Megalomania plus cult debacles of Enron, Tyco, and WorldCom became clear in hindsight–could they have been anticipated as the symptoms developed? What about Yes Bank, Jet Airways, Kingfisher, and the smoke signals from Patanjali? Recall a megalomaniacal Voltas leader in the early 1980s, whose behaviour with colleagues was arrogant, who dissed the Tata way of management, made tall claims, and left a trail of debris for successors to clean up.   

Nations, like companies, can also fall into the megalomania plus cult trap.

Megalomania

In 1876, Ottoman Caliph Abdul Hamid II acceded to the throne after Murad, his brother, was deposed. Coming after the resultant chaos, Abdul was expected to be a liberal reformer, but he turned out to be a narrow conservative. When the Christian Armenians agitated for their cause, he turned a blind eye when Kurdish goons, Hamidaye Alaylari, eliminated Armenians. His secret police, Umur-u Hafiye, arrested his opponents to prevent dissidence. He faulted his predecessors’ liberal reforms, tanzimat, and proposed a pan-Islamic ideology.  Pointing to external threats, he implemented istibdad, reducing ministers to assistants, and concentrated power unto himself. His regime was a period of decline.

As the Nazi storm clouds gathered, visitors to Germany in the 1930s included distinguished personalities like Charles Lindbergh and David Lloyd George, even the Maharaja of Patiala.   Through ubiquitous propaganda, residents and visitors were harangued about the pernicious effects of historical injustices–Versailles Treaty, Weimar regime, and Jews, for example. Disenchanted with their own struggling democracies, or by the emerging Bolshevik threat, many visitors ignored the visible dangers. 

Julia Boyd (Travellers in the Third Reich, Elliott & Thompson, 2017) aggregated the writings of ordinary travellers. Adolf Hitler claimed sole credit for all positive developments and blamed someone for all frailties; he was lauded by his cult-like circle of sycophants. Large corporates like Krupp and IG Farben are thought to have supported him. Hitler gloated in a ‘soup’ of megalomania and cult, while common people experienced the relentless rise of religious strife and fascism.  

Germans said later, “Wir haben das nicht gewusst.” (we had not known all this). They could sense the deep racial turmoil but suppressed the thoughts because (i) foreign dignitaries were received with great fanfare, (ii) their business interests were advanced, and (iii) particularly Americans would not comment lest their own track record with blacks could be raised.  

Cult

A cult, usually headed by a powerful leader, is an organized group, which dominates its members through psychological manipulation and pressure strategies. Cult leaders are dangerous because they rely on deception and are psychopaths. 

Do megalomaniacal corporate leaders like Harold Geneen (ITT), Lee Iacocca (Ford and Chrysler), Jack Welch (GE), and Carlos Ghosn (Renault Nissan) qualify as cult leaders? Or Maharishi Mahesh Yogi, Chandraswami, Osho Rajnish, and Baba Ramdev, all of whom built huge business empires? The Mormon Church is reportedly one of the largest landowners in America. The global revenues of faith-based organizations were estimated in 2016 at USD 400 billion, not far from Microsoft or Amazon. (The Divine Economy, Paul Seabright, Princeton, 2024).

Warning signals

Despite inevitable ambiguities, stakeholders must read and interpret the warning signals. Failure to do so can land the institution in dire straits; some, not all, of the following seven characteristics are usually visible and palpable among such leaders: (i) become authoritarian, (ii) have a low tolerance for criticism blaming others for conspiracies (iii) happily accept praise from domestic and foreign sources (iv) enjoy the limelight and preen themselves for photo opportunities (v) love their admirers who laud the leader with superlative descriptors, (vi) make statements as inalienable truths, and, (vii) finally, they are scornful of alleged failings of predecessors with themselves trying to neuter the consequences.

We box our leaders into a moral binary—all greatness, or all sin. The reality is that it is a mix, and what you see is what you get. You must interpret the signals–ignore them at your peril. Is Elon Musk a brilliant entrepreneur, a disaster, or both? What about Sumner Redstone of Viacom? Or his daughter, Shari Redstone, of Paramount? Are PayTM, Byju or Ola start-ups or upstarts?  

Constructive scepticism and stakeholder alertness are essential in such situations–food for thought in an India that is racing to join ‘developed’ status soon.

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Harvey Weinstein is charismatic. As a film producer, he is also a cult figure. Since upcoming youngsters believe that association with him is worth a huge price, megalomania sets in. Watch the Netflix movie about Harvey Weinstein to appreciate the cumulative effects–t is titled She Said.

Megalomania

Authority derives from three sources. First, and oldest, is charismatic authority, which derives from achievements, character, heroism, and demagoguery, like Alexander or Cyrus. Second is traditional authority, which, for example, facilitates acceptance of the son of the founder as the new CEO in a family-managed enterprise. Third, and most modern, is rational-legal authority, which imputes authority to an administrative position, for example, an appointed judge or bureaucrat. There are other definitions, but these are the important sources of authority that are at the root of megalomania.

Charisma

According to sociologist Max Weber, charisma is the perceived supernatural quality of an individual that sets that person apart from other human beings. For centuries, charisma (a subjective perception) and rationality (an objective reality) could not coexist. Weber opined that the triumph of post-enlightenment western society was that the individual and office had been separated through a rational view of authority. Charisma is like the price of shares; it is based more on future expectation of performance. This is why celebrities recommend products ranging from underwear to pan masala. Their charisma is assumed to transfer to the product.

Readers would be familiar with the charisma attributed to business leaders like JRD Tata and Keshub Mahindra. From the world of gurus, there are Sri Sri Ravishankar and Sadhguru. Politics, films, sports, all these fields produce charismatic heroes. A few of them live up to the image, but many are seen, especially with hindsight, to have been incompetent, toxic, or fraudulent.

Cult

It is an organized group whose purpose is to deify an individual. Members are manipulated through psychological and pressure strategies, and they brook no criticism of their leader. In turn, the leader nurtures an imagined existential threat from unnamed outside forces. The cult members regard the leader as the exclusive authority to know the ‘right’ path. Such leaders love praise for sure.

During his lifetime, when Gandhiji was referred to as Mahatma, he expressed his disapproval of being so called. While he was alive, Jamsetji Tata did not brand any venture as Tata. His early ventures were Alexandra Mills, Empress Mills, and Indian Hotels. After his death, his successors associated his name with new ventures. Through the practices of his successors, TATA became the most admired and valuable corporate brand in India, worth several billions of dollars now.

Too much or too little of a good thing is dangerous. Hence the value of moderation. In chapter 6, verse 17 of the Bhagavad Gita, it is stated, “Yuktahara Viharasya, Yukta Chestasya Karmasu, Yukta Swapnava Bodhasya, Yogo Bhavati Dukhasya”, which is a call for mitigating sorrows by moderation in eating and recreation, by balance in work, and by regulation of sleep.

