The Key to Innovation in India: Co-Location

Reprinted from Harvard Business Review on June 24, 2009. Click here for original.

Of all the scientific challenges facing the world today, none are as critical to humanity’s future as energy, water, and agriculture. While area-specific research is underway worldwide to find cost-efficient solutions, most of the R&D is conducted within silos that, according to the initial research design, do not allow for interdisciplinary interaction.

Viewing these three critical areas as independent, however, overlooks their inherent interdependence.

* First, as the search for efficient and sustainable energy resources grows, hydroelectric power will reign supreme.

* Second, more countries will need to invest in seawater desalination, an extremely power-hungry process, in order to provide water to growing populations.

* Third, the resultant energy and clean water will be deployed largely to agricultural processes to provide basic sustenance.

Given the connection between these forces, it is critical that tomorrow’s innovation projects be designed in ways that allow for co-location. Innovation strategies built around the principle of co-location — where interdisciplinary research programs are conducted in physical proximity to one another, in order to leverage this closeness — provide firms with a chance to mitigate escalating R&D costs, but also require more detailed planning. In today’s world, perhaps no other country offers global firms and governments the best chance at this interdependent and co-located research design than India.

India offers global firms, academics, and governments the ideal laboratory within which to conduct R&D in energy, water, and agriculture, boasting the following characteristics:

1. Natural Resources: With 4,600 miles of peninsular coastline, plus a variety of other renewable energy sources, India presents researchers with an unmatched wealth of resources.

2. Human capital: India’s science and engineering schools and universities are rated among the best in the world, an education system whose outputs provide firms and researchers with a technically-skilled, entrepreneurially-driven, English-speaking talent pool.

3. Vibrant civil society: As a relatively transparent democracy, India has a free media and a large cadre of activists who more often than not surface problems instead of burying them. The tensions which accompany human development do not tend to go unnoticed in India. This transparency provides researchers with a rich ecosystem within which to design inquiries that encourage more human-centric, solutions-based innovations.

4. Democratic capitalism: While far from perfect, India’s democratic, business-friendly government and transparent debt and capital markets safely absorb, protect, and leverage foreign investment, providing global firms with reasonably strong protections and the freedom to allocate money and resources toward scientific discovery and commercialization.

5. Existing R&D infrastructure: The majority of global research firms today already boast large R&D laboratories in India, either for the development of software, information technology, energy, life sciences, and agriculture. With the R&D infrastructure in place, global firms can ramp up projects with greater speed and not have to carry the start-up costs that traditionally hamper or cripple large-scale scientific inquiries.

India’s growing population, geographical footprint, regional diversity, and economic growth amplify the sustainability challenges the nation will face. This blend of factors makes India one of, if not the, ideal place in the world to investigate the myriad problems associated with technical advancement in energy, water, and agriculture. India provides global firms’ research divisions, in partnership with Indian universities, with a “one-stop lab space” where cutting-edge experiments can be tested in a climate filled with formidable constraints; if discoveries are unearthed and tested in India, the chances are quite good that these discoveries can be commercialized to the outer world because of their cost structures.

Finally, India possesses an immense, inherent need for solutions itself. If necessity is the mother of invention, paucity is often the impetus for surfacing human necessities. For many years rich countries have had few shortages — with the exception of oil. Poor countries have meanwhile have been too destitute to place serious demands on capacities. Globalization and growth have changed all this — poor countries like India are becoming richer, and rich countries in the West are approaching certain boundaries of sustainability. In these circumstances, many of the problems associated with energy efficiency, water purification, and improved agricultural techniques — all which deserve attention, funding, and innovation — are reaching critical mass in poor countries, and often presage issues that will be faced by richer countries only a short while later. Global firms, therefore, can capitalize on this historical trend, discover the most cost-efficient innovations in India that leapfrog existing models, and then export them to the rest of the world.