India announces a national innovation fund for early stage capital

News alert

The National Innovation Council has recently addressed 2 major issues in the Indian innovation ecosystem

1. Within the next 2-3 months a national innovation fund will be set up to provide early stage seed capital for ventures in areas such as health and education. The fund will reportedly have Rs. 1'000 crore (or around $220 mio) to invest.
2. The Union Budget for 2011-2012 will cover the creation of a new knowledge network - an optical fiber network that will connect 1500 institutes across India

These are great initiatives, given that they address 2 major hurdles in getting great ideas to market: funding and finding/connecting to potential technology partners.

As always the devil will be in the details. Will the fund have the resources to disburse such a huge sum in hundreds of tiny investments, perhaps evaluating thousands before they find the right ones? Will an infrastructure network be enough to increase collaboration and knowledge sharing between dispersed and competing institutes? We'll see. For now, good things are happening.

Innovation has a long way to go in Bangalore

As the headlines proclaim Bangalore to be the next Silicon Valley, more critical voices are often drowned out. This one will hopefully fare better. NASSCOM and BCG recently published a report on the innovation ecosystem for the Indian IT system. The following graphic from the report basically sums up their conclusions: India has a long, long way to go.



In addition, the authors found that the willingness and initiative of Indian IT firms to invest in firm-level innovation could use a massive increase.

The Indian innovation system has a lot of potential for improvement. Given that the the Bangalore IT cluster developed in response to foreign (not domestic) demand, one could ask whether other elements could also be "imported" into the local innovation system. For example, it appears that much of the more fundamental research in Bangalore's corporate R&D labs is being conducted by US-trained researchers. On the one hand, the knowledge and relationships that these researchers bring with them may help accelerate the development of Bangalore's innovation system. On the other hand, relying on foreign research training is definitely not sustainable.

National Innovation System timelines: India, China, USA

Found on Yoshiki Mikami's virtual class website.

This is Mikami's overview of the evolution of the Indian national innovation system from the 18th century to the present. The data on more recent decades isn't quite comprehensive, but it's useful to get a timeline.

Mikami's site also has timelines for China and the USA.

Business ecosystems - perfect metaphor for the biotech industry

Strategy as Ecology, Marco Iansiti and Roy Levien, 2004

Another article from the March edition of HBR. Iansiti and Levien compare networks of suppliers, distributors, outsourcing firms, makers of related products or services, technology providers, etc. to ecosystems in nature. Certainly not a new concept for anyone who has read up on networks recently, but they carry the analogy further to derive business strategies and insights. An interesting read.

Like an individual species in a biological ecosystem, each member of a business ecosystem ultimately shares the fate of the network as a whole, regardless of that member’s apparent strength. From their earliest days, Wal-Mart and Microsoft—unlike companies that focus primarily on their internal capabilities—have realized this and pursued strategies that not only aggressively further their own interests but also promote their ecosystems’ overall health.

They have done this by creating “platforms”—services, tools, or technologies—that other members of the ecosystem can use to enhance their own performance. Wal-Mart’s procurement system offers its suppliers invaluable real-time information on customer demand and preferences, while providing the retailer with a significant cost advantage over its competitors. (For a breakdown of how Wal-Mart’s network strategy contributes to this advantage, see the exhibit “The Ecosystem Edge.”) Microsoft’s tools and technologies allow software companies to easily create programs for the widespread Windows operating system—programs that, in turn, provide Microsoft with a steady stream of new Windows applications. In both cases, these symbiotic relationships ultimately have benefited consumers—Wal-Mart’s got quality goods at lower prices, and Microsoft’s got a wide array of new computing features—and gave the firms’ ecosystems a collective advantage over competing networks.

Assessing Your Ecosystem’s Health

So what is a healthy business ecosystem? What are the indications that it will continue to create opportunities for each of its domains and for those who depend on it? There are three critical measures of health—for business as well as biological ecosystems.

Productivity. The most important measure of a biological ecosystem’s health is its ability to effectively convert nonbiological inputs, such as sunlight and mineral nutrients, into living outputs—populations of organisms, or biomass. The business equivalent is a network’s ability to consistently transform technology and other raw materials of innovation into lower costs and new products. There are a number of ways to measure this. A relatively simple one is return on invested capital.

Robustness. To provide durable benefits to the species that depend on it, a biological ecosystem must persist in the face of environmental changes. Similarly, a business ecosystem should be capable of surviving disruptions such as unforeseen technological change. The benefits are obvious: A company that is part of a robust ecosystem enjoys relative predictability, and the relationships among members of the ecosystem are buffered against external shocks. Perhaps the simplest, if crude, measure of robustness is the survival rates of ecosystem members, either over time or relative to comparable ecosystems.

Niche Creation. Robustness and productivity do not completely capture the character of a healthy biological ecosystem. The ecological literature indicates that it is also important these systems exhibit variety, the ability to support a diversity of species. There is something about the idea of diversity, in business as well as in biology, that suggests an ability to absorb external shocks and the potential for productive innovation. The best measure of this in a business context is the ecosystem’s capacity to increase meaningful diversity through the creation of valuable new functions, or niches. One way to assess niche creation is to look at the extent to which emerging technologies are actually being applied in the form of a variety of new businesses and products.

Considering the proposition that the biotech industry has entered a phase characterized by many small forms forming alliances/networks with each other, research institutes and pharma multinationals, the analogy seems particularly relevant.