Why Thomas Friedman's Protectionist Column on Innovation is Wrong

Earlier this month, the New York Times’s Thomas Friedman wrote a column about Indian startups called Do Believe the Hype. 

Friedman takes a rather extreme view of the burgeoning of India’s startups – calling this movement “scary” and “depending on your perspective…a sign of the apocalypse.”

I find this protectionist sort of viewpoint strange. Don’t social innovations, like mobile banking which enables people in rural or otherwise off-the-grid type areas access to institutionalized forms of savings and transfer of funds, benefit us all? If I can save more, transfer money more easily, become richer, and make my business more efficient, that’s good for GDP and the economy as a whole – domestic and global – as innovations can, and will, be exported.

On Innovation, Entrepreneurship, Economic Growth and Democracy

Image credit: Aruinathan

The Economist, has posted a video interview with Vijay Govindarajan, the founding director of Tuck’s Center for Global Leadership, in which Govindarajan explains the concept of “frugal innovation” – the idea that while historically multinationals would innovate in rich countries like the US and sell to the developing world, in recent times this trend has reversed. 

“Frual innovation is where we innovate in poor countries and bring those products to rich countries,” says Govindarajan, citing GE’S low cost ultrasound machine, developed in Asia and now sold in the US.

According to Govindarajan, the idea of frugal innovation encompasses innovations that facilitate 300-400 percent decreases in the price point, rather than simply 30-40 percent decreases.

While conceiving of an innovation is important, Govindarajan emphasizes this is just "one percent" of the battle – the remainder falling to execution, which most companies tackle badly. 

He goes on to cite companies like Kodak, Sears and Microsoft as all having failed at executing innovation – whether this be in commercializing the digital camera, mass discount retail, or the ebook.

The most interesting part of the interview comes towards the end, when Govindarajan responds to a question about whether India could ever overtake China’s economic growth.