Review: Harsh Realities

Read Time:7 Minute
 Harsh Mariwala’s book–Harsh Realities–was a highly anticipated Indian business story of one of the biggest FMCG conglomerates in the world. Mr. Arun Bewoor, a marketing and advertising professional, and a former President of MMA, digs deep into the book and shares his insight on some of the points touched by the narrative.

Arun Bewoor

When the Philadelphia Mayor unveils the statue of Rocky Balboa in the eponymous movie Rocky III, he says: “Every once in a while, a person comes along who despite the odds defies logic and fulfils an incredible dream. Touched by your accomplishments we today celebrate the indomitable spirit of Man.”

Was Harsh Mariwala a similar maverick in a similar situation when he decided to enter the tough, competitive FMCG market in the country? Unlike the boxer who needs only his gloved fists and strong legs to win a match, Mr Mariwala realised, to compete in the arena, he would need a team of experts who could help in the challenges ahead. He quotes Steve Jobs: “Great things in business are never done by one person. They are done by a team of people.”

One of the interesting chapters (no. 8) in the book relates to the hunt to recruit talent. There could be no compromises or any shortcuts. The chapter delineates the search and quest for managers with multi-disciplined skills and who shared his vision. At the best of times, a family-owned company based in Masjid Bunder in Bombay was not an attractive inducement. But Harsh Mariwala was obviously good at sharing the revelation of what he had seen and planned for Marico. Here, he elaborates to the identified candidates that it was an opportunity to not just perform on a portfolio offered but to build an enterprise and create an institution for posterity. He obviously succeeded in transferring his dreams to the persons selected for critical functions of Marico. They served the company with rigour and energy and certainly laid the bedrock for how the firm evolved over the next three plus decades. He accesses external sources where needed and also acknowledges the unstinted support he received from his paternal uncle (Kishore Mariwala), who possibly envisioned that Marico could develop into a branded FMCG firm to compete with the best. Later in the volume there is a certain poignancy as some of these stalwarts appreciate that Marico has outgrown them and they may have outreached it in turn. They exit with dignity, satisfaction and pride at what they leave behind. This is where Harsh Mariwala displays nerve and faith to execute what he proclaimed.

Bill Gates (Microsoft) once said: “One of the most difficult tasks for an entrepreneur is to have the confidence (or is it courage?) to ‘let go’.” Not just step back from Operational Management but to literally and figuratively hand over the reins to professional managers. No primogeniture succession, no looking over the shoulder, no ‘continuous’ meetings to review progress. Despite reluctance from family and protests from well-wishers, Harsh did ‘Let go’–a rare occurrence at the best of times. And his gamble, as this story unfolds, has paid off. Competent and capable executives took charge and have more than met the standards that Mr Mariwala set for himself and them.  The book inevitably starts with the wrenching decision to break away from an established, recognised family business in commodities and do what all companies desire but not always have the wherewithal to actually do: Add Value. Internecine battles followed with endless meetings and negotiations to reach an acceptable decision to satisfy all components.  Persistence was the key, and it succeeded. Mr Mariwala was the Captain of his boat, the sails of Marico were unfolded to catch the wind. The journey had started.

The buying of the key raw material (Coconut Oil) had been built through a reliable relationship on quality, price and export. The inefficient and lengthy distribution chain was shortened, eliminating intermediaries and offering a better value to the Farmer. One brand (Parachute) was already well recognised by consumers to represent a level of quality. That emotion needed to be reinforced and spread. Marico’s coconut oil could not and should not be considered a commodity.  At the start, as expected, funds were a serious barrier. Borrowing was not easy. But again, resilience mattered. The reputation and stature of the Mariwala clan helped while negotiating with lenders. Uday Kotak turned out to be a white knight. This was critical with Marico’s IPO. It allowed investment and spending on a scale that otherwise would have cramped expansion and resulted in moribund and inadequate efforts.

Building the brands–Parachute and Saffola (Cooking Oil)–was a challenge in a market with tough competition from strong players. And here is where Marico scored with innovation, strategic thinking, use of technology, deep consumer understanding, creative advertising, wider and deeper distribution, making allies with the trade and something as simple (and yet revolutionary) as packaging. Altering the shape of the final pack for easier stacking, using pilfer-proof caps and having better graphics made an impact on the cooking oils market on a scale not witnessed before. And as any corporation realises the daring to remain ahead is continuous – no marking time, no pause. With success, other brands followed. Sweekar (later discontinued) was launched on a price platform. More significant was the diversified portfolio into hair care, fabric care. The food business (an undoubtedly difficult market to battle in) was entered through cereals. Skincare was more elaborate with Kaya clinics–specialising in complexion, hair removal, enhancing beauty. This was a first for Marico in a Direct-to-Consumer business. The participation in the market via a broader product range with decreased dependence on one or two categories, marketing became more robust as seasonal variations were ironed out. 

M&As to accelerate growth followed with focus on similar product lines and geographies, with expertise more readily available. In hindsight, some acquisitions and JVs seem a knee-jerk reaction without much forethought. Some ended before really fructifying. Others succeeded and formed an integral component of the Marico universe. Time gave the perspective and experience provided the maturity for more surer and reliable partners and ventures. One theme that streams through the book is about the set of values which were defined, elaborated, communicated and ingrained into the very soul of the company, which is now rapidly expanding with new managers, trainees, and technicians on the Board. The values went beyond the vision and strategy. They cut across company departments, budgets and reviews. Rather, they propagated norms of behaviour and practices which are repeated and reinforced. As founder and CEO, Harsh Mariwala felt that the business had to be conducted under certain norms and within a framework that was enunciated in the values. An entire chapter (no. 9) is devoted to this subject. What did it mean and how did it impact the manner business was conducted? Values become an almost core competence.

The text right throughout the book is straightforward and candid. It reflects the author’s profile of humility to the point of self-effacement. The influence of Ram Charan (co-author and Harsh Mariwala’s guru) is obvious. Events of importance, milestone markers, decisive times, inflexion points are written without drama or histrionics. This reviewer feels some parts could have been spiced up. Particularly the episode on the rather savage call from the Hindustan Lever Chairman threatening to buy out Marico or else…. Mr Mariwala makes no dramatic sweep, except displaying restlessness that converts to resolution and defiance. How the saga ended with Marico buying the very brand Unilever wanted to leverage (pun intended) is well told and forms part of company lore.

Since its founding in 1990, the company’s sales, market cap, and stature have grown leaps and bounds. Marico personnel are valued and respected. Marico brands are well-known. Awards and recognitions followed. Marico is a respected FMCG company in the Indian economy. It is included in relevance and with reverence when business papers comment on Unilever, Nestles, Colgate, Godrej and others.

The book later covers the author’s encouragement to entrepreneurship, a meaningful CSR, the Ascent Foundation, Health Initiatives and others. 

To quote Ralph Waldo Emerson: An institution is but the lengthened shadow of one man.

So, what next? The vision will set the pace. Values will hold the company. Innovation will keep it ahead. The journey continues as it must. The road ahead beckons.

Fears of Global Recession & Impact on India

Read Time:19 Minute

With the world in turmoil, how will India look at the future? What are our options? What is dragging us down and what is helping the country to move ahead? These and a lot more questions were answered in this engaging event by eminent speakers.

The global disruption

Dr. S Narayan, IAS (Retd)

Former Economic Advisor to the Prime Minister

It is always interesting to talk about Indian economy because there are always lots of both good things and bad things to say about it. Let me start with the bad things:

Globally, there’s a problem. In Europe, most of the rivers are dry. BASF is a huge chemical plant south of Frankfurt and it moves all its raw materials by barge. They have cut down production by 30%. Because the river is dry, they are not able to move the raw materials. The Rhine and Danube are dry. Temperatures are going over the roof. With the Russia-Ukraine war, there is not enough energy available there. Globally, LNG is hugely in short supply, so much so that Bangladesh and Pakistan have shut down their LNG power plants. We are also scrambling for LNG. Normally we get it from Qatar. But Mr. Doval had to go to Russia to try and get some LNG for us because we have a great LNG demand, which has developed over the last 15 to 20 years.

