Growth & Development

“Prof. Rahul Gupta Choudhary”

“The key to growth is the introduction of higher dimensions of consciousness into our awareness,” said Lao Tzu. This concept of growth is very important for individuals as there is a misconception in the minds of many people that growth is essentially material. This indirectly meant that the mind is not so much involved in the growth of individuals. This is far from the truth. There is a famous saying on this – ‘everyone wants to live on top of the mountain, but all the happiness and growth occurs while you are climbing it’. Carol Dweck (January 13, 2016) published an interesting article in HBR on growth-mindset. In that article, she discusses certain issues from her research on growth mindset and fixed mindset. According to her definition, people with growth mindset believes that it is possible to develop their talents through hard work and other means. However, people with fixed mindsets believe that their talents are innate gifts, and no improvement can be done on what has already been given to them. She noticed that people with growth mindsets perform much better than those with fixed mindsets. This is true for organizations as well. This difference affects the working culture of organizations as well. Organizations with growth mindset have a collaborative environment with high commitment levels, whereas people in fixed mindset organizations report an environment of cheating and deception. This is primarily because people in organizations with fixed mindset tries to get ahead in the talent race by hook or by crook. This, of course, affects the performance of the firms negatively.

Many people believe that they have a complete growth mindset. This is a fallacious belief because everybody has a combination of growth and fixed mindset. One is not sure if somebody may have a complete fixed mindset, but there is no doubt that there are many people who have a very high fixed mindset. The problem with people with a high fixed mindset is that they not only inhibit their own growth but also affects the performance of the team and the organization negatively. The main challenge is that most people confuse growth mindset with many other things. Growth mindset is not just about being positive or having an open and transparent culture. Growth mindset is something more than that. It is more about embracing new innovative ideas, it is about continuous learning and driving the self as well as inspiring others to new frontiers of knowledge, theory as well as practice. Unproductive effort is a waste and sometimes detrimental to self-interest as well as the interest of the organization. So, clear drive for results and goal-directed effort is an important component of a growth mindset. It is definitely not limited to just growing the top line and bottom line of organizations and attending a few training sessions. Many people forget that self-development is a prerequisite for developing a growth mindset. The reason is quite clear. If you do not grow internally in your mind, then you cannot make the organization and its people grow. This is where individuals have to move towards ‘higher levels of consciousness’. An individual or even an organization may grow their top/bottom line, but this alone does not mean that they are a growth oriented individual/organization. In business conversations, growth is an often-used word, but it is mostly to imply increase in size. However, the concept of growth is much more holistic in nature. A crucial aspect of consistent and continuous growth is the robustness of the systems and processes of an organization. If the processes are not robust, organizations falter and produces inconsistent output and becomes dependent on the business cycles. The capacity to bounce back from a weak period also gets severely limited.

There are many individuals who stop growing in their minds after some time. This is because growing our mindset requires time and effort. The first thing that the individual has to understand is where exactly does he stand on this dimension. This is where most of us go wrong as one gets defensive and the inner insecurities come to the fore. The requirement is to fully understand the strategies and then immerse yourself in robust processes which makes execution easier. Faith plays a major role in this. If one does not have faith in the strategies and does not appreciate the vision for accomplishing organizational goals, it becomes difficult for the individual to succeed – and the organization suffers. This is of course not as easy as it sounds. Very often vision and mission statements are just there as it is expected, and the ground realities remain completely different. The major problem in Indian organizations is that there are very few people who are strategists and who has the capacity or the inclination to convert the vision and mission statements to an executable reality. Very often, strategy is perceived as an ivory tower activity with little connection to reality. This is far from what the reality is. Most major Fortune 100 companies have long-term strategies in place, and they pursue it with full commitment. Here, strategies are long term plans for growth which are then broken down into smaller time-periods. The important thing for marketing/manufacturing companies is to understand that it is ultimately the product which sells. Marketing just has to follow the strategy in terms of STP operationalized by MM. Failing to work on a long-term strategy means the organization grows in fits and starts and then the growth becomes incremental. There is then a real danger of stagnation of the organization – both, in the marketplace as well as internally. It is surprising to see how some people and even managers cling on to their old belief systems and their old and outdated way of working which prevents growth of individuals in the system. On individual terms, the necessary condition of growth is maturity. When a person of forty years gets stuck at a mental age of twenty-five, he becomes a problem character. This is exacerbated when the person thinks very highly of himself but does not have the capacity to understand and behave and learn even rudimentary concepts. The resistance to learn new things is a big challenge for many people and ends up impeding growth. The learning always needs to come in the area in which the person is interested. It is very important to understand in life that in reality we know very little and all of us have our limitations in our capacity to learn. The entire education system is based on that. The policies of the organizations are an offshoot of this basic principle. It is not about specialization or being a generalist – it is only about learning and development. This is why the inability or stubbornness against learning new things makes the individual unfit for any responsible position – in terms of their work as well as in their personal lives.

