Innovation and Entrepreneurship

Kenan Sahin (Tech Review, via WSJ) writes about the “innovation backlog” in the US and makes suggestions which we in India could do well to learn and adopt:

It’s not only innovation that matters — it’s the rate at which innovations are improved and brought to market. And this has declined precipitously since the bust. The result is a surplus of innovations, with vast numbers of potentially important advances being warehoused or shelved.

This situation leaves us with a greatly underappreciated challenge: how to unlock the benefits stored in the increasing backlog of innovations, prevent further disruptions in the innovation-to-implementation flow, and avert the looming crisis. Efforts to meet that challenge should be undertaken at the same time that we begin documenting the extent of the innovation backlog, so that the burst of creativity that produced it isn’t lost forever. I have some suggestions for how to proceed:

  • Adopt alternative industry models: Think of universities, research hospitals and large corporate labs as innovation sources. They can be characterized as R&d (big research and small development) organizations. Most companies, with their marketing and production arms, would be d&D (small development, big delivery) enterprises. The lack of a strong connection between these groups is partly responsible for today’s innovation backlog. Therefore, we need more “linkage” companies to bridge the gap. These are rD&d organizations. They have some research capability in order to link to the sources of innovation, and a delivery component that helps get products to market, but their main activity is in developing innovations for market.

  • Loosen university intellectual-property rules: University-based research thrived in the 1980s and ’90s because of extensive company sponsorships that spawned new innovations, as well as start-ups. That coupling is much weaker now, partly for reasons already mentioned, but also because the intellectual-property policies of universities have become so complex and money-oriented that companies find it increasingly difficult to structure deals. These restrictive policies may also cause academics to lose their entrepreneurial spirit. I suggest that universities allow faculty members to keep a much bigger share of the intellectual property they create, and also change their rules to encourage the transfer of intellectual property, focusing more on their fundamental mission than on revenue generation.

  • Create federal incentives: The U.S. government could create a series of incentives to encourage innovation implementation. For instance, Small Business Implementation grants could provide tax credits or other incentives to companies that license or purchase innovations and bring them to market. This would encourage implementation in much the same way that R&D credits encourage idea generation.

  • India is at a threshold where, if it focusing on enabling innovations and entrepreneurship, it can become the role model and solutions provider for other emerging markets – the bottom of the pyramid with a potentila market of 4 billion people. As Sahin concludes: “we also need a culture change. In the technology-happy 1980s and ’90s, entrepreneurship centered on innovation. The founder/technologist was an entrepreneurial hero. But it has become abundantly clear that while innovation is important, it is perhaps only 5% to 10% of success. The other 90% to 95% is implementation. We need to find ‘implementation entrepreneurs’ and make them our new heroes.”

    Published by

    Rajesh Jain

    An Entrepreneur based in Mumbai, India.