The Business Value of Bedtime Stories

Once upon a time, my pet lion (who lived in the attic) started practicing customer-driven innovation. But then he began to challenge his assumptions and now he won’t listen to anything I say.
My 8-year old daughter told me this story last night before she fell asleep.
I’ve really got to start going down to the office when I take those work calls…

The Republican Response: Barney Fife Deputizes Bobby Jindal

After watching the brilliant Republican response by Bobby Jindal, here’s what my wife came up with:

Some husbands admit that their wives are smarter than they are, but this proves my wife is also way funnier than me. Her sense of humor is on display at >>
HBR: Don’t “Bobby Jindal” Your Next Big Speech
WAPO: How Bad Was Jindal?
NYTimes: Governor Jindal, Rising GOP Star, Plummets After Speech
AP: Republicans, Democrats criticize Jindal’s speech Education Through Travel

When I started my own consulting company back in 2004, my wife and I gradually realized that we didn’t have to keep sitting in Houston for the rest of our lives. We decided that we would travel as a family, visit the places we wanted to learn about, and spend some time in each of these places – learning about the history, geography, literature, culture and, of course, the people. Instead of teaching high school and college kids, my wife would now teach us.
We became globeschoolers: homeschooling on the road. Now we’re in our fifth year of travel. Our base-camp is still Texas, but we get to work, travel, and learn as we go about this country and the world.
My wife’s just started her globeschooling blog, which will explain what we’ve been doing. Really what she’s been doing to educate the kids (and us). I just tag along and learn a few things despite myself!
I’ve been bothering her to get blogging for a while, but apparently it took the Obamas and Earth Wind and Fire, to get her started…

Gary Hamel: Moonlight Madness or Management Moonshots?

Gary Hamel‘s at it again.
This time he’s got 25 moonshots for management:
1. Ensure that management’s work serves a higher purpose. Management, both in theory and practice, must orient itself to the achievement of noble, socially significant goals.
2. Fully embed the ideas of community and citizenship in management systems. There’s a need for processes and practices that reflect the interdependence of all stakeholder groups.
3. Reconstruct management’s philosophical foundations. To build organizations that are more than merely efficient, we will need to draw lessons from such fields as biology and theology, and from such concepts as democracies and markets.
4. Eliminate the pathologies of formal hierarchy. There are advantages to natural hierarchies, where power flows up from the bottom and leaders emerge instead of being appointed.
5. Reduce fear and increase trust. Mistrust and fear are toxic to innovation and engagement and must be wrung out of tomorrow’s management systems.
6. Reinvent the means of control. To transcend the discipline-versus-freedom trade-off, control systems will have to encourage control from within rather than constraints from without.
7. Redefine the work of leadership. The notion of the leader as a heroic decision maker is untenable. Leaders must be recast as social-systems architects who enable innovation and collaboration.
8. Expand and exploit diversity. We must create a management system that values diversity, disagreement, and divergence as much as conformance, consensus, and cohesion.
9. Reinvent strategy-making as an emergent process. In a turbulent world, strategy making must reflect the biological principles of variety, selection, and retention.
10. De-structure and disaggregate the organization. To become more adaptable and innovative, large entities must be disaggregated into smaller, more malleable units.
11. Dramatically reduce the pull of the past. Existing management systems often mindlessly reinforce the status quo. In the future, they must facilitate innovation and change.
12. Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.
13. Develop holistic performance measures. Existing performance metrics must be recast, since they give inadequate attention to the critical human capabilities that drive success in the creative economy.
14. Stretch executive time frames and perspectives. Discover alternatives to compensation and reward systems that encourage managers to sacrifice long-term goals for short-term gains.
15. Create a democracy of information. Companies need holographic information systems that equip every employee to act in the interests of the entire enterprise.
16. Empower the renegades and disarm the reactionaries. Management systems must give more power to employees whose emotional equity is invested in the future rather than in the past.
17. Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.
18. Create internal markets for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and companies’ resource allocation processes need to reflect this fact.
19. Depoliticize decision-making. Decision processes must be free of positional biases and should exploit the collective wisdom of the entire organization.
20. Better optimize trade-offs. Management systems tend to force either-or choices. What’s needed are hybrid systems that subtly optimize key trade-offs.
21. Further unleash human imagination. Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.
22. Enable communities of passion. To maximize employee engagement, management systems must facilitate the formation of self-defining communities of passion.
23. Retool management for an open world. Value-creating networks often transcend the company’s boundaries and render traditional power-based management tools ineffective. New management tools are needed for building complex ecosystems.
24. Humanize the language and practice of business. Tomorrow’s management systems must give as much credence to such timeless human ideals as beauty, justice and community as they do to the traditional goals of efficiency, advantage, and profit.
25. Retrain managerial minds. Managers’ traditional deductive and analytical skills must be complemented by conceptual and systems-thinking skills.
Fine. I think I get it. The real question is how many of our bail-out CEOs will get this Capitalism 2.0?

