From Followers to Leaders and Friendship

Thank you for the invitation to come to London to celebrate. I will cover three things. First, I’ll give you a little background on where I’m coming from, then on the course that Dave and I taught and the book that emerged from it. Then some reflections on innovation and development that are my take aways from the teaching and work that we’ve done in our own firm and finally some closing comments.

I grew up in India, around a family business started by my father in 1946, the year before Indian independence. Both my parents were very actively engaged in running the firm. In the 1970s the Indian State under Indira Gandhi was at its most intrusive. We had very perverse policies including very perverse industrial policies and a constant topic of conversation at the dinner table was my parents’ frustrations in trying to run a firm in an environment of a really illiberal intrusive State. Indeed a State at that time which also declared a State of Emergency so that Indira Gandhi could continue in power and where political freedoms were suspended for 2 years and so on. So that was very much a part of my formative years growing up and when I came to study anything related to economics or industrial policy later on.

When I started doing my PhD I really wanted to study how can I create Silicon Valley in Pune. When I started doing the fieldwork, I realised very soon that there were too many variables at play, that this was a pretty impossibly task, so I dropped the comparison and just focussed on technical entrepreneurship in India as the topic. I worked on technical entrepreneurship in India and started reading a lot about entrepreneurship, about technical development and the only work that really was valuable at the time was a lot of the innovation work being done then at SPRU and also by people like Nate Rosenberg and Paul David, Mo Abramovitz and others at Stanford, so I was in Economics a lot. I think 1989/1990 is when Dave was at Stanford that first visit. The reason I can date it so precisely is because after the 1989 earthquake in Northern California the Science, Technology and Society Programme had to be moved out of its original office which was declared unsafe and we were in a place called the Modular. A polite description would be a trailer, and the walls shook each time anyone opened the door, which for a place that had just gone through a major earthquake was somewhat unnerving each time anyone entered the room.

I was teaching this course on development of technology at that time, and we added a mixed graduate/undergraduate seminar which Jim Adams, Dave and I taught together. The course was called Comparative Technology Policy, and we looked at technology policy from a cultural perspective. Dave covered the UK, Jim covered the US, I covered India, we got a historian of Germany to talk about Germany and an economist to talk about Japan. We had a wonderful time. And so did, we think, the students because there were maybe 15 to 18 students in the class and there were the 3 of us and we just had this great discussion. One of the things that came out of that course was the fact that Dave was the most critical of the UK and would defend India and the US, Jim was the most critical of the US and would defend the UK and India and I was the most critical of India and would defend the US and UK. It was the students, by the way, that pointed this out – they were fascinated that we were so critical of our own countries. We ended up having this very good discussion which I think was quite instructive.

Dave came up with the idea of turning these two courses, Comparative Technology Policy and the other course that I was teaching into a book. A few years later we did a draft and then it took 6 years to get the book out. Each of us wrote, commenting on it for the other. Then we met and spent 10 days together in Pune and essentially wrote the book in those 10 days.

I was teaching roughly 2 months each year, but mostly working in our family business in India. There were a number of things that I specifically tried to apply in our own firm from the teaching and learning. The focus on R&D and building proprietary technology was something that we embraced early on, starting in 1991. Also, using exports as a way of learning. Anyone who studies industrialisation in countries like South Korea and Taiwan knows the role that exports played not so much as a market but as a technical capability driver and as a source of, source of knowledge and learning, of design. When the Indian economy really started opening up we welcomed it wholeheartedly. Within 2 weeks of the ‘liberalisation’ budget speech we asked ourselves what would we make if there were zero tariffs -  in 1991, typical tariffs for the products we made ranged between 200 and 400%, so we didn’t have to worry about imports at all. We said, okay, what would we actually make if the tariff was zero. We realised that about half of our total product portfolio would not be competitive. So we said okay, we have a few years to prepare for these products going away, we need to develop a different set of products. That was where the investment in R&D came from. We said, we’re going to have the best firms in the world coming to India so the best way of learning how to compete with them in India is if we can compete with them overseas, so to start selling overseas was the best of learning how to compete with them in India. And both those approaches worked well, they worked very well for us, as a company.

I want to turn now to my bigger topic and give some reflections on innovation and development. First, it is obvious to everyone in this group that, done right, innovation can grow much more successful firms, much more successful economies, and lead to rapid economic growth in the long run. I think we all appreciate that so then we all spend our time worrying about what the doing right means.

