Mr Modi's start-up plan is sad, frustrating and ignorant
Silicon Valley is still the undisputed start-up capital of the world. Increasingly, a large number of startups that have been emerging from the Valley - particularly, after the launch of Google in 1998 - have been fundamentally changing our lives almost in every aspect. So, when Prime Minister Narendra Modi gave the clarion call last year from the ramparts to make India the start-up capital of the world, the flutter of excitement was quite apparent. Who would not get excited imagining India overtaking Silicon Valley!
Obviously, people were eagerly waitingto know more about government's specific plan for unleashing the start-up revolution. But alas, the start-up action plan, released last month was an anti-climax. The plan, as with many other grandiose announcements of this government, was very high on hype,but abysmally low on substance.
What strikes one's attention is the astonishing level of ignorance of the government about the factors that are fuelling the current growth of startups in various technology hotspots. The fact that the prime minister was flanked by the industry minister and finance minister for the launch of the action plan without the HRD minister anywhere in the vicinity, spoke volumes about government's perception regarding the key drivers of the start-up development process, at the policymaking level.
It is probably true that the current HRD minister is a model of non-performance and possibly cannot add any value other than nuisance value to the Startup India initiative. Nevertheless, the government still cannot negate the fact that the HRD ministry as an institution must play the central role in a knowledge-based start-up development process that critically depends upon our ability to harness the knowledge and creative potential of the population.
Ignorance cannot lead to start-up-bliss
The table of contents in the beginning of the action plan reminds us of those dull and unimaginative government schemes, generally prepared by the babus, which most often do not achieve their declared objectives. As in many other SME development schemes of various governments in the past, the start-up action plan also lists out incentives for making startups look as an attractive proposition. One wonders, if such run-of-the-mill incentives can actually do the trick, then why Silicon Valley is still so much ahead of other places in launching high-growth startups.
The introductory statement of the action plan below Modi's beaming face says, "Startup India is a flagship initiative of the government of India, intended to build a strong eco-system for nurturing innovation and startups in the country that will drive sustainable economic growth and generate large scale employment opportunities."
Since the days of our first five-year plan almost all self-employment and SME development schemes are peppered with such clichéd statements aboutthe possibility of job creation through entrepreneurship and small businesses development. Not necessarily such statements were wrong. SME's huge contribution to our GDP is a clear proof of that. But, in a completely changed environment, in this Second Machine Age, can the government afford to remain so blissfully ignorant of the reality? There is an abundance of research reports indicatingthat the hoards of currently emerging startups that are set to trigger massive job loss in almost every sector is very much real.
Not job creators but job destructors
With industries getting "Uberised", a relatively small core staff can now manage a large network of just-in-time labour and replace huge number of regular workforce everywhere - be it in education or energy, food or transport, apparel or healthcare. Driverless technology, 3D printing, fully automated food-preparation systems, mobile app-based healthcare products and many other technological innovations have literally opened a floodgate of labour-saving innovative startups.
A recent Stanford University study of 1,58,000 startups worldwide shows,while a small minority of these startups enjoy steep growth in revenue as well as jobs, the gains are often substantially offset by losses in other firms. Professor George Foster, who conducted this study, sarcastically mentioned, "Politicians keep talking about gross job creation. When I say that net job creation is a better measure, they either look at me with a blank stare or they don't want to hear it."
These new startups - based on application of big data, artificial intelligence (AI) and Internet of Things (IoT) are threatening to convert many industrial townships to ghost towns overnight. Silicon Valleyprobably canreplace Detroit to become thenew automobile hub. Even our very own Tata Nano project, which was snatched by Modi from Buddha (deriving huge electoral profit in the process), may be folded up soon.
Converting craftsman to cog-in-the-machine in past
Many years ago, during the first industrial revolution, innovations in the workplace had displaced large number of skilled, but costly, artisans. Craftsmanship was not suitable for the emerging system of scale economy where a large number of people were needed to perform repetitive work without any process deviation. The educational and vocational training institutions were gradually transformed to meet the demand for standardised skills for sustainingand expanding mass production. Innovations were mostly incremental, separated by a few game-changing innovations appearing periodically afterlong intervals.
