Billions of Entrepreneurs

Tarun Khanna, Jorge Paulo Lemann Professor (Strategy, International Business and Emerging markets) at HBS, gave a talk on the above at Google. It’s related to his latest book by the same title “Billions of Entrepreneurs: How China and India are reshaping their futures and yours”. Essentially a talk about what’s different in China’s and India’s approach to progress, and Entrepreneurship, I didn’t think the talk offered anything ground-breaking in perspective (and I suspect the same is true about his book). However there were a couple of interesting things in the talk:

First, I like his summary when he describes China as “noise-free but biased” and India as “noisy but unbiased”. Perhaps a bit of an over-generalisation, however it neatly encompasses differences in political will and issues of property rights, freedom of information and opinion in China and India.

The other thing I liked was an example of the Mahindra tractor which he uses to show where China and India are co-operating. The tractor is designed in India, assembled in factories in China and sold to the American market. I searched for Mahindra’s US website and I found the following “Life of a farm” blog on it which has stories of an Amercian farmer, a family man, owner of a Mahindra tractor of course. Nice.

Creative Entrepreneurship in a downturn

I found this interview quite interesting. Some good insights on what could create business in this downturn – substitutes, availability of excess time and delivering more value for money.

Change never goes away

Harvard Business Press recently carried an interesting article on Constant Disruption and how that is becoming the new reality for all of us. The question is whether equilibrium is a thing of the past?

According to the article, in the past disruptive technologies were always followed by a period of stablity – a period when people and businesses had the time to employ these technologies and achieve optimisation and improvement through their use. However the rate of breakthroughs in digital infrastructure has been increasing. Advances in computing, bandwidth and storage are happening so fast that long term plans in several industries need to be very short.

A great philosopher once said “The only thing certain is change”. And I agree that change is increasingly constant. The article made me think:

I have often heard the question of whether technology is being pushed for technology’s sake. I understand that sentiment. There is a lot of confusion. And not just in the user community but even among the creators and providers of technology. To be honest I am not sure when Web2.0 started and where it is now, and I know some who think that Web3.0 and 4.0 are already here.I am beginning to feel that technology is creating not one but multiple realities; I may prefer to IM with someone in the next office but walk up to a partner two blocks away, and I prefer a microchip for my computational needs but don’t really need a programmable kettle. So some of the mechanisms and models that these technologies bring for us in our personal and professional lives will fail. And those that last (at least for a while) will always be in flux. Personally I think its great that there is no right or wrong answer, that nobody knows. It should be liberating for both users and businesses. It reduces some of the fear in getting it wrong. I think we can be pragmatic and pick those realities that bring some meaning to us. The bad news is that there is no sitting on the fence either. We need to live some of these realities or face extinction.

I welcome your thoughts.

Platform Competition, Compatibility and Social Efficiency

I came across this interesting research paper by HBS on platform competition and compatibility.

In summary: Many markets are characterised by 2 sided virtual and/or physical platforms where agents exchange and are charged a fee by the platform provider. The research by HBS scholars shows that profits are higher for providers if their platforms were compatible (such as when they are based on a common standard). Platform compatability generally leads to equilibrium in an oligopolistic market, and obviously benefits society best. Platform incompatibility on the other hand leads to lower profit margins, but allows one market player to gain dominance over others and earn more. The research thus shows that competition is a major factor preventing platform providers in agreeing to a common standard.

Looking at it in terms of pure supply and demand this makes complete sense. Airlines want to be overbooked. Supermarkets may squeeze their suppliers, but cannot afford to lose their customers. I can think of no industry where providers wouldn’t want a higher share of the demand.

In platforms, there is an interesting shift taking place though now with cloudware or Platform-as-a-service (PaaS). Without being an expert on this topic, I believe that the differentiation between users and developers is getting increasingly blurred. What dynamics shape pricing on such platforms? I think these platforms are still based on propreitary technology thus creating lock-ins. Is that still true for Google Apps Engine though? I don’t know, but I would love to hear from others who do.

On a personal note, I am currently involved with a trading platform in reinsurance. And while there is a common standard that all platforms adhere to, I still think that existing platforms are more aligned to one side. There is a definite empathy for one side of the platform user base.  Interestingly, the reasons are many. Not just competition! Trading platforms in this sector are still new. They are not the norm and not (yet) highly competitive. So it will be interesting to see how this develops. Any thoughts welcome.

You can read the research paper over here.