Plight of the US

US inflation is about 7 or 8%, which is the highest in about 40 years. Because of the increase in interest rates, etc., there’s a slowing down of US economy. Housing prices have risen by 20%. Purchasing has dropped. At the same time, people are not turning up for work. School bus drivers are offered 30 to 40K$ incentive just to sign on to be a school bus driver. They are paid $22 an hour whereas the minimum wage rate is about $15 an hour.

That’s a disruption not just because of the war. The Russia-Ukraine war has certainly disturbed a lot of things like energy, food, wheat, sunflower oil, to name a few. There’s sharp increase in commodity prices. Last year, it came down because of a certain amount of deflation. China is also not going well at all because of their policies like zero covid. Shipping costs have doubled. Containers are stuck. Unloading at ports is not happening. Even at the height of the pandemic, things were better off economically than what it is today. Britain is in a free fall. Whoever wins, will have a tough time to bring the economy together.

Effect on India

What is the effect of this on India? Our costs of imports–coal and oil being 10% of our imports–are going up. Exports are dropping. In the entire Tirupur-Coimbatore-Erode textile belt, order bookings for the winter season is 30 to 40% lower than last year, which was a boom year and people made lots of money. IT and Services including Google and others are laying off employees. We have heard of 150 basis point increase in interest rates. We are also running a 6 to 7% inflation. We have run down on wheat stocks because we exported a lot. The wheat prices internationally got high, so we did not procure as much wheat. Because of delayed rains, wheat sowing is about 10% less. We are going to have a sharp increase in wheat prices and by this time next year, our chapattis and rotis will cost more.

A different picture inside

If we look inside, we get a different picture altogether. Though international IT orders are dropping, local digitalization is moving very fast. In fact, the IT sector is short of qualified and skilled personnel. Today, you cannot get a good developer or AI guy in Chennai as it has become a backwater for IT. IT skilled people have moved to Bangalore, Hyderabad, Pune or Indore. But overall, domestic IT is growing quite rapidly. We see TCS and others recalibrating their employee salaries and perks. They know their international business is coming down but local business is going up. So they manage their costs differently.

After the opening up of economy post-Covid, there has been a huge pent-up demand on all fronts. Hotels are full, though hotel prices have gone up by double. Restaurants are full. As there is a lot of travel, there is demand for taxis. Everybody is spending, driving consumption in many ways. Even the sale of white goods is up. Capacity utilization in Indian manufactured goods, which is usually based on domestic demand, had come down to about 55% during the pandemic. It has already gone up to 62%. More importantly, we rely heavily on the SMEs. In Tamil Nadu, which is one of the biggest SME centres, capacity utilization in SMEs has gone up at least by 10%. It means that production has gone up enormously. There is request for finance to expand and to invest in capital goods. Sales of two wheelers and four wheelers have gone up. EV sales are up. Though July has been a poor month, the PMI index is more than 53%. The equity market is bouncing back and foreign investment is coming back into the market substantially.

Startups in manufacturing

The time for the startups is gone. You will not see much of new IPO issues. We will see a movement from startups in the services sector to startups in the manufacturing sector in the next couple of years. Chennai is one of the major startup centres. There are hundreds of startups in the IIT campus, which make very innovative things like sensors and 3D manufacturing equipment. In agriculture, though wheat is going down, this year we got good rainfall in the southern parts of the country. So rice production will go up, and farmers will be more benefited. They will buy tractors, pumps, agriculture equipment and fertilizer. Increased farm income will also drive consumption.

So definitely, we are growing very comfortably. Our economic growth, considering a nominal growth of about 13 to 13.5% and inflation, real growth will be 7 to 7.5%. Tamil Nadu is extremely fortunate because of the large dispersion of industries and a good agricultural season. Telengana, Tamil Nadu, Maharashtra and Gujarat will be the star performers this year and they will outperform national average by 30 to 40%. Telengana is better off than Tamil Nadu in many spheres.

We are affected because we import oil and coal. We are dependent on China as well. Our China imports have gone up enormously and we need to do something about it. We continue to nibble at the edges and we have not got the solutions to the core of the problem. However, infrastructure investments are happening in defence, roads, ports and ships. That also will create opportunities in steel, cement and other sectors.

So, this year, we are comfortable. But we always skate on the edge, sometimes because of our own mistakes and sometimes because of global mistakes. Hopefully, we will remain on the right side of the edge all of this year.

Like it or not, we are dependent no China…

Mr Raghuvir Srinivasan

The Hindu BL

Recession or the ‘R’ word is being used very freely. Textbooks define recession as two successive quarters of contraction. The impact of recession on economy, nation and people is very severe. So the word should be used very carefully. People call every slowdown a recession either because of lack of understanding or to create a fear psychosis or for other reasons.

Are we on the throes of a recession? Is the globe on the throes of a recession or is it going to stare at recession? I would say no, though there are lots of factors to be worried about. There are tremendous headwinds. The two engines that run the global economy–US and China–are in trouble. Europe is in equal, if not greater, trouble than the other two. That leaves only India as a big major economy, which is looking at a positive growth this year.

The global scene

The US is looking at a deep slow down, if not a recession. The first quarter was negative growth i.e. contraction. The second quarter was also a contraction but less than 1% and it has since improved. We will soon get an indication of the Fed’s thinking on the economy, inflation and interest rates. The US is in a spot of bother. There’s no question about that. There are a lot of positives that are happening. Consumer sentiment in the last one month apparently has picked up and jobless claims are coming down in the US.

Europe is in a deep hole of its own making. You have 10% inflation in the UK and predictions are that it will go up to 17-18 percent over the next year and a half. There is a runaway inflation in other countries in the European market.

Energy costs are primarily driving this inflation, thanks to the Russia-Ukraine war. We are not even looking at the worst part yet, which is going to be the winter with gas supplies dwindling and gas prices going up. LNG is now at 55 per MBTU. The normal price is around 10 to 15$. The UK is messing itself up in more ways than one–politically and economically. That’s the second factor.

The China factor

One country which is escaping the radar is China, which is in an even greater trouble than the United States, thanks its zero covid policy or whatever. The second quarter growth in China was 0.4 percent. The IMF has said that the growth for 2022 for China will be 3.3%, which is unimaginable. It’s a 40-year low. There’s political uncertainty as well with the party Congress likely to happen in October and President Xi Jinping is setting himself up for a third term. There are some political backroom manoeuvres going on. There is the Taiwan crisis and eternal tension with India. The factories are locked. Shenzhen, which is the electronics manufacturing hub, went through shutdown a couple of months ago and there are dire predictions for the world’s electronics and automobile manufacturing. We are more dependent on China than what we realise.

China property’s market is in trouble. Loans are not being repaid. Mortgages are not being respected by borrowers. Three weeks ago, in the city of Hainan, the Chinese government had to bring tanks onto the streets to drive away depositors who were standing and protesting outside banks because they are not able to withdraw their money. That is a serious situation. Across the whole world, when central banks are tightening their monetary policy and increasing interest rates, China alone dropped interest rates. Therefore, China is a greater worry than the United States at this point in time. What about the other big worries? The crude prices went past comfortable levels. They are now at a manageable level, though they are still very high. Crude oil, along with China, will be major determinants of what’s going to happen to the global economy in the next one year. If energy prices continue to shoot up, it’s going to cause mayhem in Europe and United States as well. There are already moves to resurrect the Iran nuclear deal, so that Iran’s oil can be brought back. But even that may not have much of an impact. This is the broad global scenario which we are up against. Does this mean that India’s prospects are also bleak?

