Concept2Context

Stooping to Conquer?

2009-04-24T15:29:00.002+05:30

The BrandLine supplement of The Hindu Business Line dated 23rd April,2009 carried a story on Hindustan Unilever Ltd., " testing a new economy brand in the tea market to increase its volume share". Already the company leads the premium segment commanding a market share of 23 percent. Now, it wants to extend that dominance to the mass market. It also represents an attempt to become a volume leader in addition to being a value leader. The logic is simple, straight forward, and makes enormous market sense. After all, 70 percent of the tea market resides at the lower end. The company is expanding its presence in the tea market by extending its Brooke Bond brand. In the process, the company is paying attention to Prof. C K Prahalad's celebrated concept of the " Bottom of the Pyramid(BOP) opportunity.

Secondly, the company's move also represents an "AND" solution in the sense it combines health concerns of the market segment. Substantial segment of the market at the lower end has vitamin deficiency. Brooke Bond Sehatmand attempts to address this issue. By taking three cups of tea, the company guarantees to deliver 50 percent of the recommended dietary allowance of added B Vitamins required by a person. Though Tata Tea's Agni also positioned on health and wellness platform, HUL's strategy of adding vitamin appears to be a strong and meaningful differentiator.

Finally, the company has roped in Indian Institute of Development Management(IIDM) to launch Sehatmand Parivar - Sehatmand Bharat Abhiyan, a movement with a mission to empower people combat micronutrient deficiency through education in health and nutrition represents an apt example of the concept of social marketing.

All the above are in the area of marketing. Is there any entrepreneurial opportunity here? What about migrating the product or service to solution marketing? It could open up huge entrepreneurial opportunity, may be at the micro level. But for companies like HUL it need not be so.

Management, Entrepreneurship & Innovation

2007-04-26T18:13:00.000+05:30

In an interview to The Hindu Business Line, dated 23rd April 2007, Prof. T.N. Srinivasan, currently the Samuel J. Park Jr Professor of Economics at Yale University was asked a question: "Does innovation lead to entrepreneurship or is it the other way around, entrepreneurship leading to innovation?” Prof. Srinivasan's answer is quite prescriptive in terms of outlining the role of entrepreneurship education both in promoting innovation in academic campuses and growth in the world outside. He said:

"It's a two-way relationship. In one sense innovation, somebody finds something but that somebody may not be equipped to translate that something into a commercial proposition that is where the entrepreneurship comes in. The entrepreneur identifies this idea. You may produce the idea, but you may not have the capital or the skills to find out what the market is. But as an entrepreneur, I may find that I can borrow your idea and do it. The outside of the story is what you are saying - if there was no innovation at all, what's the point in entrepreneurs. But the entrepreneur himself could be an innovator; there, the two functions combine."

Traditionally, management and entrepreneurship as areas of study and practice were considered independent of one another. It was the venerable management guru, Peter F. Drucker who visualized them as two sides of the same coin. He famously observed: “Management and entrepreneurship are only two different dimensions of the same task. An entrepreneur who does not learn how to manage will not last long. A management that does not learn to innovate will not last long”.

Rightly, Drucker and other management experts viewed innovation as a defining character of entrepreneurs. Innovative capacity is supposed to differentiate the successful entrepreneurs from the not so successful ones. This explains why the terms entrepreneurship and innovation are used interchangeably. A relook at what Drucker said about management and entrepreneurship clears much of the ground. While he expects every entrepreneur to be a good manager as well, he uses the term management - not manager – to emphasize the need to be proficient in innovation. Implicitly, he indicates the possibility or necessity of outsourcing innovation.

Prof. Srinivasan’s observation about entrepreneurship and innovation has to be looked at in this backdrop. Management education is imparted or considered necessary for those who are aspiring for a career in management as well as for the practicing managers (without formal management education) besides the entrepreneurs. In the same way, entrepreneurship education should be given to entrepreneurs and aspiring entrepreneurs as well as to those who want to become innovation professionals or practitioners.

Like management consultancies, a new breed of professional innomediaries should proliferate. Prof. Srinivasan’s thinking on the subject indicates this underlying trend. For long, we had a rare breed of people called inventors on the one side and entrepreneurs on the other – those who commercialize the inventions of the scientists. Rarely we see them in one person. In the same way, there would be a horde of people who innovate and those who leverage those innovations by setting up ventures.

Here, innovators include business model or concept innovators as well as management innovators. Unlike in the case of scientific inventors who rarely become successful entrepreneurs, more business or management innovators will morph into successful entrepreneurs. But at the same time, there is a tremendous scope and a dire necessity to create innovation professionals and innomediaries through well-conceived and well structured entrepreneurship education programmes focusing mainly on INNOVATION.

Study Groups, Working Committees, or What?

2007-01-07T15:21:00.000+05:30

Two recent articles/stories in two different business dailies acted as a trigger for this Blogger to send this suggestion to Honorable Finance Minister, Shri.P.Chidambaram virtually for a virtuous reason.

One relates to a pertinent and powerful observation made by the Management Guru, Prof. C.K. Prahalad (The Economic Times dated 5th January 2007) on the efficacy of market mechanism in addressing the inefficiencies of the agricultural sector. The other is an article by Prof.Aneel Karnani (Business Standard dated 6/7 January 2007) where he emphasised the role and responsibility of the State in making available the essential services like basic education, public health, water, sanitation, public safety and infrastructure. Interestingly, both the Indian Professors are teaching at Michigan Business School.

While responding to reporters at Great Lakes Institute of Management,Chennai after addressing its students and alumni, Prahalad made this observation : "I think agriculture is not going to be reformed by agricultural policies. Agriculture is going to be reformed by logistics".

Obviously, Prof.Prahalad bets on the power of market mechanism rather than on Government policies. The huge investments made by large retailers in their supply chains, Prahalad believes would address the problems that remained stuck despite a plethora of policy interventions.

