The Indian Economy Blog

December 20, 2005

Zero In The Numbers

Filed under: Miscellaneous — Amit Varma @ 3:16 pm

Ok, it’s bizarro time. Kenichi Ohmae, a “management guru” who is apparently known as “Mr Strategy,” tells Business Standard:

Indians are not good at manufacturing. Even if they do what we tell them to do, they always need to understand why they are doing it that way. They are more inquisitive than the Chinese. Maybe it’s because of their ability to find zero in the numbers.

This is laughable. As I’ve written in the past, India isn’t a manufacturing superpower because of the many different kinds of restrictions placed on Indian industry by an oppressive state. It is ideally placed to dominate in labour-intensive manufacturing, and there is nothing about its people that precludes it from doing so. Mr Ohmae’s statement betrays his lack of knowledge of both India and the Indian people, and the recourse to easy stereotype is laughable.

In the years to come, I hope he will be proved wrong.

32 Comments »

  1. This is the 1st time I have come across a statement that asking too many question is detrimental to progress. What does he want …….. Blind obedience and continuation of status quo..

    Comment by Manoj — December 20, 2005 @ 3:35 pm

  2. Ah! The seen and the unseen. Someimes it is easier to see the people and not see the institutions, and then make the error of basing your judgment on an “easily” available perception of a set of people. He would have probably said in 1980, “Indians only look at 0s and not the 1s and hence are not capable of being good programmers.” Rubbish! That you are an expert on management doesn’t make you an expert on everything under the sun! But I must say, he is good at the principle of strategy!

    Comment by Naveen — December 20, 2005 @ 3:52 pm

  3. Such a sweeping statement! And he doesn’t even bother to say there are some exceptions. Mr Kenichi Ohmae should take a look at the Deming Prize winner list Or see who is the best steel maker in the world. He must visit Bajaj’s plant manufacturing Pulsars.

    Making statements by looking at an excel sheet is ridiculous at best.

    Comment by Shashikant — December 20, 2005 @ 4:31 pm

  4. Amit, what Ohmae says is not entirely wrong, but not completely correct either. MNCs such as Cummins which have plants both in China and India have come to some definite conclusions, based on expereince. For high-volume, mass-produced, labour-intensive goods, China is the better place. Whereas India is clearly a better place to have the manufacturing facility if the need is for more specialised,high-tech goods which call for more creativity and innovation. So, Ohmae is wrong in painting the entire manufacturing canvas with a broad sweep of a single brush. China and India can excel in different fields of manufacturing.

    Comment by plus ultra — December 20, 2005 @ 4:34 pm

  5. Some people say selective quoting, some people say misquoting. See for yourself, what this is,

    Indians are not good at manufacturing. Even if they do what we tell them to do, they always need to understand why they are doing it that way. They are more inquisitive than the Chinese. Maybe it’s because of their ability to find zero in the numbers. But in manufacturing when you have a successful formula, what you look for is implementation, right? Indians always ask these fundamental questions.

    So the part which Amit selectively left out, is the one which actually explains the rationale behind Ohmae’s explanation :)

    Comment by Senthil — December 20, 2005 @ 8:56 pm

  6. Senthil, that extra bit is just an elaboration of what he said in the bit I quoted. In particular, an elaboration of what he says in the second sentence of that excerpt. It doesn’t change my comment at all. Are you suggesting that Indians can’t implement?

    Comment by Amit Varma — December 20, 2005 @ 9:53 pm

  7. Incidentally, Mr. Ohmae, is a genuine guru and visionary. He was a big shot at McKinsey during the 80s and 90s. His seminal work, ‘End of the
    Nation State
    ‘ predicted globalization a decade before it took place. His predictions on China, Japan and the rest of the world have mostly come true. While the world was going gaga about Japan in the 80s, he spoke about the structural issues that Japan has, and the
    problems it would land up with in the 90s and beyond. Amazing guy.

