As our Hon’ble PM said, “Mind is never a problem. Mindset is” and this is what the theme of ‘towards world class manufacturing’ involves. This is relevant and significant when government initiatives such as ‘Make in India’ are shaping the policies and industry jargons such as ‘Industry 4.0’ are guiding the corporate practices. The implied assumption is that world-class manufacturing is panacea to all that ails India’s manufacturing sector. But the questions one has to ask is ‘What is world class manufacturing?’
If world-class manufacturing is to be defined by the North
American and European standards, then naturals constraints of raw materials,
and artificial constraints of government policies, corporate practices,
business norms, and path-dependent nature of industrial development, place India
at a d i s a d v a n t a g e . I n a r e s o u r c e constrained environment,
industrial d e v e l o p m e n t p a r a d i g m w h i c h developed and became
institutionalized over the last many decades, makes it
extremely difficult to keep pace with the r a p i d l y e v o l v i n g m a n u f a c t u r i n g development paradigm.
The recent figures from 2015 indicate that manufacturing sector contributes 17% to India’s GDP and employs 50 million people. As per Prime M i n i s t e r ‘ s v i s i o n , b y 2 0 2 2 , manufacturing contribution to GDP should be 25% and it should employ more than 150 million people. To realize this vision is an extremely difficult task as Indian manufacturing sector is not only a laggard amongst its peers but is also among the least competitive in the world, as per the Global Manufacturing Competitive Index, 2016.
In a highly competitive and rapidly evolving global environment, it necessities a business leader to ask the question – why keep moving “towards world class manufacturing, “why not shift the paradigm of world class manufacturing?” Answer to this question builds on the principles of Comparative Advantage of Nations, a
classical management philosophy which promotes that competitive advantage of nations is built on maximizing strengths and not from minimizing weaknesses. In the same vein, manufacturing sector needs to focus on strengths of India. The comparative advantage of India is its demographic dividend, the high caliber students and youth of our country. In the words of our Hon’ble PM –
“Mangalyaan was made in small factories in India… proves there is no dearth of talent”
These words of our PM show what our youth and our country is capable of. Indian IT industry, which has set the standards for technology-led economic development both abroad and in India, is an effective case study of how our talented young professionals, when guided and supported, can make a difference on a global stage.
As manufacturing industry leaders, we need to catalyze and channelize the
passion and capabilities of our young professionals and entrepreneurs to develop impactful solutions to complex problems of Experience Economy that we are in. This paradigm shift provides o p p o r t u n i t y f o r p a t h – b r e a k i n g innovations which will render ineffective competitive advantages of yesteryears a s n e w b u s i n e s s m o d e l s a n d innovations will redefine the industry
norms and standards. Fundamental innovations in manufacturing are required ranging from new materials, new processes, new products, and new practices.
Though the dilemma of “capturing m a r k e t s h a r e f o r c u r r e n t p r o f i t m a x i m i z a t i o n ” v s . “ c a p t u r i n g opportunity share” for future wealth creation and the associated question that rises out of such thinking – ‘how do we have access to future opportunity share by investing in innovation, while we focus our efforts on our primary fiduciary duties and economic goals of maximizing productivity, performance, and profitability today?’ – are always high in decision optimality for a leader. Based on experience as a serial entrepreneur and an active investor, one approach that I have identified, which provides an effective solution for companies in resource constrained environment is to become part of larger innovation ecosystem which reduces the cost burden on individual company
and which allows innovation to bloom outside the constrains of corporate P&L statements.
One particular mechanism is to collaborate with local startup incubation centres, where, at the nexus of radical thinking of young minds, shared expertise of industry resources, and support of government policies, allows for the creation of solutions at the frontier of innovation for New India. Incubation centres are not only a birth place for the innovation but also a breeding ground for creative solutions based on existing technologies, and lastly, it’s a pollination network for co-creation of innovation, technology commercialization, and corporate innovation. By sponsoring innovation challenges a corporate can retain internal focus on current product portfolio and R&D pipeline and use it as an external innovation lab. By engaging with these incubators, companies can cross-breed ideas and technologies with others to create innovations.
