Building an Innovation Ecosystem

An ongoing study into the innovation imperatives and processes for India's IT and BPO Industry undertaken by the Boston Consulting Group NASSCOM postulates that a vibrant eco-system for innovation needs the active participation of five key players – the government, educational institutions, financing agencies, industry associations and the firms themselves. While the most active relationships between all the five can be seen in Silicon Valley in the USA, where the active role of institutions like Stanford and Berkeley have spawned a whole breed of new economy entrepreneurs, angel investors, venture capitalists and private equity firms have been quick to fund new ideas and teams, and companies themselves have showed that they have what it takes to dream big and succeed – nationally and globally.
It could be argued that the role of government agencies in the US has been very much in the background and there are no associations with even a fraction of the popular support that NASSCOM enjoys but the strength of the other three key constituents has enabled an eco-system to evolve that is the pride of the entire technology community today, not just in the USA but internationally. In different contexts, the government too has played a stellar role – Singapore, Israel and Taiwan are shining examples of entire industries being supported by proactive government policies. In our country too, the Government has moved very effectively from passive support in the early years when a nascent software export industry flourished under the benevolent watch of Secretary Vittal. The STPI scheme formulated in those days led to the flourishing of hundreds of companies in multiple cities as it embraced a near virtual model that enabled small companies to establish units that could enjoy the tax relief and gradually aspire and attain maturity and growth. The wisdom of three IT Ministers in the last decade and the visible support of successive commerce and finance ministers has ensured that the crown jewel of India’s global success continues to shine.
The presence of an active association like NASSCOM with the widespread support it enjoys from most of the IT and BPO firms in the industry, is perhaps the biggest pillar of future success in innovation that the country can enjoy. Under able professional leaders like Dewang Mehta and Kiran Karnik, with the active support of successive industry leaders who have chaired the executive council and taken the association to greater heights, this association has the potential in the remaining years of this decade to extend its reach from companies to individuals, from overseas ambassadorship to country-wide evangelism and achieve what one worthy participant in the innovation forum has called ‘an information tone for every Indian’.
A sector vital to the Indian IT sector is the SME sector which contributes a fountain of new ideas , many of which are extremely innovative and enable the creation of new enterprises. NASSCOM’s focus on the emerging companies in this decade has resulted in many small companies achieving national and international success and the future will surely belong to these young companies, set up by intelligent and enterprising entrepreneurs with stars in their eyes and the confidence that they have what it takes to be successful in the face of global competition. The good news is that while invention typically happens at the top of the pyramid in any industry sector, innovation can happen anywhere and history shows that the best innovation germinates in the mind of imaginative young entrepreneurs. With the right mentoring, timely does of seed, angel and venture finance and supportive Government policies , there is no stopping India’s IT and BPO SMEs as they aspire to their own place in the sun.
What else is needed to enable a true innovation eco-system to flourish? Can the enthusiasm of individual entrepreneurs and some innovative firms overcome the malaise that persists in the education system and succeed in an environment when angel funding and early stage capital is just showing the stirrings of life after a decade long hiatus? We will continue this discussion in subsequent blogs!