Sunday, November 30, 2014

National Competence Consistency: Key for Global Leadership through “Make in India”

There is perhaps no nation that has as much history of pioneering knowledge, dating back to several centuries, in eclectic sciences and technologies as India has but has struggled so much to rediscover and fulfil the potential in recent past (despite some significant achievements in certain areas of industry and infrastructure). Prime Minister Narendra Modi’s clarion call to global investors and global industries to “Make in India” resonates well with India as a resurgent nation that believes in self-reliance and global leadership. Modiji has also rightly laid stress on skill development as the basis for building scale and scope in the manufacturing, research and other areas. Though the national goal and the enabling strategic direction are well understood, the need for an almost revolutionary transformation in the competency paradigm is perhaps not fully understood. Successful nations on global missions have achieved such status based on making the required competencies a national comparative advantage.

India’s industrial development has been on fragmented lines as is well known. It is characterized by a few big capable firms with national competitive posture and several mid and small scale firms with regional or sub-regional presence. The former are able to develop or access, and compete on technology while the latter struggle to access, let alone develop and compete on technologies. This does not mean that a firm has to be only big to be competent; as Japan and Korea illustrate it is possible for even small and medium companies to be technologically competent. Many times the lag of the latter in India is attributed to scale related investments and finance; on the other hand, the lag is due to a managerial and leadership approach that fails to utilize all factor sets optimally. This lacuna needs to be addressed because global leadership can come about only when competencies are pan-Industrial and reflect a national characteristic of consistency. That India has some distance to go on this aspect is illustrated by a just published survey on India’s travel experience.

Unreasonable spread

Key findings of a survey by the leading travel website TripAdvisor listing Indian airlines preferred and shunned by passengers, and the reasons thereof, have been published in The Economic Times Magazine, November 30-December 6, 2014, pp 10 and 11. While the study on a travel service may apparently seem to have no nexus with the Make in India hypothesis, relevance does exist. Clearly, all the airlines have invested in having a fleet of modern planes, and all the associated piloting, crew, ground handling, maintenance and ticketing infrastructure. Yet, the way the individual airlines utilize the respective infrastructure and organization to deliver the ultimate services is paradoxical, to say the least. The survey generated ratings on twelve performance parameters. These are on-time performance, value for money, in-flight entertainment, in-flight food/beverages, cabin crew, landing/take-off, check-in, baggage delivery, cabin maintenance, seat comfort/leg room, website, and overall experience. Given the sophisticated nature of the airline industry, one would expect the airlines to uniformly meet certain base metrics.

The results of the survey bring out a huge variation in performance as perceived by travellers. For example, with reference to on-time performance the approval ratings ranged from a measly 0.4% to a respectable 69.6%. Except two airlines (the second trailing at 16.3%), all the others had a very low range of 0.4% to 6.3% on this factor. In fact, on each of the other eleven parameters too, the spread has been inordinately high. In terms of overall experience, the pecking order has been 42.0%, 37.8%, 10.6%, 5.5%, 2.0%, 1.0% and 1.0%. Even more tellingly, on safety too, the approval ratings showed a dangerously wide range from 0.8% to 31.2%, with only 14.9% of the respondents deeming all the airlines to be equally safe. Clearly, same or similar assets and talent base has been resulting in radically different perceptions of performance. If the survey brings out one factor as a common theme, it is the lack of consistency in competence as reflected in performance delivery and user experience.

National consistency

If a nation has to qualify as the world’s destination for any competitive activity it must first qualify as a consistently competent for that activity. India has been able to do that in the field of information technology. From the established metro cities to the emerging urban regions, aptitude and skillsets for information technology became available, making computer coding and system architecture a nationally consistent competency. In respect of manufacturing, however, India has been able to develop at best certain regional clusters of competency. Notable among these are the clusters for automobiles, auto components, steel making, shipbuilding, defence equipment, heavy engineering, pharmaceuticals, jewels, watches, movies, collieries and a few other sectors. On the other hand, certain industries have been just firm-specific and not even region-specific. Modern and safe construction industry has been more a firm-specific phenomenon than even a regional competence. Probably, construction safety by its absence is an unfortunate national consistency.

