Purpose, Pragmatism and People

Indian Business Leaders Do Things Their Own Way–‘The India Way’

By Peter Cappelli, Harbir Singh, Jitendra Singh and Michael Useem

“Purpose, pragmatism and people” aptly capture much of the essence of the India Way. Composed of a mix of organizational capabilities, managerial practices and distinctive aspects of company cultures, the book identifies what makes Indian enterprises different from firms located elsewhere. This essence is characterized by four principal practices: holistic employee engagement, improvisation and adaptability of managers, creative value delivery to customers and a broad sense of mission and purpose.

Bundled together, these principles constitute a distinctly Indian way of conducting business, one that contrasts with combinations found in other countries. Indian business leaders, as a group, place greater stress on social purpose and transcendent mission, and they do so by devoting special attention to surmounting innumerable barriers with creative solutions and through the utilization of a prepared and eager workforce.

Not all Indian business leaders are saints or sages, just as not all American CEOs are laser-like focused on delivering shareholder value while ignoring larger societal concerns. Nor do Indian firms and their leaders hold a monopolistic view on virtue. Corruption and malfeasance can be found in the Indian business community, like Satyam Computers (1), just as it can be found in other countries. Yet, the attributes of the India Way appear often enough and especially among India’s most successful companies, who have come, we believe, to constitute a clear and distinctive model. Drawn from the voices of Indian business leaders, and from our observations of Indian leaders and companies in action, the four attributes of the India Way capture much of the modern Indian way of conducting business.

In completing this study of Indian business leaders, we were repeatedly reminded of the remarkable impact that Japanese business leaders and the Toyota Way have had on the auto-making world and far beyond. The methods of lean production pioneered by Eiji Toyoda and his company—treating all buffers as waste and seeking continuous improvement in all aspects of production—originated in the cultural traditions and austere times of postwar Japan. But the methods have proved powerful drivers far beyond that context, enhancing both quality and productivity in everything from Porsche manufacturing in Germany to hospital processing in the United States. With a model originally built in Japan, Toyota has become the world’s largest automaker, and its methods have come to be widely emulated by managers far beyond Japan.

Much the same applies to the India Way. It was born of the circumstances facing Indian business during the past two decades, but like the Toyota Way, it is also a model that can readily transcend its origins, providing a template for Western business leaders to reinvigorate their own, often sluggish growth rates. Think of it pragmatically: if applying the principles of the India Way were to generate even a single extra percentage point in yearly growth, say increasing the annual growth rate from 3 to 4 percent over the next five years, the 4 percent-rate companies would see their value doubled, compared to 3 percent-rate firms. Over 10 years, they would triple their worth, compared to the slower-growing companies.

India is a world leader in business, with interests ranging from medical procedures to investment banking. Innovation and ideas either migrate from other countries to India or spring up from within. Simultaneously, Reliance, ICICI, Infosys and hundreds of India’s other top companies have been clambering onto the world stage to compete directly against Western multinationals in virtually all sectors. In mastering the art of high-quality and efficient production—and in developing unique ways to manage people and assets to achieve it—Indian executives have delivered growth rates that would be the envy of any Western executive. During much of the 2000s, India’s gross domestic product (GDP) had been rising by more than 9 percent per year—several times that of the United States and nearly equal to that of China. That 9 percent-plus GDP growth, we should note, represents Indian businesses as a whole. Many of the nation’s premier companies—the focus of our inquiry—reported that they were growing at twice the rate of the general economy or more. Chairman Subhash Chandra of Zee Entertainment Enterprises—India’s largest media and entertainment company—told us, for instance, that his company had grown from $400 million in annual revenue six years earlier to $2 billion at the time of our interview with him. Managing director G. R. Gopinath of Deccan Aviation said before his acquisition by Kingfisher Airlines in 2007 that he had been adding a new aircraft every month to the fleet, growing from one to 45 planes in less than four years. Infosys Technologies’s chairman Narayana Murthy had presided over a company that employed 10,700 and drew $545 million in revenue in 2002; seven years later, his company employed 104,900 and earned revenue of $4.6 billion.

Originally, we did not believe that the rapid expansion of the Indian economy would be the result of an innovative and exportable way of doing business. In fact, we had expected much the opposite: with the triumph of American-style capitalism, at least until it came under a cloud during the financial crisis of 2008–2009, managers around the world had often sought to understand the leadership secrets of U.S. companies like Apple Computer and General Electric. In commencing our study of Indian business leaders, we had anticipated a cross-national convergence on American terms, with Indian companies looking to adopt the management methods of Steve Jobs, Jack Welch and other leaders of American enterprise.

What we found instead was a mantra of “not invented there.” Though well aware of Western methods, Indian business leaders have been blazing their own path. And though rooted in the traditions and times of the subcontinent, the value of their distinctive path can, we believe, transcend the milieu from which it arose. When Indian companies, for instance, take over publicly traded American firms—such as Tata Motors’ acquisition of Ford’s Jaguar and Land Rover divisions in 2008—research confirms that the acquired firms increased both their efficiency and their profitability. Western firms might be well advised to learn from the Indian experience in advance. Indeed, understanding the India Way and its drivers has become vital for business managers everywhere.

 

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Principle Practices of the India Way

Holistic engagement with employees. Indian business leaders see their firms as organic enterprises where sustaining employee morale and building company culture are treated as critical obligations and foundations of their success. People are viewed as assets to be developed, not costs to be reduced; as sources of creative ideas and pragmatic solutions; and as bringing leadership at their own level to the company. Creating ever-stronger capabilities in the workforce is a driving objective.

Improvisation and adaptability. Improvisation is also at the heart of the India Way. In a complex, often volatile environment with few resources and much red tape, business leaders have learned to rely on their wits to circumvent the innumerable hurdles they recurrently confront. Sometimes peppering English-language conversations, the Hindi term ‘jugaad’ captures much of the mind-set. Anyone who has seen outdated equipment nursed along a generation past its expected lifetime with retrofitted spare parts and jerry-rigged solutions has witnessed jugaad in action. Adaptability is crucial as well, and it too is frequently referenced in an English-Hindi hybrid, adjust kar lenge—”We will adjust or accommodate.”

Creative value propositions. Given the large and intensely competitive domestic market with discerning and value-conscious customers, most of modest means, Indian business leaders have of necessity learned to be highly creative in developing their value propositions. Though steeped in an ancient culture, Indian business leaders are inventing entirely new product and service concepts to satisfy the needs of demanding consumers and to do so with extreme efficiency.

Broad mission and purpose. Indian business leaders place special emphasis on personal values, a vision of growth and strategic thinking. Besides servicing the needs of their stockholders—a necessity of CEOs everywhere—Indian business leaders stress broader societal purpose. The leaders of Indian business take pride in enterprise success—but also in family prosperity, regional advancement and national renaissance..

This piece is excerpted from The India Way: How India’s Top Business Leaders are Revolutionizing Management. The book is published by Harvard Business Press.

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(1) “Satyam: Sankrit for ‘Enron’ ” – Wall Street Journal. The Indian IT company “cooked the books to the tune of at least $1 billion” http://onlinewsj.com/article/SB123143655097064873.html

 

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