November 2003 – Emergic

Business Week on India’s Rise

[via Reuben] Media coverage always comes in a flurry. A few years ago, China was the toast of the media. Now, it is India’s turn. Business Week has a cover story on what India’s rise means for the global economy:

Quietly but with breathtaking speed, India and its millions of world-class engineering, business, and medical graduates are becoming enmeshed in America’s New Economy in ways most of us barely imagine. “India has always had brilliant, educated people,” says tech-trend forecaster Paul Saffo of the Institute for the Future in Menlo Park, Calif. “Now Indians are taking the lead in colonizing cyberspace.”

This techno take-off is wonderful for India — but terrifying for many Americans. In fact, India’s emergence is fast turning into the latest Rorschach test on globalization. Many see India’s digital workers as bearers of new prosperity to a deserving nation and vital partners of Corporate America. Others see them as shock troops in the final assault on good-paying jobs. Howard Rubin, executive vice-president of Meta Group Inc., a Stamford (Conn.) information-technology consultant, notes that big U.S. companies are shedding 500 to 2,000 IT staffers at a time. “These people won’t get reabsorbed into the workforce until they get the right skills,” he says. Even Indian execs see the problem. “What happened in manufacturing is happening in services,” says Azim H. Premji, chairman of IT supplier Wipro Ltd. “That raises a lot of social issues for the U.S.”

But there’s also a far more positive view — that harnessing Indian brainpower will greatly boost American tech and services leadership by filling a big projected shortfall in skilled labor as baby boomers retire. That’s especially possible with smarter U.S. policy. Companies from GE Medical Systems to Cummins to Microsoft to enterprise-software firm PeopleSoft that are hiring in India say they aren’t laying off any U.S. engineers. Instead, by augmenting their U.S. R&D teams with the 260,000 engineers pumped out by Indian schools each year, they can afford to throw many more brains at a task and speed up product launches, develop more prototypes, and upgrade quality. A top electrical or chemical engineering grad from Indian Institutes of Technology (IITS) earns about $10,000 a year — roughly one-eighth of U.S. starting pay. Says Rajat Gupta, an IIT-Delhi grad and senior partner at consulting firm McKinsey & Co.: “Offshoring work will spur innovation, job creation, and dramatic increases in productivity that will be passed on to the consumer.”

Whether you regard the trend as disruptive or benefical, one thing is clear. Corporate America no longer feels it can afford to ignore India.

India’s IT workers sense an enormous opportunity. The country has long possessed some basics of a strong market-driven economy: private corporations, democratic government, Western accounting standards, an active stock market, widespread English use, and schools strong in computer science and math. But its bureaucracy suffocated industry with onerous controls and taxes, and the best scientific and business minds went to the U.S., where the 1.8 million Indian expatriates rank among the most successful immigrant groups.

Now, many talented Indians feel a sense of optimism India hasn’t experienced in decades.

There is little doubt that India has to change: “If India can turn into a fast-growth economy, it will be the first developing nation that used its brainpower, not natural resources or the raw muscle of factory labor, as the catalyst. And this huge country desperately needs China-style growth. For all its R&D labs, India remains visibly Third World. IT service exports employ less than 1% of the workforce. Per-capita income is just $460, and 300 million Indians subsist on $1 a day or less.”

Haiti’s Partners in Health

I read Tracy Kidder’s “Mountains beyond Mountains” recently (will write more on it sometime later – highly recommended). The book is about Dr Paul Farmer who has been working in Haiti for two decades and his “quest to cure the world”. So, it was a pleasant surprise to see a New York Times article on the work going in in Haiti – helped complete the story the book began.

Partners in Health has become an influential model in the frenetic race to expand drug treatment in dozens of poor countries across Africa, Asia and the Caribbean…No program to treat people in the poorest countries has more intrigued experts than the one started in Haiti by Partners in Health which has succeeded by enlisting help from hundreds among Haiti’s vast pool of unemployed and underemployed workers.

