The text of the lecture I delivered at the C.K Prahalad commemorative professional network meeting at Gokulam Park, Kochi on 11/05/2010 organised by NIPM, Kochi Chapter, ISTD, Kochi Chapter, NHRD network, Cochin Chapter.
Dr. C. K. Prahalad commemorative Professional Network Meeting. 11/05/2010, Gokulam Park, Kochi.
Lecture by Shelly Jose, Rajagiri College of Social Sciences,
School of Management, Rajagiri Valley, Kakkanad, Kochi 682 039
Lecture by Shelly Jose, Rajagiri College of Social Sciences,
School of Management, Rajagiri Valley, Kakkanad, Kochi 682 039
(The other speakers were Mr. MSA Kumar of AVT Mc Cormick, Mr Ajith Kumar C S of Reliance and Mr. George Sleeba, Former CMD of FACT and presently Director of Albertian Institute of Management, Kochi.)
I shall start with one of Dr. C. K Prahalad’s famous quotes which I was fortunate to have listened to when he gave a lecture at the Ahmedabad Management Association way back in 2001. He said ‘ there is no reason why our public places should be untidy and unclean’. I am sure this does not stand out as a famous saying or something worth quoting. I shall try to explain why this was quintessentially characteristic of Dr. C. K Prahalad.
He was famously appreciative of the achievements that India had made of late. He used to often quote the example of the Communication Revolution of the late 80s and the nineties often sometimes refered to as the STD/ISD revolution.
The only resource that india had while embarking on that particular revolution was the political will and technocratic leadership. Our infrastructure was nothing to speak of then. There was also a culturally significant aspect to the revolution. Our nation is studied and classified as a highly collectivistic one. Therefore the objective of the communication revolution was simple. “ To provide telephone connectivity in every village”. Please do remember we are talking about an Indian village and not a Kerala village. Had it been a western individualistic endeavour, the objective would have been “ to provide telephone connectivity to every individual”. In a country of 100 crores of population this would have been impossible, even disastrous. That brings us back to Dr. C. K Prahalad. In this case the solution and the problem were wrapped up together. One of our problems at that time and even today to a great extent was the unemployment. By providing the STD booths, India was also generating employment opportunities to many. In effect the problem was looking for a solution when it was right there.
Another one of his famous examples was the dhabawallahs of Mumbai which most of us are today aware of and is very interesting from a management perspective. The dhabawallas have no resource except for a numbering system which they systematically follow in the chaos and din of a typical Mumbai day. The infrastructure that they depend on namely the suburban rail system in Mumbai is a common or shared infrastructure and not an exclusive one. The other infrastructure is the tiffin boxes which are actually owned by the housewives. The real resource is the simple numbering system that indicates the household, the street, the departing station, the arrival station and the final destination an office or any workplace. The system works with less than one percent inaccuracy. The whole thing is run on a peculiarly Indian custom of liking to eat fresh, hot homemade food.
Yet another of these examples which Dr. C K Prahalad was fond of but awaits development is the Indian Postal System. Reaching an individual household of a nation of 100 + crores is a nightmare. But one organisation does that every day for the last more than 100 years with 99% accuracy. That is the Indian Postal System. The potential value to be unlocked from this system surpasses the communication revolution or the dhabawalla example. If we can use the postal system or even merely the potential database that it can generate, that would surpass the world’s best mail order business.
Let us come back to Dr. C. K Prahalad again. Why are we quoting these examples. In all these cases the ambitions far outweigh the resources. To quote Dr. C. K Prahalad, “ambitions by definition are far more than the resources”. If the Mughal emperor hesitated like Hamlet about the resources there would never have been a Taj Mahal. If in the eighties we worried where the infrastructure would come from for the communication revolution there would not have been the telephone system we have today. Remember it was this infrastructure that served as the backbone of a subsequent revolution called information technology which we call today the ICT or the information and communication technology for which India is noticed by the entire world.
Many wonder whether there is anything quintessentially Indian about many of these, because many of the other success stories of yesterday were peculiarly different. The Romans had a great empire, but it was actually built by slaves. The British had an empire, but it was also the result of another equally unequal relationship of the colonizer and the subjects which all the civilised world frowns upon today. Americans had a vast and fresh continent full of resources and a relatively well developed human and technical resource from the old world to become a superpower in the twentieth century. India is the only country which has never invaded another for expansion in its entire history. What we know of and the western writers such as John Keay comment upon as the resilience of the Indians is this; that with minimal resource we can achieve remarkable feats given the right kind of will.