    His statement regarding us Indians is very accurate. During my first job in a now-famous but then start up software firm in Mumbai, my MD had lamented that he had 100 CEOs and no nose-to-the-grind engineers, salesmen and accountants. We are anarchic, inquisitive and feudal by nature. The combination is quite bizarre, but more often than not holds true. Compare that to, say the blind obedience of the Germans or Japanese, at least with regard to common causes. I’m sure he is referring to the subsuming of individual aspirations for the greater good, a quality that is admirable amongst the Japanese at least as far as manufacturing is concerned.

    Comment by Quizman — December 20, 2005 @ 10:35 pm

  8. Thanks Quizman, interesting stuff. Question: if we are “anarchic, inquisitive and feudal by nature”, why do you think that is the case? Why us?

    Comment by Amit Varma — December 20, 2005 @ 10:52 pm

  9. Amit,

    IMHO, it has to do with history. Although India has had a tradition of monarchy, the kings were often good at providing sufficient leeway for freedom of expression. The scholars – the badly used term “pundits – were respected and never punished for their views. Even our religious books are always filled with dichotomies. Even ‘heroic’ aharacters have serious flaws and hence open to be debated upon. Coupled with that, there was a tradition of the ‘vidushaka’, (mistakenly called jester] who used to speak the unspeakable to the royals.

    The colonialism that happened roughly between 1100-1991 was definitely responsible for what Nietzsche called the ‘slavish mentality’. I think feudalism was the off-shoot of mughal and later- the British tradition of jagirdari and zamindari.

    Since the rulers were never our own, we never felt compelled to obey their laws. The passive-aggressive non-comformity to structures and laws was a form of rebellion. It later turned into full fledged civil disobedience in the early part of the last century. Sadly, after independence we continued with civil disobedience since it was now ingrained into our DNA, partly as a result of the (socialist) “sarkar” being seen as “mai-baap” and not something that we were responsible for. The laws that ‘mai-baap’ made were inherently stupid, and led to corruption/alienation. This disdian and suspicion of laws has led to an anarchic attitude.

    Westerners often attribute this anarchy to the nature of religions in Asia – since they concentrate so much on the ‘self’ as opposed to say, the Protestant ethic of self + community. However, imho, the reasons are more complex than that, as I’ve tried to elabore above.

    Comment by Quizman — December 20, 2005 @ 11:09 pm

  10. Quizman, it is quite a coincidence that I had exactly the same theory about our disdain for laws – I was actually planning to write a post on that.

    Comment by Ravikiran Rao — December 20, 2005 @ 11:59 pm

  11. Plus Ultra,
    In the cummins case you site, you are comparing different segments of population In both operations different types of labors employed.
    The size of cummins operation in china is HUGE compared to india. And a lot of
    blue collar workers and technicians are employed there, where as in their indian operation a lot of white collar engineers are employed.

    Although i dont deny mr Ohmaes observation that india sucks at manufacturing but i am willing to bet that he hasnt dealt with factory floor worker in india.
    Indians like to talk more and will not be shy of talking with a stranger, and thats cultural influence.
    It may also turn out that indians only become a 2nd or 3rd tier manufacturer in the long run but if it increases living standard so be it.
    In the long run manufacturing, assembly, testing is going to be automated to the degree that its not going to be a blue collared proffession, so its going to be tough for india.

    Comment by Guru Gulab Khatri — December 21, 2005 @ 12:14 am

  12. Incidentally, Mr. Ohmae, is a genuine guru and visionary. He was a big shot at McKinsey during the 80s and 90s. His seminal work, ‘End of the
    Nation State‘ predicted globalization a decade before it took place.

    Heres an interesting article on mckinsey…
    Its slightly offtopic but its important for professionals to keep this in their minds.
    especialy those of us here in the west who are setting up or want to set up an indo-US organization and sooner or later will run into an Mckinsey type.
    Hey they may have valuable advice but just take it with a grain of salt thats it

    Comment by Guru Gulab Khatri — December 21, 2005 @ 12:44 am

  13. I partly agree with Mr. Ohmae and partly don’t. Yes, we are a difficult workforce to work with because we are an intellectually active nation. I don’t mean to look down upon the Chinese populace because except for Confucius I know nothing about China, although I’m sure, being so ancient, it is a great civilization. Given the right kind of jobs we excel beyond expectations and in fact our inquisitiveness and the question-asking nature adds value to any service we provide. It also depends on what you are doing. May be we are not good at working like robots. We are good at jobs that require complex computations and complex analysis.

