Innovation leading to success seems to consistently hit the bull’s eye with precision. And Silicon Valley in the United States is undoubtedly the hotbed of ideas and innovation! A remarkable eco-system boasting of the largest concentration of private equity investors and venture capitalists and a great educational institution like Stanford University, act like a magnet, attracting the world’s best talent to the valley. It has bred some of the greatest success stories with companies such as Facebook, Google, Netflix and several other acclaimed names reaching astronomical valuations. Innovation is a common and constant theme across these companies and a major contributor in keeping their trajectory climbing upwards.
The latest entrant to this club is Snowflake, a data warehousing start-up that was founded eight years ago with 1,500 employees. Its IPO listing opened with a share price valuation upward of USD 70bn; comparable to Goldman Sachs, one of the leading investment banks from Wall Street, founded more than 150 years ago. While the roll call of investors in Snowflake include names such as Warren Buffet and Mark Zuckerberg (among others); what is astounding is the assembly-line culture that the Valley has, of churning out one winner after another. News has it that several companies have lined up their listing ambitions for the first week of November, just before the US Presidential elections, as a safeguard against any post-election disruption. They are hoping to replicate the success of companies such as Snowflake.
From companies to countries... all have embraced innovation. In the past three to four decades, innovation has been the lodestar charting an ascendant course that brought great affluence to nations like Japan, South Korea, Taiwan and Israel, among the leading ones. Japan and South Korea in the 90s pioneered the revolution in electronics that transformed customer experience forever.
On this side of the world; China’s accomplishments are keeping pace with the West. China capitalised its manufacturing base, a forced technology transfer practice (in which the government forces foreign companies to share their technology in exchange for market access). Most importantly, the true entrepreneurship of Chinese has been to channelise great innovations emerging out of the country. The recent shares listing of ANT financial, a Fintech company founded by Jack Ma, the legendary founder of Alibaba, is valued at USD 150bn. Certainly, an Initial Public Offering (IPO) is an important channel for wealth creation and seems unstoppable even by the world’s current enemy #1 : the invisible coronavirus.
Another example is Israel; The Security Services Law mandates compulsory military service for all Israelis, on turning 18. They are required to serve between 24 to 36 months in the military. An interesting upshot of this condition is that the alumni from the military have spearheaded one of the best innovations in defence equipment.
In the current COVID-19 era, as the world races towards digitisation, the role of innovation and intellectual property rights has gained both urgency and prominence as companies race to develop vaccines, medical equipment and cloud-based solutions to create extraordinary wealth in a short period of time.
In this frenzy; India seems to not have grasped the opportunity yet, despite having a large population of English-speaking IT professionals, and arguably, some of the best minds in the world. Despite great efforts by the government to encourage the start-up culture, India ranks a distant 48th in the Global Innovation Index 2020, according to a just-released report by the World Intellectual Property Organisation (‘WIPO’).
So where are we falling short? The reasons are many, but top of the list is, imbibing innovation as a mindset to create value and incubate a thriving eco-system that breeds entrepreneurs and allows them to stay rooted in India and realise their dreams. We have long celebrated large services companies that are totally lacking in innovation and are leveraged on cost arbitrage to attain success. However, it is still an opportune time for Indians to demonstrate great enterprise and use intellect to innovate and grab a pie of the digital sweepstakes. We must remind ourselves that two of the largest companies by value i.e. Microsoft and Alphabet (Google) are led by Indians of Indian origin.