Shiv Nadar says he got the best advice from late C.K. Prahalad
August 28, 2012The balance of payments crisis triggered the need for India to undergo serious structural economic reforms in the 1990s and the government started some breakthrough reforms in India. While the Indian economy started opening up, it created windows of opportunity for India and Indian businesses. It was also around this time that I met the late C.K. Prahalad, one of the finest thinkers of our time. Over the next decade, CK and I developed a strong bond of friendship and he became a mentor for me.
A visionary, CK foresaw the impending global integration of the Indian economy even before India's economic liberalisation. HCL, too, was at an interesting inflection point in the early 1990s - we had entered into a joint venture with HP and were trying to build a global brand. CK shared some key thoughts about the core elements that Indian businesses needed to imbibe to take the big leap and become truly global. These are:
Aspirations Must Exceed Resources - The mismatch of aspiration and resources leads to INNOVATION. Indian enterprises needed to constantly innovate to be at par with their global peers. He shared the story of how the Japanese auto industry became global with continuous innovation - reducing capital intensity by focusing on quality (TQM), leveraging people (team work) and reducing waste (Toyota production system). The Japanese also used alliances to acquire technology rapidly. CK said that Indian IT firms needed to innovate on every front - labour and cost arbitrage, quality of delivery, reduced capital intensity, competency acquisition, onsite-offshore model - to become global technology giants.
Focus on the Weak Signals: The Next Practice - CK said, and I quote, "Identify new opportunities by focusing on the weak signals. Amplifying these signals and leveraging the opportunities that emerge from them offer businesses the ability to continuously reinvent themselves. This is what I call the Next Practice." The Next Practice is about "creating new rules and a new game" and is different from benchmarking best practices. It is about fundamentally changing industry dynamics and how value is created in a particular industry.
For me personally, these were truly powerful insights. I initiated a new phase of consolidation for HCL in the late 1990s as we explored alliances and entities that include HCL Technologies, HCL Infosystems, HCL Comnet and HCL Perot. This laid the foundation of the global $6.2 billion HCL enterprise as we all know it today.
Interestingly, CK had spoken about the Indian multinational way back in 1992/93, which appeared far-fetched then. Passionate about India's inherent potential, CK strongly felt that a country with a billion people should not look outward for best practices but innovate for the 'next' practices. 'Roomba pramadam', meaning 'very remarkable', is what he wrote to me when HCL made it to the cover of a top international publication. For me, CK's passing is a personal loss - the loss of a great friend.