Prof.Aneel Karnani looks at the other side of the picture to show how important it is for Government to perform its function particularly in providing public goods. To quote him: "In recent years, the political ideology of the world - and of India - has shifted decisively towards an increased role for markets and a correspondingly decreased role for the state. But the role of the state has certainly not been eliminated, nor should it be".

Their points of view appears to be at loggerheads. But that is more apparent than real. In actual practice, they have a complementary role to perform. The trick is to understand clearly their respective roles. The observations made by them are prescriptive in nature and capable of producing solutions - if only an appropriate mechanism for making this happen is found out and put in place.

One such approach is briefly outlined here. The rationale behind this proposal is to encourage participation of different segments of the society in the development process. The vehicle to be used for this is enterprise creation on experimental basis. By seeding high impact making enterprises most of the agricultural and other sectors' problems can be solved.

Government from time to time set up Study Groups and Working Committees and ask them to go into the problems faced by different sectors and segments and come out with right solutions or suggestions to overcome them. They are necessary and will continue to have relevance in future as well.

But at the same time, there is a sound logic in creating Working Groups which would literally work on specific problems/issues. Such Groups can be encouraged to work on a spectrum of issues across the breadth and length of the country. When proved successful in the place of experimentation, they can morph into enterprises - commercial or social depending upon the cases.

The idea is to incorporate such a mechanism in the Union and State Budgets. Academic Institutions, Non Government Organisations(NGOs) and Special Purpose Groups in the Private Sector (assembled exclusively for the purpose) can be encouraged to participate by pitching with innovative ideas and plans. The criteria for selection and funding should be : simplicity, sustainability, and scalability of their ideas apart from their commitment.

If World Bank can reinvent itself by embedding such features in finding and funding innovative projects some five years ago, (through Development Marketplace) Government can also eminently embark on such practices and experiments. This could well be one way to make the development process much more democratic and engaging. In the process, it also makes use of the people who have fresh perspective and innovative solutions to development.

Already Presentation of Union Budget by Finance Minister is the most keenly awaited and most popular economic event in the country. By installing and institutionalizing such a system in the Budget, it could be made even more popular and participative in a meaningful manner.

India already boasts few success stories in innovatively addressing key development issues. Amul and Aravind are two shining examples each representing the commercial and social enterprise models which demonstrate the power of vision driven organizations in transforming the life of the people.

Amul today is the world's largest processor of milk and Aravind does the largest number of eye surgeries in the world. Can these kinds of success stories be replicated in other areas crying for innovative solutions? Can this be done by Government playing the "enabler" or facilitator role?. Can this feature be built into the Budgets?

It may be an IDEA whose time has come. Are we ready for that?

Strength & Future Lies in India(AND)NESS!

2006-11-13T18:28:00.000+05:30

"What a country! Part Silicon Valley, Part Stone Age." This is taken from the quotable quote from The Week magazine attributing to Steve Hamm, writer on India in his book Bangalore Tiger.

Frankly, to me it does not come as a big criticism. It could well be taken as a big strength and there lies its future. Recently, a highly insightful and thought provoking two-part article by Hamsini Shivakumar of JWT appeared in the BrandLine of The Hindu Business Line(dated October 26 and November 2, 2006). The author eloquently talks about one unique character of India. That refers to what is now popularly termed as AND-NESS of India and things India.

The insights supplied by the author, are not just 'exploitative' in the sense they have long term relevance going beyond the immediate business concerns. The issue deserves to be researched in all its dimensions with both Industry and Institute pitching in jointly. After all, some of the research outcome can be converted into immediate business opportunities. Others have the power to determine India's future course of development.

According to the author, "India is an 'and' culture - a society where modern values don't replace traditional values but are assimilated to form new amalgams. Marketers who understand and address this 'and-ness' of Indians are the ones who will succeed with the changing Indian consumer".

By understanding this unique Indian 'AND-NESS', marketers can succeed not just in the India but at the global stage as well. Because, that is where the whole world is getting into. India is eminently positioned to leverage this unique strength to create global scale opportunities. A few examples can be sprinkled to demonstrate how India came out with unique AND Solutions and challenged the status quo.

First and foremost, through Mahathma Gandhi it showed to the world how Freedom Struggle can be FOUGHT without really FIGHTING. Ahimsa is the weapon which won the Freedom from the British - without really defeating them. This in itself is the typical AND solution. Mahatma may not have won Peace Nobel for this. But the Greatness of this man lies in the fact that every year the Nobel Committee has to come out with a statement for not awarding Nobel to Gandhi. Whereas for people who have been selected for the Prize they have to explain only once- at the time of awarding.

Secondly, India probably is the most prominent country in the world to adopt a Mixed Economy pattern. An AND solution again. Its failure is more in terms of degree rather than in substance. What has really failed is the Command Economy. Today every economy is a mixed economy- only the mix of the mixed economy has changed much in favour of Market Economy. Today Joint Sector Projects are out. But Public Private Partnership is very much in.

Thirdly, as a corollary to the second, India by not willing to side either with the US or Russia, spearheaded a Non Aligned Movement(NAM). NAM may not be fully alive and kicking but with the end of the Cold War, there are many Blocks in the world. Here again, India's unique AND-NESS proved right.

Apart from the above, we can go a bit farther back to see how India has been practicing AND-NESS for a long time. Two examples are enough to drive home the point.

One,Infotainment, Edutainment, Retailment, etc. may have gained currency now. But India has been practicing these for long. Patti(grandma) Katha and Village chandies have been offering only that. Two, the Siddha system is based on the tenet of "food is medicine and medicine is food". The growing popularity of herbal medicine and natural food is indicative of this trend.

One can go on and on. But before ending this piece, a quote from a recent Business Week reproduced in the latest issue of Business World (20 November) which illuminates this view point.

