Innovation: the new business mantra

Harvard Business Review's June edition carries a long interview with Jeffrey Immelt, CEO of General Electric since 2001, about the importance of innovation-driven growth.

I enjoyed reading it as a welcome relief from the productivity mantra uttered by so many captains of industry. Immelt believes that growth and future contributions to shareholder value will be achieved by "innovation", or research as it used to be known, rather than by increased productivity alone.

But what interests me most is Immelt's comments on where this innovation will come from: India and China. With developed nations growing only very slowly, Immelt is talking about developing technologies "in China, for the Chinese market".

John Thackara's December 2005 blog (www.doorsofperception.com) has a lot to say about the movement of innovation to developing nations. He cites a UK trade and industry report (the Cox Review of Creativity in Business) that heralds this process as all but complete.

Thackara describes a benchmarking exercise revealing that "innovation processes taking 24 steps in the US took seven steps in Bangalore", and concludes, "They are cheaper, and better".

In this regard, I read with interest a recent article in Nature's business section (K. S. Jayaraman, Nature, July 6th 2006, pp 17) about IBM's activities in India. According to the article, Cold War-time India saw IBM leave the country completely in 1978 and operate little more than a skeleton crew during the 1990's.

It is only since 2003 that IBM has had a serious Indian presence, totaling 43 000 employees at the last head count - its largest outside the US. Compare this to the 2200 scientists and engineers at GE's John F. Welch Technology Centre in Bangalore.

But according to Jayaraman, research and major product development in India is "modest". Consider the facts: a mere 110 IBM employees in India are involved in basic research - 3% of IBM's research staff. The remainder work in Zurich, Switzerland, Yorktown, NY and Almaden, CA.

So. Does Big Business have a new answer to servicing the globe's need for research and innovation? Let's wait and see.