Not a recession

I would stick my neck out and say, ‘no!’ There is enough to worry about in India. Not everything is hunky-dory, but I would still be cautiously optimistic about India’s prospects in the next year. We’re not looking at recession, for sure. That is not going to happen. It’s a question of growing at 7 or 6 or 5%. Even at 6%, India will be the fastest growing major economy in the world. Even multilateral agencies like the IMF and World Bank say this.

Our inflation in the last six months has been above the comfort levels of the monetary policy committee’s limits, which is 4% plus or minus 2%. We went past seven and dropped to 6.7. The good news is the trajectory is going down. The RBI Governor went on record to say that the inflation may have peaked in April. It is certainly something that we need to keep an eye on, considering our problems with the energy prices.

An intelligent budget

What are the things which are working? We have a stable, macroeconomic environment. Even with the fiscal deficit at very high levels, it is still under control. Government revenues and tax revenues are galloping. Direct tax and GST revenues are on the higher side. There may be worries for the government on the expenditure side but not the revenue side. This year’s budget was crafted very intelligently. There are enough buffers built into it for the fiscal deficit and it is a very conservative budget. The estimates for revenues are pegged quite low. Disinvestment is not going to happen this year, the markets being what they are. To compensate for that, the government got 1.5 lakh crores from ‘spectrum’ sales. The government is very confident of meeting the fiscal deficit target, if not overachieve.

CAD: The real worry

The worry to my mind is not fiscal deficit but the current account deficit, because exports are in trouble, largely because of the slowdown in the west and India’s major markets. Two months ago, the government imposed export duty on petroleum products. They had their reasons but it has lowered our exports of petroleum products. With exports falling and imports rising, especially because of crude oil and gold, our trade deficit is ballooning. It was $150Bn in the first quarter of this year. Last year, it was $40Bn–a 2.5 times increase in one year. We are looking at a CAD of over 3% for this year which is quite on the borderline of what should set alarm bells ringing. Last year’s current account deficit was 1.2%. So this is a problem, especially in a situation where capital flows are under threat.

When RBI rushed in…

We saw what happened between March and July, and even now it’s happening in some measure as capital started going out of this country when foreign investors started selling in the stock market and pulling out the money. About 13 or 14 billion dollars were pulled out between April and August first week from the Indian markets and the impact was immediately seen. The rupee started going on a cartwheel and the RBI had to step in. Of course, it has a huge arsenal–$650Bn of reserves. They spent 20 to 30 billion dollars to support the rupee and yet it went down from 75 to almost 80. Today, it is a shade below 80. This is a risk we need to be mindful of, due to its impact on the larger economy.

But the good thing going for India today is that our financial system is quite robust. Banks, which were reeling under NPS four years ago have cleaned up their balance sheets. They are strong now and in a position to lend. The latest data released by RBI shows that bank credit growth went to 14% in the April to June period, compared to 5% last year. In 2016-17, India was hit by sick banks and sick corporate sector. Both are now cleaned up. Thanks to Covid, the corporate sector has slimmed down and they are now in a much better position than what they were 4 to 5 years ago.

Consumer sentiment

Consumer sentiment has picked up, thanks to the pent-up demand in the last few years during Covid. People are out buying everything they can lay their hands on. People are travelling and spending on luxury goods and gold. The next three months marking our festive season, beginning with Onam soon in Kerala and ending with Diwali in October-November are going to be crucial. There is a heavy booking of passenger cars, and companies are not able to handle the demand. The constraint comes on the supply side, for various reasons, like the chip shortage for automobiles.

To sum up, the positives are a strong financial system or stable macro environment as of now. We need to watch some variables like CAD, inflation, and interest rates. Consumer sentiment will depend on how interest rates move from here. We have already seen a 1.4% point rise in interest rates by the RBI in the last three months. We will begin to feel the full impact by September-October. There are more rises in store, I think.

Take care of the Delta

The Western central banks are now in a coordinated operation, raising interest rates and making capital scarce. Assuming that inflation goes down in India and that India is in a comfortable position where it need not increase the interest rates, will it be able to do? That is the question mark. Because if we don’t maintain the delta between interest rates in India and the West, there are chances of capital outflows and the rupee will be in trouble. The central bank is brave, but they raised rates one fine morning. The next night, the Federal Reserve was all set to raise rates by 75 basis points. If RBI had not increased rates on May 4th by 50 basis points in India, the rupee would have been in trouble the next morning in the markets. This is a risk we are running. Now, this is a part of the globalized world.

When you get capital flows, asset prices rise and you make money. Everybody is happy. The sensex goes to 60,000 and people celebrate. When the opposite happens, we should be prepared for that. That’s the risk I would like to flag.

Despite challenges opportunities galore…

Mr P Ravichandran

Danfoss Industries

I believe the moment has arrived for India and Indian economy. Post pandemic, there are two important challenges the world is facing: one, of course, is climate change, the cost of which has been quite devastating on every country and there has been a general consensus on decarbonisation of economies. This is opening up new frontiers for industry.

The second biggest challenge is the 6-month old war between Ukraine and Russia. It has disrupted three areas:

a)    The food challenge; Ukraine has been a very prosperous agricultural part of Europe.

b)    Supply chain of raw materials for future technologies; Ukraine has raw materials for future technologies on mobility and hybrid solutions for a lot more.

c)    Supply of defence equipment, Ukraine being a large exporter of defence equipments.

The PLI scheme

The Centre’s efforts to push the PLI schemes has attracted investment in many sectors. The PLI schemes were launched for many reasons–one, to de-risk India by reducing imports. Manufacturing has picked up, and there has been a positive growth in the export of automotive components in the last two months from India to the rest of the world. The government’s impetus on the ease of doing business has helped both new and existing businesses. Many new industries are coming into India, especially the semiconductor sector. About 3 to 4 years back, our mobile industry was more into assembling. Today, there is more of local production of PCBs, air conditioners, electronic sub-assemblies and consumer durables. In 10 years’ time, we will be as big as China in some of those industries.

Though there has been a push back on the agricultural reforms, but in the last 3 to 4 years, value addition in agriculture has gone up. We also see the seafood industry moving from just producing seafood to seafood cultivation as well as offering value-added branded products. The food and food processing industry is today the biggest employer, putting more employment than the IT industry. It is the real sunrise industry, and India has a great opportunity to become the food basket of the world in the next 10 years. The biggest challenge the industry is facing is managing the supply chain. It has become a nightmare because we have a lot of dependence on components that comes from rest of the world, especially the electronics components.

The renewable opportunities

The second area that we see is the cost of electricity. India produces about 500 GW of power and still about 60% to 65% comes from coal. Indian coal is not as efficient as imported coal, say for example, coal from Australia. In this backdrop, there has been a big push by the government on the renewables and on energy efficiency. The energy efficiency act has been enacted and government has started energy labelling program. It has made many SMEs to use energy efficient products. Many have cut down on energy bill in lighting by introducing technologies like LED. We have close to 20 billion dollars equivalent of LED manufacturing footprint in India.

Indian automotive industry has a great potential to deliver to the rest of the world. India is already there in many of the world markets. Indian IT companies can partner with a lot of automotive companies to really play this game very differently in the future.

Focus on ESG

Many companies see ESG as a vehicle to survive the future. We see a lot of investment happening in India on the water side. In agriculture, government is nudging to use less water by changing crops. Telangana and MP have done remarkable work on water. It is attracting a lot of investment. There is no other country in the world which is growing as fast as we can in electric mobility. What really stops us is the availability of raw materials and the right pricing, because the supply chain is still not ready to absorb all the price increases but the technologies are already there. The charging infrastructure needs to be built and there’s a lot of work going on. This will open up a lot of opportunities.

