[Editorial notes: Guest article contributed by Shirish Deodhar, who earlier was President of VERITAS Software India and is now the cofounder of InnovizeTech Software. His two previous companies had successful exits to global majors - In-Reality Software with Symphony Services Inc. and Frontier Software with VERITAS Software (now Symantec Corp.).]
India is recognized as a global leader in providing IT services. However, it is often said that Indian IT has grown entirely due to cost arbitrage, and adds little by way of innovation. It consists mostly of IT Services firms and subsidiaries of global ISVs. In both kinds of companies, it is usually the customer or parent company that is responsible for overall application and product roadmap. Their staff does the creative tasks of understanding the market and users, and deciding design specifications and implementation architecture. The work outsourced to India is dismissed as being at the low end of software coding, testing and support.
Observers point to other indicators about the lack of innovation. India has several billion dollar services companies, but product companies are few and not much smaller in size. The number of PhDs and patents filed is very low relative to the number of software engineers.
This claim is true to a large extent. The services model encourages delivery and process excellence, but does not create the right environment for innovation. Employees tend to focus more on technology rather than domain expertise, and the preferred career path is to become a manager instead of a subject matter guru. Attrition tends to be high since most jobs end up becoming routine. While job hopping means new areas of work and higher salaries, they rarely lead to focus and accumulated expertise in one area which are prerequisites for innovation.
Emerging product companies are beginning to transform the services mindset. In addition, there are ways to create and grow an innovation culture even in a services business and at subsidiaries. This article provides my real-world experience at a product subsidiary and an IT services company.
Climbing the value chain at a subsidiary through innovation
At VERITAS Software (now Symantec Corp), we built a team of 600+ outstanding engineers and technical leaders between 1999 and 2003. Many of the hires comprised the top 10% of computer science graduates from IITs, IISc and few other reputed engineering colleges. They were ambitious, eager to excel and prove themselves within the global organization. Besides contributing to current product releases, they aspired to create value through new ideas. It was important to channel this energy constructively.
Most product teams usually have some idle time between releases. Campus hires would join in large numbers in July, and there was not enough work available for them immediately. We used these gaps to drive innovation. Established groups would take the new hires and transition some existing work to them. This freed up bandwidth for experienced engineers to prototype new ideas. Many significant features were developed in this way, and presented to US managers when they visited the India office. Their presence in India ensured that we had their undiluted attention. The managers would return impressed by the India team’s value and ensured more interesting work coming to us.
Newly formed groups would be creative in their initial idle time. In one case, the new team studied the product architecture, which was designed to work across platforms (Windows and different Unix flavours). They realised that the management interface was hard to use, had limited reports and was re-engineered for each platform. They built a platform independent Java based prototype, which supported a distributed management paradigm and sophisticated reporting. The US team loved it and approved the development.
We built a strong Usability Engineering group (perhaps one of the first in India) which collaborated with several teams to build prototypes for a revamped UI. A few existing products were ported to new unsupported platforms (typically Linux or Windows), which created new revenue opportunities.
In early 2002, VERITAS initiated a patent program. Employees were encouraged to file their ideas and innovations. A patent review committee decided which ones qualified for US patent applications. A year later, it was found that nearly 30% of patents filed came from the Pune team which comprised around 22% of worldwide engineering. Many patents were later granted by the US patent office. I won’t be surprised if the patent count at VERITAS India is the highest amongst Indian subsidiaries.
An innovation oriented culture creates an appetite for entrepreneurship. We harnessed this energy internally (‘intrapreneurship’) by enabling capable and talented individuals to lead new teams and groups. In subsequent years, a significant number (75+ by recent estimates) of VERITAS Pune employees became founders of product and services start-ups, CEOs or VP Engineering of Indian companies, or heads of India subsidiaries of MNCs.
Innovation culture at an IT Services firm
In a 2006 offsite at Symphony Services, we had breakout sessions to discuss company challenges. We identified three key initiatives, one of which was to help foster innovation and for which I was assigned the responsibility, given my past product experience at VERITAS and for several start-up customers.
