A Call to Action
By Ravi Venkatesan
It is one thing to thrive in the chaos called India, but by not correcting this condition of dishevelment, India will never succeed in realizing her potential.
“Companies that have done spectacularly well in India such as Suzuki, Unilever, JCB, Cummins, Nokia, Standard Chartered, Hyundai or Schneider Electric have learned to thrive in the midst of chaos and having succeeded in India, they find that they have developed the capabilities, mindset, talent and innovative products and business models that help them succeed elsewhere.”
“I have learned that sustained performance has less to do with ambition, opportunities, or resources; long term performance is in fact the outcome of strategic choices, organizational capabilities, company culture, and above all, leadership.”
Three months on the road, promoting my new book in America, Singapore and Europe have been an extraordinarily eye-opening experience. In this book, called “Conquering the Chaos; Win in India, Win Everywhere”, I look at why most MNCs have failed to make India an important market and what might be the consequences of this. Most MNCs in India are part of a “1 percent club” where India contributes an irrelevant 1% or less of their global profits. They tend to blame this on the challenges of doing business in India. A key point in the book is that chaotic India is in fact highly representative of most emerging markets. Corruption, bureaucracy, policy uncertainty and volatility, harassment by the taxman, inadequate protection for IP, poor infrastructure etc. are not unique to India alone; they are characteristics of all emerging markets and MNCs can’t escape this chaos in Brazil, Indonesia or Nigeria as well. Companies that have done spectacularly well in India such as Suzuki, Unilever, JCB, Cummins, Nokia, Standard Chartered, Hyundai or Schneider Electric have learned to thrive in the midst of chaos and having succeeded in India, they find that they have developed the capabilities, mindset, talent and innovative products and business models that help them succeed elsewhere. This is why the subtitle of the book is “Win in India, win everywhere”. These companies are not waiting for India to get better or look like a more developed market; they are instead adapting themselves and their business model to the realities of India and being richly rewarded for this. I contrast their approach with that of companies like Apple or Caterpillar who hesitate to commit to India until things get better allowing competitors like Samsung or JCB to eat their lunch. While India is a very challenging market, the bigger challenge for many MNCs is their own headquarters mindset. Such companies will find the going to be tough not just in India but all emerging markets.
Since our economy is in such dire straits and our reputation as a rising nation so tarnished, I was fully prepared for a lot of pushback and criticism of my rather contrarian views. In fact, I was surprised by the fairly ready acceptance of my thesis. The only pushback I got was, “Are you letting the government of India off the hook too easily?” It is certainly true that India is one of the toughest places in the world for a business (ranked 132 out of 200 countries according to the World Bank). If the government wants to jump start the economy and attract FDI, it certainly needs to make India a less hostile place. But my point is that even in a tough market and a slowing economy, it is possible at the firm level to carve out a very successful business. And this is what companies like Samsung have shown. However I wasn’t prepared for one question which really flummoxed me; it came from a wise former US Ambassador to India. “So what you are saying in effect is that India will continue to be a lower middle income country, like much of Africa and South America instead of someday catching up with Europe or even China; isn’t that a rather tragic scenario for a country with such amazing potential?”, he asked.
The question stopped me in my tracks and has rankled ever since. It’s fine to dish out advice to companies on how to prosper despite the chaos but what about India itself? As an Indian, I had sort of come to believe the rhetoric of Incredible India. I had come to believe that despite all our many challenges we would stumble our way forward-if not to great power status, at least to the status of a developed nation. Rather naively, I had thought this might happen even in my lifetime, but as I reflected on the question and on the events playing out in our country, it struck me that the good Ambassador had in fact asked the most relevant question. It’s not about our potential but rather how much of it we are likely to realize.
As a CEO who has run large companies, I have learned that sustained performance has less to do with ambition, opportunities, or resources; long term performance is in fact the outcome of strategic choices, organizational capabilities, company culture, and above all, leadership. Over time, I have realized that this is true not just for a company, but for any organization and perhaps even for a country. And this framework highlights India’s problems.
For a start, we cannot agree on ideas let alone strategies for anything. What should our policy be towards Pakistan? Towards China? Towards America? What is our strategy for economic development? How are we going to balance growth and the need for more equitable distribution? Is globalization positive for India or not? Are we going to welcome foreign companies and the investments, technology, and jobs that they bring or are we going to remain distrustful of them? Indeed are we going to be welcoming of businessmen and entrepreneurs or go back to Nehruvian distrust that crushed our economic potential? How are basic healthcare and education going to be delivered? How much should be left to the private sector? How are we going to improve our infrastructure? On any number of fundamental questions, there isn’t coherent thinking; we simply muddle along.
