Also, large tech companies such as Google, Cisco, Microsoft, Adobe etc are now developing a few of their products almost entirely in India. This will create a viruous cycle that iteratively reduces the intensity of the aforementioned challenges.
I think that the first wave of products is/will be around areas where there are direct customer touch points in India, so this would include areas such as:
- Information and advertising services tailored to more restricted interfaces such as SMS, VoiceSMS etc
- Payment and micro transaction mechanisms
- Products around new media formats such as interactive TV, digital signage and animation
- Gaming (both mobile and otherwise)
- Wireless equipment
- Productization of services such as security testing, banking software, specialized accounting etc
I believe (and hope) that we would start to see extraordinary companies of the magnitude of Apple, Google, Microsoft and Facebook being created in India within the next 5-7 years.