The choking of innovation

From Businessworld (registration required) The choking of innovation By Sanjay Anandaram, JumpStartup Fund Advisors

Interesting article and very relevant. There was one paragraph that caught my attention.

It is disheartening from an industry standpoint to see hundreds of millions of dollars simply lying on the balance sheet and not being invested in creating innovative competitive advantages for the future. It is disheartening to see companies lack the confidence to take big, bold steps, even after 20 successful years in the global arena. The ability to dream big on a global level and then take the required steps to realise the dreams is what will distinguish the true global players from the also-rans in the next 10 years.

Everytime I see the Infosys Balance Sheet, this is exactly what comes to my mind. Each year, they add another Rs. 1,000 crores to their reserves. Or capitalise the reserves by issuing bonus shares. All this money is lying idle!

They now talk of returning some of this excess money to the shareholders (through special dividends). It is sickening. Why aren't they taking a bold measure and invest Rs. 1,000 crores into promoting several innovative ventures in the IT sector? Why can't they diversify into IT hardware or at least fund such projects even if they do not want to manage such a show?

As it is, Infosys has been returning decent money to shareholders by way of dividend. There is no reason to pay out more. What this country needs is hardcore investment in R&D or innovative, earth-shaking ventures.