When to Jump?

What we witness today is a mad rush of companies from all over the world setting up organised formats- retail, health care, cars etal-in India. The action so far has been concentrated in areas where there are large gaps in the infrastructure or areas where there has been lots of wastage in the supply chain. Investments required to plug the gaps and to reduce wastage has been high but the returns have been equally rewarding.

These formats have been able to provide an assurance of better quality, at a cheaper rate along with a pleasurable experience. The result: Consumers have welcomed it with open wallets creating a win win situation for everyone- the producer, the marketer, the consumer, and the government.

The unorganised sector because of its nature is unable to match the service and assurance of the organised format. Its competitive capabilities are further stunted by the presence of a large number of subsidiaries between the consumer and the producer.

Looking around-from the shops where you buy groceries and vegetables to the shops where you buy books and computers-every sector in India is deliciously unorganized. Thus, in every sector that we look around, there can be a chance to bypass the bypass the inefficient system and create a single tier system in the market- i.e. there is a single entity between the consumer and the producer.

But, the fact that runs against our assertions is that the unorganised sector is still very strong in most of the pockets of India. The the two biggest reasons that come to my mind for the strong hold of the sector are:
Its ability to serve the needs of different stratas of consumers (big, medium and small)
Its accessibility at the last mile
Another reason that is equally important is the ability of the format to provide a human touch- a sort of customised personal experience.
Another very important reason for the thriving unorganised sector is the tax saving, and pirac that is possible in such formats.

The question is it whether it is really possible to jump from unorganised to the organised sector in all cases? If not, when does it make sense?

Leadership

I liked the article Leadership calls, at Durban and Bhopal statecraft written by Harish Khare, published in Hindu on 26 September 2007.

The article is wonderfully crafted and is able to bring out clearly the attitude, quality and essence of leadership that is required to propel forward teams, countries and societies. The article contrasts and compares the meeting of the national executive of the BJP with the winning of the Indian Cricket team against Australia at Durban in the ICC World Twenty 20 tournament focusing on the styles of leadership. I do not subscribe to some of the views about politics and disinclination of youth towards socialistic policies and freedom struggle expressed by the author in the article, but I did very much like the point he has brought forward and beautifully discussed about the attitudes of leadership.

I am providing some experts from the article here which I have directly taken from it. You can access the entire article here.

Background

“Even before the final of the World Twenty20 cricket championship in Johannesburg on Monday, the new India’s itch for a new leadership idiom had manifested itself at Durban in the semi-final against a very, very formidable Australia. Johannesburg not merely confirmed the new style and new confidence, the joyous eruption of celebrations across the country also underlines the new mood of self-belief: not what the outsider can do to you and get away with but what you can do to him if the leader believes in himself and his team. Beyond the media-generated hype, what got underlined at Durban and Johannesburg was that the young and the younger generations are itching to break out of the paradigm of self-doubt and timidity that the old and the tired leaders have put in place in the polity in the name of experience and seniority.

If the never-ending Atal Bihari Vajpayee-L.K. Advani sparring for the (non-existing) prime ministerial mantle was not bad enough, it was the harking back to the presumed electoral appeal of the “Ram Sethu” controversy that betrayed an unimaginative and backward-looking mindset. At Bhopal, the exhausted leaders tried to manufacture a new lexicon of demons and heroes, anchored in a very, very distant past, totally at variance with modern India’s pains, aspirations, and dreams. If Durban and Johannesburg came to symbolise the honesty of purpose and spirit of endeavour, Bhopal witnessed a relapse into calculation and cynicism.”

Contrast

“The contrast between Durban and Bhopal is essentially a contrast between two variations of national sentiments — a desire to move forward, take risk, venture into unknown territory, rely on one’s wits, skills and instincts, and not be afraid to fail; and, then, there is the old style, content to play for percentages, a preoccupation with minimalist expectations, a reliance on cleverness (rather than wisdom), and a self-absorbed mofussil pragmatism, devoid of moral certitudes. The younger generation may be oblivious to the “legacy” of the national movement, it may be regrettably unconcerned with the farmers committing suicides in the Vidharbha region, it may choose to remain unimpressed with the bogus piety and spurious sentimentality regularly dished out by a cynical political leadership; but, this generation is also unwilling to let the tired and exhausted old men define its dreams for it.”

The paragraphs have been extracted from the article Leadership calls, at Durban and Bhopal statecraft written by Harish Khare, published in Hindu on 26 September 2007.

The Coin Law

We are rising up at a rate of 9 pc GDP on a year on year basis and are eyeing a growth rate of 10 pc in near future. This indeed is great and one doesn’t require statistics to prove it. For sample answer the following questions: How many house holds could afford multiple cars in 1992.What choices did consumers have at the same time even for a tooth paste? Could you have afforded making an ISD call at that time leave alone the prospect of affording a cell phone? Thanks to the liberalized economic policies and the growth of services sector in developing countries that the prices of all the items are coming down.

a) Because of the cheap labour arbitrage, technology worldwide is becoming more affordable and is thus being leveraged
b) The jobs in service sector are providing the economy a lot of spending power, since every job in IT/BPO industry generates six other jobs.
This has resulted in a huge consumer boom and thus more money in the economy.

Now since we have reached here we have to worry that whether this growth is sustainable? What would happen If the costs of labour would increase here in India ten years down the line. Is the model of cost arbitrage that is fuelling the services sector in India sustainable in the long run? If we study history of nations we can conclude that most nations have been powered by technology. Name any Country that comes to your mind as a super power and you will instantly link its growth with path breaking technology discovered in those countries that helped them capitalize markets due to increasing productivity. The growth story of India is however different, it is about cheap labour. Is it sustainable?

I am optimistic about the intellectual capital of Indians. However, the worrisome thing is that we are not seeing any high value research from our institutions and also even that would have been okay, if we keep in mind the infrastructure available and the absence of an atmosphere that facilitates and encourages risk taking, if the students in the various premier colleges of the country were at least making an effort to contribute to doing good fundamental work. The rise of services sector has made India a backend office of the world. Is there any high end technology company run by Indians? Is there any company that is bringing its global R&D facilities here? It is the support R&D that is done here.

The quantum of salaries being dished out today are huge as compared to what our parents’ generation are earning and has resulted in complacency among students who believe that the ticket to social mobility is securing a decent job. All of campuses you see people working to improve their programming skills which they know will surely land them a good job and are neglecting other core subjects and thus not only inhibiting their own growth but also the sustainability of their present status.

I am throwing the question to the house: What should be done?

Ethics in Business?

Are Ethics in business relevant?

Why do we follow ethics?

What is the scope of Ethics?(Meaning: Is it correct to follow ethics even if it is detrimental to the purpose that we have set out to achieve.

If we take example of Nehru (who I believe wanted India to rise), correct in trying to pursue ethical leadership in world where in the end, there was a war in China which led Henry Kissinger to remark that “Idealists should not be in Politics”

or

If we take an example of Corporate environment where in the event of cut throat competition if by some unforeseen one time reason a company performs lower than expectations and then decides not to make the losses public(as it fears that it might lose customers) and declares “met expectations” result. Is the company CEO (whose job is to give better results to stake holders in the organizations namely shareholders, customers, employees) in the wrong because he did some concealing; or is he right because he knows what caused the aberration and fixes it and decides to avoid making it public to get new customers and thus giving better results to all the stake holders. Let us assume that the competition is very tough.

Also, does it make a difference what other companies have done in the same scenario?

This is one topic that I think is fundamental in running an enterprise and I have never been able to find a satisfactory answer to these questions.