Thursday, January 11, 2007

Innovate and win

China and India, in their own different ways, will be global manufacturing hubs in the 21st century, writes Arun Maira of BCG in a centre page article in today’s ET. I recommend reading the full article at least once. Do so here.

To attain high rates of growth in manufacturing sector two requisites are:

  1. Indian policymakers must develop the global competitiveness of Indian manufacturing.
  2. They must ensure that the sector creates vastly more jobs than it has so far.

These objectives can be met if the country takes note of the three paradigm shifts of the global economy.

  1. Concept of manufacturing:
    Manufacturing has moved through three different paradigms. In the first phase, which started during the industrial revolution, workmen became adjuncts to machines. Then the Japanese have reinserted the intgelligence of people on the shop floor through production processes. And now the hitherto concentrated manufacturing activities are getting deconstructed and dispersed.
  2. Concept of innovation:
    The dominant model of innovation was the industrial model, built around laboratories, R&D expenditures and patents. Now this is giving way to open source models that produce innovation through the interaction of thousands of independent agents.
  3. Concept of productive enterprise:
    The picture of the enterprise itself is changing – one comprising of monolithic, hierarchical or linear processes to one of a fluid network of interacting parts with many nodes but no singular leader.

China’s strengths lay in mass production at low cost in large factories, with top down control. India’s strengths are likely to be in smaller, nimbler, skilled enterprises, laterally linked within networks.