Indian National Development Icons: Inspirations for Quantum Leaps in Socio-Economic Growth

Over the last one year, India has received favourable global attention as an attractive emerging market, potential world-class manufacturing hub and likely global economic powerhouse. Despite certain missed expectations on big-bang reforms, global investors continue to retain faith in the India story. Prime Minster Narendra Modi’s ‘Make in India’ theme and the initiatives by various States to unveil new industrial policies and promote ease of doing business have contributed to a new air of expectation. While an uncertain monsoon, large debt levels and poor corporate earnings have recently taken a toll on the Indian stock markets (making India the worst performing emerging market this year) there is no panic yet. There is, on the other hand, optimism that India would clock a higher growth rate of 7.5 percent in 2015-16, psychologically boosted by the fact that India has crossed China in GDP growth rate the past quarter.

Being on an economic roller-coaster is not new to India. The amplitude of travel has been, however, increasing due to increasing global linkages. Various sectors that are linked to global trends (oil and gas, metals and minerals, shipping and construction, for example) besides debt dependent, rate sensitive and monsoon sensitive sectors (infrastructure, banks, FMCG) are particularly impacted. National economic policy must take care of the short term pressures and announce policy prescriptions that are creative and serve as “instant motivators”. The new Telangana Industrial Policy, for example, made a creative commitment on Right to Clearance of entrepreneurs and industrialists applying for setting up industries. Policies certainly would not only improve investor sentiment but also lay solid pathways to industrial progress. Given India’s industrial maturity thus far and developmental imperatives for the future, this blog post provides a new paradigm of National Icons as a reinforcing concept.

National icons

Icon is defined as a famous person or thing that people admire and see as a symbol of a particular idea, way of life, etc. Nations have iconic symbols. India has such iconic symbols that act as the National Identity Elements of India. These symbols are intrinsic to the Indian identity and heritage. Indians of all demographics and backgrounds across the world are proud of these National Symbols as they infuse a sense of pride and patriotism in every Indian’s heart. These are India’s National Flag (the Horizontal Tricolour with Wheel), National Anthem (Jana-gana-mana), National Song (Vande Mataram), State Emblem (Four Lions), National Bird (Peacock), National Animal (Tiger) and National Flower (Lotus), National Tree (Banyan), National River (Ganga), National Aquatic Animal (River Dolphin), National Fruit (Mango) and National Calendar (Saka Era).

National icons typically emerge from a glorious past and an exciting present to inspire and unite all Indians. They serve as reminders of the identity in functions and events, reinforcing the feeling of oneness. Companies have typically, for long, developed their individual symbols and logos to inspire homogeneity and focus, and promote an enduring connect with the customers and public at large. India has been creative in developing various thematic symbols for various initiatives from time to time; and so do international organizations. India’s recent Make in India Lion oriented icon is an inspiration for the campaign. As India gears up to achieve further global growth as an international economic powerhouse it would be appropriate to conceptualize certain national development icons to inspire aligned thoughts, expressions and actions for a glorious socio-economic future for India.

Key drivers

India’s socio-economic development will be driven by a balanced growth of a number of social and economic sectors. While agriculture, industry and services would be three core economic sectors, social and industrial infrastructure would be a key enabler as well as a key driver. In fact, the interdependence and interlinkages of various sectors makes it difficult to sequence, let alone prioritize, one over the other. Some sectors are well developed while some are yet to mature in India. In some cases, development is relatively comprehensive (steel, automobile and pharmaceutical manufacture, for example) but in some cases it is patchy (education, healthcare and housing, for example).

Given that everything develops everything else (provided a balanced development process is followed), it would be appropriate to choose certain icons which can inspire India to be proud of the progress thus far and the potentialities that need to be mastered in future. This blog post presents a framework of ten such national development icons. Some of these reflect certain matured capability of which the country can be rightly proud of while the balance are essential aspirations bolstered be certain isolated successes. It is not claimed that these are the most representative ones but these are certainly inspirational as developmental icons. These have powerful developmental force and can create cascading development impact across the socio-economic firmament.

1. National Product Icon – Automobile

India has a huge portfolio of industrial and consumer products that are domestically produced. Amongst all, no industry has achieved the level of dramatic transformation that the automobile industry has achieved. From an output of just 250,000 vehicles of all types, including a miniscule 30,000 annually of three dated cars in the 1970s, the industry has grown in scale and scope tremendously (100 fold increase!) to emerge as the sixth largest in the world with an output of 25 million vehicles annually. The industry is able to design its own new vehicles in India as evidenced by Tata Nano and Renault-Nissan Kwid. The industry is capable of becoming the third largest in the world by 2020. Automobile is truly a national product icon for India, demonstrating what the country can accomplish.

2. National Development Icon – Bullet Train

India has the world’s largest rail network. Though a government owned institution, the Indian Railways it has been able to run itself independently as if it were a corporation. Indian Railways with a network of 7,172 stations, 115,000 kms of track length over a route length of 65,000 kms, carrying annually 8.4 billion passengers and 1 billion tonnes of freight. Indian Railways is not only the lifeline of India with such a huge pan-Indian network but is an ecosystem by itself with an employment of 1.3 million and several welfare institutions such as schools and hospitals as well as housing colonies. Yet, Indian Railways needs to urgently move to the next trajectory of rail technology which is bullet trains. Bullet trains or high speed trains capable of travelling at or above 400 kmph (as in Japan, Europe or China) can dramatically transform the socio-economic status of India. 

3. National Globalization Icon – Smart Device

India had a woeful record in telephone connectivity even by the 1970s and 1980s. Today, however, India is the fastest growing market for smart phones. Over 1 billion cell phone connections exist in India, far outstripping landline connections of 28 million. With the integration of connectivity and computing as well as education and entertainment, and emergence of indigenous phone manufacturers, smart phones, or more broadly the entire range of smart devices including tablets, phablets and laptops, could be the new icon of India’s globalization. Along with hardware, Indian software may participate with a range of application supports. If scale and scope, and integration of hardware and software influence global leadership, the smart device could well be India’s National globalization icon. 

