The answer to constant innovation is entrepreneurship: Ajai Chowdhry

In his fourth article on entrepreueship, Ajai Chowdhry, Founder, HCL says that to stay ahead of the curve, organizations must seek new pathways that will fuel growth and take on competition

By Ajai Chowdhry

Peter Drucker states, “Innovation is the specific function of entrepreneurship. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.” This brings us rightly to the core of this topic—that innovation is crucial for a successful entrepreneurial venture.

Idea is the key

A successful business starts with an idea. At the heart of all successful ventures and entrepreneurship is an idea that caters to the needs of the people by identifying the right customer at the right time, filling the void that exists in the market for a product or service.

The creation of an entrepreneurial idea is a tricky business. It requires a robust ecosystem, complete with mentors and investors who can guide and inspire bright minds to their best. Often, high potential ideas need the critical support required to develop and refine ideas and grow into an innovative business model.

Entrepreneurship in India is at a nascent stage and can be developed fully with the right ecosystem.

I can share a personal example to state the dilemma that exists in the minds of young people.

I recently met a smart kid who was attending my presentation on how we created HCL and our journey. A few days later he met me saying he wants to start a business and was very enthused by our story. On further discussion, I only heard a couple of vague points and ideas that inspired him but no concrete idea or proposal. This makes it clear that a lot of youngsters do not know where to start.

In electrical engineering they say ‘a noise converts to a signal’; so it all starts with a noise. Many small ideas are brainstormed until one hits upon ‘THE idea’ that is bet upon.

Identifying a void

This journey is a long road that primarily starts with identifying a gap in the market or needs of consumers. Today, many successful ideas like JustDial, Flipkart, etc. have established themselves because a void was identified in the market and duly catered to. Both the approaches vary in terms of execution as one is a mass market service and the other, a niche service for the urban market.

It should be noted that the idea must be scalable to meet the growing demands of the audience and not reach a dead end. Novelty is most essential to grab the attention of the audience. It is also important for the idea to cater to a big enough target market to attract suitable investors for the venture too.

In the Indian context, it is interesting to see how the market and the needs of the consumers are constantly maturing.

New needs

The foremost transformation that has been witnessed is the change in demographics. India is a young country. By 2020, India is set to become the world’s youngest country with 64 percent of its population in the working age group.

With the West, Japan and even China aging, this demographic potential will offer India and its growing economy an unprecedented edge that economists believe could add a significant two percent to the GDP growth rate (according to a recent report published by IRIS Knowledge Foundation in collaboration with UN-HABITAT).

This demographic change has also been witnessed by dual wage earners, nuclear families and rise in spending. Keeping this change in mind, there are newer needs that are emerging which need to be addressed while entrepreneurs think of an idea. Youth isn’t the only audience that is fast emerging. The underserved markets, tier II and III towns are fast growing and adopting not just newer technologies but also experimenting with products, services, restaurants and even music. It is essential to understand what products and services would appeal to them and cater to those requirements.

Another opportunity is the NRI segment. NRIs need services and support for their parents/families in India, medical help and security being the most important.

Getting tech-savvy

Besides these demographic changes, the rapid innovation and penetration of technology is also affecting the demands in the Indian market.

Broadband penetration in India is expected to reach 600 million from the present 20 million by 2020, so as to cover the entire circumference of the country, according to Confederation of Indian Industry (CII) data.

Videos, apps, games and social networking have led to a boom in not just internet penetration but also the rise of handheld devices—tablets, laptops, netbooks, etc. 

Entrepreneurs now need to think of new and innovative e-commerce ideas, applications etc. E-learning is another service which has been fast growing and has revolutionized the educational system. Several companies are involved today in this sphere and virtual learning solves a great problem of shortage of good quality teachers and the problem of catering to a large audience.

If we look at the changes that are taking place in the world around, we will notice a host of services/products that still need to be developed. 

McDonald’s, Facebook and the Apple iPod are benchmarks today in innovation in creating a ‘new’ product/service from an existing one by identifying the gaps and addressing and adapting them persistently

Let us take for example the government projects. There are several programmes of the government which will generate new needs and demand for innovation like Unique Identification Authority of India (UIDAI), digitalization, smart grids and other projects in the areas of science, transport, defence, etc.

Innovate, value-add

Entrepreneurship seems an attractive option nowadays when people see several successful examples; however, the success ratio cannot be ignored. There are several business plans/ventures that fade out at the development stage due to lack of clarity or a clear strategy for execution.

While new trends are being explored and niche categories of services/products are demanding attention, what cannot be ignored is the constant innovation and value addition for existing products and services.

It is essential that entrepreneurs research on existing market trends, create focus groups and develop a strategy on how to crack the market. This can be done with new technologies, lower cost components and making something innovative out of an existing product or service.

To give an example of breakthrough, let’s look at Pranav Mistry and his concept of SixthSense. He created the concept of gestures and how our daily life can be integrated with the digital world by asking, ‘How can we leverage our knowledge about everyday objects and how  can we use them to our interaction with the digital world?’ His inventions, Mouseless–an invisible computer mouse; Sparsh–a novel way to copy-paste data between digital devices; Quickies–intelligent sticky notes that can be searched, located and can send reminders and messages, etc. are all innovations that truly foresee the future and the demands of a fast-paced life.

Innovation in itself does not imply the creation of something new or for the first time in the world. Innovation is also about constant development, adapting best practices and tailoring them to the local needs, creating multiple formats of an existing product or service and exploring a need at an extremely nascent stage

Constant development

The world saw innovation with the creation of completely new products, i.e. the airplane by the Wright Brothers, the light bulb by Thomas Edison, etc. but some great entrepreneurs took an existing product or process/service and after multiple iterations brought more value to the existing one.

McDonald’s, Facebook and the Apple iPod are benchmarks today in innovation in creating a ‘new’ product/service from an existing one by identifying the gaps and addressing and adapting them persistently.

Innovation in itself does not imply the creation of something new or for the first time in the world. Innovation is also about constant development, adapting best practices and tailoring them to the local needs, creating multiple formats of an existing product or service and exploring a need at an extremely nascent stage.

In the context of the Indian market, entrepreneurship-led economic growth is more inclusive and will act as a crucial catalyst to create employment.

The entrepreneurial spirit of India’s youth needs to be supported with the right ecosystem as the last two decades are benchmarks of economic growth due to the rise in entrepreneurial startups.

Entrepreneurs act as catalytic agents for change which results in a chain reaction of development. Hence, it can be safely concluded that the answer to constant innovation is entrepreneurship.

Ajai Chowdhry, is Founder of the $6 Billion IT conglomerate HCL. As founder of one of India’s first true-blue start-ups, he has written the book on entrepreneurship in India. Ajai is Chairman of the Board of Governors at Indian Institute of Technology (IIT) Patna & Chairman of Confederation of Indian Industries’ (CII) National Committee on Technology. In 2011, the Government of India awarded Ajai Chowdhry with the Padma Bhushan, the third-highest civilian award, recognizing his consistent contribution to the Indian IT industry.

The article first appeared in Entrepreneur magazine and has been republished with the consent of Mr. Ajai Chowdhry