By R Gopalakrishnan*
*The writer is an author. His latest book, JAMSETJI Tata—powerful learnings for corporate success, coauthored with Harish Bhat, was published in July 2024. His ID is rgopal@themindworks.me
The debate about family-managed versus professional companies is fruitless. The debate is between well-managed and poorly managed companies. The future leader will be a ‘professional entrepreneurial manager’.
I participated in a panel discussion on Long Life Companies in the 2024 Drucker Forum at Vienna. One fellow-panelist was Bloomberg and The Economist writer Adrian Wooldridge. Adrian strongly refuted my plea for Long Life Companies by quoting the Schumpeter creative destruction principle that companies without capability or purpose should be allowed to die, that Long Life is no virtue for an incapable company. Of course, that is true. Adrian readily accepted the desirability of Long-Life enterprises if they renew and have a ‘purposeful deergha ayush’. This is how we wish for a long and healthy life for family and elderly. Hence purposeful deergha ayush.
My deep commitment to purposeful deergha ayush enterprise is rooted in their significant social value in addition to their economic value. I am reminded of the energetic correspondence between economics student, B Mukherjee, and Cambridge Economist, Alfred Marshall, over a century ago. On 22nd October 1910, Marshall replied to Mukherjee about what India should do to become a ‘great nation’,” If India had a score or more of men like Mr Tata, and thousands of men with Japanese interest in realities, with virile contempt of speech-making in politics and law courts, India would soon be a great nation.”
This requires Indian policy that nurtures purposeful deergha ayush companies in the hundreds, if not thousands. I feel that Indian industrial policy missed this aspect because a control/animal spirits mindset does not support the building of virtue.
My positive models are enterprises that I know like Unilever, Tata, Godrej, and Birla. I also, along with six academics, researched and wrote about six middle-aged and potentially purposeful deergha ayush enterprises, for example, Biocon, Marico, Kotak Mahindra Bank, and HDFC Bank.
On the other hand, I am familiar with organizations that weakened their strategic strength to near-extinction, for example, Imperial Chemical Industries (ICI), Jet Airways, Kingfisher Airlines, and Credit Suisse. It is devastating and expensive for society to support and extend the life of a company that is no longer capable and purposeful. A recent book on Credit Suisse offers some sharp lessons (Melt Down, Duncan Mavin, Macmillan Business, 2024).
Credit Suisse (CS) is biologically a deergha ayush company, having been founded by Alfred Escher at about the same time as when Jamsetji Tata founded his enterprise. If an Indian horoscope were to be cast, CS must have been born during Amavasya. Its history reads is a long list of relentless wrongdoings. CS did not die in a day; its ruin stretched back into decades. Curiously, it did not die for want of capital, but due to want of trust. Founder Alfred Escher was primarily a politician, who funneled funding and favors to his business, an act which was admired initially, but decried later. Can you think of contemporary corporate use of public policy to advantage some businesses?
CS’s mergers read like a culture-contorting thriller, mixing misplaced Swiss secrecy with brash American bank greed. A chapter titled Spygate brings out lurid tales of how in 2015, CS recruited as CEO of a damaged company a talented Ivory Coast national, Tidjane Thiam, who was a UK insurance company leader. Thiam developed an inexplicable relationship with a flamboyant Pakistani-origin Iqbal Khan, who soon emerged as the most trusted lieutenant of the CEO. Then they built adjacent houses, where their respective partners got embroiled in misunderstandings, and both Thiam and Khan had an acrimonious fallout. The Financial Times observed, “The US, a ground zero for the financial crises, has jailed just one banker for issues relating to the crisis. Former Credit Suisse trader Kareem Serageldin was sentenced to thirty months in prison for artificially inflating the price of subprime mortgages, a financial product at the very heart of Wall Street’s unravelling”. The book has more sleaze, but my goal is to explore only purposeful deergha ayush enterprises.
CS was always in controversy and rarely behaved as a purposeful deergha ayush enterprise. Deergha Ayush must be both biological and operating with a deep purpose.
