Entrepreneurial Management & Innovation at WIPRO

Introduction to the organization

Wipro was founded in 1945 in India and is currently diversified from producing vanaspati oil during its initial set up to Information technology, consumer care, lighting, engineering and health care sectors. The company has a long history of budding from independent entrepreneurship to corporate entrepreneurship after its diversification. Though founded during the early 20th Century, this company came before economic liberalization and adroitly used the opportunities offered by deregulation to grow businesses. At the same time, they built strong organizational capabilities such as project management, quality of execution and speed. Arguably it is one of the few companies in India that changed its products and services with the pace of technological change and need. Wipro deals with business in IT services, Product engineering solutions, Technology infrastructure services, Business Process Outsourcing and other consulting related services. As of 2010 the company has employee strength of more than 100,000 and is classified as a large company in the IT sector.

Currently the organization is diversified into many businesses with Information Technology services playing a major role in Wipro’s success. Today the Indian IT companies namely TCS, Wipro, HCL are renowned in the global market for their services. The various external factors leading to this situation include the Indian education system, high quality engineers, low cost of creation and high technological infrastructure.

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Approach to the document

This report defines the various kinds of innovative outcomes in Wipro and how it evolved over 50 years to its current state that can be classified into the OECD innovation model. After this a few factors that have led to these innovative outcomes have been discussed and further classified as facilitators or barriers. Based on these observations a few recommendations are also provided to improve corporate entrepreneurship at Wipro.

Definition of terms

Academicians and practitioners have defined corporate entrepreneurship in many different ways in the existing literature. A number of authors emphasize that entrepreneurship primarily acts in underpinning innovation (Drucker, 1985b; McGrath, 1996; Stevenson and Jarillo, 1990).

According to Schumpeter (1934) Innovation is

1. The introduction of a new good or a new quality of the good
2. The introduction of a new method of production
3. The opening of a new market
4. The conquest of a new source of supply
5. The carrying out of the new organization of an industry

It can be differentiated between 4 types of innovations, namely “Product Innovation”, “Process Innovation”, “Marketing Innovation”, and “Organisational Innovation” (OECD, 2007). Corporate entrepreneurship is defined as the effort of promoting innovation from an internal organization perspective, through the assessment of potential new opportunities, alignment of resources, exploitation and commercialisation of said opportunities (McFadzean et al 2005). Corporate Entrepreneurship (McFadzean, 2005)

From 1945 – 2000 individual entrepreneurship

Azim Hasham Premji, the chairman of Wipro, was called upon to manage Wipro when he was 21 years old at the sudden demise of his father in 1966. He has steered the company to a rapid growth since then. In the 70’s, he realized a growing demand for computers in India with a few manufacturers. The company had no knowledge about computer manufacturing but Premji decided to venture into this and decided to collaborate with scientists from the Indian Institute of Science (IIS) to manufacture hardware and later software (when the Indian market was liberalized in 1991). Under his leadership, the fledgling US$ 2 million hydrogenated cooking fat company has grown to a US$1.76 billion IT Services organization serving customers across the globe.

Value based leadership

Premji has established a strong value system in Wipro and believed that values not only helped in achieving success but also made that success more enduring and lasting (2003). Based on the vision created by the leader the organization made its path towards diversifying into various sectors and successfully innovating. Below are the milestones in the value based leadership that led to its growth until 2000

• 1977 – WIPRO was renamed to Wipro products limited due to its wide range of products
• 1970’s – First Indian company to manufacture mini computers
• 1980 – Wipro Technologies was created to manufacture computer hardware and related software
• 1988 – Wipro Biomed was established to market and service bio-analytical and diagnostics instruments. In 1989 it turned into a joint venture with GE and launched Wipro GE Medical systems limited
• 1998 – Premji decided to undertake an image building exercise for Wipro and adopted the rainbow sunflower logo and the tag line “Applying Thought”
• 1999 – First Indian company to receive the SEI-CMM level 5 certification which would help the company in global business development.

All these initiatives led by the leader made Premji one of the top 30 all time great entrepreneurs in the world (Business week, July 2007). The magazine said, “After making the company profitable and expanding from food oil to other consumer goods, Premji led Wipro into the nascent tech economy in the 1970s. Premji is also a hands-on manager involved in day-to-day operations, even making sales calls himself”.