Tao 2.0: Stephen Mitchell’s “The Second Book of the Tao”

The Tao that can be blogged is not the eternal Tao. Or is it?
The great thing about working for myself is that I get to work with people (and companies) I like. In this case, I’ve been asked by Penguin Press to promote Stephen Mitchell‘s latest work: The Second Book of the Tao.
Stephen Mitchell is a quiet soul. The last gentleman. He’s definitely not the self-promoting type. So it was with some difficulty that we got him to talk about his first Tao (Tao Te Ching) and his newest masterpiece – The Second Book of the Tao.
The results are on YouTube!
Here Stephen talks about how The Second Book of The Tao came into being:

And here’s an excerpt; Chapter 14 from The Second Book of The Tao:

Here’s a little more about the book, adapted from the Penguin press release:
The Second Book of The Tao is a twenty-first-century form of ancient wisdom, bringing a sequel of the Tao Te Ching into the modern world. Alongside each translated passage, Stephen adds his own insights for contemporary readers.
“His meditations and provocative re-imagining of the original texts comprise a book that is both a companion volume and an anti-manual to the Tao Te Ching. Mitchell renders these ancient teachings at once modern, relevant, and timeless.”
Learn to govern your mind, and the universe will govern itself.
Or, as Funkadelic might say, “Free Your Mind…And Your -ss Will Follow.” (That wasn’t in the Penguin press release)
To appreciate Mitchell’s mind, see >>
And here are some stories about Stephen as told by his wife Byron Katie: here, here and here >>

The War on Greed

In trying times, executive behavior and more importantly, executive compensation becomes a public issue. Here’s an example of what to expect in the weeks and months ahead – has targeted Goldman Sachs for the “reckless” bonuses they handed out to their financial staff – after receiving a $6.5 billion bailout from taxpayers.
Apparently, if Goldman Sachs had shared its bailout billions with their rank-and-file workers at Burger King, they’d have handed out $18,000 to each employee. I must say I’m getting a strong French Revolution 2.0 vibe:

The Truth about Executive Pay

There’s a line of reasoning being echoed in the Obama administration that if we cap CEO pay for bailed-out companies in the financial markets, the best and brightest will leave, seeking greener pastures with foreign companies which don’t have similar restrictions.
This is false reasoning.
Executive pay must be tied to long-term performance if anything is going to change. Here’s some thinking on the issue from Stephen F. O’Byrne and S. David Young in HBR:
The justification for maintaining pay competitiveness is that it reduces the risk of losing good managers, who could be costly to replace. Corporate boards could also argue that it minimizes the risk of seriously overpaying managers as a consequence of large, windfall gains from surging share prices. In short, the claim is that competitive pay policies not only help lower retention risk but also impose limits on shareholder cost. This is false logic. By causing companies to overpay underperforming managers and underpay star performers, a competitive pay policy will actually increase retention risk. The poor performers stay on and the good ones go. What’s more, it ignores the potential wealth-creating effects of strong financial incentives.
Despite their commitment to competitive pay policies, compensation committees sometimes do act to strengthen incentives by increasing option grant shares after a year of strong stock-price performance or decreasing them after a bad year. On the surface, this appears to be good news. But such moves have little overall impact because directors tend to reverse their actions in the following year. In other words, an option grant that rewards good performance or penalizes poor performance is followed, almost half the time, by a grant that penalizes good performance or rewards poor performance. On balance, therefore, ad hoc adjustments by boards contribute almost nothing to wealth leverage.
If companies are serious about rewarding performance and retaining star performers, they will first have to wean themselves off competitive pay. They should give managers fixed-share interests in stock appreciation and economic profit improvement, thereby increasing the impact of future pay on executive wealth. Perhaps most important, they need to review vesting and holding requirements to prevent managers from unilaterally cashing out share-based pay, which also reduces the sensitivity of their wealth to company value.