All combined

Why is the combination of cult, megalomania and charisma toxic? Because the leader starts to believe in his divinity and defies mortality and fallibility. The leader, who is trapped in a syrup of megalomania, charisma and cult, displays what author Morgen Housel terms as “the dumber side of smart people.” These are: first, very smart people try to intelligently explain every little event, like why the stock market moved up or down yesterday; second, smart people feel so much pressure to maintain their intellectual reputation that they fail to change their minds even when it is called for; third, being smart makes it difficult to listen to people, especially if you believe that they are less smart than you!

Which is more dangerous, megalomania, charisma or cult? Charisma by itself cannot be considered dangerous. When a charismatic leader acquires a cult status, and, further, becomes megalomaniacal, then beware. You have a sure recipe for danger.

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While reflecting about the column on careers and business life, I asked myself what purpose could be served by such an effort. A simple idea, supported by a simple story, could be a positive format for learning and reflection and practising managers could find that useful.

Tarun Natwarlal Sheth, 73, passed away on Sunday 18th July, 2010 at the Bombay Hospital. Tarun probably had as much impact on Indian HR practice as the tallest among his contemporaries. What he could achieve with a smile and humane relationships was phenomenal.

Tarun studied sociology and became a teacher at the newly minted IIM Ahmedabad. He was among the first management teachers to be selected to undergo the Teacher’s Training Program at Harvard, which he completed in 9 months. To the early generation of IIM graduates like CK Prahalad, Arun Nanda, and Labdhi Bhandari, , he was a sort of ‘Tarun sir.’

In 1970, Hindustan Lever attracted him to join as Selection and Training Manager. That is when I first met this ‘smiling Budha of HR.’ From 1970 until 1987 when he left as top honcho of Management Development, he spent 17 fruitful years, serving under chairmen like Vasant Rajadhyaksha, T Thomas and Ashok Ganguly and under the watchful eye of his mentor, the late Dr Ranjan Banerji.

Tarun was a deep thinker on his subject, so he had a point of view. His credibility as an HR professional was first, that he solved problems with a disarming smile but he did not pretend to solve all problems; second, that he never carried his unsolved problems as furrows on his brow; third, that he could express disagreement agreeably. Above all, he never seemed hassled; it was as if he knew his own mortality. Not many professionals could display this combination of qualities in HR or any other function.

To gain industrial relations experience, he moved to the restless Sewri factory during the 1970s. Out of touching sweating shoulders, he understood human resources differently, at the grass roots; he did not want to be a mere theorist. He was always included in Unilever’s global exercises to figure out latest practice in HR. Sound organizational structuring and span of control became his speciality in the 1980s. Sometimes under pressure with his bosses on job classification, he would win his point of view by praising the boss first, and then pointing out the dangers of a particular decision. In an aggressive work culture, he was a balm. He was ‘agony uncle’ to generations of Lever managers.

Surprise of all, in 1987 at the age of 50 with four girls at home, he became an entrepreneur in the HR business. His wife, Pratibha, had started Shilputsi, a small recruitment firm, named out of a combination of the names of their three lovely daughters. As Pratibha would joke, it took a Brahmin wife to persuade a Vania husband to become entrepreneurial!

And what a firm they both built. Shilputsi still stands tall today. From recruiting, they moved on to consulting on organizational design and change management. There are few firms that have not gained from the sage advice of Tarun and Pratibha.

Tarun will not be remembered for propounding any startling theory. He will be remembered as a humane HR person, an epithet not easily ascribed to HR by line managers. He was a natural leader of hearts. More importantly, he will be remembered by the chelas and students he leaves behind in corporate India. That is the true mark of a teacher: that he taught many to fish rather than to eat fish!

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Bitzua, chutzpah, rosh gadol and other Hebrew expressions come alive in an eminently readable and inspiring book called Start-Up Nation: the Story of Israel’s Economic Miracle (Dan Senor and Saul Singer, publisher Twelve, Hatchette Group, 2009). The ideas are highly relevant for innovation capability in general, but for India, especially at this juncture.

Bitzua roughly translates into ‘getting things done.’ Israel’s first leader, David Ben-Gurion, epitomized the word because he exhorted citizens of his newly formed country to get on with nation-building by doing and learning rather than forever debating about the right approach. This spirit of ‘try it, just do it’ is all-pervasive in Israel and has led to the country becoming a top destination for R&D. According to Jewish scholar Leo Rosten (The Joys of Yiddish), chutzpah is ‘gall, brazen nerve, effrontery, presumption plus arrogance.” Rosh gadol connotes a ‘can-do and responsible attitude with scant respect for the limitations of formal authority’. Davka is used to describe the response to a threat and means ‘in spite of’ or what Indians might term as ‘kar ke dikhana hai.’

Israel is an incredibly innovative nation. It ranks the highest in the world in the per capita number of patents filed. A partner at A&G Partners, which specialises in building bridges between Israel and Asia, says that even her hairdresser has a patent on an exact algorithm for deducing the right hair shade! 22 percent of the Nobel Prize winners is Jewish; among women who have been awarded the Nobel Prize, 38 percent is Jewish. These are amazing statistics, considering that the number of Jews on the planet peaked at 18 million before the Second World War, and nowadays, number only about 12 million.

So what can Indian innovation learn from Israel? I observed some similarity and some difference, and would like to share a few thoughts.

Similarity and difference: Israel is a multi-cultural society with people of diverse ethnic origins–Russia, Europe, Middle East and Asia. They are garrulous and argumentative. Particularly during the last 60 years, they have lived with a stark fact: that uncertainty from their neighbours is a certainty. The constant challenge to their very being has made them fiercely proud as they seek self-preservation. They are restless in their quest for economic advancement and social progress; they are highly entrepreneurial. They are competitive with one another to the point that sometimes, they give an observer the impression of pulling one other down wantonly. For instance, after the tragic terrorist attack in Mumbai on 26/11, an emotional subject like the renovation of the Jewish Centre at Nariman House has become controversial and there is a legal dispute between the family of the rabbi who was killed and his religious denomination, Chabad- Lubavitch.

Viewed another way, they have the first three of the 4 Cs required for being highly innovative: challenge, creativity and chaos. I will return to the fourth C later.

Now substitute the word Israel with India. Barring an arcane detail, the comments would be correct. India too is multi-cultural and is an enormously argumentative society; India has to spend money on defence because she faces threats to peace from the neighbourhood, albeit much less than Israel. Indians are a restless people, who are incapable of doing repetitive tasks for long; they boast of a long tradition of being entrepreneurial. Finally Indians themselves joke that they are competitive to the point of pulling one other down. Thus Indians have in abundance the first three Cs of challenge, creativity and chaos.

But Indians do not have the rich record of big-scale innovation that Israelis have. As a Chinese American once explained to me, if India can improve in the fourth C, channelization or discipline, her raw creativity will convert into a hugely impactful, process-driven ‘Innovation Engine’.

Innovation Engine: In The Other Side of Innovation, Vijay Govindarajan and Chris Trimble suggest that when it comes to innovation in companies, quite often there is a tendency to focus on a copious generation of ideas. This focus unleashes incredible energy, but the authors argue that ‘focusing on execution is far more powerful’. I wonder whether the Indian Brahminical intellectual tradition, which rewards ‘thinking’ more than ‘doing’, could be an underlying reason for Indians’ penchant for creativity at the expense of disciplined execution.

