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Prahalad's plan
C.K. PRAHALAD
August 6, 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”.
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 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
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
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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