The AIDS treatment program here, one of the first of its kind in the world, was started by Dr. Paul Farmer, an American, and the group he founded, Partners in Health. It began giving antiretroviral drugs to patients here in 1999, when such efforts were virtually unknown.

“We didn’t do it to be a model program,” said Dr. Farmer, 44, a Harvard medical professor and anthropologist. “We did it because people were croaking.”

The Spartan model of care used by Partners in Health was born of necessity, but its very spareness is now seen as a virtue by many experts who want the scarce dollars for treatment to stretch as far as possible. Doctors here grafted AIDS treatment efforts onto the existing program for tuberculosis control.

AIDS patients, who will have to take the drugs daily for the rest of their lives, are visited in their homes every morning and evening by a health worker who hands out pills and watches as they are gulped down. Ensuring that the medicines are taken properly reduces the risk that drug-resistant strains of H.I.V. will emerge.

One of the biggest obstacles to rapid expansion of treatment in poor countries is the extreme scarcity of doctors, nurses and high-tech equipment. And the program here has minimized reliance on them. Generally, there are no lab tests done once treatment begins. The only monitor is a scale to weigh patients monthly.

Peasants have been trained to dispense the medicines, draw blood, take X-rays, clean bedpans, measure vital signs and spread the word about condoms preventing H.I.V. infection. Most of the workers who visit patients’ homes are paid a small stipend of $38 a month.

It is the story of how a few can change the world.

ITC’s Rural Hubs and Spokes

ITC is one of the most active companies in rural India. They have set up over 2,500 e-choupals in the villages and expect income from e-choupals to be more than their tobacco business by 2010. “In the next 5-7 years, ITC will have 20,000 choupals. Since each choupal covers around five villages, the company will have access to 100,000 villages. Each choupal currently serves 500-600 farmers.” To complete the picture, India has about 600,000 villages with about 700 million people in all. “[ITC chairman Yogi] Deveshwar explained that the revenue estimated from choupals in the coming years was not unfounded, given the importance of the rural economy. He said at present the propensity to spend was low among villagers because surplus income was low. However, the choupal network would boost farmers’ income and increase their propensity to spend, he said, adding that this would have a multiplier effect on the economy.”

The e-choupals are spokes, and where there are spokes, there is a need for a hub. The Economic Times writes about their plan to set up rural malls:

ITC is setting up 45 shopping malls in the countryside, each the size of Delhi s Khan Market, to retail everything from John Players clothes and ICICI life insurance to Eicher motorbikes. The first five malls, costing more than Rs 20 crore, will be ready for shoppers in 16 weeks.

What ITC gets in return is a dedicated customer base, savings through procurement of cheaper farm produce, and a cut ranging from 3%-40% of sales value from the brands which use its shelf space. The focus at present is Madhya Pradesh, where ITC has already managed to set up an exhaustive network of e-chaupals for procurement of soyabeans and sale of agri-inputs.

Built on 5 acres, each mall would cost ITC anything between Rs 3-5 cr [USD 650K – 1.1 million], depending on the price of real estate. To put that area in perspective, most malls in the large metros are built on just 2-3 acres of land. Each mall will be a self-contained unit, with facilities for storage of goods, warehousing of agricultural produce procured by ITC, shelf display, and parking. Each store will be manned by at least five full-time ITC sales staff, and the number could go up in busy seasons of the year.

This interests us is the context of our RISC ideas. We are working to set up a pilot by mid-2004. RISC’s goals are broader: “Fundamentally, the specific market failure that RISC addresses is that of coordination failure. RISC is designed to coordinate the activities of a host of entitiescommercial, governmental, NGOs. It synchronizes investment decisions so as to reduce risk. It essentially acts as a catalyst that starts off a virtuous cycle of introducing efficient modern technology to improve productivity that increases incomes and thus the ability of users to pay for the services, and so on. It creates a mechanism that reduces transaction costs and therefore improves the functions of markets.”

