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January 20, 2006
India and Innovation at Davos
The full shape of the program at the World Economic Forum in Davos, Switzerland that starts on Jan. 25 is now clear and it is very simple--India and innovation. Compare that to previous years when the focus was on China and outsourcing. This is an important shift that is not apparent yet to many, particularly the Chinese. And I wonder if they are ready for what it implies.
Here are the facts as I know it. Innovation, Creativity and Design Strategy is the dominant intellectual theme of the conference. Some 22 sessions, six CEO workshops, some of the top design and innovation gurus of the world participating, from Roger Martin, dean of the Rotman School of Management at the University of Toronto to Tim Brown, head of IDEO. This much I knew.
What I didn't realize was the enormous presence India will have at Davos this year. Billboards, buses, parties, sessions, workshops restaurants will all have an Indian theme to them. Delegates will get Indian pop and classical music, pashmina shawls and a cd with tons of economic data on it when they sign in. The Saturday night soiree will have Bollywood dancing and music. India's 115 person delegation will dwarf China's.
There are lots of dots here but I connect them in the following way. Outsourcing of manufacturing has been one of the great economic, social and political movements of our time. Nearly all of this outsourcing has gone to China, making it the center of the global economic universe.
But that kind of outsourcing is becoming common, normal and done. The next round of outsourcing is outsourcing innovation. And here India is the center of the global economic universe. By language, training, education, and diasporadic disposition, India's role in the world economic is more brain-driven, service-driven and ultimately innovation driven. And India, chaotic though it may be, is free and democratic. You don't have an army of censors watching over the internet and blogs, as you do in China.
Now, of course, one can go too far. Great innovation is happening in China right now. Lenovo, Motorola, Haier, and some others are doing wonderful work. Huge efforts are underway to broaden the teaching of English. And universities are expanding their graduates in design, engineering, etc. Besides, the Chinese economy is so vast, it may generate its own growth and innovation.
But the Chinese economy remains defined by manufacturing. India's economy is defined increasingly by knowledge-economy work. And it has centuries of English-speaking behind it (thank you British imperialism).
Davos this year may be sending a message to China: The big challenge ahead for China is to break out of its dependence on outsourcing manufacturing and show it can be as innovative as India or any other nation. That means big changes in education, politics, economics and business.
india and innovation
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Every few years and decades India is hyped to really make the breakthrough to become a global economic power. Yet, despite its brillant thinkers and its knowledge economy outsourcing, fact is that this country is still dominated by poverty, terrible infrastructure, discriminating social structures, rampant corruption, an agricultural society and protectionism. India's "thinking economy" is limited to a very small fraction of the population and has only lifted very few people out of poverty, while China's manufacturing led progress has had a strong impact.
As much as I hope for India that it will rise to become a global power, it will only achieve it if it can create more jobs for the Poor and tackle the most pressing of a long list of difficult issues.
Warm regards from Chiang Mai, Alex
Posted by: Alex Osterwalder at January 21, 2006 02:01 AM
Taking your dots one step further, what you're saying is, that in one case, the focus is on the bottomline (i.e. cutting costs) and on the other hand, the focus is on the topline (i.e. adding value).
In short run, one is an excellent source of revenue, in the long term, the other is always required for continued growth.
Would bonsai be a metaphor?
ps. Is diasporadic a word? sounds random to me.
Posted by: Niti Bhan at January 21, 2006 03:25 AM
You have hit the nail right on the head in terms of what China need to do to increase competitiveness. China does recognize this and has begun throwing massive amounts to redress its shortcomings in these areas. It, of course, remains to be seen as to whether it will succeed. I think its greatest barrier will be language.
Posted by: Dan Harris at January 21, 2006 03:37 PM
As we all know, business is all about creating a product or service and sell it at a profit and repeat that process and improve upon it. Try explaining this to China. The whole of China's economy runs on subsidy and hence is subsidizing the world's consumption. As long as it continues to do so, it will be a manufacturing revolution. The day it becomes a market economy in true sense, it has to bite the dust in manufacturing. If an indian business made a cent in service or manufacturing, that is its profit and it can keep the same. A chinese business does not make a profit, but exploit the free capital made available to it and calls it profit!! I love chinese goods. Who else can sell me below cost!!!
Posted by: Ram at February 3, 2006 12:14 PM