Dr. Jagdish Sheth On Invention, Innovation & Jugaad

“… from invention to innovation and then from innovation to something commercially viable, is where lot of internal friction and resistance happens. It’s a funnel that happens.”

Abhimanyu Radhakrishnan, Editor-at-Large at Beyond Jugaad caught up with world renowned Management Guru Prof. Jagdish Sheth of the Goizueta Business School at Emory University to discuss innovation in an Indian context.

Edited excerpts of the interview (video above):

AR: Where do most innovations come from?

Prof. Sheth: Innovation itself happens by many approaches. There is this approach of Eureka, suddenly you get this bright insight, light bulb goes on you feel good about that idea, it’s like connecting the dot. There is something there nobody has thought about, you thought about it. That’s not as uncommon but it’s not the only way one innovates. A majority of the innovations come from the frustration of a user. Whether it’s in the industrial setting or in the consumer setting or the services setting, where user as a consumer just feels there is a better way. Somebody is wasting my time, wasting my money, I am not getting what my expectations are and begins to become entrepreneur. Because the market somehow is not able to read the signals of market unhappiness and try to manage that or innovate for that.

And there are always legacy issues in a company. Why is it so hard to Innovate? It is (hard) when you have a huge incumbency curse because you were a great innovator on a product you are unable to innovate anything else. Kodak for example, great film based, chemical based but they couldn’t get into the digital world properly.

Anyting analog when it became digital, the analog guys basically died almost you know, very few have succeeded. So given that the best place for innovation is user dissatisfaction, frustration, friction is the new word we use now-a-days. If there is any friction in supply chain, a friction in payment system, friction in use of the product after you purchase, friction in even carrying a palate from a store to your home, just think through the lifecycle of the product usage and you will find lots of opportunities to innovate.

AR: What are some examples of innovations that have arisen due to user dissatisfaction?

Prof. Sheth:  As I said the best innovations come from users and I will give you 2-3 quick examples. There is a lady in my city Atlanta who suddenly found that the traditional pantyhose was uncomfortable. And she came out with a new type, basically spandex of some sort. It’s like a girdle and pantyhose together. Otherwise, women have to wear both of them which is very cumbersome. They are not wearing it for social purposes. Today, she is the an entrepreneurial billion-dollar valuation entrepreneur and she is only thirty years old. But, as a user in her twenties, she began to say there has to be better way. (Giving the example of Sara Blakely the founder of Spanx)

You take next example, which is in India – I just read it in the paper actually. I think there is somebody who has organized this ‘Ashoka’ – as a company. He was frustrated (with) user complaints – nobody was paying attention to his complaints. What he did was to organize a company to say, “If you have a complaint, come to me. Marketer is not taking you seriously; customer service guys are not responding – I will escalate your complaint, I will champion your complaint.” And apparently, he charges money for that.

When they (customers) are unhappy and don’t get recourse, what they think is a legitimate complaint, and would like to escalate, then it becomes a cause to them. It’s no longer the money aspect. It’s just “this is just not right” kind of a thing. So, here is a nice little business he has created. He has enormous database now, you know, so he can do all the data analytics. I think the companies will actually bless him to say “Our organization is not able to relate to consumer complaints, why don’t you become one of our affiliates who can give us information.” That’s an innovation.

AR: Can corporations continuously innovate inspite of being very large?

Prof. Sheth: Yes, I think we created this unnecessary myth that large companies cannot innovate and a start-up, new entrepreneur(ial) companies can. large companies, actually, set aside a venture capital fund, and motivate their employees to innovate – which CISCO Systems has done.

I think it’s not because they cannot innovate; but what happens is not innovation (because) you have so much of resistance to change installed capital.

So, you know that you should have soda packaged in a can, from bottle. You know that beer needs to be packaged in a can from a bottle. But the amount of capital required to change that equipment and assembly point is massive. You can’t do it overnight. It gets harder to implement the innovation.

Largest inventions are always in corporations. They file more patents than anybody. But from invention to innovation, innovation to something commercially viable, is where lot of internal friction and resistance happens. It’s a funnel that happens. So it can be done. And I can give you examples of large companies. Some of the best innovations have always come consistently over a hundred years from Bell Laboratories in telephone.

Some of the best innovations have come in automotive from General Motors – what’s called the ‘Tech-Center’. Some of the best innovations have always come from Kellogg’s in cereals. From where they began, if you look at the variety they offer, mind-boggling. Same company; their own R&D. Procter & Gamble, starting from this toilet soap to everything else, consistent innovation. And the most innovative company, actually I was thinking about it this morning, is ‘Gillette’.

I can’t believe that they have this huge monopoly after forty-fifty years. And they have consistently improved their product – within the system. So, it can be done.

AR: Is there a structure or an organizational setup enables these companies innovate consistently?

Prof. Sheth: Absolutely. There are three different approaches. If you want to do it within, one of the approaches is called ‘Skunk Works’ – which was a phrase literally created by Lockheed Corporation in the defense area. What they did? They found that you need to set it up as a separate unit isolated from everybody else. So you are in a, like a meditation zone of your own. You are given a budget.

And it has produced dramatic changes. Let’s say, in the aerospace industry – fighter planes. And you have to come out with the next generation of innovation from that viewpoint. So they are not encumbered with the legacy problem.

And the second one is much more intriguing, which Bell Labs did – where I studied when I was an advisor. They say, “Here is a new challenge!” and they create two or three teams and each team independently comes out with a solution – which is either driven by policy makers for a regularized industry or there is something happening in technology they would like to do or a cost reduction. Whatever the reasons are, but they put three teams that challenge each other.

