A new manifesto for Indian entrepreneurship
What are the key challenges and opportunities facing India? How can we create a more inclusive and purposeful society? And how can entrepreneurs meaningfully contribute to a stronger India and a better world?
These were some of the topics of a recent Facebook Live discussion with Arun Maira, former member, Planning Commission of India and former chairman, Boston Consulting Group; Sundeep Waslekar, president, Strategic Foresight Group; and Nachiket Mor, India country director, Bill & Melinda Gates Foundation. The discussion was anchored by Indrajit Gupta, co-founder, Founding Fuel. Edited excerpts:
Mr Maira, what to your mind represents one of India’s biggest challenges?
Maira: India’s biggest challenge right now is to generate enough income-generating opportunities for many more people. [And] much faster than we have done so far. Because people don’t get included in the progress unless they themselves are able to earn and feel that they can look after themselves and their families. We have not been doing very well in this regard, in spite of having pretty high GDP growth rates.
What’s the cost of not being able to achieve this?
Maira: We have already seen the symptoms of this. There is critical unrest in so many parts of the country. This is a manifestation of younger people not finding themselves sufficiently included or unable to access things that they have begun to believe they must have.
In Jammu and Kashmir, one part of the cause of the troubles is underemployment. In the tribal areas, the people are not included in the progress generally around them. They are not getting into better jobs, and are unable to afford what others in the rest of the country are able to afford. Even very basic things like education, health, clean water and so on.
Sundeep, what is that one or two key challenges that you see on the horizon over the next five years?
Waslekar: I fully agree with what Mr Maira said. I will only complement it with some information. We are facing an 800 million conundrum. What do I mean by that? About 15 years ago, we had about 200 million people who were consuming classes—who could have at least the basics that you need for a decent living—and 800 million people were living on the periphery. Now over the last 15 years, about 225 million people have joined the consuming classes. We have altogether about 425-450 million consuming classes.
So prosperity has definitely increased. But population too has increased from 1 billion to 1.25 billion. So again the number of people who are in the periphery are 800 million. In 10 years’ time, if we have a GDP growth rate of 6.5% to 7.5% then this 450 million people will expand to 600 million people. There will be lot more prosperity. But by that time population will be 1.4 billion and 800 million people will be in the periphery. So India faces this 800 million conundrum and you can’t break that at 7% growth rate.
Secondly, there is the whole question of quality of life. Mr Maira rightly focused on the livelihood question. On paper you have 500 million labour force. But only about 6% of them are in the organized sector. The 94% who are not in the organized sector, how many of them are earning a decent living? How many have education? Or decent healthcare?
India’s biggest challenge is really lack of inclusiveness.
Nachiket, you have always believed in market-based solutions to a lot of challenges India faces. Do you agree that we are not thinking big enough?
Mor: I do recognize that 800 million people not being included is an enormous challenge. I worry though that implied in the statement is that we should therefore go for the jugular and create jobs for them. I feel that search itself is the problem. We go for short-cut solutions without thinking through what is the underlying structure that you need. It may not produce jobs right away which is why there is impatience with it. We still haven’t solved the financial inclusion problem. We still don’t have the basics of healthcare or education in place. My instinct is that unless you create an economy that is able to allow people to run a life that is in their own control—get good healthcare or reasonable education when they need to—the search for jobs will be futile. Because we want jobs, we start to create a distorted economy in which we start to put subsidies, limitations, push a sector ahead because we think that’s job creating. [We need to] step back and say, “What is the economy I want so by 2030 all of the engines I need to fire can fire smoothly?”
What is the entrepreneurial ecosystem that would help us attack these big wicked problems?
Maira: To have control over your life, one of the most important thing is that I have a source of income. I have income, therefore choice in what I want to do and need to do at certain times—spend on health, education, or consumption. Creating an ecosystem in which there are more opportunities for people to earn and have good livelihoods is the central issue. This can’t be done through subsidies—that is a very short-term fix which backfires.
In the work that we did in the Planning Commission and were consulting with different stakeholders, we came to this dichotomy that many NGOs would say that the government should be giving more subsidies. The people not included need to be compensated for not being included with more subsidies on various things. Whereas, many others that I think were closer to the people and their aspirations said people really don’t want the subsidy because then they are not in control of their own lives. They want to be able to stand on their own feet to live a life without having to go with a begging bowl or waiting in the queue for the subsidies.
So jobs can’t be planted on the ground. The jobs will arise out of an ecosystem, which is a healthy ecosystem, which is creating more opportunities for people to be entrepreneurs, to make money for themselves as entrepreneurs, to engage others as partners or employees in enterprises. The creation of more enterprises is what the ecosystem should enable. So the word ‘system’ here means many interacting forces. You can’t create an ecosystem by just working on one thing. For example, one big thing being said is that there aren’t enough skilled people, so let’s go after it and train 500 million people in the next 10 years. We are on that track and it’s already been found that those sectors in which the skilling programme has gone fast in meeting the targets, those people are not getting jobs. Because the other side of the system is the enterprises which don’t grow as rapidly. Now what’s effecting the growth of jobs in the enterprises, are much more complex and a big complication coming in right now is technology.