He believed in empowering people allowing them to express their ideas and raise voices freely. There revolutionary policies would help shape the leaders of tomorrow. Employees were free to give feedback in a transparent system and the management at Wipro learnt what was hampering team performance and what could be done to rectify any problems.

Corporate entrepreneurship from 2000 onwards

From 2000 onwards the company focussed on innovation as a measure to sustain its competitive advantage. Since the launch of innovation initiatives in 2000, Wipro had emerged as one of the strongest players in the Information Technology (IT) industry. The company offered a comprehensive portfolio of products based on innovative solutions. Innovation was a prerequisite at Wipro since it believed that this was essential to achieve growth and competitive advantage. It was one of the values on Wipro’s promise statement that said, ” With utmost respect to human values, we promise to serve our customers with integrity through innovative, value for money solutions, by applying thought day after day.”

• 2000 – In September Wipro established ePeripherals Limited (Wep) diversifying into IT related businesses.
• 2004 – Wipro’s innovation initiatives focused on the publishing industry resulted in huge success thus expanding the solutions to other areas – finance, insurance, and manufacturing. 900 employees working towards developing innovative business solutions (Business Week, 2006)
• 2007 – As of March 2007, innovative initiatives contributed to 7.5% of the toal revenues. Had a target of 10% by 2009 and successfully achieved it.

Innovation council

Soon the innovation council was formed and the approach aimed at soliciting ideas from the employees. The collected ideas from employees were discussed at the IC with top management reviewing the proposed ideas and analyzing how they would help the company accelerate growth and increase the quality of its new products. Thus it offered a bottom up approach to innovation although the feasibility was considered by the top management. And with selected ones, the company granted funding, technology and resources to bring into action. This encouraged the employees to suggest more innovative ideas and by the end of 2006 the council had 200 permanent employees to handle requests.

Working framework for innovation at Wipro

The innovation initiative at Wipro began with in depth study of successfully innovating companies like Nike, 3M Technologies and Home Depot. A 2 member team was formed to consult with academicians, experts, industrialists to chart out an innovation initiative. However after thorough examination it was observed that no existing innovation models could be replicated at Wipro. Hence by adopting a ground-up approach a focused innovation model was built based on the requirements of the company also considering authorized customer ideas. According to Oslo Manual for measuring innovation there are 4 types of innovation product innovation; process innovation; marketing innovation and organisational innovation. However the working framework of innovation at Wipro classifies innovation at Wipro as Process Innovation, Technology Innovation, Delivery Innovation and Business Innovation.

Applied innovation framework

Wipro’s applied innovation was a 360 degree approach to business that focussed on four domains – business, process, technology and delivery. This would help Wipro technologies work collaboratively with its clients to reduce the cost of a project, speed up the process of delivery and identify new opportunities for business.

Innovation at Wipro (Divakaran Mangalath, 2006)

Process innovation

As part of its innovation process Wipro applied the principles of lean manufacturing and six sigma to its process of software design and development. This helped it increase productivity by 10% since it reused tools and components. It was evident that after lean principles of engineering were applied to over 700 projects, 20-30% savings were recovered for the company (director’s report, 2007).

Delivery Innovation

This included the software factory model and the global delivery model. The factory model integrated several IT functions into a centralized supply chain allowing common areas of work to be grouped for better quality and time saving. Wipro observed 10-15% reduction in cycle time of demand to delivery of products. It was globally used across projects and Wipro was credited with pioneering the virtual distributed software development model that enabled companies to manage large projects through virtually distributed teams.

Technology innovation

The company was involved in creating IPs (Intellectual Properties) that effectively enabled its customers to reduce time in the product life cycle and improve the success rates of the products. Eg: the company developed a plug-n-play patent and IP that helped reduce the product’s time-to-market by 20-25%. Also they were the largest bank of patents in bluetooth, wireless LAN and IEEE 1394.

Business innovation

To improve its relation with customers, the company focussed on business solutions that were specific to the related industry. Wipro’s business innovations included Data Privacy and Master Data Management, Clinical Data Management, Integrated Publishing platform, vendor managed inventory, retail pharmacy, etc. Wipro also developed the GCC (Global command center) with IT infrastructure for its customers. The customers were happy to monitor, diagnose, store and secure applications as and when needed.

