Two forms of technologies are combining to disrupt old-style manufacturing monoliths. One is digital technologies that enable multiple operations to be done on one machine on a small scale, such as desk-top publishing and 3-D printing of material objects. These technologies are enabling manufacturing enterprises to be viable on very small scales. For example, even small and medium enterprises can use 3-D printers that cost less than $1000.
The other set of technologies that are changing the shapes of enterprises enable efficient connection of widely dispersed suppliers and customers. These are creating new disruptive business models, such as Amazon, e-Bay, and Uber. In India, such technologies are changing the shape of retailing industry models. ‘Big box’ retailing models are being deconstructed with on-line ordering and delivery in small lots to customers, rather than customers coming to large retail stores to buy large quantities at low cost. In India’s case, these emerging models take advantage of the proliferation of smart phones in India, and they circumvent the problem of acquiring large plots of expensive land for the big-box stores.
The combinations of these two sets of technologies are enabling formations of large networks of many small enterprises in manufacturing and in services. Such models of enterprises do not require large parcels of land, which large factories employing thousands do, and need less concentrated investment too. They will cause less political strain, in India at least, than the promotion of large monolithic enterprises. Moreover, such networks of many small enterprises will generate more widespread opportunities for growth of small enterprises and employment even in rural India.
Jobless growth of the Indian economy is a ‘5C’ problem: a Complicated Condition Created by Combinations of Causes.
Automation is adding another complication to the problem. Silver bullet solutions cannot solve such systemic problems with multiple causes, nor can conventional management approaches. The conventional management approach for solving a complex problem is to break it down into its parts and then address each of them. A tough CEO may say, “Tell me the six things to fix; I will charge six teams with relevant experts in them to fix them; and I will make sure I chase the teams to get these things done.” Sounds like an effective way to solve a big problem, except that it often makes the problem much worse. Fixes often backfire because the interactions among causes are not understood. Therefore, a fix of one part of the problem makes another part worse, and the whole system’s performance declines.
A person with poor health often has a 5C problem—a complicated condition created by combinations of causes. Many symptoms of the poor health may appear in different parts of the body. Specialists are brought in to treat each of the problems: the weak heart, the poor digestion, the mental anxiety. Often, when a specialist relieves the mental anxiety with a strong medicine, its side effects can make the digestion worse. Then an intestinal specialist may prescribe the latest drug to treat that condition, which may affect the heart. The sub-systems of the body are parts of an interconnected system. Increasingly, what is missing in modern medicine is a general physician (GP) who has the skill to comprehend the whole system.
Jobless growth can have multiple causes: unskilled people, insufficient investment, difficulty of doing business, rigidity in labour laws (difficulties in firing employees), and inadequate (or inappropriate) social security systems.
Each of these requires a solution. Therefore, separate ministries are charged with the development of policies and their implementation to address these problems. Then, their progress is closely monitored as it should be. And a competition between them begins. Which is the best ministry, and the best minister? Competitiveness can make cooperation, which is vital to solve 5C problems, even more difficult to obtain.
Arun Maira, Chairman, HelpAge International and Former Member, Planning Commission writes this piece for FICCI publication “Economy of Jobs”. Post continues on Page 3.