Paradigm Shift...

This is a follow-up to my previous blog, wherein I want to provide my views on how the world is changing all over and the emerging world finds itself at the focal point.

It was during the 1980’s that the US carmakers were shocked to find out that the Japanese car makers had overtaken them surprisingly in terms of reliability, performance as well as price. The natural conclusion to this phenomenon was favorable Industrial policies and government subsidies. However, the most striking realization for the Americans was that, it was more of business innovation than the peripheral factors. This business innovation was commonly referred as “Lean Manufacturing” and “Total Quality Management”. This phenomenon is similar in other products like Computers, Mobiles wherein the emerging world achieved business efficiency through revamped production and distribution systems. These emerging organizations have proved their competitiveness not only in the home markets but also abroad. We have a significant proportion of MNCs in the developing countries. The best examples are India’s Bharat Forge in Forging, China’s BYD in Batteries and Brazil’s Embraer in Jet Aircrafts, these are easily the best in the business worldwide.

The reason for the rise is that the developing world doesn’t just remain the source of cheap labor, but also economic growth and high quality manpower. We are the source of economic growth because the emerging world represents the majority chunk of the world population with rising spending power with each passing day. We are a source of quality manpower of the continuous investment in education in the past decades, India & China combined produce close to 0.15 Million graduates with professional degrees in Engineering and Computer Science. This is the reason that the biggest and the best firms set-up their most advanced R&D centers in the emerging world. Companies in the Fortune 500 list have 98 and 63 R&D facilities in China and India respectively. Bangalore hosts one of the finest research centers for GE Healthcare and Cisco. Shanghai is the home to the biggest R&D center for Microsoft outside the US.

Organizations all across realize it that it’s not sustainable just to target the Gucci and Audi market segments. They have to learn to appeal to the vast populations present in the second tier cities across the world. However, this does not represent a bed of roses due the lack of many basic amenities in the vast emerging world like Pollution, Infrastructure, Corruption, Piracy, etc. But, what the emerging world has to offer is – POTENTIAL, which compensates for the sea of problems surrounding these countries. The incomes of the population in the emerging world is rising faster than that of the developed world. The market sizes are already significantly higher than the developed world.

The point here is that, we are slowly moving towards a state of Economic equilibrium wherein the economic disparity among the world population on grounds of imperialism and slavery is gradually narrowing. It is perfectly inline with mother nature’s law of equilibrium. It is high time people realize that the emerging nations are not a source of cheap labor, but incremental and disruptive innovation.

Its a Paradigm Shift - Embrace Change!!!