inspiring tomorrow’s innovations
DESCRIPTION
The MNC R&D ecosystem in India is in a growth trajectory again after the brief lull in 2009.TRANSCRIPT
Inspiring tomorrow’s innovations
The MNC R&D ecosystem in India is in a growth trajectory again after the brief lull in 2009
2
~100
~500
~850
FY 2000 FY 2005 FY 2011
Total Number of MNCs with R&D Center in India There are more than 850 MNC
R&D centers in India
Over 100 MNC R&D centers
have been setup in the last 3 years
The number of new setups is
again in an upward trend
PANASONIC
HITACHI
STEC (SSD Company)
Geography: Bangalore continues to be the leader but NCR is fast catching up
47%
24%
29% 40%
Bangalore
NCR
Others
Bulk of the new centers are in the Software and Telecom verticals NCR has excellent
fresh talent pool and in-country movement of talent
Distribution of all R&D Centers by location Distribution of R&D Centers across locations
set up between 2010 -12
16%
44%
Size: Majority of companies who setup centers in the last 3 years are small companies R&D Companies set up in 2010-12 - 110
40% Software/Internet
73% North America
USD 500 Million to 1 Billion - 6%
> USD 1 Billion - 20%
< USD 500 Million – 74%
Competition for Talent in US Ability to ramp up in India
70% of the leadership were local hires
Verticals: Growth among large MNCs is expected in core engineering sectors
28%
24%
19%
8% 8% 6%
Software/Internet
Semiconductor Telecom & Networking
Aerospace & Defense Automotive
Industrial
Growth
Software is everywhere Product to Services Product to Platform
Verticals
R&
D In
ten
sity
Percentages indicate average R&D HC intensity for top 20 companies in each vertical
Note: Outliers from the mean have been excluded
5
0.0
0.4
0.8
1.2
0 6 12 18
Billion dollar start ups are already here
Years Since Inception
Mar
ket
Val
uat
ion
/ M
CA
P $
B
Naveen Tewari Co-Founder & CEO, Inmobi
2nd Most Important Person in Business Insider’s 2012 “The Mobile Power List”
2011
Indian companies constitute 20% of Top 10
6
InMobi
Flipkart
Fashion & you
Snapdeal
One97
Make my trip Just Dial
Info Edge
Research focus is increasing in universities USD 36 mn
USD 23 mn
USD 32 mn
USD 24 mn
0
10
20
30
40
IISc Bangalore IIT Madras IIT Bombay IIT Delhi
Bosch
P&G
GM
Yahoo !
Analog Devices
Applied Materials
Cummins
Texas
Instruments
Oracle
Mercedes Benz
Total Investments in Universities
IIT Madras - Yahoo! India R&D set up Grid Computing Lab
IIT Kharagpur – Aims at a 2:3 intake ratio at UG to PG (& PhD) level to improve annual sponsored research
output to USD 100 mn
IIM A – New annual appraisal for faculty to give equal weightage to
research as teaching
7
Indian companies have increased their R&D investments
XUV 500 Sold more than all other D-segment cars*
USD 120 million in 2-wheeler investment
< INR 5000 smartphone with voice recognition
Based on technology developed by Bangalore based startup - Dexetra
Mahindra
Micromax
Some battles were won and some lost..
Solid line reporting to center head is thing of the past – Matrix is the present and future
No reliable measures for productivity – Teams agree to disagree
Glass ceiling finally broken - Global roles based on one’s Aspiration and capability
Pyramids are long gone - Talent structure in all kinds of shapes
We continue to debate the rest…
Center head role’s – Leaders continue to define their own
Role in driving global innovation – Success still only in pockets
Measure for organizational impact - Many theories and few solutions
Localization of organization culture and process - Based on individual leaders than organization
In spite of a mature R&D ecosystem, very few Global Innovations have come from India
Apple
Android
SpaceX TesLR
Centers need to solve the current innovation inhibitors
12
India market not yet large enough
Competition from other locations
Steve Jobs effect
Talent competition from start ups
Talent disengagement at leadership levels 1
2
3
4
5
There are clear signs of disengagement at leadership levels
Lack of recognition
Manager issues
Work-life imbalances and stress
Inequality in compensation
Monotony of job/different…
Limited growth opportunities
3%
11%
17%
33%
36%
61%
Key drivers for attrition at Leadership Levels
“India center is in auto pilot”
“Next 2 yrs. priority on kids high school education”
“Our head quarters is very happy with what we deliver”
India Market is not yet large compared to China
Audi Market No. of cars sold (June, 2012)
Aviation Market Passenger Capacity
Internet penetration
Apple sales
PC Market Shipment (2011) Units
4,000 193,871
10.2% 38.3%
~ 12 mn ~74 mn
< USD 1 bn USD 20 bn
10 X
4 X
20 X
6.5 X
51 mn 290 mn 6 X
14
Zone of Progress Zone of Sub Optimality
7%
8%
7%
8%
9%
12%
11%
6%
5%
6%
3% 5% 6%
4%
3%
2%
2%
4%
8%
5%
11%
4%
7%
12% 12%
1.00
2.00
4.00
8.00
16.00
32.00
64.00
128.00
-1% 1% 3% 5% 7% 9% 11% 13%
Bangalore
Austin
Taipei
Toronto
Greater Manila
Pune Hyderabad
Noida
Kyiv
Selangor
Buenos Aires
Boise
Boulder
Eden Prairie
OklahomCairo
Bucharest
Prague
ChengdDublin
Dalian Bratislava
Dallas
Chennai
Strong Competition from other locations Talent Pool Growth in Emerging Cities
ln
Tal
ent
Po
ol S
ize
in 1
00
0’s
Talent pool C.A.G.R (2005-2011)
Zone of Fast Emerging Cities
Zone of Progress
Sao Paulo
$
15
Zone of Progress Zone of Sub Optimality
7%
8%
7%
10% 9%
8%