The authors point out that continuous improvement and operational innovation are best performed by the existing structure, which has been tuned to be an economic ‘Performance Engine’. Ongoing operations have already been programmed to be repeatable and predictable, so continuous improvement ideas are easily absorbed into an operational Creative Idea–Execution cycle. Many would agree that continuous adaptation and improvement, at times referred to pejoratively as jugaad, is a strong point among Indians.

A lateral or break-all-the-rules idea requires a differently oriented organisation, called the ‘Innovation Engine’. Quite the opposite of the ‘Performance Engine’, this ‘Innovation Engine’ must encourage challenge, must be hugely experimental and must accept failures. If a breakthrough idea is pushed from the stage of Creative Idea to Execution without a special Planning Phase in between, then the idea loses its zing. With an incremental innovation, this risk is reduced by the well-tuned planning activity of the ‘Performance Engine’.

Kiran Mazumdar-Shaw of Biocon says, “Innovation is about applied creativity but by natue, it can be incremental or experimental/breakthrough.” She narrates how Biocon evolved in a planned manner from enzymes to import-substituting insulin to insulin analogues and is now, daring to work on breakthrough oral insulin. “We fully realize that we may not succeed in this audacious endeavour,” she says in a matter- of-fact way.

Innovation culture in any organization evolves through four phases: first, it is ‘Bureaucratic’, and then it evolves into ‘Controlled Creative.’ Many Indian companies are at about this second stage. The third stage is “Daringly Creative’; Indian examples are mentioned later. The high and final point, to which Indian companies should aim to reach, is ‘DCD–daringly creative and disciplined.’ In this evolutionary journey from controlled creative to DCD, India can learn from Israel by adapting the behaviours of bitzua, chutzpah, rosh gadol and davka. We must create in our companies a sort of ‘Cultural SEZ’ called the ‘Innovation Engine’ where planned irreverence can be practised.

India has such a track record: we have been incredibly successful in executing some daringly creative ideas, but there are not enough of them. Davka and chutzpah were displayed when America denied India the technology of the supercomputer. As the Washington Post wrote, an ‘angry India’ set out to develop the Param supercomputer. Dr RA Mashelkar often says that India should be permanently angry. India demonstrated during the Green Revolution the same davka and rosh gadol when America suspended the PL 480 shipments.

India has produced DCD icons, who practised being daringly creative and disciplined: Vallabhai Patel and C. Subramaniam in public life, Ratan Tata and E. Sreedharan in industry and infrastructure, and Raghunath Mashelkar and MS Swaminathan in science and technology. Our academic curriculum in management and our national folklore in innovation should progressively shift the fulcrum of focus to this fourth C of channelization—which involves learning how to create an ‘Innovation Engine’ to plan and execute risky ideas, which may not get nurtured naturally in the ‘Performance Engine.’. Coupled with the existing presence of the first 3 Cs of challenge-creativity-chaos, Indians can then aim to deliver and celebrate breakthrough innovations in the coming decades. The future for Indian innovation is bright.

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The word ‘parenting’ conjures visions of nurturing and inspiring; it does not connote involvement with and intrusion into any and everything that the child does. Parenting varies with the age, health and capabilities of the child. Especially with healthy, well-performing wards, the parent learns how to remain interested without getting involved, how to be there when needed without being overbearing. The child has obligations to the parent as much as enjoying privileges.

These ideas can be applied to the relationship between a company and its subsidiaries.

India’s aggregate economic growth has been impressive, though issues of the unequal prosperity and lagging social development cry out for attention. The private sector is leading the growth effort and is dynamic with activities in acquisition and consolidation in both the domestic and overseas markets.

When companies develop rapidly, the organization structure gets stressed and the inter-relationship among its constituents begins to inhibit growth. If there is a corporate centre, how will it interact with the constituents without becoming overbearing or intrusive? How will the corporate centre add value to the constituents and avoid becoming a stumbling block?

Companies in other nations have faced these issues and there are lessons to be remembered. I will cover two perspectives: historical and intellectual.

Historical Perspective

The concept of operating divisions/companies and their relationship with the corporate centre developed before the Second World War when some American corporations had grown too big to be run on a functional basis. Alfred Sloan is considered an early practitioner of the concept by implementing the multi-division, multi-business concept in GM with great success. The experiences of Du Pont and Standard Oil added to the understanding of these ideas.

Thus for the first time, a conceptual separation occurred between business-level issues and corporate-level issues. There was a rapid proliferation of divisionalized companies after the war. In his book Strategy, Structure and Performance, Richard Rumelt (1974, HBS Press) reported that among the Fortune 500 companies, the percentage of divisionalized companies rose from a low 24% in 1949 to a stunning 80% in 1969. May be it had become a fashion statement to have a divisionalized structure!

Peter Drucker wrote The Practice of Management in 1955 in which he had put forth the idea of the ‘general manager’ as one who had mastered the general principles of management. These could be applied in any business setting. The thinking was that the human and conceptual skills of a general manager could more than make up for a lack of domain or technical skills. These ideas gave a further fillip to the management concept of diversification.

When I began my career, I was in awe of successful conglomerates like Litton Industries, led by Roy Ash, and ITT, led by tycoon Harold Geneen. The American experience drew great admiration in Europe as well. The magazine Management Today carried an adulatory article by British writer, Robert Heller, “Today Litton Industries is a household word; ‘doing a Litton’ is becoming accepted shorthand for what Britain as a nation and British companies as private enterprises require—harnessing of new technology to practical application and dynamic business growth.”

By the early 1970s, a large number of the Fortune 500 companies had diversified, some into related areas and some into unrelated areas. As the stable economic climate of the 1950s and 1960s gave way to the turbulence of the 1970s, huge challenges arose from volatile exchange regimes and oil-driven inflation.

Diversified companies came under pressure and portfolio models like the BCG model evolved to address the challenges. Raiders like Carl Icahn and T Boone Pickens demonstrated that they could break up large, diversified companies and demonstrated that the sum of the packages exceeded the whole. The management world was ready for the ‘core competence era’; being very recent, I will not delve into its evolution.

Thus the subject of corporate organization structure has not stood still; over the last half century, there have been waves of thinking about divisions and conglomerates. The search for a sound and lasting basis continues.

But the more subtle point is that there may not be any sound and lasting model in the first place. How to organize a conglomerate is an evergreen subject, worth reviewing every so often as the economic climate changes with increasing rapidness.

Intellectual Perspective

When I use the expression ‘division or business’, for the purpose of this article, I include all three types of structures in which a sub-group of a larger management group is engaged in serving customers of a defined kind and operating commercially within an identified market space. The legal status may be of an internal division in a multi-business legal entity, as within GE; or a separate legal entity with 100 percent ownership by the parent; or a separate legal entity with part ownership by the parent. Admittedly there are differences, but for this brief article, all of them are regarded as children of a parent.