Secondly, we know the financial sector is grossly overpaid. Even the Chinese will tell you this. I blogged earlier about China’s Gao Xiqing, president of the China Investment Corporation:
– “If you look at every one of these [derivative] products, they make sense. But in aggregate, they are bullshit. They are crap. They serve to cheat people.
– “I have to say it: you have to do something about pay in the financial system. People in this field have way too much money. And this is not right.”
He’s not mincing words, and neither is the Economist >>
I say let them go. It’s time these executives we came back to Earth. If they want to risk their own money great, but why should we subsidize irresponsible management practices?
I’m with Warren Buffet when he says in this letter:
“CEO perks at one company are quickly copied elsewhere. “All the other kids have one” may seem a thought too juvenile to use as a rationale in the boardroom. But consultants employ precisely this argument, phrased more elegantly of course, when they make recommendations to comp committees.
Irrational and excessive comp practices will not be materially changed by disclosure or by “independent” comp committee members. Indeed, I think it’s likely that the reason I was rejected for service on so many comp committees was that I was regarded as too independent. Compensation reform will only occur if the largest institutional shareholders – it would only take a few – demand a fresh look at the whole system. The consultants’ present drill of deftly selecting “peer” companies to compare with their clients will only perpetuate present excesses.”
No one is saying we should stop paying for performance. What we’re saying is let’s stop rewarding unsustainable business practices and outright fraud.
Where are we going to find low-cost, competent CEOs? That’s a business GE should look into. A CEO-for-Hire profit center. Training grounds? India and China, of course.

Cut Capital Expenditures, Not People

When executives want to boost profitability, their first target is often their “most valuable asset” (ha!) – people. But a better way to find value is to bring increased discipline to the capital budgeting process for small items.
Check out Tom Copeland‘s 2000 article in HBRCutting Costs Without Drawing Blood.
Here’s what he says:
… a company can almost always create far more sustainable value by sensibly reducing its capital expenditures. How? Not by postponing or eliminating big spending projects, which are usually less than 20% of the budget anyway, but by conducting a rigorous, disciplined evaluation of the small-ticket items that usually get rubber-stamped. Those “little” requests often prove to be unnecessary—in some cases they duplicate other requests—or gold plated. But few managers have the time, energy, or inclination to ask about them. They should.
You get more bang for the buck—or perhaps more buck for the bang—by cutting capex dollars than by cutting payroll. According to my estimates, the increased market valuation that resulted from Kodak’s $400 million payroll cuts could have been achieved by a $280 million reduction in capital spending. The reason for the difference, of course, is that a company has to make severance payments—$600 million in Kodak’s case—to people it has laid off. (There is no severance pay for capital.) The table compares recent payroll savings at Kodak and several other corporations with my estimated value-equivalent capex cuts.
Something to think about very, very carefully.

Rosabeth Moss Kanter on Simplicity

Rosabeth Moss Kanter is one of my favorite business gurus, the “female Peter Drucker,” as I tell people when I recommend they read her book Confidence: How Winning Streaks and Losing Streaks Begin and End.
In her latest blog post at HBR, she tells us that the next big trend is simple: to simplify.
Among her observations:
Companies sow the seeds of their own decline in adding too many things — product variations, business units, independent subsidiaries — without integrating them. They create complexity, which makes costs increase faster than the potential gains from the new parts.
“Just why did General Motors need 47 brands of cars? Was that responsible for its top-heavy load of managers? Or for cannibalization within the company?”
and this brilliant line:
When everyone else suffers from over-complexity, there is a market for products and services that simplify life.
More here >>

