Rajiv Narang has been invited by the Tata Group to make a presentation at its annual general meet at Phuket. He is also busy getting ready for Financial Times' annual Innovation Summit in London.

"Suddenly there is a huge interest in innovation and the demand is growing," observes Narang, founder and CEO of Erehwon Innovation Consulting. Erehwon - that's "nowhere" spelt backwards - was originally set up by Narang with a few like-minded people "to ignite imagination in children, teach them to think creatively and apply knowledge in new ways". The programme ran in almost 400 schools between 1987 and 1991.

However, as a business model, it flopped. That's when Narang, an engineer and management graduate, switched to corporate training in innovation and creativity. It was a short leap from training to consultancy and Erehwon now boasts of a client list that includes the likes of Asian Paints [Get Quote], Bharti, Hewlett Packard, JP Morgan Chase, Apple, Mahindra Auto and Wipro [Get Quote].

Erehwon came full circle recently when it launched innovation programmes for management students. Narang spoke with Shuchi Bansal on the need for a culture of innovation. Excerpts:

Does every organisation need a culture of innovation? How do you build it?

The question is "when" a culture of innovation becomes necessary. It becomes necessary when companies find they no longer have a differentiated product and when they feel threatened by competition. Few companies think ahead and innovate at the peak of their success.

The culture of innovation can be built by transforming the leadership mindset. Leaders have to understand that innovation review is not a performance review. You can cultivate new leadership practices leading to culture of innovation.

The mission route, for instance, is the extra-constitutional route where a dedicated team focuses on innovation. Another way could be the "groundswell" route, that is, to multiply the champions of innovation within a company - basically train people in innovation skills and build it like a social movement.

But can creativity be acquired or taught? Isn't it instinctive?

It is instinctive, but a large part of it can be developed. For instance, you can teach people not to go to the usual "insight" sources.

For breakthroughs you need to shift the insight source. People can be taught skills for breakthrough innovation just as they can be taught how to excite and enroll others in their innovation. Unless you have the skill to enroll others, your idea will get diluted. Innovation skills - on how to generate concepts and how to carry them to their realization - can be taught.

People think that brainstorming also generates ideas. But those ideas emerge from a conditioned space and, therefore, old ideas keep coming up.

How did the idea of teaching innovation to management students come about?

We want to build innovation into a movement and to multiply the number of creative leaders that emerge from business schools. The idea is to produce creative leaders and not just structured MBAs, to create people who are not seeking stature or position but seeking a challenge.

At the B-schools, the programme is sponsored by different companies. For instance, the sponsor at IIT, Mumbai, is Thermax and while Marico sponsors the programme at S P Jain. The company sets a live challenge for students and we train them to pursue a breakthrough innovation. The intent is very clear. We need to un-condition their minds.

Next year we may take the programme to leadership institutes and not necessarily management schools. The IAS academy or St Stephen's College, for instance.

What do you teach the companies with whom you consult?

Over the years, we have enabled organisations to leverage innovation. For instance, we taught Marico about "orbit-shift" interventions, which help top leadership to recognise the current orbit of the organisation, inspire the team to challenge the existing status and identify "innovation keystones" - areas where innovation will help create the next orbit for the organisation. Marico used this to make a quantum jump in the strike rate of new products, such as Shanti amla hair oil.

Insights don't come only from consumers. The Kaya Skin Clinic concept, for instance, emerged from a service possibility. The first reaction at Marico was, "We are an FMCG company, what do we know about the services sector?"

But then the head said, "Perhaps we could test a low-cost, low-risk model." The tool was "breakthrough insight dialogue." Typically, ideas get pulled down; the mindset is to maintain what you are doing. So, first you dig out the mindset through diagnostic tools.

With Philips, we launched the India Business Creation Centre last year. The company set up four teams and within eight months they came up with innovative ideas. Three of their proposals - two product innovations and one business model innovation - were accepted. The company is now developing a breakthrough music delivery product and a new medical system for eye care. Both the products have global potential.

We worked with Mahindra Auto to develop new concepts for pick-up trucks. The purpose of engagement was to redefine the cargo carrier space. It resulted in one unique product concept that is ready to be patented and its launch has been announced by the company.

Your client list seems dominated by large corporations.

Innovation has generated a whole lot of interest. To be honest, we have not developed a mature business model for the small and medium enterprises. We are expensive. But I must add that the smaller companies are no longer afraid of the giants.

Does innovation refer only to product and service design? Where else is it necessary?

Data shows that in India, maximum growth in companies has come from innovation in business models. Innovations can be in product and services, in business models, business processes and strategies.

Unfortunately, most companies think that breakthrough innovation is limited to technology or a product. Since the West thinks that innovation is related to R&D, product or technology, India, too, believes the same.

You say that India could be the innovation leader of the world...

Japan is the quality leader because discipline is embedded in the Japanese society. And quality emerges from discipline. India has the intellectual capability. We are known for our thinking ability and the orientation to jugaad, that is, the small problem-fixes that we think about and implement.

But that is thinking innovation at the lowest end of the value chain. We have to move that to another level in the business and social space. For instance, why can't an Indian beat a Google or a Microsoft?

At the social level, why can't someone come up with an innovation to resolve the potable water or power crisis in the country? If we can create innovations to break rules, we can surely use them for constructive purposes. We have the raw capacity, we need to move it to a much higher plane.

In Denmark, a straw has been innovated that purifies the water as you drink through it. It costs Rs 200. With our level of water crisis, shouldn't India have innovated it?