A version of this appeared on rediff.com on 27th May at http://news.rediff.com/column/2010/may/27/lessons-for-india-from-thai-insurgency.htm

A Bangkok on the Yamuna? Lessons from the Thai insurgency

Rajeev Srinivasan on why the Thai troubles should be an eye-opener for India, which faces similar insurgents with covert agendas

Despite pious promises in the past about “looking East”, it is clear that the Indian establishment, including the media and the foreign ministry, remain obsessed with the West and Pakistan. Events unfolding in Thailand have remained under the radar in India, even though the parallels are ominous, both regarding India and regarding Nepal.

Consider: in Dantewada, Communist terrorists first massacred 76 policemen; they then proceeded to massacre 36 civilians riding in a bus. The first instincts of both the Congress and the media are to justify the terrorism based on the same tired clichés about poverty fomenting violence. Aren’t they embarrassed to trot out this hoary old chestnut?

Also consider Hyderabad in the wake of the Telengana agitation: I am sure investment decisions have been put on hold and real estate prices have dipped along with consumer and investor confidence. Similarly, Thailand’s economy will take a hit, as ASEAN neighbors Malaysia and Indonesia suddenly look more stable.

Finally, look at Nepal: a functioning monarchy has been replaced by an aggressive Communist regime, with the expected results – political turmoil, and anti-national forces including Chinese proxies, missionaries and jihadis having a field day.

The roots of the Thai problem are murky, but the event that triggered off today’s crisis was the coup in 2006 that overthrew the government of the billionaire industrialist Thaksin Shinawatra. I was in Thailand in 2006 during the revered King Bhumibol Adhulyadej’s 80th birthday celebration – and it was a grand gala affair. My previous visits had been over ten years prior, and I was impressed at how far Thailand had come in the interim: it had the makings of an intermediate economic power.

Thailand has left India in the dust in economic growth: an indicator is the exchange rate between the Thai Baht and the rupee. When I first went to Thailand, there was rough parity between the two; today the Baht is 40% higher. The ramshackle capital with run-down roads and unbelievable traffic jams (people used to carry portable urinals in their cars) was transformed by an elevated expressway. The skyline is impressive, and the city looks clean, orderly and prosperous, in a Singaporean kind of way.

This prosperity is based on small to medium industry, especially textiles, electronics and automobile components. Endemic political instability, including bloodless military coups, did not hurt because there was always a symbol of strength and continuity – the royalty. Thais revere their monarchy, and the King could always resolve any problems.

Until now, that is. The army and police seemed helpless against a few thousand insurgents who barricaded themselves inside the city, urban guerilla warfare, the King hospitalized and silent – this is a nation under siege, not the kind of place where locals or foreigners will risk their money. This will hurt the Thai economy.

Who gains from this? Malaysia and Indonesia, especially the former. There is a festering separatist movement in southern Thailand, which is ethnically Malay and Mohammedan. Given the Malaysians’ increasing religious fervor – they have been tyrannizing religious minorities recently – Malaysia may be offering moral and material support.

The apparent demand of the insurgents is justice for the poor who live far away from the glitzy capital, in the north and northeast. I suspect this is a slight exaggeration, along the lines of what Communists claim in India’s tribal belt. The Red Shirts in Thailand may be acting principally on behalf of Shinawatra, who wants to be prime-minister again, to ensure the survival of his business empire, not to mention avoid a $1.4 billion fine. The Communists in Jharkhand may be agents of China, intent on wrecking India from within. None of them is particularly interested in the poor, except for rhetorical purposes.

What alarms me about the Bangkok situation is that I can easily imagine a similar situation in New Delhi, with the capital held hostage by gangs of Communist insurgents, quite possibly barricaded inside the JNU campus, where they gain succor and support from armchair urban guerillas. Just as in Bangkok, we might watch on TV the hopes of a stable and progressing Indian economy going up in thick, black, acrid smoke – welcome back to the dark ages of ‘roti-kapda-makan’ and the rent-seeking neta-babu-journalist nexus, a preview of which we got with the 2G scam.

There are differences, of course. The Indian Army is not involved in business, whereas the Thai army is a smaller version of the Pakistani Army in that context – it runs many industries, and is not dependent on the national government for all of its budget.

But the eerie parallels to, say, Nepal, are many: the end result may well be a ‘secular’ movement to overthrow the Buddhist monarchy, which will then be portrayed as roundly corrupt, godless, feudal – whatever else the spin-meisters can think of.

The destruction of the Thai State would be a tragedy. It was just about the only Asian nation that, through some fancy footwork, avoided being colonized. This has given the average Thai a certain self-confidence. Secondly, turmoil is likely to be exploited by vulture-like missionaries descending on the country, much as they did in the aftermath of the tsunami elsewhere. In Nepal, it is reported that a million people were converted to Christian sects after the Communists took over. Similarly the number of mosques, and presumably adherents, has soared. We might find the same in Thailand.

Odd, isn’t it, that there are Communist revolutions in Hindu and Buddhist monarchies, but never in Christian or Mohammedan monarchies? Coincidence? Communists have been accused of being ‘useful idiots’ for others. Let us note that, according to reliable sources, the manifesto of the Communist terrorists in India speaks at length about extinguishing ‘imperialism’ and ‘liberalism’, but is silent about ‘poverty’ and ‘tribals’.