W. W. Rostow was a civil servant and a developmental economist for the US government. In 1960, he came up with the theory on how countries develop. His theory was modelled on the Western developed countries and the goal of becoming a wealthy democratic capitalist country. So, according to Rostow, there are five stages of modernization or development and growth of a country. They are traditional society, preconditions to take-off, take-off, drive to maturity, age of high mass consumption. What looks and sounds too simplistic now, was quite new at that time as the cold war between USA and USSR was in full flow at that time. Although the obvious objective of Rostow was to establish the superiority of industrialized and urbanized wealthy western countries, it did help in the development of many poor countries to a prosperous economy. Without doubt, it also facilitated the creation and growth of substantial markets for the western economies. At a later date, this also ensured the supply of cheap labour for the western industries.    

Traditional society means a subsistence agricultural economy which is highly labour intensive. In this kind of economies, science and technology hardly plays any role of consequence. This however gives way to preparation of industrialization. In the preconditions to take-off stage, manufacturing activity starts, and the outlook and attitude begins to change. Then from infancy, the economy develops farther and there is a phase of rapid growth through industrialization. Along with this, institutions are also established. Then if this period of activity is sustained, the drive to maturity happens. This is where technology is adopted by the economy in a major way and industrial activity across various sectors becomes substantial. As a result of this, standard of living of the people starts going up and the economy becomes more and more stable. Then the last stage is the developed stage which Rostow gives the example of USA. The wealthy country was and still is characterized by mass production and consumerism. In 1960, world population was around 300 crores (3 billion approx.) and the population of USA and India was around 18 crores and 45 crores respectively. In 2020, world population touched almost 8 billion (776 crores approx.) and that of USA and India was around 33 crores and 140 crores (1.4 billion) respectively. So, in terms of population, while the world population grew by 267%, that of USA grew by 184% and that of India by 312%. So, in 60 years, from 1960 to 2020, USA did not even double its population whereas India has tripled its.

Now, let us have a look at the per capita GDP figures of these entities. The per capita GDP of the world in 1960 was around $450, which increased to almost $11,000 in 2020. The corresponding figures for USA was $3,000 and $64,000. The per capita GDP of India was only $82 in 1960 which has now increased to approximately $2,000 in 2020. So, we see from these figures that while the world as well as India has increased their per capita GDP 25 times, USA has increased 21 times approx. So, in 1960, the per capita GDP of USA was 37 times that of India. The situation has improved slightly now. In 2020, per capita GDP of USA is 31 times that of India. A quick calculation shows that had India been able to control its population to double that of 1960 instead of triple that of 1960, India’s per capita GDP would have touched $3,000 – the point at which USA was in 1960.

Now, let us have a look at China. The per capita GDP of China in 1960 was approximately $89. In 2020, this figure stands at almost $10500. So, China has increased its per capita GDP an astronomical 118 times in these 60 years – from 1960 to 2020. In the same time period, China’s population has grown from 67 crores to 141 crores (1.41 billion). So, China’s population approximately doubled between 1960 and 2020 and the per capita GDP grew 118 times.

So, Rostow’s postulations does not seem to hold good always and there seems to be a number of factors as well as models and methods of growth available to countries. The biggest limiting factor for India is its history. Centuries of foreign occupation and deprivation of its people has really turned the focus of millions of Indians to only survival – growth and development being a distant dream. The scenario in western developed nations were quite different. They were the colonisers and benefited immensely from the early adoption of technology and industrialization. The renaissance in Europe had catapulted them to an altogether different level which enabled them to lord over virtually the entire world. In this also, we see that there are disparities – western Europe progressed much more than their eastern counterparts and they were also more adventurous and ambitious. This resulted in some vicious wars among themselves – but their progress went on almost unhindered. The good part of this renaissance was that they progressed and developed in almost all areas of human endeavour – be it science or technology, or fine arts and sports – they were on a continuous growth path. At this time, India was still in the medieval ages and no progress whatsoever was being made. The nawabs were only interested in their own gratification and palace intrigue was the only art they knew or practiced. The overall problem was that the rulers of any consequence in India for a very long time were not Indians – their origin was all foreign. So, they never bothered to come out of their basic mentality of looting and exploiting the people. Progress, especially scientific progress, was probably beyond their imaginative powers. The renaissance of Bengal happened under the British occupation and so Bengal could never develop the military prowess necessary to become a world power. Other Indian states were lagging so far behind at that time that nobody could present a unified India before the British occupation. The Marathas tried but could not sustain for a long time. It is much later that people caught on and freedom struggle was launched – but by that time, valuable resources as well as time was lost. A wealthy country like India just forgot the growth paradigm and that too, centuries after centuries. It will not be easy to make up for that lost time and it will not be easy for us to turn around our fortunes within a limited time frame.  

