A Spokesman or Business Prophet of Surging India- C.K. Prahalad

Here is a portion of an article by Pete Engardio in ‘Business Week’ about an Indian management Guru based in US, but helping in building an image of surging India. I keep a track of what he writes and tells. The ideas are fresh and interesting providing a lot of hope for India and for that matter for all developing countries:

You must have seen Bombay: raggedly dressed homeless families sprawled on blankets amid shacks. Traffic hopelessly clogged with every manner of soot-belching vehicle and wooden cart. Gaunt hawkers and beggars tapping on your window at red lights.

View the same streets through the eyes of C.K. Prahalad, however, and they become a beehive of entrepreneurialism and creativity. “I see the positives inside the muck.” As the ‘Indica’ sedan that he hired moves on, he notes that virtually every individual is engaged in a business of some kind — whether it is selling single cloves of garlic, squeezing sugar cane juice for pennies a glass, or hauling TVs.

On every block he points out the intriguing enterprises tucked into the nooks and crannies. With the world’s cheapest telecom rates, “all you need here is a phone and a $20 card to start a business,” he explains in his measured baritone. He notices a busy closet-sized shop charging a few pennies per page to send faxes. “That guy probably started with a single phone and then added a fax and printer. Now he has a self-contained communications center offering extremely low prices.” Such entrepreneurs, he contends, pioneered cheap pay-per-use services long before they became a fad in the West. The car stops at a small dry-goods shop. Prahalad bounds out and asks the owner to let him behind the counter. Tiny 5 cents single-serve containers of shampoo, soap, toothpaste, and other household goods dangle from the walls and ceiling. He notes the brands: Head & Shoulders, Lifebuoy, Pears, Colgate, Lux. “Low quality won’t sell,” he says.

The University of Michigan professor’s knack for being able to change people’s perceptions of the world around them has made Prahalad an incredibly influential corporate strategist. Prahalad and colleague Gary Hamel helped spark a management revolution in the 1990s with their idea of “core competence,” which says that companies must identify and focus on their competitive strengths. Their 1994 book, Competing for the Future, is regarded as a classic. A decade later he co-wrote The Future of Competition, which argued that the traditional “company-centric” approach to product innovation is giving way to a world in which companies “co-create” products with consumers. That book gave Prahalad a reputation among designers. At the same time, he has been working to convince executives that today’s needy masses, so often dismissed as subsisting largely outside of the global economy, are actually its future. Prahalad’s 2004 work on that topic, The Fortune at the Bottom of the Pyramid, has been hailed as one of the most important business books in recent years and turned Prahalad into a celebrity in the field of international development.

Street-smart innovation
One of the management world’s most creative thinkers believes that the entrepreneurial ingenuity at work amid such poverty, where success depends on squeezing the most out of minimal resources to furnish quality products at rock-bottom prices, has cosmic implications for executives and consumers everywhere. Some of the most interesting companies of the future won’t emerge from Silicon Valley or other places of abundant means, he says. They will come from places many executives don’t even think about because they have been considered too marginal. They won’t have that excuse for much longer, though.

In the world according to C.K. (Coimbatore Krishnarao) — poor nations are incubating new business models and innovative uses of technology that in the coming decade will begin to transform the competitive landscape of entire global industries, from financial and telecom services to health care and car making. Globalization, outsourcing, the Internet, and the spread of cheap wireless telecom are accelerating dramatic change. Few Western corporations fully harness these forces, Prahalad warns. And that puts them in danger of being usurped by a new breed of supercompetitive multinationals completely off their radar.

For his next book, Prahalad is assembling case studies of Indian companies that could spawn entirely new ways to think about conducting business. Fast-growing telecom operators such as Bharti, Reliance, and Tata, for example, are profitably selling cellular service for as little as 2 cents a minute “even though they must buy the same hardware as Western companies,” he says. Now they’re preparing to launch broadband TV, data, and voice for around $30 a month — about a third of the cost of such packages in the U.S. Bangalore’s Narayana Hrudayalaya hospital charges a flat fee of only $1,500 for heart bypass surgery that would cost 50 times that in the U.S. and operates on hundreds of infants each year for free. Yet it is highly profitable, has no debt, and claims a higher success rate than most U.S. hospitals. Narayana also profitably insures 2.5 million poor Indians against serious illness for 11 cents a month per person.

Low wages alone can’t account for such price gaps with the West, Prahalad contends. The real secret is ingenious cost-cutting practices, such as extreme reliance on outsourcing, novel use of technology, and making the most of capital investment. “These are radical innovations,” Prahalad says, many of which can be adapted to the U.S. Just look at the info tech industry: Long dominated by giants IBM, EDS, and Accenture, it has already been transformed by Indian companies such as Infosys and Wipro that supply top-quality services at lower prices. That, says Prahalad, is just the beginning of the revolution.

Here is one NRI that is doing more than many more Indians to build a brand image of Surging India. I wish he is approached or on his own he volunteers to study the case of Bihar and suggests some innovative way out to move ahead fast.

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