"Has the Bhagvad Gita replaced the Art of War as the hip new ancient Eastern management?....Swami Parthasarathy.. counselled hedge fund managers about balancing the compulsion to amass wealth with the desire for inner happiness.... the Swami's East Coast tour was one small manifestation of a significant new trend:Big Business is embracing Eastern philosophy."

P.S.: This article in a way answers my student R.Siva Subramanian's query on why India is not figuring in the list of countries that are in the forefront of Quantum Invention. This particular issue was raised by his web friend Mr. Bala Pillai of Sydney.

Citizens,Harijans,and PURA

2006-09-15T12:28:00.000+05:30

Etymologically speaking, the word 'citizen' having its roots in Old French means 'one who is an inhabitant of a town or city'. Over a period of time, this aspirational status comes to mean anyone who is legally recognised as a member of a country. So today everyone is a citizen irrespective of whether one lives in the rural backyard or in the urban settlements.

Large scale migration of rural poor to urban areas only means transportation and transformation of rural poverty into urban poverty unless their livelihood oppourtunities improve dramatically. Urban areas also add to the stock of poor people in the country due to inadequate oppourtunities. And many remain that way. Few however find escape route by clinging on to some oppourtunity or other.

Therefore, what is needed is not just change in the nomenclature or name but the true meaning associated with that. Viewed from this angle, Dr.A.P.J.Abdul Kalam's project of Providing Urban Amenities to Rural Areas(PURA) makes enormous sense. For, it addresses and challenges the status quo by providing the necessary amenities and services. There need not not be an 'either or' situation. In many cases what is needed is an 'AND' solution.

Converting the PURA concept into reality needs no further Committees and Task Forces. People committed to the vision and having the ability to carry out the tasks are the need of the hour. And the best way to make this happen would be to select and excute few such projects across the country on an experimental basis. Simple, sustainable, and scalable PURA Projects could be the way to go ahead.

Closely related to this issue is Mahatma Gandhi calling the 'untouchables' as Harijans meaning the children of God. Despite Mahathma's noble intention the purpose has not been fully realised. The recent cotroversial policy on Reservation can be looked at from this perspective. Definitely there is a case for a preferential treatment of marginalised sections of the society. But reservation may not be the right route to achieve the goal. Something like the PURA concept could well address this issue.

But the immediate challenge would be to find translators for realising the goals set out in the PURA by His Excellency,Dr.A.P.J.Abdul Kalam the President of India. As he himself pointed out in one of his speeches, the country needs Development Councils (DC) at the Village level. By installing DC's selectively in few places, may be at the block level, PURA can be experimented before rolling out at the national level.

The Power of Three

2006-08-04T19:22:00.000+05:30

A recent edition of The Hindu Young World (9th June 2006) carried an article written by Sujata C. It emphatically drove home the need to "understand the power of three". To substantitate her argument the author quoted quite a few illuminating examples. Some of them are reproduced here:

The three phases of time: past, present and future

The three distinct levels of human being: body, mind and soul

The sum of human capability: thought, word, and action

The Trimurti, the foundation of the Hindu religion: Brahma, Vishnu and Maheswara

The strongest form of construction: a triangle

One can think of many more. But a few can be added here to further strengthen the argument:

Matha, Pitha, and Guru, the most important sources of ones knowledge & character

Knowledge, Wealth and Courage, the three essential ingredients for success

Iyal (prose), Isai (verse) and Nadakam (drama), three aspects of language & literature

Interestingly, the concept of sustainable development is also built around three P's: Profit, People and Planet. The World Business Council for Sustainable Development (WBCSD) defines in the following manner:

"Sustainable development involves the simultaneous pursuit of economic prosperity, environmental quality, and social equity. Companies aiming for sustainability need to perform not against a single financial bottom line but against this triple bottom line".

A couple of recent developments at the national level as well as at the global corporate level seem to confirm that the concept of inclusive development has really gathered momentum. The draft approach paper to the Eleventh Plan released recently is appropriately called as "Towards Faster and More Inclusive Growth".

But what attracted the media headlines all over the world relates to the recent decisions taken by Bill Gates and Warren Buffet, the world’s richest and second richest. Gates has announced his plan to give up his day to day role at Microsoft from excatly 2 years from now and devote his time wholy for Melinda & Bill Gates Foundation. This Foundation works in the areas of Health and Education for the world's poor.

Even more path breaking is the decision taken by Warren Buffet to donate bulk of his wealth ($ 31 Billion to be precise) to Melinda & Gates Foundation. Warren Buffet is reported to have told the Fortune magazine that "We agreed with Andrew Carnegie who said that huge fortunes that flow in large part should be returned to the society". He further declared that philanthropists "should seek out talent to distribute their money just as they sought out talent to acquire it". This is a clear pointer to the need for developing and attracting management talent in the development sector.

Avaiyar, the saint Tamil Poet centuries ago referred to the possibility of inclusive development when she said " nadengum vazha kadenrum illai " . Translated into English this simply means that there is nothing in the nature that obstructs growth of one and all. The time has come that development planners all over the world shoud realise that the concept of inclusive growth is not only a desirable goal but an eminently achievable one - if only we have the courage of committment.

Can We See Dr.V ?

2006-07-10T13:34:00.000+05:30

1918-2006

Dr.Govindappa Venkataswamy affectionately and appropriately called as Dr.V is no more. Is it possible to see Dr.V now? We can see the Vision of Dr.V through the thousands of poor people who got the vision by undergoing surgery at Aravind Eye Care System, the organisation he created. Dr.V lived upto what Martin Luther King Jr. had said about compassion. "True compassion is more than flinging a coin to a begger; it comes to see that an edifice which provides beggers need restructuring".

Dr.V one of the proud recipients of the Helen Keller International Award has lent newer meaning and substance to Helen Keller's celebrated quote on Vision. She was once asked,"What can be worse than losing your sight?" Her answer: Losing your vision". Dr.V, by having a vision to eliminate all needless blindness in India, and establishing a clutch of Eye Hospitals in the name of Aravind restored sight for thousands of poor people and prevented many more thousands from going blind.