The extinction of the State, neo-colonization and neo-conversion – these are the downsides of globalization. India would be well-advised to watch the Thai example with great care.

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A version of this appeared in DNA on may 17th at http://www.dnaindia.com/opinion/main-article_obama-is-no-friend_1384304 or

http://epaper.dnaindia.com/epaperpdf/18052010/17main%20edition-pg12-0.pdf for a pdf version

Barack ‘Chamberlain’ Obama?

Rajeev Srinivasan on why the US president seems hell-bent on appeasement

Once upon a time British politicians were held up as exemplars; they were colorful, and their actions were noted around the world. Neville Chamberlain, former British prime minister, became infamous for appeasing Nazi Germany. He declared, upon returning from the 1938 Munich conference that sacrificed Czech Sudetenland to please Germany: “I believe it is peace for our time!” Famous last words, as World War II started shortly thereafter.

It is worth remembering him for two reasons: first, the recent British election and its pedestrian politicians evoked no more than mild disinterest from the rest of the world – how indeed the mighty have fallen! Second, it is remarkable that US president Obama seems to be following Chamberlain’s playbook in terms of – foolishly – placating his enemies.

It appears that Obama virtually revels in appeasement. So much so that there is valid criticism that it is not clear what he stands for, if anything – he is so busy with attempting to shepherd everybody in the room in some direction that he quite forgets what that direction is. It appears that there is a process, everybody is running around doing something, but the results are woefully poor.

For instance, Obama’s foreign policy has been nothing short of disastrous. He arrived on the scene convinced that he was going to be the Great Peacemaker after the despised warmonger George W. Bush. His chosen method: make unilateral concessions first, expecting the other party to reciprocate the goodwill. Laudable as this might be in theory, it doesn’t seem to work in practice – see how China used Jawaharlal Nehru.

In fact, Obama may well share Nehru’s crowning vanity – the idea of being privy to the secret of World Peace. Nehru appears to have felt he was the Emperor Ashoka reincarnated, equipped with the Panchasheela or Five Principles that would cause World Peace to break out. Obama, although more discreet, seems to suffer from the same mixture of megalomania and naïvete and, above all, inexperience.

This flaw is exploited by hard-boiled practitioners of realpolitik. Obama has tried danam (giveaways) with several foes – China, Iran, and now Pakistan (which is certainly his foe although Americans prefer the fiction that Pakistan is “a valuable ally in the war against terror” [sic]). His kowtowing startled and then amused the Chinese. Iran ignores him.

With Pakistan, and Islam in general, Obama has bent over backwards. He made speeches eulogizing Arabs and Islam, literally curtseyed to the Saudi king, and removed the term “Islamic terrorism” from his vocabulary, preferring the euphemism “man-caused disaster”!

Alas, the net result of Obama’s exertions is that Arabs and Pakistanis despise him and the US more than ever. A Pew survey discovered that Pakistanis – despite, or perhaps because of, the $15 billion sunk there by the US after 9/11 – have the world’s worst opinion of America. But Obama is persistent. In the aftermath of the abortive Times Square bombing, there was the ill-timed news that Homeland Security was reducing its budget for New York City by 30-50%! The New York Post reprised a famous headline: “Obama to City: Drop Dead!”

In domestic policy too, Obama seems to have miscalculated with fruitless ‘reaching out’ to the opposition Republicans. It is remarkable that his landmark achievement – some might say his only achievement – of passing health care legislation came with absolutely zero bi-partisan support. This is far worse than predecessors who generally managed to cobble together a working coalition.

The trouble may well be that Barack Obama really does not stand for anything per se. He may well be a Zelig, the chameleon-like eponymous hero of that film, or Peter Sellers’ remarkable character Chaunce the Gardener in Being There. Someone who is fluid in substance, someone who reflects what others want to see in him. This, of course, is perfect for an election – everybody projects what they desire onto the candidate.

Which may be why Obama seems to be in permanent campaign mode as well. His timetable for withdrawal from Afghanistan was sharply predicated on expected sound-bites that would help his party win mid-term elections in 2011.

An erudite Indian friend in Los Angeles, sympathetic to black issues, suggested that this fluidity may well be the very reason Obama was able to win the presidency – and how he has been called the epitome of the so-called “magical negro” trope: the black helper who plays a supporting role to the white protagonist. A black with concrete views and convictions could never have won, he felt.

Be that as it may, Obama is President. And the reason Indians should worry about Obama is that he appears quite willing to sacrifice the last Indian and the last inch of Indian territory in order to placate the ISI and the Taliban. This is hardly in the national interest. Whatever else he may be, Obama the appeaser is no friend of India.

824 words, 15 May 2010

A version of this appeared on rediff.com at http://news.rediff.com/column/2010/may/12/rajeev-srinivasan-on-why-india-is-so-full-of-charlatans.htm

Accountability, a four-letter word in India: Why India has so many charlatans

Rajeev Srinivasan on why the State must ensure that people will pay for the consequences of their actions, a concept that is sadly unknown in India

“Clawback” – now that is a term in the American financial jargon that must be giving sleepless nights to some of the ex-Masters of the Universe from the fearsome investment banks that have fallen on hard times. This refers to the literal clawing back of benefits gained by those who, in hindsight, turn out not to have deserved them.

