Education system
Bowonder: Another area where we are lacking when we talk about our universities is conceptualising.

Abhiraman: We cannot blame the education system. What the education system does is provide tools. What you do with your educated people is also important. 

If what you do is simply an extrapolated way of following whatever happened in the classrooms, then you should not expect any great results. Because what you are then trying to do is solve problems at the end of each chapter; you are not being taught to create the problem, you solve it through the clues you possess. 

You don't necessarily bring in a thought process that has an opening for something else. Making that opening is not necessarily a matter of having large resources. The moment you create even a small opening, you can produce a result and that creates the resource for a larger opening. 

Many organisations actually go from limited resources to huge resourcefulness to large resources. You do one thing differently from what has been expected and it pays off and makes another thing more viable. This is as much a matter of resourcefulness as it is a matter of resources. The rise of Japanese industry is an example of this.

Contract research
Bowonder: Let's now talk about contract research, which is emerging as an important opportunity for India. It is predicted that the market for contract research is going to grow by about 25 per cent per annum. 

Ramkrishna: The pharmaceuticals industry offers the classical case of contract research, and plenty is happening in this field as far as India is concerned. The nature of the industry is such that from R&D to chemical trials to the development phase, the requirements are enormous. 

Bhat: There is another angle to this. In our Design Studio, we have encouraged people to moonlight as well as to do contract work for other organisations, with us benefiting as a result. Restricting them to the product space we are in, which is watches and jewellery, tends to get them bored after a while. They then want to leave because they desire exposure to the greater domain of design. We started this primarily as a motivational exercise.

Sumantran: One way of looking at it is that there are two thresholds of benefits. The first is just participation; you get more people immersed in this culture where they are working. For instance, working with global companies gives you a certain kind of experience, training, and the chance to immerse yourself in a particular discipline or technology. This generates tremendous value inside India. The second threshold comes in ownership. Can we go beyond the first threshold, which is about gaining experience, to the second threshold, where we own the intellectual property rights? I remember the time when the Soviet Union broke down and all of Russian industry and technology were available in the market. My wife was at the University of Michigan's medical school and, overnight, they had a huge number of contracts with Russian research laboratories, which were selling their assets at distress-sale prices. These contracts were written in such a manner that the Russian organisations derived no long-term benefits from their patents. 

As contract research starts to become a larger industry in India, it is perfectly logical to say that our ambition should only be to get to the first threshold, where our people get to participate and gain experience of this knowledge. Or we can argue that for a country as big as India, for the strategic interest we would have in so many technologies, we ought not to be satisfied by being at the first threshold. The long-term objectives for the country in the education system and the industrial research environment must be to safeguard the second threshold, which is the ownership of the intellectual property. 

Ramkrishna: To take your point about the ownership of intellectual property rights, I'd like to go right back to the beginning, when you made a distinction between invention and innovation. Contract research does not usually mean an invention that can be patented. It is usually research that carries on to ultimately yield a marketable product or service. 

Ghaisas: I also think it's the quality of work that comes in, and here I'm drawing a parallel with the IT industry. During the last three decades, our business model has been based almost entirely on cost advantage. My point is that if 22 per cent of Oracle employees are Indians and 25 per cent of Microsoft employees are Indians, then why not have an Oracle or Microsoft in India. Why can't we produce one operating system or database? My fear is that contract R&D in the pharmaceuticals and biotech industries will ultimately result in Indians working for multinationals. The salaries of the people in R&D will keep going up, as is happening in IT and now in the BPO field, and then China and Russia will become much cheaper. We could lose out if that happens. 

Ramkrishna: It is a little simplistic to assume that contract R&D is driven primarily by cost advantage. It's certainly not. It is merely the skills and knowledge available here that are attracting these multinationals to India. We need to leverage those skills while simultaneously focusing on creating intellectual capital. 

IT as an enabler in traditional sectors
Bowander: Can we discuss IT as an enabler in traditional sectors such as jewellery and leather, where innovation wasn't keeping pace earlier?

Bhat: In the jewellery business, primarily, IT has improved our connection with the market, our response time. This is an unorganised business, at the sourcing end and at the front end; then there's the country's diversity. For us to be able to track trends on a daily basis is tough. Our complexities increase because the price of the metals we use changes every day. 

The margins in the industry are small, so you have to increase your cycle time and production has to be short. You have to deliver on time, recover your costs and then produce again according to patterns based on the marriage market and festivals. IT has helped us significantly in these areas, but not in product innovation. 

Mukundan: Indian companies don't exploit opportunities. If you go to Uttar Pradesh you will see a funny-looking vehicle that runs on diesel. It is called Jugard. Its front looks like a Mahindra jeep, the sides are open and it accommodates 20 people. Have companies gone and looked at this vehicle and done some smart little improvements to make sure that it performs slightly better?

But we haven't approached this traditional solution of the innovative Indian mind and brought to it a corporate understanding of what improvements can be made. We need to look at solutions like this.

Sumantran: Sometimes we do not pay enough attention to local customs and environment, but, thanks to government regulations, no registered Indian company will be authorised to make a vehicle like this. Having said that, I definitely believe there are opportunities for us to look at ideas and solutions that are atypical. What one has to be careful about is whether the technology is relevant. 

There can be unique solutions for India that provide tremendous value, but attempts to produce such solutions have not been very effective. Either they have gone to one extreme of being totally impractical, or they have aped western solutions that bypass Indian realities. 

There is another element, and I would love Bhaskar Bhat's opinion on this. People have often asked why we do not have local themes or forms in design. Now, if you take a wristwatch, where are the Indian motifs? 

People ask us why we don't make cars with a trim that is ethnic and Indian. Frankly, the limited tests we have done show that nobody wants them, because cars are identified as a western product and, hence, must have a western form. 

The same goes for refrigerators: why should our refrigerators have Scandinavian designs? Why isn't there an Indian form for a refrigerator, one that perhaps looks like one of our almirahs? 

Bhat: I'll give you an example where we learned the hard way. We designed an ethnic-design watch for Indian women in the early 1990s. It was called Raga and it had ethnic patterns, colourful straps, anything that would go with the saree. It was a big hit with the elitist crowd, with working woman in the big cities and with the fashion conscious - but it was a huge disaster for us in terms of economics. 

The problem was that it did not, could not, match every colour of saree. Women would come and appreciate the product, then buy something that was gold plated. We realised there was something else we needed to do, which was make the bracelet common. 

We changed to gold-plated bracelets with ethnic Indian patterns, so today's Raga has a coloured dial but they are all bracelet watches. Raga is not sold anywhere else in the world; it is an only-in-India product, and a reasonably profitable one at that. Our men's watches are totally western in style; there's nothing called Indian styling here, just as there's nothing called western styling in jewellery. That's the market.

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Uploaded on August 9, 2004