Aravind in the process has set world beating standards of efficiency and economics in eye surgeries. In other words, Dr.V has shown to the world how quality eye care can be made available to the poor by achieving efficiency in operations, which in turn can be ensured by just following simple management practices.

Aravind's innovation in management starts with the organisation of workflow from patient identification to post operative care. But it does not stop with this. While its steadfast adherence to the basic principles of management promotes utmost efficiency the theory of cross-subsidisation works overtime to ensure its financial sustainability. Aravind does more than three-fourth of its operations for free.

It is abundantly clear that Dr.V is a 'social entrepreneur' par excellence though he did not have any particular liking for anything related to business. That in a way can be considered as a measure of success of his vision-driven organisation. To the management guru Peter F. Drucker, social entrepreneurs are the people who "raise the performance capacity of the society". Viewed from this perspective, Dr.V doubly fits into this definition.

First he raised the performance capacity of poor people who had undergone eye surgeries in any of the Aravind Hospitals and secondly by increasing the capacity of doctors who make eye surgeries. The latter has far-reaching implications and impact on the eye care delivery system at the global level.

So the best way to pay homage to Dr.V would be to create Aravind like organisations based on the basic principles of sustainability and scalability. By replicating the experiment, many of the socio-economic problems confronting the nation can be made a thing of the past. If only we can see the power of Dr.V's Vision!

Invasion of the Inclusive Idea

2006-06-20T13:36:00.000+05:30

"An invasion of armies can be resisted. But not an idea whose time has come". So declared Victor Hugo. Now the time for an "inclusive"growth strategy has really arrived. The Confederation of Indian Industry(CII) has announced the four missions for this year. R.Seshasayee, its President has made a clarion call for an" inclusive and sustainable" strategy. They represent two of its missions for the year. They can infact be considered as two sides of one broad development strategy.

While one side concerns with the inclusivity in terms of 'people', the other side focuses on the concerns of the 'planet'. The people side has two different dimensions. They refer to: promoting inclusiveness in consumption and production. The former is a business imperative now. To put it in the words of Seshasayee, "we are talking about inclusive growth not because it is politically fashionable, but because unless we have inclusive growth we are not going to be able to expand the market".

Ford Motor Company is an excellent example of a company which expanded the size of its market by pursuing an inclusive growth strategy. Henry Ford famously stated once that he wanted to put a Ford car in each and every garage in American homes. One more company which immensly benefited both by penetration of cars in America and through an inclusive strategy is ofcourse is Wal-Mart.

Every one knows what an inclusive approach to market can do to determine the fortunes of a company. But what is not fully understood is how far that strategy can be taken forward without affecting the concerns of the other "P" i.e. Planet. Sometime ago, a scientist of repute made a revealing statement. That is, if every Chinese and Indian starts owning a car the world will become unlivable. That is the measure and magnitude of the problem a foretaste of which is already in evidence.

That does not however diminish the value of having an inclusive strategy at the corporate or national level. Right here in India, the shampoo market has witnessed astounding growth rate in penetration mainly through such a strategy. By spreading the "single serve" revolution - to use the celebrated phrase of CK Prahalad, who popularised the now famous Bottom of the Pyramid approach- the shampoo industry has seen its penetration in the rural areas jump from just 13% in 2000 to a third of the population in 2005. Its penetration in states like Andhra Pradesh and Tamilnadu are as high as 50%.

The other aspect of the inclusive growth strategy concerns with how a particular economic activity is carried out. It has implication for both people and planet. The idea here is to adopt a pocess which involves employment of more people and/or protection of the planet. As pointed out rightly by Seshasayee "how we grow is even more important than how much we grow". Sustainable development therefore is all about "inclusiveness".

Jairam Ramesh, the Minister of State for Commerce announced a Cluster Development Approach which for 100 Handloom Clusters in the country. This could well be one of the promising inclusive development schemes being introduced by the Government. As the second largest employer in the country with 6.5 million people at the bottom of the pyramid, the programme will promote inclusive growth. Already it generates Rs.2500 crore export turnover with prospects for greater achievement. However the ultimate success of this programme will depend on the size and quality of investment on soft side of the cluster intervention.

It is worth remembering what Arnold Toynbee said on this vital issue with conviction. "The twentieth century will be chiefly remembered in future centuries not as an age of political conflicts or technical inventions, but as an age in which human society dared to think of the welfare of the whole human race as a practical objective".

The 21st century could well make this objective a reachable or achievable one.

Mankind Is Our Business

2006-05-30T09:25:00.000+05:30

Declared Charles Dickens with an outburst of humanism. Milton Freidman, the Nobel Prize winning economist advised businessmen few decades ago that "the business of business is business". They seem to be at loggerheads. But fortunately some kind of convergence is happening already.

The new recruitment strategy announced by Scope International Pvt Ltd. the BPO company from the Standard Chartered Bank Group goes to prove this point. Sreeram Iyer, the company's chief executive officer recently outlined a three-dimensional recruitment strategy to widen the scope of its workforce.

First and foremost, Scope is foraying into Tier II cities in Tamilnadu. It has already hired 50 people in Coimbatore and has plans to extend its recruitment drive to places like Trichy, Pondicherry, Cuddalore, and Salem.

The second dimension of the strategy relates to hiring students who have just passed plus two to work on simple processing. The company proposes to part-finance their continuing education through correspondence.

Recruiting housewives in the 30 plus category represents the third plank of Scope's recruitment strategy. It aims at recruiting those women who stopped working due to family circumstances and other talented ones who do not wish to take up a full-time job.

Mr.R.Seshasayee, President of Confederation of Indian Industry(CII) and other captains of the industry are pitching for "affirmative action" as a credible alternative to job reservation. It promotes an 'inclusive development' by expanding the horizons of opportunity for an increasing number of people. The recruitment strategy outlined by Sreeram Iyer could well be taken as a blueprint for sustainable development of the BPO Industry as a whole.