The education system had developed the capacity to churn out a whole new class of managerial professionals and also a sizeable number of entrepreneurs (mostly subservient to large businesses) for supporting production of standardised products and services on a massive scale. With sophistication of the managerial processes, achieving six-sigma became the goal for many firms. In the competition for zero defect creativity was largely stigmatised, or rather, "sigmatised".
But, the situation is now undergoing a fundamental change as mass production is gradually giving way to mass customisation. The on-going technological revolution is fast eliminating the need for human interventions in a wide range standardized and repetitive tasks, both physical and mental. Also, many jobs that require fairly high level ofcognitive skills, andwhich were never considered automatable earlier, are now taken over by machines.
Most importantly, innovations are taking place at a breakneck pace. Moore's law has already entered the steeperregion of the exponential curve. As a result, there is very little time to learn new skills. By the time a new skill is acquired, newer technology makes the skill obsolete even before it is put to use. As Vivek Wadhwa of Stanford University observes in his column in Washington Post, the jobless future may not be a Luddite fallacy anymore.
Start-up revolution without education reforms is a utopia
Success of a start-up revolution in this new economy solely depends upon our ability to create an environment where every citizen is able to apply his or her creativity for sustaining an ever-growing pipeline of knowledge-intensive innovative ideas and game-changing solutions. In such an environment unemployment will be widely treated as an opportunity rather than a problem. Every individual will have the ability to continuously search for valuable network connections, often from different domains, to create completely new kind of solutions and products. Also, it is important to understand that wealth-creating start-ups are now almost impossible sustain without good domain knowledge of the entrepreneurs. This brings us to the critical link between Modi's Startup India slogan and education reforms.
The new education system must be able to develop inquisitive mindset of each and every individual from the early childhood. Every citizen has to learn how to find creative solutions to problems in an environment that is changing at a jaw-dropping pace under the impact of newer innovations all the time. Every citizen trained in the new system must know how to manage personal growth under high uncertainty by combining critical and creative thinking. This is possible only when our education system is fundamentally reformed, from primary all the way up to tertiary levels.
In this new innovative start-up-driven economy, if we want to succeed then our huge population must not only be literate, but also knowledge-economy ready. Considering the exponential and combinatorial nature of today's innovations, to achieve this goal and make India the leader in start-up creation, substantial transformation of our education system has to happen within next three to four years. This is a doable task in view of the current state of rapidly developing educational technology. At the policymaking level, we need clarity, willingness and guts to bring about the transformation. Trivial solutions (which are often impractical) like setting up more schools, hiring millions of teachers or advising how to take exams through Mann Ki Baat cannot take us far.
Create student-centric education system
The new education system has to be student-centric, based on a fundamental belief that every student enjoys success, loves fun and is wired differently to learn the same thing most effectively in different ways. At all levels we have to create a very wide variety of educational institutions using different pedagogies and learning styles to fully develop the creative potential of each and every individual. Such a diverse educational and training system can allow industries and startups to figure out who is suited the best for a particular kind of job or partnership.
Take for example, German software giant SAP's decision to have one per cent of its workforce by 2020 with autistic disorder. The company is not doing it as a part of its corporate social responsibility. It had discovered that somepeople with autism are extremely well suited to performing tasks like software testing, quality control and security monitoring.
Our government's start-up action plan must provide a broad framework for educational development - not only for educational institutions, but also for large companies -that can create opportunities for students and workers to develop their innovation potential. Academic environments at every level have to be redesigned to enhance the potential for innovative startups.
What Modi should have learnt from Silicon Valley
No place demonstrates the link between startups and educational institutions better than Silicon Valley. Modi has a natural advantage because of his high face recognition in the Valley, partly, thanks to the PR blitzkrieg during his visit.
It is certainly logical to expect that he had the opportunity to familiarise himself with the universities of the Bay Area. These universities have been playing the most pivotal role in creating and sustaining the dynamic environment of Silicon Valley. Surprisingly, Modi's start-up action plan doesn't give any idea about how to create such an environment in India.
It is naïve to expect that without addressing our archaic system of academic governance andby simply creating some incubators and science parks, we'll be able to automatically turn India to the start-up capital of the world. It is sad and frustrating to read a start-up action plan after so much of hype, which is more yawn inspiring than exciting.