National or regional consistency has, to-date, been a resultant of top down initiatives. The establishment of heavy engineering and steel companies in public sector and the other noted companies in public/private sectors has created a pull factor for the generation of competencies in the 1950s and 1960s. Initial training by overseas collaborators followed by indigenisation of skills has helped development of regional clusters. As India looks at a new wave of Make in India none of the previous strategies would be good enough for the task ahead. Consistent competency development has to be a simultaneous nation-wide effort. It is not impossible. The new waves of the Indian Institutes of Technology (IITs), Indian Institutes of Information Technology (IIITs) and the Indian Institutes of Management (IIMs) that have been so successfully set up in tier 2 cities and in the far flung regions of the nation indicate that Indian population is always game for creating new centres of excellence, whatever be the domain.

Make in Education

An effective Make in India initiative can happen not in India’s industries or firms but only through India’s schools and colleges. The Indian educational system needs uniformity of high standards, encouragement of creativity, openness of evaluation and continuous bridging of theory and application. In the current India, quality is heavily tiered in terms of classes of schools and colleges. While some differentiation across institutions is inevitable even in advanced nations (like between Ivy League and other institutions), the kinds of differentials that are allowed to perpetuate between different boards of education, different types of public and private educational institutions and institutes of national importance and several other tiers in India are so huge, and in many cases so discriminatory, that a uniform quality of education on a pan-India basis has been elusive. The educational system is in urgent need of reforms ground-up in terms of building national competencies.

As this would inevitably take time, there is an urgent need for some top-down reforms too. One way would be to dedicate the final semesters of each course to finishing courses which align the students to the industries of their choice rather than to desultory project assignments in which the randomly matched firms and students have no shared interest.  The finishing courses would comprise generic toolkit such as communication, collaboration, project management and networking skills and specific industry specific toolkit such as advanced computer languages in respect of information technology industry, international regulatory compliance in respect of pharmaceutical industry, mechatronics in respect of machine tool industry, genetics and epigenetics for biotechnology industry, and so on. The finishing courses should be nationally standardised and should be of such rigor that student of any institution should be on par or above the best of global educational standards. Availability of such skill optimization would make India a natural destination for Make in India realization.

Together we succeed

While India has many industry associations, almost all of them have agendas related to policy reforms. Macro-economic factors remain their paramount engagement. Skill upgradation is seen to be the task and responsibility, or even a unique competitive advantage, of each individual firm. Many firms are reluctant to open themselves to the pathways and success factors that determine competitiveness through intra-industry collaborative dialogue. Let us take the example of upgrading rail infrastructure to a level of bullet train network. This would require most modern track making and coach making technologies. If the existing railway wagon firms such as Integral Coach Factory, BEML, Kalindee Rail, Texmaco, Stone India and Titagarh Wagons (and 12 others) do not upgrade their capabilities together there is little chance of Make in India being successful in this sector.  Similar logic would apply to indigenous manufacture of new generation telecommunication gear, defence equipment or power plants.

The national psychology must change from one of exulting over the indigenously benchmarked relative superiority of the leading firms to one of demanding absolute superiority of global standards. When there are reports of certain indigenous cars failing safety tests or certain products lagging packaging requirements, the industries as a whole must collaborate to develop and validate templates that meet global customer standards.  Even granted that some of such global concerns tend to be subterfuge for non-tariff barriers, there is merit in industry-wide analysis of causes and development of solutions. Higher level of skills when pursued by individual firms may make individual firms competitive relative to other Indian firms but industry-wide actions make the entire industry competitive relative to global firms. This transformation would influence global industries as a whole to move into India as their preferred manufacturing destination. Consistency of competence across the industries as a national comparative advantage is key to the success of Make in India revolution.

Posted by Dr CB Rao on November 30, 2014

1 comment:

Unknown said...

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