The concept of the individual business strategy is well understood by India Inc after liberalization. Business strategy becomes explicit by answering three questions:

• Who are our customer segments?
• How will we service them with a distinctive proposition?
• How will we earn a value surplus?

The concept of the corporate strategy emanates from answering three different questions:

• In what businesses should the company invest its resources, either through ownership, minority holdings, JVCs or alliances?
• What distinctive and beneficial influence will the parent offer its subsidiary?
• How will this parent add more value than any other parent?

Thus corporate strategy is at the corporate level, what business strategy is at the business level. Through its distinctive competitive advantage, the business unit must deliver value surplus to the parent. Likewise a company must deliver to the subsidiary a distinctive parenting advantage.

Corporate strategy tends to be too general, for example, to allocate resources, to offer challenge and to give a second opinion. So how do you make the corporate strategy specific? You do this by making the strategy explicit and almost contractual.

Nurturing, inspiring and defining the heartland

Three characteristics constitute good corporate strategy.

The first feature of good corporate strategy is the company’s distinctive parenting value, which is equivalent of a parent nurturing the child. For example, when Tata Motors, as a parent, helped its fledgling automotive software business, Tata Technologies, to go global through the acquisition of INCAT; or when the Tata Global Beverages agreed to explore with PepsiCo their shared vision of an emerging segment for healthy beverages.

The second feature is the parent’s value creation insights which are about inspiring the child, example: identifying opportunities that the business management has not perceived or unlocking of value that can be beneficial. So when the parent encouraged Tata Steel to unlock value by selling its power generation assets to Tata Power, a mutual win-win situation was created.

The third feature of corporate strategy is defining the heartland business of the company. Unilever did it by stating that it “seeks to serve the everyday needs of everyone, everywhere.” Conglomerates tend to be broad as Tata has defined its seven segments of business. More importantly, a parent may define what it will not do as a business, like entertainment or liquor or cigarettes.

In the years ahead, business leaders will spend more time agonizing about the parenting value of the corporate centre to the operating companies/businesses.

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“Think with a blank sheet of paper. Treat India as a multi-dimensional resource and not merely as a consuming market for your readily available technologies and products.”

There is tremendous interest about India among global companies but they face dilemmas. Many have a global organizational structure, not country-oriented and this inhibits their ability to get the best out of India.

India is distinctive enough to be dealt with differently. For example, for over a decade, the general expectation has been that India’s retail trade will” modernize rapidly. But India has turned out different. During the mid 1970s, there were 2 million grocery/mom-and-pop shops for a population of 550 million. Today there are 8 million shops, catering to 1.2 billion people. Unique among countries, India has achieved a dispersion of retail trade.

Indian business leaders informally advise global companies about their India strategies. I reviewed the advice that they give and this is what I heard: “Think with a blank sheet of paper. Treat India as a multi-dimensional resource and not merely as a consuming market for your available technologies and products.“

I have listed five points to elaborate.

Come with the spirit of exploration

An explorer company enters India to develop all the possible business interests it can within that economy —buy, sell, develop new products etc. To be an explorer, a global company will compel its local leaders to take total business responsibility with the facility to tap expertise in global headquarters.

In contrast, a settler company treats India as one more opportunity to sell its products and to deploy its competencies. The settler has a sharp sense of his core business and appears narrow in the context of an emerging market. With good intent, the global parent connects its local leaders to cross-border support systems inadvertently resulting in a diffusion of responsibilities.

Here are examples of successful explorer companies in India.

Unilever long ago adopted a policy of Indianising its management, its capital, its research and its manufacturing technology. This policy stood the company in good stead for the long period for which it practised the policy.

Texas Instruments entered India in 1985 when the license permit Raj was still in existence. They placed a bet on Indian engineering talent in chip design and digital signal processing. Texas Instruments India has several break-through innovative offerings for the Indian and global markets. Texas Instruments did not come to India as a farmer, but explored India as a resource.

IBM re-entered India after liberalization. Within 20 years, IBM has 160,000 employees in India, a tad less than the USA. These employees are delivering software wage arbitrage as well as high level R&D work.

GE has research facilities here. Its Jack Welch Technology Centre employs 5,500 scientists, who have applied for 1,000 patents during the last 10 years. GE earlier was organized by SBUs with an ambassadorial country manager. In a dramatic move, GE has appointed a full line country head who responds directly to the global CEO.

Devolve more and clear local authority

In the past, global companies gave their India-based CEOs considerable autonomy and the space to disagree constructively. I see less of that in the last twenty years as India has liberalized. Global companies matrixed their organization precisely when autonomy and entrepreneurship could have play a positive role. From what I have seen and heard, many global companies in India have re-structured themselves into spaghetti of shared relationships and responsibilities with regional and global headquarters. It is often not clear to an observer who is responsible for what.

While interviewing managers of Indian subsidiaries of global companies, I have found that many are frustrated with their narrow jobs because the regional office does many things. In one case, a talented finance director resigned because he was basically a glorified book keeper. His only career growth was to accept an overseas posting.

In earlier days, a foreign posting had a cache; indeed a job in a global company was prestigious. Not any longer. The vigour of Indian companies acts as a lodestone for employees who feel the pulsating energy of 8-10 percent growth and the buzz of a ‘happening’ place when they work in India, and Indian companies are hugely attractive employers.

Further global companies paint all their subsidiaries with the same policy brush. For example, an Indian subsidiary had developed a very interesting ‘adjacent’ business as a growth initiative. After allowing the product to develop for 5 years, an edict was given to dispose of the adjacent business—not because it was losing money or not delivering, but because in a HQ re-appraisal, anything that did not fit into a defined ‘core business’ was to be eliminated!

In another case the Indian company had little freedom to make its extra cash work harder.

Use India as a significant frugal innovator

Because of history and culture, Indians are natural innovators, even though they are a bit undisciplined! As a visiting American Chinese entrepreneur from Silicon Valley recently told me, you need 4 C’s to be an innovative society—Chaos, Creativity, Communication and Channelization. India has plenty of the first three but lacks the fourth. Global companies bring the fourth skill. The combination can be terrific as the examples of Texas Instruments, GE and IBM demonstrate.

Someone has made ‘frugal innovation’ famous as a global world. Jeff Immelt and Vijay Govindarajan have coined the term ‘reverse innovation’. Clearly there is an opportunity.

In the environment of the global managers, it is not possible for them to think of an automobile priced at $2,500 with emissions less than a 2 wheeler! Or to design a 130 teraflop supercomputer for $30 million as the world’s first privately funded supercomputer. These are as unlikely as an Indian village scientist dreaming up a new racing car.

Emerging capital markets could become interesting in future.

The Credit Suisse Global Investment Returns Yearbook 2010 suggests that between over 25 years from 1985 to 2009, Indian equity markets yielded far greater returns than the stock markets in developed economies. The Indian stock market has a higher P/E ratio compared to many other markets, including Asian markets.

