Vision 2047 — An Indian development plan

While reading the Vision 2030 document of Saudi Arabia, I found the clarity of thought and the detailing amazing. It’s an ambitious blueprint that combines the country’s long-term goals with its strengths.

Saudi Arabia’s Vision 2030 rests on 3 key pillars:

1. Religious: As the land of two holy mosques, it aspires to become the centre of the Islamic world. But it explicitly says that it wants a moderate version of Islam and welcomes people from all over the world to achieve this dream.

2. Economic: It wants to diversify its economy away from oil towards more sustainable development and attract foreign investment.

3. Political: It aims to leverage its strategic location to become an international centre of trade by connecting Asia, Europe, and Africa.

The blueprint talks about how it plans to achieve its strategic objectives such as a thriving economy and a vibrant society inside an ambitious nation.

It lists down explicit goals like increasing life expectancy, creating more live able cities, reducing unemployment & increasing female workforce participation, making the kingdom a center of tourism, increasing non-oil revenue, making government more transparent and effective, increasing household savings, and many others.

It identifies specific industries like logistics, healthcare, housing, tourism, finance, and others that it wants to improve through its multiple Vision Realization Programs. Everything is so crisp and detailed that anyone reading it will realize the effort and thought that has gone into making it.

The question is why hasn’t India created a similar blueprint?

In my opinion, every country needs a development plan like this that can galvanize the government, the bureaucracy, citizens, businesses, and all other stakeholders and inspire them to achieve something monumental.

Indian Prime Minister Narendra Modi talked about a 25-year vision (Vision 2047) on Indian independence day in 2022. But it’s like stating an ambition that exists in the heart of every Indian. Everyone wants to see his country become rich and developed.

The country needs a master plan or blueprint that identifies a 25-year plan that ordinary people can see and discuss. It must identify our strengths and strategic advantages and explains how we are going to achieve them.

Saudi Arabia has set a fine example. Now India must follow it and declare how it will create its future. India’s destiny is in our hands. Now it’s time to spell it and write it on paper.

What should be the growth rate of your company, or how fast should your business grow?

Growth rates are a result of several factors such as: industry growth rate, GDP growth rate, stage of the company (early/mature), access to capital, desired return on equity, etc.

However, let’s look at some broad based thumb rules that can help you to determine if your business growth is reasonable or not.

👉🏼 GDP Benchmark: You should ideally grow at a minimum of 2–3X the GDP growth rate of your country. This should be assumed at about 5% p.a., so your business should ideally grow at about 12–15% p.a. at the very least.

👉🏼 Inflation Benchmark: If the inflation rate is at 6%, you should ideally grow at an annual growth rate at least 2X of that to actually, meaningfully grow your business.

👉🏼 Return on Equity Benchmark: If you expect the stock market to give you a return of 12% p.a. on your investment, ideally the return on investment in your own business should be higher because shares give you passive income. Your own business requires active effort, so best if it’s double the return. Thus, for unlisted privately held businesses, given the risk profile, an annual return of 24% is expected.

👉🏼 IPO Benchmark: Listed companies around the world are expected to grow on an average of upwards of 20% in the year in which they IPO.

👉🏼 Y Combinator Benchmark: Paul Graham says that at the absolute early stage of startups accepted to YC, they’re expected to grow at 5% per week!

The metric for growth for most businesses may be different — some may want more revenues or market share, or some other operating metric, but in real sense, it has to be net cash inflows i.e. actual cash taken home net of all expenses — that must grow every year.

The sexiest business model for the future will be this:

I talk about digital business models and have also written extensively about the 8 types of business models in my book, Daily Coffee & Startup Fundraising but lately, while analyzing platform businesses, marketplaces and D2C brands, I realize a common theme.

A lot of these new-age businesses are making losses despite reaching mass scale, having captured market share and penetrating customer reach through digital channels.

And it has been done so unsustainably, that for any new player to attempt to reach their scale without burning as much money seems intimidating, and for them to turn profitable is still seemingly distant.

But let’s go down to first principles:

People either buy intangibles (services, experiences, and status signals) or tangibles (goods, and status signals).Even at the core of your purchase from Amazon, Nykaa, Uber, Apple there is a hardware product. There is something tangible you can touch and feel.

And if you’ve followed the semi-conductor industry story. I think the next sexy business would be again something old school again manufacturing tangible goods.

Even your D2C brands have realized that the only way to make margins is through backward integration to own the manufacturing facilities. Your platform businesses like Amazon, Nykaa, Myntra are getting into manufacturing their own label of products.

A lot of these are first white-labeled contract manufactured, but after a point, the margin lies in conquering the margin at the manufacturer level.

And this return to focus on manufacturing will force businesses to stop trying to justify premium through brands and status… but move focus towards keeping prices low for customers and focusing on cost reduction.

And this focus on further cost reduction will push businesses to innovate and drive further efficiencies in manufacturing. Just like fashion, capital markets, and human rebirth, even business models are a cycle. It moves from one to the next and back to the first. And thankfully, the world progresses because this cycle is upward-sloping.

If you’re in manufacturing, know that you will continue to be the future, as long as you can bring innovations here and be the next semi-conductor manufacturing monopoly for the world, or some such.