The third area of opportunity for India is decarbonisation of heavy industries. Some of the cement manufacturers have said they want to be carbon neutral by 2028. By 2025 or 2026, carbon tax will likely come in Europe and so, some of the textile companies are looking at decarbonisation as well. Demographics and the digital capabilities are two great advantages for India.

ONDC: The game changer

We have a great opportunity to build a lot of India centric digital platforms. The initiative by Mr Nandan Nilekani on the ONDC (Open Network Data Commerce) would be a game-changer for India because this is a platform which will enable someone sitting in a village corner sell to someone sitting in Delhi. India is a country of 30 + states. Lot of innovation is happening everywhere. The people from bottom of the pyramid are moving up and creating many opportunities.

Ukraine Crisis: Is the global focus moving back to Europe?

Read Time:16 Minute

Kanwal Sibal, India’s former Ambassador to Russia, focuses on where the West went wrong, Putin’s calculations, and how the world is shaping up to the new realities.

The global focus is moving back to Europe, but in my view, in a negative way. The West failed to construct an inclusive, security architecture in Europe after the demise of the Soviet Union. There were many promises made to former Soviet President Gorbachev by a host of Western leaders that NATO will not go an inch beyond East Germany. That was one of the political basis for the unification of Germany. This narrative is sometimes contested because this promise was not written down. But Matlock, the former US ambassador to Russia has confirmed that this promise was given by various leaders including the British.

Eminent American scholars who dealt with Russia and the issues of NATO enlargement over the years, like George Kennan, Robert Gates and William Burns—today the CIA director—have been emphatically speaking against the East-West expansion of Europe and have characterized it as a grave error by the West, which would inevitably invite a Russian response.

It also needs to be mentioned that after the demise of the Soviet Union, Russia actually wanted to become part of NATO. Even President Putin in his earlier years of the presidency wanted that. He thought of himself as a European and Russia as a European country. But this was spurned by Europe. The Western and American point of view was that there was an opportunity to permanently weaken Russia geopolitically. They thought it must not be missed when Russia was weak and is incapable of any response. They wanted to isolate it from Europe.

Interference and expansions
They have been five expansions of NATO, in phases, since the demise of the Soviet Union. I was the Indian Ambassador in Russia when Putin at the Munich Security Conference in 2007 gave a very impassioned speech against the expansion of NATO. This was not heeded. In 2008, Georgia and Ukraine were offered membership of NATO. The Georgian President at that time, Saakashvili, thought he had some encouragement because of the offer of membership. So he tested the waters. The result was that Russia took military action and two separate Republics, which were historically not part of Georgia became independent republics—Abkhazia and South Ossetia. These were recognized by Russia. So Russia had very clearly drawn a red line, but this was ignored.

In 2014, Ukraine witnessed the Maidan protests, which resulted in the overthrow of Yanukovych, a legitimately elected president. The protest was openly supported by United States. The Assistant Secretary in the State Department at that time, Victoria Nuland, who is now the US under-secretary and is visiting India, distributed cookies to the Maidan protesters. That was gross interference in the internal affairs of another country.

Ukraine: The eastern & western parts
As a result, Russia annexed Crimea. Objectively speaking, Crimea has always been thought of as an integral part of Russia. In 1954, when former Soviet Union Premier Khrushchev, who was a Ukrainian, was the General Secretary, to commemorate the 300th anniversary of the treaty between the Czars and the Crimean Tatars, this territory was made part of Ukraine. But it was one country. It’s like a reorganization of our own states in 1956.

There are ethnic, religious and linguistic divisions between Western Ukraine and Eastern Ukraine. This is a fact of life.

Then there is this issue between the Eastern Ukraine and Western Ukraine. The fact is that parts of Western Ukraine, historically, have never been part of either Soviet Union or Russia. They’ve been part of the Austro-Hungarian Empire or the Lithuanian Empire or part of Poland. They are Catholics. So there are ethnic, religious and linguistic divisions between Western Ukraine and Eastern Ukraine. This is a fact of life.

The Eastern Ukrainians are ethnically Russian or Russian-speaking. They identify themselves with Russia. That is the origin of the conflict in Donbas. The Ukrainian nationalists have been absolutely adamant not to yield an inch in terms of the constitutional amendment to respect the rights of the people of Donbas and recognise Russian language as a national language.
After 2014, after the annexation of Crimea, there were the Minsk agreements 1 and 2 which were brokered by France and Germany and which were ratified by the UN Security Council. For seven years, these have not been implemented because the Ukrainian nationalist government is dead set against it. One can understand them. Perhaps, they want to retain the entire territory as their Sovereign national territory.

Stopping NATO
After that, in 2019, despite all this background, the Ukrainian Parliament decided to make a constitutional amendment and apply for membership of NATO and EU as part of their Constitution. Because of the annexation of Crimea, the West decided to start arming Ukraine and training their army. The British Ambassador said on television that their special forces have trained 16,000 Ukrainian military personnel. Lots of arms have gone into Ukraine. In fact, without Ukraine being a de-facto NATO member, it is being treated as a member of NATO.

After the Afghan fiasco, Biden simply cannot accept another political and strategic defeat in Europe.

Putin said, “I have been opposing the expansion of NATO over the years. You never listened to me. I have tried to deal with this peacefully for seven years. We’ve not been able to move forward on Donbas. Now, I will have to use force to make you listen to me.” He made some draft proposals to the Americans. He didn’t want to talk to the Europeans because his view is that the Europeans have no say in the matter.

Putin’s proposals to be United States are:

  • No further enlargement of NATO
  • No NATO deployment of forces or weapons in countries that joined NATO after 1997
  • Consultative mechanism should be set up.
  • A hotline should be set up between the United States and Russia.
  • There should be no deployment of intermediate nuclear forces. (Incidentally, this treaty has been reneged by the United States)
  • No NATO military activity in Ukraine or Eastern Europe in the Caucasus and Central Asia
  • Nuclear weapons should be only on the national territory of countries. In other words. The United States should move out their nuclear weapons from Europe.

We can understand that the United States would have never accepted the totality of these demands or even the core of these demands. So United States said, , ‘Well, in terms of strategic stability, which means positioning of strike weapons in Eastern Europe and all that, we can negotiate and have some fresh disarmament agreements but there is no question of denying NATO membership to Ukraine because NATO will continue to follow an open-door policy.’

Also, after the Afghan fiasco, Biden simply cannot accept another political and strategic defeat in Europe. The transatlantic alliance is vital for the Americans and Europeans. If Biden demonstrated his helplessness in yielding to Russia’s demands, his presidency will be virtually finished. So one can understand the reasons of US refusing to accept Russia’s proposals. Leave alone the United States, even the Baltic states, Poland and Slovakia would have never accepted this kind of a compromise. On both sides, for whatever reasons, inevitably, it was leading to an inexorable conflict on the ground.

Making Putin a villain
The US-Russia relations have been full of tensions for a long time. It’s nothing new. Obama was extremely dismissive of Russia. He said the US was facing three problems: terrorism, Ebola and Russia. He demeaned Russia and a host of sanctions were imposed on Russia. Trump followed suit despite his efforts to find some kind of a position of dialogue with Russia. But because of many toxic issues in US domestically, he couldn’t do that. Also, in order to prove that Russia had not helped him anything in the elections, he also imposed sanctions on Russia, on the ground that there have been Russian interference in US elections. The Democrats think that they lost four years of governance because of Russia’s interference in US elections. Especially Blinken and Nuland will not forget this.

