India’s Tata Group

India’s Tata Group is perhaps the most successful of its mega corporations.  It goes way back: It built the nation’s first steel mill, the first power plant, and the first airline.  Tata has been in the news recently for designing and building a car that costs only $2,000 (and no, I didn’t leave off a zero!)

Business Week magazine reports* that Tata has made innovation a priority almost ever since India’s economy was opened up in 1991.  Before that, Tata and other Indian companies had been protected from international competition, and Tata new they’d need to step up their game in the absence of this protection.  It’s worked; so what are they doing to innovate?

1. Senior leadership is committed to innovation.  Chairman Ratan Tata made it a personal priority for the company. Then, he created a 12-member panel of senior executives that’s called the Tata Group Innovation Forum (TGIF–not sure I like this particular acronym in this context!)

2. Tata established formal systems for collecting, evaluating, and harvesting ideas.  They created multiple channels; small ideas are funded by the business unit; bigger ideas go to one of the company’s 19 innovation labs (research centers that are each focused on one technology or one sector); some ideas are funded by an incubator fund out of the CTO’s office.

3. Innovation is built into the annual review process and professional development process: it’s one of 9 categories of evaluation, and employees receive training (in the leadership institute and in a four-day Technovator workshop, for example).

4. The all-important “slack time” is available: 5 hours a week are available for personal projects. This could be developing an idea, but it could also be learning a new skill.

5. Social networking supports the process: an internal Digg-like social network called IdeaMax lets anyone submit an idea, and everyone can comment on and vote on all of the ideas.  CTO Ananth Krishnan reviews the top 10 ideas every quarter.

All of this is working: ten percent of last year’s revenues came from innovation.  One half of their customers can describe something about their product that is innovative.

*Jessie Scanlon, “How to build a culture of innovation. ” August 19, 2009 Business Week