Choose the winners carefully
Date: Monday , January 30, 2006
The mid 90s in India was about IT services. From 2000 onwards it was about BPOs. The next wave is about IT and telecom products. In the last issue, I spoke about how this nascent products industry in India has to break free from the services mindset. This time I will talk about what it has to embrace. It is called the Component Responsibility Model.
You probably know how an Airbus plane is made. The nose, including the cockpit, is made in Meaulte; the fuselage comes from Saint Nazaire; the central wing box from Nantes; and, the final assembly is done in Toulouse, France. Did you know that all petrol engines for the Toyota Innova come from Thailand while all transmissions are made in Bangalore? In both these examples, each location is invested with the complete responsibility for a key component. That location is the primary development center for that component and worries not just about the current release but also about future releases. The whole product is a result of many such primary development centers collaborating with each other in their unique areas of specialization. This form of partitioning work across locations is the Component Responsibility Model. Toyota calls it the third-generation manufacturing model. But this paradigm is not unique to automobiles or planes. This has been happening in the IT and telecom product world for years, though in a quiet way.
The anti-thesis of this Component Responsibility Model is the Job-shop Model where the remote development center specializes in one or more steps in the process. Typically this is coding and testing for a design developed elsewhere. These remote software factories are akin to contract manufacturing in the hardware world. This kind of partitioning of work across locations is more about cost reductions than about talent leverage.
Now tell me, where do you think the smart people in Israel’s product-oriented IT industry choose to work? They work for startups, of course. But they also work for captive MNC development centers, provided these MNC development centers follow the Component Responsibility Model. I am sure Intel doesn’t have a problem attracting the best talent for its Centrino development center (which has been set up there). The reality is that working for a development center, irrespective of size, that follows the Component Responsibility Model is a lot better than working for one that follows the job-shop model. Not only is there a broader range of roles available, but also each one has more depth.
To make the Component Responsibility Model work well, one needs strong product architects, release managers, program and product managers. To individuals starting out their career, this exposure to a wider variety of roles is important in helping them choose the one that suits them best. These development centers also have stronger technical tracks, as there is a relentless focus on future releases. This is vital for people with experience that are now looking to specialize in some specific area.
As the products industry picks up momentum in India, there is a flight to the Component Responsibility Model. In this gut-wrenching change, partitioning of work by process steps is out (lets do the coding and testing in India), and the partitioning of work by product architecture is in (lets do the “transmission” entirely in India). Everybody is going through it. However, only a few will succeed big time. Make sure you work for these winners. They will come in all shapes and sizes. In the product engineering services space, they will eventually look like Sasken. In the captive MNC development centers, they will eventually look like Symantec and TI in India. And, among the local startups, they will eventually look like i-flex.
And, what does this mean for all those entrepreneurs in waiting? I will talk about that in the next issue…
Sharad Sharma is GM and VP – Product Operations for Symantec India. He was earlier a co-founder and CEO of a successful wireless infrastructure startup. The views expressed here are his own. He can be reached at email@example.com.