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5 steps to the next India Inc

By Arindam Banerji
Last updated on: October 23, 2003 10:55 IST
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Arindam Banerji's strategic plan to make corporate India and the Indian nation forces to reckon with globally. The first of a three-part series.

In the last few months, CNN has done two very different shows:

The first, a 2-part series on China which drooled itself into raptures about China's economic success, and its manufacturing and technical strengths.

The second, a piece on outsourcing which repeatedly points out the cheap cost of labour in India and markedly shows an ox-cart on a busy street outside the office of a BPO company in Bangalore.

Yes, I'm sure that the image of India is changing, but clearly much of what we still see and hear is essentially the same 3-dimensional view -- cows on streets, nuclear war with Pak over Kashmir, and cheap labour. The same old, the same old -- yes, I'm sure there are some exceptions, but most people have this 3D view of India.

The question is -- what do we need to do outside India and inside India to go about changing this view?

More importantly, what does the changed view of India look like?

And finally, even if we figure out where we want to go, how do we get there?

Formative experiences

For most people, strategic direction and vision are natural follow-ons from personal experiences, and insights and gained there-in. I'm no stranger to this process and have arrived at many of my core beliefs about Indian industry and strategies for the same, based upon my cumulative experiences.

I call these the formative experiences -- I'm sure most of you have had similar things happen to you and can commiserate with me. In any case, I'll share some of my personal formative experiences with you:

Refusal to innovate

In the late 1990s, tired of struggling with time differences and soporific work ethics in the United K, I moved the development and management of a key early-to-market product from California to India.

Remember, most of this was still research-ish work and no one knew how things were really going to work out there in the customer's shop.

The India team had engineers with basic engineering degrees with anything from two to seven years of experience doing mundane project consulting. None had advanced degrees, few had any experience with a product and absolutely no one had ever brought new technology products to market.

So, the problem was that at first, all attempts to work around engineering problems with creative solutions failed. To make a long story short, after some intense weeks of breaking down chains and locks against innovative thinking, these relatively inexperienced teams, were well on way to creating a world-class, extremely innovative product.

The product went on to define a whole market-segment. However initially, these same bright engineers had just about refused to innovate – 'cannot do it' was the attitude. Why?

Conformity training

To tell you why, let me relate another story. As an undergraduate at IIT-Kharagpur, I once stood up in one of those large common classes, where a professor -- who was mumbling something inconsequential about IC engines -- and asked: 'Why can't you have engine cylinders which cross-sections that are anything other than circular?'

The venerable professor answered: 'Look at this idiot; he thinks he knows more about IC engines than me.'

The 100-odd people in the class started guffawing, while I tried to find a place to hide. Now here's the problem with that answer: in that class, I learned not to ask stupid, out-of-the-accepted-norm questions. But, almost a decade later, I found out that BMW does use elliptical cylinders in high-end engines.

By then it was almost too late for me, I'd already learnt the wrong lessons -- not to question basic axioms, which did not get unlearnt till many years later under the tutelage of an MIT professor, who spends every living day thinking up new innovations that he can sell.

Thanks to him, I managed to unlearn what was taught to me at IIT well enough to make technology innovation the basis of my career.

But why did I have to fly 10,000 miles away from home just to learn to think differently? The problem remains, that even at the topmost institutes of our country, young minds are not taught the arrogance to believe that they can create ideas to compete with the best in the world.

These same people often go on to populate US university faculties and research labs, after some indoctrination in creativity at a foreign university.

Oh, well! Maybe we can get better professors to fix this, right?

Where are the great educators?

A couple of years ago, Krish (not his real name), a close friend of mine from my IIT days, gave up his professorship at a well-known foreign university to go and take up a teaching position at the Indian Institute of Science, Bangalore, to take his learning back home to India.

Great so far, but there was a catch. Krish had to return a year later to his position at the foreign university. The problem is that India just lost out on a huge talent: Krish, you see, was one of the two brightest people I'd met at IIT -- that's no mean achievement.

The reason he left is well understood -- he could not put his children through 15 years of sheer penury, just to teach in India. The result, someone much less talented will teach in Krish's place and Krish went back across the seas.

Young Indian students will not learn the basics of research and innovation from someone with Krish's abilities. Surely, our fast-growing technology industry will provide the right incentives for innovative thinking?

Corporate culture

Yes and no. In some segments, where innovation has been a cornerstone of the business model, such as the pharmaceutical industry, we Indians are doing a fine job.

Unfortunately, this does not apply to most other industries -- certainly not to the computing industry that I understand very well. Over the past few months, I have been in deep discussions with two companies in the healthcare IT segment -- one in India and another in Silicon Valley.

Both have Indians as key personnel. But, the company in India is having all kinds of troubles, since it is essentially trying to provide cheap labour with some mumbo-jumbo about healthcare, while the other company is one of the most successful start-ups in Silicon Valley and sells a focussed, high-IP solution.

The folks in the Indian company are now in a bind, because they know they need to innovate, but their company culture does not allow it. For most its life, the Indian company has survived by exploiting cost differences and has never had to depend upon innovation to grow the business.

Hence, a culture of innovation was neither required nor desired. Measurable conformity and predictability were good enough.

The same thing is happening in quite a few other large companies that have outlived their price advantages -- they need to create strategic differentiators, but they do not have the company culture to create and take innovative differentiators to market.

We talk about an Indian Silicon Valley, but that will never happen if we cannot mimic some of the wanton creative spirit and innovation brought together by Palo Alto and Sand Hill Road.

I know, some of this sounds like the inevitable India bashing that we Indians often like to indulge in; but believe me I'm incredibly bullish on India.

But, to a large extent, these experiences do point to some of the key issues and problems that act as hurdles in building a better India, in creating the next vision of India Inc.

But, before we start. . .

Usually, any discussion on India Inc's problems gets quickly mired in ideological and philosophical discussions. In fact, every time the discussion comes up, we Indians tend to offer such overnight recipes for success as 'end corruption', 'do away with the caste system' or 'throw out all the politicians'.

So, perhaps, some ground rules are best looked into:

  • First, ideological, philosophical and intellectual discussions are fine, but best done elsewhere. Only pragmatic and practical solutions that can be put in place tomorrow are my concern.
  • Second, throwing out the system and other such extraordinary measures are not required. The system is large and reaches most people; the idea is to make it somewhat more effective in places without, for example, trying to 'end corruption once and for all'.
  • Third, minor modifications to how corporations, venture capitalists and educational institutions do things today are the primary focus. Small changes in these institutions will give us a lot of bang for our buck.
  • Fourth, Indianising innovation is neither swadeshi, nor is it bad. After all, the West would not come up with a Rs 17,000 tractor attachment for motorcycles, only an Indian would. Innovation choices must be based on India's export and internal needs.
  • Fifth, and finally, we must know whether we're making progress. Hence, the metrics of success must be chosen and followed. Not metrics that the World Bank or the IMF tell us to follow, but those that make sense for where we're trying to go.

There are many big ideas out there about how to improve India Inc. The shortage, however, is in successful implementation and success that can be seen the day after tomorrow.

Hence, much of the focus here is on ideas that can be implemented and realised by individuals, organisations and companies, without requiring large grassroots movements or direct intervention of the Indian prime minister.

Now, let's get back to the topic.

Part II: Where is India going wrong? 

Part III: 5 Ways to Make India Inc Great

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