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Inspiring Tomorrow’s Innovations

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The MNC R&D ecosystem in India is in a growth trajectory again after the brief lull in 2009.

The MNC R&D ecosystem in India is in a growth trajectory again after the brief lull in 2009.

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  • 1. Inspiring tomorrow’sinnovations
  • 2. The MNC R&D ecosystem in India is in a growthtrajectory again after the brief lull in 2009 Total Number of MNCswith R&D Center in India There are more than 850 MNC ~850 R&D centers in India Over 100 MNC R&D centers ~500 have been setup in the last 3 years ~100 The number of new setups is again in an upward trendFY 2000 FY 2005 FY 2011 FACEBOOK PANASONIC STEC (SSD Company) LINKEDIN HITACHI 2
  • 3. Geography: Bangalore continues to be the leader butNCR is fast catching up Distribution of R&D Centers across locations Distribution of all R&D Centers by location set up between 2010 -12 Bangalore 40% 29% NCR 16% 24% Others 44% 47% Bulk of the new centers are in the Software and Telecom verticals NCR has excellent fresh talent pool and in-country movement of talent
  • 4. Size: Majority of companies who setup centers in the last 3 years are small companies R&D Companies set up in 2010-12 - 110 < USD 500 Million – 74% 40% Software/Internet 73% North AmericaUSD 500 Million 70% of the leadership wereto 1 Billion - 6% local hires > USD 1 Billion - 20% Competition for Talent in US Ability to ramp up in India
  • 5. Verticals: Growth among large MNCs is expected in core engineering sectors Percentages indicate average R&D HC intensity for top 20 companies in each vertical 28% Growth 24% R&D Intensity Software/Internet 19% Aerospace & Defense Automotive Semiconductor Telecom & Industrial Networking 8% 8% 6% Verticals Software is everywhere Product to Services Product to PlatformNote: Outliers from the mean have been excluded 5
  • 6. Billion dollar start ups are already here 1.2 InMobiMarket Valuation/ MCAP $B Flipkart Info Edge 0.8 Make my trip Just Dial 0.4 One97 Fashion & you Snapdeal 0.0 0 6 12 18 Years Since Inception Indian companies 2nd Most Important Person constitute 20% of in Business Insider’s 2012 Top 10 “The Mobile Power List” Naveen Tewari 2011 Co-Founder & CEO, Inmobi 6
  • 7. Research focus is increasing in universities40 USD 36 mn USD 32 mn30 Bosch Applied USD 24 mn USD 23 mn Materials20 P&G Yahoo ! Oracle Cummins10 GM Analog Devices Mercedes Benz Texas Instruments0 IISc Bangalore IIT Madras IIT Bombay IIT Delhi Total Investments in Universities IIM A – New annual appraisal for IIT Madras - Yahoo! India R&D set faculty to give equal weightage to up Grid Computing Lab research as teaching 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 7
  • 8. 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 Mahindra < INR 5000 smartphone with voice recognition Based on technology developed by Bangalore based startup - Dexetra Micromax
  • 9. 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
  • 10. We continue to debate the rest… Center head role’s – Leaders continue to define their own Localization of organization culture and process - Based on individual leaders than organization Measure for organizational impact - Many theories and few solutions Role in driving global innovation – Success still only in pockets
  • 11. In spite of a mature R&D ecosystem, very few GlobalInnovations have come from India Apple Facebook Android TesLR SpaceX
  • 12. Centers need to solve the current innovation inhibitors Talent disengagement at leadership levels 1 2 India market not yet large enough Competition from other locations 3 4 Steve Jobs effect Talent competition from start ups 5 12
  • 13. There are clear signs of disengagement at leadershiplevels Key drivers for attrition at Leadership Levels Limited growth opportunities 61% Monotony of job/different… 36% Inequality in compensation 33% Work-life imbalances and stress 17% Manager issues 11% Lack of recognition 3% “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”
  • 14. India Market is not yet large compared to China Audi Market No. of cars sold (June, 2012) 4,000 10 X 193,871 Aviation Market Passenger Capacity 51 mn 6X 290 mn Internet penetration 10.2% 4X 38.3% Apple sales < USD 1 bn 20 X USD 20 bn PC Market Shipment ~ 12 mn 6.5 X ~74 mn (2011) Units 14
  • 15. Strong Competition from other locations Talent Pool Growth in Emerging Cities Zone of Fast Emerging Cities 128.00 Zone of Progress Bangalore 9% 6% Taipei 64.00 8% 32.00 Dallas Greater 4% Pune Hyderabad Manila 12% 5% 5% Noida Austin 4% 11% 16.00 Sao Paulo 11% Eden Prairie Selangor 6% Chennai 2% $ Bucharest Dublin Chengd 7% 8%ln Talent Pool Size in 1000’s 8.00 Toronto Cairo Prague Kyiv 8% 12% Oklahom 2% 12% 4% 6% 7% Boulder 3% 5% 7% Dalian 4.00 Buenos Aires Bratisla va Boise 3% 2.00 Zone of Sub Optimality Zone of Progress 1.00 -1% 1% 3% 5% 7% 9% 11% 13% Talent pool C.A.G.R (2005-2011) 15
  • 16. Strong Competition from other locations Talent Pool Growth in Emerging Cities Zone of Fast Emerging Cities 128.00 Zone of Progress Bangalore 9% 6% Taipei 64.00 Beijing Shanghai 7% 8% 9% 32.00 Dallas Greater 4% Moscow Pune Hyderabad Manila Budapest 12% 5% 5% 7% St. Petersburg 10% Noida Austin 4% 9% 11% 16.00 7% Sao Paulo Eden Prairie Selangor 6% Mexico City Xiamen 10% 11% Chennai 2% $ Bucharest Dublin Chengd 7% 8%ln Talent Pool Size in 1000’s 8.00 Toronto Cairo Prague Kyiv 8% 12% Oklahom 2% 12% 4% 6% 7% Boulder 3% 5% 7% Dalian 4.00 Buenos Aires Bratisla va Boise 3% 2.00 Zone of Sub Optimality Zone of Progress 1.00 -1% 1% 3% 5% 7% 9% 11% 13% Talent pool C.A.G.R (2005-2011) 16
