India’s Missing Jobs

It was the Wall Street Journal yesterday. Today, it is The New York Times:

India’s economy is spawning a growing middle class, a host of world-class companies, a booming stock market and a new image for this nation of more than one billion people.

But those very reforms and conditions are also reducing the prospects of some of its citizens. India may be “shining,” in the description of a controversial and expensive government publicity campaign, but it is also struggling to generate jobs.

This southern state [of Andhra Pradesh] and its chief minister, N. Chandrababu Naidu, capture the challenge facing India as a whole. The lack of work here is bad among educated urbanites, and worse in rural areas, where two-thirds of the work force lives and depends on nature’s bounty. Severe drought – and a lack of irrigation and power to ease it – have prompted migration and farmers’ suicides, and helped sustain a tenacious left-wing insurgency that nearly succeeded in killing Mr. Naidu last October.

Over time, predicts S. P. Gupta, a member of India’s planning commission who specializes in employment, the social consequences of jobless growth will become more severe, whether in mass migration, or in riots like those that broke out last fall when 600,000 people applied for fewer than 3,000 low-level railway jobs.

In part, Mr. Naidu’s blandishments reflect the dynamics of the global rush to India. As more cities, from Bangalore to Chennai (formerly Madras), compete for information technology companies, the companies have the leverage.

But it is not clear how much his state is getting in return when it comes to jobs. While nearly 60,000 jobs in information technology have been created here, many have gone to young Indians from across the country, despite this state’s 350,000 English-speaking graduates.

Since taking office, Mr. Naidu has increased the number of engineering colleges from 32 to around 230, and the number of graduates from 8,000 each year to 75,000. By the end of 2002, the state had around 2.6 million educated unemployed residents.

The Fourth Network

[via Om Malik] Gary Morgenthaler writes:

The new network would offer not the five channels or 70 or 500 channels typical of the broadcast, cable or satellite networks. Instead, it would offer 50,000 or even the 500,000 channels made possible by the Internet. The industry could thus take full advantage of the seemingly insatiable consumer drive for increasingly personalized communication and entertainment. Viewers would draw on this infinitude of programming to select precisely what they want and when. Call it “TiVo Meets the Internet.” Imagine a world where anyone can ask for and automatically receive any program– recent Bosnian soccer matches, Great Lectures in Physics, Tomb Raiders XXVI, Tai Chi lessons, or a videoconference with a daughter in Chicago.

This is narrowcasting-less a difference in degree than a difference in kind. Such a network, long-predicted, is now about to become a reality, I believe, within the next five to seven years. And it will become the communications form of choice. It will supercede broadcasting.

Om calls the fourth network as the “MegaNET.”

Carr on IT

NYTimes has an article by Hal Varian on a new book by Nicholas Carr, “IT Doesn’t Matter.”

His basic point is straightforward. At one time, information technology was so expensive and so difficult to manage that companies could make large amounts of money simply by being able to make systems work. (Think I.B.M.)

Companies that lacked the skills to manage information technology effectively suffered compared with competitors that had mastered those skills. But over the years, as information technology has become cheaper and more manageable, this source of competitive advantage has been reduced and perhaps eliminated. Hiring knowledgeable employees is much easier than it used to be, and the tools to manage this technology are far more powerful than they were a few short years ago. Nowadays anybody can set up a Web server, or an accounting system, or an inventory management system.

The ability to manage technology effectively is no longer the barrier to entry it once was. Hence, it no longer serves as a source of competitive advantage.

But as he would readily agree, it is not the whole story. A potential competitor could go out and buy the same technology that Intel uses and still fail miserably in trying to compete with it.

Even Intel doesn’t know quite why some chip manufacturing processes work better than others. In the late 1990’s it instituted a program called “Copy EXACTLY!,” which required that new plants use equipment and procedures replicated from existing plants, right down to the color of paint on the wall.

When a technology is so complex that the only way to make things work is to copy what you already have in place, you have a competitive advantage. After all, only the incumbents have something to copy, which makes it difficult for new companies to enter the industry.

But most businesses aren’t as complex as chip manufacturing. If someone makes money selling fruit-flavored iced tea, you can be sure that other competitors will soon spring up. And if one of them gains some temporary competitive advantage by building an inventory management system, the others will soon follow.

So Mr. Carr’s main thesis is right. It is not information technology itself that matters, but how you use it.

In my view, companies cannot afford to ignore information technology, or relegate it to the back burner. Commoditizing it does not necessarily mean innovation slows. If anything, it could accelerate as more and more innovators experiment and tinker with those cheap, ubiquitous information technology commodities.

I had written a Tech Talk on Carr’s article sometime ago.

