David Fradin has over the last 36 years worked with many start-ups that went on to become giants such as Apple Computer and HP.

He is a contemporary of Apple’s founder Steve Jobs and is now a part of the Institute of Product Leadership.

In an interview with Business Line, Fradin, Principal at Spice Catalyst, talks about the lack of good quality Indian engineers coupled with a product mindset and the need for start-ups to focus on designing products keeping customer problems in mind rather than imitate blindly.

Excerpts:

On hindsight, do you think the Indian approach to services was right?

Services is commodity and always puts pressure on companies. There is a ceiling to which you can increase profitability. Eventually a (services) company can’t grow its business unless they hire more people. Infosys has 1.5 lakh employees and always have to train 10,000 people. Competition is coming from China and they are willing to work for less. Others like Singapore are also pushing into services business and their Government has set aside $1.2 billion for services business. Challenge for Indian companies is having the ability to think of anything radical or new. When specifications are given, Indian engineers can tinker and work on it. But customer demands are changing.

Nowadays, as IT has matured, customers make demands, which Indian service companies are unable to compete.

Are Indians improving when it comes to designing products?

Very marginally. I was scouting for a company in Mumbai to outsource some work. I asked him again what does the product does. He replied that it is like Windows. I asked the question again? He said it communicates using SMS. I told him SMS is expensive in the US. People do not use it extensively. That is an example of disconnect between market wants and the design capability of engineers to offer it.

Also, after two hours of explanation, the company could not document it and as a result the project failed. They could not explain technical terms. So, as all training starts after the product is developed, they gave me schema, codes, but no instructions as to how to install or configure the software.

If the company had a product manager, he would take care of this issue. In another case, it took three months to get Java scripts to change the homepage of an e-commerce retailer. That is not acceptable.

With constant pressure to show returns (if they are funded), how should a start-up think?

When a start-up starts developing a product, it should not think about failure else the product will be a flop. As a start-up grows, CEOs should realise that they cannot do product management, operations, sales, marketing, finance etc. The CEO should look at development of people, strategy, tools, customers and processes. Lot of start-ups do not have processes. Initially, revenues do not matter. It is about the capability of the founders.

Most start-ups here feel that processes hinder innovation…

No, lack of processes would result in a culture of blame. You can have a light weight and heavy weight process. I visited Motorola before they were acquired by Google. They were a train wreck. On the software side of their business, they were using processes that were applicable to vehicle manufacturing. This does not work. It is an esoteric argument. If you don’t have a process, you will not know who made the mistakes and it will keep recurring.

While B schools talk about investing during a downturn, corporates around the world seem to do exactly the opposite?

In 2007, Steve Jobs told us that in a downturn, we will increase our product development cycle. It is not enough to build a blockbuster product. In order to do that, you have to build a strong company. Dave Packard (one of the founders of HP) taught us that.

The problem is greed. In 1980, when stock market started gaining ground, our planning sued to be 5 years ahead. Now we are talking about quarterly returns. So, the long-term planning is getting shorter and you combine with the attention deficit amongst investors and you see the problem. However, Apple has stuck to long-term planning. It also goes back to compensation package. The CEOs’ compensation is tied to the performance of the stock and this vested interest results in CEOs looking to capitalise on the short term instead of the long term. Corporate governance also needs to be blamed. The question is will Wall Street straighten up its act.

Is that that the reason companies like Dell or Alibaba have decided to go private?

Yes. They are looking at the long-term future of their companies.

How do you see competition from software products in China?

It is worse off and IP infringements are a big issue. I have been approached by a bunch of Chinese companies to overcome this issue.

>venkatesh.ganesh@thehindu.co.in

Related Topics