Rant on India, China, Walmart and Innovation

After linking to my previous post, where with reference to this "Best of…" by Dominic Basulto at the Fortune Innovation 2005 blog (hey, you’ll have to drop the 2005 🙂 he very kindly shared with me the context of the quote I’ve questioned. Here is the background,

Anyway, I noticed that you made a quick comment about the "India as
Wal-Mart" quote in my "Best Ofs" list. It was a quote from one of the
speakers – Peter Georgescu of Young & Rubicam. He spoke at length on "why innovation is important." He called
commoditization the "cancer of our time," and pointed directly to China and
India for pushing down prices worldwide. So, the
context of the quote was: if America doesn’t invest every resource it
has into being innovative, it will be swallowed up by India and China,
the same way that the mom-and-pop stores of the world have been
swallowed up by Wal-Mart. That’s why I called it a "scary" comment.

Wow! I must agree with Dominic that that is indeed a "scary" comment, and I’d remove the quotation marks too! Here are my 2 rupees worth (how much is that in Yuan?), in fact I’ll use far better words than I could have written. Grant McCracken wrote a post back in June titled "India:China; Walmart:Target" that best sums up this conundrum and clarifies Peter Georgescu’s mixed metaphors, or was that a mangled analogy? Here’s a paragraph, and a link to the rest.

There is a better way to make the comparison:

China is to India as Wal-Mart is to Target

I apologize to 2.4 billion people so characterized and to TBSA
readers for this violent insult to their intelligence.  But as long as
the NYT is trading in dubious metaphor, surely bloggers have license
equally rash and quite as ludicrous. 

Here’s what I mean by the analogy.  In the international economy,
China is a commodity player.  India’s promise lies in its control of
cultural particulars.  And by this I mean, India understands and participates in the culture of the First World West in ways China does not. 

As long as the world wants its merchants to "pile ’em high and sell
’em cheap,” China will flourish as Wal-Mart does.  But as Virginia
Postrel’s vision of the marketplace comes to pass, and all consumer
goods begin to add value and win share by embracing design
intelligence, India will flourish as Target has. 

India has a large intellectual and creative class.  Many of these
people are worldly in ways the chattering classes of the West are not.
More than that, India is its own intellectual challenge, a culture that
knows a thing or two about diversity and discontinuity.  Moreover,
India has been drawing on the intellectual and educational resources of
the West for several hundred years.  (What’’s theirs is theirs, what’’s
ours is theirs.) 

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4 Responses to Rant on India, China, Walmart and Innovation

  1. niblettes says:

    My modest experience with more traditional cultures (such as what we would find in India and China) and value systems is that authority, established mores, and acquiescence to the larger group, are far more important than they are in less traditional cultures (such as what we would find here in North America). Indeed we can see this on a smaller scale within North American culture comparing populations with more (parts of the deep south) and less (parts of northern California) traditional value systems.
    As an example, in usability studies Indian users will more likely than American users tell the tester (the person in authority) what they think the tester wants to hear even if that means completely contradicting what actually happened.
    My assumption here is that rather than offend authority (by pointing out usability problems), Indian users will prefer to affirm authority. And by extrapolation this phenomenon is rooted in the behaviors traditional cultures encourage versus the behavior less traditional cultures encourage.
    It is important to note that I’m talking in general relative terms rather than absolute specific terms.
    If we take the example of corporate culture many believe that embracing values like openness, decentralization, failure, and unorthodoxy encourages innovation. Such values reject traditional authority structures.
    I’m sure you can see where I’m going with this. If what I’ve said so far is more or less true (and it may not be)…
    What kinds of innovations can we expect to see from traditional cultures?
    Are traditional cultures at a competitive disadvantage when it comes to innovation?
    Would such a competitive disadvantage (if true) be general or apply to only particular kinds of innovation?
    How will various cultures deal with the conflict between traditional values and the values that encourage innovation (and the related economic benefits)?
    Is this perhaps a good thing, with more traditional cultures excelling at execution and related innovations while less traditional cultures excelling at exploring the edges of innovation?
    I’m not sure I’ve framed this as well as I would like. Hopefully you get the idea.

  2. Niti Bhan says:

    And after reading your comment through, my only response would be, I don’t know. I cannot hazard a guess what a couple of billion people are going to do, or what they are capable of, however, simple probability and statistics allow me to feel confident that of all 2.5 billion of them, some are rule breakers, mavericks and iconoclasts. While extremely long term trends in civilization show ups and downs in every culture, who is say that the people who invented gunpowder and paper, and bureaucracy or the people who invented surgery, the number zero and political ethics may yet demonstrate an iota of creativity occassionally?
    I’ll also hazard a guess, from my own experience living in South East and South Asia, that it may well be that the pioneers of innovation, supported by corporate cultures just as you describe, will emerge from fields such as design, advertising, marketing, literature, drama and film, i.e. the creative arts rather than engineering, software programming, quality assurance and telemarketing. Furthermore, to your point, on excelling at the edges, every culture has it’s fair share of those that dance “in between” or in Limnos. Whether it’s the pioneers that travelled to the Golden Mountain in northern California to help build the railroads or those that traded with the Phoenicians in the Arabian Gulf, I’ve found that regardless of the mores and mentality of any given culture, adventurers emerge.
    Does this help answer your question?

  3. Great points, Niti. It’s also worth mentioning that in the post WWII rise of Japan as a manufacturing giant, initially people in the West underestimated how quickly Japan would become a global competitor to traditional Western industry.
    It was widely believed that the Japanese, due to some of the same cultural factors listed by the writer above, were less likely to excel in innovation and would be relegated to simply copying American innovation.
    I’m NOT saying that this is what the writer above contends for China and India. I’m just saying that we should expect that India and China will become players in ways we have not imagined and that it will probably happen sooner than we think it will.
    What does that mean to Western industries in general and Western designers specifically? I’m not 100% sure.
    .chris{}

  4. Perspective says:

    Collection: Emerging and new markets strategy

    Observations on India, China, the United States, emerging markets and the bottom of the pyramid Rant on India, China and Walmart – from Grant McCrackenBusinessWeek’s global realignment – analysis of their strategy New Delhi notes – observations on econ…

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