Continue reading ITC’s Rural Hubs and Spokes

From Invention to Rcognition

On Dec 17, it will be 100 years since the first flight undertaken by the Wright brothers. Forbes has a special series of articles celebrating 100 years of flight.

One of the Forbes articles looks at about how a few years elapsed before “the world discovered the Wright brothers.”

One hundred years ago, on Dec. 17, 1903, a flying machine carrying Orville Wright rose from the dunes of Kitty Hawk, N.C., and landed 12 seconds later and 120 feet away. Orville and his older brother Wilbur made two other flights that day, the longest being 852 feet. It was the first time in history that a machine carrying a man had lifted from the earth, moved forward under its own power, maintained control in the air, and landed at a point as high as that from which it started. The world could not have cared less.

Build a better mousetrap, they say, and the world will beat a path to your door. That didn’t happen to the Wright brothers. Most people at the time still considered heavier-than-air flight the province of deluded dreamers, especially after the highly public attempts by Samuel Langley, the director of the Smithsonian Institution, to fly his own machine, which ended in spectacular failure that autumn.

Word about the Wright brothers circulated amongst flying enthusiasts, especially in France. But it was not until 1908, five years later, that the general public hailed the Wright brothers as the fathers of flight.

This continues to be true with invention and innovation – it takes time for the world to recgonise the benefits of something that is path-breaking. We are used to thinking incrementally, and so find it hard to recognise disruptive innovations until much later.

4 Years Since the Deal

Today is 4 years since I sold IndiaWorld [1 2] to Sify. I don’t contemplate much about it, because I’d rather look ahead. But anniversaries are such things – they do make one think a little.

So, how have been the past 4 years? They can be divided into 3 phases: the first 18 months or so which I spent with Sify, the next year was spent thinking on what to do even as I managed Netcore, and the past 18 months or so have been spent trying to work towards realising the vision of making affordable computing solutions for the next billion users (with a specific focus on SMEs in emerging markets). To this, there is a second goal which I have added: how can we transform rural India.

It has been a struggle for the past year or so, as I have realised (slowly) that the transformations that we bring will need a much greater effort. For example, with SMEs, it is not good enough to just create low-cost software based on Linux. One has to think in terms of an affordable computing ecosystem, and co-ordinate the efforts of many to bring about the change. Rural India too is very similar. So, the paths that I have embarked upon are going to be long and challenging – with “mountains beyond mountains” (as Tracy Kidder puts in, in his book of the same name).

When I meet people, they still remember the deal and how it changed mindsets towards entrepreneurship in India. For me, it was perhaps the hardest decision of my life – to sell the company I had created. Sometimes, I imagine how life would have been had I decided not to sell. The Internet revolution in India has been slow and incremental, which has been disappointing. Hopefully, the computing revolution that I want to bring about can be faster.

I like to work on one or two things at a time – which are large and complex enough so that they occupy all my time. Entrepreneurship (as I have often written about in these columns) calls for total involvement. There are things I could have done a lot better in the past 18 months, but one learns. That is perhaps the best part of life – being able to reflect on one’s actions and course-correct. I am working with a compass, not a map.

If there is one change that has happened in the past four years, it is that I have learnt to accept success and failures as two sides of the same coin. So, both don’t sway me dramatically either way. I accept uncertainty as part of a day’s work, rather than becoming rattled. I have realised that to bring about change (the two problems I want to solve) will require long-term multi-year efforts. It will mean doing things I have never done before – building a bigger team, for example (IndiaWorld had all of 20 people, we are already double that size now).

The blog has perhaps been the best thing for me personally in the past four years – it has given me an outlet for my thoughts, and introduced me to some wonderful people. As I look ahead, I will continue to document my experiences in these columns. The journey has just begun.

Social Networking Impact

NYTimes writes about how social networking sites are portending a change in how relationships form:

Danah Boyd, a sociologist, says that the real world has a set of properties, which she calls architectures. With its deceptively simple set of features, her thinking goes, Friendster bends or replaces all of the real-world architectures.