Putin had been demonised for long. All sorts of things are being said about him. The Russian leadership is convinced that the West wants regime change in Russia.

Putin had been demonised for long. All sorts of things are being said about him. The Russian leadership is convinced that the West wants regime change in Russia. It is very clear to my mind that though not necessarily realizable, this is the ambition of the West, just as they brought about regime change in Ukraine. They thought that if Ukraine became a very successful democratic experiment, then the Liberals and the Europeans in Russia would get encouraged. That is the reason why Navalny, who is a nobody, is lionised as if he is the core of opposition in Russia that can destabilize the regime. The matter has been taken to the United Nations Security Council, the UN General Assembly and the UN Human Rights Commission.

Hitting a low in diplomacy
It is unfortunate that diplomatic norms have been breached. You can’t call a Head of State—like President Biden did—a war criminal. You’re closing the doors of any dialogue if you descend to this level, in terms of dealing with someone of Putin’s stature.

Now there is much more supply of arms. There’s a lot of encouragement being given to the Zelensky, who’s a comedian-turned-President. He is now demonstrating how successful he is in theatrics on the international stage. He keeps changing his mind every day. The West is building him up as a hero. He speaks to the US Senate, European Parliament, German Bundestag and British Parliament. They all encourage him.

This is not the way to find a negotiated solution; you are encouraging a man who’s a puppet in the hands of forces he can’t control. But since he is a damn good actor and he won the election on the basis of his theatrics, he has been able to mobilize a lot of sympathy and support as a man who stands against Russia.

As a result of this, Germany has shut down for the time being the Nord Stream after resisting initially, which I thought was very honourable. They have now been compelled and pressured to supply even arms to Ukraine. I think with the increased defence budget, they’ll buy F35 from United States. The US Defence Industry, of course, will be delighted.

The question of refugees is very legitimate and unfortunate. There is a lot of sympathy, not only in Europe but elsewhere because already 3.5 million refugees have entered Poland and other countries and if the Germans receive 8 million as they expect, that will really be a disaster for the European economy.

One-sided coverage on media
The other point I want to mention is that what we see is real NATO standard information war that is being conducted. It is totally one-sided. It is so unfortunate that our own TV channels and mainstream press have fallen prey to it. There is simply no balance in reporting. This is a lesson for us, in the future.

A lot of the fault lies on the Russian side. Everything they say is in Russian language. Nobody understands the Russian language. They don’t have any agencies which set out well-crafted English-language reports, which can be reproduced. So all the news that we get is from western agencies, western leadership and social media. It is very easy to cut and paste these things into our mainstream national press and all of us begin to believe them, because there is a reality on the ground of bombing or infrastructure being destroyed.

Will the Russians succeed?
I don’t believe that the Russian military has got stalled or they overestimated themselves. Their aim is to secure the Donbas region, secure the Black Sea Coast, make Ukraine landlocked and bring Ukraine economically down on its knees. Ukraine is the biggest country in Europe with 200,000 troops. You cannot control the whole of Ukraine and Russia is very careful. They don’t want to go to the Western Ukraine. Besides overstretching themselves, they don’t want to go close to NATO because some mistake can be committed somewhere in the heat of the battle and then the whole thing can become conflagrated into something bigger. Russia is achieving their objectives. Maybe, it is slower than what they thought. Maybe they’ve suffered casualties. But to say that they will not prevail is more wishful thinking than anything else.

The global impact
The world has suffered already a great deal because of the urges for war in Europe. We’ve had two World Wars, both of which are essentially European wars. They call it World War because of their colonies everywhere but they’re European Wars. Now you are creating a situation where potentially, there could be a Third World War and rest of the world will suffer.

The UNGA doesn’t reflect global opinion. There is pressure on countries to say ‘yes’ to sanctions. But most of the world is not behind these sanctions.

The damage to the world economy will be immense. Already, a lot of pressure is being built up. The sanctions have been really unprecedented. The oil prices shot up to $140 at one time. Every single dollar increase in oil price adds half a billion dollars to our oil bill. This is true of all the oil importing countries.
There is now great fear about potential famine in West Asia and especially in Africa, because both Russia and Ukraine are major exporters of wheat. Now wheat trade will get disrupted.

“The UNGA doesn’t reflect global opinion”
We talked about the rule of law but how can the sanctions, which are not approved by the United Nations, come into effect? They talk of pursuing international law or rules-based order. On what rules are these sanctions based? If it was UN approved, it is fine. India will abide by them because it’s our obligation under the UN Charter. Otherwise, what obligation do we have, especially as the sanctions hurt us?

The UNGA doesn’t reflect global opinion. There is pressure on countries to say ‘yes’ to sanctions. But most of the world is not behind these sanctions. I would also say that the arguments that are given by the West are contestable.
They say that Ukraine cannot be denied the choice of becoming a NATO member as if when Ukraine makes a decision, all other countries are bound by that choice. The other countries also have a choice. They have to judge the entirety of the situation before they accept the choice made by X, Y or Z. We also know from realpolitik that the choice can be engineered.

The double standards are very clear. After all, it’s not the first time that another country has intervened against the sovereign country. We’ve had Iraq, Libya, Syria and Afghanistan. We have seen destruction of infrastructure and civilian casualties and refugees in much larger numbers.

Freedom of expression is a core value of the West. But they have banned Russia Today and Sputnik news. Why? Let the people have access to other views. If you say it is state-controlled media, so is BBC. If you think that state-controlled media gives you biased news, I don’t know if you think that BBC, New York Times, Washington Post, The Economist or the Independent are not biased against us.

There is talk of borders in Europe getting changed, quite forgetting that Yugoslavia doesn’t cease to exist. It has been broken up into several states. Most of them have become members of NATO. It happened in Europe.
Another concern is what if Russia wants to create a sphere of influence? The counter to that is what if the extension of NATO or EU happens? Doesn’t that create a sphere of influence for the Europeans and the United States? So all these arguments are very debatable.

Two decades of Putin
Putin has been in power for 22 years. He acted in 2008 in Georgia, in 2014 in Ukraine and once again in 2022 in Ukraine. He intervened in Syria to prevent a regime change, intervened in Belarus, again to prevent the regime change, rightly or wrongly. He intervened in Kazakhstan recently at the request of its President. He intervened in Armenia in the conflict between Azerbaijan and Armenia, but other than these, he has not intervened in areas, thousands of miles away, which pose no direct security threat to them.

India’s stand and our national interests
India’s position on this has been criticized, that we are being neutral; that we have abstained in the UN Security Council and UN General Assembly. If you look carefully, our statements are muted, no doubt. They are understated but they’re all critical of what Russia has done.

We talked about the UN Charter, respect for sovereignty and respect for territorial integrity, but the focus is on abstention. Why did we abstain now? Our position is very difficult because our ties with the United States are very close. And they will, in course of time even become closer. In fact, US is the most vital partner in terms of India’s technology modernization, management best practices and investment. They also supply us high-end weapons, which are very necessary for maritime security. So there’s a whole range of domains in which India is now dependent on the United States. But there are also some critical domains in which we are dependent on Russia. About 60 to 70 percent of our defence platforms are Russian.

In the UN Security Council or in other forums, if we keep voting against Russia and keep condemning it, it will mean a breakdown of our relations with Russia. With the 15,000 Chinese troops sitting at the border and if Russia starts slowing down spares or servicing or ammunition, what will be the state of our defence preparedness? Any responsible government has to weigh this and not simply satisfy the Americans or anybody else, by voting with them and score some brownie points. Our abstention causes no harm to the security of the United States, but our condemnation of Russia will directly cause threats to our security. Therefore, we have to weigh these two options.

