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February - 2006 - issue > In My Opinion
Be ready for change
Vivek Paul
Monday, January 30, 2006
During my days at GE, I led workforces in Japan, France and in the U.S. but having spent the last six years taking the Indian software services industry global, I have found that there is no workforce like the Indians. Indian engineers aspire to excel. They display an amazing desire to learn and strive for intellectual expansion, a trait that is difficult to find outside India.

And yet, last year Wal-Mart imported nearly $20 billion of products from China while India accounted for less than a billion dollars of goods sourced. Is there something Wal-Mart needs that we can’t make? I bet not. India still accounts for a mere 6 percent of the world’s economic output, compared to China’s 13 percent. And China continues to grow at over 9 percent each year while we are proud to average 6-7 percent. By fully utilizing the value of India’s workforce, we can indeed become a world leader in creativity and innovation to bridge this gap.

With all the success in the services industry, we are at risk of declaring victory too soon. We are yet to get to the point where we are leaders in innovation. This may sound somewhat paradoxical – after all, Indian engineers are designing the latest products, using the latest techniques, in the most modern languages, so how could one be worried about innovation?

The fact is that Indian managers in the service industry have been raised on a ‘how to build’ culture and are excellent at process quality but they have not focused on the ‘what to build.’ Once asked to create something, they certainly can, but if asked what to create, they struggle to answer the question.

As a venture capitalist today, I have seen too many business plans where the idea is a mere extension of a technology instead of a solution to a pressing need. As the knowledge of “how to build” continues to commoditize and the ability to know “what to build” remains in scarce supply, this shift will be even more pronounced.

This is not to say that we cannot do it, simply that today too few do it. Perhaps the best placed are those working in the Indian operations of international product companies that are deeply immersed in the product planning process. Some of the most interesting business plans I see are coming from that direction. And to my delight, the world is changing – while few of the existing companies have that innovative edge, the new entrepreneurial companies being formed do have an incredibly strong spirit.

The secular growth in the IT services industry has resulted in some managers living in a deterministic world while the real world is stochastic. They tend to optimize rather than create. Many have climbed the career ladder not because they had an innovative idea, but because they could manage ever-larger workforces. In the drive towards innovation, managers need to constantly scour global markets for ideas and business opportunities.

It is not that the future descends unevenly on people, it is that some notice it faster than others by always being aware and by picking up on the weak signals. The biggest sin of all is inadvertence.

Part of the issue also is that employers have not allowed for risk taking and placing bets, despite much lip service. While one can do a lot of analysis and forecast emerging market segments and customer needs, predicting the future is always an imperfect science. Often enough you will get it wrong, but that is the nature of the beast. Not all bets will lead to success but then there’s hardly any safety in passivity either. You need to have the self-confidence to set a direction but not the arrogance to change it if market conditions so require.

As innovators chart their own course, deciding what to build, and taking that risk, they have to be more accountable for the outcome not the activity. In the services business, I have seen some managers get away with simply telling a customer that they have put in “best efforts” and expecting the customer to come up with an alternative approach. When it is your own idea, and your own nickel, some backdoor to the mind needs to be opened so seemingly intractable problems get solved. Managing outcomes not activity becomes the key to the world of innovation.

Lastly, despite growing world-class companies, it is interesting to see that many senior managers in India aren’t confident enough of their ability to shape events. This is absurd. In industry after industry Indian companies are rising to the fore. Do not set limits on yourself. Don’t just meet client requirements, shape them. The world is alive to major dislocations in global industries and those who can manage the fallout of this will be the winners.

The irony is that young engineers today are smarter, better and more ambitious than ever before. They come with a “can do” spirit and are fortunate to be exposed to world-class systems and processes. When I talk to a fresher in the IT industry, I get a sense of unending optimism. They are telling themselves that they are as good as the engineers in the U.S. or anywhere else in the world. This confidence must be harnessed to make India actualize its global potential.

I am writing this from the World Economic Forum in Davos where interestingly the two themes are “India Everywhere” and “The Creative Imperative.” India is in a unique position to build an innovation powerhouse for the world, and the winds are already shifting in that direction. For that momentum to grow we need to unleash the full power of the Indian workforce. The world is waiting.
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