 

4. National Energy Icon – Power Plant

India is criticised for its woeful performance in the power sector; power, in terms of availability and cost, is identified as one of the critical bottlenecks for India’s industrialization. That said, India is one of the few countries which has a mix of all kinds of power plants, thermal (coal, oil and gas), hydro, nuclear and renewable power plants. The total power output is nearly 300,000 MW but has a huge gap to be met. Power projects apart from road projects are some of the most stalled or delayed infrastructure projects in India. As an aspirational icon, power plant will be seen over the next few years as one would accelerate India’s socio-economic development with an equal focus on energy for residential and industrial purposes. The Ultra Mega Power Projects and Renewable Energy projects would be seen as new icons of economic power for India.

5. National Security Icon – Housing

Housing is one of the fundamental needs of security for any society. India presents a very patchy and paradoxical picture in terms of housing. Some reports suggest that in certain metro areas lakhs of apartments are remaining unsold even as the demand for affordable urban houses has been facing a demand gap of a few million units. Lack of proper housing with protective structural elements is the major pain point in all of rural and most urban areas. Housing being the fundamental need and also being the most important employment provider as well as trigger for a number of industries (such as steel, cement, construction materials and paints as well as interior fit-outs), ‘housing for all’ which is a Modi Government’s Mission is an aspiration for India as a whole.

6. National Welfare Icon – Healthcare

Every society owes to itself the duty of health and wellness of every individual. India despite its rich heritage of Ayurveda and Yoga is ironically facing some of the most disabling healthcare challenges in the world, including proliferation of diabetes and other metabolic disorders, besides infectious and cancerous diseases. The hospital and doctor network as well as access to emergency services are patchy while the aged and independent have no healthcare insurance that is worthy of mention. The country has just one doctor for 2000 people while the density of hospital beds per 10000 population is just 9 against global average of 30 and a range of 60 to 150 in the developed Asian countries. The availability of medical technicians and technologists as well as nurses and paramedical staff is also woefully low. Indian doctors and surgeons, however, have demonstrated the ability to conduct complex surgical operations and be globally competitive. This capability requires a universal coverage within India. Healthcare, therefore, will need to be the National Welfare icon in India.  

7. National Equity Icon – Education

Come May and June, India would be in the exciting phase of amazing results from school final examinations and the excruciating phase of seeking admissions in schools and colleges. Statistics apart, it is touching to come across cases of students making the highest grades despite the handicaps of underdeveloped geographies and schools, and constraints of poverty and non-affordability. Education is the fundamental driver of equity and equality in India and has helped people from indigent sections move up in terms of high positions in administration, business and industry. India is a globally competitive powerhouse in the education sector with 1.4 million schools and 35,000 higher education institutes, Indian Institutes of Technology, Indian Institutes of Management, National Institutes of Technology and several other specialized institutes. India has the capability to globalize its educational competencies even more. Education will, however, be the most potent instrument of establishing social equity in India with appropriate policy support.  

8. National Competitiveness Icon – Space Mission

If there is one sector that has gained reached astronomical heights (literally!) despite being in public sector in India it is the space sector. Indian Space Research Organization (ISRO) has been in the forefront of building and operating satellites, satellite launching rockets and satellite launching stations in India. It has not only put several satellites in orbits but recently joined the exclusive club of developed nations that has sent a satellite to Mars (Mangalyaan Mission). ISRO has the infrastructure to put its space technology for India’s industrial and economic development requirements (including communication and weather forecasting) and the ability to support the space programs of other emerging nations. India’s space mission would remain an icon of India’s national competitiveness.

9. National Sustenance Icon – Agriculture

India is still an agrarian economy. If it were not so, despite the industrial sophistication the Reserve Bank of India and the Stock Markets would not have adversely reacted to forecasts of deficient monsoon this year. With nearly two thirds of India’s population dependent on agriculture, it is clear that national sustenance is closely dependent on agricultural output. Many feel that China is ahead of India only due to massive manufacturing scope and productivity. On the other hand, agricultural buoyancy seems to have been supporting Chinese economy to a greater degree than is visible. According to a study, China has bettered India in terms of farm output (twice over), agricultural area (515 versus 179 million hectares), crop yields (double the level), capital formation (thrice over), per capita agricultural supplies (twice over), and so on. Raising farm productivity and rural prosperity would be vital for the overall Indian economy. Agriculture would continue to be India national sustenance icon.

10. National Innovation Icon – Design and Development

Innovation is first time discovery. Innovation leads to novel designs and developments. Design and development is the intellectual driver of industrialization. Given the diversified industrial capabilities acquired so far and the huge pool of scientific and technical talent base with a very young demographics, India has the greatest chance to innovate across the arenas. Instead of merely adopting and adapting overseas designs, India’s huge scientific and technical manpower should be leveraged to set up design studios for Indian industry and global industry as well. If the industry and governments put their heart, soul and investments into innovation, new product development can be an iconic part of India’s development. Starting with early stage design and development immediately, India can become a global innovation hub eventually. India’s innovation can straddle both process and product aspects. Only when India has achieved a global recognition in innovation, the fullest potential of Indian talent could be seen to be fulfilled. Design and development needs to be firmly positioned as India’s national innovation icon.

Iconic identity

Icons bring pride and ownership and inspire common identity. If the fullest industrial, social and economic progress in terms of the above 10 sectors becomes iconic, India would emerge as a truly global icon of equitable development. There is huge work to be done but India is capable of delivering on such iconic identity.

Posted by Dr CB Rao on July 4, 2015 

Multi-polar Strategic Management for Unlimited Growth: The “Scale-up with Start-up” Model for India

Theories of strategy and execution are replete with exhortations of how focus and specialization help deliver growth and value to corporations. There are, of course, several examples of companies trying to do too much by way of diversification and achieving too little by way of sustainability. Such eventuality is almost akin to one individual being inadequate as a hero for all occasions and events. This criticism of doing more for achieving less is often made against Indian firms which have a strong urge for growth and an almost obsessive compulsion to get into any field which happens to be the flavor of the season. Such critics point to the example of Apple which has a leadership position with a focus on just five product lines and only one or two products in each product line, even cumulatively over a period. The implication obviously is that by focusing so sharply and executing so perfectly, a firm can achieve industry leading growth.

