DRIVING TO ECONOMIC SUCCESS
Two Harvard economists, Sachs and Warner, studied 97 countries over two decades to understand what drove the economic success of nations. To the surprise of many, availability of abundant natural resources actually correlated negatively with economic success. Human ingenuity and innovation is always more valuable than physical resources.
Examples of economic success through innovations today are countries like India, Singapore, China, S.Korea and a few other African and Asian countries. India has already established itself as a leader in process of innovation between the IT industry that has redefined excellence in IT and knowledge processes, and the pharmaceutical industry in the generic space.
This redefined excellence alone has sparked a sense of optimism, pride and confidence that has the entire country willing to invest and consume. As we look at GDP growth rates in excess of 8%, the Sensex heading towards a record index number and an increasingly dominant knowledge economy it can be confidently surmised that India has embarked on a path of steady progress. It has acquired the competitive ability while making the progress even when competing with developed nations. In fact the developed nations are out sourcing their major work from India and partly from other Asian countries.
The reality is, India has only seen the first generation of process innovation and are yet to embark on any serious product innovation. It will take a strong social consensus to stay the course of innovation comes at a serious cost. A major driver for innovation is the force of competition.
Market shifts resulting from competition can extract a price on societies as people, jobs and investments undergo multiple changes and this can test political and social resolve. Many ideas in incubation are very interesting. Most of the developed companies in the tech fields have fallen into the trap and failed with the intention of becoming the most established foreign company of India assuming that the services business is still immature or that global incumbents cannot expand to India.
Today in India, itâ€™s the young, entrepreneurial companies that are driving innovation. Interestingly innovative ideas are not coming from the large services companies, but from the Indian arm of global product companies where leaders steeped in the product planning process are able to answer â€˜whatâ€™ needs to be built, rather than service companies answering â€˜howâ€™ it needs to be built. And a strong domestic market is proving to be crucible for ideas to emerge and evolve.â€™
There are impediments though. India ranks among the lowest in the world in terms of the time it takes to launch a business due to endless regulations and the cost of corruption. The R&D coordination between universities, government funded research centers, corporations and start-ups is weak. And of course, the poor infrastructure continues to exact another toll. Progress is slow.
The future descends equally on everyone, but some notice it faster because they are always pushing the frontiers of their knowledge, asking questions, and picking up on weak signals. Second, you have to be willing to place intelligent bets, and give up the smoothness of predictability for the non-linear upsides of intelligent risk taking. Not all bets will lead to success but thereâ€™s hardly any safety in passivity either. One needs to have the self-confidence to set a direction but not the arrogance to fight the need to change if market conditions so require. Finally, we must restrain our ambition and allow self-imposed limitations to makes us aim too low. Between knowledge power, the local market as incubator, and a burning ambition, India has the potential to be among the world leadership.