Richard Dobbs, author & director of McKinsey Global Institute, and director of McKinsey & Company talks to
Sunil Dhawan about his book
No Ordinary Disruption.
Q: The book says, by 2025 emerging economies will grow 75 per cent faster than developed economies, and will occupy half of the global GDP as against one-third now. What could be the challenges for emerging economies before it achieves that stage? A: This is not just a challenge for emerging economies, but with all developed and developing countries. The two basic challenges are skill and infrastructure. In the US, only 15 per cent of graduates have degrees. This is a big problem in the US. It has a huge shortage of skilled people, and also has issues with infrastructure. And so is the case of India. The problem will be solved when it will deliver the quality education to the rural population.
Q: You talked about growing cities within emerging economies. How do you see them growing in future? A: Tianjin, China, is a classic example of a city that most western executives have never heard of. And it is as big as Stockholm, and by 2025, it will be as big as Sweden. Mumbai currently has a GDP as big as Auckland, and by 2030, Mumbai will be as big as New Zealand.
Q: What according to the book could be the impact of the fast changing technology on existing businesses? A: Telephone took 75 years to reach 50 million people, radio 38 years, television 13 years, twitter 9 months. So, technology is happening at a different speed and scale. First, we are seeing technology disrupting businesses in a couple of ways. Technology is resulting in business activates that used to be one ways suddenly being some other ways. Second, it is allowing new competitors to compete. Technological firms are increasingly competing. Like, Amazon is offering loans to its suppliers. Because they understand supplier risk, and therefore, lend them perhaps better than banks. And third, technology is enabling small-and medium-sized companies to compete with global-sized firms.
Q: A recent report suggests India will overtake China’s GDP in future... A: China in the next 35 years is going to have 150 million fewer working-age population. So, India is well placed when China, Japan, Korea and Europe age. China is successful today because of its quality rural education. India’s education system is also world class. Indians and Americans are going to be the key to the technology disruptions. But the question is whether India is going to play that game or is it going to be working elsewhere in the world.
(This story was published in BW | Businessworld Issue Dated 11-01-2016)
