The John F. Welch Technology Center in Bangalore is General Electric’s (GE) largest research and development center worldwide. A team of 4,500 scientists, researchers and engineers works here on projects that span all of GE’s technology businesses. A special focus at the center is on developing products specifically for the India market.
Earlier this year, Dr. Gopichand (Gopi) Katragadda, who has been with GE for 10 years, took over as managing director of the center. In a conversation with India Knowledge@Wharton, Katragadda talks about his priorities for the center, global trends in research and innovation, and the direction in which India needs to move. Katragadda says India needs to break into the next waves of innovation and create wealth not just for a few years, or for a single company, but for hundreds of years and for the whole nation. “There is a quantum leap required in terms of our thinking,” he adds.
An edited transcript of the conversation follows.
India Knowledge@Wharton: GE has recently announced an investment of Rs. 300 crore (around US$50 million at the current exchange rate of Rs.57 to a dollar) toward setting up new research and development labs here. Can you share some details of this and also of the investments made at this center up to now?
Gopichand (Gopi) Katragadda: Over the past 10 years, in rupee terms we have invested around Rs. 1,000 crore in this center. The investments have mainly been in creating infrastructure for employees and in material science-oriented lab areas. These are characterization labs — labs where you can develop new materials and test them, both at the size of a sample and prototype …. Our early investments were into building simulation capability. But for a research organization to be complete, it needs the final experimentation capability as well. So later investments have been of that nature — into [building capabilities for] designing and testing of components. The new investments will go from components to subsystems and then scaling up to systems in the areas of health care, energy and locomotive, and also in the new areas of bioscience, medical diagnostic and so on. Those are all areas where we are going to add capabilities.
India Knowledge@Wharton: Can you give us an overview of the work that happens at the center? How has it evolved over the years?
Katragadda: We work across all of GE’s technology businesses. Significant amount of work happens here in the areas of energy and health care followed by transportation and aviation. The evolution has been from working on tasks and projects and primarily doing simulation work — and that is a natural state to begin with — to doing a significant amount of experimental work…. This means that we can do end-to-end engineering work and research work at this center.
India Knowledge@Wharton: Does this mean that while earlier you were doing task-based work, now you are also conceiving the project ideas here?
Katragadda: Absolutely. In the first 10 years [of this center], GE filed 1,000 patents from inventors here. Inventor is a legal term, which means that the idea for the concept is from that particular person. The work done by inventors at this center alone has resulted in over 400 patents being filed last year by the General Electric Company. This is a giant step for the center. It shows how the thought process has evolved.
India Knowledge Wharton: How important is this center within the GE world? How critical a role does it play?
Katragadda: This center is very critical for GE. As a combined research and development center, this is the largest center for GE worldwide. As a pure research center, it is the largest for GE outside of the U.S. Four hundred patents from GE’s portfolio of 3,000 patents last year were from here. One of every five or six GE technologists is from here. Pretty much for all our major product launches a significant portion of the team is [based] here …. In some cases we also have the leadership and we leverage GE resources globally. For instance, in the case of the low-wind regime [speed] wind turbine, we have the ownership. We have released this [product] in the India market and we will be releasing it in other markets as well. Globally, we work as a team. We try to grow a certain capability in a certain area and not duplicate it everywhere. [GE has research centers in New York, Shanghai, Munich and Rio de Janeiro.]
India Knowledge@Wharton: You took over as head of this center earlier this year. What are your key priorities in this role?
Katragadda: We have done extremely well as an organization contributing to GE’s success. I would like to continue to grow it further into a GE asset, but I would also like it to be recognized as a national asset. I would like our team here to increasingly solve some of the toughest problems of the world, but also some of the toughest problems of India.
India Knowledge@Wharton: So how are you working towards this?
Katragadda: One of the measures is how much of the team here is focused on India-related work. Three years ago, it was 5%. At this point in time, it’s around 10%. If we can get to 20% to 25% of our team working on very critical India programs in around three to five years, I think we will be able to move the needle quite a bit. We are already [at this level] in some pockets, like health care. There are certain unique requirements in India that need to be addressed specifically, but we are not looking at say 80% of our team working on India-related products because much of [the GE] products can be used in India without needing any intervention from the India standpoint.
India Knowledge@Wharton: How many products have been developed for India at this center and what is the plan going ahead?
Katragadda: The products already there in the market include the ECG portfolio of products, the lullaby warmers, wind and steam turbines. At this point in time, we are working on 30-plus products that we hope to bring into the market over a three-year period.
India Knowledge@Wharton: What are your thoughts on the concept of reverse innovation [an innovation that is adopted first in the developing world]? Do you see it happening in a big way?
Katragadda: I believe that reverse innovation will be very important not just for GE, but for all multinationals. The way I think about it is that you need to focus on the market you are present in. You make the products for that market…. The trend is to move away from making products that will serve all of the world in one go because then you can become more cost effective by removing the bells and the whistles, which may not be relevant in a particular market.
