The Hindu Business Line : Let's show some enterprise

Holistic USP: The future belongs to innovative, ecofriendly businesses such as this chewable spoon made of cereals by a Hyderabadbased woman. - P.V. SIVAKUMAR

A key ingredient for India's success will be the level of entrepreneurial activity that we can stimulate. Fortunately, the climate and support for entrepreneurship are much better today than at any time in the past. The opportunities for creating new businesses are also plentiful and diverse.

The situation was quite different 25 years ago when we started Mastek. Most industries were heavily regulated by the government and needed licences to operate. Capital was scarce, and businessmen were not seen in a favourable light: less than five people from my graduating batch at IIM ventured out to start their own businesses.

We at Mastek were fortunate to be able to catch the IT wave in its early stages. We were also lucky to have been one of the first units to be funded by one of the first venture capitalists of that time — TDICI. In fact, venture capital was so new that we had to keep evolving our funding agreement and exit clauses as we went along!

The situation is quite different today, and capital is abundant. According to the India Venture Capital Association, the apex association of VCs in the country, almost 50 VCs and private equity firms operate in India, with a funding of around Rs 5,000 crore. I'm sure that a lot more capital will flow in if the demand increases. Business is seen in a far more positive light today and government regulations are slowly being simplified. The climate for entrepreneurship, therefore, couldn't be better.

To identify new opportunities in the next few decades, we will need to find out how different the world will be in the years to come. We will need insights into the customer — not just his needs, likes and preferences today, but what can change them in the future. For example, iPod succeeded not just because of its technology but also because of Steve Jobs' uncanny ability to change the way millions of customers bought and listened to music.

Let me summarise what I think will be some of the significant trends impacting the world and the opportunities for new enterprises over the next decade or two...

Connectedness: We have a far higher sense of connectedness to every other being in the planet than ever in the past. This is, in part, due to better communication where happenings in any remote part of the world are immediately visible in other places worldwide. This is also due to globalisation — not just of economies, but also in the social and political spheres.

Indian IT and BPO industries owe their growth mainly to this connectivity, which has enabled division of labour between countries. The ability to relate to and deal with people across continents in real time has also generated a lot of opportunities. For example, tutors in Bangalore are helping kids in the US with their homework! It's not difficult to see this being extended to private secretarial services, counselling services, medical diagnostics, and even the services of a personal astrologer in India!

Micro segments and mass utilities: As human tastes and preferences evolve, a significant part of the market will move away from off-the-shelf, mass-produced products to personalised variants made using mass-produced commodities, components and infrastructure.

As an example, we could see a revival in the fortunes of the neighbourhood tailor — instead of stitching your shirt from cloth, he now assembles and alters the collar, sleeves, cuffs and body to create a unique one-off product for you. Today's garment makers, then, become mass utilities that mass-produce these components in the most efficient manner, in any part of the world.

Such a scenario would lead to the proliferation of small, specialised, highly profitable businesses servicing very narrow micro-segments that they understand well. These niche businesses, in turn, will be serviced by a handful of huge low-cost, low-margin entities that can manufacture and deliver at peak efficiencies. These micro-segments could be local or global or both. This could apply to almost anything used by individuals or businesses — from home entertainment systems to food to office equipment and supplies. It's like Wal-Mart providing its global procurement and supply chain efficiencies to your local provision store.

Holistic/balanced lifestyles: According to Jeffery Sachs in his book, The End of Poverty, the period between 1820 and 2000 has seen astronomical growth in gross world product — nearly 50 times. However, this has come at a cost. A significant part of this growth has happened by drawing from Nature's Bank Balance — using up natural resources without replenishing them — topsoil, forests, petroleum, clean water and clean air, to name some. It is unfortunate that our measures of growth like GDP and GNP do not account for this loss.

People in the 21st century will definitely have a more balanced and holistic approach to life. This would throw up opportunities in organic farming, hybrid vehicles, alternative medicines, focus on wellness rather than treating diseases, and health tourism. In fact just as a hybrid vehicle is more eco-friendly than the petrol-driven car, there are opportunities to create `greener' or more eco-friendly versions of all polluting products.

The growth in the last two centuries has also widened disparities between the poor and the rich. While in 1820, the ratio of per capita incomes between UK — the richest country and the whole of Africa — the poorest continent was 4:1, in 1998 the gap between the US and Africa was 20:1. The disparities within a country are even starker, especially in a country like India with over 300 million people below the poverty line.

A growing understanding that development needs to include the poorer and needy sections of society will lead to the rapid growth of social entrepreneurship in India, with the NGO or the citizen sector growing in a major way. With more than one million NGOs operating in India, this could be a major sector in the coming years. In fact, a John Hopkins study (quoted by David Bornstein in his book, How to change the world) of eight developed countries found that between 1990 and 1995, employment in this sector grew two-and-a-half times faster than for the overall economy.

Mobility: There will also be heightened levels of mobility — of people, products, money and ideas — in the knowledge society. During the course of this century, I wouldn't be surprised to see national barriers lowered, patent and IPR protection reduced, taxes and duties simplified, and a move to a single global currency.

The rate of knowledge creation and innovation, and the speed at which it will be leveraged across the globe, will increase exponentially.

With increased mobility and varying tastes, niche tourism catering to very specific interest groups is bound to grow. Just as we see the quick adaptation of successful foreign TV shows in India, we will see growing two-way cross-licensing and adaptation of ideas in all fields, whether it's entertainment, fashion, retail, food, books... again, in almost every area where people's preferences and interests change quite rapidly. And I'd love to see the day when we create global centres of learning like the ancient Nalanda University, and become a centre for knowledge creation and dissemination for the world.

India has no dearth of entrepreneurs. In fact, India has over 42 million enterprises as compared to fewer than 6 million in the US. Many of these would be micro-enterprises like the vegetable vendors, the paan shops and the like. It is just that with the emergence of organised retail, these entrepreneurs need to figure out a way of adding value, and of differentiating themselves to remain in business. And new entrepreneurs need to come on board to build the medium and large enterprise — where India has less than 6 lakh enterprises as compared to the 12 lakh in the US.

There are abundant opportunities for entrepreneurship. All it takes is the imagination to come up with a business idea and the courage to take a risk. The reward is not just personal wealth — it is in making a meaningful contribution to the country as a whole. Are you game?

The author is CEO, Mastek Group. He can be reached at sudhakarr@mastek.com

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