India-Russia-China: The triangular balance
In the context of the ties between Russians and Chinese becoming closer and closer, there is a big problem for us because the triangular balance between India, Russia and China is getting destabilized in favour of China. Russia still values its relationship with us. It’s important for them to have us on their side. But if we go against them, then our ability to maintain some kind of Russian stakes in this triangular equation will become weaker and weaker and that will add to our security threats. In fact it will weaken our security. We are not fence-sitting. We are only protecting our national interests.

As a result of this crisis, US, Europe and Russia will become weakened and China will emerge stronger. The US arms companies have benefitted from the war. That US is now counting on China to isolate Russia and it shows its weakness. Nuclear weapons do not give a nation security but atmanirbhar can.

How India can make this decade its own

Read Time:9 Minute

Bhaskar Bhat, Director, Tata Sons Ltd., delivered the keynote address at the MMA Annual Convention 2022. He spoke on the theme: “How India Can Make This Decade Its Own.”

The theme for the convention is about how India can make this decade its own. I believe it’s not India’s decade but it is India’s Century. It’s only a question of the ‘how.’ I don’t profess to know too much about the ‘how’ but I do believe, as most of us in the Tata Group have betted on and believed, in this economic engine called India. It’s a very unique engine. It has been on a growth path, irrespective of governments and global ups and downs for the last 31 years, starting from 91-92. We have had years of slow growth and years of extraordinary growth. But like the proverbial Indian elephant, it is growth and it continues to grow. One extraordinary indicator has been the performance of the Indian stock markets. I did not really believe, through my career, that companies’ market caps represent their performance but the reality is that hard money is put into the markets.

The great bull run
The performance of Indian stock markets during the Covid period is now legendary. The index has perhaps more than doubled, except for the last three weeks, thanks to the war in Eastern Europe. Why I refer to the stock market is because it is real money chasing ideas or investments or performance. It has put money into the hands of many middle-class Indians, apart from investors themselves. But more than that, it signifies the potential of the economy.

The demand on companies has increased because of attrition. But this is not like the great resignation that is happening in the western world, triggered by soul searching by young people on what they do at work and why they work.

As we come out of the pandemic, we have to be careful but let us not be fearful. One important indicator of the Indian response is the recent announcement of opening up of the scheduled international flights. It indicates the confidence that the Indian government has placed in the so-called reduction of the danger of the pandemic. Through these two years, starting from 23rd of March 2020, the Ministry of Health has been working with the aviation sector, which has very rightly regulated flying—stopping flights for some time, regulating the capacity utilisation compared to pre-Covid levels, and then reviewing the pricing by each airline. The government is confident of handling even any minor, local outbreaks or if there is any recurrence in a new form or a new variant of the Sars-Covid virus.

Consumption-driven economy
For the current year, in Tata view, it is going to be an 8.8 percent GDP growth. It varies depending on who has done the projection but it is still a growth and which is one of the highest in the world. It will be driven, as usual, by consumption to begin with and thereafter by a cycle of capex investments and investments by industry after they have covered the capacity utilization shortfall, which is of the order of about 35 percent on average. It is going to be a very steady but positive and continuous growth in consumption and consumer expenditure. The accumulated savings over the last two years are going to be available to households.

The second is the performance of our rural sector. Overarching on all that has been the fact that three fourth of our population—700 plus million people—have been vaccinated. For consumer confidence to come back, it has to start at the level of the individual consumer. The actions of the government lead to confidence among consumers to go out and spend. The high physical touch sectors like restaurants, retailing and travel, which were significantly impacted, are going to come back with a bang. We are already witnessing this in some of our companies and it’ll only improve.

Our per capita GDP is so much lower than many other countries, which are as large as us or larger, and some smaller than us. But our journey is only upward.

Stressed labour market
The labour market is on fire. The demand on companies has increased because of attrition. But this is not like the great resignation that is happening in the western world, triggered by soul searching by young people on what they do at work and why they work. In India, it is due to the red-hot economy of startups and technology companies who want new-age talent and young talents. It is a good time to be in the job market today. Of course, the skills have to be quite different from what they were earlier.

Formalisation of economy
The third theme is the confidence that we all have in our elephant trudging along—maybe we’ll make the elephant even dance—is the formalisation of the Indian economy. That journey started several years back and it is a very determined and well-planned move.

We have had our problems with demonetisation and GST. But GST collections have been rising month on month. Even during some months of Covid, collections crossed 100,000 crores. Now we are crossing 130,000 crores. Formalisation of the economy is a very good sign as global investors look at investing in India as well.

Young at heart
The fourth theme that holds out great hope for India is the young population raring to go, not just to spend but to create new business models in this digital age. It’s an extraordinary change in India, which is the desire to make a significant impact in a selected sector of the economy. Not everyone succeeds but great and good ideas have found money and success. There are many lessons to be learned but these youngsters are not just young by age. They are young at heart as well, big risk takers, very hardworking and willing to get tripped at one hurdle and yet, rise and run again. That undercurrent in the economy bodes great news for everyone. It is very competitive. But India is such a huge market. Our per capita GDP is so much lower than many other countries, which are as large as us or larger, and some smaller than us. But our journey is only upward. In every sector—whether you take airlines or FMCG or fintech—the opportunities for transformation, change and improved consumer experience are only going to make it better and better.

3Cs – The key areas
Therefore, where should big investments need to be made? Based on what online and digital has shown us, I would drill down to three focus areas, namely: Convenience, Comfort and Cost. When I say convenience, Covid has showed us what we could do online comfortably sitting at home. You don’t have to venture out in a car and go to a retail outlet, park your car far away, walk to the retail outlet and purchase goods. Also, the cost of transactions has come down significantly, thanks to online.

Experience economy
All these are captured in ‘Experience.’ Globally, investments are going big time in experience economy. Consumers are willing to pay a multiple of what they were paying for a product, for the experience of acquiring that product. Nobody knows how it splits. But we know that premiums on brands and product categories are based on the functionality of a product. Sitting on top of that is the experience of the product, as well as the experience of transacting with a company in the purchase process; in the use process and in the after-sales service process both for a physical product or a service. If you take restaurants, it’s not the food alone. It is the experience of eating—sitting and getting served—that people pay for. The list goes on.
In experience economy, India has still not witnessed the kind of growth that we are going to see. The big fat Indian weddings where billions of dollars were flowing were on a back foot for two years. Now, it’s going to explode. The event itself at best or at worst, would be for two hours. But today, weddings last for four days. Each of them is sliced with a different experience, different theme, different dress, different jewellery and different food. So, we have to think in an innovative manner about the experience economy.

The emotional mix
In India, the Experience economy is mixed with what Indians are known for: Emotion. The number of movies made in India is not just about entertainment but emotions. So, when you mix experience with emotion, you get a bang for the buck, which is the product functionality, experience and emotion. All these combined gives India a unique position and economics for the companies.

The formalisation of economy, digitisation, globalization, atma nirbhar and the PLI scheme are all aligned towards making India stronger. There are debates about what is working and what is not working. But directionally, we are on the right path. I say this despite being involved in one of the most challenged sectors, which is aviation, where there is serious attempt by the government in trying to make structural changes through rationalisation of taxes and being thoughtful about networks, bilaterals and so on.
The DGCA and the Ministry of Health have made air travel safer, faster and comfortable and helped create the perception amongst Indians that air travel is not luxury travel anymore but the sensible way to travel. Of course, we have a great train network in India and also, our roads are improving.

Agility in uncertain times
But the point I want to credit the airlines with, is for their agility. Despite incurring 25,000 crores of losses year-on-year for the last two years, the aviation industry has delivered to the consumers’ requirement. Many of us had our own problems of refunds and flight cancellations. But the service has been on, throughout the pandemic despite the tough regulations. Industries like aviation, hospitality or retail have learnt to be agile, people-centered and to manage with the everyday uncertainty. People across industries, cities and nations across the globe had to face this uncertainty.

