Use entrepreneurship and innovation as antidote to poverty, says C K Prahalad

Use entrepreneurship and innovation as antidote to poverty, says C K Prahalad
The Economic Times, December 22, 2009, Page 5

ENTREPRENEURS, big or small, should think beyond available resources to become successful. This isn’t merely limited to a particular region, the golden rule applies to all. That’s what Dr CK Prahalad, Paul & Ruth McCracken Distinguished University Professor of corporate strategy at the University of Michigan’s Ross School of Business Management, told ET’s Sutanuka Ghosal and Atmadip Ray in a freewheeling chat. Excerpts:

As author of The Fortune at the Bottom of the Pyramid, are you happy with the way India is looking to achieve inclusive growth? Is there a need to strengthen the ecosystem here for unlocking value at the bottom?

There’s no denying that India needs to do more to eradicate the abject poverty in the country. Yet, we have to take notice of the success stories all around us in reaching out to the poor. The self help group system, ITC’s e-choupal model or Amul’s dairy plant are successful experiments of using the ecosystem for reaching out to the poor masses. Cellphones too have penetrated rural markets and now a million kirana shops are selling telecom products. If the telecom boom can happen, what’s stopping us from achieving similar success in other areas? It’s all about mindset...how you look at it.

Do you think, India lacks entrepreneurship in reaching out to the poor ?

There’s no dearth of entrepreneurship in the country. Even the little boys on the street, who sell small things to earn a living, are entrepreneurs. Entrepreneurship doesn’t necessarily mean volume of investment. In fact, it largely depends on innovation and the way you think. Entrepreneurship and innovation are the antidote to poverty alleviation.

The opportunities are immense in the era of globalisation. The surge in connectivity, digitisation, convergence and social networking have opened up new doors for entrepreneurial boom.

But public policy is a real stumbling block for entrepreneurial development. Why should the licences not be given in two days? Who should an entrepreneur wait months to get the requisite clearances for business? The procedures are cumbersome and the authorities need to address these issues.

What is your advice to the GeNext who aspire to take on entrepreneurial roles?

Transformation isn’t about resources. It’s all about aspiration and imagination. Why doesn’t one try to offer one-consumer-experience for a product? For instance, an entrepreneur can bring in innovation in a very traditional shoe business. Let him scan the footprint and take a 3-D image and send it to the design centre for a tailor-made product. A customer will be happy to shell out a little more for such an innovative product.

So, don’t focus on best practices, focus on your next practices.

The country has been growing at a decent clip. However, the global recession slowed down the pace a bit. What is your prescription for India Inc in the light of the latest situation?

For the last six to seven years, Indian companies had performed well and their bottom lines have risen significantly. The global recession provided them an opportunity to look back and consolidate and pay more attention to expanding operations in rural India.

Officially, India is growing at 7%. This means, some states like Gujarat, Punjab or Tamil Nadu are growing at a much faster rate. So, the average growth doesn’t mean much. It’s a segmented growth. Truth is India is a huge market and everybody is interested to come to India.

How important is scale of operation, especially in a country like India?

The scale of operation is a necessity if you want to make a difference for the people in the country. That’s why Amul is so special; ITC’s e-choupal is a runaway hit. Can’t we replicate these models?

If you have desire to do it, you can achieve it. To enhance scale, one can always opt for the franchisee model. Once you’ve perfected your business, then the franchisee model is the way to get a virtual scale.

You have always batted for the Indian economy. What makes you so upbeat about the economy?

India became independent in 1947. But it achieved economic independence only in 1992 and, in merely 17 years, the country has come a long way. India is doing pretty well compared to others. Every time a comparison is drawn between India and China, but don’t forget that China is 20 years ahead of us as far as economic reforms go. It’s like the story of the hare and the tortoise.