For instance, there is a move afoot to seize the multimillion-dollar bonuses awarded to investment bankers while their firms were creating the financial meltdown with their cavalier use of collateralized debt obligations and credit-default swaps. Those who caused billions of dollars-worth of damage couldn’t possibly deserve their fat bonuses.

It is not clear whether proposals to regulate Wall Street will succeed, and whether any ill-gotten gains will actually be clawed back by the taxpayer (who ended up, of course, bailing out said firms). But the very fact that this is being considered is a deterrent to future hanky-panky. That is, people would have to factor in the possibility that their malfeasance will have consequences.

India is refreshingly free of such old-fashioned niceties. In India, there are no consequences to the worst behavior, provided, of course, that you have the right credentials – that you belong to certain privileged categories of people, which include media mavens, film stars, politicians, cricket players, et al.

It goes beyond a lack of concern about delivering results – it has become routine to be cynical; promises are mere expectations. Many contracts are not worth the paper they are written. It has become a national pathology, or national pastime if you prefer, to lie about what one will deliver: you too must be guilty of saying “Consider it done!” when you knew there was no way you were going to do it.

Most Indians work this into their calculations, but it baffles foreigners, thereby adding to the impression that Indians, like Chinese, are inscrutable – a euphemism for “unreliable”. This makes it difficult to do business, because what appears to be an iron-clad guarantee to the outsider is often really only a ‘best-efforts, god-willing’ type of weasel-wording to the Indian. And Indians are accustomed to there being no penalty for lack of performance.

This is seen in every walk of life. On the one hand are the lionized cricket-players who make absolute billions. One would expect that the cricket-consuming (I am tempted to say something about Lotos-Eaters, but shall desist) classes would demand top-notch performances from their stars; but alas, they routinely put in pathetic performances because they know there are no consequences – they will get their millions, win or lose.

I have suggested in the past that there should be some deterrents to poor performance: I understand in soccer-crazy Latin America a player who caused the national team to be eliminated from the World Cup was shot dead on return. The threat of physical harm – say the loss of a finger or two if you screw up badly – would energize team-members wonderfully. Well, if you are squeamish about that, the least one can do is – there again, that wonderful concept – ‘claw back’ their ill-gotten earnings!

Similarly, much has been written about the lavish lifestyles of cricket executives – who, not surprisingly, include a number of politicians. Why not set Income Tax on these folks and claw back the BMWs and private jets and other bling they have accumulated?

Well, perhaps the cricketers are minor villains in comparison to politicians. The naturally cynical voter, accustomed to lavish promises at campaign time, expects nothing to materialize. Experience suggests that this is wise. The elaborate ruses intended to ease rent-seeking are truly creative, a wonder to behold.

A good example is the ongoing saga of the 2G mobile telephony licenses. The circumstantial evidence is damning – an ‘auction’ which was first-come, first served, and also wherein the last date for bidding is arbitrarily shortened by one week without notice. The final ‘winners’ included several players who were totally innocent of any telecom experience before and after. But they were quick to turn around and sell their licenses to telecom companies at 10x profit.

Interestingly, there has been no talk of clawing back these obscene and undeserved profits. The Prime Minister, who is said to be honest and decent and an economist, has maintained a Sphinx-like silence. The latest I heard about this is a detailed memo from the Department of Telecommunications exonerating themselves and their minister from all blame – a ‘clean chit’ in quaint officialese. No penalty for anybody.

Then there is the matter of the nuclear ‘deal’ that India has entered into, after many promises of a wonderful energy future. This was the justification for acceding to many conditions, which, in my opinion, eviscerated India’s nuclear deterrent capability and did nothing more for its energy security than create dependence on uranium-mining nations.

Interestingly enough, Pakistan and China, bellicose nuclear neighbors, have just entered into a deal for which Pakistan did not have to make any concessions whatsoever. China is giving Pakistan two nuclear plants as well as missiles: which, to put it bluntly, is pure proliferation. The United States, which screams “non-proliferation!” whenever India is involved, was strangely silent. In other words, yet another scam has been perpetrated.

Is anybody losing his job, or are they being prosecuted, for misleading the Indian public and walking the country down the garden path? Of course not. Similarly, the country is suffering the worst inflation in decades, and the price of food items in particular have shot through the roof. Has anybody been punished? Of course not.

By not putting in place mechanisms to ensure there is punishment for sinning, India is creating the right environment for ‘moral hazard’. People will take unnecessary risks, secure in the knowledge that if they win, they keep the loot; if they lose, the taxpayer pays. No wonder India is so full of charlatans.

An edited version of this appeared on rediff on May 6th at http://news.rediff.com/column/2010/may/06/rajeev-srinivasan-on-the-banality-of-evil.htm

Why good people do bad things: the ordinariness of evil

Rajeev Srinivasan on why normal people do appalling things in the wrong circumstances

In the aftermath of the Ajmal Kasab trial and the failed bomb attack in New York, the impartial observer would find it hard to conclude that Pakistanis were mild, inoffensive people. But in fact there are a number of people – apart from the professional Wagah candle-holders – who cannot believe that this kind of horror could come from the kind of Pakistanis they know – PLUs (people like us), urbane, sophisticated, great hosts and dinner companions.