Technology can be a great enabler of change, of efficiency, of enterprises but it changes the pattern of things as they were. So there is a dynamic change of what the jobs will be or what the enterprises will be and the skilling system can’t track it.
Mr Maira has touched upon a core issue, around the role of technology and the premium that we place on the Silicon Valley model of bigger and better, of better valuation driving the technology-based organisations. Do we really need to re-think that?
Mor: I have a somewhat different perspective. Clearly we need the jobs. I view that as an end outcome. I worry that if you start with that, you don’t know where you are going—as Mr Maira himself pointed out, you skilled a lot of people but there are no jobs. And where are these people going to find jobs?
Let’s look at the telecom sector, as a classic example of a purely for-profit business and look at its development impact. It’s able to now offer services to a very low-income category of customer, purely driven by profit.
The problem seems to me actually the reverse, which is not enough of an ambition to make money. The desire to make a modest amount and then be content, seems to me to be the real problem. People with real ambition to make very large amounts of money now have to come to the Indian market and say the only way this is going to happen is I make a low-margin, high-volume businesses happen and I really touch a billion people.
The government has an important role and I am certainly not saying that we should move the government into private. I am saying, since the conversation is about what can the private sector do, my own belief is that it can be more ambitious, it can start to build a health system rather than merely tertiary hospitals. Many of the large groups are making Rs400-500 crore profits that seems to be adequate for them. Where is the group that says “I want to make Rs20,000 crore?”
Why is it not happening? Why are large corporations not willing to bet on healthcare?
Mor: That is actually a curious puzzle. Maybe it has an old world character. It has a sense of ‘oh my god I have to hire so many people. I have to manage so many people’. People want to go into digital, into something that happens quickly and this doesn’t have that character. You have to build it slowly. This is the world full of human beings and human beings are going to need healthcare. It’s one business that’s going to survive forever and machines are not very well-equipped to really handle all of the high touch requirements. So don’t try to build small cute NGO type organizations. Try to see if you can build very large businesses that truly become low-margin, high-volume and can serve a larger group, help to organize that Rs3-3.5 lakh crores that is being spent by people out of pocket today. Can they get better value for it? There’s no question, the government will have a role in governing this sector.
To do frontier stuff it requires ambition, it requires resources. Are we missing a trick or two?
Maira: I think we are missing quite a bit. I just want to step into healthcare for example. To ensure that people never need to go to a hospital or to see a doctor—wouldn’t that be a very nice healthcare system? So what enterprises do you require to ensure that people don’t need doctors and hospitals? Whereas enterprises that we are promoting and celebrating are about treating people who have got ill already. So it’s a reframing of what human beings really want. We really don’t want to go to a doctor. So what about clean water, no pollution in the cities? Aren’t these all health care issues? These are systems.
We need big ideas in changing some of the paradigms that we have about what business is and also what economies are.
So we come to looking at a more complete picture of people, their lives, and the system in which they live. And we need better ideas. I think economics is ripe for a new paradigm. In India we have been getting in the last 20 years less jobs per unit of GDP growth than other countries. In India, per unit of GDP growth we are damaging the natural environment more than other countries.
So it’s the quality of growth that matters very much. Are economists able to measure these things? Do you even want to measure these things?
How should entrepreneurs think about their new mindset? How they stay relevant in the world of tomorrow? How they find meaning and purpose in what they do?
Mor: I have been a strong believer in what I call the principle of obliquity. Do you want to make money? Don’t focus on making money. Solve a real problem. In most businesses, if you’re solving a real problem, you will make a ton of money.
Waslekar: It is also very important to see how you can be ahead of your time, how to be forward looking. If you’re just going to look back and if you’re just going to follow examples of other entrepreneurs who first spotted a problem and started addressing it and you think because they are making money now, I should also solve the same problem—that’s not going to help you.
Scenario planning is not just an exercise for the country, entrepreneurs have to do scenario planning themselves and consciously think where they want to go next.
Maira: Entrepreneurs who will make a good effect on the world are those who take the first step towards something that they deeply care about and in ways that others will wish to follow. It starts with the listing to yourself something that you deeply care about and as Nachiket said it’s not about making money.
The second is, everybody exists as a part of a system. We have to listen to the rest of the system. For what reasons? One is so that we can know that where the cooperation is going to come from. As I said, others must follow you in the first steps that you take, so that you can blow the impact of your enterprise, make an impact of your enterprise. You’ve got to listen to the rest of the system also, because your own footsteps may have such an effect on the rest of the system, that it comes back and hurts you. So, being an entrepreneur is being mindful about the impact you’re having on the rest of the system.
Listen to the full discussion on www.foundingfuel.com