Apple, however, is an exception rather than the rule. One has at the other end of the spectrum 3M which believes in a continuous flow of innovative products every year. Professor Michael Porter tries to tackle the conundrum by hypothesizing that once we define an industry we operate in, there could be a slew of generic strategy options that the firms in the industry can successfully pursue. He says that diversified firms can be as successful as focused firms. However, even Porter does not answer if unlimited growth is indeed possible for any firm and a law of diminishing returns from excessive expansion or diversification does exist as a hard fact of industrial economics. Many business leaders opt for either cocooned specialization or wild diversification without applying appropriate logic. This blog post proposes that multi-polar strategic management which pursues multiple business lines is possible, and is indeed relevant for India, if a ‘scale-up with start-up’ model is adopted.

Limits to growth

There are certainly limits to growth but there also exist limitless options for growth, especially in India. Natural resources in the planet are finite; be it land space, ores and minerals, oil and gas or water and vegetation. These determine the limits to growth. At the same time, there are natural resources that are abundantly or seasonally available be it solar power, rain water, natural winds and there are usable resources than can be recycled, including all man-made products. By focusing on which resource can be prudently leveraged human ingenuity can continue to push the limits to growth at progressively higher levels. Over the years, alternative materials and products have been discovered, adapted and commercialized. The emergence of shale gas an alternative to conventional crude oil and solar power as an alternative power source are just two examples. 

Steering clear of the nature’s limits to growth, there are various other limits to growth that operate through disingenuous corporate or human behavior. The first is aspiring to grow without understanding economic, demographic and technological fundamentals which generate the basic demand. The second is seeking to grow without having the patience to last through an economic cycle. The third is pursuing growth without a sustainable competitive position within the industry. The fourth is pursuing growth in an industry which is already well catered to by several firms. The fifth, of course, is a risk-averse organizational culture. The fifth factor is important because all growth entails risk and the risk taking ability of an organization determines the gearing for growth. The sixth factor is one of leadership myopia with leaders failing to see a broader vision and accordingly failing to develop multiple leaders who can establish and scale up multiple businesses,   

Opportunities for growth

In an emerging market like India, opportunities for growth far outweigh limits to growth. The very basic needs of infrastructure of various sectors (transport, housing, education, water, sanitation, power, water, oil, healthcare, banking and food, to name a few) are enough to trigger mammoth growth in infrastructure and a host of downstream industries. If we add to this the desirable goal of getting these to international service standards, the growth opportunities would be even higher. An economic environment that supports growth is all that is required because unlike Japan or US, India has a huge domestic market that needs to be satisfied while providing more affordable products and services for other global markets. India’s own growth story, however halted it may have been at the Hindu rate of sub-5 percent growth, illustrates this fact.

In a growth paradigm, nothing succeeds like success. India’s first industrial revolution, in the post-independence period of 1950s and 1960s, of heavy industries and massive river dams has created the first profile of a middle class that can be benefitted by economic development. The later stage green revolution of the 1970s and 1980s brought some uplift to the rural population even though it was skewed in favour of the landed class. India’s Information Technology boom of late 1990s and early 2000s, post-economic liberalization, has created a whole new youthful middle class with significant purchasing power and a capability to stimulate the growth of various sectors such as housing, automobiles, consumer durables, consumer goods and apparel. Social and economic infrastructure development from now on would provide an even more powerful and more multipronged opportunities for growth in India between 2015 and 2030, by the end of which period India should be the third largest economy of the world.

Growth deliverers

The Government of India with its belief in a public sector led self-reliant socialist economy delivered the first wave of growth. A more agrarian oriented Government with the goal of food self-sufficiency delivered the second wave of growth. A largely private sector led information technology revolution that moved from a start-up scale to a globalized scale delivered the third wave of growth. The prospective infrastructure led growth wave would now require a powerful combination of the big business houses, established public and private sector corporations and intellectual think-tanks to deliver epoch making growth, progressively by 2030. The concern in the current scenario, however, is that the big, established entities seem to have lost the flair and passion to grow adventurously and aggressively as they did only a few years ago (just to recall a few examples, Tata Motors, Tata Steel, Ashok Leyland, Mahindra & Mahindra and L&T at a company level and Ambanis, Hindujas, Jindals, Dhoots and Birlas at a business house level set scorching paces of growth from the 1970s in spite of the licensing limitations of the period).

    

In addition, a host of public sector companies expanded and diversified aggressively all through the 1960s to the 1990s while certain government wings provided growth impetuses significantly during the same period; for example, SAIL, BHEL, ONGC, GAIL and IOC as companies, and oil, power, banking, steel and space as sectors. Growth in this context connotes not merely increase in revenue but scaling up of new product lines and business lines as well. In contrast to India’s own past performance and the current air of global expectancy on India, all of the entities seem to have lost the mojo to grow through diversification. It is worrisome if the mantra of focus continuously articulated by management gurus has resulted in the current cautious approach. With the unveiling of new initiatives such as NITI Aayog (National Institution for Transformation of India) by the Prime Minister Shri Narendra Modi, hopefully the impetus would return. However, large corporations, whether private, public; and Indian-owned or foreign-owned, and business houses must start owning up leadership perspectives that enable multi-directional business growth. 

Diversity beckons

India is a land of development opportunities. There is no reason why Tatas need to be content with just one aviation initiative; the group by itself can initiate and compete for a number of other infrastructure projects too. In collaboration with other related groups like Shapoorji & Pallonji, Tatas can form a collaborative alliance to tackle the challenges of resources for infrastructure development while leveraging the capabilities of existing group entities. When Ratan Tata can bet on e-commerce initiatives through personal investments, there is no reason why Tata group cannot bet on e-commerce. There is also no reason why Indian software giants cannot diversify into electronic hardware. The only reason that can be attributed for such big groups not being as entrepreneurial as they should be is the management logic that focus alone would pay at a standalone corporate level, and core and non-core distinctions must be made at group levels.

