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BOOK REVIEW
Nirmalaya Kumar and Phanish Puranam (2012). India Inside: The Emerging Innovation
Challenge to the West (Boston: Harvard Business Review Press).
INTRODUCTION
The title of this book is modeled on the idea of 'Intel Inside' – a phrase that Intel used
tellingly as a part of its brand building strategy to increase the awareness of its
customers to the ubiquitous presence of microprocessors in computers. Not only did
this phrase increase the curiosity of customers, but also served as a guarantee of
quality.
I had a student at IIT Delhi who argued that while some technical features of AMD
processors were inherently superior (especially in terms of clock-speed), Intel
became better known because of its brand-building strategies. Here the phrase 'India
Inside' is used in the sense that we must differentiate between products 'Made in
India' and those which are made here but not not widely known to be made here.
The authors hope to throw light on the process of innovation in the hope that 'India
Inside' will soon become 'synonymous' with innovation as is the phrase 'Made in
India.' The authors of this book are of Indian origin and based at the London
Business School.
They therefore have a fairly good idea of the differences between the conditions in
which both innovators work and the conditions in which business academics

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formalize these differences both in Indian and Western business schools. The range
of technical areas that are covered here include marketing, strategy, and
entrepreneurship albeit in the context of innovation.
Nirmalaya Kumar and Phanish Purnam are influenced by the work of significant
predecessors like C. K. Prahalad at the University of Michigan and Vijay
Govindrajan of the Tuck School of Business at Dartmouth College.
These theorists of innovation initially spelt out the basic forms of innovation that
could be observed in India and also explained why understanding these
achievements should matter to the Western academy.
VISIBLE & INVISIBLE RESEARCH
The main burden of argument in this book is that much of this emerging innovation
in India remains 'invisible' for a complex set of reasons and must be made 'visible' in
the course of their research.
They also explore the reasons that a number of Indian firms have agreed to do
research in a 'captive' form in India without insisting that their brands must be
invoked openly in selling these products in the global markets. This includes well-
known firms like Wipro that have high brand recognition in this and other parts of
the world.

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If and when these innovators are also able to subsequently build a brand for their
products, only then it will become - as the subtitle of this book points out - 'the
emerging innovation challenge to the West.'
Hence it is important to understand the strategic intent and motivational structure of
these captive R&D units in order to explain how these innovative challenges might
play out in the years to come both in India and in the global markets.
QUESTIONS COVERED HERE
There are eight chapters in this book. The range of topics covered here comprise a
number of important concerns including the following:
Why are so many firms content to work at the level of services? Why do they hesitate
to make a transition to value-added products? What are the main challenges in
outsourcing or offshoring innovation from Western countries to India? How should
we differentiate between process-based and management-based forms of innovation
(including business model innovation)?
What is the role of 'frugal engineering' in making innovation possible in this part of
the world? How do we differentiate, for instance, between the 'visible and invisible'
forms of innovation? How will India overcome the constraints that have made it
difficult to make the transition - as Rishikesha T. Krishnan of IIM Bangalore/Indore
is fond of pointing out - from 'jugaad' to systematic innovation?
Rishikesha T. Krishnan
And, what finally, is going to be the future of such innovations to India's economy?

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How furthermore will that process of innovation be understood and emulated
abroad through mechanisms like 'reverse innovation' that have ben popularized by
Vijay Govindrajan?
While these are some of the important questions in contention, the book is also
littered with interesting insights on a range of issues like talent management, - (as
opposed to under-employment) as a source of innovation, the managerial abilities
needed to function within constraints in an emerging economy, and so on.
INNOVATION IN PRODUCTS & SERVICES
Nirmalaya Kumar
It should therefore be of relevance to anybody interested in general management in
addition to the areas mentioned above. The book also emphasises on the need for
Indian companies to be innovative at the level of developing both new products and
services, and in terms of emphasizing 'business model innovation' such as the
development of the 'global delivery model' by the IT sector.
The main argument here is that innovation does not have to happen all at once or
even in the same place. In fact, the norm nowadays is to have 'globally segmented
innovation,' which means that global R&D projects can work at both the 'vertical'
and 'horizontal' levels. An important reason for the invisibility of the innovators in
this part of the world is related to the segmentation and the outsourcing or
offshoring of the innovation process.

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Wipro for instance has done a lot of outsourced R&D work for Western companies
and is considered to be a pioneer in the area of Product Engineering Services (PES)
in India. Here the intellectual property that is developed will belong to the clients,
but Wipro will also license pre-built chunks of intellectual property to solve client
problems or to meet design specifications for their clients.
They are also developing intellectual property modules that can be re-used across a
range of clients. Wipro does not expect their clients to make it known to end-users
that they have played an important role in the process of innovating the final
product.
It does not make much sense to ask whether this type of outsourced research is at the
lower end or higher end of the value chain since such a question presupposes the
existence an unsegmented value chain in global R&D. It is precisely the
disappearance of such value chains that is implicated in the sudden emergence of
the segmented model of R&D in the contemporary economy.
It would not be incorrect to say however that these firms are on the threshold of
making a breakthrough into global R&D if they choose to go on their own rather
than make their innovative abilities available to clients for a fixed fee.
Such abilities in R&D may also go beyond the IT sector to include pharma majors
that are hoping to do something more interesting than just work on the generics that
are going off-patent in the years to come.
Emerging players in these areas include Aurigene Discovery Technologies and the
collaborative arrangements that it has in place with Forest Laboratories Holdings
and Merck Serono to segment the different steps in the innovation process including
'the discovery and optimization of lead compounds,' and 'subsequent drug
development and commericalization.'

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These innovative forays by Indian pharma companies are modeled on the success of
the IT sector and are based on the understanding that it is possible to leverage on the
availability of talent on a large scale in India without making a fetish of completing
the innovation process in one particular location.
A large number of IT and pharma companies then are quietly planning to make such
a transition from services to innovation including major players like HCL, TCS,
Infosys, Biocon, and Nicholas Piramal.
An important advantage in the PES sector (as opposed to the regular IT services) is
that the period of engagement with a client is much longer. It could even be three to
four times longer and is based on partnerships involving 'designer-to-designer
interactions rather than a buyer-seller relationship.'
These firms then are on the strategic threshold of making a breakthrough into the
global markets but are proceeding with caution in order to avoid paying the
'strategic penalty' of competing with former clients (given the assurance of large
revenues from these clients) if they do not do so.
And, again, we must not assume that being a product-based company is necessarily
better given how IT companies are positioned in the mind of the prospects -
especially of those in the capital markets given that this will require a huge amount
of organizational development and transformation.
It will also have implications for the services business and deplete the high margins
that they have in 'contract research operations' (apart from the possibility of
endangering relations with long-term clients).
It is therefore advisable for these companies to think through their options carefully
and not make a strategic leap in migrating up the product value chain as an end in
itself (without taking the revenue and organizational implications of doing so

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seriously).
CONCLUSION
The future of Indian innovation then depends on thinking against the grain in terms
of the global R&D value chain and not do what everybody else assumes should be
done on the basis of linear assumptions that don't make sense within a segemented
model of innovation.
That is why it is meaningless to think of innovation as an end in itself oblivious of
the contexts in which it happens or in which it becomes necessary in India or
elsewhere. This is one the best books available in this particular genre. Anybody
who wants to make sense of innovation in India in the context of the global economy
or the value chain model in strategic theory must read this book.
SHIVA KUMAR SRINIVASAN