For instance, when two people speak to each other, they assume their conversation is fleeting, but e-mail and instant messaging, by making that conversation persistent, offer a new architecture. When two people greet each other on the street, neither can see (nor hope to grasp) the range of the other’s social network. For that matter, no individual can see information about his or her own social network: who knows whom, and how.

Friendster offers a mix of architecture-changing tools and technologies: e-mail, a profile (which offers a persistent presentation of self) and a coarse representation of a social network. “Friendster is an architectural change,” Ms. Boyd said. “It’s not a mimicry of a change; it’s a total change.” Once the early users of Friendster discovered these new architectures, they began to play with them. That’s how Friendster evolved from a dating site into something else.

[P]eople’s social curiosity turned [Friendster] into a place where everyone becomes the center of an unfolding drama (or comedy) of connections.

This is [a] mistake that Friendster and other sites make, Ms. Boyd contends. The site is built on the premise that friendship is transitive; that is, that if A is a friend of B, and B a friend of C, then A can be a friend of C, too.

But friendship develops in social contexts, Ms. Boyd says; it doesn’t just flow through the pipes of a network. “Just because you’re friends with somebody doesn’t mean their friends are similar in the type of context you are with your friends,” she said. Unless the social networking sites adapt to how people need to use them, she said, the sites will not succeed.

Tech Innovation in Europe

WSJ has a report on innovative European companies:

Abmi is building a gadget to provide real-time monitoring of the tiny particles that clog brain arteries and trigger strokes. The Swiss company hopes ultimately to make a user-friendly device that might be easily carried in a pocket.

Raphael Bachmann was stunned by the limitations of an early handwriting-recognition device, so he decided to come up with his own software. Enter SpeedScript, a postage stamp-size product that aims to be a simple and fast way of writing on touchscreens.

Siemens seeks to make phones, computers and PDAs act as if they’re all parts of a common system. Business and private users eventually would be able to use these tools across private business networks and via the public phone networks.

A University of Fribourg team has developed a laser device that could lead to a radical change in heart diagnosis. The device, used to measure the heart’s magnetic field, is likely to be considerably cheaper than existing technology.

Prous Science’s voice-recognition system can distinguish between inflections and accents without training — a Holy Grail for the business. The technology eventually could allow for audio-visual searches of the Internet.

Most people know LEDs as indicator lights in mobile phones and digital video recorders rather than for their ability to light up a room. Lumileds is trying to change this notion.

PocketThis offers a way to let you store information from the Web on your mobile phone. This enables users to make information found on the Internet or stored on a PC portable.

Acaris thinks it has come up with a solution for asthma sufferers battling house dust mites. It’s a handheld device that measures levels of HDMs. After identifying “hot spots” of concentrated HDMs, Acaris then advises on how to rid the house of them.

Drugs are usually tested on animals first, before three phases of clinical trials in people. Xceleron cuts out the animal stage, instead putting a microscopic dose straight into people.

Cambridge InnoVision’s software turns photos generated by a digital camera into a detailed 3-D image. The technology has attracted interest from museums, which could use the camera to document and display artifacts.

The award winners:

Gold Winner: Abmi SA, Switzerland
Silver Winner: SpeedScript Ltd., Switzerland
Bronze Winner: Siemens IC Networks, Germany
Honorable Mention: University of Fribourg, Switzerland

Continue reading Tech Innovation in Europe

Internet Security

Security is one of the biggest concerns we face – with viruses, spams and worms intruding into our space. The Economist discusses this issue further and considers what lies ahead:

The issue boils down to the question of how much anonymity society can tolerate on the internet. Drivers’ licences and registration plates dramatically reduce the incidence of hit-and-run accidents. Crack cocaine is never bought by credit card. If everybody on the internet were easily traceable, people would think twice about hacking. I’m kind of a fan of eliminating anonymity, says Alan Nugent, the chief technologist at Novell, a software company, if that is the price for security.