There is another school of thought that says that being ‘asset light’ makes better economic sense. That may be true for developed nations but India needs productive assets to generate wealth creating activities. India needs to create huge capacities in multiple areas to lead development. Banking and financing paradigms must be restructured to encourage asset heavy investments that are long term value generators. Banks must be allowed to capitalize with cheaper foreign capital and backload the repayments and interest payments from the Indian infrastructural investments. Among the established Groups, probably Virgin Group of Richard Branson is a role model for entrepreneurial diversification of large scale enterprises. Virgin venturing into commercial spaceflight is an example. The only tenable argument for large companies and groups being non-entrepreneurial is that their structures and processes no longer allow the nimble-footed competency which a new start-up activity demands.

Start-up to scale-up

India is in the throes of a start-up culture. More graduates of premier institutions are willing to opt for start-up careers. Directors of Indian Institutes of Technology and Indian Institutes of Management are of the view that the shift towards start-up culture is what the country needs. A closer look at where the start-up culture is shaping up points to services and e-commerce sectors than anywhere else. It seems to be another needless flight of technical talent to areas less warranted. Over and above that, infrastructure is hardly the domain in which individual start-ups can gain a toehold, let alone grow. If India is to be infrastructure-endowed there is no alternative to big groups and big companies launching their own infrastructure start-up units. The need for infrastructure start-ups is dictated by the need to combine entrepreneurial spirit (which only a start-up organization can provide) with infrastructure financing (which only big business can provide).   

India’s own tryst with some of the biggest infrastructure successes proves the point that when large establishments start up big infrastructure projects with entrepreneurial leadership and processes there is a greater chance of successful infrastructure development. Konkan Railways, Delhi Metro Rail, Mumbai Metro Rail, IRCTC, Airport projects in Hyderabad, Bengaluru, Delhi and Mumbai are examples. Many times, some of these projects are cited as successes of privatization. The real reason for their success, however, is the power of big business combining with a start-up entrepreneurial culture to start small, and scale up rapidly. There are 500 top companies in India with annual revenues upwards of Rs 1500 crore, and reaching as high as Rs 500,000 crore, covering both public and private sectors. If each of these companies, on an average, establishes 10 infrastructure start-up companies, thus totaling 5000 start-ups in total, and progressively scale up with their resources, India’s infrastructure would be dramatically upgraded.

Posted by Dr CB Rao on January 3, 2015

Good Governance in India: Gandhian Economic Philosophy with Digitally Connected India

One of the election planks of Narendra Modi’s campaign has been ‘Minimum Government-Maximum Governance’. It is befitting that the elected Government of Narendra Modi has organized an essay competition for school children on good governance. Governance is a word that has become important in a business context as well. Corporate governance, for example, is taken very seriously by all progressive corporations. Governance is applicable for any and every organization, for that matter. At a broader level, of course, governance at a national level is the most relevant factor for national development. This blog post seeks to delve into the definition of governance and explore what could governance for India’s development and strategies to secure and institutionalize good governance.

Governance defined

The word ‘govern’ is defined in a national context. It means legal control of a country or its people with the responsibility for introducing new laws, organizing public services and managing economy. Governance is the activity of governing a country in terms of its various facets. At a company or organizational level it involves setting its articles and memorandum of association, forming its code of conduct, and establishing and operating the company as per the articles, business code and all applicable national and international laws.  Governance at the country level is extremely important for India as governments are formed by the parliamentary and legislative representatives of democratic India elected by its people as per the constitutional processes. With 29 States and 7 Union Territories having local State level governments and the nation as a whole having the Union government at the Centre, governance in India, however, tends to be quite plural.

The central theme of good governance is economic growth with social equity. There are, of course, other supportive themes such as gender equality, poverty elimination, people empowerment, modernity with tradition, globalization, employment generation, universal education, healthcare and sanitation, housing for all, rule of law etc. All such themes can be defined as integral inputs or outcomes to the central theme of economic growth with social justice, and in short - development. While people’s aspirations are expressed through elections, they can only be achieved through governance by the elected representatives. The structure and processes of governance are determined by the constitution while the strategies to execute on governance are determined by various laws, policies, schemes and procedures (together, governance tools). While the bureaucracy both creates and executes the governance tools and is accountable to the elected governments, they, in turn, are accountable to the people.       

Gandhian Governance

Mahatma Gandhi advocated a concept of good governance that emanates from the grassroots level. He held that the village is the smallest microcosm of the nation which must reflect good governance through empowerment and self-rule. His concept of Panchayat Raj is the structural definition of his concept. Gram Swaraj for Mahatma was very much a part of his concept of Poorna Swaraj for the nation. In one of his writings, Mahatma said, “Panchayat Raj represents true democracy realized. We would regard the humblest and the lowest Indian as being equally the ruler of India with the tallest in the land”. Successive governments have tried to provide constitutional and legislative enablement to Gandhi’s concept of Gram Swaraj and Panchayat Raj. That said, even after several decades of Indian independence, the rural population and the underprivileged continued to be left out of the mainstream of development which is reflected in recent governmental initiatives such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

MGNREGA seeks to guarantee 100 days of livelihood security to the population meeting prescribed criteria. While it is welcome, Mahatma’s goal of generating wealth through economic activity and good governance remains unfulfilled. Gandhiji gave several avenues, under the broad umbrella of Sarvodaya, to achieve economic self-sufficiency at the village level. He advocated ending poverty through improved agriculture and small scale cottage industries across all villages. Gandhian Economics focused on economic self-sufficiency at rural community level. He not only advocated Sarvodaya but gave relevant tools such as Charkha and Khadi to generate employment. Large scale industrialization that emphasizes machine made products vis-à-vis handmade products has pushed Gandhian economic tools to the background. The call by the Prime Minister Narendra Modi for Indians to patronize khadi is indeed a welcome exhortation. Good governance initiatives of the PM have a greater probability of success with a digital connect that would restore both gram swaraj and Gandhian economics.