    Comment by Amrit — December 21, 2005 @ 1:27 am

  14. Amrit,

    I would disagree. If you’re in the US, check out the difference in service between an Indian restaurant and a Chinese restaurant. They are poles apart. The typical Chinese restaurant runs with far fewer manpower, but provides a significantly greater quality of service.

    These tasks are mistakenly thought of as robotic or menial. It takes a great deal of intelligence to schedule, work out a queuing system, identify peak hours/load, distribute resources, and create an attitude of customer service amongst all employees. We mistakenly think we are smart, but more often than not, do not use our brains.

    What we, as a nation, are good at is at being arrogant. :-) We could spend hours on this topic.

    Comment by Quizman — December 21, 2005 @ 2:09 am

  15. Yikes..been in America too long. I meant “I will disagree”

    Comment by Quizman — December 21, 2005 @ 3:12 am

  16. Amit,

    You ask “Indians can’t implement ?”

    With shaddy infrastructure, where is the point of IMPLEMENTING ?

    Visit a port in india and the same in china and you will get answers of our Implementing.

    (though Ohmae doesnt talk about Infrastructure much)

    You might ask, can’t we improve Infrastructure ?

    The answer is a NO. All those are interested to do FDI in India pretty much know there is too much red tape and too much CORRUPTION.
    (Enron doesnt help as well). They chose China easily.

    Manufacturing sectore is poor because

    Infrastucture is poor because

    FDI scenario to boost Infra projects is poor because

    too much red tape+corruption+etc

    TOO MANY LAYERS OF COMPLEXITY to get rid of soon.

    I dont think we will see India becoming a manuf power in our life time.

    Someone can easily say “look at bajaj plants pulsars etc..” What crap ?
    They are too miniscule to laud about when you see China accounted for more than 7% of the global total, as manufactured exports from China reached $400 billion in 2003.

    Comment by Navin — December 21, 2005 @ 3:18 am

  17. Quizman,

    I absolutely agree with you on this: we are arrogant more often than not and a lot of times we think we’re smart when actually we’re not. Heck, I’m having trouble even with my domestic help for they think they are smarter than my wife and I and give us a few tips regarding how to manage the house almost on a daily basis :-).

    The point is we can have apt examples from both the ends. Every segment of the society, of the world in fact, has its share of arrogant, and truly intelligent people. There is no dearth of arrogance in the US and other western countries. In the west people think we can work as code coolies but cannot analyze software solutions and manage intricate procedures whereas this is not true as many prestigious projects abroad are being managed by Indians.

    And no, I don’t agree that managing a restaurant’s queuing system requires lots of intelligence – beyond a certain point it becomes a routine. You cannot equate serving in a restaurant with writing complex algorithms and working with embedded software. No, it’s not a lesser work but you don’t need an IIT degree to serve in a Chinese restaurant.

    Comment by Amrit — December 21, 2005 @ 3:26 am

  18. Amrit,

    I gave the example of a restaurant since it can be set up by a person with reasonably low formal education. While highly educated Indians – the elite, are good at writing complex code, so are Chinese, Israelis, Brits, Americans, Germans, Estonians, Armenians and people of other nations. I was referring to the intelligence of the average joe or the lowest common denominator, if you will.

    I contend that on an average, the Indian is irrational, illogical and highly emotional. Heck, we can’t even form proper queues in most places, although it is the logical, intelligent and mutually beneficial thing to do. :-) These serious cultural problems have always surprised me since our religions/philosophies [Hinduism, Jainism, Sikhism, Buddhism] had a history of debate, interaction and highly developed logic. My firm belief is that this got diluted during the Arab/Mughal invasion and completely wiped out by the British.

    Luckily, we’ve recently seen the first post-1991 generation come of age. They will redeem us.

