Chennai Journal
Sunday, November 05, 2006
Deja Vu all over again.....
I'm sure some Indian astrologist could find this in my chart, but I have been quite fortunate, as Dean Rusk once put it, to be ''present at the creation" of some remarkable transformations in the world business shift of power. As some of my readers know, I spent over four years in Japan at the time when Japanese companies were coming on the world scene as major competitors--the book, "Japan as Number One: Lessons for America " was published while I was living there. Though a pop rather than an academic book, some of Ezra Vogel's lessons still apply---and have been ignored at our peril.

Now living in India, it sometimes feels, in the immortal words of Yogi Berra, like "deja vu all over again." Today's Hindu carries a story of the visit of Prime Minister Manmohan Singh to Chennai, who declares that "we will make India the manufacturing workshop of the world."

This is, of course, in addition to India as the IT and back office processing center of the world.
Americans are complaining about losing jobs to India the way they used to (and still do) complain about losing them to Japan. Is manufacturing next to be "Bangalored" ? (
That's about to become Bengaluru, by the way, as Bangalore goes the way of Bombay, Madras, and Calcutta in Indian-izing its name)

The jury is out, but there are some echoes of the situation 30 years ago. First, everyone points to labor costs. Japanese workers were cheaper back then, just as Indians are today. There are numerous import restrictions and high tariffs, preventing western countries from selling imported products here (though fewer restrictions doing business as a multinational). Legacy costs are also lower, and the workforce much younger. So---if you want to find excuses for not being competitive, the only thing that's really changed is that these excuses have moved southwest.

There are large differences between India and the Japan of 30 years ago. Infrastructure is of course the big one. Though when I first went to Japan the city I lived in had only 40% flush toilets and no skyscrapers, it took only a few short years for this to change, and of course surface transportation including the Shinkansen or bullet train were already world class. As a small, homogeneous country, Japan was able to rapidly mobilize itself to meet external conditions and share the benefits with its own people. India has a long way to go in this area, and it is a major constraint to growth. If you fly into Delhi, the airport hasn't changed much from what it was 20 years ago (other than that baggage claim was on dirt instead of tile floors). You've seen my pictures of flooded roads and poor drainage. Manufacturing requires a strong and stable infrastructure, and that is where India has a lot of catching up to do.

On the cultural side, the Japanese commitment to quality and follow through is legendary, and India also has work to do here. Although even in Japan the bloom may be off the rose, in part due to changing attitudes of young Japanese who no longer wish to die with their suits on, the Japanese attention to detail and quality is still world class, and individuals will honor any commitment at great personal sacrifice. I learned this the hard way when I worked for a Japanese company. If you say you are going to do something by a particular time, your Japanese counterpart expects that you will do it---and they will follow up in dismay if they don't hear from you. In India, things can be a lot looser, especially in the service industry. The intention to get back is often just that---an intention that may go astray. This cultural tendency can create issues for Indian companies trying to expand to the west ---not to mention multinational companies who want to service global clients here. The IT and BPO companies have had to find ways to overcome this and train a more rigorous attitude into people. High attrition--a problem the Japanese lacked---doesn't help.

On the flip side, many Indians find it easier to mix globally than Japanese do, and this is a great help in advancing global business. Part of this is the lack of homogeneity here which is a kind of microcosm of the world, as well as the effect of the Indian diaspora--not to mention the key ingredient of English language ability. You see more and more Indians as heads of global companies, as thought leaders, as entrepreneurs. Skills and sensitivity to deal with diversity, conflict, and ambiguity are main ingredients to being successful globally. There is a strong entrepreneurial bent--and willingness to take risks. The main problem is that there aren't enough of these people and the demand for them is very high. But their quality is world class.

The differences between the two scenarios are many, and the list could go on. What interests me equally are the similarities.

Probably the biggest thing is the desire to learn and grow--and to achieve. When I lived in Japan I was continually amazed by not only the work ethic, but also the lengths to which people would go to get a job done. Here, I would say that the work ethic is not only as strong (albeit more uneven--as in the U.S., there are a fair number of people who just slide by), but the conceptual skills and ability to deal with ambiguity tend to be better. Taken with the hunger to do well and prove oneself, this is a powerful combination. People highly value learning and training, and like the Japanese, the focus on education--especially math and science-- is very strong. As the world changes more rapidly, this desire and ability to learn new things is a true competitive advantage.

Whether this translates into India becoming a manufacturing powerhouse, surpassing the U.S. and even Japan, is yet to be seen. But I remember the advice someone once gave me about hiring: take a chance on the person who is eager and engaged, but inexperienced, over someone who is skilled and can do the job, but has less energy. These words also apply to nations.

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