April 16, 2006

Core Competence of India

Posted by Bizaholic | 2:09 PM | , with 2 comments »

A few days back, Atul raised a question on his blog: What are Core Competencies of India and Other Powerful Nation? Well, I will try to put forth my views on core competence of India. At the same time I will ignore the core competence of other powerful nations because I am fairly ignorant on affairs of other countries.

What is core competence? C K Prahlad and Gary Hamel, fathers of core competence, said:
A core competency is "an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity."

Core competencies are the collective learning in the organization.

Basically, core competence is something that is unique and literally impossible to imitate. It is something that with the passage of time and repetition becomes ingrained in the DNA of an organization or the fabric of a nation. Something is core competence of an organization or nation if on speaking about it the name of the organization or nation comes to the mind. A few examples: Miniaturization (Japanese), Finance (England), Precision engineering (German), Science and Technology (American), Business and Enterprise (American), Fashion (French), Low cost production (Chinese) etc.

Coming to India, what is it that describes India in a profound manner? Is it Intellectual capital, cheap manpower, IT skills, diversity, rich past, miracles, superstitions, yoga, religious monuments, agriculture or something else? Almost all of the above can describe India in parts but definitely none of these sums up the essence of India. These are basically what Prahlad and Hamel call core products, business units, and end products.

The diversified corporation is a large tree. The trunk and major limbs are core products, the smaller branches are business units; the leaves, flowers, and fruit are end products. The root system that provides nourishment, sustenance, and stability is the core competence.

But where is the Indian root? If there are flowers, fruits, leaves, branches, and truck, there has to be a strong root system as well that provides nourishment to our country. What is it? This is the ultimate question which will lead us to find India’s core competence.

If we carefully look at the recent success story of India, we will notice a pattern. All the success of past decade has its origin in a few phenomena. Let’s ask a few questions to find the answers. What fueled India tryst with IT? Why recently Indian managers are gaining worldwide prominence? Why India is making waves in outsourcing and auto components arena? Why Indian engineers are getting recognition on the world stage? There are some things common in all these. If you look beyond the obvious you will see that answers to all these questions are linked in someway to:
  1. Importance given to education by a large Indian middle class
  2. Quest for knowledge and skills in application of knowledge
  3. Adaptability, assimilation, and quick learning in the event of changed realities or new opportunities.
  4. Comfort level with complexity
  5. Managing diversity

I think these five aspects of India and its people constitute the core competencies. Delving a little deeper in each one of them will make it clear why they are core competence and how India can play around these competencies to race ahead of other nations. Here we go:

Importance given to education by a large Indian middle class
Educating their children is a passion for a large Indian middle class. They consider it as the best investment they can make for their children. And this obsession with education is paying India reach dividend there days. The result is a large base of educated individual. All the students passing out from leading colleges and university symbolize this obsession with education. This is something of a value that every generation imbibes. I think national IQ of Indians is fairly higher than that most of other nations. When this IQ is combined with proper education, it results in a large base of aware individuals who have a strong mental foundation. Definitely this is an asset.

Quest for knowledge and skills in application of knowledge
From time immemorial, Indians are said to have a strong inclination towards quest for knowledge. From the ancient time to till date, Indian had strived to gain knowledge. Of course in ancient time this quest for knowledge was for unknown while these days it is more about acquiring knowledge of the known. Perhaps this current trend to acquire knowledge of the known is a direct subset of Indian middle class obsession with education. Personally, I feel the ancient practice of searching knowledge of unknown was a much better option. But that doesn’t undermine our current tendency to get knowledge of the known as it has some advantages of its own. The advantage is that we are well versed in the past and present knowledge and live in the present with a better understanding of how this knowledge base can be optimally utilized in the present. That turns us into good doers. The obvious disadvantage of this, compared to ancient style of quest for knowledge, is that it doesn’t help us in thinking futuristically; hence as a nation we lack innovation and creativity to a large extent.

