Blog: Are Indian CEOs taking innovation for granted?


Are Indian CEOs taking innovation for granted?

India's CEOs consider innovation to be their 4th biggest challenge, while in China, it is their 1st. Is India at risk?
Are Indian CEOs taking innovation for granted?

The Conference Board CEO Challenge 2014 Report throws up a lot of eye-opening data. The study asked CEOs and business leaders across the globe to rank their top challenges in 2014. Not surprisingly, Human Capital was ranked No 1 by India, and most other countries. Our giant neighbour, China, however, ranked it No 2. This jumps out as a clue – or risk. China ranked innovation as their No. 1 CEO challenge. Now why would they do that?

Let’s rewind. In the 1980s, when the Indian economy was still crawling at 3.5 per cent – the ‘hindu rate of growth’ – China was hurtling ahead at 10 per cent on a still-very awesome infrastructure. India’s infrastructure continues to struggle. China scored on human capital then and continues to do so today simply because they invested in two areas (among others) that have guaranteed the ROI on human capital: Education and Healthcare. India under-invested in both!


China’s present literacy rate of 95.1 per cent versus India’s 74.4 per cent is enviable both in percentage terms as well as in actual terms. Their nine-year schooling for every child is mandated by law. Their mostly private English teaching industry, worth over $3 billion, enrolls children from age 2. A phenomenal gender balance further optimizes the capabilities of its workforce. In a recent study done amongst 134 countries, China ranked 61st in gender equality against India’s 113th. In economic empowerment, China ranked 50th. India was 131st.


Compared to India, China has a much lower mortality rate. Over 95 per cent of its population has health insurance. 5.4 per cent of GDP is spent on healthcare. Only 15 per cent of India’s population has any kind of health insurance. Private healthcare is inaccessible to most. The public healthcare system…well, less said, the better. So, despite a spending of 4 per cent of the GDP in this sector, and some high-visibility campaigns, the road ahead is long!

China’s game-plan: Capitalize on people. Create a supportive regulatory environment and it has worked. On the other hand, India has had to virtually invent innovation! The one element that has given her a one-up position against China – and most of the world. India’s innovation-focus institutionalized off-shoring. The BPO industry today delivers significant savings and generates millions of job opportunities. Another example: Software development, the product, and the service, was conceived, developed and delivered from India. And there are many more.

Innovation actually made India shine – not some fancy government campaign! India’s business leaders decided that to survive, they had to come up with something unique, yet workable and globally relevant. Not because of the regulatory environment, but despite it!

Innovation is probably also the single, most prominent, area where India scores over China. The ability to conceptualize, operationalize, and capitalize, unique globally-relevant solutions. For all its efforts, China has institutionalized replication. Mass-producing someone else’s ideas. The do-ers!

Let’s be clear: I am no China–lover, nor an India basher! So, let’s double back to the statistics from the CEO Challenge 2014 report:

China’s No 1 CEO challenge is Innovation!
Indian CEOs relegate Innovation to No 4
China indicates Human Capital as its 2nd biggest challenge
Indian CEOs consider Human Capital as their No 1 challenge

India Inc’s No 1 challenge of Human Capital is more about how CEOs can handle a poorly educated workforce – then find ways to train it themselves. Government support is at best basic. Sure there is the National Skill Development Corporation and other institutions involved in mass-skilling programs, but questions abound.

One isn’t saying that this will happen tomorrow. Just that there’s a long way to go and, compared to China, the playing field isn’t level!

After all, China has been investing in human capital for over 30 years. Maybe this success is now beginning to peter out. Cracks are appearing. Their population is aging. The impact of their one-child policy is showing up. Their successes are starting to spring leaks. Time to focus on…Innovation! Innovation is all about delivering more with less – while gaining another opportunity to nail India!

China will likely use templates similar to the ones they’ve used since the 1980s. An aligned strategy, government willingness, private-public impetus and clockwork execution! If China resolves their Innovation challenge the way they did their Human Capital one, would India’s value story get impacted? What if China shakes off their tag of ‘replicator’ and changes it to Innovator and Mass-producer?

Whether the Indian CEO’s No. 1 challenge is solvable, even in the next decade, remains a moot question! More to the point: By relegating it to No 4, do we risk taking innovation for granted? Or, are we now innovating by incorporating innovation into our human capital strategy? Let’s deliberate...

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Topics: C-Suite, Leadership, #Innovation

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