Author:
Publication: The Business Standard
Date: May 1, 2003
One of the central messages of the
management guru, C.K Prahalad, to the Confederation of Indian Industry
(CII) this week, as on previous occasions, is that India Inc's biggest
problem is that it has consistently been underestimating its own potential.
Dr Prahalad's way of pressing his
point home is to present a series of examples in order to show just how
competitive India can be. For those who say India simply cannot develop
new products since it does not have the technological skills, he cites
the examples of Telco's Indica and Mahindra & Mahindra's Scorpio -
both are new products developed autonomously, at a fraction of the cost
of buying finished technology overseas, and in a sense these have catapulted
India into the league of countries where advanced engineering can be done
at low cost.
Indeed, the prospectus for the public
share offer by Maruti Udyog talks of how Suzuki plans to use Maruti as
one of the only R&D centres that it has outside of Japan.
For those who say India cannot compete
with China's low costs since it doesn't have a large enough domestic market,
Prof. Prahalad cites the example of Aravind Netralayam (he calls it Aravind
Eye Hospital) where the cost of a lens implant is just $16; this compares
with more than $1,000 in US hospitals, and since Aravind did 250,000 such
operations last year, Dr Prahalad contends that if US prices are applied
to it, Aravind is a $250 million corporation.
Similarly the Jaipur Foot, which
fits prostheses for as little as $30 (against $10,000 in the US), could
be considered to be a $160 billion firm, based on its scale of operations
and on US costs. Both have unique delivery systems, partly based on a McDonald's
style assembly-line operations model.
The basic points being made are
two. One, it is possible to develop a different model and become competitive.
Second, if you cut your costs, the volumes that can be got are tremendous
(the Jaipur Foot fitted 16,000 artificial feet last year, as against just
4,000 by the next-best firm abroad).
Dr Prahalad extends this to cite
other unique Indian discoveries, so to speak. He talks of how the model
of providing software solutions over long-distance telephone wires is a
unique Indian proposition. Of e-choupals and kiosks to download government
forms.
Since the same set of problems,
such as those relating to stifling government regulations and high-cost
infrastructure, apply to these success stories as well, the central message
that comes through is one of hope. If one firm can do it, surely others
can too.
Cynics will argue, and perhaps correctly,
that while one or two firms can always succeed by thinking differently,
for India to do well as a nation, government procedures just have to be
made simpler and the infrastructure better - after all, one of the reasons
for software doing so well is that there were no government regulations
for the sector.
This is of course true, and there
is no arguing with the proposition that more economic reforms will benefit
the nation - like motherhood, it cannot but be good.
The point, however, is that there
is a lot that can be achieved even within this constraint. Dr Prahalad
argues that Indians don't celebrate their small victories enough, certainly
not publicly, and that's why good ideas don't spread and/or inspire others.
That's true too; too many Indians
spend more time on the bad news than on the good.