The VERITAS patent program had been a revelation for me in its ability to motivate people and benchmark an organization’s innovation vitality. It could not be replicated directly at Symphony Services, since the IP developed by our teams belonged to clients. Patenting is expensive, and very few customers had such a program.
Employees at large companies tend to be cynical about corporate programs, especially if they add more work to their already busy schedules. We decided to avoid a big bang announcement about intentions, but instead put something tangible in place first. The program’s objectives and implementation approach was spelt out in an FAQ (Frequently Asked Questions). An online Innovation Resource Centre (IRC) was created to serve as the primary platform to enter and track innovations.
Ensuring wide participation was possible only if we had supporters embedded in all client teams across the company. So we set up an Innovation Council consisting of people who were considered technical gurus and had good communication skills. Each group had Innovation Mentors (IMs) in a rough ratio of one IM per 25 employees.
We went live in two months, and to get the initial surge, we let employees enter their claims for innovations done in the past two years, with the first 100 to file ideas getting special T-shirts. The initial response was beyond expectations, with 100 entries coming in less than 10 days.
The program rewarded innovation and not ideas. Ideas are good, but become useful innovations only after they are implemented and result in measurable business or revenue impact. We set a high bar for recognizing innovative contributions, categorizing them as having low, medium, high or disruptive impact. Low impact improvements were considered as being part of the normal job function, and not recognized as innovation.
Innovation points were granted based on progress and impact. High impact ideas that were accepted by client and implemented in the end product, received the highest score.
Given IP sensitivities of clients, each team’s ideas were visible only within that team. Their IMs rated those ideas. We encouraged client side architects to become part of the review process.
The IRC kept track of points awarded to engineers and cumulatively to the team. A rewards scheme based on accumulated points was established. Awards ranged from Spot to the ultimate recognition as a ‘Distinguished Innovator’. Each quarter, a jury of senior executives would select the best performing employees and teams, and awards were handed over by the CEO at company meetings.
From a business perspective, the innovation initiative yielded significant results in three areas:
- Discovery – Symphony now had a platform to discover innovations that were already impacting customers. Many achievements were not visible even to Symphony management. For example, we discovered that a team had conceptualized and built an entirely new product for a customer, and created a substantial revenue stream.
- Visibility - High-value innovations from India teams could now be projected to senior client-side executives (CEO, VPs) at governance meetings. Until then, they were unaware that many innovations had originated from their offshore Symphony team. An Innovation Scorecard was created which captured the depth of our contributions.
- Sales – Existing customers appreciated the enhanced value created through this program. Symphony began to project itself as an Innovation Partner to prospects rather than just another outsourcing vendor.
Within one year almost half the company had contributed in one way or the other – by filing ideas or being mentors. The program motivated engineers to go beyond what clients had instructed them to do. It created a self-perpetuating cycle of high awareness and motivation, innovative contributions, matching rewards, which in turn led to more involvement by employees.
In 2010, the Symphony Services COO had this to say: “In the past 2.5 years, our Innovation Program has witnessed participation by more than 1800 employees, generating over 6000 ideas. Of these, a significant number are high-impact ideas that have brought millions of dollars of benefit to clients who took them forward. The program has also catalyzed 33 patents submitted on behalf of clients and 2 filed and granted for Symphony.”
Innovation separates great organizations from the good and average ones. It is not just about ideas, but the capacity to drive them to completion and revenue generation. Indian IT companies are acknowledged as leaders in outsourced services, but not recognized as truly great companies due to the relatively low level of innovation. This article shows how innovation culture can be nurtured at Indian IT firms.
‘From Entrepreneurs to Leaders – Building Billion Dollar Software Product Companies from India’, Shirish Deodhar, Tata McGraw Hill, 2010.
[About the author: Shirish Deodhar is the cofounder of InnovizeTech, which has developed Sapience, a patent-pending and award-winning solution that powers a 15-20% increase in work output for companies, without requiring any change in existing process or additional management effort.]