Adaptability, assimilation, and quick learning in the event of changed realities or new opportunities
We, as a nation, have great adaptability. We can quickly sense a situation and adapt ourselves to the new realities. Take for example the recent IT boom. Way back in mid 90s, computer had just arrived on the Indian consciousness and within a decade we turned it into a big opportunity. How? By sensing something big and grabbing it with both hands. If you think that IT revolution happened because of IIT or other top engineering colleges, you are dead wrong. It happened because of numerous average college going youth, many of whom might have remained unemployed. Still not sure? Well, think of all those Aptechs, NIITs, and other neighbourhood computer centers which mushroomed on streets across entire length and breadth of India. They made great money but they also imparted computing skills to millions of average youth who would have spoiled their life giving competitive exams. And many of these academically average youth turned out to be fairly extraordinary geeks. This is the genesis of the Indian IT success story. But how it happened? It happened because we sensed a new opportunity and quickly adapted ourselves to tap into it. We as a nation love to play around with new toys. Give us something new and we will immediately get absorbed in it to figure out how it works and how you can have fun with it. This theme was present in medical transcription business a few years ago. The same theme is present today in BPO industry and in the dynamics of all call centers. And the same theme will be in play in KPO very soon. This is what I call Indian’s ability to quickly adapt, assimilate, and learn in the event of changed reality or a new opportunity.

Comfort level with complexity
We, as a nation, are good at managing complexity. We don’t get buckled under complexity. Our strength lies in finding a way out of the complexity to find a solution. Just think of Indian bureaucratic setup, Indian legal system, Indian laws, Indian businesses, Indian consumers, Indian joint family, etc. What comes to the mind? Complexity. But do any of them deter us from finding a solution. Despite a complex bureaucratic setup, many of us get things done by pulling in the right strings of the network. Despite a complex legal system and even more complex Indian laws, lawyers and litigants find a way out to help their case. Despite extreme complexity involved in setting up and running both small and large businesses in India, some people simply thrive on it. Go to large wholesale markets to understand how the system works despite extreme complexity. Or go to Heaven and ask Late Dhirubhai Ambani on the art and science of managing complexity and profiting from it. Now take the Indian consumers. Ask any marketer how complex their buying behaviour is. And yet the marketers always find a way out to find simplicity amid complexity and sell their goods and services to Indian consumers, be it men, women, kids, or grannies. Another superb example in managing complexity is the great Indian joint family. Anyone who has lived in a joint family knows how complex it can become to manage a complex network of relationships.

So a typical Indian is born into a complex world and grows up navigating through complexity. In the process, he/she becomes an expert in finding simplicity amidst complexity. This is definitely one of our core competencies. World is fast becoming complex and in coming years managing complexity will be a much sought after competency. And who can be better placed than a typical Indian, who navigates through complexity of one kind or the other every moment of his life, to comfortably manage complexity.

Managing diversity
We, as a nation, are a nation within nations. Unity in diversity as the cliché goes. Despite our inherent bias for caste, creed, religion, sex, regionalism etc. we are more or less a harmonized nation who are fairly good managers of diversity. Go to any national institute or university, or to various private or government offices and you will see that amidst diversity and a subtle visible discrimination there is a well balanced harmony and a good deal of bonhomie.

Today the world is fast turning into a global village. Tomorrow, if one skill will be at premium, it will be the ability to bring unity in diversity. Individuals as well as nations will have to be sensitive and receptive to various cultures and societies. And citizens of which nation would be more competent than a typical Indian to understand the nuances of this diversity and how to manage them. This is a competency that will play a big role in India global march.

According to me, the five competencies discussed above constitute the core competencies of India. And these are competencies that are unique to India and are a result of years of social and environmental conditioning. Hence, these are sustainable competencies. Moreover, these are competencies that cannot be imitated by competitors in a short period of time. It will take decades of conditioning for other nations to create this set of competencies. In short, we could say that these competencies pass the three tests enumerated by Prahlad and Hamel;

At least three tests can be applied to identify core competencies in a company. First, a core competence provides potential access to a wide variety of markets…Second, a core competence should make a significant contribution to the perceived customer benefits of the end product…Finally, a core competence should be difficult for competitors to imitate. And it will be difficult if it is a complex harmonization of individual technologies and production skills.

Now having identified the core competencies of India, the big question is how to build on these competencies to put India into an orbit of sustained development and global superiority? Well, that is going to be the subject of anther post some other day.


  1. Atul // April 16, 2006 at 7:59 PM  

    Excellent Commentary. Thanks Mayank for taking this discussion forward. Will comment on specifics later but great start on this topic

  2. Ajit Chouhan // April 17, 2006 at 1:43 PM  

    Good post yaar...very exhaustive and lucid.