4.2 Technological innovations in the SME of Mysore, Karnataka

Askar Microns is a medium-sized machine manufacturing enterprise operating in the Hebbal Industrial Estate in Mysore. Two first generation entrepreneurs started this enterprise on a small scale in 1995. Both the entrepreneurs had acquired MTech (Master of Technology) from PSG College of Technology, Coimbatore in Tamil Nadu, which is one of the prestigious educational institutions in South India. After obtaining their MTech in 1985, they joined M/S, Kirloskar Electric Company, Mysore, which was one of the most reputed electric companies in Karnataka in the 1970s and 1980s. In this company both were in the machine division and were involved in machine building activities.

Their desire to innovate CNC machines originated due to their involvement in the development of a machine by name 'companion' in 1989, which was developed to replace a product called 'lathe mate'. However, Kirloskar Company, which is basically an electric company, did not support their innovative thinking in machine building activities. This made them to conceive the strategy for initiating their own enterprise to implement their ideas in the form of developing new machines. In 1993, they started the blue print of their venture. In 1995, both of them resigned from Kirloskar Electric Company and set up their enterprise. Thus their 'urge to innovate' led to the birth of their enterprise.

In 1995, they invested about Rs.6 million for setting up the enterprise including Rs.4 million exclusively on plant & machinery. Subsequently till January 2001, they had invested another Rs.4 million. The enterprise had 35 employees including two Managing Partners. Out of them, 12 were engineers (seven of them with electronics engineering degrees and the remaining five with mechanical engineering degrees) and five were involved in marketing exclusively. They had an office in Pune, Maharashtra, which is a major auto ancillary hub of India. This office was responsible for marketing and servicing of machines sold in the region.

The availability of land at cheaper rates and subsidies influenced them to locate their enterprise in Mysore. The new enterprise gave both the entrepreneurs scope for giving concrete shape to their ideas and implement their innovations. Thus, this enterprise was primarily 'innovation driven' and its technological innovations were revolved around new product development. The required technology development activities took place in-house by the entrepreneurs themselves. However, this enterprise did not have any formal R&D department and innovations were carried out informally.

To develop new products, the entrepreneurs developed new designs, drawings and prototype development prior to the development of final products. CNC based lathe machines were the main outputs of their technological innovations. The basic designs for the new products were developed based on technology imported from Japan. In addition, they performed retrofitting of existing and imported traditional machines with CNC facilities. In retrofitting, the major contribution was in terms of software development along with the development of a few components. To develop a new product, from the conception stage to the final machine, it took almost one year for them. Then they did trial testing of the machine and obtained a feedback from the prospective customers for final production, which took another six months.

Thus, CNC based lathes were the major outcomes of their technological innovations and retrofitted CNC machines were the secondary output. On average, 60% of their turnover came from the production of CNC lathes and 40% from the retrofitting activities. During 1995-2001, they developed three types of CNC lathes with the brand name 'spinner'. Initially, they developed 'Spinner-20', which was a bigger size CNC based lathe suited for producing auto components of four-wheelers. Later they developed a smaller version, 'Spinner-10', which was suited for manufacturing two-wheeler components. Subsequently, a further smaller version, 'Spinner. Com' was developed, which was claimed to be suitable for high speed machining. In 2002/03, they launched CNC co-ordinate table for conventional lathes, which, according to the entrepreneurs, had become very popular as a low cost solution for centre lathes. This product also gave life and recycled old machines, which otherwise would have been discarded. In 2003/04 they launched yet another product--Vertical Machining Centre--VMC. They started the production batches of this product from June 2004 onwards. As a result of these technological innovations and new product developments, the turn over of the enterprise increased from Rs.12 million (about US$ 261000) in 1995/96 to more than Rs.1200 million (about US$ 26.1 million) by 2004/05. This gave further confidence to the entrepreneurs to expand their business. Recently, they took over a State promoted enterprise, namely, 'Chamundi Machine Tools' from the Government of Karnataka and implemented the second phase of expansion with an investment of Rs.50 million. Thus this enterprise graduated from a small-scale enterprise and became a medium-scale enterprise over the period of a decade.

The technological innovations of the enterprise were based on in-house technological capability. In-house training of labour was a continuous process. External support played a role to the extent that every year the entrepreneurs sent their systems personnel to M/S Siemens and other machine tool manufacturing companies for training. They had incurred an annual expenditure of Rs.1.5 million for training of personnel and participation in national and international exhibitions. The major objective of their participation in exhibitions was to exhibit their products, learn about the latest developments in the industry and develop business contacts. This has significantly contributed to the growth of their exports and turn over.

To conclude, it was the self-motivation and strong desire of entrepreneurs to innovate, backed up by their technical education and work experience which were primarily responsible for the birth as well as technological innovations of Askar Microns, Mysore. Equally responsible for the birth of the enterprise was the lack of support and appreciation from the large enterprise for the innovative ideas of the entrepreneurs who were employees of the former earlier. In-house technological capability developed due to self-efforts and periodic training of personnel had enabled the entrepreneurs to implement their innovative ideas to achieve 'radical innovations' in the form of designing, drawing, prototyping and manufacturing of new products. On an average, they had developed one new product in every second year.

5. COMPARATIVE ANALYSIS AND INFERENCES

Technological innovations contribute to the competitiveness of SMEs and they are better suited for undertaking technological innovations because of their flexibility and personal attention from the entrepreneurs. This brings out that technological innovations in SMEs can emerge primarily due to internal factors. The technical education background, work experience, self-motivation, perceiving a threat from external environment--all would make a difference to SME innovations. Japanese SME realized the need and planned for technological innovation due to an external threat perceived by its technically qualified entrepreneurs. Whereas Indian SME owes its very origin due to lack of encouragement for the innovative ideas of two technically qualified employees by the large enterprise employer. In both cases, technical education background, work experience in a large enterprise and self-motivation of entrepreneurs played a decisive role in undertaking innovations. However, the two case studies substantiate the impression that SMEs do require external support to carry out technological innovations. It is the innovative entrepreneur who develops the strategy about: (i) what kind of external support to use, and (ii) how to make use of it.

What is noteworthy is that entrepreneurs neither in Japan nor in India have got any significant support from a government institution. While Japanese SME engaged itself and took advantage of institute collaboration, Indian SME has not entered into any collaboration with any Institute/ University. The supportive role played by large enterprises is more conspicuous in Japan than in India. It was the new product needs of major customers, which gave an immediate push to the innovations of Japanese SME whereas it is the constant touch with the customers, own perception of entrepreneurs and periodic visits to international exhibitions, which played a crucial role in the innovations of Indian SME. In addition, technology import from Japan did help in its innovations.

Japan being an industrialized economy, Japanese SME focused marketing of its products entirely on the domestic market as all of its customers are located in Japan itself. Its product innovations enabled it to climb up the value-chain and resort to the production of high-end products by shifting from the production of low-end products as required by its core customers. This enabled it to survive and grow in size in the intensive competitive environment of the 1990s and after, in the midst of considerable exit of SMEs in Ota. Whereas India being an industrializing economy, Indian SME proved its mettle by entering the international market subsequent to its product innovations and grew in size.

The above case study based comparative analysis of the nature and strategy of product innovations in SMEs enables the following inferences and propositions:

* Internal capability is decisive for product innovations to emerge from SMEs

* Technical education and work experience give a prompting edge to entrepreneurship for undertaking innovations

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