Five principles

Governance, in its fundamental ambience, represents universal inclusiveness, transparency, access, simplicity, objectivity and ease. If we agree that India still lives in its villages (as it is true) and true empowerment must start with the indigent and downtrodden, whether rural or urban (as also it is true), whatever ideal governance we have must satisfy the six principles of inclusivity, transparency, accessibility, simplicity, and objectivity. Law and procedures, projects and schemes, structures and processes, administrators and enablers must have a system of governance that works for the layman as much as it does for the erudite. This can be achieved by imbuing simplicity in each second component of the four pairs mentioned above. For example, while laws would perforce need to be complex to envisage and address all eventualities, procedures at least must be simple and intelligible.

Similarly, while projects must be based on an overall developmental magnum opus, schemes must be those that touch the lives of all in a simple manner in an immediate and recurring timeframe. Again, in a large federal country like ours political and administrative structures cannot anything but be complex. However, the processes must be simple and speedy. Administrators who are required to work with multiple political systems may be cautious by instinct and training but those who are heads of agencies (district collectors, departmental secretaries or public sector heads) need to focus on being in touch for speedy delivery. This duality of foundation and purpose or of the institution and the individual requires that the back-end of the governance mechanism could be as complex is the wont but the front-end of people contact must be as simple as it can be. This balance of internal complexity and external simplicity can be achieved only with digitization.

Digital governance

Digital governance is a system of governance in which all laws, procedures, projects, schemes, structures, processes, administrators and enablers are connected with each other and the individual across India in a seamless way. This requires that the whole of India is a wifi village with broadband, fibre optics and tower systems connecting all of India. This also requires that every individual has a Unique Personal Identification Number (UPIN) and every institution will have a Unique Institutional Identification Number (UIIN). Needless to say, India is moving into a new future in that direction with the Central Government sponsored Aadhar Project. The governments would like to connect subsidies and benefits to Aadhar number, for example. AP Government has made supplies of sand for construction purposes a digitally enabled process administered through women self-help groups. However, much more needs to be done for total digital governance at a national level, in terms of hardware and software.

In the full digital model, every individual will possess at least one electronic device, one smart phone and one tablet. He or she would have Internet access wherever he or she is in India. Every transaction requiring interface between the individual and government would have an electronic form and processing system. Every individual would have opened a new Jan-Dhan Bank account or would convert one of his available accounts into a Jan-Dhan account. The entire landscape of laws, procedures, projects, schemes, structures and processes would be in the form of multi-language ready access portals, with easy to manage forms and processes for applications and approvals, queries and responses, and self-certifications and random evaluations. Every minister and public official should have a position-linked email ID based on which he or she can be communicated with. Each Minister and Officer should have an information processing assistant to handle queries and responses on a prioritized basis. The objective would be to enable a person of even ordinary literacy be a helpful and helped member of pan-Indian digital governance.

Connected India

Connected India is possible with a mammoth collaboration between global and Indian digital giants. The recent days have seen such global majors making a beeline to the Prime Minister Modi, Central and State Chief Ministers and officials. India must conceptualize collaborations between global majors such as Google, Facebook, Twitter, Microsoft, Cisco and such other digital enablers on one hand and Reliance, Bharti, Idea, Tata, Infosys, TCS, Wipro, HCL Technologies, Cognizant, BEL and such other Indian telecommunications and information technology companies on the other to develop a digitally connected India. Just as ‘Make in India’, ‘Connect India’ must be a campaign and execution platform for global and Indian corporate majors to receive support from India’s Union and State Governments.

Connected India would fulfil the Gandhian economic dream of Sarvodaya whereby the most distant and grassroots individual could be connected with the rest of the country and the highest echelons of the governments. It will connect the producers with the marketplace, and help identify and integrate inputs for producers and outputs for users. India has wrought an information technology revolution for the world; it is time that India did something digitally for itself. The Government may need to establish a major collaborative fund, with contributions by global and Indian governments and corporations, to finance the Connected India program. The programs will provide economic returns to contributors in terms of hardware and software sales. The only ask should be that the costs of connectivity should be extremely affordable. Gram Swaraj, Poorna Swaraj, Sarvodaya and Gandhian Economics and Good Governance will merge with, and enable, each other in a completely Connected India.

Posted by Dr CB Rao on December 28, 2014

    

Strategic Spirituality and Soulful Development: A Combination That Drives Equitable Socio-Economic Development

Strategy in a business or organizational sense is highly material. It is all about generating and utilizing resources, and equally about creating and deploying wealth. All factor resources, natural or synthetic, are utilized to advance businesses in pursuit of growth. Over time, a highly capitalistic approach was proven to be a more efficient creator of wealth but a less effective enabler of social activity. While alternate forms of public ownership (Russia), mixed socialist economy (India) and totalitarian (China) have differentially influenced resource and wealth generation paradigms, strategy has evolved as an instrument that transcends ownership and influences resource and wealth in societies and economies. Many times, these economic systems exist and evolve in combination with political systems such as controlled elections, total democracy and command & control administration to deliver relevant results.

Societies and governments have recognized that societies must get back certain portion of wealth generated through successful strategies; so have highly successful entrepreneurs and businessmen. Bill Gates and Warren Buffet have been the leading business lights in US who channeled a large proportion of their wealth into charitable and philanthropic activities. In India, founders of a few major groups such as Wipro, HCL, GMR and more recently Vedanta have pledged 12 to 75 percent of their wealth philanthropic and charitable activities. While such acts are dependent on voluntary commitments by such successful leaders, the legal framework of Corporate Social Responsibility (CSR) developed in India under the new Companies Act 2013 signifies the desire of regulators to somewhat compulsorily channel business profits (based on certain criteria) into acts of development for the underprivileged sections of the society.

Many approaches, one source

There are, as summarized above, many approaches, ranging from voluntary to compulsory, that may channel pre-existing and created wealth to causes of social equity. The source for all the approaches, however, is profitability. That said, higher profitability does not necessarily mean higher social contribution. Profitability that arises from usurious squeezing of factor resources or excessive skimming of consumer surplus may be seen to be socially exploitative. Any social investments that are made from such unnatural profitability may be seen to be a distorted form of social contribution. The policy of contribution after substantial generation places the choice and discretion in the hands of businesses in that profits are earned first and deployment is considered next (if at all). The much repeated saying of businesses that they must give back to society what they take from society arises from the first principle of earning allocable profits first, before any deployment can be made.