9%
12%
11%
6%
5%
6%
7% 9%
10%
3%
7%
5% 6%
4%
3%
2%
2%
4%
8%
5%
7% 11%
4%
7%
12% 12%
1.00
2.00
4.00
8.00
16.00
32.00
64.00
128.00
-1% 1% 3% 5% 7% 9% 11% 13%
Bangalore
Austin
Taipei
Moscow
Toronto
Greater Manila
Beijing
Pune
Shanghai
St. Petersburg Budapest
Hyderabad
Noida
Xiamen
Kyiv
Mexico City Selangor
Buenos Aires
Boise
Boulder
Eden Prairie
OklahomCairo
Bucharest
Prague
ChengdDublin
Dalian Bratislava
Dallas
Chennai
Strong Competition from other locations Talent Pool Growth in Emerging Cities
ln
Tal
ent
Po
ol S
ize
in 1
00
0’s
Talent pool C.A.G.R (2005-2011)
Zone of Fast Emerging Cities
Zone of Progress
Sao Paulo
$
16
CISCO
Companies have adopted top-down innovation model
Focused approach towards its products and makes 90% of its revenue from 4 product lines
Shut down over 25 projects and have refocused most of their resources on few product categories
Discontinued CE devices to focus on core business
Apple
Start Ups in India have started to compete with Large MNC in attracting senior talent
Aparna Ballakur
Ratnesh Sharma
Sanket Atal
Anand A. Kekre
McAfee
CA Technology
Yahoo !
Citrix
Vaultize
Make my trip
Flipkart
InMobi
Incremental interventions or point solutions has not really helped companies address the challenges
19
Hiring without Charter
Unstructured capability improvement initiatives
Random initiatives with no alignment to organization priorities
Arbitrary Innovation Programs
What can companies do to transform themselves
Well defined Charter
Organizational Momentum
Accelerated change process
Inspirational Leadership
Inspirational Leadership - Key to any bold transformation
Inspirational leadership
21
Aspiration
Passion
Patience
Courage
Discipline
Vision
Well defined Charter: Some examples
“Bring the next billion on to internet”
“Influence billion dollars in revenue”
“Increase revenue contribution from emerging markets to 25%”
“Build new business in an area not related to current focus areas”
Gaining Organizational Momentum is possible through having the right charter…
Charter
Topline
Bottom-line
Technology Business
COE for testing to service multiple product lines
Transition sustenance ownership
Build Flex team to enhance bandwidth
Extend the life of sunset products
Strategic outsourcing to 3rd party
Reduce engineering cost
Incubate adjacent/ orthogonal global Business Units
Building products for growth Markets
Influence revenue in specific regions
Build solution through cross BU leverage
Build common technology platform
Contribute to N+2 product roadmap through core research
…and getting a buy in from the primary stakeholders
Charter
Topline
Bottom-line
Technology Business
CFO
COO
Engineering leadership
CFO
Business unit leadership
Engineering leadership
CEO
Chief Strategy Officer
Business unit leadership
CTO
Business unit leadership
Engineering leadership
Different levels of maturity is required for various charters
Product leadership Engineering Leadership Module leadership Engineering Support
Operational Support Operations Independence
Strategic Independence
Global Strategic Partnerships
Center Level Maturity
Product Team Maturity
Build solution through cross BU leverage
Building common technology platform
Contribute to N+2 product roadmap
through core research
Incubate adjacent/ orthogonal global
Business Units
Building products for growth Markets
Influence revenue in specific regions
Extend the life of sunset products
Reduce engineering cost
Strategic outsourcing to 3rd party
COE for testing to service multiple product lines
Transition sustenance ownership
Build Flex team to enhance bandwidth
25
Transformation is not easy and would require deep commitment
Portfolio Realignment
Capability Development
Key Hires – Expats/Locals
Innovation Culture
Ecosystem Connect
Key Enablers
3M
Success Stories
BMC Software New business unit (Cloud Solution), bringing in 10% of divisions revenues
Nearly 1/3rd of the 2010 revenue came from products developed by India R&D center over the last 5 years
Fasal helped farmers increase income by 15 to 20%. Close to 1 mn farmers benefiting from it in AP, Gujarat and Karnataka
Intuit
Won 2 out of top 3 spots in EMC’s annual Innovation podium in H2 2011 EMC
Sold 25,000 tractors in 2011 & exported around 13,000 units to ~68 countries including the US and South America
John Deere
Delivered industry’s first and only Supply Chain Process Platform for cross-application optimization and integration
Manhattan Associates
28
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Aspirational
Visionary
Passionate
Motivational
Social innovation is on the rise
30
Connecting the 2 India's through a common platform
Impacted over 7000 lives through: • Over 2,000 lenders • Over $250,000 loans • 100 artisans set up/expanded SMB • 200 Youth placed • Solar lighting to 100 families • 500 water connections & toilets
Medicine solves only a part of the problem … Need: An end to end holistic solution for the not so privileged India
29000 villages covered with 42 million people Also, 10% of Novartis India Revenue comes through this program
In India, employment is not a challenge, continuous employment is – requires identity, skills and certification
Reduced cost of training from INR 50,000 to INR 2500
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