Education-Innovation: India's Success Mantra Date:   Tuesday , August 03, 2010 A football player at his heart, Ajit Balakrishnan, the tech-savvy CEO of Indian online giant Rediff, knows how to successfully bring the ball to his court. He wanted to be a football player ignoring his education until one day he encountered a football player who had to compromise in a thatched hut due to lack of education. The next day he was back to his books, and even today Balakrishnan thanks his father who made him realize the importance of education in life, as without it no country can develop. The success of Rediff as a news, information, entertainment, and shopping portal, which allowed them to be the first Indian internet firm, to be listed in NASDAQ, is not merely a boost to Ajit Balakrishnan’s financial assets. For him, in a country like India, being a leader of a company like Rediff allows his voice to reach out to a much larger mass, than it would have allowed being a footballer. “In today’s world of globalization, success comes only through innovation. And to talk about innovation, we have to talk about education,”Ajit succinctly puts his view. To prove his point he promptly draws out the research paper The Anatomy of a Large Scale Hyper-Textual Web Search Engine’, by Sergey Brin and Larry Page that reveals the history of the search giant Google. Right at the first note, a glance at the company address shows where the idea came from – students of a university. This in itself is remarkable. As, in an earlier era of 1970s or 1980s, one would expect an innovation of this kind to emerge from industrial labs like AT&T’s Bell Labs, which were maintained by large American, German or British companies. Thus, the core of the system of innovation lies in the increased interest for more knowledge which in result can boost the number of doctorates. The locus of innovation is more and more PhD students working on their doctoral dissertations. “However, India as a whole produces about 300-350 PHDs in computer science, a number which is easily crossed over by universities based only in California,” Balakrishnan pinpoints as he mulls over the challenges of innovation in India. The only solution to it he presumes is the increase in the number of PHDs in computer science to 5000-10000 every year. Especially it is witnessed that scholars, more and more, look at the underlying network of universities, government research and financing bodies and companies and the complex interactions between them to unravel the puzzle of Innovation. Innovation in India For many of the Indian companies innovation means ‘innovating for the rich’. They are more inclined to target six million households sitting at the top of the social ladder, a group that has the purchasing capacity anywhere around the world. “The missing point is the target – which is a promiscuous crowd. A crowd that stays in India, with their heads in U.S.,”he quickly opens the rich’s mind to enlighten Indian entrepreneurs. To deal with such a crowd is an ever-lasting process, as their change in preference is directly proportional to the change in the days. So, who could be the right target? It’s the next genre of the society. In Ajit Balakrishnan’s crispy words, “Think of the man in the scooter with his wife behind and a child in the front while innovating and it will be a success.” Also, innovations within the society, needs to be recognized. “Any innovation bears its origin somewhere in the society,” Balakrishnan reminds everyone. For instance as he mentions, in a book How Breakthroughs Happen, Andrew Hargadon, a noted researcher looks at many such examples of what he calls ‘recombinant innovation’. It implies that most innovations are the result of recombination of existing concepts and materials. Email, the application of that controls core of communication in modern life, was ‘invented’ by Ray Tomlinson in 1972. It was a combination of the software code of an existing intra-computer messaging application with an existing inter-computer file transfer protocol. Also, if we see the history of the Excel spreadsheet, a tool that every marketing and accounting person will vouch for, is nothing but a combination of the best features of two earlier products, Visicalc and Lotus 123. Balakrishnan could easily relate to it as Rediff too was a similar experience for him. The inspiration to start Rediff came from a business course he took at Harvard Business School in 1989-90, where he studied about Compuserve, an information services company before the era of the Internet. It used a proprietary networking protocol and one had to use a command-line interface to log on to a time-sharing computer. It had news, chat and practically everything the Internet is known for. “The missing link was Windows, which had not yet been created. So, the user interface was a black screen with blue text. The commands were quite complex and required a lot of keystrokes, dots and slashes. One needed to be half-a-programmer to use it. With the introduction of TCP/IP, and the disaggregating in the computer industry, I guessed that it was time to start a new business, which was based loosely on Compuserve, but with newer protocols and technologies,” he recollects. The Rediff Innovation When a company innovates for a new market, there is always a sense of risk involved and Rediff too has witnessed greater risks which even questioned its existence. The company took its shape with the release of the TCP/IP protocol instead of keeping the base of X400. Balakrishnan clearly saw the advantage of TCP/IP over X400. “With the new protocol, networks were much cheaper to build; with Compuserve or X400 type protocol it was almost like the old landline switches. The connection needed to be kept alive. If you had 10,000 users online then you needed to keep 10,000 connections alive,” he says. There was a great amount of debate over which network protocol would take center stage. The two contenders were X400 and TCP/IP. As late as 1989, there was absolutely no assurance of which was going to