75 C.K. Prahalad Paul and Ruth McCracken Distinguished University Professor The University Of Michigan

My Vision for 75 Actively Shape the Emerging World Order Through Economic Strength Technological Vitality Moral Leadership

The Potential of India

What India can be in World’s largest Pool of Trained Manpower: 200 million college graduates (16%) 500 million trained, skilled workforce (40%) Universal literacy Education : Stretch that allows us to innovate 2.World’s Leaders in Industry and Commerce 30 of Fortune 100 from India 25% of yester years we have lost 3.India Accounts for 10% of World Trade A broad scope of products and services 4.India as a Source of Global Innovations New Businesses, New Forms of Organization, New Technologies

What India can be in Focus on the Bottom of the Pyramid as a Source of Innovations for the World (Leaders in Health, Education, Energy, Transportation, Sustainable Development for all) 6.A Flowering of Art, Literature, and Science ( 10 Nobel Prize Winners from India) 7.A New Moral Voice for People Around the World India as a country where Universality and Inclusiveness is widely practiced. India becomes the most Benchmarked country for its capacity to accept and benefit from its diversity

Principle Number #1 The Essence of Entrepreneurial Transformation Situation ASituation B Resources Low High Aspirations High Low

Principle Number #2: “Fold the Future In” 2007 Extrapolation Budgeting Orientation 2017 / 22 Fold the Future in Innovation Orientation

Principle Number #2: “Fold the Future In” / 22  Clarity to Direction  Willingness to Discover  Clear Milestones  Speed and Stamina: 400 meters at a time but a Marathon

Principle #3: Focus on Next Practices Well Known Practices Best Practices Next Practices Amplify Weak Signals

Focus on Here and Now: Tactical, Blocking and Tackling Focus on New Opportunities: Aspiration > Resources Folding the Future in, Focus on Next Practices Thinking Differently about the Here and Now

India: Potential Vs. Reality 1.Incrementalism will not work. We need a Radical Rethink of Policies and Practices 2.Key to becoming a Developed Nation : Shared Commitment to Goals Creativity and Innovation Focus on Entrpreneurship 3.The essence of Entrepreneurship Aspiration > Resources

The Emerging Context: 2005 – 2017/22

Agenda for the Session : 1.The Emerging Issues : 2007 – 2022 a.Abject Poverty to Income Inequality b.Income levels to Life Style Measures c.Unique needs to Universality of Aspirations d.Affordability to BOP to impact on Price-Perf. e.Low Tech. to Universal Access to High Tech. f.From BOP to “ Straddle the Pyramid” g.Provisioning Products and Jobs to Environment 2.The Emergence of a New Model of Development?

The Paradox of Rapid Economic Development. Rapid Movement of people away from Abject Poverty ($1 / Day) China India Increasing Income Inequalities (e.g. G – Coeff.) China India The Emergence of Social Tensions

Measures of Inequality: Gini coefficient USAChinaIndiaBrazilSouth Africa

Inclusive Growth Means… 1.Elimination of Abject Poverty ( $ 1 / day?) 2.Reducing Income Inequalities ( G- coeff.?) 3.Eliminating Unequal access to opportunities 4.Changing Life Style inequalities 5.Reducing inequalities in Choice 6.Reducing inequalities in Share of Voice

Inclusive Growth Means… 1.Elimination of Abject Poverty ( $ 1 / day?) 2.Reducing Income Inequalities ( G- coeff.?) 3.Eliminating Unequal access to opportunities 4.Changing Life Style inequalities 5.Reducing inequalities in Choice 6.Reducing inequalities in Share of Voice Redistribution of Wealth Vs. Wealth Creation ? Public Policy Focus Vs. Entrepreneurship/ Market Focus ?

The Changing Value Equation BOP Rich Middle class Price Performance (Functional + Emotional)

The Changing Value Equation BOP Rich Middle class Price Performance (Functional + Emotional) $ 30 Cataract Surgery $ 35 DVD Player $ 30 Cell Phone $0.01 Shampoo in a sachet $ 2000 car $ 20 hotel Room

What are the Implications… BOP Market New Price Perf. Levels for All Explosive Growth in Market Size, Scale of Operations. Environmental Demands. Access to High Tech for all Straddle the Pyramid?

The Focus on Price-Perf. Forces… 1.Scale : Local Responsiveness and Global Standards 2.Focus on Costs 3.Access to New Markets : Knowledge and Trust 4.Technical and Social Insights Emergence of a New Social Compact for Business: Collaboration with CSO; Private- Public Partnerships

Let us Look at Data From Around the World 1.GDP/ Capita in PPP terms (Source : World fact Book,2002) 2.Human Development Index ( Source : UNDP, 2003) 3.Quality of Governance : Corruption (Source: Transparency International, 2002) Selected 25 countries from very rich to very poor

My Takeaways: Human Development is not about More Resources but less corruption in the Deployment of Resources. Good Governance (less corruption) leads to High Levels of GDP/Capita; not the other way around. Focus on Human Development (Focus on Individuals) and not Groups’ Rights Leads to Rapid Economic Development (GDP/Capita)

India as a Developed Nation : What is the Trajectory? 2003 GDP/ Capita $2500 (PPP) 2020 GDP/ Capita $25000 (PPP) Rank in HDI 127/175 Rank in HDI 20/175 CPI Rank 2.7/ 10 CPI Rank 7/ 10

How do we Correct the Trajectory? High Commitment to Rights of the Individual, National Character, Universal Principles Low Technological And Economic Accomplishment ? Low High

What are the Prerequisites: 1.Change in Mental Models 2.Data Driven not Dogma Driven Debate 3.Individual Rights not Group Rights 4.Principles not Rituals 5.Corruption is treated as Treason 6.Focus on Performance, Accountability 7.Imagination not Resources

What Impact Does Poverty Alleviation have on the Environment? 1 Billion Micro Consumers Urbanization Creation of New Jobs- Micro producers

Sustainability is multi-dimensional:

BOP Experiences Environmental Impacts First

Many Dimensions of Eco Systems will become Stressed… 1.Water: Quality of Water Availability, access Usage Mix: Agriculture, Industry, home 2.Energy Fossil Fuel and Substitutes Regressive to progressive Fuels 3.Health

Phase II of India’s Development The Emerging Issues : 2007 – 2020 a.Abject Poverty to Income Inequality b.Income levels to Life Style Measures c.Unique needs to Universality of Aspirations d.Affordability to BOP to impact on Price-Perf. e.Low Tech. to Universal Access to High Tech. f.From BOP to “ Straddle the Pyramid” g.Provisioning Products and Jobs to Environment The Emergence of a New Development Paradigm?

What are the Dominant Themes: / Primary Market Based Solutions 2.Social Equity in Development 3.Rule of Law, Individual Rights 4.Scale 5.New Price-Performance Levels 6.Ecologically Sustainable Development

The “Sandbox” for Economic Development Innovation within These Constraints Global Scale Rule of Law’ Individual Rights Social Equity Focus Market Based New Price- Performance Levels Environmentally Sustainable

The “Sandbox” for Economic Development Accountability for Performance Business, Politicians, Civil Society, Bureaucrats Global Scale Rule of Law’ Individual Rights Social Equity Focus Market Based New Price- Performance Levels Environmentally Sustainable

The Emerging World Order: C.K Prahalad’s view in 1989 USA, Europe, (2000) Japan China India China India, Brazil S.Korea, Taiwan Finland Switzerland World Scale Domestic Market Small Domestic Market Local FirmsGlobal Firms ?

The Poor of India are Ready for this Journey: Are the Leaders Ready?