Business Models for Short Attention Spans

I wrote once on another blog, that no one has time to read Harvard Business Review, or listen to an entire music CD, or watch the whole movie.
Our attention span is somewhere between 3 to 5 minutes. And that’s the size your idea-bite has to be if you’re going get heard at all. See Twitter, YouTube, CNN, et. al. We’re getting dumber second by second by second.
How do you build a business model for short attention spans? I think this is the key challenge for online publications – from newspapers, to blogs, to forums. Perhaps the key is enticing readers to return over and over – let’s say twenty times a day! So online journals must be updated very often (compare HuffPost with the NYTimes) with corresponding micro-blogging on the same topics.
And the revenue will come not for selling ads, but selling products and services. And sometimes, you may just sell them the longer version of your story.

Starting a Business in a Recession

As someone who has started a business in a down economy, I have to say it is not as easy as these articles (see below) make it out to be.
For starters, this is not the time to write a business plan, as some of them would have you do. Instead, focus on finding and keeping customers.
Two, get ready to answer these questions from your customers, er, prospects:
– Who are you?
– What can you do for me?
– Why should I believe you?
– How soon can you make a difference to my bottom line?
Starting a Business in a DownturnBusinessWeek
Strategies: It’s a good time to start a businessUSA Today
How to Start a Business During a RecessioneHow
Starting Up in a Down EconomyInc.
Five reasons why a recession is a good time to start a companyThe Industry Standard
What’s a good business to start now? Something you’re good at, crazy about. Something people call you about to get free advice on. Something you want to do for the rest of your life.
Can’t think of anything yet? Here are some fun new business ideas, 999 of them to be precise…
If you already have an ongoing business, here are some things to do now >>

Heart Disease and Indian Politics

India Today gives us a cardio-pulmonary view of the political pulse of India.
I suppose it is pretty stressful being a politician in India and all…
The article also mentions the inevitability of “Rahul Gandhi happening.”
Good luck, Rahul. I hope you’re ready to “happen!”

What’s up with Dubai?

Not much apparently.
When foreigners are abandoning their cars at the airport so they can avoid debtors prison, you know the economy has taken a turn for the worse.
Read all about it >>

Indian Innovation: Distributed R&D

The points raised by Anil Gupta and Haiyan Wang in their book – Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage are echoed in this BusinessWeek article by Gunjan Bagla and Atul Goel.
So are things slowing down with the global recession? Here’s what they say:
We believe there may be a temporary hiccup in R&D globalization, caused primarily by companies freezing in their tracks as they reassess the new financial realities. But as soon as they rebuild their product road maps, nimble companies will actually accelerate their globalization efforts, pushed harder by tight budgets and the realization that the old ways can be disastrous.
Next up: What’s up with Dubai?

Brand Promises: What to Do Now

The one thing we all know as branding professionals is the axiomatic statement: “your brand is your promise.” When you start breaking that promise, you lose brand equity.
That’s been the story for so many brands, from Sears to the Republicans.
So what can you do in these turbulent times?
Step one: don’t lie. To yourself, your employees, and most of all to your customers.
Step two: think 80/20: focus on the 20% percent of actions which give you 80% of your returns. In other words, work on your effectiveness. Don’t try to do too many things at once. But focus on your best customers and more importantly, your best employees. Fire the deadwood – beginning with deadwood customers – the ones that cost a lot to service and are just not worth it.
Step three: observe your customers’ pains. How can you help them? Can you show them something they might not have known? Can you help them bring in additional revenues? Pitch in and they’ll never forget you.
Step four: invest in the future. Sure, things look bleak. But now there are more opportunities in your market and if you look closely at your adjacent markets, you should be able to see the opportunities.
Step five: service counts. The better your employees do in face-to-face encounters, the better you’ll weather the storm. Where can your service delivery be redesigned to make it even better.
Step six: be true to your brand. Don’t just start accepting anything you need to do to survive. Focus on customer value, not price competition.
Step seven: customer driven innovation. It’s now or never time. Get an innovator’s mindset.
Step eight: use the Internet like your life depends on it. Because it does. I don’t care what industry you’re in, the Internet will help you reduce your costs – marketing costs, operational costs, employee costs, and, most importantly, it can help you grow.
Step nine: test your ideas. Now is the time for smart business experiments.
The sky is not falling, despite what the papers say. Yes, you might lose your job, but you can find another one. This isn’t Europe. So get busy!

