Two great avenues for entreprenuers to become global supply partners

I mentioned earlier that it is important for Pakistan to become a part of the global supply business.

Disclaimer: China and other countries already have a significant head-start in what I am about to say here — the good thing is, that these avenues do not depend on who’s first.

Let’s get some facts out of the way :

Fact : we will face a greater set of resistance initially from international customers in convincing them to take their businesses to PK.

Fact : Part of this is an image problem of the country.

Fact : Most of it is a quality issue.

But here are two ideas for entrpreneurs and dynamic companies alike to think about.

As always, a long coffee-session follows. Refill your mugs before diving in.

If you analyse the way the global manufacturing industries are moving, two trends are becoming clear. Both of them are opportuntities for Pakistan.

———- First : The Critical Mass of Fashion ————-

Here I talk about Consumer Electronics.

Initially, people buy all consumer products because they are actually quite useful. In this phase, the product with the most features at a competitive price-point will win, meaning that engineering focuses on putting the most features in the smallest space, and manufacturing focuses on optimizing assembly costs.

For the typical company in this phase, the larger expected sales from their features-rich products will eventually offset the costs of putting the extra features into the device. This type of thinking was largely the cause of the first electronics bust.

But afterwards, the product gets into what I would call is a ‘critical mass of fashion’. In this phase, the consumer’s perceived value of one product vs another doesn’t differ all that much irrespective of the feautres on the device — eitehr because there are too many competitors, or that the features ont he device have saturated.

In this phase, people buy one product VS another because of how good it looks; feels; how much of a fashion statement it becomes, etc.

In this phase then, the most important functions in the company are:

1. Industrial Design — coming up with wacky design concepts that can click with consumers just in the way fashion does
2. Imaginative Engineering — break conventional thinking to support those wacky designs (you might need flexible PCBs; maybe the product will be spherical)
3. Diverse Manufacturing — with expertese in building a very wide range of product finishes, from glossy to brushed metal to icy glass etc.

For a typical company making consumer electronics, whoever can get the above three things in the best quality at the least cost will be successful.

All three of the above are great areas to start a Pakistan-based professional services business in.

The most respected industrial designers today — who are designing for companies like apple, samsung, MS and others — come from countries like Brazil, Singapore, Germany etc. If you have great design ideas, make a portfolio and put it online. Send your device ideas to famous blogs that are covering product design, and have product design specs ready for anyone who shows interest. Luxology’s Modo is some great software for this. You can literally do this from garages, but most importantly you will have to get out of conventional shells and invest your time in building some great concepts. If you can, it doesn’t matter what your prior qualifications were.

For manufacturing, international companies dont want a job shop. They want to find someone who will sit with them and actively explore design ideas. They want someone who can say “Hey you know what, my manufacturing shop is able to give this great semi-glossy brushed-metalesque blinn look to this, let me send you a sample.” Most importantly, they need to get out of the shell of “everything I do must be paid-for” and invest in going the extra mile with customer service (e.g. with free samples / facilitating prototype design etc.)

For engineering firms, this area of supporting crazy industrial designs is new. Since a lot of engineers are resistant to breaking conventional wisdom, this results in higher engineering design costs for companies. Any engineering firm that can create a ‘winning-formula’ for approaching complex industrial designs will get a lot more attention in this world.

China has a great head-start on this, because they realized last year that design was the future of technology, but the great thing about design and creative fields is that it’s the only place where the playing field is truly flat — so Pakistan has just as good a chance as anyone.

—————– Second : Core IP ——————-

This I present with a grain of salt. Local companies such as
And-OR and CARE have struggled with this, and others such as
PalmChip and Com-Cept are also working on parts of this. The idea is certainly not unique, but it deserves to be spelled out.

The idea is this: This is the second age of reference IP designs.

It happens when engineering in any industry hits a ‘critical mass of complexity’ — most projects just become infeasible for new companies to attempt all by themselves.

The first tech industry where this happened was Microprocessor design. When uCs became too complex, they started to realign their design process around using modular IP created by other people. Companies started focusing on niches, leveraging each other’s expertese. ARM, SigmaTel, nVidia, NI and others can attribute their success largely to this phenomenon.

Software Product industries also caught onto this pretty quickly, with firms focusing only on OS, Compilers, Anti-virus etc.

So what’s new? Now is the age of reusing modular IP designs for people more downstram in the technology universe.

In software, enterprise software (i.e. putting products together so they ‘just work’) becomes more complex by the day, and there is a need for someone to create incredible reference architectures and middle-ware frameworks aligned with certain industries. The key design features will be better management of change. The key businesses will be to license out the framework or designs to people.

Think about why this would succeed: Most IT Professional Svcs companies are barely surviving at the price-points and project schedules they are workign with. Their first approach – reducing engineering salaries until the point of reasonable exploitation – is only a stop-gap solution. How do you continue to deliver in shorter project schedules, but yet turn a profit? Well, license out a ready-made, proven reference solution from the “Reference Design” company, and use a minimal number of engr resources in implementing it.

Another reason why it would succeed is because most enterprise customers do not really judge the finer details of the proposed design solution for IT projects. I.e. they dont care to look at how one firm’s architecture is better than anothers. They care about solving business challenges in the way which has least costs upfront, AND least costs down-stream when their business environment changes, which it sure will (read: flexible change mgmt).

I am amazed at how many IT companies in PK keep re-inventing the wheel without building their work into reusable IP as a means of reducing their own costs as well as their customers’ costs.

So I think it’s a great time for a firm to just focus on building enterprise frameworks and licensing them out to these thousands of struggling IT firms in Pakistan and India. Since their customers will be creating IT solutions for the actual customers, the ‘refernce design’ company will have a much larger set of industrial knowledge to put back into the framework.

Ok, what about manufacturing? NOW is the time to build reusable PCB designs as licensable IP. You want to build an MP3 player? Cellphone? Digital Camera? Oh well simple plug-and-play the “Camera Image Processing” PCB design with the “RF link processing” reference designs, move them around, few links here and there and you’re good to go.

The company that is focusing its business entirely on reusable PCB designs can optimize the traces, power, thermal and electrical specs of that one solution to a great great deal. They can even get a lot of industrial insight and support from IC-makers that would want their ICs to become central to the design IP.

The company that is using those designs to build product specs can both reduce its costs and most important achieve much shorter time-to-market.

How do you start this one? Most of the design can be done in simulation software, but you would have to invest in building prototype PCBs — you can put up specs and created benefits of the design on a website, e.g. show how the BOM costs for your design is much lower than others. Have prototypes, numbers and charts to show to anyone who shows interest.

——————— Conclusions ——————-

You really don’t have to be in San Jose to be succesful in the business ideas mentioned. By working in these areas, you have a much better chance of being a critical link in the next-generation of products being designed and built in the global markets.

What you certainly need, though, is the ability to get out of a conventional ‘get money from doing nothing’ shell. Invest your time, or money in building the frameworks, designs, IP needed. Invest in protecting the IP. Put them on a website. Be ready to have much more open discussions with your leads about your abilities. When you meet your first customer, have very clear, quantifiable results to show.

Oh, and please dont claim to do everything-under-the-sun on your website out of desparation. This will put you in a bad cycle of delivering very poor quality products because your firm had never done before what they claimed in order to get the work.

I will agree that part of the challenge is an image problem resulting from unobjective media coverage of Pakistan. This is a very small problem, however.

The image issue doesn’t make me change my name to Sam in order to survive. I will always be worth as much as the knowledge I can create. So will Pakistan.