Eighteen months after the collapse of Lehman Brothers, as the world economy struggles to find its feet, we are witness to an apparent paradox. The United States, the hitherto undisputed leader of market economy system, continues to uncover instances of capriciousness of its capitalist leaders. The frauds perpetrated by likes of Madoff and the ingenious schemes devised by Goldman Sachs and others to rip their customers continue unabated. On the other hand, the puny Indian economy in its short brush with market economy has created world-class companies that are willing to look beyond merely increasing shareholder value to fulfilling a greater social responsibility. These companies in a short time have gone from mere imitators of Western products and practices to trailblazers in their own way.
Authors Cappelli et al have explored this transformation through an in-depth qualitative analysis of India?s corporate sector. Their conclusion: the best companies in India may have been inspired by their American counterparts in the past, but have now come to operate on the basis of a unique set of corporate values and practices which the authors call the ?India Way?. The India Way comprises four tenets?holistic engagement of employees, imaginative leadership, a unique approach to creating competitive advantage and corporate governance. Underlying the four tenets is the unique characteristic of the India Way, the ubiquitous principle of jugaad. The authors candidly acknowledge that this invisible feature is what enables ordinary managers come up with path-breaking ideas and turn small-time operations into billion dollar multinationals.
Employees First, Customers Second–HCL?s motto captures the essence of the leading Indian companies? approach to their employees. Right from the moment they are recruited, new hires in companies following the ?India Way? are not just trained to excel at their jobs for longer periods compared to American companies, but are also indoctrinated in a way that almost creates a family-like atmosphere. Results: HCL implemented a ?100 per cent share everything with the employees? policy leading it to clock phenomenal growth. The famous Bukhara restaurant in Delhi has head chefs who have stayed put for a quarter of a century, but still cook everyday for the junior chefs, creating such bonds that none of them thinks of leaving.
In an economy of a billion people where till 1991 consumerism was looked down upon with the unleashing of the economic reforms it was perhaps not difficult for the Indian corporate leadership to visualize that the country was on the brink of an unprecedented opportunity. And they rose to the occasion magnificently and in few years created world class products and services for the millions at a fraction of the cost compared to the west. The winners included both hitherto family run businesses like Mahindra & Mahindra to ICICI Bank and Infosys. Their success lay in the fact that several of them brilliantly adapted their skills acquired in the best American universities to the harsh conditions of the Indian market. Call it jugaad if you will but the leaders of the Indian Way had the gumption to see what, as Deepak Parekh puts it, was ?invisible to others? and the resilience to reach their goals.
CEOs of the India Way are differentiated by their focus on strategy and topline growth as opposed to bottomline and shareholder value maximisation. The book contains insightful case studies of Bharti Airtel, Cognizant Solutions and Hindustan Unilever to illustrate this. At HUL, innovative ideas are given primacy over profit growth. The authors have clearly captured in their detailed interviews with Indian CEOs their passion for growth despite odds and their resilience in face of tough and constantly changing conditions of the Indian marketplace.
In a nutshell, the India Way is an excellent chronicle of the Indian economic success story and its key players. However, barring the odd public sector example of an ONGC or MTNL the book fails to find success stories of public sector companies or state governments who could have figured in this book. Apart from the fact that the book?s focus is private sector, it is a sad reality that while economic reforms of 1991 brought out the latent entrepreneurial talents in the private sector, the government sector continues to suffer from lethargy, lack of innovation and a general abdication of its social responsibility. What else accounts for the terminal patient that is Air India, or the dysfunctional government apparatus? Why do our airlines and railways are not safe and why can?t we control the Maoist rebellion? The babus and netas of India need to read this book and learn the India Way if India is to realise its true economic potential.
?The reviewer is a banker