On Innovation and Leadership

In this week’s Businessworld, Sangeeth Vargheese writes on the importance of India moving to a knowledge economy from merely being a low cost production destination.

"For now, everything seems to be hunky-dory. Yet, one point being missed is that most of India’s present growth is a result of our lower cost services when compared to other countries. But cost competency is never a sustainable proposition. In the long term, it holds no competitive advantage, since it can be easily replicated. Today it is India; tomorrow it could be any other country. If Pakistan or Ethiopia offer the same services at lesser cost, all these multinational companies that are currently swearing by India will pack their bags and move there. The solution is to differentiate India in ways other than just cost competency, before we can hope to consolidate India’s leadership.

However, our present systems — be it education or culture — focus on creating a bunch who are more doers (managers, engineers and analysts) than dreamers (change architects, innovators and entrepreneurs). This further reinforces our excessive reliance on cost competency. We are adept at replicating ideas and reverse engineering but are yet to be taken seriously as innovators.” (Link)

Vargheese has an important point, growth lead merely by low cost is replicable and not sustainable in the long run. With the appreciating Rupee, exporters are already lining up at the government’s doorstep asking them to offset the rupee appreciation.

India, henceforth needs to focus on innovation and leadership. Low cost can only grow the economy to a certain extent, for it to leapfrog into the next level, innovation is required. Indian companies have to consistently invest in research and development to innovate for them to survive.

Web 2.0 And Entrepreneruship

With the advent of web 2.0 companies like Youtube, Google and others, the common belief is that entrepreneurship is easy. It’s a cake walk. It is true in the case of these companies and numerous others like them, but not so for a majority of such companies.

Glen Kelman has written a guest post in Guy Kawasaki’s blog, (via) quoting the flip side of entrepreneurship.

“Lately I've been thinking how hard, not how easy, it is to build a new company. Hard has gone out of fashion. Like college students bragging about how they barely studied, start-ups today take care to project a sense of ease. Wherever I’ve worked, we’ve secretly felt just the opposite. We’re assailed by doubts, mortified by our own shortcomings, surrounded by freaks, testy over silly details. Trying to be like James or Markus has only been counterproductive.

And now, having been through a few startups, I’m not even sure I’d want it to be that easy. Working two hours a day on my own wasn’t my goal when I came to Silicon Valley. Does anybody remember the old video of Steve Jobs launching the Mac? He had tears in his eyes. And even though Jobs is Jobs and I am nobody, I knew how he felt. I'd had the same reaction--absurdly--to portal software and more recently to a Redfin, a fledgling real estate website.”

Glen is on the mark when he says he start ups are a hard work. Entrepreneurs are usually eccentrics who are driven by their foolhardy dreams. When Jamshed Tata wanted to build Jamshedpur, he was ridiculed largely because the mere idea of building a city on marshland seemed ridiculous. To start any firm, apart from Web 2.0 companies, it requires hard work as Glen points out. Entrepreneurs are also driven by the romanticism of the entire process of building their company, and the strong belief that better days are just ahead. This has lead to the culture of serial entrepreneurs, who move from one start up to another.

Google, Youtube, and other such Web 2.0 start ups are just a flash in the pan. There are unlikely to be many other successful firms which can be built like them.