A wholesale adoption of this kind of a three-pronged recruitment strategy has the potential to ensure a greater access to the existing talent pool and develop a bigger pool of talent reservoir in the country. From the company point of view, it helps maintain its competitive advantage in the global market.

Competitive advantage of the BPO industry would best be attained, retained, and even enhanced only by continuously going up in the industry's value chain on the one hand and gradually disbursing the BPO activities to the second and third tier cities. The latter plays a decisive role both in expanding the size of the talent market and safeguarding the labour cost arbitrage vis-v vis other competing nations.

This kind of a recruitment strategy can be considered as a Corporate Social Responsibility(CSR) in its best form. Because it fulfills business objective and social objective-all at the same time. Therefore,what Charles Dickens famously observed need not live in the world of Best Literature. It can transcend into the world of business as a best business practice promoting Sustainable Development(SD).

A CSR initiative should go beyond boosting this year's or next year's profit bottomline. But they can aim at boosting the same in the long run by focusing on the other two Ps viz. People and Planet. The People part of the Triple Bottomline can boost the future profitability by bringing in "the out of scope" customers or any other segment of stakeholders. In this case, it helps bring in out of scope employees into the company's fold.

Some time ago D. Sampath Kumar, Associate Editor in The Hindu Business Line gave an expert lecture to our management students. While talking about the role of news papers in understanding the business environment, Mr. Sampath Kumar gave an interesting analogy. News papers present trees. It is upto the reader to see them in the context of a forest.

What is happening in the BPO sector have to be seen in the larger context of an increasing attrition rates, demand for talent chasing limited supply in spite of widespread educated unemployment, the current controversy and conflict over the issue of reservation, the future of Indian BPO industry etc., The recruitment strategy announced by Sreeram Iyer of Scope needs to be viewed in backdrop of above mentioned developments.

Edupreneurship

2006-05-25T11:18:00.000+05:30

The ongoing controversy and conflict on the thorny issue of Reservation brings to the fore the age-old friction between economics and politics. Every right-thinking and well-meaning individual would unanimously be of the view that any purposive development effort should be as inclusive as it could. In other words, every section of the society should take part in the development process to make themselves eligible for sharing the bounty.

There is obviously a near unanimity among development planners that less privileged or marginalized sections of the society should be given special attention. Concurrence with the objective does not however mean commonality of approach. The dominant view held by the majority pins their hope on Reservation Policy. A small but an increasingly influential section of the society strongly believes in what is now come to be referred as "affirmative action". Reservation per se can not guarantee a lasting solution.

Students belonging to the forward castes particularly in the North have taken to the streets worrying about their opportunities for entry dimming. An ideal solution should try to address the special concerns of the Backward Class students without affecting the normal prospects of the Forward Caste students.

In this respect, it is worth quoting Tim Harford's best selling book "The Undercover Economist". Tim raises a pertinent question which is very relevant here. "Can we enlist markets to help with fairness? Is it true that we have to choose between the efficiency of perfect markets and the fairness of benevolent government intervention?". Tim leans to the Nobel Prize winning economist, Kenneth Arrow in defense of this argument. Arrow proved that not only are all perfect markets efficient, all efficient outcomes can be achieved using a competitive market, by adjusting the starting point.

Adjusting the starting point here could be taken to mean developing the competency, building the commitment and preparing the less advantaged students to perform as well as the others. Reservation on the other hand is more like removing the entry barriers or having different 'bars' for different sections of the students. This would enable those students to reach the bar who would otherwise fail to cross the bar. But removal of entry barriers do not ensure successful performance. If entry itself is considered as an indicator of success, then obviously something important is being sacrificed. Reservation is easy to introduce but would hardly serve the purpose.

So what is needed is committed individuals who are passionate about developing people. Stated otherwise, the old system of Gurukul has to be reinvented in line with today's changes to meet the requirements. An ecletic system which combines the virtues of Gurukul with that of the market mechanism would address this problem comprehensively. A new breed of edupreneurs should commit themselves to this cause.

Outcome orientation of the system can be brought out by measuring how well the students fare in the examination and how prepared they are for the job market. Fees for the economically poor, backward caste students should be borne by the Government itself. In addition to that, some kind of an incentive system can be built into the whole thing for recognising and rewarding those edupreneurs who produce superior results on the above scores.

Broadly speaking, the above kind of mentoring can take place at two different ways or places. Either educational institutes can go forward and do the finishing or the employing companies can backward integrate into preparing the students "market-ready". In both the cases, the edupreneurs play a decisive role. All these are happening already in some measure or other and in some form or other, but in a very small way. These sporadic moves on the part of few institutes or companies should become all encompassing movement.

India's demographic advantage at the global level provides a perfect launch pad for such a futuristic initiative of developing tomorrow's Knowledge Workers -not just for India but for the entire world. Window of opportunity for India would remain open at least for the next 15-20 years giving enough space and time for taking advantage of this global opportunity.

Autopreneurship

2006-05-19T10:50:00.000+05:30

An interesting article written by Radhika Chadha in yesterday's BrandLine supplement of The Hindu Business Line rekindled this Blogger's long-held interest in the Auto Travel Industry and provoked the blogger to post this article. The auto travel segment of the transportation sector could play a pivotal role in more than one way, if a purposive intervention is initiated at the earliest.

Radhika's article focuses on one important aspect of the industry, i.e. an absolute stalemate in terms of design innovation. This can best be addressed through the market mechanism: by encouraging more and better competition. Right now, Bajaj Auto dominates the industry with Mahindra’s and Piaggio being just in the "also ran category". But the proposed entry of TVS Motors and Honda India can be expected to stir up the market leading to a spate of innovative designs and models.

