The flag of India (MONEY SHARMA/AFP/Getty Images)
Snapshot
  • India can leapfrog our China-Pakistan issue and become one of the most powerful countries in the world by 2030.

It is evident that military strategy is relevant for business: for instance, the book Business Wargames by Benjamin Gilad applies lessons from military campaigns to more mundane business situations. And for many CEOs, Kautilya’s Arthashastra is required reading (or should be), for its wealth of insights.

However, it is equally true that business strategy can be applied to military and geopolitical issues. For instance, the late management guru C K Prahalad’s classic essay “Strategic Intent” is worth revisiting in the context of power relations in Greater India and in the looming conflict with China.

Innovation is one of the best strategies for companies, especially if you create a culture that encourages it. In a dynamic environment, you win if you innovate, taking into account changing power equations and core competencies. For instance, business strategy guru Michael Porter’s Five-Forces Model focuses on the competition in deciding whether to enter a market. Translation for nations: understand your friends and foes before venturing on geopolitical adventures.

A deeper strategy perspective is the Resource-Based View, which looks at your long-term prospects based on what you are capable of, both today and in the future as you build up capabilities. Naturally, this applies equally well to nations: for instance, the views expressed by Prahalad’s The Core Competence of the Corporation can be applied almost wholesale to nations.

A third business concept of interest is that of Game Theory, and in particular the Prisoner’s Dilemma game. International relations can be modelled as a repeated Prisoner’s Dilemma game where both parties know that they will benefit from cooperation, but the temptation to fool the other side, betray it, and get the greater benefit is often irresistible.

In such a game, you may do well if the other side is gullible, but in the long run, you have to assume they are equally smart and will figure out your betrayal, and will retaliate in ways that are painful to you. Thus, it turns out that the long-run best strategy is “tit-for-tat”, that is to mirror the other party in the next round, for good or bad. They will get the message.

For some strange reason, this simple logic has not seemed to occur to India’s foreign policy establishment. The policy that India has followed for 70 years, wherein Pakistan repeatedly betrays India, yet India does not turn around and betray next time around, has made Indians look like patsies, and allowed Pakistan to game the system and gain the lion’s share of the benefits.

Recent actions by Prime Minister Narendra Modi have indicated that India has finally decided to follow the tit-for-tat strategy.

If Pakistan needles us in Jammu and Kashmir, we needle them in Balochistan. If Pakistan sends terrorists across the Line of Control, then India can return the favour by doing surgical strikes. If Pakistan saber-rattles its nuclear weapons, India can threaten to drop its no-first-use policy. If Pakistan does not cooperate, then it may get kicked out of SAARC.

If Pakistan continues its wayward ways, the Indus Water Treaty will get renegotiated, or at the very least India will use up the 20 per cent of the water it is entitled to, even though the overall treaty is heavily biased in Pakistan’s favour.

It is beyond comprehension why India has not done these things so far, none of which escalates to the point of war, but which serves India’s purpose of deterrence. One can only wonder at the mindset of political leaders and the incompetence of the foreign service mandarins. Alternatively, perhaps it boils down to a lack of strategic intent.

Strategic intent is defined as the essence of winning, by creating a well-defined and worthy goal that remains constant over time, which excites the participants, and which calls for a reciprocal “contract” if you will, between the leaders and the led. Those firms that have such an intent (and that is distinct from the mission statement which is usually too much “motherhood and apple pie”) tend to do significantly better than those that do not, because they induce creative thinking.

Nations often have a clear strategic intent: the US clearly signals its intent to be Numero Uno in the world in everything: economy, military, culture, technology. Interestingly, China has the exact same intent, which means there is and will be inevitable clashes between them. What would be India’s intent? I have asked generations of students this question, and they have hesitated. “To be among the world’s top five powers?” “To create a more equal society?” “To be a developed country?”

The sad fact is that India has not had a clear intent. Thanks mostly to Nehruvian woolliness, it has not had the clearsighted aim a great power should. It has been dabbling in all sorts of matters, not focused like a laser on advancing its own interests. It is possible that PM Modi does have a strategic intent of making India a global Great Power.

That would be a worthwhile strategic intent: to be one of the poles in the world order, and to get to a G3, instead of the G2 that has existed for some time: the US and the Soviets, and now the US and China. In fact, by sheer momentum and scale, India will shortly become a Top Five power, even if nothing special was done. Therefore, the key is to imagine a worthwhile goal and work towards it.

I have long felt that India’s strategic intent should be to be Numero Uno. It is the only major power capable of challenging the US and China across the board. Consider the other contenders: Brazil has a habit of flattering to deceive; Russia is in demographic collapse; the European Union is falling apart; Canada is too frozen and too cowed down by the US; Australia is too empty. In India’s case, it has had all the ingredients in place, except for the crucial one: leadership and thus self-belief.

If India can continue to grow fast, it will easily be the No 3 economic and military and technological power by 2030. Admittedly, that is a big if, especially given that globalisation is under attack. India can develop the core competencies and capabilities needed: but we have a major gap in education and R&D, and in infrastructure, but these can be remedied by just throwing money at them.

The fact is that neither China nor the US wants to have another Great Power in play, naturally preferring monopoly or duopoly, which is in their best interests. Thus, the US will not help India beyond a point. And China has been actively and unremittingly hostile to India in every possible forum. Both find it convenient to use Pakistan as a proxy to contain India and confine it to a “South Asia” ghetto. The Pakistan “problem”, if you ignore the religious fundamentalism angle, is really a Porter-style “barrier to entry” being erected by the G2 incumbents against a rising India.

The way to combat this is through creating and enhancing Prahalad-style core competencies. This requires highly innovative thinking. For instance, India’s Traditional Knowledge Systems have great opportunities, as western medicine runs up against the wall of drug-resistant bacteria. Similarly, India’s capability in frugal innovation will be helpful in a resource-constrained world. But new competencies must be built, and India can create near-miracles in innovation, as ISRO demonstrates regularly, and as is documented in Anil Gupta’s fascinating book Grassroots Innovation.

India’s core competency is two-fold: in agriculture, and in abstract thought. In a world that will struggle to feed 10 billion people, Indian genetic variants and traditional techniques for high productivity can be harnessed. Abstract thought can become the engine for exports, as manufacturing, hitherto the key driver of exports, becomes distributed through technology such as 3-D printing. But design, or engineering, will remain a competitive advantage. Indians have traditionally had a flair for this: and it goes back to Panini’s grammar and Madhava’s infinite series.

By carefully forecasting what capabilities will be needed in the future, and building those up in India (admittedly a tall order, given India’s thoroughly messed-up Macaulayite education system designed to produce coolies and clerks for Empire) India should be able to reach the G3 soon, and indeed even surpass the G2. Prahalad relates the fascinating tale of NEC vs GTE in the 1980s. To begin with, both were small players in telecommunications. But by correctly forecasting that electronics and semiconductors would be the future competencies needed, NEC soon became a major player in those and telecommunications, while GTE remained a bit player.

Thus, India can leapfrog the current G2 by thinking though and gathering the competencies needed twenty years hence. Pakistan is merely a nuisance: unsentimental application of Game Theory is enough to keep it in check. But to handle China, India needs to give full vent to its creative juices and innovation, and in a way invent the future.

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