Business Today

Prahalad's plan

An India that's home to 30 of Fortune 100 companies, the world’s largest pool of technically-trained manpower, and Nobel Prize winners in arts, science and literature? That’s management guru C.K. Prahalad’s dream for India@75, and he’s got a plan how to get there. A Business Today exclusive.

Print Edition: August 24, 2008

As the celebrations of India @60 wind down and as the national attention is consumed with problems of the moment—price of energy, inflation, debt relief to farmers, political realignment in the states—it is hard to focus attention on the future of India. The urgent is likely to drive out the important. Moreover, it is easy to get carried away by growth statistics of the past five years and feel “we have arrived”.

C.K. Prahalad
C.K. Prahalad
Leadership, however, is about the future, about hope and change. Leaders must elevate the national debate and focus on the potential of India. A shared view of India@75, for example, can provide a framework for building a multi-stakeholder consensus and making choices that are directionally consistent with that goal. Unless we are clear about the potential, it is very difficult to undertake an arduous journey.

I believe that India has the potential to actively participate in shaping the emerging world order. This demands that India must acquire enough economic strength, technological vitality and moral leadership to do so. Just economic strength and technological maturity is not enough. We know that the Soviet Union and Nazi Germany had economic and technological muscle. They failed. Morality is an integral part of leadership. We should emphasise all three dimensions, in equal measure, in India’s march to Her destiny.

The potential of India

Let us imagine the potential of India without constraining ourselves by the record of India during the first 60 years of independence. In an important sense, India got her second freedom.the freedom to grow only during the early 1990s. Let us also not constrain our thinking by the problems of the present. Let us first imagine this future.

  • India turns its population into a distinct advantage. India has the potential to build a base of 200 million college graduates—a portfolio of educated people in every discipline. This is just 16 per cent of India’s population. Further, I would like to see 500 million certified and skilled technicians. Implicit in this future is universal literacy. This is possible in 15 years, if leaders focus on this goal as a priority. Think about what this means. India will have the largest pool of technically-trained manpower anywhere in the world. This must be the starting point for global leadership. If India fails in its educational mission, the rest of my vision for India cannot be realised.
  • India?s strength: The country?s demographic advantage can be turned into a competitive advantage
    India?s strength: The country?s demographic advantage can be turned into a competitive advantage
    India must become the home for at least 30 of the Fortune 100 firms. I know this is an audacious goal but it is possible.
  • India accounts for 10 per cent of global trade. India can. We have to change our mindset. In fact, Indians took a lot of pride when India was not affected by the 1997 Asian crisis. I said, at that time, that it is a sad commentary because if India was connected with the rest of the world, she would have felt the impact of the crisis. India must become connected with the rest of the world—a critical step in influencing others and, more importantly, the basis for learning from others.
  • India becomes a source of global innovations—new businesses, new technologies and new business models. The early evidence is already in. Increasingly, India is becoming home for new business models—very low capital intensity, extremely low fixed costs, and conversion of fixed costs into variable costs (as in the case of Airtel). The bottom of the pyramid, the 800 million Indians, can become a major source of breakthrough nnovations.
  • India needs to focus on the flowering of arts, science, and literature. Why can’t India have 10 Nobel prize winners? I want to add that it would be all the better if it was for the work done in India—not just Indians getting the Nobel Prize for the work done elsewhere.
  • India becomes the world’s benchmark on how to leverage diversity. It becomes a benchmark for the practice of universality and inclusiveness. India has the opportunity as she is home to all the major religions, 15 major languages and hundreds of dialects, and a complex range of cultures, food habits and rituals—all the diversity one can hope for. If India is not the laboratory to practice diversity and inclusiveness, nobody else is. India is the laboratory to the world.

India?s manufacturing prowess: Cars manufactured in India are getting shipped out from a port
India?s manufacturing prowess: Cars manufactured in India are getting shipped out from a port
One could add to the list. The six big opportunities that I have identified, when accomplished would significantly improve the quality of life of all Indians; it will also change the influence of India around the world. India has the potential. If this potential intrigues you, then we can move on to the next interesting question: How do we realise this potential? What are the principles we have to start with?

Can we do this?

I would agree that the goals for India@75 are very ambitious. Therefore, it is easy to dismiss them as impractical. Yet, consider India’s struggle for freedom. In 1929, when Congress declared Poorna Swaraj as the goal, did it seem likely? Could anyone at that time have articulated the details of how it can be accomplished? The key was that it was a worthy goal. All Indians could relate to it. But the means had to be discovered. If one had applied the test of availability of resources and the record of the previous two hundred years of British ascendency, including the results of the first War of Independence in 1857, the goal would have looked impractical.