India has the entrepreneurs with the a p t i t u d e t o e x c e l a t c r e a t i n g manufacturing innovations and creating industries of the future. However, there are other elements of the ecosystem that are either in nascent stages of development or completely non-existing in most places. For example, product start – ups need expert technical
mentoring, though service and software start-ups also need mentoring, but the requirements are more complex and challenging for product start-ups. Secondly, and more importantly, product start-ups have critical need for prototype development and minimum viable product development (MVP) resources, facilities, and funding. Finding such manufacturing facilities is not feasible in most cases for fledgling start-ups. As a result, a lot of interesting ideas never move beyond the concept s t a g e a n d s e e t h e l i g h t o f commercialization. By providing not only the usual incubator benefits such as office space and the ability to network, manufacturing incubators can o f f e r a c o m m o n i n f r a s t r u c t u r e composed of tools, machinery and other benefits that would otherwise be too expensive or difficult for anyone startup to procure.
There is a significant rise of cutting-edge manufacturing technologies that is transforming the industry with upcoming start-ups and the innovation they bring in. And those startups, before they can further innovate, will require the kind of support and infrastructure only a corporate manufacture incubator can provide. These incubators are the place that nurture the young entrepreneurs and dreamers, who unconstrained by the industry dogmas, are using their creativity and critical thinking to solve
complex challenges and develop innovative products. Innovations done at these incubation centres, collectively across India, will help set new industry standards, boundaries, and trajectories of growth.
Though
India has 3rd largest number o f s t a r t u p s , t h e n u m b e r
o f manufacturing startups is insignificant. Unintended consequence of this is
that first, these startups are low on innovation scale, which may not be
significant for individual company but at t h e a g g r e g a t e n a t i o n a
l l e v e l , determines the country’s innovation index and defines its growth
trajectory. Secondly, the number of startups may be large but since these are
service and e-commerce oriented, the employment generation and multiplier
effect they have on the economy is limited. Economic growth is a function of
employment generation which is provided primarily by start-ups and companies in
the manufacturing sector. Though the challenges are many but it is of paramount
importance to support the
d e v e l o p m e n t o f h i g h i m p a c t manufacturing start-ups. The start-ups which drive innovation and widen the frontiers of the industry by opening new avenues for growth in the country.
It goes to reason that not only incubation centres are critical for the d e v e l o p m e n t o f i n n o v a t i v e manufacturing startups but the benefits t h a t e s t a b l i s h e d m a n u f a c t u r i n g companies can derive from supporting and engaging with such centres are significant in terms of profitability, productivity, people, and processes. It is equally important for government to support such incubators, as viewed whether from the perspective of social development, economic growth, or strategic self-reliance, a strong and advanced manufacturing industry is essential.
Believing in the economic rationale of manufacturing startup incubators and having faith in the capabilities of our young entrepreneurs, Mr. Sudhir Mehta, Chairman and Managing Director of
Pinnacle Industries, has established a manufacturing startup incubator, AIC-Pinnacle, in Pune. This is a not-for-profit initiative, supported by Atal Innovation Mission, NITI Aayog, GoI. This initiative is fueled by the underlying belief that industries of today should support and nourish the industries of tomorrow. Active involvement and participation of industry leaders is critical to the success of this community initiative.
With the prodding push of favorable
government policies, marshalling the
c o l l e c t i v e s t r e n g t h s o f l a r g e s t
demographic dividend, following on the
path blazed by our global IT companies,
a nation is on the rise and people are on
the move. As manufacturing industry,
let’s believe in the power of innovation
and collaborate to surpass the vision of
our Hon’able Prime Minister of “Make in
India” and realize the ultimate goal of
“create in India”.
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J e e t Vi j a y, C E O , A I C – P i n n a c l e Ventures
Email : [email protected]