The other aspect is [thinking about] where is the hunger for a particular product? If you take a low-wind regime wind turbine, that hunger is here [in India]. So in this case, the lead market should drive the innovation. Here we are not talking about just the right features but fundamental innovation. So rather than let only the developed markets dictate the product specifications, we need to consider the needs of the emerging markets because that is where the market is shifting. Once you do that, there will be a portfolio of products for the emerging markets, which will [be useful] in the developed markets also…. But the focus has to be on the market in the region rather than where I can sell it afterwards. The “reverse” portion will happen automatically if you develop a fantastic product. For instance, our single-click ECG machine made for India sells more in Europe than in India. But I would say that our journey of reverse innovation [at GE] has just begun.
India knowledge@Wharton: Has GE taken any specific measures to give a push to reverse innovation from this center?
Katragadda: The biggest push is [creating] the India P&L. [India was made an independent P&L within GE at end of 2009 and for the first time someone of the rank of senior vice-president — John Flannery — was made the head of GE India.] The best way you can pay respect to a region is by saying that you are a P&L, you’ll have decision authority but you’ll also be responsible for the results. This also enables you to have a long-term view instead of a short-term view.
We have John Flannery [president and CEO of GE India]. He is the India P&L leader and he is capable of making technical investments, taking commercial calls that may be different from what may be taken globally and [he has] the ability to quickly turnaround decisions. This has been one key reason for our range of “for India” products.
India Knowledge@Wharton: What do you see as some of the other big trends in research and innovation, not just in GE but globally?
Katragadda: The way I look at it is that you either have new science or you have new materials or a combination of materials. A combination of this will have to meet either a present need that is not fully met or a new need. In this framework, if you look at genomics as a science that has emerged over the past decade, it has not been tapped to the fullest extent. So I see that getting a lot of attention…. The fundamental understanding of new and increasing diseases is something that will get a lot of attention in the near future. Then there are relatively lesser known areas like connectomics — the understanding of the way the nervous system is connected. This will again lead to a whole new set of cures in the health care area. But that’s not all. A thorough understanding of both genomics and connectomics will revolutionize computing systems because you will be able to model computing systems [based on that learning]. If we look at our genes, they are a digital storehouse of information. All that our ancestors learned is there in our DNA. And the things that we learn and react to are stored in our nervous system. The shorter-term analog, the longer-term digital and the way these two interact is the best computing system. Just imagine the potential of taking this knowledge and creating computing systems based on it.
The other area [for innovation] is energy. The biggest thing in energy today is shale gas. In the U.S. you get shale gas for US$2.2 per MMBtu (million British thermal units). There is no difference in terms of using that as a fuel compared to the US$15-18 MMBtu that I have to pay here. There is no other commodity at this point in time that has such a price difference. So there is something that needs to happen here, globally. I think we will see things happening on this front in India because we do have shale gas here…. Water scarcity will also be a big area of research, especially in India.
India Knowledge@Wharton: Do you see the talent in India, not necessarily only within GE, driving any of this new research?
Katragadda: I think so. For example, if you look at the talent in India, we have ample strengths in statistics and much of the genomics work is statistical in nature…. So statistics is a piece of it, analytics is a piece of it, wet labs are a piece of it and in all these areas, India has good strengths. But in an area like shale gas, we have a catch up game to play. If you look at the U.S., it took them years to build the capability to extract shale gas economically. There is a lot of intellectual property locked up….
India Knowledge@Wharton: On a scale of one to 10, where would you place India in terms of innovation?
Katragadda: I would put India at a four. Ten would be when you create a wealth of nations. For example, 125 years of American wealth is based on electrification. You have centralized electricity generation, which came up as a concept there. The Industrial Revolution created 300 years of wealth — and continues to create wealth — for the European nations. The digital revolution has created wealth of nation for both the U.S. and Japan. So I would challenge ourselves, including myself, to break into the next waves of innovation and create wealth not just for a few years or for a single company, but for hundreds of years and for the whole nation. Compared to this, on a scale of one to 10 we are at four today in India.
India Knowledge@Wharton: How can we change this? How can one nurture the spirit of innovation in people, in a country as a whole?
Katragadda: Individual entrepreneurs are the fundamental building blocks of an innovative ecosystem. That is not encouraged when you don’t have the right framework of incentives. For instance, if you want to set up a wind farm in India, technically it is very straightforward, but you need to understand the policies in their Nth level of detail and go through immense red tape…. So first of all, policy has to be simple and transparent and entrepreneurship must be encouraged. Apart from this, government funding [for universities] should mandate industry participation because it is [the connection] with the market that helps you innovate. At present, while there is a good amount of funding from the government, it comes without any strings attached. So when we go the universities [with funding] we are not received with open arms because we do want some deliverables ….
Knowledge@Wharton: India is known for its concept of ‘juggad’ – loosely translated as “doing more with less.” How do you view this?
Katragadda: I look at juggad as makeshift innovation which can be repeatable but not monetized. You get things done somehow. It is creative, it is innovative, but this is not what real innovation is all about. Innovation is finding new ways of creating value. I have nothing against juggad for the purpose it serves, but we can’t rest on juggad. It is not the kind of innovation we should be aspiring for as a nation. There is a quantum leap required in terms of our thinking.