Mr R. Gopalakrishnan - Executive Director, Tata Sons Ltd, led a team of 18 senior Tata executives on an Innovation Mission to Israel.
They visited around 50 Israeli companies in a week. As a result lot of opportunities for joint work have been identified between Tata companies and Israeli companies. The mission was focused on Water, Agro, Life sciences, Nano materials and IT. His speech is shared below.
What entrepreneurial India can learn from innovative Israel : The Four Eyes Proposal
The title of this talk raises the question whether there is any significant difference between entrepreneurship and innovation. To me they are two sides of the same coin. Innovation is about thinking of new ideas and implementing them. Entrepreneurship is the process of mobilizing the required resources to execute the innovation on a large, impactful scale. A study, ‘The Innovation-Entrepreneurship Nexus’, written by Advanced Research Technologies, United States clearly demonstrates that entrepreneurship tends to be high in regions where innovation is high and vice-a-versa! Thus they feed on each other, they enhance each other.
And this is my central idea today.
Israel is an engine for new idea generation and execution, but Israel has a small population and has a small domestic market. Very few start-ups become domestic giants. India is a huge market. It can become a giant motor to which the Israeli innovation engine can be coupled. Together they could impact on the world, on both the economies, and would surely advance Indo-Israeli relations. For example, Israel can make terrific tomato seeds, but only India can grow tonnes and tonnes of tomatoes.
Hence I would like to propose the FOUR EYES PROGRAM, standing for the India-Israel-Innovation-Initiative. More about this at the end of this address.
Some common features
There are some common features with regard to innovation and entrepreneurship of the two countries that are useful to recall. An enterprising community is characterized by an outward-looking attitude, a willingness to explore new ideas as well as to accept exogenous influences. These characteristics have been vibrant in the history of both the nations through the centuries. The history of the Mediterranean region is the history of the interaction of the cultures and people of the lands surrounding the Mediterranean Sea —the central superhighway of transport, trade and cultural exchange between diverse peoples. When it comes to trade, Israel was a keen participant in commercial activities and maritime trade with Phoenicians starting from as early as the ninth and the tenth century. The biblical Book of Kings provides documentary evidence of the pre-Christian trade of by King Solomon, who exchanged Israelite grain for the Phoenician lumber of King Hiram of Tyre.
Israel is a multi-cultural society with people of diverse ethnic origins: Russian, European and Asian. When it comes to the display of an attitude of exploration, Israel ranks very high among nations. Israel has a natural social diversity as well as a widely spread diaspora that actively supports the innovation agenda. This diversity has gifted Israel multiplicity of viewpoints and perspectives, so essential for an innovation climate.India shares a similar history. Merchants from Mohenjo-Daro and Harappa were trading with Sumeria even before King Solomon was trading with King Hiram. The world’s first university was established in 700 BC at Takshila where sixty subjects were taught to 10,500 students, who came from all over the world. On the east coast of South India, so many Roman coins from the first century have been found that it is entirely possible that the balance of trade favored India at that time.
India has a 20 million strong diaspora, which has migrated over a long period of time—Tamils to Sri Lanka, Malaysia and east Asian countries, people from Madhya Bharat to the West Indies, Gujaratis to Africa, Keralites to West Asia, and Sindhi/Punjabi people everywhere. Israel and India are both multi-cultural societies. Both countries have an enormously argumentative society. In both countries, if you read the domestic newspapers, you will get only bad news. But if you read how foreigners see the countries, you will find positive news. Both the nations have restless people, who are incapable of doing repetitive tasks for long and are extremely competitive. This most valuable gene of enterprise in both the nations has prospered through battles and adversities. In fact adversities and scarcities have forced these nations to come out with creative solutions and have been a great enabler in the process of making them highly entrepreneurial.
Some features of Indian entrepreneurship:
I wish to mention four features of Indian entrepreneurship.
1. Austerity as a way of life
Most innovation programs are built on the assumptions of affluence and abundance. Not so in India where the psyche is to make the most from the limited resources. There are a lot of first-time consumers in India who cannot afford expensive offerings. Faced with shortages of resources and infrastructure, audacious entrepreneurs in market like India have had no choice but to stand accepted wisdom on its head. A potent combination of constraints and ambitions has ignited a new genre of innovation which some academicians call frugal innovation. Smart Indian companies have come up with new technologies and radical business models to penetrate the country’s mass markets. They have done this by transforming almost every element of the value chain, from supply-chain management to recruitment, and creating novel business ecosystems. There are many examples. The most famous and recent example is the Tata Nano. At $2000 per car, the price is less than the DVD player of a BMW! Just as the mobile revolution heralded inclusion in communication, the Nano has the potential to make every Indian "transportation-inclusive". To arrive at a disruptive price positioning in the market, Tata Motors has reduced many cost structure elements by engineering innovations and use of cheaper yet environment-friendly materials.