The Indian capital market is over $1 trillion, in excess of the GDP. Admittedly it is not sufficiently broad-based and deep, but it is efficient enough to do transaction settlements as fast as the fastest stock market in the world—what they call T+1.

In the future global companies can use this to advantage by listing their Indian subsidiaries here. To be a bit adventurous, even the global company can be listed here. This is no pipe dream or crazy idea.

To get more visibility and show commitment, Standard Chartered became the first foreign company to list the parent in India through an IDR issue. The bank was already listed in London and Hong Kong.

But what do I see around me? I see global companies trying to delist their companies from the stock market or buy back their shares. To be in one of the world’s fastest growing economies, which is attracting $60 billion of foreign investment every year, for a global subsidiary to buy back shares, suggests a lack of imagination. Surely there a missed opportunity!

I also believe that a listed company has a better chance of developing well-rounded managers. They gain a broader exposure to be general managers. Early in their career, they learn to deal with cash flows, balance sheets, multiple stakeholders and public concerns.

That is one reason why Unilever in India is perceived as a ‘CEO factory’. What is common among the following seven companies in India? Bosch, Cadbury, Glaxo, Lafarge, Nokia, Hindalco, Star News, Tata Sky and Tata Rallis? They all have Unilever alumni as CEOs!

Use independent directors on local boards more strategically

I have knowledge and experience of how Indian listed subsidiaries use their independent directors. The local board and listing disclosure requirements are treated as a ‘necessary chore’. Independent directors are sought to be engaged with sketchy board meetings and occasional dinners. Few global company CEOs seriously engage their talented independent directors in a strategic debate about how the Indian subsidiary can better benefit from a liberalizing India and then follow through with real action.

This denies the global leadership the opportunity to listen to embrace the diversity of opinion. You cannot miss out on listening to such talented directors if India really matters to your global company!

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(Tell people that you work for a company in automotive, electronics or computing and they understand. Tell someone, “I work for a company that produces nitro-cellulose, surfactants and starch-based polymers”, and watch the clueless look. For the large part, chemical companies are faceless and incomprehensible.)

To emphasize how intimately chemicals touch our daily lives, I wrote an article titled, ‘Live one day without using chemicals’ (ET, 10th Nov 2008): from food, clothing, paints, fertilizers, medicine, cleaning products, to construction and transportation. The global chemical industry is a whopping $3.5 trillion, about 6 percent of world GDP. In India, the $83 billion chemical industry is as big as steel and auto together. Though the affairs of this industry are little understood, it should be of interest to many.

The chemical industry is at a fork in its journey. The industry has been single-mindedly obsessed with innovation. The results have been fabulous. To take just one example, the path-breaking ammonia synthesis process developed by Fritz Haber and Carl Bosch in 1909 for urea has resulted in enough food for today’s 6 billion. Arguably this is the technology that made the greatest difference to mankind in the last 100 years.

In the future, however, the industry has to balance innovation with consumer-intimacy and sustainability.

The image of chemicals

In addition to everyday products the industry also produces value-adding, industrial products: polymers, catalysts, coatings, petrochemicals. However, its consumer connectedness and environmental image are weak.

Two surveys illustrate the chemical industry’s lack of consumer connectedness and poor communications. In an image survey by TSMG, the auto industry conjured mobility and evoked feelings of speed, telecom connected with social warmth and communication, and IT associated with computation. The chemical industry evoked an unclear image with a negative hint. To the query on improving the quality of life, respondents admitted ignorance.

Tell people that you work in the automotive, electronics or computing industry and they understand. Tell someone, “I work for a company in the chemical industry that produces nitro-cellulose, surfactants and starch-based polymers”, and watch the clueless look.

A 2009 brand survey by Inter-Brand also reinforced the lack of consumer connectedness of the chemical industry. Almost every sector except chemicals finds a mention in the list of 100 leading global brands.

Explorers and farmers

Recently I had a philosophical conversation with the President and CEO of Kureha Corporation, Takao Iwasaki, a visionary technocrat. He was sure that the recent crisis and global concerns would trigger an ‘environmental technology revolution’ that would transform the industrial framework of the world.

But what might the new framework be? In my view, as shown in the chart, it means a triangulation of environmental sustainability, consumer-connectedness and innovation. Successful companies in all sectors are gravitating to this triangulated space.

Iwasaki-san said that there were two types of manufacturing companies or activities: hunters and farmers. A company may be one or the other; it may also combine the two types. I prefer the term ‘explorer’ rather than hunter.

Explorer companies produce consumer-facing products as Toyota, Sony and Kao do; consumers are their ‘finds’. Being consumer-oriented, explorers are sensitive to the behavioural patterns and expectations of consumers. They use creativity and ingenuity (read innovation) to capture as many finds as possible. Explorers are highly consumer-connected, B2C type companies.

Farmer companies are focused on what their land can produce. They sell to markets/customers rather than to end consumers. They monitor market prices and will grow/develop any new thing based on customer demands so long as their land (=technology) can do it. Through product advantage, they improve their customer’s offering to consumers. Farmer companies are customer-connected, or B2B companies.

Chemical industry

The chemical industry retains the appellation of chemistry unlike its peer sciences, which have not spawned physical, mathematical or biological industries! As the peer sciences evolved, they began to be recognized through their applications; for example, physics evolved into engineering, optics, and electronics. Biology manifested as medicine and animal health. Chemicals suffer from inadequate recognition, though the applications of chemistry are vibrant and diverse. Unlike other industry segments, the chemical industry sells as much as 80% of its output to B2B customers. For the large part, chemical companies are faceless and incomprehensible.

The chemical industry has too many farmers and too few explorers. Add to this, the occasional environmental damage, and chemicals become the number 1 villain of the future.

That is why the chemical industry is exploring a new positioning within the triangle of consumer connectedness, environment and innovation. Through bio and nanotechnology, the chemical industry can become benign in a transformational path.

Sustainability

Promoting sustainable approaches makes business sense. Sustainability calls for thought about the long-term implications of activities, and to measure the future performance of investment against environmental and social criteria apart from financial criteria. Sustainability means meeting needs of the present generation, without compromising ability of future generations to meet their needs.

ICIS conducted a study in 2009 which spanned over 900 respondents from the petrochemicals, specialty chemicals and polymer segments of the chemical industry, including CEOs. The good news was that the industry was aware about sustainability issues. The worrying news, however, was that most companies did not know what to do or had postponed actions due to more pressing matters.

In the ICIS survey, 60 percent of chemicals customers actually expressed interest in sustainably produced chemicals. However cost was perceived as the biggest prohibitive component of a sustainable program, followed by technical capabilities. Most CEOs in the developed countries worried that making their operations sustainable and developing green products might place them at a disadvantage vis-à-vis rivals in developing countries that don’t face the same pressure. Hence most executives treat the need to become sustainable as a corporate social responsibility, and not directly related to their business objectives.

A study by C. K. Prahalad, Ram Nidumolu and M. R. Rangaswami suggests that sustainability has successfully acted as a spur to profitable innovations. Becoming environment-friendly lowers costs because companies end up reducing the inputs they use. In addition, the process generates additional revenues from better products or enables companies to create new businesses. Smart companies increasingly treat sustainability as innovation’s new frontier.