    Comment by Quizman — December 21, 2005 @ 3:46 am

  19. Quizman wrote
    “I would disagree. If you’re in the US, check out the difference in service between an Indian restaurant and a Chinese restaurant. They are poles apart. The typical Chinese restaurant runs with far fewer manpower, but provides a significantly greater quality of service”
    Poles Apart! Thats not been my expereince in US. They both are about the same, and the QOS depends on the neighborhood and the $ they are charging.
    Another trend i’ve noticed in one indian enclave(Oaktree road, Edison NJ) is hiring of south americans labor for the backend operations in groccery store and also in restaurant.
    I saw similar trends in some japanese restaurant in NYC (where they are more easily noticable)

    Comment by Guru Gulab Khatri — December 21, 2005 @ 4:52 am

  20. In an article published three years back, TIME magazine had analysed the reasons behind India’s success with IT and software. “How did India gain superiority in this field alone” it wondered “ while China which had excelled in so many other fields remained a non-entity in IT, struggling to get its bearings right ?”

    After looking at possible answers like “ India has the advantage of having a large English-speaking population “, “ the accident of time zones of India and the USA being such that a seamless 24-hour interface could be ensured, “ and so on, TIME concluded that while the Chinese were extremely good with tasks that called for discipline, strict adherence to rules and instructions and conformity to standards- as required in manufacturing, mining, construction, etc, Indians had that uncanny ability to thrive in chaotic conditions( TIME photo : Indian house with internet cable lines entwined with laundry lines) – which equipped them to take on the type of challenges that IT and programming posed.

    I guess that our ability to work our way around chaos helps us in being masters in IT-related fields, but is a definite handicap in fields which require an orderly and strait-jacketed approach. Mr Ohmae is not too far off the mark. No reason to take umbrage

    Comment by plus ultra — December 21, 2005 @ 12:05 pm

  21. it is a personal opinion. you will also come across a dozen other management gurus who air exactly the opposite view.

    Comment by Bonatellis — December 21, 2005 @ 12:32 pm

  22. That is ridiculous caricaturing. More so if its coming from someone considered a guru. That he paints the entire population with one brush and says they’re so (or not so) is ridiculous. As is anyone else saying Indians by general arent submissive in terms of working – for a supposedly chaotic IT Industry, I have noticed the workers here are in general, submissive – no questions asked kind of people, quite a few of dont care/dare to ask why.

    While I agree with Quizman’s theory on the lack of respect for law per se, I find the anarchic, inquistive and feudal comment as improbable – and a paradox in itself.

    Comment by Prasanna — December 21, 2005 @ 1:33 pm

  23. I guess that our ability to work our way around chaos helps us in being masters in IT-related fields, but is a definite handicap in fields which require an orderly and strait-jacketed approach. Mr Ohmae is not too far off the mark. No reason to take umbrage

    Well we are not masters in IT related field by any shot.
    The revenue generated in these services has to be compared to what others are generating outside india(say as in US). Theres more money being spent on purchasing trinkets globaly.
    And again you are comparing different segments of the workforces.
    A factory worker will conform exactly to what is needed on the job.
    But india simply does not have the manufacturing infrastructure in the first place.
    And the only market india was able to grab was IT. Apart from the “talent pool”, the big reason is this kind of job is not regulated heavily in india so its
    “relatively easier” to tap into.

    Check this guys blog from 96 when he went to setup apples indian sw center.
    http://www.khosla.com/cityboiledbeans/1996apr25.htm
    His description of pre1991 stuff is amazing
    http://www.khosla.com/cityboiledbeans/1996jul14.htm

    This was in 1989. Getting a 64KB link to TI in Texas was a major issue. The Defense ministry would not allow the DOE to place the line because they were afraid that secrets of state would be transmitted over the line. Consequently they wanted a line printer that would print all data sent over the line, for review by their security. Mr. Oberoi informed them that it would take a 10 story building just to house the paper that would be produced in one year, and that there was no way they could read a printer that produced sixty pages a minute. The negotiations proceeded slowly until TI hit upon the idea of a digital recorder that would keep the last 4 minutes on file. Such a recorder could be purchased from Ampex (they had 2 in existence), and so it came to be that TI was allowed to set up shop in Bangalore.
    The first time the Defense ministry came to visit was on the day Rajiv Gandhi lost the elections. An engineer at TI e-mailed a short note to one of his friends in the U.S. that Gandhi had lost. Sure enough, the mail was in the 4-minute buffer, and the ministry regarded this as a state secret. It took much negotiation on Mr. Oberoi’s part to allow TI to keep operating.