Irving Rothman: The Barber In Modern Jewish Culture

Dr. Rothman‘s book The Barber In Modern Jewish Culture: A Genre of People, Places, and Things, With Illustrations is already out of in print.
Here’s Dr. Rothman on YouTube:

Back in 1988 I did a little bit of research on “barbers in literature” for Dr. Rothman. I really enjoyed his classes – his Eighteenth Century Lit starring Samuel Johnson, and his Nobel Prize Winners in Lit class starring (for me) Garcia Marquez.
Back in the 80s it wasn’t uncommon to see Donald Barthelme, Rosellen Brown, Ntozake Shange, and Edward Hirsch all walking around on campus. Those were the days of Homer Noodleman

Newsweek: Shrinking to Survive?

Will Newsweek be able to compete against the Economist?
That’s what they’re betting on, apparently.
The goal is to turn Newsweek into an opinion-based “thought leader” with branded journalists like Fareed Zakaria, Christopher Hitchens, and that fossil of a conservative, George Will. So we’ll see lots more trash-talking and provocation.
While this is a step in the right direction, I think they’ll really have to worry about low-cost, online disruptors like HuffPost, DailyKos, and The Week, as well as established institutions like The Atlantic and The New Yorker.
The makeover is supposed to gain them mindshare and, ahem, walletshare. Where have we heard that before?
What they’re missing is a daily view of their ecosystem. I’ll get into that in a separate entry on And as I tell my clients, thought-leaders do dominate in ecosystem competition, so the Newsweek strategy does make sense.
What I don’t see any mention of is value-co-creation with its readers. And their revenue model is still based on advertising. Even the Economist knows that to make money you’ve got to sell those country reports, the surveys, books, and conferences.
Finally, I hope they’ve thought about video – online video – as another key ingredient which makes online news attention-worthy.

Blues Dance Raid: Steel Pulse versus Morgan Heritage

The original, Steel Pulse in 1985:

The remake, Morgan Heritage in 2008:

The lyrics:
Blues Dance Raid
by Steel Pulse
Muzik a bubble not looking for trouble
Some shekels fe I shenks
Just a burn up de lambs bread
Session rocking ysh!
So dem come so dem drop
From time to time dem been watching
Dem a spy with dem bad eye
(Come a raid I blues dance)
Tipped off by informers
Dem a watch who come out and come in yeh
(Come a raid I blues dance)
Yes they knew when the time would be right
Run come gate crash I party
(Come a raid I blues dance)
Raid blues dance raid I blues
(Come a raid I blues dance)
Kick off door woe I name dem call
I back against de wall a rub a daughter
(Come a raid I blues dance)
Dem a run come kill I vibe interfere with I
The pigs come to destroy Rasta cry blood
Dreadlocks cry blood
Raid blues dance
Out of darkness out of night
People screaming batons wheeling
A lot of bleeding bruised feelings
Search warrant for their outvitation
Walkie talkies reinforcements
From dem pocket dem draw handcuff
Dis yah session it rough
Every step of the way got to retaliate yeh
Fight dem back mash dem down
Vex to death dem a threat
Mek arrest kiss me neck
Raid blues dance raid I blues
A run come a run come who
Run come kill I vibe interfere with I
Pigs come to destroy Rasta cry blood
Dreadlocks cry blood
Come a come a come a come a raid
Come a kick I speaker
Come a mash up I tweeter
Come a grab up I shenks
Come a lick out I window
Come a move out I soft drink
Come a rough up the people
Come a turn off me System
Have fe give you some bitch lick
Come a smash I turntables
Come a scratch up I music
Come a drive up you meat van
Come a come a come a raid.
For me, there’s no contest.
Steel Pulse, all the way. But Morgan Heritage is fun as well 🙂