The successes of India in food production—the Green revolution, the White (milk) revolution—and the development of space technology are all worthy of note. The Club of Rome in their Limits to Growth predicted that “catastrophic” food shortages in India and Africa may turn into “apocalyptic” famines by 2010. The green revolution made India self-sufficient in food.

Underinvestment in agriculture for over a decade has resulted in current food problems all of which are reversible. India today is the largest producer of raw milk. Did anyone believe in 1980s that India would be a credible player in space and launch 11 satellites simultaneously?

India?s low-cost engineering wonder: Ratan Tata at the launch of the Nano
India?s low-cost engineering wonder: Ratan Tata at the launch of the Nano
Let us look at India’s gains during the last 15 years. I can relate to these changes at a very personal level. When in 1994, I suggested to a select group of CEOs that they must build multinational firms from India (Indian MNCs) rather than be paralysed by the entry of multinationals in the Indian market, it looked far fetched. Very few, if any Indian, CEOs thought it was possible at that time. Today, Indian MNCs are a reality.

Similarly, 10 per cent growth and 10 million new jobs per year (10/10 programme) looked impossible in 2000. The idea was ridiculed. One was reminded of the traditional Hindu rate of growth of 3-5 per cent. But India is growing at close to10 per cent; some states are growing at 15 per cent plus. India is yet to generate 10 million new jobs a year. But that can happen if we put our mind to it.

The poor of India were seen as a burden. Converting the poor into micro-consumers and micro-producers—recognising the fortune at the bottom of the pyramid—has changed the character of the economy. Yes, there are still 200 million Indians who live in abject poverty. But the cell phone revolution, two-wheelers, consumer finance, and consumer goods of all kinds are fuelling the economy and changing peoples’ lives. Cell phones have shown that there is a huge untapped market. Amul, ITC eChoupal, Jaipur rugs, EID Parry and Reliance Fresh are showing us that we can creatively connect subsistence farmers to regional and national markets. Micro-producers can get a chance to improve their livelihoods.

It was just 10 years ago that most managers and politicians had declared manufacturing in India as a dead end. “We have no hope against China” they said. Today, manufacturing is alive and well and growing rapidly. India is becoming a manufacturing hub. Exports of manufactured goods are at $91 billion (Apr. ’07-Feb. ’08) and growing at more than 15 per cent. Others are taking note. Investments by Hyundai, Nissan, Ford, and Nokia are a small indication that not just Indians but others also believe that India can build excellence in manufacturing.

India was not known for its quality. Today, many Indian firms have demonstrated that they do not lag behind anyone in quality—be it in software development, manufacturing fine chemicals for pharmaceutical industry or in automotive component manufacturing.

These examples of extraordinary accomplishments suggest that India can change its developmental trajectory. These accomplishments also allow us to extract principles behind these accomplishments against all odds and conventional wisdom. What are the principles of “game changing accomplishments”?

1. Focus on the future and not on the past, or on the trajectory of the past: Building Indian MNCs or developing private sector solutions to alleviate poverty are clear departures from the past. Decide on the desired outcome, put a stake in the ground and then develop the means to get there. Start with a clear goal and focus on discovering the means. We don’t have to know the details of “how to” before we commit to these goals. It is enough if we can identify key milestones. This process is not about becoming more efficient but becoming different.

2. Aspirations must exceed resources: Entrepreneurship and innovation are the key elements behind every one of the accomplishments described above. The goals must, by design, exceed resources. This mismatch, by design, is at the heart of innovation. Therefore, the often-asked question: do we have the resources that are inappropriate? The questions should be: how do we accumulate resources rapidly? How do we learn at low cost? How do we leverage available resources? And most importantly, how do we change the game to our favour?

3. Imagination is more important than analysis: We tend to analyse and often use past data to justify future direction. But imagination is about amplifying weak signals, connecting the dots, and seeing a new pattern of opportunity emerge. We have to imagine a new India; India@75 that is not just continuation of the developmental path that got us to India@60. What data analysis could have led us to believe that India could boast of MNCs or that we would have 300 million cell phone users?

India has one further advantage. All the problems that India faces—in primary health, education, farming, water, pollution, corruption, or in infrastructure— are very well researched and documented. India can, therefore, focus on finding creative solutions. We have to move away from, “We have all these problems and, therefore, we can’t accomplish these stretch goals” to a mindset that says, “We know all our problems, therefore, we can solve them”.

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