There is, of course, the fallacy of rapid generalization: every Pakistani is not like the people you know, who are likely to be the world-traveling sort. There are many dirt-poor, uneducated people who have been brainwashed with strange notions of what Indians are like and what India is like. Given high population growth and a fairly stagnant economy, the number of these “Bottom-of-the-Pyramid” people is much larger than those at the top of the pyramid, the 22 ruling feudal families who own the place.

But apart from the logical fallacy, there is also a more subtle issue, that of how easily evil can take over  even perfectly normal, well-adjusted people. It turns out you don’t have to be a sociopath to do the most horrifying things: your random neighbors, such as the kindly old man down the street, the kid who drops off the newspaper, the old lady who is full of religious zeal – any and all of them can turn into monsters under the appropriate circumstances.

This was demonstrated in Cambodia, when under the Khmer Rouge, perfectly ordinary people became mass killers. I have been to Tuol Sleng prison and interrogation center in the middle of Phnom Penh, where thousands of people were tortured, and confessions extracted from them. They were photographed and meticulous dossiers prepared about each of them. They were then taken to the Killing Fields on the outskirts of town and dispatched with a blow to the back of the head with a spade.

But what is most amazing about Tuol Sleng is that it was formerly a school in the middle of a residential neighborhood! It still looks like an inoffensive school from outside, although inside it is the Genocide Museum, with the interrogation cells left as they were, harrowing paintings of inhuman torture, and row after row of black and white photographs of those who were about to die, including some Indians and other foreigners. It is a metaphor for the banality and very ordinariness of evil. The Khmer Rouge were the greatest mass-murderers in the recent past, killing some 15% of their compatriots.

Ordinary Cambodians – farmers, artisans, bicycle-repairers, fishermen – were instruments of civilizational suicide. Similarly, perfectly normal Hutus went on the warpath in Rwanda against  embattled Tutsis, attempting genocide. Ordinary Germans did the bidding of the Nazis; ordinary Europeans participated in an orgy of violence on innocent people during the horrifying Inquisition, dispatching thousands, especially women, in the most appalling ways.

And so with the Pakistanis. The young men of the Lashkar-e-Toiba and other terrorist outfits were not monsters to begin with: they were turned into what they are quite deliberately – they have been manufactured by a consciously-created system where they have no choice but to become monsters.

I was reminded of all this when I was listening to an archived podcast from 2007 of an interview with Philip Zimbardo, a retired professor from Stanford, whose celebrated “Stanford Prison Experiment” of 1971 was a startling practical demonstration of how evil is engendered. In 2006, Zimbardo wrote a new book, The Lucifer Effect, because he was struck by similarities between the Abu Ghraib prison scandal in Iraq and the Stanford experiment.

The experiment was simple: Zimbardo set up a simulated prison in the basement of one of Stanford’s buildings, and recruited 24 normal male college students for a two-week study of the behavior of prison guards and prisoners. The students were randomly assigned to either role and given uniforms or prison smocks to wear, but no specific instructions on behavior except that there must be no physical contact. Zimbardo himself acted as both ‘jail superindendent’ and research leader.

The results were startling: within 36 hours, the ‘guards’ started misbehaving, exerting their power over the ‘prisoners’. One of the prisoners had a nervous breakdown. Within three days, the guards were exhibiting brutal, sadistic behavior, and the prisoners were increasingly humiliated and oppressed. Several other prisoners also had nervous breakdowns. On the night of day five, sexual torture began: the prisoners were made to expose themselves, and to simulate sodomy with each other.

On the sixth day, a shaken Zimbardo abandoned the experiment, which had been slated to run for two weeks. He was shocked to realize that certain dangerous boundaries were being crossed, and that some of the participants might end up with permanent psychological damage.

The fact that perfectly normal, intelligent college students – they had been screened for any abnormality – could so easily be turned into sadistic monsters is astonishing. Apparently the situation had gotten the better of them:

Perhaps the normal human condition is indeed the Hobbesian “nasty, brutish and short”. Maybe “Lord of the Flies”, the book about a group of boys abandoned on an island evolving into a dictatorial society, is all too true. Perhaps the Law of the Jungle is indeed the right metaphor, much as we like to think of ourselves as civilized beyond fang and claw and might-is-right.

In a related study, the Milgram Experiment at Yale analyzed the willingness of volunteers to administer electric shocks to unseen victims based on orders from authority figures. It turned out that – with no gender differences – people were quite willing to torture people whom they had never met. (The shocks were simulated, and so were the recorded screams of the recipients, but the subjects didn’t know that.)

Zimbardo believes that it is not the individual’s own inherent tendencies, but the social situation around them that drives bad behavior. That can help us understand the pathology of the Pakistani situation. These young men have been told for such a long time that Indians and Hindus are evil and monstrous that they have internalized it. It is the environment that addles them. Therefore, expending a lot of effort on the arrest and prosecution of individual terrorists is not going to have a major impact, because they are expendable – there are many waiting in line, ready to step into their shoes. In that sense, it is immaterial what happens to Ajmal Kasab – he is simply cannon fodder, dispensable.