The harshness of our lockdown in 2020 created unprecedented pain to the migrant labour but we lived through that and the country came together to once again gather pace of growth. So it is a very India story.
As we look at India, it is no longer only limited to Chennai, Bombay, Bangalore, Hyderabad or Delhi. Thirty years ago, people in tier 2 and tier 3 towns had a much lower quality of life and lived with lower prices without demanding more. The people in towns have now proven that they are no less than their so-called city cousins, in aspiring for a better life. They have responded extraordinarily to availability of products, premiumization and quality. All these bode very well for the future and that is not going to last for only one decade. In my blue book, this is the India Century.

Cyber Security and the Fouth Industrial Revolution

Read Time:7 Minute

Excerpts from the Key Note Address given by Prof V Kamakoti, Department of Computer Science & Engineering, IIT, Madras on, ‘Cyber Security and the Fourth Industrial Revolution.’

Industrial Revolution 1.0 started with steam and then proceeded to electric power as Industrial Revolution 2.0. It further evolved and more of automation came as part of Industrial Revolution 3.0. Today, Industrial Revolution 4.0 is governed by data, next gen communication and connectivity. When we say data, there will be many sources of data. These sources are going to come from all digitization initiatives, starting from smart cities, telehealth, 3D printing, monitoring of agriculture and irrigation, ocean engineering, vaccination and so on. Even Covid hotspot prediction is modelled on data. The most important thing is communication and connectivity. A lot of collaborative effort is required in Industry 4.0 to get the best outcomes. Next generation communication, including 5G and 6G, will drive this whole effort. In healthcare, it is now possible to do remote surgery. For these applications, some of the biggest challenges are getting low latency and high bandwidth communication. That is precisely where the next generation communication is taking us forward. When control is being exerted from a remote place, communication has to be extremely reliable with low latency involving a lot of data exchange.
Once we think of that, immediately cyber security becomes extremely important. The security of anything is directly proportional to the number of elements or components that we have in the system. If we have a low number of components, reliability will be high. If we have more components, there will be a higher chance of failure and a higher risk of being intruded by a hacker.

In 5G and 6G, the number of components will be at least 10X of what we have seen in 4G, especially in number of base stations, small cells, etc. Many things are going to come up. Once we have such a very complex environment, then it is going to be a very complex affair to deal with cyber security, and that is why the government has taken a lot of initiatives.

One such very important initiative is the National Telecom Security Committee headed by the Deputy NSA, which looks at the trustworthiness of the components introduced into a telecommunication network inside the country. This is a very proactive measure that the government has taken.

Need for Atmanirbhar
Next gen communication is driven by software. That is precisely the reason why more people today talk of indigenous software in their own country. This software will run on commodity servers. We can now decouple hardware and software and have different vendors for each. Is this a boon or bane?

Having different vendors mitigates the risk of a bigger attack on the network. That is a boon. We, as a country, have been developing complex software over a period of time and so we can have an atmanirbhar communication network.

But on the negative side, since it is software driven, there can be more attacks. We need to have a high level of security in the compute infrastructure that we put as part of next-generation communication network. For example, a core today has a lot more compute which runs on the commodity server. The compute infrastructure needs to be highly secured.

Our mobile phone is a compute infrastructure that needs to be secured. There are many things coming up in this direction. 5G and 6G are going to be very important factors for our success in Industry 4.0 and there is no doubt about it. Once that comes up, there are going to be more cyber security issues. There is an immediate necessity for us to build many more atmanirbhar components to see that we are secured and we can gain confidence in this direction.

One of the recent developments is the release of drone regulations. Regulations must also ensure is that there is ease of doing business. Security and ease of doing business are two ends and we need to find out a proper balance.

The government policies are extremely crucial for this. The government has come up with important policies, including personal data protection regulations and non-personal data protection regulations. Data is the oil of the next century. It is a wealth of information from which we could get many things, both commercially and strategically.

Drone and Space
Then there are a lot more of enablers that come for Industry 4.0, especially unmanned aerial vehicles and some autonomous vehicles. One of the recent developments is the release of drone regulations. Regulations must also ensure is that there is ease of doing business. Security and ease of doing business are two ends and we need to find out a proper balance. We cannot compromise on security and this is one major challenge, both from strategic and civilian ends. The recent drone regulations are favourable to the industry.

Today, space also has become very important. Last week, there was a launch of the Indian Space Association–INSPACe. When we talk about space, again there is a lot more of connectivity that is coming up which will be 6G driven. We need to regulate the data transmission from an Indian entity to another Indian entity such that it doesn’t go out of India to a foreign nation.

Life in a Cyber Physical World
We are going to live in a cyber-physical world. Recently, Mahindra and Morris Garage have come up with AI-driven vehicles which will be completely connected. We have around 8 to 10 cars today which are connected. We can even track these vehicles. One important mission of the government—The National Mission on Interdisciplinary Cyber Physical Systems (NMICPS) was launched a couple of years ago with an outlay of close to half a billion dollar. All the IITs and some IIITs have set up Technology Innovation hubs to work on the different verticals, starting from A for agriculture to O for Ocean engineering. There are many vertical sectors. IIT Madras is involved in sensor networking actuators and control systems. We call it SNACS. We welcome members who are interested to reach us. Interestingly, these innovation hubs are formed as not-for-profit companies. It is involved in incubating startups to make and deliver systems for the next generation cyber physical world. Cyber security essentially has to be an underlying enabler or a building block for this.

Today, a lot of things including communication itself are more of computation. The interesting thing is that the hardware and software need not necessarily be from the person who is doing the business.

Separation Kernel
The last point that I want to talk of is about compute. Today, a lot of things including communication itself are more of computation. The interesting thing is that the hardware and software need not necessarily be from the person who is doing the business. For example, if I am doing banking, I really can’t do the hardware or the software. I depend upon some external vendor to give me this. The bank owns the data but one who can interpret it and do a lot of things on the data would be essentially a system integrator. Essentially, this means that there needs to be some sort of confidence. That is where the notion of what we call ‘Separation Kernel’ comes up.

We had earlier seen only one such in the world. Now, there is an Indian company which has this separation kernel today and it is successfully working; a piece of software that exists between the hardware and the operating system. This can control the use of hardware from the operating system. So, a lot more of security can be introduced in this. We are trying to put this all the way from a small mobile phone to a large-scale high performance computing server in a super computing environment or on a cloud. This could give us a very high level of security.

Covid: The Test Bed
A lot of unfortunate things happened because of Covid. But one thing that Covid has done is that it has created a test bed for all the things that we discussed. There was a work from home challenge. Banks have today employees who have to work from home. That means, their core banking has to be given some access. The Stock Exchange has worked with employees working from home. If they don’t work, the entire economy of the country will tank. Telemedicine did work. Online meetings worked. We don’t know whether these meetings can be tapped by someone but then, this gives us a test bed on which we can start experimenting and put sound cyber security systems in place.

Find your iKiGAi through your job

Read Time:10 Minute

How do you futureproof your career, so that you stay in step with all the opportunities and take full advantage of them? Gopi Kallayil, Chief Evangelist, Digital Transformation and Strategy at Google, shares his learning in his keynote address at the 20th All India Management Students Convention.

I want to start off by asking you a question. How many organs are there in your body? If you’re not sure, Google will tell you that there are 78. I want to introduce the 79th organ, which is the little device that you hold in the palm of your hand—your mobile phone.