In the meantime, it is not as if no progress happened. The people of India finally got themselves free from the tyranny of foreign rule and started developing their country in right earnest. India was set on a growth path which remained more or less consistent over a period of time. Democracy is the cornerstone of our existence and development has happened and is happening all around. Most of India is on a growth mindset now and aspirations are rising fast. However, we are lagging behind the developed countries so much that playing catch-up is also becoming more and more difficult. Maybe it is better for us to set absolute benchmarks rather than continuously comparing ourselves with the developed countries. The need is to target the basics of modern living standards. Quite a lot of development has taken place in that direction. According to world bank figures, percentage of population having access to electricity has increased to 99% from a low of just 51% in 1993. The percentage of rural population having access to electricity stood at only 40% in 1993. In the last 30- years of continuous development, this percentage of rural population having access to electricity has touched 99%. This is quite remarkable given the size and other challenges that India faced, and to a certain extent, still faces. In 1973, number of air passengers carried in India were 33 lakhs. In 2021, that figure touched almost 8.5 crores. So, air passengers carried has shown a jump of 25 times in the last five decades. This is no mean achievement – however, we, as a country, definitely need to continue our investments in the infrastructure building process. In 1973, number of air passengers carried in USA was approximately 20 crores, which has now jumped to 66 crores in 2021. So, USA increased its air passengers carried by only about 3 times compared to India’s 25 times. But then, the base itself for USA in 1973, was so high – approximately 60 times that of India’s air traffic passengers – that it will take India a few more decades to reach that level. Let us have a look at educational attainments. The cumulative percentage of the population of 25+ age group who has a bachelor’s degree has touched 38% in USA. The corresponding figure for India stands at 15% only. However, if we calculate in absolute numbers, India has 21crores of 25+ age group people who have a bachelor’s degree. The corresponding figure for USA is only 13 crores. So, whatever be the absolute numbers, it is quality that matters more in education and not quantity. The country (India) should not dilute the higher education standards by running after percentages and numbers. The strategy for primary education should be the exact opposite. We as a country need to bring in as many of our children as possible to the classrooms - and, very importantly, make them stay there for a minimum period of time.    

In 1995, India had around 62,000 kms of railway lines, while USA had around 2,00,000 kms of railway lines. By 2020, India has been able to increase its railway lines to only 68,000 kms, whereas USA has increased its railway lines to almost 15,00,000 lakh kms. So, railway lines have remained almost stagnant in India, whereas it has grown by more than seven times in USA. In the meantime, India’s railway passenger traffic has more than tripled from approximately 3,20,000 million passenger-kms to almost 11,00,000 million passenger-kms. In 1995, railways in USA carried only around 22,000 million passenger-kms which increased to only about 33,000 million passenger-kms in the same time period. From these figures, it is very clear that Indian railways need major investments in building railway lines and of course improving on other parameters as the pressure on the system in terms of passengers travelling are very high and ever increasing. About a decade back, one Indian executive was standing in a queue in Melbourne, Australia for reserving a ticket for Sydney. The person in the ticket counter was continuously chatting with two young women who had arrived from England. There was an elderly Australian standing along with the executive. The gentleman got very irritated as they were waiting for probably more than half-an-hour. Then he turned towards the executive and said that these kinds of guys should first be sent to India and study the railway system there. Is this even remotely possible in India? – he wondered. He further added - How many millions travel in railways every day in India and this people in railways Australia cannot even handle a few customers properly. The Indian executive felt justifiably proud – but in his heart of hearts, he also knew that a lot more needed to be done on the quality front, just numbers are not good enough. The introduction of Bande Bharat and the bullet train as well as the acceleration of Metro work in a large number of cities are definitely a much-needed step forward, but investments in the legacy system is also very much needed.    

