Wednesday, February 15, 2017

Why US, Russia and ESA need to be wary of India, the new kid in town !!

ISRO PSLV C37 ready for launch with 104 satellites ..
India's total cost for the much successful PSLV C37 launch of 104 satellites on 15 February 2017 was a paltry $15 million. This is $ 5 million more than the cost to insolate Kochi international airport, 9 million traffic, the world's first and only, and yet to be challenged,  100℅ energy neutral, solar energy international airport in the world. Click here for more details on Kochi airport ..
PSLV C37 being assembled ...

Elon musk's much talked about Space X would have sent these 104 satellites for about 4x costs at $60 million and ESA, Japan, China and NASA for a cool and reasonable $100 million each, about 6.5x Indian costs. 

Wonder why others are getting very expensive, less competitive and losing the spirit to innovate on costs ? 🙏


Primarily the most important reason for this losing out is not lacking the technical competency, but according to me, there are two main reasons.

The first one is the naturally higher costs inbuilt into the system, due to societal pressures and living a sophisticated, artificial, extravagant, lavish, wasteful life from the beginning. A less sophisticated life would have seen all of us living with nature.. The players are not even willing to introspect as to why their costs are skyrocketing and try to reduce the costs. These players perceive that superior performance and improved functionality (almost all the time) is all that matters, regardless of the costs. Their perception fails to retain their clientele. More often than not, they fail to catch up with the lower cost players, customers switch sides and losing business ..  These major players eventually fade off and get pushed out of the market.

The second reason is the feeling of complacency, the feeling that they (the incumbents) are too big for others to even touch them ..

Prof. Christensen of Harvard calls it disruptive innovation, (click here to read more on Prof Christensen and disruptive innovation), where new players beat incumbents on costs and slowly capture the market till they finally drive the incumbents out .. examples are global large scale steel industry giving way to smaller plants, Japanese auto makers disrupting US automakers and so on.   

Unless the incumbent old space players do something like buy out smaller nimble companies, they will be driven out of business by the lean newcomers like India ! 👍🙏🙏

George

2 comments:

  1. Highly valid points Sir. I could very much relate them to Prof. Christenson's video on Disruptive Innovation about the steel industry that you showed us during our Ops Strategy class. India's capability to showcase cost leadership is being talked about by the entire world.

    Will this lead to China being pushed away from the eyes of the word as a cost efficient destination... Will investors turn towards India for our leadership in cost control... ?? Many questions still remian unanswed... but we r slowly capitalising on them..

    Apple's next manufacturing facility in Bangalore by late this year is only the starting point of a revolution that is about to take our economy to an acceleration growth trajectory..v.m uch similar to ISROs PSLV trajectory clogging 10k kms in under 2000 secs. We can only wait and watch... But one thing is for sure. We Indians do have the talent to take our country to even greater heights.. And ISRO had just been a leading example of our talents.... Jai Hind!

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  2. True Nikhil, great observation. Even though the west coined the term Disruptive Innovation, they are not yet ready to accept the phenomenon in its fullest sense, maybe due to a false sense of pride and superiority.. Nature and nature's processes will take care of such hotheads ..

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