This particular piece lays equal emphasis on business concept or business model innovation. This industry represents a fertile ground for such innovations. But it has been bereft of them for long. Recently, one new business model (atleast in Tamilnadu) in the form of Share Auto got introduced. But despite the model's inherent attractiveness, it is yet to make its mark in terms of market share or viability. It only lends credence to the belief that Government-induced initiatives are good at attracting more players rather than creating visionary enterprises.

Failure to attract reasonably sized enterprises into the market or inability to inspire visionary individuals to enter into the market is more than glaring. Scope exists for multiple business models and proliferation of industry players. And the basic principles of marketing like segmentation, targeting, and positioning (STP) should be applied. In other words, what is needed today is a repeat of something like TVS entering into bus transport few decades ago. The industry like most others, need vision-driven, value-based enterprises. Today auto drivers are widely perceived and known for cheating. Quite unfortunately, Chennai is considered to be the worst in the whole country on this score. Other places are not entirely different.

This is one among the major problems plaguing the Tourism Industry in the country. A click and browse of the http://www.google.com/ would show a number of unpleasant experiences narrated by people from different walks of life. Local commuters are not spared either. But one good thing about this otherwise somber scenario is the belief and confidence that things could be changed for better. To make this happen, all the stakeholders of the society should join together and act on it. The problem assumes greater significance from the point of view of the people involved and the industry in which they operate. They are part of the 300 million strong segment called "unorganised sector". The number of people dependent on auto industry would outnumber the people in the organised bus transport industry by a big margin.

Above all, the biggest challenge and opportunity in the area of Entrepreneurship Development would be to impart the entrepreneurial skills and values to these people who are already in that mode. The National Commission for Enterprises in Unorganised Sector headed by Arjun Sengupta has just recommended a Social Security Scheme for them promising health and life insurance, provident fund and old age pension. A huge sum of Rs.6384 crores from the Centre and Rs.1254 crores from States are earmarked for this scheme for the first year alone. This presents a wonderful opportunity to look at the issues facing the unorganised sector segments like auto travel and address them in a wholistic manner. Such a course of action should also include promotion of vision-driven enterprises run with values. This will in turn ensure hassle-free, experience-rich, inter-city conveyance for the customers and a quality life for the autopreneurs.

Focus-The Key and The Way

2006-05-14T16:35:00.000+05:30

Michael E.Porter, the strategy guru in his magnus opus, "Competitive Strategy" popularised three generic strategic approaches that can be adopted by any firm wanting to outperform the competition.They are:
1)Overall Cost Leadership
2)Differentiation
3)Focus
Most firms, according to Porter pursue any one of the above stratgic approaches as the primary target.But one could see a happy confluence of all the three in the case of geographical clusters.Clusters are present across the geographies, industry categories and sizes. Few are performing to the potential but most are under performers. But all vibrant clusters by focussing on one particular type of product, enjoy overall cost leadership and achieve differentiation as well.
Yet, there is a vital difference between a firm adopting any of the three generic strategies to gain competitive advantage and clusters being bestowed with the benefits of all the three sources of competitive advantage. In the case of clusters, economies of scale and experience curve effect relates to the geography as a whole- not just to a unit.Transaction cost comes down because the cluster as a whole enjoys economies of scope as most of the players in the cluster's value chain are located at arm's length. Global buyers also benefit from lower transaction cost as they have a wider choice of suppliers both to select and switch, if necessary.
Differentiation again is a collective function in the case of indutrial clusters. The geographical regions housing the industrial clusters are invariably associated with the insustrial activity of the cluster.So much so,Tiruppur today is inseparable from the Hosiery Cluster and known only as a Banian City.In the same way, Sivakasi always goes with its cluster activity, viz. Crackers or Fireworks.The list goes on and on. Surat, Nagpur, Patiala, Panipat and Banares are few more examples. They are referred to as Cluster Brands. Today they can be registered as Geographical Indicators (GI) under the Intellectual Property Rights (IPR).Pochampalli in Andhra Pradesh has already been registered as GI for the sarees it makes.
The Finance Minister Mr.P.Chidambaram in his Budget Speech this year called for a "theme based" approach to urban development.One good thing about our country is that already hundreds of urban centres are blessed with a marketable theme either in the form of a cluster activity or tourist attractions. All it requires is to breathe life into these places through appropriate interventions from outside.
This year's Supplement to Foreign Trade Policy (FTP) released recently by the Commerce Minister Mr.Kamal Nath has an innovative scheme that can be leveraged to promote the products manufactured b the clusters. The scheme refers to Focus Product Focus Market replacing the earlier Target Plus Scheme.What is needed to be done is to take an inventory of both SME and Micro or Craft Clusters functioning in the country,undertake a diagnosis of each and every one of them,design an appropriate cluster intervention stratgey, and execute the same in a professional manner.
Clusters coming undr craft category assumes particular importance in view of their capacity to promote employment oriented exports.More importantly they create jobs for the poor people. Therefore building capacity at that level will help the poor segments of the society to participate in the global trade and benefit out of that.

Engaging the Youth

2006-05-06T18:50:00.000+05:30

Youth are emerging as a powerful economic force in the so-called “New Economy” which is shaping the fortunes of most economies. For the first time in the history of mankind, the young are spearheading an Industrial Revolution. They are scripting and implementing the blueprint for success of Information Technology and Internet, which has opened up a plethora of opportunities all over the world. India could be considered as the only developing economy (with the possible exception of China) to extract maximum mileage out of the IT boom, thanks to its incredible reservoir of knowledge workers. This definitely bodes well for the future of the Indian economy.

The Rural Challenge
But the real challenge lies in revitalizing the Rural India where more than two-thirds of our people make a living. Over the years, the share of agricultural sector in our GDP has come down to reach the present level of 23 percent. Its premier position has been taken away by the service sector, which commands a share of 52 percent today, in accordance with the growing sophistication of the Indian economy. Despite these welcome shifts in the sectoral composition of GDP, the Rural Economy’s extent of dependence on the agricultural sector for livelihood remains more or less unaltered.

