Essential start-up lessons

Risk taking, experimentation and teamwork must also infect government machinery.

Written by Tarun Khanna | Updated: January 19, 2016 5:30 pm
Prime Minister Narendra Modi with Finance Minister Arun Jaitley during the launch of "Startup India" action plan at Vigyan Bhawan in New Delhi on Saturday. (PTI Photo by Kamal Kishore) Prime Minister Narendra Modi with Finance Minister Arun Jaitley during the launch of “Startup India” action plan at Vigyan Bhawan in New Delhi. (PTI Photo)

Prime Minister Narendra Modi has just launched the Start-up India scheme, first alluded to on Independence Day last year. In the interim five months, the aspiration, the reality and the stretch goal of this initiative have been coming into focus.

First, the aspiration. As several entrepreneurs said at the event, we should take it upon ourselves to imagine and implement solutions to our own problems. Who better to look to for insight than those living with the issues? Of course, there’s no point reinventing the wheel. Wherever similar problems have been identified and partly solved elsewhere, we should unabashedly borrow solutions, giving credit where it is due.

Part of the aspiration also, as MoS for finance, Jayant Sinha, reminds us, is that there is a real opportunity here for Indian entrepreneurs to provide solutions to the developing world, much as the United States has provided solutions for the developed world. This aspiration makes eminent sense. After all, mobile money solutions from East Africa and low-cost medical diagnostics from India have speedily disseminated across the developing world already, as ready proof-of-concept.

Of course, every country is busy developing along its own path, with idiosyncratic problems. Nonetheless, there is some commonality across the classes of problems. For example, the idea of innovating under scarcity, and of ensuring access to the disenfranchised, are generalised concerns across at least four of the world’s seven billion people.

Turn next to the reality. Full marks are due to the PM for tapping into the enthusiasm of our youth. They are the engines of entrepreneurship across India. Beyond these celebratory exhortations, we have already made incremental, but solid, progress on substantive policies. Finance Minister Arun Jaitley just announced that the tax burden on start-ups would be simplified. If one looks at numerous surveys on the web about the pet peeves of entrepreneurs, foremost among these are the tax burden and the regulatory morass in which small companies must wallow. This is enervating, the kiss of death. That the FM has responded is excellent news.

But we should also be mindful not just of those who are already entrepreneurs, but those who aspire to be. Their voices are unheard in these web surveys. Think, for example, of the millions who benefit from microfinance today. Some are capable of much more. These would-be entrepreneurs would likely put capital scarcity high up on their list of problems, as they would the difficulty of getting relevant skills to further realise their potential. We should think of “start-up” and “stand-up” as applying to the broadest swathes of our society, not just e-commerce and mobile apps, as important as these are.

Still on the substantive reality, it’s encouraging that policy machinery is coming into place. Recently, I had the honour of chairing the Expert Committee on Entrepreneurship and Innovation for the government of India. As a consequence of the report we submitted a few months ago, we now have a structure in place within NITI Aayog for the Atal Innovation Mission (AIM), with appropriate governance to provide a forum to discuss issues and monitor policy progress. The press and the public should hold us to account so that action survives much beyond today’s euphoria.

Finally, the stretch goal. All these policy initiatives will not amount to much if we don’t measure our progress. What should we measure? How aggressive should it be? I’d suggest, echoing my colleagues’ views in the AIM report I mentioned, that we have some short-run and medium-run goals. As an example, in the short run, I’d certainly like us to dramatically upgrade and expand our incubator ecosystem. Why focus on this? Because there is a foundation of effort and interest upon which we can build, yet there is a lot of inefficiency in the system, affording us the opportunity to make measurable progress. There is much that can be done to link the incubators on the input side to the university and laboratory ecosystem and on the output side to corporates.

Another stretch goal for us is to get the government to adopt a bit of the start-up bug. The PM appears to be inclined to think in that fashion, perhaps he can excite others on his team to do the same. In a start-up, one adopts a risk-taking and experimenting attitude, and one works as part of a team. Both these dimensions should infect government machinery more than they currently do. Risk-taking is not an attribute that is commonly heard in Delhi’s halls. Since entrepreneurship is a team sport, we need different policy initiatives of the government to work in concert, rather than in silos — for example, the AIM, the financial inclusion policies of the finance ministry and the RBI, the skill development attempts of that ministry, and the ministry of science and technology’s efforts to upgrade the scientific infrastructure.

These are just a couple of examples of areas where we can stretch, and measure. Hopefully, we can have a continued national conversation about this through the mechanisms set up by the AIM. The key to a stretch goal is that it is sufficiently challenging so that it motivates us to work away at it, but not so hopelessly ambitious that it ends up being discouraging to the rank and file.

So, while the twitterati are agog with enthusiasm at the celebration, I’m even more encouraged by the substantive progress towards fulfilling our aspirations.

The writer chaired the government’s Expert Committee on Entrepreneurship and Innovation. He is the Jorge Paulo Lemann Professor at Harvard Business School and director of Harvard University’s South Asia Institute.