More fundamental than profitability is strategy that generates profitability. A smart strategy identifies and fulfills latent and established (and even hitherto unknown) consumer needs through efficient design, manufacture and delivery of products or services and in the process optimizes investment-expenditure-cost-profit relationship. There is a view that there can be no right or wrong strategy but only right or wrong execution. This is an oversimplification of the strategic process. For example, it is not appropriate to hypothesize that being the 100^th firm in a million unit market is a right strategy and execution will take good care of such a pedestrian strategy of market and resource fragmentation. Right strategic process involves an inventive mind, prudent resource management and revenue generation without compromise to profitability. For businesses and organizations to be socially responsible they must first be economically responsible.

Economic responsibility

Economic responsibility is a less understood concept. While the old adage says that time and money once spent cannot be got back, there is a reluctance to accept money as a factor that is as valuable as time is. Such reluctance is due to the popular perception that money always buys something in exchange, and often generates more money. That said, few realize that money, though a manmade currency, is a finite amount that has a relationship with the overall efficiency of a national economy. Living beyond means or means that trail the living aspirations lead to a negative spiral of deficit financing and inflation. Like nations, businesses and organizations must live within means or expand the means at unit level. Concepts of globalization and cross-border pooling of costs and profits have impacted the ability to incisively track economic responsibility at unit levels.  

Growth in population and aspirations requires more products and services, the inputs for all which come from nature. In such a context, economic responsibility can be best expressed in terms of three basic concepts. The first is doing more with less, both in terms of natural and synthetic resources. The second is to conserve natural resources by prudent utilization and efficient exploitation. The third is to renew the natural resources by recycling. An economically optimized society would follow a normal distribution where poverty and luxury, by value, are both minimized and the core of the society has the maximal coverage of value. In normal distribution mean, median and mode (of incomes) converge. A true egalitarian society is one in which the standard deviation of the incomes is such that 68.2 percent is within one standard deviation of the set, 95.4 percent is within two standard deviations of the mean and 99.7 percent is within three standard deviations. Egalitarianism is hard to get in human societies which require materialism and capitalism to crate productive economic activity in increasing measure. 

De-concentration   

Concentration of wealth is a concomitant of capitalist and free market economies. Even controlled economies that have injected a measure of capitalism have experienced concentration of wealth. While creation of jobs and improvement of economic conditions is one way of economic development, voluntary de-concentration of wealth provides periodic trigger and sustainable stimulus for efforts aimed at economic egalitarianism. Azim Premzi of Wipro has pledged 25 percent of his wealth of USD 16 billion. Shiv Nadar of HCL has pledged 10 percent of his USD 11 billion wealth while GM Rao of GMR has pledged 12.5% of its wealth of USD 2.6 billion. Today, Vedanta group chairman, Anil Agarwal is reported to have stated that he would give away 75 percent of his wealth of USD 3.5 billion to charity. Globally, Bill Gates and Warren Buffet together donated USD 69 billion to Bill and Melinda Gates Foundation. Such initiatives help in de-concentration and diffusion of wealth for social good.

De-concentration helps kick-start major philanthropic and charitable initiatives. WHO in the past and the Gates Foundation in recent times have contributed to eradication of multiple diseases, including polio. There is no doubt that periodic availability of billions of dollars helps the governments, private organizations and public-private partnerships take up transformative measures in the social arena. Eradication of poverty, disease and squalor, including national transformative programmes like Swach Bharat, require massive allocation of funds. Voluntary measures of de-concentration and diffusion of wealth, without doubt, are vital elements of social equity. Given that strategy is the key driver of wealth generation (or wealth erosion), strategy needs to be viewed an important component of de-concentration.

Micro-strategy

Given that ‘earn and distribute’ of the above type takes years, and even decades, of industrialization and business growth to happen, development of nano, micro, small and medium industries (together micro industries) in an aggressive manner is a strategy to distribute wealth ab initio. Such enterprises create greater employment opportunities and thus contribute to income redistribution. In a similar manner, proliferation of service activities helps self-employment of a large proportion of population. Infrastructure and transportation provide major avenues for employment. Here again, diversification of infrastructure across the nation (for example, developing 12 ports along a State coastal line rather than I mega port) helps in enhanced and diversified economic activity and consequent employment generation. Transportation services are also some of the biggest generators of employment.

Micro-businesses require micro-technologies, standardization and ancillary networks to succeed. An automobile typically comprises thousands of components. Of these, at least a few hundred components lend themselves to micro-enterprises.  For example, nuts, bolts, washers can be standardized in design to be of universal design. Micro-technologies can focus on standardized designs and support manufacture with compact and high technology machine tools. Well developed ancillary networks can help micro enterprises cater to mega automobile makers. Electronics, electrical and telecommunication industries constitute another example of the pyramid of manufacture with micro enterprises supporting mega electronic products. This kind of industrial and economic development may be characterized as development with soul. Soulful development, which is development that reflects the inner good qualities of human life, requires a spirit of strategy that is unique and different from the one that is deployed solely for  commercial purposes.      

Strategic spirituality

Spirituality has many definitions and interpretations. For the purpose of this blog post, spirituality is the quality of being connected with humanism and human spirit. Humanism is a system of thought that seeks to solve human problems with the help of reason. Spirit is a state of mind that reflects courage, determination to progress. Strategic spirituality integrates the human dimension in every aspect of the corporate, business and functional strategies. From defining the industrial structure of development and manufacture of a product (huge integrated monolithic structure versus diffused multi-tier diversified structure) to calibrating functional strategies in line with socio-commercial considerations (products as revenue generators versus products as social instruments), strategic spirituality adds a distinctive humanistic face to commercial strategies.