It is the system that is psychotic, and it is so by intent. That is why Pakistan refuses steadfastedly to move against those who have created the system: for instance, Hafiz Saeed of the Jamaat-ul Dawa (the current nom-de-guerre of the Lashkar-e-Toiba). The Pakistanis have refused again and again to prosecute Saeed, just as they refuse to extradite Dawood Ibrahim. These are strategic assets for the ISI. People like Hamil Gul, ex-ISI eminence-grise, have articulated the grim calculus of this perspective.

The system in Pakistan was put in place by General Zia-ul-Haq, who fundamentalized education, the Army, and the rest of society (it may be remembered that Zia in effect banned the use of the ‘Hindu’ sari, and encouraged the ‘Pakistani’ salwar-kameez). The textbooks were re-written to eulogize Central Asian invaders. History begins with the Arab invasion of Sind in 712 CE. The word ‘Hindu’ is always preceded by ‘cunning baniya’. The idea that a single Mohammedan soldier is worth ten Hindus in valor was put about, notwithstanding considerable evidence to the contrary.

American psychologist Sam Keen suggested in Faces of the Enemy that a major part of warfare lies in dehumanizing the enemy. Every nation has created extraordinary propaganda against its enemies: by internalizing this, young soldiers are able to kill other young men without compunction, because they believe the enemy are sub-human monsters intent on raping ‘our’ women, destroying ‘our’ nation, and so on. The  book includes hundreds of posters, cartoons and other material from 20th century propaganda, which Keen calls the “archetype of the hostile imagination”.

Surely, there is Indian propaganda against Pakistan; however, it is on a secular plane, and does not target Pakistanis based on religion. In fact, average Mohammedans are better off in India as compared to anywhere else in the world, including, and especially Pakistan, where only the feudal upper classes (castes) live well. In  North India (as seen in Vikram Seth’s “A Suitable Boy”, there is a certain admiration – justified or not – for some alleged nawabi high culture, possibly because using Farsi/Arabic is considered cultured by some.

And the leftists in the media are ever-ready to cry themselves hoarse in the service of poor Mohammedans. Not to mention a government with a Prime Minister who says without irony, “Muslims must have first claim on the nation’s resources”, which is, in passing, strange from someone sworn to uphold the religion-blind Constitution.

But that is not what Pakistanis believe. In encounters with middle-class Pakistanis in America and on the Internet, I have heard how glad they are that there is a homeland for subcontinental Mohammedans who would otherwise have been oppressed by Hindus. They are silent, however, when I point out that there are, in fact, two homelands, and how the one homeland couldn’t keep half of its inhabitants happy and started a genocidal war with them.

This incomprehension about India was seen in the transcripts of the conversations by the 11/26 terrorists with their handlers in Pakistan: the terrorists were obviously confused that India was not a whole lot like what they had been brainwashed into believing.

Thus, it is the environment, of radicalization and mind-games, that is creating a cadre of evil-doers. Any amount of ‘talks’ and ‘goodwill gestures’ and ‘walking the extra mile’ is unlikely to change the situation unless the hate-mongering institutions with a monomanical jihadi agenda are dismantled. So long as India cannot get Pakistan to do this, there will be an endless supply of cannon fodder.

There is another issue – terrorism has now become a job, and quite a lucrative one at that. Zimbardo is of the opinion that a lot of the brutality in the Stanford Experiment and at Abu Ghraib happened because of simple boredom, especially at night, when the guards had nothing better to do and wanted some entertainment – perhaps the ultimate in the banality of evil.

In the case of the Pakistanis, and, alas, in the case of a number of home-grown terrorists in India, terrorism has now become an easy and attractive job, with perks like foreign trips (eg. to Pakistan via Dubai to throw people off the scent), cash (including counterfeit Indian rupees shipped in container-loads), women (who will dare say “no” to an AK-47?) and so on. For an ill-educated youth with poor prospects, this must be like manna from heaven. This has been demonstrated in Kerala where a number of young men were trained and shipped off to J&K as mercenaries/jihadis to kill Indian soldiers.

Thus, the cognitive dissonance between the “they are just like us” ordinary citizens of Pakistan and the ruthless killers is a matter of their environment. Unless it is cleaned up, and the godfathers of the system such as Hamid Gul, Hafiz Saeed and Dawood Ibrahim forced to stand down, India – and (note to President Obama) the West — will continue to face evil and bleed. It is not the individuals, but the system of propaganda and inducement of hatred that is to blame. And that suits the Pakistani establishment just fine: it sustains their failing State.

Versions of this were published by the New Indian Express on Apr 22nd at http://expressbuzz.com/opinion/op-ed/man-who-changed-strategies-in-the-business-world/167215.html and by rediff.com business at http://business.rediff.com/column/2010/apr/21/guest-c-k-prahalad-the-man-who-knew-strategy.htm

CK Prahalad – the man who knew strategy

Rajeev Srinivasan considers the legacy of the man who popularized strategic intent and the Bottom of the Pyramid

The term ‘guru’ is casually tossed around to denote anyone who has managed to jump on the bandwagon of some idea as it became popular. But there are some genuine thought-leaders in the business world who have created truly earth-shaking ideas; C K Prahalad of the University of Michigan, who passed away this week at the age of 69, was a giant of that kind.

