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An evening with Mr Ajit Rangnekar

On Friday, March 31, we had a fascinating session by Mr Ajit Rangnekar. This was the 98th session under the ICFAI WiseViews series. Mr Rangnekar shared his views on entrepreneurship and innovation. He explained what we should be doing to solve the important problems of the world with a special focus on sustainability and climate change.

About Mr Ajit Rangnekar

Mr Ajit Rangnekar is the Director-General of the Research and Innovation Circle of Hyderabad (RICH), a Telangana Government initiative. He also heads the PSA supported Hyderabad City Cluster initiative. This is a collaborative network of research and academic institutions, industry, startups, civic bodies, and government, to drive technology Innovations for mass impact.

Mr Rangnekar retired as the Dean of the Indian School of Business. He has been a member of many global committees in Business Education. He is a Governing Board member of IIITH, a founding member of T-Hub, a Board member of various companies, and a Director of Social Venture Partners, India where he volunteers with NGOs to increase their impact.

Prior to ISB, Mr Rangnekar was in Hong Kong for over 20 years, 14 of those with Price Waterhouse Consulting. Mr Rangnekar is a graduate of IIT, Bombay, and a post-graduate from IIM, Ahmedabad.

Introduction

Every 40 years or so, the dominant world view changes. Most people subscribe to the dominant world view of the time with a much smaller and less powerful group opposing it.

During 1900-1945, we had colonization. Even the Nazis were in some sense colonisers. They were trying to colonise countries like Britain and France which had succeeded in colonisation! The opposition to colonisation came from the freedom struggle movements in the colonised countries.

Between 1945 and 1980, we had democracies (including Fabian socialists), opposed by a smaller group of communist nations. The Non-Aligned Movement led by Nehru and Sukarno could not quite take off.

Between 1980 and 2020, we had globalization opposed by some isolated groups like extreme Islam in the middle east. Today, globalization is no longer the dominant world view.

Since 2020, the dominant view has been climate change. This is opposed by a small group of sceptics and some selfish groups who are more focused on doing things to serve their own countries (or pointing the blame on some countries rather than trying to solve the problem). Mr Rangnekar emphasised that when a building is on fire, we should not be trying to protect our own room or apartment. The key point is that if climate change is the most pressing issue of our time, our actions must be aligned accordingly.

ISB’s role in promoting innovation and entrepreneurship

When ISB was set up, it was felt that instead of setting up traditional departments on functional lines, the focus should be on impact. That is how the Centre of Entrepreneurship was set up in collaboration with TIE. Later, a Centre for Emerging Markets solutions was set up.

When it came to entrepreneurship, the focus was on enabling startups which worked in four key areas: Food and agriculture, Health, Education and Climate change. (The focus of climate change those days was on pressing issues like drinking water.) When ISB studied the landscape, it found there were some 40+ national research institutions in Hyderabad. But they were working on their own and reluctant to collaborate with others.

ISB made a presentation to the government in 2o10. A case was made out that these research institutions were national treasures created with the taxpayers’ money. It was important to have everyone sitting at the table and exchanging ideas and working together to solve important problems. That is how the Research and innovation Circle of Hyderabad (RICH) was born.

Though the Circle was set up, nothing much happened for a few years. Things changed when the state of Telangana was formed and the KCR government came to power in 2014.On the second day after taking charge as minister, KTR visited ISB to have detailed discussions. He made it clear that the government’s focus would be on innovation and more specifically inclusive innovation.

One of the key challenges was to set up the ecosystem. For example, in case of both MedTechs and Agtechs, testing and validation was a major problem.

The agenda for Telangana

Mr Rangnekar mentioned that innovations have traditionally focused on the wealthy. We need innovations that will benefit the poor. Mr Rangnekar came up with several ideas.

We must ensure climate resilience in food production. If due to climate change, we lose 15-20% of the agricultural production, there will be catastrophic consequences. While it is important to advise farmers on what they should be doing, we should also tap into their traditional wisdom. RICH has documented 25 traditional climate resistance practices used by farmers in Telangana and shared them with UNDP. Many of them are counter intuitive.

We should focus on water availability. The city of Hyderabad had some 300 water bodies at one point of time. We must ask ourselves how we can sustain the existing water bodies and protect the groundwater levels. Even if we have 4-5 years of draught due to climate change, we should be able to protect food supply.

Telangana has a strong pharma cluster. These companies should look at their carbon footprint and increase their focus on green chemistry and effluent treatment.

When it comes to electric cars, we are only assembling them. We need innovations in areas like batteries and green hydrogen.

In the retail sector, there is a lot of scope for improving sustainability. Excessive use of packaging, especially plastics, is a matter of big concern.

Investment criteria

Traditionally, when we invest, we are guided by ROI. However, many startups may generate low financial returns but may make a big social impact. If there are ventures with different types of social impact (cleaning, vaccination, education), where should we put our money? Educational institutions have failed to come up with a framework where we can measure and evaluate the returns from social impact.