Let me come back to Dr. C. K Prahalad again. His argument or rather observation that ambitions are far more than the resources’ was theorized into what is called the ‘strategic intent’ in a paper he co-authored with Gary Hamel in the May- June 1989 issue of the Harvard Business Review. For perhaps the first time, the authors undermined the till then sacred notions of ‘strategic fit’ because ‘strategic intent’ flies in the face of strategic fit. An entrepreneur or a manager waiting for all the resources to fall into place would wait forever but one that sets the objectives far above the resource would achieve it. Dr.C.K. Prahalad quotes the examples of Komatsu, Honda and Canon in that paper. Komatsu in the 70s was less than 35% as large as Caterpillar in sales. By 1985 it was a 2.8 billion $ company. The story is elaborate but the intent was compressed into two words; “ Encircle caterpillar” .
Yet another of these examples which Dr. C K Prahalad was fond of but awaits development is the Indian Postal System. Reaching an individual household of a nation of 100 + crores is a nightmare. But one organisation does that every day for the last more than 100 years with 99% accuracy. That is the Indian Postal System. The potential value to be unlocked from this system surpasses the communication revolution or the dhabawalla example. If we can use the postal system or even merely the potential database that it can generate, that would surpass the world’s best mail order business.
Let us come back to Dr. C. K Prahalad again. Why are we quoting these examples. In all these cases the ambitions far outweigh the resources. To quote Dr. C. K Prahalad, “ambitions by definition are far more than the resources”. If the Mughal emperor hesitated like Hamlet about the resources there would never have been a Taj Mahal. If in the eighties we worried where the infrastructure would come from for the communication revolution there would not have been the telephone system we have today. Remember it was this infrastructure that served as the backbone of a subsequent revolution called information technology which we call today the ICT or the information and communication technology for which India is noticed by the entire world.
Many wonder whether there is anything quintessentially Indian about many of these, because many of the other success stories of yesterday were peculiarly different. The Romans had a great empire, but it was actually built by slaves. The British had an empire, but it was also the result of another equally unequal relationship of the colonizer and the subjects which all the civilised world frowns upon today. Americans had a vast and fresh continent full of resources and a relatively well developed human and technical resource from the old world to become a superpower in the twentieth century. India is the only country which has never invaded another for expansion in its entire history. What we know of and the western writers such as John Keay comment upon as the resilience of the Indians is this; that with minimal resource we can achieve remarkable feats given the right kind of will.
Let me come back to Dr. C. K Prahalad again. His argument or rather observation that ambitions are far more than the resources’ was theorized into what is called the ‘strategic intent’ in a paper he co-authored with Gary Hamel in the May- June 1989 issue of the Harvard Business Review. For perhaps the first time, the authors undermined the till then sacred notions of ‘strategic fit’ because ‘strategic intent’ flies in the face of strategic fit. An entrepreneur or a manager waiting for all the resources to fall into place would wait forever but one that sets the objectives far above the resource would achieve it. Dr.C.K. Prahalad quotes the examples of Komatsu, Honda and Canon in that paper. Komatsu in the 70s was less than 35% as large as Caterpillar in sales. By 1985 it was a 2.8 billion $ company. The story is elaborate but the intent was compressed into two words; “ Encircle caterpillar” .
Similarly Honda was smaller than any American Car company. But by 1987 it had started manufacturing as many cars worldwide as Chrysler. Another example he was fond of quoting was that of Canon and Xerox. Conon was a small company manufacturing lenses. Xerox was a company whose name was synonymous with photocopying. Canon by the late 80s had matched Xerox’s global market with a mean and short internal catch line, “ Beat Xerox”.
To quote C. K Prahalad again “ The lesson is clear; assessing the current tactical advantages of known competitors will not help you understand the resolution, stamina and inventiveness of potential competitors”. This ambition out of proportion to their resources and capabilities was at the centre of C.K Prahalad’s thinking. He was emphasizing that jumping a ditch of 8 feet would not be possible with two separate jumps of 4 feet each.
That makes us think what made C. K Prahalad different from the other management and strategy thinkers. Let us try to consider C. K Prahald with Michael Porter and Peter Drucker. Michael Porter is considered by many as the father of strategy thinking in business. His ideas chiefly were summarized under the five forces approach to competitive analysis or what now we understand as the structural analysis of industries. These five forces are rivalry among existing firms, the likelihood of Potential entrants, Bargaining Power of suppliers, Bargaining power of buyers and the threat of substitute products or services.
The framework of the core concepts of competitive strategy of Michael Porter include the cost leadership, Differentiation , Cost focus and differentiation focus. When we analyse both the five forces approach and the core concepts of Porter they derive from what we understand as the opportunity and threat side of the SWOT framework.