The Human Development Index (HDI) published by UNDP, country wise, gives us a measure of where countries stand vis-à-vis some of the key dimensions of human development. The three key dimensions are a long and healthy life, being knowledgeable, and having a decent standard of living. Healthy life is measured by life expectancy at birth, and education is measured by mean of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. Standard of living is measured by gross national income per capita. The HDI uses the logarithm of income, to reflect the diminishing importance of income with increasing GNI. The scores for the three HDI dimension indices are then aggregated into a composite index using geometric mean. However, it must be kept in mind that this HDI is only a partial reflection of human development. This does not touch upon many other basic crucial areas like, inequalities, poverty, human security, gender inequality, empowerment, etc. The HDI is calculated on a scale of zero to one and begins in 1990. On this scale, countries scoring below 0.550 is considered to be of low human development. Countries scoring between 0.550 to 0.699 are considered medium and countries scoring between 0.700 and 0.799 are considered high. A score of 0.800 and above is considered as very high human development.

The average score of the entire world in 1990 was 0.600. This went up to 0.732 in 2021. So, in the past three decades, the world has moved up from medium to high degree of human development. The top two countries in the world are Switzerland and Norway with a HDI of 0.962 and 0.961 respectively. In 1990, Switzerland and Norway had a HDI of 0.851 and 0.838 respectively. So, they already had a very high base and has further improved in the last three decades. India has also moved up from 0.434 in 1990 to 0.633 in 2021. So, India has improved from low to medium level of human development, and high level of human development does not seem to be very far off. However, unfortunately, as of now, we are still ranked 132 among all nations of the world. According to the index, developing countries have an average HDI of 0.685 – very close to high human development.      

The Table below shows the relevant indices:

	Life Expectancy at Birth	Expected Years of Schooling	Mean Years of Schooling	GNI per capita 2017 PPP $
WORLD	71.4	12.8	8.6	16,752
INDIA	67.2	11.9	6.7	6590
SWITZERLAND	84.0	16.5	13.9	66,933
NORWAY	83.2	18.2	13.0	64,660

 

From the above table, it is quite clear that India is catching up with the world average except perhaps in GNI per capita. So, it is obvious that we have to bridge this gap fast and then target the very high HDI countries in other indices – ultimately, it is all about the economy. The question arises that whether it is possible to have a high or very high HDI on a low or medium GNI per capita. This is very difficult to answer. The reason for this is that all the earlier models of growth in Asia, especially South-East Asia and Japan (also China in a limited manner), has been export-led where they, first and foremost, targeted the GNI per capita. As income rose, other indices also started moving upwards. In this global marketplace, manufacturing and exports need to drive the GNI upwards. Even small companies need to think of the global marketplace. We come back to it again - it is about the mindset, the growth mindset and not the fixed mindset. Once in a relatively small city with a lot of legacy as an industrial hub in USA, an executive stumbled on a small cobbler shop. He saw that something was written on the large glass window on one side of the shop. He took a close look and saw what was written – “The World’s Best Cobbler Shop”. This was an eye-opener. Even a small cobbler in a small city is thinking about competing with the world -and, not only that, being the best in that world. All the practical counterpoints of him not understanding what the world is in reality is well taken, but, in the ultimate analysis, it is the thought that matters. This is a clear indication of a growth mindset.                                        

What is important for the individual, the business, the society, the culture, and the country is that growth and development must be sustainable. So, the United Nations developed a set of goals for the planet and its inhabitants – which is called SDG, or Sustainable Development goals. The following is what United Nations say about the initiative: “The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries - developed and developing - in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests”. This is a commendable initiative that encompasses all facets of life in the planet and fulfilling these goals will make our world a much better place to live in. The following are the 17 Sustainable Development Goals (SDGs):

1) No Poverty; 2) Zero Hunger; 3) Good Health and Well-Being; 4) Quality Education;             5) Gender Equality; 6) Clean Water and Sanitation; 7) Affordable and Clean Energy; 8) Decent Work and Economic Growth; 9) Industry, Innovation, and Infrastructure; 10) Reduced Inequalities; 11) Sustainable Cities and Communities; 12) Responsible Consumption and Production; 13) Climate Action; 14) Life below Water; 15) Life on Land; 16) Peace, Justice, and Strong Institutions; 17) Partnerships for the Goals.

While there is no doubt that all the goals are very important for the planet, the first four goals are an obvious priority. This planet, in the 21^st century, cannot have its inhabitants not being able to afford the basics of a bare minimum standard of living. It is astonishing to even think that there are people in this planet in the 21^st century who go hungry or cannot even feed their children properly. The next priority of course are health and education. The planet hopes that all this development initiatives will fructify and will change a lot of things in a lot of countries across the world. Everybody is keen that the world becomes a better place for all its inhabitants and then continue to flourish.