The outcomes of corporate entrepreneurship

In 8 years, by the end of 2008, innovation became an integral part of product development process. Since the cyclic processs has been inculcated in the employees, the “time-to-market” was significantly decreased for new products and also the products used leading-edge technology.

A work flow solution – Flow-Brix was estimated to generate revenues in the range US$ 75,000 – US$ 1 million.

Innovation had spread across all sectors of the organization and i-Desk was the first one to enable easy HR management – by a collaborating workplace tool for workflow solutions for publishing.

All these innovation initiatives have been fruitful and also helped the company attract prospective employees to fill 29% of vacancies in 2006 (Business week, 2006)

Hence it was certain that the innovation process enabled a strong product portfolio and also brought good revenue streams. In Wipro technologies, the company was focussing on consultancy services which would further enhance its image in the global software industry.

Internal organizational factors to consider for successful innovation

Effect of leadership

In Wipro it was not only recruiting the right kind of people, but also in proper training of its people. Employees were mandated to frequent internal training sessions with major responsibilities showered on them although they may not seem well prepared for the role. Premji (2005) defined 8 leadership qualities which were made a standard against which new employees would be recruited and trained. He believed that training and development at various stages were designed by mapping people’s competencies to specific roles in the Life Cycle Stage Development Plan.

Innovation Culture

Premji also placed utmost importance on innovation and creativity in developing a successful organization. Stressing the importance of innovation for the overall development of the organization, Premji said, “Innovation is essentially the application of high creativity. It need not be restricted to just products; it applies to services, employee attitude and across all levels. Innovation is a fundamental mindset pursued seriously by an organization. It is imperative to imbibe the culture of innovation”(Manu B. 2006). Analysts report that the open and supportive culture at Wipro gives employees the opportunity to develop their skills and as a result, contribute more to the organization.

Management practices

In order to come out with innovative products and services, the top management at Wipro committed itself to fostering innovation in the organization and encouraging employees to come out with innovative ideas.

Value system

The company also strove to make it more customers centric. The company believes in the objective of “customer-in” where the voice of the customers is built in the products rather than being “product-out” where the products are sold by marketing its features to the customer. Premji also believed that this value system has to remain intact even after his tenure which was openly admired by the competitors.

Organizational structure

In Wipro the organizational structure was also responsible for carrying out innovation initiative in selected projects. The company emphasized the commercial viability of an idea along with innovation. The concept was to create components with Intellectual Properties (IP) that would generate revenues over a period of time rather than one-time revenue from projects.

Innovation strategy

Another approach to innovation involved executives of several industry vertical business units identifying new technologies that would be of importance to their clients in the near future. The objective was to have expertise in the new technologies and come up with the products and productive services that could be patented by Wipro. These centres also work with research institutes, technology providers and also provide a platform for the growth of the employees. The company was able to launch new products continuously due to its innovation strategy, which considerably reduced the time between idea-generation and final product development.

A few hindrances to effective innovation

Competitive rivalry

WIPRO was able to produce hardware and software for the domestic market, however due to high competition and low quality; they decided that they could not export their products in a market that had the niche products from the big companies. They were not ready to take the risk of competing with IBM, Intel, and Apple and decided to use the opportunity where doors were open in the Indian market. If in the process, they were able to attain the quality as these giants, they could have made it to the bigger markets in no time and could have proven cost effective than other options. But due to unavailability of high quality raw material and skilled resources, they had to limit to the domestic market.

National culture

India is a developing nation and it takes time for technological changes to occur. Also the initial cost of hardware and software related to new technology is very high and not affordable to most projects. Hence although the Innovation council decides on feasible innovative ideas posted by employees, quite often they are rejected due to unavailability of resources in the country. However the company is striving to compete with global competitors in the technological field and this barrier can cause a major impact on the innovation strategy.