Lenzing of Austria

Lenzing was set up in 1938, committed to natural fibres (like rayon) from wood pulp. They were pitted against giants like Courtalds and DuPont who made competing synthetic fibres, based on polymer chemistry. Lenzing focused on the consumer and environment by developing solvent-spinning to reduce the environmental damage that rayon-like products caused. In 2004, Lenzing bought Tencel technology developed by rival Courtalds. It is now a focused, highly successful environment-friendly cellulosic fibre company, offering absorbency that the synthetics do not offer—a delightful success story of sitting in the middle in the triangle.

Here is a four point future agenda for chemical companies:

1. Communicate comprehensibly and reinforce consumer benefit even for B2B applications rather than industrial use. Achieve better recall and a relationship with the end consumer. If sufficient brand equity is established, this could even lead to ingredient branding.
2. Focus on sustainability strategies. Emphasize water, energy conservation, reduced carbon footprints and ‘go green’. Even if some technologies are not viable currently, it is only a matter of time before there will be industry standards. Regulations should not be the sole reason to drive sustainability initiatives.
3. Companies should track percentage of sales coming from new products or processes. Research teams should also be tracked on this measure to ensure that R&D spending is effective. Devote a part of R&D to efforts involving sustainability.
4. Leverage next generation technologies like biotech and nanotech.

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(The consumer demand for quality education is huge. The Indian education market is gargantuan at $ 80 billion per year, about the size of the Indian steel and automobile industries put together. It is highly regulated and under-governed.)

Oblique and indirect ways of solving complex problems abound in economic planning, infrastructure, agriculture, public health and education. Direct solutions do not always work. Oblique solutions often turn out to be remarkably effective. Our brain is wired to seek direct solutions, so such tangential solutions should not be pooh-poohed. But the tangent needs to be clearly articulated.

Yale University’s Charles Lindblom is one of the early advocates of incrementalism when he considered the role of ‘baby-steps’ or ‘muddling through’ in decision-making. Under most circumstances, policy change is evolutionary rather than revolutionary. Lindblom arrived at this view through his extensive study of welfare policies and trade unions across the industrialized world. In 1959, Lindblom wrote that there are two kinds of problems: those that are closed, determinate and with clear-cut objectives, which can be solved through a direct approach. Then there are those that have higher-level, ambiguous objectives which are best solved through an indirect approach.

Two examples of the former are a game of sudoku and the improvement/expansion of an ongoing business. Two examples of the latter are a start-up business and the solving of complex social/political issues. The former can be solved through the direct and rational single-minded focus, while the latter requires the indirect methods of experimentation and discovery.

John Kay has recently written a delightful book entitled Obliquity in which he comments on the tangential achievement of goals and indirect solving of problems. He quotes Jim Collins and Jerry Poras (1994) about how the most profitable companies do not sport direct profit-orientation. They simply do the right things and end up being nicely profitable.

ICI flourished for decades through renewing its interpretation of one consistent and tangential theme–responsible application of chemistry. After the Hanson Trust threat in 1991, the company revised its vision to a direct form, ‘industry leader in creating value for the customer and shareholder.’ Over the next 20 years, ICI declined and vanished.

Led by the visionary Bill Allen, Boeing delivered spectacular results through an oblique approach to profits. Phil Conduit changed the approach ten years ago by stating that ‘shareholder return is the measure to judge us.’ Boeing soon lost the plot.

Kay suggests that at both ICI and Boeing, shareholder value was best created when obliquely sought. He offers the same lesson through the examples of Marks and Spencer, Saint Gobain and Merck.

Two months ago, Unilever CEO Paul Polman sensibly said that he was focused on serving consumers, and that returns and profits would follow. Writers and analysts flayed him. In my view, Polman is right and he confirmed that he would ignore his critics when I queried him.

An even better everyday example concerns happiness. To quote John Kay, “Oblique approaches are the best route to happiness…..happiness is where you find it, not where you go in search of it.” His statement verges on the Vedantic and is very compelling!

Solving problems indirectly

Consider how indirect solutions might work through the example of education in India.

The Indian education is broke and requires urgent attention. If India is to reap the demographic dividend, the burgeoning youth need to be enabled and empowered through education and employability. Otherwise they will become unruly and anti-social.

Universally, citizens and policy makers do not regard education as a business which makes distributable profits. Surpluses can be made but to be ploughed back into infrastructure, curricula and research. Competent institutions abroad renew themselves and compete for excellence. Many nations design policies to achieve this and refer to this as ‘not for profit’ activity.

The Indian state has a different take on ‘not for profits.’ It wants to be involved in controlling the activity to
the point of throttling it. However in the 1980s, a new phenomenon of ‘self-financed institutions’ and of Shikshan Samrat (educational barons) began, if I may quote the Director of IIT Kanpur.

Government has a woolly approach to private participation and surplus. If any institution hires top faculty and delivers terrific pedagogy, it will generate a surplus. The system then officially restricts the surplus to a target level. It is basically a 1970s device, carrying all the woes of price control—corruption, mediocrity, lack of accountability and inefficiency. So entrepreneurs have found a way to get around it

Wherever there is a large and growing market, entrepreneurs will find a way to enter and prosper. Private equity money of $100 million has already been attracted into the Indian education market. There are 10 major players running international schools in the country, many of them in tier 2 and 3 cities. These are outside the purview of policy that restricts promoters from taking a profit. Apart from these, there are opaquely funded institutions that are mushrooming everywhere. The state pretends it does not know of any transgression and the entrepreneur pretends that his actions are acceptable!

The consumer demand for quality education is huge. The Indian education market is gargantuan at $ 80 billion per year, about the size of the Indian steel and automobile industries put together. It is highly regulated and under-governed. Government spend at 3.7 percent of GDP is lower than Malaysia and Brazil (4.5 to 6 percent) but higher than Pakistan and Bangladesh (2 percent). There needs to be more public expenditure and the efficiency/quality needs to improve. At the kindergarten to class 12 levels, 93 percent of schools are public but they account for only 60 percent of school enrolment.

Private expenditure in this market is growing at a sizzling 15 percent per year, an impressive number in one sense but is hopelessly inadequate in another because India has 20 percent of the world’s population but accounts for only 5 percent of the world’s education spending, that too in PPP dollars.

Although government’s intention is that education should be a non-profit activity, private sector edupreneurs (educational entrepreneurs) account for as much as two thirds of the $ 80 billion market.

How did the camel get into the tent?

HEIs can adopt one of several avatars: Trusts, Societies, or Section 25 companies. Irrespective of the avatar, they are allowed to make only a small surplus, which too they must use for the advancement of the HEI. HEIs are heavily and clumsily regulated by government bodies, which fix both students’ intake, college fees and have an influence on the teachers’ salaries.

To the lay person, it would appear that the selling price is fixed, the volume of production is fixed, the costs are subject to control, then where is the scope to earn profits? Enter Indian entrepreneurship: create two tier models so that the regulations can be adhered to by one without sacrificing profits, which are made in the other tier.

