A seductive idea

Could China and India become the new IT partners? Two Gartner analysts seem to think so.

IT and the East

James M. Popkin & Partha Iyengar
Harvard Business School Press
Pp: 226
Price: $35 (Rs 1,435)

CHINDIA—that is, China and India—as a phenomenon is some years old by now. A number of authors, including Jairam Ramesh and BusinessWeek’s Peter Engardio, have written about the economic rise of the two countries and how their growing importance in the global marketplace could shift the balance of economic power to the East. China is, of course, the global manufacturing powerhouse, while India is the new star on the IT (outsourcing) firmament.

Variously, writers have talked about how China could end up adding IT to its formidable portfolio of exports, and India, manufactured goods. But it is to Popkin and Iyengar’s credit that for the first time perhaps, one gets a comprehensive look into what’s going on in IT in China, and some answers to the question that everyone—at least in India—seems to be asking: How real are China’s chances of making it big in IT?

To begin with, China has a far bigger information technology market than India. For example, China’s IT spend in 2005 was about $119 billion—about four times that of India. Most of the money was spent on telecom equipment, reflecting China’s relentless focus on IT infrastructure.

The country already has the world’s largest cellular phone market, and some of the biggest hardware manufacturers. But in terms of IT services, China is way behind India. It has no firm that has the scale or competency levels of, say, a Tata Consultancy Services. “Yet, several young firms—typically, with headquarters or development operations based in China and sales and client teams in the US—have growing relationships with major corporations,” write the authors. In other words, while it is important for the Indian IT companies to keep an eye on China’s budding rivals, they need not get paranoid about them—at least, for now.

There are several factors that will determine whether China becomes an IT player of significance. The two most important of them, the authors argue, are the government’s involvement in the economy and the relative pace of innovation in IT. At any rate, there are significant complementary strengths between the two countries.

For instance, among the things that India could offer China, write the authors, are services expertise and process capability. China, on the other hand, offers a large IT market, infrastructure, and a hardware industry. But can the traditional rivals—if not enemies—come together? Popkin and Iyengar give it a relatively high 60 per cent probability.

Irrespective of whether a Chindia bloc comes into being, western companies will have to figure out ways to compete with their rivals from China and India, not only in the two most populous nations, but also elsewhere in the world.

Selling Blue Elephants on the next page...

Selling Blue Elephants

Howard Moskowitz & Alex Gofman
Wharton School Publishing
Pp: 252
Price: Rs 499

When someone once asked Henry Ford how much he went by what his customers wanted, he replied famously thus: “If I had asked my customers what they wanted, they would have said a faster horse.” Point: Often, marketers spend an enormous amount of time and money trying to figure out what their customers want. But guess what? Customers don’t always know what they want.

And that’s the point about Selling Blue Elephants. Here, the authors, both heavyweights in the area of psychology-led market research, tell you “how to make great products that people want before they even know they want them”. At the heart of their book is a business process experimentation system called rule developing experimentation (RDE), which they say is far superior to focus group exercises. How? The authors claim that “RDE breeds market success through knowledge by clearly and dramatically revealing how specific factors drive consumer acceptance and rejection”. More importantly, Moskowitz and Gofman argue, RDE tells business what to do, rather than leaving suggestions as hypotheses.

Managers should love that. However, as the authors themselves point out, RDE is not a new idea. It’s just that “RDE systematised the process of discovery and development”. Mercifully, the authors have avoided using psychology jargon, which means that most marketers should be able to figure out if RDE is the way they need to go.