‘Innovation doesn’t slump’

In a challenging business environment that we find ourselves today, innovation has become the major differentiator in the marketplace. DNA got together seven prominent industry players cutting across the semiconductor ecosystem to see what sets apart the successful innovators from the also-ran. Not surprisingly, the consensus was on customer-led innovation. Excerpts:

Can you give us an overview as to how companies are integrated into the semiconductor value chain.
Poornima Shenoy: Semiconductors are two stages removed from the customers. But if you look at it, the bulk of customers are the systems companies, some of whom are represented here. The role of systems companies in the semiconductor space is important because if change has to happen, it has to be driven by them.

Bobby Mitra: As Poornima rightly said, the semiconductor industry in India has been looking at innovation as an important agenda. There is no other way for the semiconductor companies to be successful other than anchoring innovation on the customer. Look at any segment that comprises the semiconductor ecosystem — mobile handsets, telecom infrastructure, the energy sector, or software companies involved in writing code for semiconductors — the bottom line is that the system level innovation is tied to customers.

Talking of system level innovation, how do ideas get translated into products?
S Janakiraman: I look at it more like the Mindtree organisation. Ten years ago, it was very different when the West was looking at India. The drivers at that point were whether I can get a cost arbitrage or a talent advantage. But in the last ten years, the industry has matured to a level where it is delivering a notch above customers’ expectations.

The second thing is that customers in the semiconductor industry want us not just to design the integrated circuit, but also to help them take it to the market. Similarly, system companies are asking us if we can take them to the service providers and system integrators.

Companies are making products and services for a market larger than their own backyard. How do they arrive at this matrix?
Ajay Vasudeva: Nokia’s philosophy is to inspire innovation. Organisations need to spend time, money and resources on creating a culture of innovation. So we want to know what’s on our customers’ minds and mine data accordingly. We have a huge role to play in rural mobility. For instance, Nokia Life Tools Agriculture services aim to plug the information gaps and needs of the farmers by providing information on seeds, fertilizers, market prices, and weather via mobile phones.

How important is innovation during the downturn?
Arindam Sen: Innovation doesn’t take a vacation in a downturn. Companies often miss the clinical need in the healthcare space. There is a skewed ratio when it comes to healthcare spends. Only 10% of the population gets 80% of the healthcare benefits. In India, over 700 million don’t have access to healthcare. GE’s priority is to drive access and reduce costs. We are putting aside a $5 billion global fund to drive healthcare innovation.

We have two different approaches at play here. Conzerv is delivering niche technology globally and Texas Instruments is offering solutions to cater to the local market. How is innovation fuelling this drive?
Vijayaraghava Chitti: Conzerv realised the  need for a better consumer connect. After conducting internal studies, we found that there might be a pattern and timing to the economy, and we could align some of our initiatives in this direction. As part of online monitoring systems, we came up with the dashboard, which gave us an accurate capture of customers’ perception on what we were delivering vis-à-vis what they required.

Mitra: Over 1. 6 billion people in the world lack access to electricity and 25% of them live in India. To narrow the gap, we have developed a solution based on the LED (light-emitted diode). There is economics behind it.

What is the engagement model between the systems companies and the semiconductor firms?
Sanjay Nayak: The good news is that the ecosystem in India has evolved as co-creators of innovation. It all started with the services companies building a huge base of talent. Then MNCs like TI and Synopsys brought technology to India and systems players put it all together. India has emerged as a strong market for consumer technologies in the last 5 years.

The cost arbitrage is important for India. But there is a dilemma when it comes to volume versus price. How do you tackle this?
Nayak: Let me give you an example. India adds 11 million subscribers every month whereas the population of Israel is 7.5 million.  We add an Israel every month. Does that count? Not much. The momentum is coming from the emerging markets. Look at what Nano has done to world. It’s about creating a disruptive affordability benchmark.

Janakiraman: Previously, to sell some product in the third world market, companies would downsize the product and remove some of its features. But today, that’s not the case. The demands of the customer is on par with the rest of the world. Innovation starts with how you can amortise costs over volumes rather than addressing a few niche customers.

Mitra: I will give you an interesting example. Tampering meters is rampant in India. We have come up with electronic meters which are tamper-proof with advanced features like the remote meter reading. From a semiconductor point of view, it is important to know whether the chip has right interfaces required by customers.

How do you institutionalise innovation?
Janakiraman: We have a system called the neuron where ideas get captured. Ideas can come from anyone in the organisation. And then, it goes through the technology council, which evaluates them and identifies the likely partners.

Nayak: As a pure-play company, we live and die by what we think is the right product to build. The context is the most crucial thing. You are tuned to the changing trends in technology to address customers’ pain points. I think you have to be global in outlook. India has the ability to do a lot more for less in terms of innovation.

What is Nokia’s stand?
 Vasudeva: I think we are driven by consumer insights.Then we start working with our partners within the ecosystem to come up with a unique handset. On the software side, how we drive our people to think differently starts from the non-hierarchical structure. We encourage risk-taking. We believe in fail fast and scale fast philosophy.

Mitra: We have identified India as a very important growth market. We may have the best chips, but how to use them in the systems context is a big part of innovation. That’s where the role of applications engineer comes in. In TI, we have created a footprint of 14 offices in India that are close to the customers with the intent of supporting sales and application.

Chitti: At Conzerv, we have set up the iLabs for pursuing R&D. iLabs has benchmarked the future of energy management through standards defining research and evolving technologies to develop products that are characterised by accuracy and reliability.

How do you prepare for derisking innovation?
Janakiraman: The problem with Indians is that we get emotionally attached to something we do. We will keep the antiques rather than throw it away. We need to change our mindset and take risks.

How are you coping up with the slowdown?
Janakiraman: IT investments made earlier have been our saviour. Slowdown has helped us in value creation and deriving value from our investments in good times.

Nayak: We started the company in 2003. So we are seeing a second slowdown. Slowdown has given us the time to build on our capabilities when everybody else was frozen. Even if we took sometime to build our capabilities, it didn’t really matter as customers weren’t buying.

Mitra: From TI’s point of view, we plan to increase investments in key growth areas. One of them is energy harvesting wherein energy derived from external sources is captured and stored. Some time back, we did a demo to show how it works. We got 1.8 volts from 2 apples!