    The big looser in india is the dude who by virtue of his parentage got screwed b/c his family hasnt had education for generations He cant move up the socio economic ladder by working in a factory which is a possibility in other asian countries for people with similar backgrounds. So he does what his granddaddy did, which is act as a dud load in a family owned farm/business.

    How can one compare him with a guy who manages to get a degree and can learn newer white collared skills through out his lifetime.

    And this fellow does not have much time to catch up. Soon the demands on a factory worker
    will be that he should be literate.

    Its not a cultural trait. My observation from having gone to both indian and american schools is that most students are NOT inquisitive, creative or innovative by nature(or nurture). Those folks are in the minority in both places, and %age wise US has the edge on that.

    Despite being an alleged IT/Engineering super power what IT product was invented in india? Open source is touted to be a big thing in india.
    How many projects do indians contribute their?
    It may happen that we may start to do all that in the future, but its not happened yet.
    Its too early to declare ourselves masters in anything.

    I dont buy any arguement that its our culture that has kept ‘mindless’ work out.
    Call centers do not provide any one with much intellectual stimulation.
    Its our economic system(or educational) that college graduates in india man call centers.

    Comment by Guru Gulab Khatri — December 21, 2005 @ 2:24 pm

  24. Question :how many of the people commenting here have actually worked on the shopfloor in an Indian manufacturing company ?
    I come from a family of such persons and from what i hear ohmae is not completely wrong and his comments are certainly not stereotypical.
    For every Sundaram there are literally hundreds of small, medium and large manufacturing units that are incapable of producing quality. The incapability is not all the making of the entrepreneurs. Govt. and unionism has actively participated in the overall low quality of production.
    The Sundarams exist inspite of the surrounding mediocrity and it is a tribute to their vision, their ability and their luck ( good blue collar and good white collar workforce, committed management, strong financials). Think about it.

    Comment by Ila Bhat — December 21, 2005 @ 8:24 pm

  25. Prasanna wrote: While I agree with Quizman’s theory on the lack of respect for law per se, I find the anarchic, inquistive and feudal comment as improbable – and a paradox in itself.

    Anarchy = disrespect for established or unestablished order
    Inquisitive = curiosity ( this is slightly dicey. We are curious about intellectual matters, but not good at, in the words of Gurcharan Das – tinkering. He posited that this was due to the “Brahminical contempt for manual labor.” No idea if this is true.
    Feudal = respect for the powerful and disrespect for the not-so powerful.

    I contend that an average Indian displays all three characteristics. :-)

    Comment by Quizman — December 21, 2005 @ 11:45 pm

  26. Anarchy and regulations dont go together
    Inquisitiveness and lack of innovation dont go together
    Brahmanical contempt for manual labor implies india would have developed mechanized production of all means. that doesent make sense.
    Brahmanical neat freak obsesssion is not reflected by india, not even in varanasi.

    Comment by Guru Gulab Khatri — December 22, 2005 @ 1:10 am

  27. Guru,

    I have qualified my statements. Actually, the more regulated we are, the more anarchic we love to be. We love to break rules, primarily because our laws and regulations are illogical and have a background of being enforced by alien powers. As I stated, we are inquisitive about the metaphysical/intellectual but not innovative since (acc to Das’ theory) that requires us to get our hands dirty.

    I think you misunderstood Das’s theory. Even for creating machines, you have to have the ability to build/break things. We did not do that for far too long. As an example, you can simply look at the number of hobby stores, self-help kits available in the US, and compare it to the lack of them in India. There is no distinct “tinkering” culture in India. Almost every autobiography of a Western entrepreneur or scientists has a chapter on their childhood which they illustrate with examples of how they used to take watches/clocks/other machines apart.
    Perhaps due to the nature of the class/caste system, we ensured that each task had a specific owner and thus ensuring lack of dignity of manual labor amongst the intellectual elite.

