Reinvent innovation models to win global game, Forrester tells US firms

Rich talent in India waiting to be tapped

American firms must "re-invent their innovation models" to take advantage of the immense talent available in India.

"Unless US firms internalise the win-win rules of the global innovation game, US-Indian Innovation Networks will remain just a geopolitical pipedream," Forrester, a US-based consultancy said.

Chief executives of American technology firms (tech CEOs) have to realise that there is more to India than labour cost arbitrage. This will help form "strategic innovation partnerships with talent-rich Indian firms," Navi Radjou, Bobby Cameroon and John McCarthy, vice presidents of research who "focus on Indian tech firms, their capabilities and innovation", said.

Just as they adapted their business models and refocussed their core competencies to fully exploit China's manufacturing capabilities, "US firms must ditch their rigid, US-centered innovation models in favour of a fluid market ecosystem."

Forrester calls such an ecosystem, Innovation Networks that interconnect specialised US and Indian S&T capabilities to meet local and international demand, they said.

Forward-thinking US companies should recognise the drivers of this ecosystem "� invention, transformation, brokerage and finance "� and map the companies' resources to the producing and consuming these engines of growth.

So, tap the Indian pools of inventors beyond low-cost programmers, scale the transformers "� in India and US "� to turn Indian inventions into global offerings, fund cross-border tech ventures through both US and Indian financiers, and "accelerate the invention-to-innovation cycles by using Innovation Network Brokers," analysts said.

Prime Minister Manmohan Singh's US visit, this week, is built on momentum generated over the last four years. In 2001, US and Indian political leaders affirmed the expanding Indo-US relations. In 2002 an Indo-US High Technology Co-operation Group was formed.

In 2004, the US unveiled a strategic framework for techno-economic cooperation with India and in March 2005, US secretary of state Condoleeza Rice affirmed US' strong commitment to India, the analysts recount.

But, they say, CEOs of US tech firms "� the original equipment manufacturers (OEMs), independent software vendors (ISVs) and venture capital (VC) firms who really drive global high-tech trade "� "continue to view India merely as a cost-effective labour source for low-end IT activities."

It is time they "� several of whom belong to Indo-US business associations like the HTCG "� translate their public statements on US-India science and technology co-operation into concrete actions.

In recent years, US tech firms have been recruiting thousands of software developers in India. IBM plans to hire 14,000 Indian developers this year. But they still have to aggressively buy high-end R&D services like system design from Indian providers like Wipro. CEOs of tech firms must reject funding for any new product development project unless at least 30 per cent of its R&D is conducted in India, they said.

The emerging Indo-US innovation network markets need a powerful cross-border transformation platform. Such a platform should hasten the conversion of Indian inventors' ideas into scalable new products, services, business models or processes.

To facilitate that transformation, US tech vendors need to rebalance their skills mix, hiring more managers in India to coordinate local R&D and more US-based managers skilled in vendor management and cross-cultural negotiation, the analysts said.

For example, as Flextronics' Indian base takes over more engineering design responsibilities from global OEM customers, Flextronics' Indian R&D and manufacturing engineers can collaboratively transform local inventions into globally-marketed products, they said.

India's under-funded entrepreneurial inventors and transformers need US financiers to rapidly scale up their high-tech businesses and take them global.

Unfortunately, the financiers on Sand Hill Road generally aren't used to investing in startups outside a 20-mile radius of their home base. US-centric VC firms must emulate forwarding-thinking US financiers like Warburg Pincus, Silicon Valley Bank, and Intel Capital, which not only urge US startups they fund to shift R&D to India, but also finance Indian startups, they said.

To accelerate Indo-US invention-to-innovation cycles US firms need brokers "� market makers and facilitators. For example, the Confederation of Indian Industry and the National Association of Software and Services companies, and US associations like the Silicon Valley Network and The Indus Entrepreneurs, the Forrester analyst said.

ON THE WAY TO INDIA

• US firms must ditch their rigid, US-centered innovation models in favour of a fluid market ecosystem.
• They must recognise, produce and consume the drivers of this ecosystem - invention, transformation, brokerage and finance.
• So, tap the Indian pools of inventors, turn Indian inventions into global products, fund cross-border tech ventures and network like never before.
• The firms are yet to aggressively buy high-end R&D services such as system design from Indian providers such as Wipro.
• CEOs of tech firms must insist that at least 30 per cent of any new product development project be done in India.
• Silicon Valley's Sand Hill Road venture funds, generally aren't used to investing in startups outside a 20-mile radius of their home base.
• US-centric VC firms must emulate forwarding-thinking firms such as Warburg Pincus, Silicon Valley Bank, and Intel Capital - urge US startups they fund to shift R&D to India and also finance Indian startups.