2. A focus on “Difficult to Replicate”
Traditionally, the western world has looked at innovation in terms of R&D effort. The measure of innovation tends to be “first in the world.” In India entrepreneurs often look at changing and strengthening critical parts of value chain that constitutes the whole business model. A whole business model is difficult to copy because of a simple and clever twist which competition finds difficult to follow. Take for example Mumbai’s 5,000 plus Dabbawalas who are now world famous for their impeccable service standards. They pick up lunch boxes from over 2,00,000 homes, deliver them to some 80,000 destinations and again ensure their safe return all on the same day with each lap of journey en route accomplished within the specified time limit. The people involved are not MBAs and commute through crowded pavements and overloaded trains and still deliver what is a six-sigma level of service. Clearly to understand and replicate this is going to be tough!
3. Holistic innovation including social applications
It is important to innovate holistically including assessing the impact that the product and service is going to have on the society. The innovation should ideally benefit every stakeholder. Let me elaborate this through the case of Tata Swach – the most cost-effective, basic water purifier in the world. Safe drinking water is a long standing need in many parts of the world. In India, water-borne diseases cause more than 1.5 times the deaths caused by AIDS and double the deaths caused by road accidents. Tata Chemicals was inspired to create an affordable product that could save millions of lives by delivering safe drinking water.
As a result of 18 months of collaborative effort among multiple Tata companies, TATA Swach has been launched as “the lowest cost water purifier in the world”. Further the product is made by using natural material, runs without electricity and provides bacteria free water as per international standards. The product is available for Rs. 999 and has a life of over 3000 liters. Other models at price point of Rs 750 and Rs 500 have also been launched recently. The point here is that Tata Swach is an example of holistic innovation in product, business model and social application as it will impact millions of people previously unexposed to any water purification solution.
4. An intuitive common sense while innovating
In the 1950s Caltech Professor and Nobel Prize winning Roger Sperry reshaped our understanding about the functioning of the human brain. According to Sperry, the ‘so called less valuable or subordinate right brain’ was the “superior member when it came to certain types of mental tasks”: holistic appreciation, emotive interpretations, pattern making and imagination. Some sketchy evidence exists about the increasing recognition of the value of the right brain. Western thinking is strongly influenced by left brain, logical and linear methods, largely influenced by the European Age of Reason. Eastern thinking is influenced by right brain, intuitive and circular methods, largely influenced by the underpinnings of eastern philosophies.Innovation requires a combination of left and right brained thinking. Development of the right brain is also a function of the varied experiences that we assimilate in our lives and the variety of people that we meet along the way. Innovation often depends on having a different perspective. Perspective comes from experience. Real experience also typically comes from age and or maturity. Management academics have also studied living systems and the principles of biology and ecology while seeking new organizational forms. They have derived four principles from living systems for a “fluid network organization”, an organization which is more interconnected and adaptive in a changing world.
It is apparent that India has done reasonably well until now riding on its entrepreneurial spirit and drive. However, Indians still don’t have the record of big scale innovation that Israel has.
What India can learn from Israel?
Israel ranks the highest in the world in the per-capita number of patents filed. A good 22% of the Nobel Prize winners are Jewish; among women who have been awarded the Nobel Prize, 38% are Jewish. Israel has the highest number of start-up companies and ranks first in availability of skilled scientists, engineers and technicians and second in venture capital. It ranks seventh in the total company spend on R&D. These are amazing statistics, considering that the number of Jews on the planet peaked at 18 million before World War II, and today, number only about 12 million. So what seems to be working for Israel that India needs to emulate?
Based on a recent Tata Innovation Mission to Israel, I conclude that there are some lessons that India can learn from Israel. Our mission was focused on Agricultural Technology, Water, Life Sciences, Nano and information technology.