Chinadotcom’s Software Offerings

I remember Chinadotcom from the late 1990s when it started off as a portal. It raised a lot of money (over $500 million) via two Nasdaq offerings. What is it up to now? Business Week writes:

In the past year, Yip’s chinadotcom Corp. has bought companies or formed partnerships in the U.S., Canada, and India — while preparing to shed one of its key businesses in China. The reason: CEO Yip requires knowhow to turn chinadotcom into a provider of enterprise software to Chinese manufacturers.

Yip wants to focus on software — a business chinadotcom has long been quietly building. For years, the company has resold Western programs that help Chinese businesses streamline their production, manage contacts with customers, and organize their human resources departments. To prosper in that field, though, chinadotcom needs its own software, Yip says. So in February, the company completed a $56 million buyout of Pivotal Corp., a 420-employee developer in Vancouver that specializes in customer-relationship-management programs for small and midsize businesses. Another acquisition, of Atlanta’s Ross Systems Inc., is almost sealed. And last year, chinadotcom paid $50 million for IMI Corp., a maker of supply-chain-management software.

Another of Yip’s ambitions is to turn chinadotcom into a software outsourcing shop. Though the company has just 140 programmers in China today, Yip expects to have 1,000 within three years. To boost expertise in outsourcing, chinadotcom formed a joint venture with India’s vMoksha Technologies.

Even after the recent deals, chinadotcom has more than $250 million left over from its 1999 initial public offering and subsequent stock issues. “Unlike so many of the dot-coms that raised money, chinadotcom didn’t blow through its cash,” says Jason D. Brueschke, an analyst at Pacific Growth Equities in San Francisco. And while chinadotcom was never a star, last year it turned its first profit, earning $15.4 million on sales of $89 million.

Still, analysts like Brueschke say Yip’s change in strategy is smart. Brueschke predicts that software sales will help chinadotcom more than double its earnings to $38 million this year and $51 million in 2005 as Chinese companies seek to boost productivity and efficiency. To be sure, Yip will face plenty of competition. SAP is pursuing small and midsize customers in China, while Oracle Corp. has opened development centers in Beijing and Shenzhen, and is sponsoring educational projects nationwide. But with its foreign technology and Chinese pedigree, chinadotcom could be the one to beat.

Innovation and Entrepreneurship

ACM Ubiquity has an interview with Peter Denning, who teaches students at the Naval Postgraduate School how to develop strategic, big-picture thinking about the field of computing. Excerpts:

DENNING: Let me return to my initial distinction between the creation of a new idea and the process of producing change. Many people can indeed be more creative in their production of ideas they can break loose from their standard habits of thinking, they can try out different observers, they can create new games. People often find these creative processes to be uplifting. The invention of a new possibility can lift one’s spirits and can be fun. Look at the great moods people enter after a brainstorming session. A creative person can help someone who’s stuck in a negative mood by proposing new possibilities for them. Obviously, people who can open new ways of thinking, and help us see what was previously invisible, can make a big contribution. But there’s a world of difference between being in a good mood about a new possibility and actually making it happen. Helping people actually make the change, is where the real work is, and that’s a different skill set…People who have trouble accomplishing innovations may lack knowledge of the process or of a foundational skill.

UBIQUITY: What’s next after identifying an opportunity and creating a new possibility for addressing it?

DENNING: Drucker says: Analyze it. Can you make a business or project plan to accomplish the result? Can you identify the costs, the benefits, the risks, the responses to risks, and the main milestones? Can you lay out your engineering or science approach? Only after such analysis can you decide whether you want to go forward; you might well decide that you can’t go forward. The analysis phase is very important. After analysis comes listening. Drucker says go out into the community in person, discuss your proposal, and assess their receptivity. Are they open to your proposal? Enthusiastic? Apathetic? Hostile? What changes must you make to secure their buy-in? Are they so unreceptive that you might as well drop the project?

UBIQUITY: What’s next or does the listening phase go on forever?

DENNING: After you have concluded that your plan is sound and is likely to be received well, you get to execution of the plan. But Drucker does not call this the execution stage; he calls it the focus stage. That’s because, during execution, you need to keep everyone’s attention on a simple core idea behind the change and keep from veering off into interesting distractions. Many projects fail because their leadership cannot maintain focus and their energies become scattered. Moreover, if your proposal looks too complex, people will give up on it. Maintaining the focus requires clear thinking, discipline, and a mood of ambition and confidence.

Rich Internet Applications

David Temkin writes in the context of Gmail’s interface:

What’s received less attention is that Gmail is effectively what we at Laszlo would call a rich Internet application (RIA). By this I mean that a lot of logic and interaction is client-based, and it is not an ordinary page-based Web application, where each click generates a server return-trip. It does not look like an application — in fact, it looks like a simple Web page — but is application-like in many regards, featuring keyboard navigation, instant response to certain actions, etc.