The issue of institutional capabilities is even more troubling. We could have all the ambition and even strategic clarity but without strong institutional capabilities, nothing can happen. “It’s like trying to go to the moon on a bullock cart; no matter how much you flog the bulls, you won’t get there.” says spiritual leader Jaggi Vasudev. We have to upgrade our capability from bullock cart to spacecraft. Many of our institutions are still in the 19t century; perhaps some like the ICS were stronger then than today. Harvard economist Lant Pritchett points to rampant absenteeism, indifference, incompetence and corruption in many of our institutions and suggests India is a ‘flailing state”. How can we reasonably expect anything to be implemented when our implementation capabilities are so compromised? Historian Ram Guha points to the deliberate and systematic erosion of many of our critical institutions–law enforcement, judiciary–and posits that instability may be India’s destiny.
How about culture? It is easy to blame the current situation on politicians and babus, but what about us? While there are indeed incredible aspects to our culture, there are some things that are truly shameful. Even Dr B.R. Ambedkar, the father of our Constitution, recognized that we are a fundamentally undemocratic and amoral culture. Take corruption. It’s very easy to blame the person asking for the bribe, but what about the person paying it? Why pay a fine for running a traffic light when you can get away by offering Rs 100? Why suffer a delay of some months getting a property transaction registered when you can pay a bribe and get it done today? Most of us have become so used to corruption that we fail to see much wrong with it. The whole pond has now got poisoned and it is hard to find a single sphere of activity that isn’t highly corrupt-business, civil society, education, even religion. No act is now so brazen as to be truly shocking. Lack of concern for the commons, evident from the condition of our public spaces, for instance, is another striking feature. I couldn’t help but notice that in New York City, every little public space has a small little garden or flower patch tended by volunteers. In India, every one of those would likely be a garbage dump. What about dodging taxes? In a country of nearly 100 official billionaires and zooming luxury car sales, is it not egregious that only 40,000 people, almost all of whom are professionals with tax deducted at source, have a declared income of over INR 1 crore? After visiting Europe many times, I cannot but be impressed by the extent to which European society focuses on the rights and needs of its weakest and most marginalized members of society. Yet we dismiss them as weak society in terminal decline even as we shrug indifferently at the death of children in Bihar who were fed a poisoned midday meal or at the countless daily acts of violence against women. Which is the better society? Where would you rather live?
This brings me to the matter of leadership. Human nature is not fundamentally different around the world. If people in Singapore or Switzerland follow the rules diligently, pay taxes, and don’t litter, it isn’t because they are different or better. It’s because these countries have rules, regulations, and laws and swift and equal consequences for violating them. This happens because they have built strong institutions and a strong culture which in turn are a product of good governance and good leadership. The ultimate failure in our country is one of leadership and governance. It is impossible for India to make any progress on any front when self-interest trumps national interest every time. We have gradually allowed our country and our society to be hijacked by people who are criminals at worst and self-serving at best. For the most part, those at the helm of affairs today have little interest in India’s development. 30% of Lok Sabha members are criminals; 369 MPs and MLAs have been convicted of crimes against women. 100% of our parliamentarians under the age of 30 are children of politicians; so are 2/3rds of those under the age of 40. These aren’t the people focused on the country’s development. This extraordinary corruption and selfishness is true not just in politics and not just in the civil services or judiciary. It is equally true in business where much of the prosperity has been created more by crony capitalism than real entrepreneurship. And to an extent it applies to all of us, the urban middle class, who have chosen to stay disengaged and simply feather our own nests.
I cannot claim to have a good solution but it does strike me that we have a few choices. Some of us can emigrate-as many did in the seventies and eighties. Others can erect stronger moats around our gated communities and try to keep the chaos at bay. We could turn to religion and pray for things to get better. We can pray for a savior like Mahatma Gandhi to arise and lead us to a better future. Or at least a benevolent strongman like Lee Kwan Yew though India seems much too complex to be led by a strongman. Or more of us could step up and demonstrate greater public spirit and leadership and try to reclaim India’s future. We could start by being good citizens-law abiding, paying taxes, voting in elections, refusing to pay bribes. We could join hands and protest strongly, publicly, peacefully against injustice-the suspension or transfer of an honest civil servant for instance. Activism matters more than we might think; Jessica Lal’s murderer would still be free if it weren’t for activism. India would not have an antirape Act if it weren’t for activism. We could donate generously and support the small number of individuals and non-profit organizations who are fighting courageously for better governance. And finally, handful of us could muster up the courage to jump into politics and tip the balance in favour of good.
Progress has always hinged on the forces of good being stronger than the dark forces. Once we make a decision to be a force for good, we are limited only by our imagination. It is the educated middle class that ultimately determines the future of a society. It is time for us to step up.