Productivity levels on the farm front, though have been improving, its growth rate is not sufficient enough to wipe out poverty and unemployment in the country. Per hectare yields of most of the crops in India pales below the global standards.Kanwal Rekhi the legendary Indian entrepreneur from the Silicon Valley put it graphically when he was inaugurating the Chennai Chapter of the TiE sometime ago: An average Indian farmer today produces food for one-and-half person (including himself). Compare this with that of the American situation where a typical farmer produces food for roughly 54 people – by just employing 2 percent of its population”. This explains fully the paradoxical situation, in which Indian economy is bracketed. Neither Indian agriculture is able to make a sizeable fraction of the farming community redundant by improving their productivity nor the non-farm sector is able to attract them with newer income generating opportunities.

Stoop to the Bottom-Tier
What is happening is a certain amount of rural poverty is being transformed into urban poverty year after year due to the migration of rural people. This is not to belittle the achievement made so far by our agricultural sector. The idea here is to highlight the challenges faced by our Rural Economy. By virtue of its conducive agro climatic conditions, vast area of fertile lands, fine track record of cultivating a whole range of crops and the hard working nature of our farmers, India is tipped to become the “food basket of the world”. To make this happen, concerted efforts from all corners – Government, Research and Educational Institutions, Private Corporate Sector, Non-Governmental Organisations (NGOs) and the Farming Community – are the need of the hour.

The greatest business opportunity for Indian businessmen lies in actively taking part in the transformation of the Rural Economy. Given the demographic profile of the Indian economy, catering to the needs of – to use the celebrated phrase of the Strategy Guru, C.K. Prahalad – “the bottom tier of the income pyramid” constitutes the biggest opportunity for Indian Industry to become a Global Player in a number of industries. When talking about the “digital divide”, Prahalad, further says: “Selling to the poor may be more profitable than selling to you and me. This is where the future is. Opportunities are everywhere. This digital divide is not about lack of opportunity, it is lack of imagination”.

Problem as Opportunity
The opportunity is two-fold : to increase the productivity of the agricultural sector, which will release a substantial segment of the farming community, to be deployed elsewhere and creating a whole gamut of business opportunities in the non-farm sector which will absorb the people thrown out of the farm sector-all within the boundaries of the Rural Economy.

The problem of low productivity on the farm front can be considered as an opportunity for the simple reason that it means bigger scope for mechanizing and energizing farm operations; greater use of agricultural inputs and high-yielding varieties of seeds; widespread adoption of modern cultivation practices; even and easy access to agricultural credit, market information and above all guaranteed market access. Success in the above areas will invariably result in a quantum jump in yield levels of various crops, making the economics of cultivation quite attractive and the farming community, wealthy. By boosting the efficiency of the farm sector, a sizeable segment of people will be released to be employed elsewhere in the non-farm sector. Here comes the next round of opportunities – to create an array of non-farm enterprises. This is how, the virtuous circle of prosperity can be set in motion.

Youth Plus Technology
The problem assumes gigantic proportions because it has been eluding a happy reversal for decades. The solution, as in most cases, is simple. Apply the contemporary technology to solve the age-old problem. And deploy the young people, who are at the forefront of the Technological Revolution, which is sweeping across the world. The youth, particularly the educated youth should be exposed to the seemingly intractable problems of the Rural Economy. This will sensitize them to the hard realities of rural life and if they internalize this experience, it will lead to positive change in the attitude of the younger generation. Such a change will urge at least a few to involve themselves in the process of rural rejuvenation.

Some will view the socioeconomic ailments like illiteracy, malnutrition, unemployment, poverty etc. as a big business opportunity and start solving the problems through commercial ventures. Few may take this as a wonderful opportunity to serve the society and help the rural poor cross these economic hurdles by starting some social enterprises. However, most of them may seek opportunities either in Government or in the booming New Economy sectors in the urban areas. But they are most likely to do something tangible when they are in a position to contribute. People who end up working for organizations – Government as well as Private – which in some way or the other come into contact with rural people will display an intense commitment and passionate involvement while discharging their duties. The experience is most likely to provoke them at some stage in their life to do something concretely for the betterment of the less privileged sections of the society, as an act of gratitude.

Stated differently, students who have undergone the “Rural Immersion” Programme can be expected to contribute to the Rural Rejuvenation, in the following ways, depending on their career choice. This is briefly summarized below :

1. Students who opt for careers, which do not have any direct relevance to the Rural Sector, may do something for them during the latter part of their life i.e. when they are in a position to spare their expertise, time or financial resources.
2. Students who pursue a career in Government or any other sector, which addresses the concerns of rural people, are expected to apply their head and heart while discharging their duties.
3. Students, who see rural problems as commercial opportunities, start ventures aimed at solving such problems.
4. Students who are moved by the sufferings of the rural people, and want to make a difference to their lives, do so by becoming Development Activists, or starting social ventures / Non-Government Organizations (NGOs) etc.

Mandatory Rural Immersion
This kind of a scenario is not just a wishful thinking. A number of Indian businessmen who made fortunes in America, Europe and elsewhere are showing their gratitude to the motherland, in a number of ways. People like Kanwal Rekhi, K.B. Chandrasekar et all are getting multiplied day by day. What we need today is, like our NRIs who aspire to do something for their country when they become rich, people leading comfortable lives in urban areas should start contributing to the development of our Rural Economy. After all most people can trace their roots to these villages.

In richer countries, sizeable segment of affluent people make contributions for philanthropic purposes, as a way of life. To inculcate such an attitude, some kind of “Rural Immersion Programme” should take place at the time of their college education on a compulsory basis. It is not difficult to come out with an appropriate mechanism, through which such a Programme can be implemented.