Prahalad was responsible for propagating not one, but at least three outstanding ideas. In addition, as an extraordinary speaker and communicator, he influenced thousands of students and hundreds of companies with his vision and perspectives. Along with the late Sumantra Ghoshal and a few others, Prahalad was part of a phalanx of Indian-origin stalwarts making waves in business schools in the West.

As a professor of strategy, Prahalad was perhaps peerless; he teamed up with Gary Hamel to come up with the seminal idea of the “core competence of the corporation” in a famous Harvard Business Review article from the 1980s. According to Prahalad and Hamel, “stick to the knitting” made a great deal of sense – they suggested that a company figure out its true strength (an almost Shakespearean “to thine own self be true”), focus on building up its ability to become impregnable in that area, and then produce a slew of products all based on this core competence.

Furthermore, they felt that creating competing strategic business units would lead to unhealthy competition and the hoarding of resources within the units, whereas it would be more optimal for all human resources were to be available wherever in the firm’s far-flung operations they could be most useful.

The duo followed this up with the even more stunning paper on “strategic intent” – a true HBR classic. Impressed by the then seemingly-unstoppable Japanese invasion of the automobile sector and the electronics sector, Prahalad and Hamel argued that unlike short-term-focused Americans, Japanese planned a long-term strategy based on an intent that was clear, easily articulated, and around which all its activities could revolve.

This research led to a resource-based perspective of a firm’s strategic direction, which nicely complemented the incumbent theory of competitive advantage as articulated by Harvard’s Michael Porter. Porter’s theory held that a firm’s competitive strategy was determined by external, market issues: the bargaining power of suppliers and customers, the threat of new entrants and substitutes, etc.

Prahalad and Hamel articulated the resource-based perspective of how a firm could pursue its long-term by incrementally improving its capabilities. They used examples such as Canon (core competence in optics) and Sony (in miniaturization and packaging) which used them to expand into adjacent markets – such as laser printers and video recorders respectively.

Thus, by deciding a priori on where they would invest their resources, and by working towards ambitious stretch goals (for instance earth-moving equipment maker Komatsu had the singular goal to “Beat Caterpillar”, its entrenched and much bigger competitor), Japanese firms outsmarted their American rivals who were more focused on short-term goals related to stock price and thence executive compensation.

Intriguingly, the idea of intent can be applied to nations too: those that have strategic intent do well, which those that do not flounder about with no direction. The contrast between the performance of China and India can be explained by their respective strategic intents (China intends to be number one, India lamely wants to be an also-ran).

This body of work would have been enough for Prahalad to be considered a serious thinker, be lionized and become a favorite on the lecture circuit, as usually happens with the one-trick ponies in the business hall of fame of the moment. But Prahalad was not content, and his next idea was even more compelling. And timely, just as poor nations were metamorphosing from ‘less developed countries’ to ‘emerging’.

Prahalad’s insight was into the nature of poor societies. He may not have invented the concept of the purchasing power of the masses – quite possibly development economists had recognized it already – but it was certainly he who popularized the idea of the Bottom of the Pyramid, in eponymous books and essays.

The idea is that even though individual consumers in poorer countries may not be able to afford much by way of discretionary spending, in aggregate they do form a tempting market. Therefore, if you were able to create products that made sense to them, packaged in ways that they could afford, you might open up a whole new class of consumers.

It turns out that many of the world’s potential consumers – and certainly India’s – fall into this category. And firms which succeeded in reaching out to them have demonstrated that these are viable customers. Examples include Nirma in detergents, and others who have created tiny one-rupee sachets of health-and-beauty products, which would fall into the discretionary spending power of even relatively poor people.

Prahalad was the prime mover behind the idea that large firms including multinational companies could profitably target these customers: a version of “doing well by doing good”. There has been criticism in some circles who maintained that Prahalad over-estimated the profits that could be made; others suggested that there was something unethical about the very idea of, as it were, exploiting the poor.

The fact remains, though, that the poor pay disproportionately more for what they consume. Almost everywhere in the US, the cost of gasoline in poorer neighborhoods is higher than in tonier ones. Grocery stores charge more and carry less healthy merchandise – there are few fresh fruits and vegetables, and lots of high-fat, high-fructose-corn-syrup-laden processed foods. Even under micro-finance programs, the poor in India pay much higher rates of interest than their wealthier peers. Some of this is justified by enumerating the high costs of default, crime, pilferage, etc.

In his most recent work, Prahalad combined elements of the BoP idea with work on innovation. With ‘the innovation sandbox’, he showed how imposing constraints often engenders creativity of the first order. For instance, there are the success stories of Aravind Eye Clinic, Narayana Hrudayala and the Jaipur Foot, all of which offer uncompromising world-class services and products at a fraction of the prevailing cost, through astonishing process and product improvements.

