Cloning is not innovation
As per the latest list released
by The Forbes, unsurprisingly 8 out of top 10 most innovative companies in the
World in 2018 were American companies. ServiceNow has been termed as the most
innovative company of 2018, while Facebook is positioned at number 10.
The two non American companies in
the top 10 occupy 8th and 9th place in the league table. One of these two non
American companies is Naver Corporation, which runs an online platform in South
Korea.
The most surprising entry however
is at number 8, which is Hindustan Unilever Limited - an Indian fast moving
consumer good (FMCG) company. I say surprising because it is the only company
in the top league not running a technology driven business or in simple words
an old school company.
The other surprising part was
that no company from Germany, Japan, and China figured in the list of top
innovators.
If this list is valid then there
are sufficient reasons to believe that —
(i) Demographic
decline might be hurting Japan and Europe more than the popular estimates;
(ii) China might have many more miles to cover before it can catch up
with USA on the innovation scale;
(iii) Notwithstanding all the political rhetoric regarding VISA
restrictions and local jobs, US Corporations may continue to employ the best
talent available anywhere in the world. A tougher local VISA regime may further
accelerate the off shoring trend in new age digital companies.
(iv) There are numerous examples of Indian enterpreneurs cloning
successful innovative US business models like Uber (OLA); PayPal (PayTM), Amzon
(FlipKart etc.), WalMart (Big Bazzar etc.), StarBucks (Cafe Coffee Day),
Monster. Com (Naukri.Com) Match.com (Shaadi.com etc.), Netflix (ZEE5, JIoTV,
Airtel Xtreme etc).
However, innovation that is
scalable to global reach is still missing. The companies with foreign lineage,
like Hindustan Unilever, Nestle, Maruti, etc are predominantly leading the
innovation initiatives.
The policy
makers need to take note of this and escalate the efforts to promote innovation
rather than dissipating scarce resources on some jugaad ideas that sound good
but are not scalable and discourage the cloning business.
Investors
also need to build in these considerations in their investment strategies.
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