Second, something that I think we’ve all learned to appreciate over time, and I think it came out very clearly in the last session, on innovation in the life sciences, is that the firm is at the heart of innovation. Certainly when you talk about industrial innovation the firm is at the heart of innovation and needs to therefore be at the heart and the focus of industrial policy. If one really wishes industrial policy to be effective, forming policy without thinking about firms, and policy effect on firms, and how firms will respond to those policies, is not likely to be effective. So one needs to constantly keep putting the firm at the heart of innovation.

Third, policy matters, it can make a difference to what firms do and issues like openness, how competitive the environment is, what role education policy plays in the availability of talent in the country, all of these things are really critical. Not only are they critical but they’re probably more critical than policies that specifically deal with technology. So-called technology policy, if it’s narrowly defined, can be rather limiting. I think that technology policy should be thought of in broad terms and should include education policy, it should include trade policy, should include competition policy, as these things might have a more fundamental role to play in the final capability building within firms, more so maybe a specific R&D policy or incentives for R&D or anything like that.

Fourth, and now these are personal biases, I’m a big believer in pragmatism. I think Dave is too. You know, as he mentioned, we came at things from a very different ideological perspective. So when we talked ideology we disagreed, when we talked about what should be done by a firm, we agreed. And it was quite remarkable that differences in ideology led to almost identical approaches in practice. So that’s a bias, pragmatism but I think it trumps, or should trump, ideology most of the time.

Finally, on development, if we look at national development we should see it from an essentially interdisciplinary approach. But I also think the point that was made in this morning’s session of also hanging onto our disciplines, using our disciplines to enrich our understanding of the development process but then engaging with other disciplines and reflecting on what other disciplines bring to bear in understanding a particular development challenge can be so fruitful and productive. This morning Marc [Wuyts] spoke of the power of combining theory and practice. He used the wonderful phrasing of the general and the particular and of bouncing back and forth between the general and the particular as a way of ensuring progress in a particular field. When in the STS programme where Dave and I spent a lot of time, in Stanford, a big recurring theme in the weekly seminar was the relationship between science, technology and innovation, and there was a lot of going back and forth about what the proper relationship was. The general view was that technology often comes before science but that there’s a very fruitful interplay between the two. If one looks at where science should be done, doing it in the university system instead of in autonomous laboratories as in India, will end up with a much more productive overall innovation system. The theory and practice combination is very valuable in our own firms. We found it works at the firm level, I think it works at the national policy level and I think it certainly works at the level of overall innovation and progress in innovation.

So, over the years Dave and I have stayed in touch, meeting in the UK some but especially at Stanford, I have to tell you that one of the more amusing incidents was about 20 years ago when both Dave and I were at risk of being held up for launching a terrorist attack on Stanford. Dave had been visiting for about a month and he was heading back to the UK. The next day I came back after class and I found that the whole department had been sealed off, there were police cars everywhere, there was a fire engine, there was an ambulance, no-one could go anywhere. So, what did I do, I said okay, this is too much of a mess, I went to the library for about 3 hours and when I came back everything was fine. I walked into the department, and the two secretaries there sort of looked at me and said is this yours and they tossed this packet on the table in front of me. It was a little packet with my name and address scrawled on it, and so I said yeah, I think that’s mine. I think that’s Dave returning the key to the office and Dave had the key to the office and he’d forgotten to hand it in the last day that he was on campus. So he decided to mail it from San Francisco Airport. Most people would forget. But not Dave, he said ‘I’ll mail it in’. And he thinks, ‘Now if I’m going to be mailing a key we shouldn’t show that it’s a key, right’. So he wrapped it in tissues and put it in the envelope and then and mailed it. And there was no point in putting a return address on it because he was leaving the country and catching a flight. So anyway, so that large part of the Stanford campus was shut down as a result.

To close, as I got older I got more involved in policy issues. I got more involved in the Confederation of Indian Industry, that took me into the policy arena to a much greater extent. I found that an understanding of innovation was absolutely so powerful to almost any policy issue that I needed to interact with the Government on. I found I was able to bring an understanding of some of the broader implications for industry, on trade policy, on education, even on IPR, a stack of different issues. This is a field that all of you have worked on all these years. It has so enriched our understanding of what really matters in the world. I think it’s a wonderful field that provides a terrific lens to approach almost any issue of development or any issue connected with policy.