Let us now look at Peter Drucker’s strategy thinking. Among his many writings on Management thinking, the most strategically oriented is a paper titled “ The theory of the business” HBR, Sept- Oct, 1994. His main concern was that the right things are done but fruitlessly. The solution that Drucker advocated was to constantly examine the mission of the Corporation against the actual reality, the corporation’s assumptions about the environment and the core competencies of the corporation. Drucker emphasized that these three . ie the assumptions about the companies’ mission, environment and the core competencies must fit reality.
Let us now look at Peter Drucker’s strategy thinking. Among his many writings on Management thinking, the most strategically oriented is a paper titled “ The theory of the business” HBR, Sept- Oct, 1994. His main concern was that the right things are done but fruitlessly. The solution that Drucker advocated was to constantly examine the mission of the Corporation against the actual reality, the corporation’s assumptions about the environment and the core competencies of the corporation. Drucker emphasized that these three . ie the assumptions about the companies’ mission, environment and the core competencies must fit reality.
Let us come back to Dr. C. K Prahalad and his idea of strategic intent once again. If Canon or Komatsu or Honda tried to match the external realities as Drucker theorized they would never have beaten Xerox, Caterpillar or the American Car companies. Instead they reformulated the companies’ mission beyond their current capabilities and then developed the competencies for the same in leaps and bounds.
If Canon, Komatsu or Honda merely did a five forces analysis of their respective industries as Porter would advocate, the entry barriers were so great, they would never have beaten Xerox, Caterpillar or GM. The idea of strategic intent that ‘ambitions far outweigh’ the resources or even the reality, offers more than Michael Porter or Peter Drucker in superior and sustainable achievement as these examples suggest.
If Canon, Komatsu or Honda merely did a five forces analysis of their respective industries as Porter would advocate, the entry barriers were so great, they would never have beaten Xerox, Caterpillar or GM. The idea of strategic intent that ‘ambitions far outweigh’ the resources or even the reality, offers more than Michael Porter or Peter Drucker in superior and sustainable achievement as these examples suggest.
That brings us to the question of how was the idea of Prahalad different from that of the major stalwarts of strategic thinking.
Two of the other major theories of Prahalad might answer the question. The theories of both Porter and Drucker were heavily focused on the competition whether it is the five forces model or the assumptions about the environment. On the other hand Dr. C. K Prahalad focused on the inner strength of the firm and hence the idea of the core competence. While Porter and Drucker were focused on the external world, Dr. C. K Prahalad examined the inner strength of the firm and found from the examples of Canon, Komatsu and Honda that they created a mismatch or a misfit with the external environment. In this they had no idea except that they had to overcome certain forces. How to overcome was secondary. That they have to overcome the forces was primary.
How did these companies do it? They knew that the existing theories of strategic thinking merely repeated the game of ‘catching up’. So the prevalent ideas were that of benchmarking, TQM and reengineering at the operational level. But these techniques have a problem. They are merely techniques that can easily be imitated or even bettered. It is only a question of time, a question of ‘when’ rather than ‘whether’. So eventually after one firm catches up and may be overcomes, the other firm also catches up with the first one and surpasses. This will only lead to a game of endless catching up.
Two of the other major theories of Prahalad might answer the question. The theories of both Porter and Drucker were heavily focused on the competition whether it is the five forces model or the assumptions about the environment. On the other hand Dr. C. K Prahalad focused on the inner strength of the firm and hence the idea of the core competence. While Porter and Drucker were focused on the external world, Dr. C. K Prahalad examined the inner strength of the firm and found from the examples of Canon, Komatsu and Honda that they created a mismatch or a misfit with the external environment. In this they had no idea except that they had to overcome certain forces. How to overcome was secondary. That they have to overcome the forces was primary.
How did these companies do it? They knew that the existing theories of strategic thinking merely repeated the game of ‘catching up’. So the prevalent ideas were that of benchmarking, TQM and reengineering at the operational level. But these techniques have a problem. They are merely techniques that can easily be imitated or even bettered. It is only a question of time, a question of ‘when’ rather than ‘whether’. So eventually after one firm catches up and may be overcomes, the other firm also catches up with the first one and surpasses. This will only lead to a game of endless catching up.
