Politicians, prosperity and rhetoric
Mar 25 2014
In our country, we have seen that industrial development can take trajectories, viz. Singur-type, Odissa-type, and then Gujarat-type. In the first, politicians barge in to throw out industry; in the second, politicians prevent industry (and the state) from acquiring land and creating necessary infrastructure and ambience for investments. The third type, where people are able to peacefully engage in productive activity, leads to prosperity and job-creation. For the first time, instead of the first two types being blamed for perpetuating poverty, we are seeing the third type being blamed for industrialisation, peaceful work ambience, and creating economic prosperity. National elections are largely rhetoric and populist, but one can still be sensible on the basics!
Barely a politician in India ever talks of the possibilities and far-reaching implications of the global economic and technological revolution taking place, symbolised by the $19 billion acquisition of WhatsApp by Facebook. Remember WhatsApp which is just five-years-old with hardly 50 employees, does not spend anything on marketing or advertisements, and relies on a simple business model based on word-of-mouth and over-the-top technologies. Within a short span, it could gather 450 million active subscribers. The buyer (Mark Zuckerberg, founder of Facebook) himself is not even 30 (a kid?) and somebody in Indian elections should be educating our masses how a young entrepreneur can enter into (or reject) more than Rs 1,00,000 crore business deals. Zuckerberg earlier had rejected Microsoft’s overtures which wished just a minority stake in Facebook for a similar astronomical sum!
The WhatsApp example shows that the new economic logic is increasingly driven more by knowledge than physical resources. As more and more knowledge workers join the workforce, productivity of the entire economy goes up. Competition is for developing new customer-ended innovations that provide more value at a lower cost. It also shows that companies have to continuously develop new products based on newer technologies resulting in shorter S-curves and even shorter product cycles. Those criticising the peaceful drive of a state to industrialise and bring home technologies and quality jobs do not know the harm they are doing to the very people they claim to be the protectors of (after all, what did the poor people in Singur ultimately get)!
The knowledge economy is not a hype or a myth — it is about icons and role models who are not only passionate about changing the world, and who take large risks to see the change without compromising on their espoused values. In India, we have had many IT entrepreneurs who became aspirational spirits for the younger generation. Role models can create a positive ‘can do’ effect on individual and collective mindsets. It leads to ever-expanding spirals where people emulate the icons, and who in turn become icons for the next generation, thus triggering a spate of high-performance innovations across the spectrum.
It is worthwhile to remember that only last year, Google was eyeing WhatsApp but had valued it only around $1 billion (not a small amount by any means for a start-up). What has changed within a year that Facebook upped WhatsApp’s value astronomically? Of course, it is spurred by the smartphone revolution and the rivalry between the two tech giants, given that both had huge gaps in mobile phones messaging services. But it also indicates couple of powerful megatrends sweeping the globe —the need for simple smartphone applications and the predictive-prescriptive power of data analytics.
About a decade ago, automobile and engineering companies could take pre-emptive maintenance on their machines based on data on the nature of complaints and repairs done across the world. This used to take several months. Now companies can look at enormous amounts of hidden background information emerging from millions of smartphone users on daily basis, including websites visited by the subscribers, their spending patterns, and group memberships, among other things, and then can discern emerging behavioural patterns.
For the user, WhatsApp seems a simple communication application sitting on our smartphones. Yet, it also generates billions of bytes of information everyday forming part of a complex world of big data and systems approach to dynamic decision-making. The background algorithms can capture, measure and control a large number of simultaneous interactions, without any apriori judgments about which variables to focus on. It results in identifying hidden patterns leading to new insights on demand, consumption and customised products and services.
The big data revolution is transforming each and every activity in our world, including politics and elections. From the operations-world, algorithm generated information has quickly swept into corporate boardrooms and strategy-conclaves. In several cases, it has shown that obvious answers (such as rhetoric) were not the right ones. Politicians can remain oblivious to the revolution only at their peril while damaging the foundations of a prosperous society.
(The writer is a professor of strategy and corporate