And then, somebody in the laboratories and their manufacturing arm called Western Electric decide which of these three solutions they would commercialize it. Fantastic! And scientists love those challenges. Just like we love challenges in sports, you know. It’s competing for getting new things out. So, I think that’s the second major way of innovating within the company.

Third, became very interesting in the late 80’s roughly, and became a model more and more, where large companies simply said, “We will set aside X amount of money for R&D, new or breakthrough.” And they create a separate venture company of their own. And what they decided was that this venture company, like any venture capital company, would not just invite internal employees, and some of them will actually take a leave of absence to create this innovation, where the companies like Intel, Cisco Systems – everyone of them nowadays. But they open up for anybody. So they create their own venture capital arm, where they pick up innovations coming in.

The latest one now, innovation itself is getting democratized. Today people are doing ‘Crowd-sourcing’ to gather ideas for innovation. I mean, its most exciting, because everybody has ideas, on a given problem. Why not get ten thousand people in forty eight hours give you ideas and solutions. You know, that’s the fourth way that’s organizing, but the first three have been very traditional approaches.

AR: What do you think of Innovation as a separate function within the organization whether through Innovation Councils or Chief Innovation Officers?

Prof. Sheth:  I have been on innovation council for ‘Motorola’. We were all supposedly visionaries thinking about the future, not to be encumbered by the present issues. “Don’t worry about operational aspects, capital, just think what’s possible.” It’s like a space age movie, you know, imagine – fantasize. Something will be there. And when you bring in a cross-functional team of people, you can create that.

We did that at General Motors within the company, the same way, but 11 people, all PhDs from different disciplines, thinking about the next generation of automobiles, which is now becoming a reality, what we call a dual-mode car. Very fascinating.

But back to the point, these councils fizzle out over time. They don’t get institutionalized. The biggest problem we found is that we have one meeting. In and out, brainstorming, but then, we don’t get traction, of the ideas we submitted, into some action in the company.

So that’s clearly an issue. So, my (opinion is) if you have an innovation council, it has to be institutionalized into the corporate culture… the structure, the processes. Then, you can see a steady flow of these ideas becoming inventions becoming innovation becoming products and services. You know, there you are.

The second part – the Chief Innovation Officer. I worked with quite a few in many companies, including General Mills type, Pillsbury, Hi-Tec, what I found is that the only thing that makes a difference is the leadership of the organization. If that person is very holistic, he or she is not just a scientist, but understands the business reality and knows how to manage internal politics of a large organization. Those, and we call them Laboratory Directors, they become very good. But the next laboratory director often is not that good. So just anything else in life, (it) is the leadership issue. So, in my vision, leadership is very important in the innovation – not just technology and science.

AR: Where does India stand on the innovation landscape?

Prof. Sheth: In India, the focus on innovation has not been there as the center of what the industry ought to be doing, or, a company ought to be doing. It is now becoming much more real. So, I would say, it’s happening. I’m more optimistic in India, for two three reasons. First of all, many of our people are very well trained in science and engineering. They just don’t come through commerce route. They come from basic knowledge. So, foundation of the knowledge is there. More important, it is not the expertise but respect for scientists is there, because you are a scientist, you know how difficult it is. So, that’s clearly one part.

We always have learned how to do it in an improvisation way. We can improvise constantly, experiment, etc. Which is allowed, surprisingly, in this system and a third thing is that in India, we think everything has to be done yesterday.We don’t give long cycles to anything. Just get it done. Don’t debate, don’t discuss, no reports, it has its own disadvantages.

AR: How is India different from the western world when it comes to its approach to innovation?

Prof. Sheth: Let me tell you one key aspect about India’s innovation which I think is very unique perspective. We like to improvise, like compare a Christian wedding with an Indian wedding. Christian weddings are all planned out eighteen months (to) two years out. Everybody knows what to do. Every operational detail is laid down.

The priest is always on time, ahead of time, the bridegroom knows what to say, bride knows what to say, everybody has rehearsed and all that stuff. And wedding takes place, no emotions, they are all anxious. Nobody should from the audience say “Anybody objects to the wedding?”,right? And there is a sigh of relief, and then they have lunch or dinner. I have attended many. And I find it fascinating, not being a Christian myself. Then, you go to a typical Hindu wedding, when the wedding begins, who cares? Just enjoy. When does it end? Who cares. Everybody is talking at their own table, nobody is listening to the priest.

You see, it’s chaos, but there is some excitement in that chaos. What does it say? If there is some crisis, who is in-charge? Nobody in-charge but everybody’s in-charge. Right? Everybody jumps in. It’s very fascinating.

What it says is that in those sciences which are trial and errors, discoveries, Indian innovation will always do better. But, sciences which are deductive, mathematics based, like physics and mechanics, where you have to follow a formula, we may not do as well.

We are very good at improvisation. So, to me, Chemistry, and that’s why some of the World’s Chemistry people are of Indian origin. In Chemistry, I’ve never seen anybody coming out first time right. Whether it’s Pharmaceutical Chemistry, Bio Chemistry, Agricultural Chemistry, it’s all trial and error. And I used (say) Chemistry is like a voodoo magic. It happens.

So I think it depends on the culture and then, certain types of innovations can be incubated better in certain cultural settings. I’d say it’s the discovery science (where) we might do quite well.

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