War and Poverty
Using youth power for national priority is not something new. A number of small countries, even today ask their young people to serve in the military services on a mandatory basis. In some of these countries, even women are expected to fulfill this condition. The rationale behind such a move is simple and straightforward: war is considered as the most dangerous threat confronting a nation, capable of decimating a number of lives. The same logic can be applied to problems like poverty, malnutrition, incidence of fatal diseases like AIDS, etc. The net result in both the cases is the same : casualty of people. As a matter of fact, the socioeconomic problems like poverty have far more serious consequences than occurrence of war. For, in the case of wars, mostly soldiers get killed whereas in the case of poverty and malnutrition, innocent people including children become the victims.

Moreover, while war with an another country almost invariably raises the patriotic spirit of the people and help channelise their energies for strengthening of their economic and military might, problems like poverty dissipates human energy and motivation, making them incapable of achieving anything. Above all if the problem remains unsolved for longer spell of time, it will result in political strife, social disorder etc. Therefore, there is a pressing need to treat problems like poverty on par with outbreak of wars.

Reinvent and Reorient
A valid case can be built for involving youth in making a dent on these problems. Even institutions like World Bank, which was basically created to reconstruct the war-ravaged economies, have reinvented themselves and reoriented their objectives to attack economic problems like poverty. Our failure in making doctors serve in rural areas, for a fixed number of years on a compulsory basis, should not deter our policy-makers from experimenting this Programme. What we need is a scheme or a system, which will ensure 100 percent success in such an endeavour.

There are a number of other reasons, which favour such a mandatory “Immersion into Rural Economy” as part of the curriculum in College Education in our country. Giving an opportunity for the students to use their ideas and energies at their most creative stages in life will definitely go a long way in changing the destiny of our rural people. Moreover, today’s youth possess a number of attributes, which will help achieve the national agenda.

Use or Lose
Failure to do this will leave most of their potential untapped and our dreams unfulfilled. The loser is not our youth alone but the entire country. As Shiv Khera, the world-renowned trainer puts it succinctly : “Youth may not constitute hundred percent of our population, but hundred percent of our future depends on them”. So, the need of the hour is to engage them productively in rejuvenating our Rural Economy. Otherwise, something else – as it has been already happening in some measure or other – will engage them, spelling further doom and gloom for the economy as a whole.

P.S.
This article was originally written sometime during 2000 with the view to get it published and make this as a Project to be implemented among final year College Students. Though it remains unpublished, the blogger is convinced about its relavance even today. The only change effected here relates to the scope of the Project i.e., instead of limiting to Rural Economy, it can be applied to the problems of the entire economy.

Let thousand flowers bloom..!

2006-05-02T17:09:00.000+05:30

Enterprise
You must be wondering what Bhagavan Sri Ramana Maharishi has to do with enterprise. But that is how Sri Ramanar himself described his journey when he left his house at Madurai in the year 1896,at the tender age of 16. Responding to the divine call of Lord Arunachala,Sri Ramanar set off to Thiruvannamalai - to put it in his own words,"embarked on a virtuous enterprise".An ongoing advertisement campaign of Force Motors Limited ( a Firodia Enterprise ) thoughtfully claims responsibility "for making entrepreneurs out of enterprising men for over three generations".

It is very clear that while all business people necessarily have to be entrepreneurial, all enterprising people need not be business-oriented.In other words,enterprise is a common demominator of all visionary leaders.They see a world before anybody else and commit themselves to create that world.They take it upon themselves to resolve the unresolved issues.Fittingly the word 'entrepreneur' in French means,"one who takes into hand".They decide the destiny instead of leaving it to chance or others.They are the ones who shape the destiny of the society. They take the road less travelled or sometimes not travelled at all. And in the process they reach new destinations and help others reach the same. To Randy Komisar of Stanford University,"entrepreneurs are the ones who challenge and change the status quo".

Virtuous Enterprise
This blogger has devoutly borrowed Sri Ramana Maharishi's phrase of Virtuous Enterprise as the focal theme of this virtual platform.Virtuous enterprises are the need of the hour.While all commercial enterprises need to adopt virtuous practises, social enterprises of every type need to sprout all over the country both for protecting and promoting virtuousness in the society.

Social enterprises,according to the management guru,Peter F. Drucker, are the ones which raise "the performance capacity of the society". Role models abound already in this sphere. Madurai, that way has the distinction of giving birth to two shining examples.They are: Aravind Eye Hospitals and Dhan Foundation. Dr.G.Venkataswamy,affectionately and appropriately called as Dr V, is responsible for creating a success story in the form of Aravind Eye Hospitals..Dr.V is a social entrepreneur par excellence as he raised the performance capacity of the society in two distinct ways - first by increasing the capacity of the thousands of poor people who undergo eye surgeries free of cost every year and secondly by increasing the performance capacity of the Aravind doctors who perform those surgeries.It is common knowledge now that in terms of efficiency the doctors at Aravind boast an unparalled record at the global level. No wonder, an article in Man's World (October 2002 ) described Dr.V as "the most efficient doctor" in the world.

Proliferate Virtuous Enterprises
The recent proposal of the HRD Ministry for extending the Quota and Reservation for SC/ST and Backward Communities in institutes like IITs and IIMs and private sector employment has generated a lot of debate,heat and light.Everyone concerned with the societal well being is convinced about the need to uplift the underpriveleged sections of the society. But not many - and rightly so it appears - are in favour of quotas and reservations.The issue is concerned with the basic equity vs. efficiency dilemma encountered in the market driven economies.The challenge is to come out with a public policy that would promote equity without hurting efficiency. But 'affirmative action' as proposed and propagated by CII can go a long way in achiving this. What we need today is social entrepreneurs like Dr.V and social enterprises like Aravind in the area of Education. And the country needs hordes of them. To produce few success stories of the stature of Aravind, hundreds of experiments or business models have to evole.
Let thousand flowers bloom..!