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Wednesday, March 09, 2005

Asian Century : The Rise of Innovation in Asia

Jeff Nolan points out to the HBSworking article on Rising asian innovation prowess.We recently covered John Hagel & John Seely Brown's detailed writeup here and here stating,"Far from being easy targets for exploitation, emerging markets are generating a wave of disruptive product and process innovations that are helping established companies and a new generation of entrepreneurs to achieve new price-performance levels for a range of globally traded goods and services". David Kirkpatrick writes,"After my trip to India last month,my worldview has been changing" -" Now I'm aware of how quickly the divide between the developed countries and developing ones is closing. Seeing what’s happening in India helps make it clear that the U.S. can no longer count on remaining the world's technological leader". To stay competitive with India—and other emerging economies—it must do more to train young Americans in the sciences and technology. David adds, "Jeff Immelt, CEO of General Electric, explicitly drew the link in a reent discussion - "In India and China," he said, "30% of the students get science and engineering degrees. In the U.S., it’s 4%." In India, it is every parent’s dream that his child become either an engineer or a doctor. In the U.S., engineering is considered uncool. Citizens in other nations— India, China, and elsewhere—show a more tenacious work ethic and a greater willingness to tackle tough subjects like engineering". Also add the fact that India has the maximum number of young people in the world today and also the maximum number of english speaking young people.The Economist captures this succintly when it wrote,"A broader view of innovation that values the role of incremental change communicates the power of bootstrapping.Companies that start out with limited capabilities—such as those in many developing economies—can rapidly build them over time through a series of modest process and product innovations. Ultimately, individual innovations may matter less than the institutional capacity to sustain a rapid series of improvements and the pace at which they are developed and disseminated through the network. The principles and examples are very illuminative, but Asia( nay india) may need to do more to change the rules of game decisively across all shades of the spectrum. We also covered recently about the Heightened interest about India.
The HBSWK article says,"Although Asian countries have been able to use cost advantages and software coding prowess to attract outsource business from around the world, the region is quickly moving up the value chain to challenge America's leadership in innovation". AsHBS professor Warren McFarlan put it,"researchers in the U.S. may soon have as much to fear about losing their jobs to overseas competitors as call center employees do today". Executives debated "The Present and Future of Innovation in Asia" during the 2005 Asia Business Conference held on February 19th at Harvard Business School. A recent survey of 200 mostly Fortune 500 companies found an "irreversible process" of traditional white-collar jobs being sent to Asia, said Arie Lewin, a professor and director of CIBER, sponsor of the study. The article adds India is the favoured destination.We also covered in our blog earlier the Indian Industry's perspective - in the words of G.B.Prabhat -Across every industry spectrum, there is potential for knowledge work to relocate to India. and also covered India Inc moving towards delivering high value work.More and more, Lewin said,the work being outsourced goes beyond call centers and similar services to include research, HR functions, and engineering services. He expects organizations to create Web-based organizational structures that will help them compete globally. Certainly the United States has no lock on innovation, panelists suggested. Technology is the great leveler, the powerful ingredient that can catapult a company, an industry, and even a country to the head of the class almost overnight, said Kiyotaka Fujii, president and CEO of SAP Japan Co., Ltd.HBS professor McFarlan said it is clear that Asia has benefited from the Internet's ability to send work—including highly-skilled work—easily around the globe. "Asia is competing in the global technology-enabled game," he said.
My Take: All these are good developments and would only serve to make the globe more prosperous and this need not be seen as negative development in the US - After all the US is the engine of the global economy and traditional leader in innovation and applied research - hopefully these developments would spur the US to accelarate their preparedness and progress but we shall defintiely see a more prosperous and vibrant Asia in the next two decades. Thing also would not go on an autopilot mode for Asia - it is also beset with several social and economic issues that needs to be addressed right away to make the growth braodbased and sustainable.

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