A leading manufacturer of personal hygiene products has interest in promoting product sales. By undertaking a massive programme for girl child education (which will improve perceptions on personal hygiene), the company can combine social and commercial purposes. Leading manufacturers of sanitary hardware (companies such as Cera) which have seen multi-fold increases in their market capitalization in anticipation of Swach Bharat mission would do well to develop a range of customized products to provide affordable solutions to the national mission. Leading manufacturers and marketers of food products can leverage diversified culinary skills of housewives to develop portfolios of low volume-unique taste products. Possibilities are endless; chief executives and strategists must embrace strategic spirituality as a larger professional purpose in life. Strategic spirituality leads to soulful development; development that blends economic growth with social equity.

Posted by Dr CB Rao on September 27, 2014          

               

Ten Commandments of Indian Entrepreneurship: Five Inspirational and Five Precautionary!

There were times when graduates of premium engineering and management institutes thought of anything other than professional career as the only employment option. Things have changed significantly in current times with young professionals forsaking attractive employment offers and going in for entrepreneurial ventures. There was of course, the more established trend, of moving into entrepreneurship after a few years of work experience and savings accrual. Both segments reflected first generation entrepreneurship. India Bulls, Bharti, Apollo, Orchid, Sun, RedBus, Wellspun, Dusters, JustDial, Flipkart and a host of entrepreneurial companies are examples of such entrepreneurial initiatives. Within the first generation entrepreneurship, the class that jumps into the entrepreneurial journey straight after education needs special kudos. They may be called India’s new age entrepreneurs. While business management and leadership are common across all enterprises, established or entrepreneurial, there are certain guidelines which Indian entrepreneurs must be cognizant of to a greater extent. 

Young entrepreneurs are typically full of academic accomplishment and growth aspiration, and typically imbue their immediate environment with high energy and anticipatory excitement. They also tend to dream with the guts that are required to turn their dreams into realities. While it is difficult to hypothesize when and how the young graduates are influenced in favor of entrepreneurship, the placement season, more often than not, tends to be the period when they get to know not only their worth but also whether their aspirations and corporate offerings match. The placement season is not only a time of futuristic direction and career shaping but also a period of self-awareness. That is the period when all students feel equipped to enter industry or business, but some feel inspired to give back to the society in terms of wealth creation through organizations and businesses they aspire to establish.  This blog post postulates ten principles which are particularly relevant for Indian entrepreneurship. 

The context   

Most young entrepreneurs get their entrepreneurial call as they pursue management programs. The reasons are not far to seek. Management programs, in particular, provide students with a unique value addition that puts the basic academic capabilities, be it engineering, science or commerce to even more efficient and effective use. Management program provide one with unique conceptual and analytical skills which helps one view complex business problems in terms of their simple core issues on one hand and at the same time splice them in terms of diverse perspectives with insightful analytics on the other.  In addition, the programs equip people with multiple soft skills, the main skill being people skills.  The institutes and programs prepare the students not merely to be managers of day-to-day operations but also be equipped to be potential leaders who can shape the strategic future of  organizations.  

That said, there is a valid concern that scientists and technologists would be straying away from their core if they pursue management programs. The only way this concern can be mitigated is through letting the managerial thinking create the spark of entrepreneurship. India holds great potential; all economists agree that India would be the third largest economy of the world by 2030 or so.  Statistics, however, tell only one part of the story.  In qualitative terms, our growth has been more in terms of islands of manufacturing excellence, retail luxury or social affluence.  We need to do much more in terms of social infrastructure, be it schools, colleges, universities, hospitals or industrial infrastructure, be it power, roadways, railways, seaports and airports.  The opportunity for contribution by young professional aspirants to Indian economy therefore stand out, the opportunity is not merely one of a regular job rather it is more of making a difference through an entrepreneurial spirit, of creating wealth and jobs for the society.

The challenge 

The journey as an entrepreneur is not only the most challenging but also the most satisfying one.  The journey is challenging because, more often than not, one as an entrepreneur, would have nothing but one’s dream to pursue and convert into reality.  The entrepreneur is most likely to lack the organization, the financial resources and in some cases even the support of his or her near and dear as he or she pursues the entrepreneurial journey.  That said, it is this challenge of creating something valuable from almost nothing, against all odds, in pursuance of one’s dream makes for the entrepreneurial excitement. No entrepreneurial journey, however, cannot commence without seed capital to support the dream idea. The more fortunate ones step up from the initial security of their regular self-employed businesses, for example pharmaceutical distribution or medical practice, to venture into product development and manufacture or healthcare service; Sun Pharma’s Dilip Sanghvi and Apollo’s Dr Pratap Reddy, respectively, are two examples. Many others leverage their professional employment opportunities, in India or abroad, to generate savings. 

Either way, one would have to go through the tribulations and excitement of an entrepreneurial journey. Even the most successful entrepreneurial behemoth cannot be immune to vicissitudes. Dr Reddy’s which seemed to make no wrong move hit a bad patch subsequent to the acquisition of Betapharm in Germany. To be a successful entrepreneur, one may hypothesize a three step process. The first is self-discovery; a recognition of the yearning within to be an entrepreneur. The second is the ability to spot the niche. The third is the ability to raise the seed capital. The ecosystem for entrepreneurs in India pales in comparison to the one that exists in the USA. It is to the credit of the new age entrepreneurs that they are undaunted. For example, Ola, a taxi service startup founded by two IIT-Bombay graduates has succeeded in starting its services and raising funds ahead of someone like Uber making an entry into India. So do the likes of Café Coffee Day in being ahead of Starbucks, for example. Whether it is lateral entrepreneurship or new age entrepreneurship, there exist certain commandments; recognizing them entrepreneurs can institutionalize growth and sustainability in their entrepreneurial ventures.

High Fives 

First and foremost, is the discovery of the intrinsic inspiration and passion within a person to become an entrepreneur. All successful entrepreneurs (and even unsuccessful ones) would agree that there could be no avocation more challenging and exciting than that of being an entrepreneur.  The satisfaction of creating a business of value to the society, of building an organization creating employment, and developing a brand that brings recognition to the nation are well worth all the problems one would face in assembling a like minded team, finding progressive investors and creating an R&D, manufacturing and marketing infrastructure.  Dedication and commitment of an authentic entrepreneur  would be such that even If one were given an option to restart the my life after a degree, he or she would unhesitatingly choose to be an entrepreneur again. 

