Business Week on CK Prahalad

Business Week carried a profile of management guru CK Prahalad recently: “Now one of the management world’s most creative thinkers has an even more radical idea: He 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.”

Vertical Search Engines

Forbes writes:

Vertical search sites have a big advantage over general search: They are able to go much deeper and present much more structured information for the user.

“The advertisers on vertical sites are gaining exposure to would-be buyers who are much closer in time to a purchase decision than the average Google user,” said Greg Sterling, an analyst with the Kelsey Group. “That’s the motivation for advertisers to appear on vertical sites. Someone on Edmunds.com is typically more serious than someone doing a car search on a general search engine.”

Feedster, Search and Syndication

David Berkowitz writes:

Feedster’s business model centers on RSS advertising, syndicating ads every few posts into its feeds. If you’re looking to run an advertising campaign on Feedster, get in line. “We’ve probably turned away more campaigns than we’ve run,” said Redlitz. Holding Feedster back for the time being is an inventory crunch. Redlitz said Feedster could double its inventory this year, yet advertiser demand is spreading beyond the early adopters. I asked Redlitz when he foresaw inventory meeting advertiser demand. He answered bluntly, “I don’t think it will.”

In the context of other developments in the search engine space, Feedster fits in most closely with vertical search, both as a vertical search engine itself and as a distribution channel for other vertical search sites. In aggregating others’ feeds, Feedster can be a resource where consumers can subscribe to publishers’ feeds of news, jobs, movie reviews, recipes, message board posts, product listings, travel deals, and other types of content. The syndication model changes the nature of search from a pull to a push model, and in the push model, search isn’t really search at all.

Developing Markets and Innovation

John Jordan writes: “Brazil is leading the world in some facets of cloning and alternative energy development. China is developing a state-backed Linux distribution. Korea leads the world in broadband deployment. The Microsoft Developers Network has 6.5 million people in India, which is second only to the U.S. What has been called the BRICK cluster – Brazil, Russia, India, China, and Korea – is evolving extremely rapidly, although the political instability of Russia is impeding its progress as investors back away. Look for a major announcement from one of the four remaining countries, potentially in biotech, optics and displays, or networking.”

Content’s Kingdom

Broadband Directions discuss three inter-related questions:

– Where’s consumer behavior heading?
– What business models and content will work best?
– What technologies will win?

An excerpt from the discussion on the third question: “I continue to believe that for new video distribution technologies to succeed, they need to be finely focused on optimizing one particular user experience and content business model. Once a foothold has been established, this can be used to grow into other areas. A great example is how Apple optimized the iPod for music, and then with this success, expanded to support video. At least for now, buyers don’t regard iPod’s video capability as their primary purchase criterion, rather they look at it as an incremental feature to the music capability. Further, Apple’s business model for video is paid downloads, just like music. However, it is likely that we’ll see other business models evolve from Apple, leveraging the success of paid downloads.”

TECH TALK: India Rising: An Answer from Atanu

Atanu Dey built on Lee Kuan Yews incisive analyses and summarized his learnings. The harsh truth:

Why, one may wonder, dont the leaders of India see what LKY so easily sees? Are they merely incapable of clear thought, or is it that they think but are prevented from acting due to circumstances, or is it a combination of both? Surely, one would think, that if the Indian leaders are not competent thinkers, they would at least have the intelligence to hire intelligent advisors to figure out the problems. So what is the problem?

I think the answer lies in what economists call the objective function. Individuals have a certain goal which can be stated as the maximization of a function given a set of constraints. For instance, for someone maximizing the amount of money given the constraints of time and effort may be the objective function; for another it could be to maximize leisure given the constraint of a reasonable income and time; for another, it could be to do social work subject to leisure, time and money constraints.

LKYs objective function, I believe, was to rapidly develop Singapore. He was not looking to win elections, or to maximize his personal wealth, or to be a mahatma, etc. Given that he is a man of amazing practical genius, he figured out the sequence of interventions and implemented them. Under his autocratic rule, he did what Indias autocrats have been either unwilling or unable to do.
Indias autocrats have had different objective functions. I suspect that to a first approximation, their objective function have been to maximize personal wealth, not the development of the economy, through corruption, nepotism and bribery. Of course there was the matter of elections every so often and funding this costly farce required even more corruption.

Atanus short and simple prescription: Manufacturing has to be the base upon which Indias growth must be based. To produce stuff, you have to have infrastructure. Build infrastructure first.

India is a large economy (in terms of population numbers) and like any other large economy, it has to be largely self-sufficient in that what is consumes, it has to produce itself. Small economies can specialize and import the other stuff they need, but India cannot. In other words, India has to grow its own food (and therefore must have a large agricultural sector), must manufacture its own stuff (and therefore have large manufacturing sector), and provide its own services. Large here means production capacity, not necessarily employment capacity.

I am not in favor of employment; I am in favor of producing stuff. If you produce enough stuff, you can give stuff away to unemployed people. On the other hand, if the obsession is with employment, and if this employed population produces zilch, then all can be employed and yet all can be dirt poor.

You cannot produce much with your bare hands. So you need factories, You need power to run those factories. You have to have roads and ports and airports to bring inputs to the factory and take the output out. Invest in infrastructure.

And you dont need to bring out the excuse that the government does not have the capacity to fund the infrastructure. The private sector at home and abroad is more than eager to build them, provided the asinine policies blocking this investment were discarded.

Last Word

India is the flavour of the day. But we need to make it more than that. India needs a few decades of sustained development to make up for all the lost time. We have the worlds youngest population. If we are not to disappoint and lose this generation, we need to work on building the India of tomorrow. We may not be easily able to change our politicians and policies, but I firmly believe that we can use our innovation and entrepreneurial abilities to bring about change. We have to do this not between two generation, but between two elections. The India Rising story needs to not become a chapter but a book.

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