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How Do Companies in India Innovate?
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How Do Companies in India Innovate?

Innovation isn’t easy. Globally, at least 90 percent of new product introductions fail in the year they launch. India is often viewed as a hotbed of innovation, but truth be told, the odds of launching a breakthrough success in this market may not be meaningfully better than anywhere else in the world. And the landscape is highly competitive. In looking at more than 14,000 launches in the fast-moving consumer goods (FMCG) sector in 2011 for India, Nielsen deemed fewer than 40 as true breakthrough innovations.

So how can you increase odds of success and stay competitive in India? Benchmarking your choices and investments against industry peers is a good place to start. To better understand the choices and decisions companies in India make regarding innovation, we talked to 90 industry professionals across industries and levels. The insights we gleaned help us understand how innovators think, discern whether they’re setting themselves up for success, and determine whether India is living up to market expectations as an innovation leader.

The path to innovation is paved by five key decisions that organizations take as they set out to innovate. The journey begins with the decision to invest in innovation and ends with how they support and nurture their innovations once they’ve brought them to market.

How Much is India Investing on Innovation?

Adequately investing in the end-to-end innovation process and the necessary resources to bring a product to market can be the difference between success and failure. One in three organizations invests less than 5 percent of its annual revenue in innovation-related R&D. Only three out of 10 organizations invest 10 percent or more of their revenue on innovation. Fast-moving consumer goods (FMCG) organizations tend to invest more heavily on innovations than other sectors.

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What triggers innovation in India?

Innovation drives business, but what drives innovation? The industry professionals we spoke with clearly suggest that sharp consumer insight leads to innovations in their organizations. This is true for almost nine out of 10 organizations. Industry professionals also stress the need for a competitive response, improved R&D capabilities, the ability to navigate financial pressures, and securing guidance from senior management as other triggers. FMCG companies tend to be more open to leverage successes in other countries outside of the one they primarily do business in.

How Long Does it Take for Indian Innovations to Launch?

It takes 50 percent of companies an average of one to two years to take an innovation from concept to launch, which is consistent with a large majority of FMCG companies. Interestingly, three out of 10 companies can turn an innovation around in less than a year; these companies, however, are non-FMCG companies.

How Many Innovations Make the Cut?

One in five industry professionals across sectors told us that more than 25 percent of their ideas make it to the shelves. Comparatively, one in four FMCG industry professional said that more than 25 percent of their ideas get launched.

How Do Indian Companies Support Their Innovations in the Year They Launch Them?

Even the strongest breakthrough innovations can falter without adequate support. Companies in India spend about one in three Rupees in the launch year on advertising. Nielsen research suggests that advertising is the second-most important factor with respect to year-one sales, only behind distribution. Trade and consumer promotion account for another 30 percent of spending for launches in India.

What Kills Innovation?

While innovations are the lifeblood for growth-oriented organizations and help strengthen product portfolios and the bottom line, experts generally agree on four key disablers that can hamper progress.

  • Long lead times from conceptualization to launch.
  • Allowing short-term priorities to supersede long-term thinking.
  • Limited finances available to fund innovations.
  • Conflicting priorities across internal teams.

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