Product and Service Innovations in Large Organizations Operating in India: A Systems Approach

Product and service innovations in emerging markets like India, China, Mexico and Brazil are gaining importance due to their affordability, acceptability and future scope (Govindarajan and Trimble, 2012; and Radjou et al., 2012). However, the literature on the intricate processes involved in developing the products (and services) is quite sparse (Ray and Ray, 2011) in these countries. The present paper is based on the interviews of 100 experienced business executives in 30 organizations based or operating in one of the key emerging markets of the world, i.e., India. The question is: How do these organizations carry out product and service innovations to make an innovative new product or service successful? We explore the path of input, process and output as it happens in the select organizations. Based on the results obtained, a framework of the product and service innovation is proposed.IntroductionA company is expected to achieve sales by launching new products and services in the market; it helps the company to gain competitive advantage if these products are innovative (Porter, 2004). These innovative products and services could be used as a means of new product development (Trott, 1998; and Ettlie, 2006) and as a part of growth strategy of the firm. Over a period of time, the emerging markets theme has become quite popular in management research showcasing the frugal innovations happening in countries like India, China, Mexico and the like (Radjou et al., 2012). The famous multinational corporations whose domestic markets became almost saturated started looking at emerging markets like India and started establishing their research centers for product development. Products like baby warmers or CT scan machines have been developed in India at almost 1/100* price or even lesser and overtime these products and services became tools for gaining competitive advantage not only in India but also in the developed world markets (Govindarajan and Trimble, 2012). In order to succeed in bringing out innovative products, large or small organizations need established frameworks and processes (Dougherty and Hardy, 1996). In the absence of a systematic framework of innovations for a particular local market, organizations fail to capture market shares. We observe a lot of examples where organizations have failed to understand the market and have gone back to the drawing board (Bell and Shelman, 2011; and Brown and Anthony, 2011). Secondly, while launching new products or services, companies need to assess themselves whether they will be able to create only such products and services that are better than the current offerings (Verganti, 2011). A company has to make a choice between being the first to the market and waiting for its rivals to march ahead. There is also the choice of cannibalizing one's own sales for the sake of going ahead with new product launches in the market (BCG Senior Management Survey, 2009). Given the above context, there is a need to understand how these large organizations innovate, the way they pursue a particular system of innovation, the factors that support innovation, the roadblocks that impede innovation and the outcomes.To explore the above issues, we studied 30 large organizations in India (both Indian and multinationals) over a period of two years to analyze the process of product and service innovations and propose a framework based on the findings. The research was based on in-depth interviews of 100 executives from these 30 listed companies. A study conducted by OECD (2005), which compared the classification of organizations in different countries of the world, found that different countries have classified their micro, small, medium and large organizations based on the number of employees in the organization, and in any case, small and medium enterprises do not exceed employee strength of 500. Therefore, any organization employing more than 500 people was a large organization. All 30 target organizations had employee strength of more than 1000 and the minimum turnover of any of these organizations was over $200 mn. …