This is the true inspiration behind what has come to be known as ‘frugal engineering’. In its April 15th survey on innovation in emerging markets, the Economist magazine talks about signal successes such as the Tata Nano, the low-cost electrocardiograph made by General Electric in India, and other products that are changing the rules of the game, cutting costs by as much as 90%. These products represent ‘innovation blowback’ that will discomfit established western corporations that have not paid sufficient attention to the challenges and rewards of dealing with BoP customers.

Thus, after a lifetime of advising multinationals, Prahalad heeded the call of his roots in India. Companies have been paying attention to the needs of India’s customers, taking his advice to heart – for instance, the Tata Group with its successful Ginger brand of moderately-priced business hotels; some multinationals, notably Cisco, are even setting up their innovation operations in India.

It is tragic that at a point when his blueprint of India in 2020 – his essay on India@75 — is almost within grasp, CK Prahalad has moved on to the ages. His vision was that India could take advantage of its demographic dividend, but only if it created 500 million skilled and trained people, he declared at his pan-IIT keynote a few years ago. He believed in an India that could provide spiritual and not merely technical leadership. That vision – so close to that of giants like Sri Aurobindo – is something that Indian firms need to keep firmly in mind as they develop their strategic intent.

A version of this appeared in DNA on May 3, 2010 and in its web edition at http://www.dnaindia.com/opinion/main-article_mobile-cheque-book_1378624

How to make money off mobile telephony

By Rajeev Srinivasan

Mobile telephony has been nothing short of revolutionary in India, as within 12 years, tele-density has gone from 1% to 40%, that is, apparently 40% of India’s 1.1 billion have acquired phone – usually cellular – connections. But this is only the beginning: the next step may be for mobiles to become the payment mechanism of choice.

When a phone SIM card is used as an electronic wallet, many transactions may become easier and cheaper – for instance, old-age pensions for the poor, or even buying groceries from the corner shop. Cellular telephony is available to far more people than banking services are. In several African countries, mobile payment is now commonplace.

But is there money to be made in this business? India is the fastest-growing market, and some call rates are the cheapest in the world, as low as 30 paise per minute. There is a vicious price war; however, the carriers are not hurting. The current auction for 3G spectrum (speeds at a minimum of 200 kilobits/sec) is vigorously contested, and billions of dollars are being bid on the right to offer 3G services. Clearly the companies bidding expect to make money.

There are several ways in which mobile telephony can be profitable. One is to simply grab the wireless spectrum, through means fair and foul, and sit on it. The second is to make process improvements to squeeze maximum productivity out of the system. The third is to create radical new business models that change the rules of the game.

The spectrum land-grab has been highly successful in many countries, as wireless frequencies are a scarce and limited resource whose value increases dramatically through network effects – that is, as more and more customers sign up, the value of the ‘raw material’ goes up exponentially. In the US, fortunes were made through capturing the spectrum, much as 19th-century railroad ‘robber barons’ made fortunes through an actual land-grab wherever the new rail lines were built.

In India, of course, there is a twist to this: there are persistent allegations that the older generation (2G) spectrum was parceled out in sweetheart deals by rent-seeking politicians and bureaucrats. Indeed, strange things did happen – the deadline for submitting a bid was suddenly shortened by a week during the bidding process a few years ago. The winning bids, surprise, surprise, were at rock-bottom prices.

New and incriminating information, it is alleged, has come out recently. Be that as it may, some of the winning bidders had no prior or later experience in mobile telephony. They simply turned around and sold the spectrum to actual mobile players at hugely inflated prices that reflected their real value, thus pocketing a healthy profit, in effect defrauding the public.

The second mechanism is process improvement. India’s carriers are now seen as models for process innovation. Airtel, for instance, has outsourced its entire network to switch manufacturers who are paid for a certain number of calls completed; its IT operations are handled by a major IT firm; Airtel is in essence a telephony marketing company. This has enabled Airtel to be profitable despite the very low calling rates.

This model of process innovation is admirable. The late management guru Professor C K Prahalad has pointed out how a number of Indian service entities are indulging in frugal engineering in the way they do business – for instance, the medical services organizations Aravind Eye Hospital and Narayana Hrudayalya. By radically rethinking their operations, they have been able to squeeze profits out of low-priced offerings.

The third mechanism, of changing the business model, is currently making waves. It is data transmission, including Internet access, that is key (and it is clear that data, including SMS text messages, appeal to even customers in poorer countries). Companies like Apple have disrupted the status quo through incremental innovation. Smart-phones like the iPhone have created a new paradigm – touchscreens and ease of use are making them the primary Internet access devices.

Moreover, there is a new distribution mechanism for applications: application stores create a new ecosystem wherein software developers can reach customers relatively easily. This has led to an explosion in creativity, and the focus of computing is shifting to ubiquitous mobile phones. The recent entry of Hewlett-Packard into the fray by buying struggling smart-phone pioneer Palm shows how the worlds of computing and cellular telephony are converging.

Some rich countries are already rolling out the next generation (4G at 100+ megabits/sec), which promises much faster data connections. Indeed, critics suggest that India has missed an opportunity to leapfrog onto 4G because of unnecessary delays in the 3G deployment.

Despite the possible shenanigans, cellular telephony has created vast improvements for the public. Macroeconomists estimate that it has added as much as 0.8% to the GDP growth rate. Profiteering by a few clever people may then perhaps be seen as teleologically acceptable – the greatest good for the largest number.