These players have come out with creative strategies and innovative structures to deliver value education, make money and grow in this highly regulated space. In the jargon of finance, these private players have dis-intermediated the market. In the process, many of them feel passionately that they are contributing to nation-building by making several Indian youth employable, while generating enough profits to sustain and scale up the spiral of growth.

The lesson here is that you cannot fetter an idea whose time has come. It is part of the middle class Indian ethos to spend on education till it hurts. If the state cannot do it, someone else will. One can gloss over all this as a desirable private-public partnership.

That government has inadequate funds for education is a source of long-standing discontent. In that case, a planned and calibrated liberalization in education should have begun long ago. Government should not set so many controls and hurdles. The nation can definitely adjust to indirect solutions to education issues but with a clear statement of the tangent. It is high time that fuzzy ideas and back door entry are replaced by active and pragmatic policy.

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Following a recent strike at an air carrier, a company executive is reported to have said, “Half our company’s problems are because there are no clear directions from HR.” If half of any company’s problems emanate from HR, that company deserves an entry in Ripley’s Believe it or Not! Practising HR and being humane are the essence of any manager’s job, and certainly not HR’s prerogative.

Never before in human history are so many young people entering the work force of their economies in such a short time in so many countries in Asia, Africa and South America. Employee discontent has emerged as a key issue in many countries. The unprecedented challenges require innovative responses.

There are three types of societies. Rich and low-growth capitalist democracies are experiencing a re-emergence of new form of union activities, aided by the internet and modern communications (like US, Japan and Europe). High growth and authoritarian countries with state-directed capitalism are responding by pedalling harder on the growth treadmill (like China, Russia, and the Middle East). The few emerging and high growth democratic economies like India have to focus on employee connect with far more passion than ever before.

Rich and low-growth capitalist democracies: These have evolved by first unleashing unbridled capitalism. With the need for order, liberalism and democracy developed subsequently. Low growth and ageing population are both key issues. The share of population above age 60 in Japan and Europe would have moved from the early teens in 1950 to over 40 percent by 2050. Generous retirement benefits are no longer affordable as fewer workers have to support increasing pensioners. This issue has been around for some time, but like global warming, it seems to have suddenly burst forth into public attention.

In March 2009, the head of Sony France was shut up overnight inside the factory by the workers, reminiscent of gherao, invented and exported by the Bengal communists during the 1970s. During the last three years, companies like France Telecom, Renault, Peugeot and EDF have experienced increasing suicides among workers. Even in America, the rate of suicides has increased by 28% in the last two years.

In these nations, employees are offended that they are expected to offer loyalty to their employer, but they do not receive an equal commitment from the employers to protect their jobs. Employees everywhere say that they are “in distress” or that they are “stressed out.” A certain degree of confrontation is inevitable in the years ahead.

Emerging and high growth authoritarian capitalist economies: These countries have authoritarian political regimes with overt policies of capitalism–China, parts of Africa and Middle East, for example. Apart from China whose population has peaked, others have a growing population. In 1950, Africa accounted for 9 percent of the world population, but by 2050, it will account for 20 percent. In Iraq, Iran, Afghanistan and Pakistan together, 66 million will be added to the work force within the next decade.

Even in China labour unrest has begun in recent years. Permanent workers are unhappy with their migrant conditions and heavy work schedule; temporary workers are unhappy due to insecurity. Such trends are seen with Honda automotive and Foxconn electronics and may have accelerated since workers were permitted to voice their discontent.

Author Stefan Halper argues that a new model will dominate the 21st century, that is, authoritarian capitalism—an oxymoron to students of capitalism. Halper points out in The Beijing Consensus that the absence of liberties in China may appear transitory or even unacceptable to western eyes. Yet more Chinese people are grateful for their jobs and improving standards than those who are unhappy about their political rights. For an authoritarian capitalist society to thrive, the economy must somehow continue to grow.

The Chinese government is therefore doing the reverse of what it did in the past that is, encouraging an upward wage revision. This could maintain the Chinese growth through an orderly transit from an export-dependent economy to promoting domestic consumption. If successful, China would have addressed three problems in one stroke: reducing employee discontent, achieving continued growth and a natural adjustment to the exchange rate, rather than one which is forced by another nation!!

Fast growing, emerging, democratic economy: India is among a few emerging, high growth emocracies.
Employee discontent will manifest as union activity and as a political force. India’s response cannot resemble the rich democracies or the authoritarian capitalist economies.

India has experienced some hyper cases of industrial action in recent years. In September 2008, an Italian company’s Indian CEO was killed in an auto-components factory in Gurgaon. During April and May last year, M&M had a stoppage of production at Nashik, Hyundai faced problems at its Chennai factory, Nestle had a closure of its foods factory in Uttaranchal, and the Wockhardt Hospital in Goa had to be shut down. In 2009 a company executive was killed at Pricol in the south. Strikes have occurred at Gurgaon-Manesar, Chennai and Coimbatore. In Chandigarh, an unemployed BPO employee used his I.T. skills to post nude pictures of his female boss on a network site, a novel way to protest about not having his job or compensation. The formation of UNITeS (Union of IT enabled services) to represent BPO workers is a reincarnation of industrial labour unions of yesteryear but with a modern twist.

In India managements have been sympathetic to workers, partly due to the general social conditions and also due to paternalism. However management’s approach has to shift to empathy for the rising aspirations of employees. It is not as easy as it sounds. It would be opportune to deregulate industrial relations as was done for industrial licensing 20 years ago. This will help managements and employees to be more engaged through dialogue rather than through laws, rules and confrontation.

People connect has to have an emotional component, a meeting of hearts than only minds. Technology, globalisation, demography, societal trends and low carbon will work together to shape the future of work as pointed out in a May 2010 study by Lynda Gratton of LBS. However these rapid transformations in technology-enabled communications should not diminish the quality of person-to-person connect.

The art of conversation as well as the ability of leaders to invest emotional time in people relationships are diminishing. Spending clock time on people transactions is not enough. Managers must relearn to be intuitive as much as they are analytical. Leaders have to invest in relationships. Emotion is not bad. Leaders have to anticipate a lot more about employee needs and reactions by talking to their people and listening to their people. To be successful, it is important that the manager is perceived as authentic and genuine. The latest research has revealed that managers who are more inclined to appreciate people sensitivities are likely to be more successful than others and it may not be surprising to see more and more successful leaders are either from social sciences background or those who are sensitive to human emotions.

During my IIT days, I witnessed how two hostel wardens dealt with student complaints of poor quality food in the canteen. One professor listened patiently and set up a student sub-committee to survey the food quality compared to other hostels and to suggest measures for improvement. It was a perfectly valid response, but emerged from the professor’s head. The other professor decided to join the students for a meal on three unannounced occasions to ‘taste’ the problem himself. He responded from the heart. Both problems were solved but which solution do you think was perceived as effective and memorable?