It has a skin. You touch it; it responds. It has ears. You speak to it; it understands your voice. It can talk to you. It has eyes because it can see things around you. It recognises faces and objects. It is incredibly intelligent: it seems to be able to tap into the collective knowledge available to humanity and give you the best answer. It can give you directions. It can order food for you. It can call a car to take you to the airport. You can pay various merchants with it. It is a source of endless music and entertainment. It can find a room for you to stay when you travel. All of these have become entire subclasses of industries with their own career tracks. None of this was available 15 years ago. The iPhone itself was only introduced in 2007. So it is a very recent phenomenon.

I am using this one piece of technology as an example to showcase how much opportunity now exists in terms of career paths. So congratulations! You are stepping into an incredible array of opportunities. But they also beg the question: how do you navigate your way through all this? How do you futureproof your career, so that you stay in step with all the opportunities and take full advantage of them? As answer to the question, I have five recommendations or suggestions.

Is this going to fulfil me?
The first principle is: Pick a career track that gives you the most meaning and context. No matter what you pick, you need to have a sense of purpose. This is a lesson I learned early on from David S. Pottruck, who was former CEO of Charles Schwab. When I joined Wharton as a young MBA student, CEOs of big companies were invited to come and speak to the students.

In my first month at Wharton, David S. Pottruck was one of the invited guests and I got a chance to meet him and have dinner with him later. When we asked him how he had made his career choices and futureproofed his career, he said, “The first job I picked when I graduated from Wharton was not based on the highest salary. But I picked a job that gave me the most meaning, context, a sense of purpose and fulfilment.”

David said that he did it for his second job and third job too. In each job, he outperformed because he was in love with his job. That led him to become the CEO of Charles Schwab eventually. I took that advice to heart and have followed it ever since. I always ask the question when I pick a job or career or project: Is this going to fulfil me?

A Mission in 10 Words
When Larry Page and Sergey Brin, the founders of Google—where I work—started the company in 1998, they came up with a mission statement in just 10 words and they articulated very clearly the meaning, purpose and mission of the company. Every employee could easily understand it. Those ten words were: Organize the world’s information, make it universally accessible and useful. I have seen over the years how Googlers often take that purpose and meaning and contextualize it for themselves in their own personal way.

My roots go back to a tiny rice-farming village in Palakkad, Kerala, called Chittlancherry. It is a small village of mostly rice farmers. My grandparents were poor rice farmers. My parents grew very modestly—without electricity, running water or access to a college education. When they finished high school level education in the village, their education pretty much stopped. But they had aspirations for their four kids and hoped that they would go on to do other things and would have better education.

Access to Information
Thanks to those aspirations, their four children—my three siblings and I—went on to get advanced degrees, including two from US ivy league business schools, even though my parents had never set foot in America. So what caused that kind of social mobility in one generation? It is simply access to information.

I remember when I was at the National Institute of Technology (NIT), Trichy, and wanted to apply to graduate schools in the US. I took the Rockfort Express from Trichy to Chennai, so I could go to the US Library and look at a physical copy of the US World News Guide to Graduate Schools. I was willing to make that eight hour train journey in order to get access to that particular report. Today eight hours seems too long because we have got used to accessing information in much more faster ways. But back then, even though it was a slow process, that access is what propelled me and my siblings forward to where we are today.

In an era where information is like oxygen, we are levelling the playing field for information and that is what gives me a sense of meaning and purpose in my own job. I have taken the mission of the company and contextualized it for my own personal context.

When I go back to the village school where my mother studied in Chittlancherry and look around, one thing becomes very clear to me. While the physical infrastructure may not have changed dramatically, what has changed is that kids in that school and in schools around the world have access to the kind of technologies that we are now building. They have access to the same amount of information as somebody who goes to an IIT or to Harvard Business School.

In an era where information is like oxygen, we are levelling the playing field for information and that is what gives me a sense of meaning and purpose in my own job. I have taken the mission of the company and contextualized it for my own personal context. So that would be my first lesson to you: Find meaning and context in the job and find a sense of purpose.

Find Your Ikigai
The second principle is to find your Ikigai through your job. Ikigai, a Japanese word means, finding your true purpose in life. How do you do that? You can find your Ikigai when your life, your work, your career sits at the intersection of four circles. What are those four circles?

The first circle is, do what you love. No matter what you pick as a job, career or profession, make sure you truly love it from the bottom of your heart. It is something that you really look forward to. It makes a huge difference.

There was no YouTube, Chrome, Android or self-driving car then. When a new thing comes up, find out what it is. Thankfully, when a new technology emerges, there is a huge amount of information available.

The second circle is, do what you are good at because we are all innately talented in a variety of things. It could be leading organisations, music, creative works, speaking, teaching or doing social work. Whatever it is, every one of us is good at something. Find that something.

The third circle is, do something for which there is a demand. Ultimately, whatever you pick as a job or a career, you want to make sure that there is a demand for that particular line of work.

The fourth circle is, do what the world will pay you for. There must be a fair economic compensation for what you do. In my present role, I love to be in front of customers, talk to them and demystify complex concepts for them. There is a demand for it and I am paid for it.

Be Curious
The third principle is: Embrace curiosity. It is impossible to tell what the careers will be, five years from now. When I graduated from NIT, there was nothing that I could have learnt to be in the centre of the industry that I am now: internet, cloud-based computing or machine learning. But along the way, I picked them up. Curiosity is what drove me to new and interesting frontiers of technology. Even when I joined Google, I could not have anticipated the kind of things that I am doing today.

There was no YouTube, Chrome, Android or self-driving car then. When a new thing comes up, find out what it is. Thankfully, when a new technology emerges, there is a huge amount of information available. For instance, now there is so much information about crypto currency. Platforms like YouTube explode with talks, tutorials and workshops conducted by experts. You get free access to that information. All you need is a sense of curiosity to embrace these new things.

A Giant Experiment
The fourth principle is: Embrace experimentation. I picked up a philosophy from going to ‘Burning Man’ for fifteen years and that is, ‘all of life is a giant experiment.’ Experiments by definition lead to unexpected results. But we will never find out, till we try out. Treat your life as one series of experiments and be curious. Try different things. For example, early in my career, I was working in McKinsey as a strategic consultant. I decided to experiment and leave the consulting career to start a company along with McKinsey alumni. I did two startups. We noticed some success. Both got acquired. We could argue that we didn’t fail. I could experiment in preparing a business plan, fund-raising from investors, taking a new concept to the market and proving that there is a use case for the concept. I learnt about what it takes to start a company and to have a first customer. I would not have learnt any of these, if I had not experimented. I can guarantee that it gave me unexpected results.

Fail Well
The fifth principle is a concept that we follow in Google—that is, fail well. In Google, we have nine products that are used by a billion people but many may not be aware that behind those massively successful products, there were hundreds of products that failed. Many of them did not even get launched. That is the dirty little secret of successful companies like Google. It is considered okay in an innovation-driven company like Google. So we often say: fail well, fail fast, fail big and fail often.
Be prepared to have a similar mentality when it comes to your career. Try a lot of different things, knowing that you will fail most of the time. Embrace the failure. The most important question is: what did you learn from the failure? What can you salvage from the failure? Can you morph the failure into something else? The concept of morphing from failure is an important one. I worked for many years in Google Plus—Google’s social media. Currently, the product is withdrawn but out of that experimentation emerged two products that you know and use all the time—Google Photos and Google Meet. They were derivatives of building a social media platform called Google Plus. In that sense, we can call it a partial success as it morphed into something else.

So always think of experimenting with your career. Be prepared to succeed sometimes and fail most times but out of each failure, learn something and morph into something else.

In conclusion, I would like to summarise the five lessons to futureproof your career:

  • Find meaning and context in your job
  • Find your Ikigai through your job.
  • Embrace curiosity, as things are going to emerge rapidly.
  • Treat your life as one giant experiment.
  • Fail well, fail fast, fail big and fail often. Embrace failure but learn the lessons