Ripples in the Indian Blogosphere: L.K. Advani versus Amitabh Bachhan

In India, we see L.K. Advani from the opposition fundamentalist BJP party try his hand at blogging. While I wonder, if at his age he’s ever used a computer, the posts are somewhat entertaining. For example he talks about why democracy has taken root in India, but not in Pakistan – and uses the words of the late Benazir Bhutto to make his point.
According to Bhutto: “I attribute your country’s success to two factors: firstly, your Army is apolitical; and secondly, your Election Commission is constitutionally independent of the Executive.”
No kidding.
Too bad the BJP doesn’t care too much about apolitical anything; they’re the ones that have sought to divide India by religion, and I believe that, by definition, is a great disservice to India’s cultural heritage. Sort of like the Taliban destroying Buddhist statues in Afghanisthan, but not on the same scale of intolerance.
In terms of influence, however, I’d say Bollywood (or should we call that Mollywood?) icon Amitabh Bachchan‘s blog, corny as it is, has more of an impact across the Indian world – from Mumbai to San Francisco. I just wish he’d focus on bigger issues and less on his daily ablutions. For example, when speaking about his recent trip to Davos, he could have talked about the issues in greater depth.
If and when he does so, he will become India’s answer to Bono.
Here’s a comment he makes which shows how he can, in fact, influence the growth of a secular India:
To me Cinema has always been, apart from its entertainment value, a medium of great integration. When we enter the darkened hall of a theatre we never ask whether the person sitting next to me is a Hindu or a Muslim, or Sikh or Christian. We are never concerned with the colour of his or her skin. Of being black or white or brown. We watch before us the unfolding of a story, where we laugh together at the jokes, sing their songs together, cry together at the same emotions. There are sadly very few institutions left in this world that can propagate the values of such an event. In a world filling rapidly with hate and violence, perhaps this is one medium that prides itself in bringing together, in integrating people rather than dividing them. The popularity of Indian Cinema within our shores and now increasingly outside, is not just the stars and their physical attraction, is not just the song and dance, is not just the escapist nature of our stories, but the fact that it brings us poetic justice within 3 hours. Poetic justice for most of us, does not come within a lifetime, sometimes several lifetimes. What better example of global understanding can there be, in these strained and uncertain times.
Now let’s work on real justice, and leave the entertainment to the politicians… where is India’s Barack Obama?

Hunger and Republican Values

To get a better idea of what it’s like to live on a food stamp budget, CNN’s Sean Callebs decided to eat for a month on $176 and blog about it >>
What is depressing is the rising number of people going hungry in this, the “land of plenty.”
I’m just sick at the Republicans – first they get us in this mess, then they go obstruct everything. Their idea of a stimulus is more tax cuts for their friends who live in the top 2% – otherwise, nix!
The Republican party stands for one thing: lies and more lies. And the corporate media is just as guilty.
More here about what life is like for an increasing number of people on Main Street>>

The Politics of Evolution

From the Economist:
The US – last – except for Turkey… this is what happens when science education is guided by the politics of faith.
I wonder how many of these same people believe in faith-based open-heart surgery?

A Design Guide for Recessionary Times

I think we’ve finally hit the wall in terms of design.
Whether you’re designing a product, a service, or a website, the designer has to make their work relevant to the buyer in ways they may not have considered before this recession. Here’s what I mean. Your offering is no longer competing for attention or even price. It is competing on usefulness and time to value.
The question you have to answer is this: Why will this product/service help me now, and how fast can I see results?
And, two – “How can I justify spending any money on this at all?”
Three: “What’s the risk for me (and my money)?”
Got it?
Pretty simple, but your survival as a company may just depend on answering those three questions properly.
So Hyundai designs a car which says, buy it, use it, and we’ll take it back – if you can’t pay because you lost your job. The policy allows people to return vehicles in the first 12 months if they can’t make payments due to job loss and Hyundai covers depreciation. In essence, Hyundai is eliminating your risk.
Consider a small business in today’s economy. Why would they spend money on anything but the essentials? So who needs MS Office when you can use Google Docs? Who needs a Mac when a netbook will help you get by? Who needs office space when you can work from home? Who needs to fly when you can Skype it in? Who needs to buy when you can rent? It’s not about how much the website costs, rather, it’s about how fast will I make money from the website? Why do press releases when you can blog?
It’s value time, period. Show me, don’t tell me.
One last thing, why should I trust you? Are you trustworthy? Is your product/service trustworthy? Maybe trust goes beyond the product/service. It lies in the concrete actions you take to actually help your customer. Have you ever thought of helping someone out who is not your customer?