Dr. C. K Prahalad and Gary Hamel’s answer was to look within and develop what was termed the ‘core competence’ in a paper from HBR May- June 1990. Core competence was a going back on decentralization or rather a reflection on the family values of a decentralized entity. Consider Canon. The product line is many from cameras to medical imaging to photocopiers. But at the core of all these products is the lens, the manufacturing of which Canon will never outsource. Consider HONDA , the petrol engine which is at the core of all HONDA products they will never outsource. In fact, the founder of HONDA Soichiro HONDA was an automobile enthusiast and a racer who tinkered with the petrol engine and fine tune it everytime he lost a race. It is the founder’s enthusiasm that is captured in the Honda engine that further is the hallmark of all Honda products.
The game of ‘catching up’ that the other strategic thinkers inadvertently advocated ended when the firm hit the core competence of the rival. They found that the core competence was valuable, rare imperfectly imitable and non replicable (VRIN). Today the idea of core competence and strategic intent has developed into a new branch of strategy called Resource based view (RBV). RBV concentrates on enhancing the strengths and mitigating weaknesses more than on opportunities and threats and in the process strengthens themselves so that others find it difficult to emulate. The competitor to Honda can replicate many things but he can never replicate the enthusiasm of the entrepreneur Honda. A company can hire the employees of another company, but they will never be able to hire its organizational climate or culture. These aspects namely the history, culture and the legacy are the things that eminently qualify for the adjectives VRIN.
HR professionals may have noted that all these variables such as culture and legacy are in fact outcomes of HR whether we use the term HR in the sense of resource or in the sense of practices.HR practices are what leads to the unique culture and unique culture is what is the unique competence of the firm.
Coming back again to Dr. C. K Prahalad in promulgating the idea of core competence, he was pinpointing the central precept of strategy. In emphasizing the strategic intent he was advocating and exhorting an attitude that was the essence of entrepreneurship. The history of the latest revolutions such as the computer revolution is replete with examples of an ecosystem of firms that co create and reinforce each other. The idea of co-opetition was one of those ideas by James F. Moore of the famous moore’s Law that he came out with in a paper titled ‘Predators and Prey’: A new ecology of competition’ in HBR May – June 1991. Dr. C. K Prahalad extended it to the problems of India. He creatively extended the idea to co- creation and applied it o the problems of India and brought together business interests and poverty alleviation which was formerly thought to be incompatible. The result was the idea of ‘Fortune at the bottom of the pyramid: Eradicating poverty through profits’. In a way the solutions to the problems lay in the problems themselves and this was the insight that Dr. C. K. Prahalad unearthed for the benefit of both business and society. The results of this idea is now found in products as wide ranging as from shampoo sachets to the Nano car.
I would conclude that Dr. C. K Prahalad is the example of the quintessential Indian synthetic or synthesizing thinking in which everything even diverse things and ideas had a place in the universe as against the analytic and prescriptive thinking of the western mind. In putting forth these ideas whether strategic intent, core competence or bottom of the pyramid he was actually putting forth the integrative, resilient and compassionate Indian mind into the business world.
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HR professionals may have noted that all these variables such as culture and legacy are in fact outcomes of HR whether we use the term HR in the sense of resource or in the sense of practices.HR practices are what leads to the unique culture and unique culture is what is the unique competence of the firm.
Coming back again to Dr. C. K Prahalad in promulgating the idea of core competence, he was pinpointing the central precept of strategy. In emphasizing the strategic intent he was advocating and exhorting an attitude that was the essence of entrepreneurship. The history of the latest revolutions such as the computer revolution is replete with examples of an ecosystem of firms that co create and reinforce each other. The idea of co-opetition was one of those ideas by James F. Moore of the famous moore’s Law that he came out with in a paper titled ‘Predators and Prey’: A new ecology of competition’ in HBR May – June 1991. Dr. C. K Prahalad extended it to the problems of India. He creatively extended the idea to co- creation and applied it o the problems of India and brought together business interests and poverty alleviation which was formerly thought to be incompatible. The result was the idea of ‘Fortune at the bottom of the pyramid: Eradicating poverty through profits’. In a way the solutions to the problems lay in the problems themselves and this was the insight that Dr. C. K. Prahalad unearthed for the benefit of both business and society. The results of this idea is now found in products as wide ranging as from shampoo sachets to the Nano car.
I would conclude that Dr. C. K Prahalad is the example of the quintessential Indian synthetic or synthesizing thinking in which everything even diverse things and ideas had a place in the universe as against the analytic and prescriptive thinking of the western mind. In putting forth these ideas whether strategic intent, core competence or bottom of the pyramid he was actually putting forth the integrative, resilient and compassionate Indian mind into the business world.
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Excellent and great insight into the thoughts and philosophy of great Management Guru Dr.C.K.Prahalad.
ReplyDeleteDr.A.Jagadeesh Nellore(AP),India