Mr Rangnekar mentioned that he is an incurable optimist. Eventually, we will have a solution to all our problems. But we must play a more active role and demand from the different stakeholders whatever is needed to safeguard the future of our children.

Mr Rangnekar gave the example of RTPCR kits. In March 2020, India did not have the capability to make such kits and was completely dependent on imports. Within 3 months, the different clusters were working together to bring the startups to speed. With government approval following, the kits became available across the country. Over the next 9 months, the focus was on improving the quality and to make the country self-dependent on the ingredients which go into the kits. By April/May 2021, the country was fully self-sufficient in RTPCR kits and even ready to export.

Malnutrition among women and children in tribal communities is common. One way to deal with the problem is to provide supplements such as iron tablets. But RICH has tried to push cooking practices that make the initiative self-sustaining.

In agriculture, RICH has tried to encourage agritech start ups. From a list of 300, 86 have been shortlisted. RICH is working with the state agricultural university and using the government machinery to promote the use of these solutions.

As Mr Rangnekar mentioned earlier during his prepared comments, RICH is trying to shape the ecosystem. Many Medtechs have a problem when it comes to testing and validation. RICH is bringing the research institutions, government, hospitals, and industry together to make this happen.

For innovation to happen, we need a combination of intellectual capital (research and educational institutions) innovation capital (entrepreneurs), industry and supportive government.

Telangana is fortunate to have a very supportive government. The government has put in place policies for all key areas. Mr KTR and Mr Jayesh Ranjan are always around to help businesses as and when they face any problems. They are also great ambassadors for the state and sell the state effectively in forums such as WEF. That is why so many foreign delegations are visiting the state. That is also why next month, some 100 IAS officers from all over the country are visiting the state to understand the ecosystem here.

The government believes only in providing the infrastructure. It does not get involved in running the business. There are 9 government sponsored institutions in the Telangana ecosystem and they are all headed by private sector execs. There is only one government nominee on the boards of these companies.

THub: T-Hub has been conceived of as a public private initiative involving the government, industry, and Academia. The founding partners include the Telangana government, ISB, IIIT Hyderabad and NALSAR.
TSIC: This is the state innovation cell that takes innovation to the districts.
WE HUB: This has been set up to encourage women led businesses.
T- WORKS: This serves as a rapid prototyping centre.
RICH: Resource and Innovation Circle of Hyderabad works closely with other leading labs in and around Hyderabad.
TASK: This is the Academy of Skilling and Knowledge which runs various courses.
Emerging Technologies: This arm of the government explores the possibility of innovations driven by emerging technologies such as blockchain, AI and ML.
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Additive Manufacturing

The government has also chosen the right areas for focus: Agriculture (Hyderabad accounts for two thirds of the seeds production in the country), Healthcare (The state has strong clusters of pharma companies and hospitals.) and sustainability (the need of the hour).

Telangana is also blessed with a large young, entrepreneurial community. To encourage entrepreneurship, the state has designed various courses.

The Honeybee network has been around for a long time. Rural people are quite creative as necessity drives innovation. But these good ideas have not translated into a meaningful economic impact. The state machinery has multiple priorities and should realign them to get entrepreneurship going in the rural areas. TSIC, the state innovation cell has the mandate to take innovation to the districts.

It is young individuals with a fire in the belly who are really driving innovation. Others are only providing support such as infrastructure or sometimes even coming in the way. The academic community has been most resistant to change. Mr Rangnekar referred to the entrepreneurship program launched several years ago by ISB. The students were amazing and came up with brilliant ideas. For example, one of them developed an air-conditioned helmet that can be used by construction workers in places like the middle east. But the faculty were stumbling blocks.

In recent years, a lot of money has been flowing to educational institutions to set up incubators. But most of these institutions do not have the expertise to take these ideas to the market. For almost 70 years, our educational institutions have been focused on teaching and to some extent on publishing. It is unrealistic to expect them to make the switch overnight. Some of the bigger institutions like the IITs, IIMs, ISB and University of Hyderabad have pivoted. But these institutions cater to the best and brightest or only a minuscule portion of the ecosystem. Many good students can be found in Tier 2 institutions. So, it is important to bring them up also to speed.

We should also be clear about what to expect from the educational institutions. It would be wrong to expect them to start producing unicorns. Their main role is to provide hands on entrepreneurial education to students. This knowledge will stand the students in good stead if they want to take a plunge into entrepreneurship later in life. The role of these institutions is to nurture ideas and provide a testing ground. If we are too much focused on outcomes such as ROI, many ideas will not qualify for the incubator.

If individuals do it, we call it jugaad. If larger institutions do it, we call it research. We should avoid this kind of classification. Quick fix is an important component of innovation. Any idea that solves a real problem is worthy of being called an innovation.

VCs have plenty of money to invest. It is good ideas which are in short supply. Entrepreneurs should also be able to sell their ideas effectively to VCs. For this they need to be good story tellers. In general, we are not good at story telling.