win. TCP/IP did, and Compuserve eventually died because they did not move to TCP/IP. “In technology innovation, simplicity is always a winner,” he says with a smile. The man is known for his simplicity knack, no wonder he is called the Chief Simplicity Officer (CSO) at Rediff. If someone builds new features for Rediff, he would only face one question from the CSO, “Will my mother be able to use it?” If the answer is no, the project immediately shifts back to the drawing table. Dotcom Bust Blues It’s these simple ways and Balakrishnan’s futuristic outlook ensured Rediff’s success after surpassing the grave dotcom bust. “We had our IPO in June 2000 and in July everything collapsed. As experienced entrepreneurs, we kept everything low cost, something we still do today. We had between $50 and $60 million in the bank when everybody else had zero. We did our share of foolish things - but not as foolish as what others did,” he shares his secret. However, as every company has increased the focus on internet, the CEO can see the results quite clear. “India’s broadband stands under-regulated, which implies lack of improvement in the internet penetration,” he says. He is dismayed to see only three percent internet penetration in India. The fact is not much of an astonishment considering that Indian broadband prices are the highest in the world. Added on to the internet woes, the country witnesses the average revenue per user at just $2 per year, while in China it’s $9. “If you want to know the user-generated revenue of any internet site, simply multiply the user base of the firm with two, and you will get the yearly revenue in dollars,” calculates Balakrishnan. And if 3G is looked at as the solution, the facts have a different version to say. It’s seen to be the expensive way of delivering internet, unless every service provider gives an unlimited service for all-time on 256 kbps. Balakrishnan knows the challenges well and he is continuously, vouching for operational meeting point of Internet service providers (ISPs) in India. Its main purpose is to facilitate handing over of domestic Internet traffic between the peering ISP members, rather than using servers in the U.S. “The consequence of that is if someone from Bangalore sends a mail to Rediff, it has to go to U.S. and come back. Unless you have domestic peering, the costs are high. The National Internet Exchange of India (NIXI) was set up, but no one listens to it. We should have strong government action to force people to adhere to it,” he says. The Challenge in Indian Innovation System In a country like India the support system too needs a revision. A step back to the Google research paper, we would see the amount of support they received while doing this breakthrough work from different organizations. “These companies, like IBM, Sun Microsystem and Intel, at that time could not possibly have foreseen how the work of these two researchers could help their own businesses. So, such acts of open-minded generosity are perhaps part of fostering Innovation,” Balakrishnan says. In terms of the financial support to the research paper of Sergey and Page, the government too had been equally encouraging. The list included the prominent names like National Science Foundation, a Federal Government’s funding body, U.S. Defence Advanced Research Project Agency ( DARPA), an agency of the U.S. Department of Defence; the U.S. National Space Administration ( NASA). “In short, the way the U.S. innovation system work is - Large scale U.S. Federal Government financial support is channeled through civil and military agencies for Master Projects that addresses emerging areas. The projects are of universities, where graduate students and their guides interact to produce breakthrough innovation,” Balakrishnan wraps up the entire U.S. innovation system. It shows the encouragement that every innovation receives, especially considering the merit-based scholarships, which makes the doctorate education easily accessible to every meritorious student. While in India, people can’t even expect a decent compensation for those in the research field, which forces the ones who have the real penchant for research to opt for it abroad. Only, once this innovation part is achieved, the success of the innovation can be looked through. “India must create an ambience, which not only encourage the Indians to stay back and the NRIs to return but also attracts the intellectuals of different countries. Because if we see the U.S. innovation system, it was greatly boosted by intellectuals from different countries like Albert Einstein, who was a Jew,” the CEO pinpoints. Whenever the humble tech-savvy CEO, Ajit Balakrishnan, looked back at the turbulences in the industry, he could easily see the opportunity it brought along. It could be the 1988 Tiananmen Square in China case that led to the Soviet Union’s collapse that led to a mega recession. This led many countries including India to bankruptcy and that’s when Indian rupee deflated from Rs.8 per dollar to Rs.45 per dollar. These were the negative vibes but the silver lining was the change in the outlook towards the Indian programmers. Earlier the programmers, who were looked down upon due to the minuscule salary, began to gain the importance and the IT services industry in India gained prominence. Also a look at the year 2000, we can notice the grim dotcom bust, but for the Rediff CEO it’s the rise of Google that matters the most in 2000. “Keep your eyes open for any such opportunity as they happen on their own with any prior notice,” says the ever-optimistic entrepreneur. Despite being a well-known voice in the IT industry, the humility and the tech curiosity remains ingrained in Balakrishnan. Today, Balakrishnan sits on the government committee reviewing the Indian Information Technology Act. He is an alumnus of Indian Institute of Management Calcutta and is currently the Chairman of its Board of Governors. At a personal point, even today, he wants to use his voice to raise football to the level of hockey and cricket in the country.