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While reflecting about the column on careers and business life, I asked myself what purpose could be served by such an effort. A simple idea, supported by a simple story, could be a positive format for learning and reflection and practising managers could find that useful.

(Four circumstances conspire to produce an unintended consequence: a small percentage of highly competitive, creative and competent students from a large number! Followed by a career in the relatively orderly work environment with much process-orientation of the west, the Indian manager goes Boom, Boom. He or she becomes super-productive because of lower frictional losses and obstacles.)

Some famous person said that the measure of a society is how it converts its pain and suffering into something meaningful and useful. India has done that through the remarkable success of its overseas managers.

Indians are rightly jubilant with the overseas success of their compatriots, for example, when Nitin Nohria was appointed Dean of Harvard Business School; or earlier when Subra Suresh became Dean of MIT or when Arun Sarin and Vikram Pandit rose to the top of their companies. The positive emotion often has a trace of ‘India Rising’.

The achievers are humble about their success. Adobe CEO Shantanu Narayen nonchalantly says, “It is not a big deal, because America is an egalitarian and meritocratic environment.” HBS’s Nitin Nohria gives credit to IIT. Pepsico’s Indra Nooyi modestly says, “I am a mother first and then a CEO.”

Do India-born managers possess something distinctive? Do they achieve more success abroad than other immigrants? It is tempting to think so and indeed there are many views. One view is that Indian managers are no different from similarly educated managers from elsewhere. Another is that Indians have always done well overseas, but media coverage has brought visibility and celebration. A third view is reflected in the recent book, The India Way: how India’s business leaders are revolutionalizing management thinking, Wharton professors Peter Capelli, Harbir Singh, Jitendra Singh and Michael Useem identify four distinctive Indian practices: holistic engagement with employees, improvisation and adaptability, creative value propositions and broad mission and purpose.

Whichever may be correct, the upbringing of India-born managers quite unintentionally prepares them for a good chance of success overseas. As author Sanjaya Baru wrote in March this year in Careers 360, “Stories of extreme hardship, braving impossible odds and innumerable sacrifices, abound in the lives of nearly 90 per cent of the students in the country. But among them, some perform exceptionally well. Their academic laurels are so brilliant, that at times their CV looks intimidating. And each one acknowledges that it’s the right education that made them what they are today.”

India-born managers are products of four unique circumstances.

Competitive education: IIT/IIM effect

Thanks to subsidies, higher education is accessible to middle class people. When viewed with the cultural propensity to acquire degrees, this fact results in an avalanche of several thousand applying for every college seat. Higher education is crushingly competitive. Bright Indian children who do not get into IIT effortlessly secure admission into an Ivy League College! In the US, this has repositioned IIT as a genius factory, and IIT alumni promote this assiduously!

In reality the graduates of India’s top institutions have been psychologically autoclaved through high pressure competition. They emerge as people with insatiate ambition, which vastly exceeds their intellectual or financial resources. This stretch between resource and unreasonable ambition is significant: recall the late Prof CK Prahalad, “It is essential for top management to set out an aspiration that creates, by design, a chasm between ambition and resources.”

The Indian system creates in many graduates a chasm between aspiration and resource but quite unintentionally.

Accelerated learning

Life for the student is a struggle in India compared to elsewhere: commuting in chaotic cities, inadequate privacy and lebensraum to study at home, facilities for sports and libraries, and a crushing burden of exams. Almost every student has faced early setbacks: inadequate marks in exams, a lost college admission or a limited job choice. Chance plays too important a role in the Indian student’s life, making it quite stressful, hence youngsters just have to learn to face setbacks early on. They learn to be persistent and to fight with a never-say-die attitude.

Leadership research indicates that extraordinary setbacks accelerate personal learning. Duke Corporate Education board member Judy Rosenblum wrote in 2009 in the Financial Times, “In order for people to develop as professionals, they need to be immersed in problems. A problem provides the opportunity to grapple with and test one’s ability to adapt.”

Although family and peer pressure are high, they also provide the required support to the youngster to handle the stress. Fortunately the influence of parents is prolonged and significant compared to other societies. Sir Winston Churchill told the English people, “Never give in, never, never” for the war years.

The Indian student practises this all through life. Success is not just about being ambitious, it is about overcoming adversity.

Hard work plus creativity

It is not that other nationalities are lazy. It is just that overcoming shortcomings of infrastructure requires Indians to expend energy which could otherwise have been productively deployed. The educated youngster is forced to develop the traits of hard work like East Asians who naturally derive it from their Confucian ethos. But there is a difference: unlike the East Asian, the Indian has a low aptitude for repetitive tasks. The Indian will try to do he repetitive task differently and creatively: in short, he works hard and creatively, a brilliant combination. The serious student works and sweats as if on an academic treadmill and business executives do the same in their workplace.

Indians’ propensity for hard work was grudgingly acknowledged by Abraham Pinkusewitz while explaining how the Gujaratis managed to capture 70 percent of the diamond trade in the Antwerp market, “Indians succeed because business is all they have in their lives. If needed, they will work 24 hours per day.”

Apart from the tough demands of education and life, young Indians have to adapt to challenges arising from diversity, which is quite different from, for example, the Chinese: learning several Indian languages, adapting to school systems while transferring with parents, and coping with variable teaching quality. Howard Gardner, Harvard academic on Cognition and Education, poins out, “The only reliable way to determining whether understanding has truly been achieved is to pose a new question or puzzle—one in which individuals have not been coached and to see how they fare.”

Indian students are wired to work very hard, with passion and creatively.

Thinking in English

Where else in the world would a temple be constructed for “Goddess English”? On 25th October 2010, the birthday of Babington Macaulay, such a temple will be inaugurated in Uttar Pradesh. English is being installed as a deity in the temple so that those who pray to her can be blessed with progress.

Uniquely Indian managers think in English, the test being that they use English to express fine points. Many don’t comprehend the nuances of a vernacular paper. The manager’s professional education has almost certainly been in English, case studies have been Anglo American, language proficiency has played an important role in success and socialization, and the language of business is English. As a result of these influences, the Indian manager abroad is quite analytical, linear-thinking, and articulate in his intellectual skills. He or she hits the ground running in any overseas employment.

Unintended consequence

These four circumstances produce a sufficient number of highly competitive, creative and competent students! Followed by a career in a relatively orderly work environment with much process-orientation in the west, the career manager goes Boom, Boom. He or she becomes productive very early on because of lower frictional losses and obstacles.

Many, many Indians are successful abroad, not just the few that the media write about. I know from my Unilever experience that Indians are prized as much in India as in Peru, Poland and Philippines.

These facts about the Indian manager ignore the harsh reality that many do not make it through the obstacle race. This has unfortunate social consequences. But for those that do, the probability of success abroad improves a lot.

A concurrent trend is that foreign business leaders are joining Indian companies: Carl-Peter Forster in Tata Motors, Marten Pieters at Vodafone Essar, Wolfgang Prauck-Schauer at Jet and Raymond Bickson at Indian Hotels.

In short, Indian managers are rapidly globalizing and that must be a good thing for the future.

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