In India everything seems to happen four years later than you expect it to happen. I'm trying to figure out if there is a way to speed things up. The all too often discussed reasons of red-tapism, inefficiencies of our legal system and ineffectiveness of our governmental agencies are becoming a rather boring and fruitless part of social conversations in our country. I don't want to be part of such conversations.
I think it's this bias towards cheaper products and services that seems to slow down the economy, making it poorer. It's a cycle that feeds low quality and perpetuates poverty. Now I'm not suggesting that the guy asking for a higher price for his services is necessarily a better vendor but the guy who made a lower offer had probably overlooked contingencies or factored in an excess amount of luck in drafting his offer. Cash flow problems that result from unaccounted contingencies lead to delays in implementing projects and sometimes into projects that never end. I can hardly think of a project in India that finished anywhere close to the scheduled date and within budget. I have no objections to buying products cheaply but excessive focus on costs can make us victims of low quality. Everybody is for quality but provided it is also at the cheapest possible price. Businesses ending up buying low quality products because of their excessive focus on the purchase price may end up with a) Lesser number of customers b) Cost overruns due to frequent maintenance or replacements and c) A higher cost in supporting and selling it's products and services. Gary Hamel and C K Prahalad in their book 'Competing for the Future' warn businesses of lower profitability from- 'A downward spiral of customer expectation where, ever poorer service begets ever lower expectations and ever more price sensitivity.' Most people trying to reduce cost by focusing on the purchase price, end up with contrary results. Excessive focus on purchase price has kept higher quality vendors away from the Indian market and resulted in a drain of high quality professionals to markets where quality is better appreciated. So the Indian market now has abundance of low quality products and service vendors willing to work at lower margins. Lower margins in turn leads to – a) Poor investments in product improvements b) Use of capital equipment for longer than their recommended life span c) Under budgeting for planned and capital expenditures, leading to higher unplanned and unexpected expenditures in maintenance and emergency replacements. So these vendors who start out as low cost alternatives eventually pad up their price to cover for all the unexpected maintenance and repairs. That's a double whammy - low quality at high costs. True sometimes what starts out as poor quality, in time improves as has been the case for Japanese and Korean products that started at the lower end of the product sophistication and moved up to occupy the top slots. But that happens only when there is overriding quality vision driving businesses. In the absence of such a vision, external market conditions play an important role in determining the fate of a business. Right now the Indian market place breeds low quality at high cost. That's bad news for Indian businesses in a rapidly integrating global marketplace. Unless we as businesses and consumers change our buying habits, Indian products and services are likely to fall into a mediocrity trap. Quality doesn't necessarily mean high costs; in fact many times it means lower costs. The paradox is that the lower cost may be hidden beneath a higher initial purchase price.