It also shares a number of undesirable properties with other RIAs — a significant initial download (400K+ of JavaScript according to our measurements), very limited browser compatibility, limits on accessibility relative to static HTML, etc.

It’s interesting to think of RIAs as belonging to three different categories, each analogous to an operating system:

  • Unix-style RIA: Gmail is a great example of this. It’s essentially text-only, with keyboard equivalents. It’s reminiscent of Pine or vi, particularly with regard to how keyboard shortcuts work. The emphasis is on speed, not friendliness — it’s best for geeks and most likely designed by geeks (and I mean that in a nice way).

  • Windows-style RIA: Oddpost, another rich Web mail service, is a perfect example of this — a Windows-style UI delivered into a Web browser. This can be done with DHTML heroics (as is Oddpost), or with Java. Here’s a comparable example built with Laszlo. The look and feel of these applications is essentially a duplicate of the “classic” Windows desktop look and feel. Users new to these applications can lean on their familiarity with Outlook and similar applications, but they don’t reflect what we’ve learned on the Web about UI — very little linking, very little contextual “content” or media.

  • Mac-style RIA: Here I’m talking about the visually differentiated, smooth/animated interaction often associated with Mac OS X (or with Flash), but used in the context of a Web application. These applications as a category represent the attempt to blend the best of the Web with the best of applications. Most of Laszlo’s deployments and demos fall into this category.

  • TECH TALK: The Company: Peter Drucker

    Peter Drucker, writing in his book Managing In The Next Society takes a look at the future of the Company:

    For most of the time since the corporation was invented around 1870, the following five basic points have been assumed to apply:

  • The corporation is the master, the employee is the servant. Because the corporation owns the means of production without which the employee could not make a living, the employee needs the corporation more than vice versa.
  • The great majority of employees work full-time for the corporation. The pay they get for the job is their only income and provides their livelihood.
  • The most efficient way to produce anything is to bring together under one management as many as possible of the activities needed to turn out the product.
  • Suppliers and especially manufacturers have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands.
  • To any one particular technology pertains one and only one industry, and conversely, to any one particular industry pertains one and only one technology. This means that all technology needed to make steel is peculiar to the steel industry; and conversely, that whatever technology is being used to make steel comes out of the steel industry itself. The same applies to the paper industry, to agriculture or to banking and commerce.

    Every one of these assumptions remained valid for a whole century, but from 1970 onwards every one of them has been turned upside down. The list now reads as follows:

  • The means of production is knowledge, which is owned by knowledge workers and is highly portable. This applies equally to high-knowledge workers such as research scientists and to knowledge technologists such as physiotherapists, computer technicians and paralegals. Knowledge workers provide capital just as much as does the provider of money. The two are dependent on each other. This makes the knowledge worker an equalan associate or a partner.
  • Many employees, perhaps a majority, will still have full-time jobs with a salary that provides their only or main income. But a growing number of people who work for an organisation will not be full-time employees but part-timers, temporaries, consultants or contractors. Even of those who do have a full-time job, a large and growing number may not be employees of the organisation for which they work, but employees of, eg, an outsourcing contractor.
  • There always were limits to the importance of transactional costs..Now the traditional axiom that an enterprise should aim for maximum integration has become almost entirely invalidated. One reason is that the knowledge needed for any activity has become highly specialised. It is therefore increasingly expensive, and also increasingly difficult, to maintain enough critical mass for every major task within an enterprise. The second reason why maximum integration is no longer needed is that communications costs have come down so fast as to become insignificant.
  • The customer now has the information. Whoever has the information has the power. Power is thus shifting to the customer, be it another business or the ultimate consumer. Specifically, that means the supplier, eg, the manufacturer, will cease to be a seller and instead become a buyer for the customer. This is already happening.
  • Lastly, there are few unique technologies any more. Increasingly, the knowledge needed in a given industry comes out of some totally different technology with which, very often, the people in the industry are unfamiliar.

    Will the corporation survive? Yes, after a fashion. Something akin to a corporation will have to co-ordinate the next society’s economic resources. Legally and perhaps financially, it may even look much the same as today’s corporation. But instead of there being a single model adopted by everyone, there will be a range of models to choose from.

  • Last Word

    The Company is for us, perhaps the single most important institution for us, outside of our Family. There is a two-way relationship between us and the Company, and one which keeps evolving. Knowing more about the history and evolution of the Company can help us better understand this living being and shape not just its future, but also our own.

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