Financial Daily from THE HINDU group of publications
Monday, May 05, 2003
The land of hidden strength
Prof C. K. Prahalad's views on India's strengths are refreshingly positive.
IF ONE looks up the Sunday sections of American newspapers, magazines or ezines, there is a whole slot reserved for inspirational writing. Started originally as religious writing, it comes in several forms, including personal essays, stories of valour, everyday incidents that have an uplifting end and seemingly chatty pieces that pack an inspirational punch in the last line.
Unlike India, where only celebrity achievements count, for the average American reader, inspiration can come from the next door Jane and John, whose ordinary humdrum life may offer as much scope for emulation as would America's most admired.
Being touched and touching everyday lives of the readers is an important component of the US publishing business, and the popularity of inspirational writing proves that people thirst for information and experiences which would transform their lives for the better in small and big ways.
Perhaps, it is this daily dose of unconscious inculcation that makes Americans think positive and respond to a national emergency or issues of national importance as homogeneous whole, rather than as disparate factions. Though the Iraq war is not such a good example to uphold to demonstrate this national trait, September 11 undoubtedly is, when the Americans rose as one to condemn the terrorist attacks. One did not hear people escaping from the Twin Towers condemning the administration for its tardiness, the policemen for callously handling the carcasses or the firemen for arriving late though such human failings must have marked rescue operations of such a dimension, at least in some measure.
One can almost imagine what would be the scene in India had the same crisis occurred here. One can bet safely that at least one witness would have settled for his 15-minute glory on television by venturing a first-hand account of police failure (police often seen as being synonymous with administration), public apathy, and its ilk, instead of concentrating on the positive dimension of disaster management.
Thinking positive is not something that comes easy to Indians, more so when there is a beast of burden available around called the government to carry every blame named in the book.
Nothing brings home this Indian failing till one hears C. K. Prahalad. For those convinced that there is no hope for India power and water shortages, corruption, poverty et al Prof Prahalad's perception of India, and its list of strengths, can only come as a refreshing shock.
Those who have heard the Harvey C. Fruehauf Professor of Corporate Strategy at the University of Michigan Business School before would know his line of thinking. Forming the base of the pyramid to enhance profitability is his well-known hypothesis, and Prof Prahalad builds on it in every instance. Simply explained, it is the management guru's belief that there's moolah to be made at the bottom of the heap. Only, to succeed at the lower end of the market, entrepreneurs need to evolve business models based on low margins, high volumes, larger scale and greater efficiency to deliver quality products.
Delivering the keynote address at the CII Annual Session and National Conference early this week, Prof Prahalad did do the expected. He did expound on his pet theory of doing business at the bottom of the pyramid, but he also introduced an equally interesting element to his presentation. This element was on the importance of aspiration and attitude.
According to Prof Prahalad, were he given a choice between aspiration and resources, he would go every time for aspiration or the desire to succeed. His argument is that while the resource constraints are known infrastructure bottlenecks, lack of power and its high cost, policy pitfalls what an entrepreneur can do is treat what is not there as given, but instead build on existing capabilities.
For Prof Prahalad, the list of India's positives includes things that are all there but which none of us see:
A large consumer base, and a growing per capita income, which is now very close to the wonder figure of $600-700 and could push India into the same league as China in terms of consumption.
Lack of legacy systems, which makes it possible to adopt cutting edge technologies without having to worry about switchover costs.
A computer-savvy consumer base that makes it possible to marry IT to operations across the value chain including in traditional sector like farming. India's Indianness such as its knowledge of Ayurvedic, which could be commercially exploited.
India has these strengths is known, but rarely has one seen as being in the same class as India's innumerable weaknesses such as shortfalls, costs, corruption, policy failures, and infrastructure bottlenecks.
It is only when Prof Prahalad lists them out does one realise that India could look like that too. His presentation is replete with success stories, starting inevitably with IT which he says has proved beyond doubt that it is possible to succeed despite the resource constraints moving down to as unexpected examples as the Aravind Eye Hospital in Madurai and the famous Jaipur Foot.
Prof Prahalad points out that India has demonstrated global-scale markets in telecom, two-wheelers, trucks, cement, petrochemical and entertainment. Amul has proved the unorganised sector offers immense opportunities but more recent successes of Aravind Eye Hospital and Jaipur Foot, among others, bear equally careful scrutiny. These have not caught the public eye because they are charities, and are probably viewed in that light, but they are actually successful, multi-million dollar business, operating (predictably) at the lower end of the pyramid.
To Prof Prahalad, the Jaipur Foot is a $600-million business. Now if you were to ask how, the answer is simple. The foot is provided free but the organisation survives on donations $30 per prosthesis. The equivalent of the Jaipur Foot is available at $1000 per prosthesis in the US. Since Jaipur Foot manufactures and distributes about 6,000 pieces, that makes it a $ 600 million business.
Similarly, Aravind Eye Hospital stands out for its processes. It uses its vans to reach the patients who are spread out all over the place to the hospital (similar to Amul collecting milk from the cooperatives and bringing to a centralised place) where doctors perform cataract operations. Sixty per cent of the work done by the hospital is free. It still makes money and were it to price the services at US rates, it would be another example of a multi-million dollar business.
Some of Prof Prahalad's catch phrases during his presentation include, "Entrepreneurs must deal with the pack of cards they are dealt," "Think next" rather than follow the crowd, "We can't let our farmers be destroyed," "Aspiration is half the battle," "What kind of an entrepreneur are you if you can't build on what you have," and "We can do it."
Understandably, by the time Prof Prahalad finished his presentation at the CII, the first breathless question from the audience is, "Sir, where can I get a copy of your speech?"
Undoubtedly, it is part of the job of acknowledged theoreticians and management experts like Prof Prahalad's to build magical dreams on a theoretical base to keep their audiences spell-bound. It is also probably true that experts like Prof Prahalad have been propounding their theories for quite a while, but the promised transformation has not taken place in part, because doing business on the ground is probably different from propounding theories.
Yet, the first question from the audience at CII proves that underneath the cynical façade of the jaded Indian, there beats a heart dying to be inspired out of its everyday rut. The only problem is how does one carry these inspirational messages beyond the portals of hallowed portals of institutions like the CII to the masses the youth, the engineers, the entrepreneurs who are Prof Prahalad's own target groups. If one looks at the newspapers, more space was given to the CII's nonchalance at the Finance Minister, Mr Jaswant Singh's absence from the conference rather than to Prof Prahalad's elevating keynote address. This is a matter that requires the application of the collective Indian mind.
(The author, a freelance writer, can be contacted at firstname.lastname@example.org)
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