Execution Focus and the value of time : Bitzua roughly translates into ‘getting things done. Israel’s first leader, David Ben-Gurion, epitomized the word because he exhorted citizens of his newly-formed country to get on with nation building by doing and learning rather than forever debating about the right approach. Davka is used to describe the response to a threat and means ‘in spite of’, or what Indians might term as ‘kar ke dikhana hai’.This spirit of ‘try it, just do it’ is all-pervasive in Israel and has led to the country becoming a top destination for R&D. At eighteen, Israelis go into the army for a minimum of two to three years. Amongst other things this also infuses in them a sense of urgency to execute all jobs. In the military one is in an environment where one has to think on his feet. There is no time to waste. Life and death decisions have to be made in a very short span of time.Since the country’s founding, Israelis have been keenly aware that the future-both near and distant-is always in question. Every moment has a strategic importance and that is why that tendency is to hustle and push and get the work done. Business ideas are executed as soon as one thinks of them. The notion that one should accumulate credentials before launching a venture simply does not exist. Adversity, scarcity and survival have actually shaped the Israeli DNA of focus on execution and challenging the status quo. Some of the greatest Israeli innovation has come because of the need to survive. Take for example the Arab boycott of Israel. How did Israel respond to this? Israel embraced the internet, software, computer and telecommunications arenas. Because Israel was forced to export to faraway markets, Israeli entrepreneurs developed an aversion to large manufactured goods with high shipping costs, and an attraction to small, anonymous components and software. Water scarcity spurred companies like Netafim to develop drip irrigation technologies that could improve crop yield by upto 50% while using 40% less water.There have been several instances when India has also responded to crisis with utmost urgency. As the Washington Post wrote, an “angry India set out to develop the Param supercomputer.” The country demonstrated during the Green Revolution the same davka when the US suspended the PL 480 shipments.
Dr R A Mashelkar often says that India should be permanently angry. Perhaps that’s the way we get spurred into action! But despite these flashes of brilliant execution, there still exists an execution gap that has the potential to choke best of ideas. India clearly needs to have an innovation culture that places as much, if not more, emphasis on execution, as on strategizing and brainstorming. Overcoming the fear of failureIn India we tend to be a bit risk-averse which limits our chances of achieving breakthrough innovation. Since incremental innovation is more convenient and less disruptive in terms of cost of failure, it is practiced more often. This has also got to do with how our society views and reacts to failures. In TATA, we have introduced an unusual annual prize called Dare to Try, through which the corporation recognizes positively any innovation attempt which has failed and from which lessons have been learned.Israel has unique policies to accommodate and assimilate immigrants and newcomers.
There have been several operations like Operation Moses and Solomon where thousands of immigrants were airlifted to be part of Israel. Of course there are economic and social costs associated with such a heavy influx, but it is matter of time before some of these immigrants come out with significant contribution. More importantly this makes Israel a country of risk takers. Immigrants are not averse to starting over. They often have nothing to lose. All of this gives Israel the drive to push, persevere and succeed without really caring of what the world thinks of them. Israeli attitude and informality also flows from a cultural tolerance for what some Israelis call ‘constructive failures’ or ‘intelligent failures’. Most local investors believe that without tolerating a large number of these failures, it is impossible to achieve true innovation. In the Israeli military, there is a tendency to treat all performances- both successful and unsuccessful-in training and simulations, and sometimes even in battles, as value neutral. So longs as the risk was taken intelligently, and not recklessly, there is something to be learned. Indeed a 2006 Harvard University study shows that entrepreneurs who have failed in their previous enterprise have an almost one-in-five chance of success in their next start-up, which is higher, which is a higher success rate than for the first-time entrepreneurs and not far below that of entrepreneurs who have
had prior success.
Being direct and challenging the authority
Perhaps fear of authority is universal. But social evolution and cultural factors influence the way this tendency is manifested. The trait of not speaking up our minds especially in front of authority is more prevalent in India and thereby having a debilitating effect on our innovation agenda. Rig Veda has a prayer, “jivema sharadah shatam” pleading for 100 years of healthy life where key faculties are well functioning and preserved. The prayer talks about the sense of sight (Pashyema), sense of hearing (Shrinuvama) and sense of touch and feel (Prabhravama). Interestingly the speech does not talk about speech at all. May be this is illustrative of the lower priority we assign to speaking and our inhibition to speak up.