Secondly, and this is as important to established businesses as to entrepreneurial start-ups, the right business choice is one which helps an entrepreneur secure a toehold; and within the business the   product choice is what makes or breaks a business; and a right product choice backed by the deployment of efficient process technology, provides the sustainability to business. The success of new age entrepreneurs lies in reinventing the ordinary services into new customer-centric services deploying new technologies of development, manufacture and delivery. Even ordinary businesses like recruitment, coffee serving and ticket booking can be viable entrepreneurial activities with a dash of technology and a feel of customer-fulfillment, achieving differentiation and sustainability in the process.  

Thirdly, nimble execution is as critical as differentiated strategy, especially to entrepreneurial firms. Execution cannot be at the cost of quality though.  Ability to establish a quick but perfect beachhead not only optimizes the investment-revenue equation but also raises entry barriers to the others. Many successful real estate firms began their journey by delivering their first projects fast and perfect. Great Lakes Institute of Management in Chennai, set up by Professor Bala Balachandran has to its credit the fastest execution time frame for a high quality academic infrastructure of its kind.  Establishing or accessing world-class R&D and manufacturing infrastructure in record time frames, developing products and securing regulatory approvals in the shortest time frame is a sure prescription for success in the scale-up phase of an entrepreneurial startup. 

Fourthly, sustainable competitive advantage is derived by operating at opposite ends of spectrum without compromise to any one factor; for example, being the highest quality producer with the lowest cost position, being lean in organization but powerful in delivery, balancing efficiency requirements of high throughput with market needs of low batch sizes and high product variety and driving high revenue and market share without compromise to profitability and sustainability. It is important for the entrepreneurs to focus on the critical parameter that differentiates one’s competitiveness and then reinforce it. An icecream maker, for example, has to focus on two essential parameters: access to high quality milk and integration of a cold chain. Everything else, comes next.

Fifthly, technology ought to play a major role in whatever we conceive of, and execute. If Flipkart, despite being a first generation enterprise, could secure a leading position in the highly competitive e-retailing format, it is in no small measure to its unswerving emphasis on high technology, including certain quality and compliance differentiators specific to Indian e-purchase environment. Entrepreneurs often are forced to make choices between technological competitiveness and resource optimization. Those who persevered with technology eventually end up successful. The case of MTR Foods in terms of newer technologies driving value despite the limitations of a family enterprise is an example. 

Check fives 

While the above are significant positive lessons for a successful entrepreneurial journey, there also exist some pitfalls one must be aware of.  Firstly, as a first generation enterprise, it is an eternal struggle to overcome financial resource limitations.  Given the classic preference in the Indian stock markets that promoter should stay invested in the company with high promoter share-holding, it is a challenge to raise risk capital without dilution.  Perforce, one is required to depend on debt.  The race to become what one is capable of in terms of product, manufacturing and marketing canvas has to be tempered by prudential norms of debt-equity structure from time to time.  Dilution of equity and monetization of non-core assets would become inevitable, to restore balance sheet stability and sustain future growth, however emotionally painful such options would seem to be.  

Secondly, as a company evolves from being an entrepreneurial start-up to become a more organized enterprise it is important to keep developing organization structures and talent profiles as well as systems and processes that move in step with changing business requirements.  The art of management and leadership vary significantly between a start-up and an established enterprise; the leadership teams must display a high degree of self-awareness and sensitivity in this important aspect. Even a highly successful company such as Infosys struggled with reinventing itself to changing levels of competition and the increasing levels of internal aspirations of people for positions of influence and power.

Thirdly, all organized activity, including its competitive advantage, will stem from people, and only people. The success of a first generation enterprise such as Orchid Pharma in becoming a globally recognized pharmaceutical major has been directly linked to the founder’s ability to attract and leverage some of the stalwarts in science, engineering and business in achieving aggressive technological development and business growth.  The real source of competitive advantage of an entrepreneurial firm would lie in its ability to attract the best talent with inspirational goals and empowering ecosystem.  The day a front ranking organization loses the ability to attract such talent, one may say that the organization has lost its soul!  

Fourthly, as entrepreneurs scale up their organizations and businesses, they must learn to evolve from the science of making right product choices to the art of making right business choices.  As a successful entrepreneur, once he or she brings up a business to a critical mass, he or she must learn how to forego control, entrust it to other professionals and redirect his or her entrepreneurial entry and passion into newer vistas of growth.  Inability to make this transition in a timely and graceful manner could cost you the business dearly and also sub-optimizing future potential immensely. The recent split announced by Indiabulls’ three promoters indicates their realization that their business has outgrown the desire to stay together. 

Fifthly, entrepreneurs at least the successful ones, would need to look beyond their own firms and businesses, and consider how they can contribute to creation of virtuous ecosystems in the country that institutionalize entrepreneurial spirit.  This requires establishment of a positive climate of angel investing, start-up investment and equity investment besides an institutional framework for incubation of ideas.  This requires that entrepreneurs should not be lost in the success of their enterprises but must interact with the broader stakeholder community so that our nation can be truly a nation of entrepreneurs. While N R Narayana Murthy’s Catamaran is an example but the hugely successful entrepreneurs and entrepreneurial groups can do much more, if they put their heart to creating an Indian entrepreneurial ecosystem. 

Ten commandments

The growth of India’s private sector has been that of India’s entrepreneurship, right from the historical days of Tatas and Birlas. Indian entrepreneurship has been less flamboyant than it ought to have been, given its successes. The potential to maximize new age entrepreneurship is also less recognized than it ought to be. India’s future still has several challenges of scarcity and inequity, but with dedicated and diversified entrepreneurship each challenge is an opportunity of development for both established businesses and entrepreneurial startups. As one embarks upon an entrepreneurial journey, the ten themes of entrepreneurship of this blog post should be of some inspiration and guidance.

Posted by Dr CB Rao on July 13, 2014