The internet is heading in this direction already. Enrique Salem, Brightmail’s chief executive, says that all e-mail in future will either be authenticated or be sent into a quarantined in-box where few will dare to click. The sender’s authentication may well be tied to a driving licence, social-security number or passport. An entire industry has sprung up to work on other forms of identification, such as the biometric scanning of irises or hands.

The reality, however, is that the internet is already balkanised. Companies and governments have intranets, where users’ privileges depend on their log-in. Virtual private networks (VPNs) traverse the public internet like guarded convoys. For example, employees at Merrill Lynch, an investment bank, cannot check their Hotmail or Yahoo! e-mail accounts while surfing the internet at work.

The proper analogy for what the internet might evolve into, says Novell’s Mr Nugent, is a public library, a place where readers can browse in relative anonymity, but only until they take a book out, at which point they have to identify themselves. The degree of traceability varies with what one does in such a place.

Converged Mobile Devices

Kevin Werbach writes in an article entitled “The Triumph of Good Enough”:

Subtle improvements can have huge consequences. The same is true when it comes to functionality. A torrent of incremental advances are now producing converged devices that are “good enough” at each of their primary functions. This will have significant consequences for both device manufacturers and operators.

In the mobile handset world, we’re already at the point where a camera is a standard element of new phones. Analysts predict 100 million cameraphones will be sold next year. Unless privacy fears create a market for camera-less phones, handsets without that functionality will soon become anachronisms. Meanwhile, Motorola’s latest fully integrated phone module for hardware manufacturers measures 16 by 20 by 1.4 millimeters. That’s about the size of a US nickel. We’ll see phone functionality popping up in handheld gaming devices, portable music players, and other places that used to be completely different markets. When converged devices were either hulkingly large or pitifully incompetent at some of their functions, they were the domain of gadget freaks and early adopters. As the “good enough” threshold is passed, they will become the baseline standard.

The rise of converged devices will have a huge impact on operators. More functionality in devices at the edge of the network makes it harder to monetize the network in the middle.

In the new world, the money will be in applications on the edge devices, hardware sales, and of all things, dumb connectivity. The first wireless operator to execute the Dell/Wal-Mart model — being the efficient commodity provider, with a great brand — will make a killing. (Partly because they will kill their competitors.) Not that this is an easy task. Legacy billing systems and legacy culture are huge hurdles to overcome, and the ideas of “owning the customer” and “delivering value-added services” are deeply embedded in operator DNA.

The hard truth is that devices are evolving faster than networks. Wide-area wireless connectivity will be just another function that a “good enough” converged mobile device provides, albeit an important one. Put together a series of little things, and that’s the inevitable result.

Creating Hits

Rich Karlgaard (Forbes) writes:

In business the future is real-time supply chains. This development is made possible by a new wave of technology: radio-frequency ID chips the size of pepper grains, broadband wireless and Web-based “dashboards” enabling monitoring and management. Because smart supply chains can be done, they will be done. In fact, they are being done. Manufacturers and retailers now deploying smart supply chains will jump the learning curve and become the Wal-Marts and Dells of the 21st century. Don’t imagine that you can withdraw from this arms race. Smart supply chains are becoming the sine qua non of modern business.

Yet for all the recent progress in supply chains, a weak link remains–the link between product development and manufacturing. You see, it’s not enough to manufacture quickly and cheaply and get your products into the stores just as the big ad campaign is breaking. Your products have to be desired by buyers. You want hits, not dogs.

Affluent, informed people want more than mere adequacy in the products they buy. They want products that satisfy deep desires and make emotional connections. To get this response from customers, you must generate a flow of hit products.

Supply-chain technology also will march in the direction of standards and ubiquity. (Think of personal computers.) At that point, decisive advantage will go to companies that use their supply chains to boost their rate of hit products.