Hyper-Disruption: India’s $10 Laptop

Here comes the next wave of hyper-disruption: the $10 laptop.
Are your ready Dell, HP, Apple? Are you ready Microsoft?
As we saw in Getting India and China Right, by Anil Gupta and Haiyan Wang, China and India are not going to be content simply filling out orders for low-cost products. They are also going to be springboards for innovation and disruptive products and services.
When I was growing up in India, there was a rule of thumb we followed which said that anything made in India should sell for 10 times the amount in the West and vice-versa. Looks like that rule still applies!
I’m still somewhat skeptical, but hey, it’s coming. If not tomorrow, then soon.
The point is this: every assumption we have about price limits and barriers needs to be challenged. If we don’t challenge them, Chindia will.

Book Review: “Getting India and China Right” by Anil Gupta and Haiyan Wang

The edge has become the core.
That’s the central idea presented by Anil Gupta and Haiyan Wang in their new book – Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage.
It’s not enough to merely be present in India and China, argue the authors.
Their thesis: “…any Fortune 1000 company that is not busy figuring out how to leverage the rise of China and India to transform the entire company runs a serious risk of not being around as an independent entity within ten to fifteen years…”
China and India are different from all other countries in that they present four “stories” or opportunities rolled into one:
1) Mega Markets: they provide growth opportunities for every product and service
2) Cost Efficiency Platforms: with low wage rates, they can help reduce your global cost structure
3) Innovation Platforms: the talent pool of engineers and scientists can boost your firm’s technical and innovation capabilities
4) Launching Pads for New Global Competitors: your next global competitors are likely to emerge from here
So what are you supposed to do?
The book guides you, chapter by chapter, to explore the following imperatives:
1) Compete in India and China simultaneously. Why? Four reasons: i) the growth trajectory for both countries places them as the world’s top 4 and 5 markets for every product and service imaginable; ii) India and China offer (for the time being) complementary strengths in services and manufacturing respectively; iii) there are also remarkable similarities which help your company transfer learning from China to India and vice-versa, accelerating your success in both countries; and finally, iv) an integrated China and India strategy helps you reduce your political, economic, and intellectual property risks inherent in operating in just India or China.
2) Compete for mega market dominance through micro-customers. The authors show you how to compete at the top, middle and bottom of the pyramid in India and China. What I found especially interesting was the authors’ insistence that innovation opportunities abound at the bottom of the pyramid and that companies should use this segment as a “learning laboratory” for the discovery of new business models!
3) Leverage China and India for global dominance. There are three opportunities: cost arbitrage, intellectual arbitrage, and business model innovation – each of which can help you build a global platform for competitive advantage.
4) Compete with the locals – the dragons and tigers. The authors show you how to defend yourself and compete against the emerging titans in India and China using three key strategic initiatives: i) attack these emerging titans on their own turf; ii) neutralize their supply-chain advantages by tapping into the cost effective and innovation opportunities available in both countries; and iii) pursue an integrated India plus China strategy which, oddly enough, is more difficult for the emerging players in both countries.
5) Compete for local talent. You must project a positive and visible presence in the local media and local academic institutions. You can offer better global career opportunities for employees outside of India and China. Finally, by being sensitive to cultural and social mores, your company can build strong emotional ties to employee families – spouses, and yes, parents! The authors also suggest you hire in second and third tier cities to achieve lower salary scales and reduced turnover rates. (Wuxi is calling!)
6) Rethink what it means to be a global enterprise. The authors give us four areas to rethink – global strategy, innovation, organization, and lastly, our very mindsets. They warn us to stay slightly ahead of the changes in each of these areas, lest we get left behind on the road to global competition.
This is not a light read, but it is an essential one for every manager or leader with global vision. What I haven’t mentioned in this blog post is the detailed case studies and business examples the authors present to make their case.
Ignore the timely warnings and insightful lessons in this book, and chances are we’ll see you on TV asking for a government bailout.
For more info, see Wang’s blog here and this article in the Wall Street Journal>>