    I find that theory interesting and worth exploring. It could be a thesis topic for someone to do research on. :-)

    Comment by Quizman — December 22, 2005 @ 1:40 am

  28. “For high-volume, mass-produced, labour-intensive goods, China is the better place. Whereas India is clearly a better place to have the manufacturing facility if the need is for more specialised,high-tech goods which call for more creativity and innovation.”

    Fascinating discussion. Not being Indian I am not going to dive in. I will just limit myself to noting that I find it hard to imagine this discussion taking place on a Chinese blog.

    I agree with the structure of the paragraph I have pasted above. The thing is – as Atanu would be the first to point out – India does have a lot of available labour. But if too much goes into the first kind of activity, India will be condemned to remain poor. To get richer, India needs a growing GDP share of the more valuable activities. This is where the kind of dis-aggregation of manufacturing – separating out the high value activities hwich you keep at home, and sending the low value ones abroad – which German and Japanese companies are practicing is so important to learn from.

    Comment by Edward — December 22, 2005 @ 12:32 pm

  29. Quizman,

    Feudal = respect for the powerful and disrespect for the not-so powerful.
    Anarchy = disrespect for established or unestablished order.

    are definitions you provide. In the light of that, If an Indian is to be called anarchic and feudal at the same time does that not strike you as a paradox? for no power (center) can be but established, and no established order can be anything but powerful.

    Comment by prasanna — December 23, 2005 @ 9:18 pm

  30. For the benefit of discussion here, I would like to quote a statement by Ted Fishman in book “China Inc” on why western companies prefer China for manufacturing:

    “Even at twenty-five cents an hour, Chinese workers cost more than laborers in the poorer countries of Southeast Asia or Africa. China is the world’s workshop because it … offers the world’s manufacturers a reliable, docile, and capable industrial workforce, groomed by government-enforced discipline.”

    Comment by Nachiketa Version 0.1 — December 24, 2005 @ 1:44 am

  31. I’ll only put facts down. I dont know of chinas growth.
    I dont know if there numbers are what they claim to be.
    But china is doing amazing things. I can understand if the intent is to develop a complex or nuanced picture but its not.
    Putting a man on space is not a docile or mindless or robotic feat.
    now i know that a lot of folks will jump up and say its old russian tech. just look at ISRO its a mishmash of technologies which were licensed, copied, reingineered from allover the world.
    I dont put down chinas progress, nor do i want to pump them up as being the next biggest thing. I dont think its cultural when you are comparing different segments of society. An illiterate peasent types from both countries do lack skills and gravitate towards ‘robotic’ jobs.
    Indian regulations are stifling indian manufacturing and business in general. IT was an exception b/c it happened with much less oversight not b/c we are geniuses with visions for technology.
    There is a large group of people who can be productive in a manufacturing environment.
    Its responsible thing to change course and to atleast try.
    In order to decide that indians are not capable of ‘docile’ ‘robotic’ manufacturing they have to try to do so in the first place.

    Comment by Guru Gulab Khatri — December 24, 2005 @ 10:24 am

  32. We need not agree with Kenichi Ohmae. Kenichi through Ohmae & Associates is involved in encouraging Japanese companies to outsource Japanese call centres and service providers to China (Source: The World is Flat: A brief history of The Twenty-first Century by Thomas Friedman).

    It is true a number of firms look at China, basically because of labour cost. With a tightly controlled political and economic policies. it is easier to get the manufacturing process going. However, more and more firms are realising the dark side of China. Smart and forward thinking business firms are moving their critical and important activities out of China.

    Anyone who had the time to read “The Coming China wars’ by Peter Navarro, will think twice before going to China, unless they are involved in cheap products and cater to mass market. They have nothing to worry about Interlectual Property Rights and willing to leave without any legal rights when things go wrong.

    Hopefully Indian Businessmen will be smart enough to be cautious about China. Read Peter Navarro’s book first.

    Arul John Peter
    Centre for Creative Thinking, Singapore

    Comment by Arul John — April 10, 2007 @ 7:21 pm

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