Contrast this to the display of Israeli chutzpah which according to a Jewish scholar, is ‘gall, brazen nerve, effrontery, presumption plus arrogance’ In the Israeli army, soldiers are divided into those who think with a “Rosh-Gadol”, literally a “big-head”-and those who operate with a “Rosh-Katan”, or “little head”. Rosh-katan behavior, which is shunned, means interpreting orders as narrowly as possible to avoid taking on responsibility of extra work. Rosh gadol thinking means following orders but doing so in the best possible way, using judgment, and investing whatever effort is necessary. It emphasizes improvisation over discipline, and challenging the chief over respect for hierarchy. Indeed, ‘challenge the chief’ is an injunction issued to junior Israeli soldiers, one that comes directly from a postwar military commission. It’s easy to imagine how soldiers unconcerned with the rank have fewer qualms about telling their boss, “You’re wrong.” This chutzpah molded through years of IDF service represent Israeli entrepreneur.
Fluidity, according to a new school of economists studying key ingredients for entrepreneurialism is produced when people can cross boundaries, turn societal norms upside down and agitate in a free-market economy, all to catalyze radical ideas. Thus the most formidable obstacle to fluidity is order. A bit of mayhem is not only healthy but critical. Some leading thinkers argue that the ideal environment is best described by a concept in ‘complexity science’ called the ‘edge of chaos’. They define that edge as ‘the estuary where rigid order and random chaos meet and generate high levels of adaptation, complexity and creativity. This is precisely the environment in which Israeli entrepreneurs thrive. Israeli economy benefits from the phenomena of rosh gadol thinking and critical reassessment, undergirded by a doctrine of experimentation, rather than standardization, wide enough to have a national and even a global impact.
Channelization of entrepreneurial energy
Indians have in abundance the first 4 Cs of innovation (Chaos, Challenge, Creativity and Communication) but need to improve in the fifth C of innovation, Channelization.
Paradox and ambiguity are part of everyday existence in India. To cope with these paradoxes, the Indian mind has evolved into being highly adaptable. Indian society has a long-standing tradition of free communication, open debate and fierce argument. If India can improve in the fifth C, which is channelization or discipline, her raw creativity will convert into a hugely-impactful, process-driven Innovation Engine. In fact, channelization or discipline is the sum total of all the above-mentioned points. It includes internalizing and adapting to Bitzua, chutzpah and Rosh gadol.
In The Other Side of Innovation, Vijay Govindarajan and Chris Trimble suggest that when it comes to innovation in companies, quite often, there is a tendency to focus on a copious generation of ideas. This focus unleashes incredible energy, but the authors argue that ‘focusing on execution is far more powerful’. The authors point out that continuous improvement and operational innovation are best performed by the existing structure, which has been tuned to be an economic Performance Engine.
A lateral, or break-all-the-rules, idea requires a differently-oriented organization, called the Innovation Engine. Quite the opposite of the Performance Engine, this Innovation Engine must encourage challenge, must be hugely experimental and must accept failures. Innovation culture in an organization evolves through four phases: first, it is bureaucratic, then it evolves into controlled creative. Many Indian companies are at about this second stage. The third stage is daringly creative;. The high and final point, to which Indian companies should aim to reach, is DCD: daringly-creative and disciplined. As I mentioned earlier, our academic curriculum in management and our national folklore in innovation should progressively shift the fulcrum of focus to this fifth C of Channelization: which involves learning how to create an Innovation Engine to plan and execute risky ideas, which may not get nurtured naturally in the Performance Engine.
Coupled with the existing presence of the 4 Cs, Indians can then aim to deliver and celebrate breakthrough innovations in the coming decades. The future for Indian innovation is bright provided it internalizes the lessons from Israel! Four Eyes ProgramHistorically, global companies innovated in their home markets, the developed world, and took those products into developing countries. Now the west is enthusiastically looking at East to serve its innovation agenda. With powerhouses like Israel and India leading the innovation drive, along with rising global interest to tap this expertise, I propose that we should have a more formal and institutionalized form of partnership that focuses on inclusive, lean and austere form of innovation to generate affordable products and services for the benefit of large majority of people across the world. India with its huge market base and Israel with its creativity can be a very potent global force. Tata has already taken the first step through its innovation mission to Israel to explore the areas of agriculture, water and life-sciences. But Indian businesses need to further expand and formalize such initiatives to reach our objective of making difference to millions of lives. Perhaps the time has come to launch a FOUR EYES PROGRAM standing for India Israel Innovation Initiative! Observer Research Foundation can undertake to do a research project and act as a promoting agency to couple India and Israel through innovation.