  • 17. Companies have adopted top-down innovation model Shut down over 25 projects and have refocused Google most of their resources on few product categories Focused approach towards its products and Apple makes 90% of its revenue from 4 product lines Discontinued CE devices to focus on core CISCO business
  • 18. Start Ups in India have started to compete with LargeMNC in attracting senior talent McAfee VaultizeAnand A. Kekre CA Technology Make my trip Sanket Atal Yahoo ! FlipkartAparna Ballakur Citrix InMobiRatnesh Sharma
  • 19. Incremental interventions or point solutions has notreally helped companies address the challenges Hiring without Charter Unstructured capability improvement initiatives Random initiatives with no alignment to organization priorities Arbitrary Innovation Programs 19
  • 20. What can companies do to transform themselves Inspirational Leadership Well defined Charter Organizational Momentum Accelerated change process
  • 21. Inspirational Leadership - Key to any bold transformation Passion Aspiration Discipline Inspirational leadership Vision Patience Courage 21
  • 22. 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”
  • 23. Gaining Organizational Momentum is possible throughhaving the right charter… Topline Incubate adjacent/ orthogonal globalBuild solution through cross BU leverage Business Units Build common technology platform Building products for growth Markets Contribute to N+2 product roadmap Influence revenue in specific regions through core research Technology Charter Business COE for testing to service multiple Extend the life of sunset products product lines Transition sustenance ownership Strategic outsourcing to 3rd partyBuild Flex team to enhance bandwidth Reduce engineering cost Bottom-line
  • 24. …and getting a buy in from the primary stakeholders Topline CTO CEO Business unit leadership Chief Strategy Officer Engineering leadership Business unit leadership Technology Charter Business CFO CFO COO Business unit leadership Engineering leadership Engineering leadership Bottom-line
  • 25. Different levels of maturity is required for various charters Product Team Maturity Engineering Support Module leadership Engineering Leadership Product leadership Strategic outsourcing to 3rd Build solution through cross BU leverage party Building common technology platform Incubate adjacent/ Build Flex team to orthogonal global enhance bandwidth Extend the life of sunset Business Units products Contribute to N+2 Influence revenue in Reduce engineering cost product roadmap specific regions through core research Building products for growth Markets COE for testing to service Transition sustenance multiple product lines ownershipOperational Support Operations Strategic Global Strategic Independence Independence Partnerships Center Level Maturity 25
  • 26. Transformation is not easy and would require deepcommitment Portfolio Realignment Innovation Culture Key Enablers Capability Key Hires – Development Expats/Locals Ecosystem Connect
  • 27. Success Stories Nearly 1/3rd of the 2010 revenue came from products developed by India R&D 3M center over the last 5 years BMC Software New business unit (Cloud Solution), bringing in 10% of divisions revenues Fasal helped farmers increase income by 15 to 20%. Close to 1 mn Intuit farmers benefiting from it in AP, Gujarat and Karnataka EMC Won 2 out of top 3 spots in EMC’s annual Innovation podium in H2 2011 Sold 25,000 tractors in 2011 & exported around 13,000 units to ~68 John Deere countries including the US and South America Manhattan Delivered industry’s first and only Supply Chain Process Platform for Associates cross-application optimization and integration
  • 28. Thank you info@zinnov.com www.zinnov.com69 "Prathiba Complex", 4th A Vatika Business Centre, 3701 Patrick Henry Dr., 21, Waterway Ave,Cross, Koramangala Ind. Layout, 2nd Floor, Block B, Building 7 Suite 3005th Block, Koramangala 1st India Place, M.G Road, Santa Clara The WoodlandsBangalore – 560095 Gurgaon-122002. CA – 95054 TX – 77380Phone: +91-80-41127925/6 Phone: +91-124- 4028888 Phone: +1-408-716-8432 Phone: +1-281-362-2773 28
  • 29. Inspirational Leadership - Key to any bold transformation Aspirational Visionary Motivational Passionate
  • 30. Social innovation is on the rise Impacted over 7000 lives through: • Over 2,000 lendersConnecting the 2 Indias through a • Over $250,000 loanscommon platform MILAAP • 100 artisans set up/expanded SMB • 200 Youth placed • Solar lighting to 100 families • 500 water connections & toiletsMedicine solves only a part of the 29000 villages covered with 42problem … AROGYA million peopleNeed: An end to end holistic Also, 10% of Novartis Indiasolution for the not so privileged PARIVAR Revenue comes through thisIndia programIn India, employment is not achallenge, continuous Reduced cost of training from INRemployment is – requires identity, LABORNET 50,000 to INR 2500skills and certification 30

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