Recommendations

Top down approach

An entrepreneurial vision indicates the strategic intent of the organization. Stein (2002) proposed that the most admired companies set challenging goals. This vision encourages individuals to hold informal discussion with colleagues, friends and share the knowledge that they bring with different project experiences. This helps refine the idea based on the critical analysis by more than one person. Thus the vision setter actually motivates employees to strive to excel beyond their capabilities and routines. Although innovation and creativity cannot be forced on employees, this provides a platform to discuss, relate and generate new ideas. This continuous innovation is also possible only when the employee understands and accepts the vision and strives to deliver it.

Team based activities

In Wipro technologies project work is also carried out in teams. This inculcates an team based culture for working among employees. Although the employee is not forced to discuss innovative ideas within his team he can depend upon forums to find people with similar interests. As part of knowledge sharing the company encourages participation in forums and blogging. Thus a webbed structure is created in sharing ideas. For example, people working for different projects but with similar technological backgrounds can rely upon the forums for their needed expertise. In this way simple tools created in one project can be easily passed on to other projects with similar requirements effectively reducing time to collaborate with the Innovation council. This can also be seen as a knowledge management initiative that fosters innovation.

A new perspective

The organization can look upon innovative ideas as a change management process. The organization has keenly created the Innovation council to take care of the process. However the acceptability of existing teams to these new ideas is not calculated as a risk. People could be inflexible in accepting a novel way of doing business. They are more comfortable with the routine methods and could prove a failure to the case. Along with innovation management the organization should also consider change management as part of the culture. This would improve acceptability of ideas and keep the cyclic process of innovation going on.

Conclusion

Wipro which began with the success of an individual entrepreneur has matured to a corporate entrepreneur that fosters innovation. The innovation discussed about Wipro technologies in particular can be applied to other industries too. Analysts feel that these internal organizational factors – culture, leadership, strategy give employees the environment conducive for continuous innovation and contribute more to the organization. However, the company has to rethink of its methods since close competitors like TCS, Infosys and CTS are also making huge investments in innovation. Hence with increased competition, it is a challenge for Wipro to sustain the current position of the innovation leader in the Indian market.

References

1. Azim Premji, “8 Steps to Excellence”, The Smart Manager, January 2005.
2. “Azim Premji’s Interview with IIM Bangalore’s S.Krishna”, www.azimpremjifoundation.com, March 2003.
3. “Director’s Report,” www.moneycontrol.com, March 2007.
4. Divakaran Mangalath, “What Makes Innovation Work,” www.wipro.com, December 2006.
5. Drucker, P.F. (1985b), Innovation and Entrepreneurship: Practice and Principles, Heinemann, London.
6. Elspeth McFadzean, Andrew O’Loughlin, Elizabeth Shaw, (2005) “Corporate entrepreneurship and innovation part 1: the missing link”, European Journal of Innovation Management, Vol. 8 Iss: 3, pp.350 – 372
7. Gupta, A.K. and Govindarajan, V. (2000), “Knowledge flows within multinational corporations”, Strategic Management Journal, Vol. 21 No. 4, pp. 473-96.
8. Jon Tozzi, “The Greatest Entrepreneurs of All Time,” Business Week, July 2007.
9. Manu A B, “Premji on Innovation, Creativity,” www.rediff.com, February 16, 2006.
10. McGrath, R.G. (1996), “Options and the entrepreneur: towards a strategic theory of wealth creation”, Academy of Management Proceedings, pp. 101-5.
11. OECD (2007): OECD Science, Technology and Industry Scoreboard 2007, Organisation for Economic Co-operation and Development, Paris, p. 94.
12. Stein, J.C. (2002), “Information production and capital allocation: decentralized versus
13. hierarchical firms”, The Journal of Finance, Vol. 57 No. 5, pp. 1891-922.
14. Stevenson, H.H. and Jarillo, J.C. (1990), “A paradigm of entrepreneurship: entrepreneurial management”, Strategic Management Journal, Vol. 11, pp. 17-27.
15. Schumpeter, J.A. (1934): The Theory of Economic Development, 13th Printing 2007, New Jersey: Transaction Publishers.
16. Wiklund, J. and Shepherd, D. (2003), “Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses”, Strategic Management Journal, Vol. 24, pp. 1307-14.
17. “Wipro’s New Groove,” www.businessweek.com, February 17, 2006.
18. “Q&A with Wipro’s Azim Premji,” www.businessweek.com, November 27, 2006.

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