Innovation @ Tata Consultancy Services Limited (TCS) Case study

TCS understand that innovation is the lifeline of business and it is a very complex process. IT is always regarded as the company’s innovation champion and IT managers want to help their businesses succeed through innovation. Businesses identify innovation critical for business growth and performance and there is still some apprehension about the return on investment on the innovation front. TCS believes innovation can be broadly defined as an idea that makes a material difference to an organization’s current capabilities or creates a future capability. TCS believes that innovation must come from all parts of its organization and it has to be part of the organization DNA and can’t only be restricted to R&D departments in the organizations. TCS also believes that other stakeholders like clients, academic institutions, peers, other technology firms etc play a critical role in the innovation process and they have to be actively involved. TCS Innovation initiatives are discussed in this article.

Clayton Christensen Innovation Framework

According to Harvard Business School professor and author Clayton Christensen who also serves on the board of directors of TCS, innovation can then be divided into three discrete subsets: “derivative innovation,” “platform innovation,” and “breakthrough innovation.” These segments require different environments and support systems to emerge and create maximum business value. TCS apply Professor Christensen’s segmentation (please see figure below) as follows: Derivative or sustaining innovation that continually provides improvements on current services and solutions, Transformational improvement or platform innovation that facilitates a swift move to ‘visible adjacencies’ in terms of emerging technologies as well as markets and Disruptive or breakthrough innovation that enables customers to access potentially game-changing or/and new market business models. Derivative or sustaining innovations are handled and funded by the business unit in which the idea originated and Platform-level innovations that might extend an existing offering are directed to one of the company’s 19 global innovation labs. Disruptive ideas often originate in the labs, but if one emerged from a business unit it would be directed to a lab or funded through an incubator fund run by the CTO’s office.

Innovation Lifecycle- Adopted from Prof Clayton Christensen. Source: TCS white paper Innovation Networks: Casting a Wider Net for IT

TCS Innovation Labs

The Tata Research Development and Design Centre (TRDDC) was established in 1981 as a division TCS and is the largest R&D facility among the network of Innovation Labs at TCS. TRDDC has three R&D labs: Process Engineering, Software Engineering and Systems Research and had built a  collaborative and open innovation environment for engaging with industry partners and clients in various domains, academia, strategic technology partners, startups, standards organizations, etc. Since the year 2000, TCS has set up Innovation Labs that create value for clients and foster an innovation network in the organization for the successful development and commercialization of new ideas, technologies and best practices.

TCS has 19 Innovation Labs based in three countries including TRDDC’s three R&D labs. TCS Innovation labs have 800 associates in R&D and provide an environment for complex IT research in leading-edge technologies as well as in various domains. TCS labs work on areas like Life sciences, Open source technologies, enterprise architecture, wireless technologies, performance engineering, etc. TCS Innovation labs are customer aligned and metrics driven and scientists and researchers continually publish/present research papers and publications. Some of the products created by TCS Innovation labs are mKrishi, DBProdem, Jensor, Wanem, Scrutinet, SmartTest Manager, etc.

TCS’ Co-Innovation Network (COIN™)

TCS set up COIN in 2004, based on the book -The Future of Competition: Co-Creating Unique Value with Customers, co-authored by the late management guru C.K. Prahalad and Prof. Venkat Ramaswamy that talked about “co-creation” as a strategy for companies to satisfy customers and sustain profitable growth. Co-Innovation network consists is led by TCS Innovation Labs and includes academic institutions like Stanford, MIT, IITs,etc, start-ups like Cicero and WorkLight, venture funds like Helios, Sequoia, Amadeus, etc, strategic alliance partners like Intel, SAP, HP, Cisco, etc, multilateral organizations and key clients. COIN brings to the businesses innovative solutions; customized to the client’s needs, disruptive technologies, risk mitigation which is spreading the risk among multiple partners and simplification of technologies. The company now has 24 active TCS co-innovation partners and is generating revenue through 75 solutions developed jointly with various partners in the last five years.

Other Initiatives

TCS Leadership has set up systems for encouraging innovative thinking and processing of ideas and created multiple channels, and managers are trained how to direct an employee’s idea. Innovation is also part of the employees formal annual review process and employees who provided innovative ideas are thoroughly rewarded. IdeaMax, a Digg-like social network that lets any employee submit, comment, and vote on ideas is the platform provided to the employees for innovation. Innovations are a critical component of the formal training programs for the employees and managers and are encouraged to think creatively. Innovation events like “Innovation Days” help key customers and TCS researchers to collaborate on research toward specific solutions and “Innovations Forums” held annually in the UK and USA serve as confluences of thought leaders and researchers.

TCS Innovation success – Frugal Innovation

TCS innovation initiatives have started generating significant amount of revenues but it is still looking for a disruptive offering that will be major part of revenues. TCS has been able to instill an innovative environment within the organization and has developed successful innovative offerings. The company has already invested significant resources in the innovation initiatives and is looking for future growth and performance through them.

Recently the company is also talking about ‘frugal innovation’ in to capture more business in the emerging markets. Frugal Innovation is derived from Frugal Engineering or Gandhian Engineering is the science of breaking up complex engineering processes/products into basic components and then rebuilding the product in the most economical manner possible. Frugal engineering results in simpler and easier to handle processes and cheaper products with necessary features. Tata Nano the cheapest car in the world today, is held up as an example of successful frugal engineering. The term 'frugal engineering' was first used by Carlos Ghosn, the joint chief of Renault and Nissan. (Source: Wikipedia)

Discussion Points:

1. Will the overall Innovation strategy of TCS drive business growth?
2. Will frugal innovation work for TCS?
3. What should TCS do for increasing its revenues through innovation?