Much has been said about the fact that the time is now right for the biggest and the best of India Inc to have serious global ambitions and pursue big plans overseas. In a recent interview with this paper, megacorp Reliance?s new chairman Mukesh Ambani, too, has spelt out his plans to turn his group into a global powerhouse. In short, most believe the time has come for Indian corporations to develop into multinationals with global presence and repute. Not something which is beyond India Inc?s reach, surely, but the point from an organisational and management perspective is: Are Indian corporate groups really prepared organisationally to take on the world?
Talking to a frontline consultancy chief the other day, it became clear to me that the consulting world also nurses similar concerns about India Inc. The question is not whether Indian companies can, in fact, take on the world. Everyone believes they can. But the concern is more on the fact that Indian groups need to be organisationally stronger, and better equipped, to do so. What is engaging the minds of India Inc watchers is that even now, most companies and groups have decision-making concentrated in the hands of a few, and the personality cult remains dominant. Consequently, as the consultancy chief says, most Indian corporations or groups have still to graduate into becoming “organisations” in the true sense, strong enough to take on global competition. Even some of the biggest groups are seen as excellent project implementors, but not great organisations.
In this context, the example of Infosys?s NR Narayana Murthy is important. Having built Infosys into a truly world-class organisation, he has been able to distance himself from the day-to-day management of the company, with Nandan Nilekani moving into a key executive position. The Narayana Murthy example shows it is important to learn to let go in order to let the organisation develop, and function, thereby clearly drawing a distinction between ownership and management. This is the cornerstone of corporate governance and the creation of shareholder value. While the promoter and his personality may initially draw shareholders to a company or a group, the strength of the top management team across business functions will determine its future. In today?s business environment, the team which a company is able to build will also be the key reason for its success or failure in the global business arena. Because the major companies it will compete with overseas will typically be ones which have invested in building organisations.
It is also to be kept in mind that in a global context, Indian corporations will also have to keep in mind global sensitivities. So what may be the done thing in India, may not be so at all in another part of the world. A decentralised organisation with a clear-cut structure of decision-making will go a long way in tackling some of these issues.
The good news is that Indian corporate groups have begun waking up to the reality that it is important for ownership to gradually let go of management. That it is necessary to bring in a team of professionals, particularly across diverse business interests. The AV Birla group, led by its young chairman Kumar Mangalam Birla, has been doing this systematically, by bringing in some of the best managers to lead his forays in various sectors. Be it Saurabh Misra, Debu Bhattacharya or Sumant Sinha, the Birla group has been gradually ensuring that the team of professionals moves ahead to build a group capable of taking on tomorrow. Notwithstanding the recent controversies surrounding it, the Tata group has also been aiming to do that, with a top team of professional managers including the likes of Ishaat Hussain, RK Krishna Kumar, Kishore Chaukar and R Gopalakrishnan handling its key businesses.
Most other Indian groups have not begun to separate ownership and management in the true sense. And while there may be managers running some businesses, the stranglehold of ownership on the businesses and the identification of the personality with the group is almost total. For an investor community which is also getting accustomed to global standards, that?s something which will certainly need to change. And fast.