A Pyramidal Model for India’s Entrepreneurial Ecosystem

The Indian government, in the budget speech early in 2015, authorized the Atal Innovation Mission, including a corpus of funds set aside to help promote entrepreneurship and innovation in India.  Out of that grew the work of a committee I had the privilege of chairing in New Delhi, the Expert Committee on Entrepreneurship and Innovation, which has submitted its report.

Link to PDF here.

The framework we developed directs attention to three classes of actions that must be taken, ranging from immediate action items through long-run, even generational, changes.   In our imagination, this spectrum of actions ranges from the so-called slow-moving ‘cultural changes’ base layer of a so-called ‘entrepreneurial pyramid’ to the immediate-acting top layer.

01-Pyramid02-FirstStep03-SecondStep

The top layer, including things like competitions, incubators, tinkering labs and such, can unleash pent-up energies and facilitate measurable increases in entrepreneurship in short order.

The middle layer includes working on sensitizing schools about entrepreneurship, and also working on other pre-existing institutions in the country (bankruptcy processes, intellectual property rights and such). This is not easy, but we can see results in a decade or so.

04-ThirdStepBut the bottom layer, the base atop which all of today’s entrepreneurship ensues, is the most significant as it creates tolerance for risk-taking.  It should not be neglected. Indeed, it is what will put India on a more robust growth path for decades to come.

The spirit of the report is to promote several traits that are the handmaidens of an entrepreneurial ecosystem.  There are three in particular that the committee embraced:

First, different actors – public and private sectors and civil society members – much cooperate.  The deep distrust between private sector entrepreneurs and bureaucrats and government officials, endemic in many developing countries, including in India, must be eliminated.

Second, we must adopt a performance-oriented culture.  Tolerating incompetence or, worse, fraud, is almost as bad as perpetrating it.

Third, we must encourage a spirit of experimentation.  Experiments often fail. That does not mean they are bad.  So we must learn to distinguish between failure that comes from a good attempt that did not work out, and failure that comes from incompetence or laziness or both.

Finally, if we follow the path laid out by the committee, there will be enough short-run payoff to build a constituency for continued improvement, that is, to show people that we can get sufficient results to allow us to keep moving forward.   Notice that I prefer ‘improvement’ over ‘change,’ since the essence of India is to be entrepreneurial in any event, we are trying to just remove the irritants that get in the way.

In the months ahead, I hope we can transition speedily to implementing some of the report’s recommendations.

 

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