This appeared on rediff business on 3 May at

http://business.rediff.com/column/2010/may/04/has-apple-invented-a-whole-new-paradigm-for-computing.htm

Has Apple invented a whole new paradigm for computing?

Rajeev Srinivasan

Apple Computer announced today that the iPad had sold 1 million units in just 28 days, notably faster than the iPhone’s 74 days. Although the initial euphoria has died down, it is worth considering if Apple has, true to its image as an innovator, created something truly new and different. The chatterati are divided: technologists are disappointed by what’s not in the iPad, while ordinary users seem pleased that is easy to use and requires less maintenance than a standard PC.

If the latter are right, then we may have just witnessed the passing of the Windows era of computing. There are persistent problems with the usability of Windows PCs: the system gets bloated and slows down over time. Besides, there are few ways of ensuring that only trusted applications are loaded onto your system.

What the iPad seems to offer is help in both these areas: the system will remain relatively pristine over time, and anyway the applications available have been informally certified under Apple’s eagle eye. Of course, this is in addition to the change from the Windows paradigm of mouse-keyboard interaction to the gesture-based touch-screen paradigm.

The touch-screen fundamentally changes man-machine interaction, and it has inherent appeal, as demonstrated by the iPhone and imitators. Thus, Apple has invented something new. But has it also learned the lessons from its previous failure to turn its inventions into commercial success? The Apple Macintosh, of course, was the original “computer for the rest of us”, but Microsoft stole Apple’s thunder, relegating it to an also-ran. A lot of this was based on Apple’s excessive reluctance to license its system software.

Intriguingly, Apple started succeeding only when it moved away from product innovation and into business model innovation. Despite cool and elegant products, it kept losing ground to Microsoft, which realized that the operating system was a distribution channel.

Since Windows runs on two billion computers, Microsoft pushed other products through – Internet Explorer, the lucrative Office franchise, and many thousands of third-party products. Apple could not deliver this large audience – size matters – and software makers began to build products only for Windows. This became a vicious cycle, and Macs became niche boxes.

With the iPod, Apple turned this game on its head using iTunes. iTunes was the real breakthrough, not the iPod itself: business model, not product innovation. With iTunes, Apple began distributing third-party products, including music, movies, and podcasts. The operating system became less relevant.

ITunes is the third most ubiquitous software product around, after Windows  and Adobe’s Acrobat. Result? Apple has become the world’s biggest music distributor. Incidentally, they sold a lot of iPods too, which of course was their goal. For the end-user, it suddenly became easy to pick up music that was legal and inexpensive, and so they did, abandoning illegal downloads.

Similarly, with the iPhone, it is not the touch-screen that made the product successful, but the App Store: an easy-to-use distribution channel for third-party applications. It was not a new concept. In the smartphone/PDA space itself, there was a Palm Store as long ago as 2000, with a few thousand applications. However, Apple was the first to enjoy the network effects and has 180,000 applications now.

It is this ecosystem that counts today. The fact that the App Store reduces the amount of marketing that a software developer needs to do means they can concentrate on what they know best: product development. This holds promise for Indian software makers – if you build something attractive, the App Store may take care of marketing and distribution, which has been your Achilles heel.

It is a positive feedback loop – the more apps there are, the more people buy the platforms, and the more new apps are developed. Microsoft once lured away software developers to Windows from the hitherto reigning champions, Unix-based systems from HP, Sun, IBM et al. Now Apple is repaying them in the same coin.

This is not to say that everything is perfect: Apple exerts extraordinary control over the environment and the ecosystem. Third-party software developers have to abide by Apple’s rules, which may be draconian. It recently began to insist that developers must only use Apple’s own development tools; they are also forbidden from building multi-platform apps (for instance Adobe’s Flash).

Nevertheless, the long-awaited convergence between telephony and computing has been given a fillip by Apple’s new products; the debate over whether the right product for the vast emerging markets is a low-powered PC (as the One-Laptop-Per-Child initiative believes) or a souped-up phone is a moot point now. The phone is the computer, to paraphrase an old Sun Microsystems dictum.

The iPad, which is basically a large-screen iPhone, may come into its own with the consumption of media content. Thus, the phone may the newspaper, in addition to the electronic book reader and the music player. Furthermore, as mobile payments become more widespread – early experiments in Africa have been encouraging – the phone can become the wallet, too.

It would be poetic justice if Apple rides in like a white knight and rescues the publishing industry. The iPad may allow Apple to disrupt one more industry, as it has done with music and telecom already. There are downsides – publishers may discover they don’t like ceding too much power to Apple. And as far as consumers are concerned, especially those in emerging markets, they may find themselves priced out of a lot of currently free content.

There is the possibility that Apple will not end up holding monopoly power as the industry evolves. As it is, Google with its Android system is showing itself to be a worthy competitor. The entry of powerhouse Hewlett-Packard into the fray with its purchase of stumbling smartphone pioneer Palm is a new factor. And let’s not count out traditional market-leaders such as Nokia and Motorola, or new players like HTC.

Clearly, we live in interesting times, and consumers and software developers are the ones benefiting the most.

1000 words, May 3, 2010