This refers to my earlier post dated April 5 where I had written about the article written by four Wharton professors that appeared in the March issue of HBR .The article in HBR was an excerpt from the forthcoming book The India Way: How India’s Top Business Leaders Are Revolutionizing Management. I had concluded that we will wait for the book to be released to make final comments on the Indian leaders and their leadership. I could lay hands on the book immediately on release and finished reading the book only yesterday.
The book is wonderfully written and will showcase the Indian leadership to the rest of the world. The testimonials for the book, though mostly written by the leaders who find a mention in the book, will vouch that that the “India Way “ is different from the West and will definitely kindle interest in managers from all other countries. The book emphasizes that the India Way is different from the Western and especially the US way in that in the west, managers are preoccupied with the shareholder concerns, Indian leaders are more concerned about the societal good that is expected to be delivered by the business.
The authors identify four principal practices that identify the India Way as:1.Holistic engagement with employees;2.Improvisation and adaptability;3.Creative value propositions; and 4.Broad mission and purpose. The importance given for training and development and especially the development of a second line is well highlighted. The Bharti Airtel example of structure forcing strategy and not the other way round as is commonly propagated by strategy stalwarts, provides a different view of strategy. And the authors bring out very clearly the efforts by Indian companies and leaders in putting customer delight as a key driver of business sustainability. The book also narrates well the changes that have happened in the economy over a period of about 60 years since independence.
But, my appreciation for the book and its contents stop there. Are the four practices anything unique and not attempted by managers anywhere?Many of the comparisons the authors make are not necessarily valid or right. For example, the authors provide a table on How Indian and US business leaders have changed their allocation of time over the past three years? By the very nature of ownership, US companies have to spend more time on reporting to the board and maintain good shareholder relations as management is usually different from owners. In India, management is usually vested with the owners who also sit on the boards and thereby reducing their need to report to the board and also maintain good shareholder relations. May be during the last three years, US managers might have become more concerned about governance issues as a fall out of rising concerns on governance and stringent implementation of Sarbanes-Oxley. In India, promoters have been continuously increasing their stakes and most of the promoters today have attained very dominant holdings if not majority holding in their companies.
As already mentioned in my April 5 post, the sample looks to be very small considering that there are about 6000 listed companies in India. And the quality of leadership should be assessed not by interviewing leaders but by interviewing those who get inspired by leadership. Leadership is defined by followers and not by leaders themselves. The survey should have covered employees from lower down.
While talking about governance, the authors stress on the point that Indian companies have adopted more of value-based governance in comparison with their US counterparts where the stress is on compliance. The authors state that a large percentage of leaders felt that the Indian governance is in a state of transition and is a distinctive product of the country’s regulatory regime or ownership structure. Are they? Because, whatever corporate governance regulations we have adopted so far are mostly based on Cadbury report and SOX. And if Indian industry felt that we want a distinct governance model for us, why is it that industry bodies like FICCI, CII or Assocham not pushing for a different governance model? The authors state that the changes in the governance norms were not entirely welcome, but it might please be noted that the committees which were set up by SEBI for evolving corporate governance guidelines were mostly headed by industrialists who have only tried to draw from UK or US guidelines rather than going for a unique Indian governance model.
Authors also state that the issue of governance is not considered as a serious issue by Indian leaders. Is it because typical governance issues (as a result of agency conflicts) don’t arise because owners and agents are the same? But, this can become a deadly combination(agent and owner being the same)as it happened in the case of Satyam. Of course, in the case of Satyam, the promoter owners held a very small percentage and had to step back fro their decisions under pressure from other major shareholders. But in a majority of the major companies, the promoters may be able to push for their ways since they command very high stakes.
Authors also point to Indian firms looking at depth rather than breadth. But is it necessarily giving them any edge? The research conducted by Palepu and Khanna show that if companies in emerging markets want reasonable growth, looking at depth in one area may not be sufficient as that area alone might not offer enough opportunities for big growth. Emerging markets have specific characteristics that necessitate companies to look broadly than deep.
And the authors very often highlight that Indian growth far outstrips the US growth. This comparison of growth rates is not correct because US GDP which is about $ 15 trillions has a very big base and it is very difficult for such a big base to grow at rates at which developing countries like India grow.
One question puzzling my mind has been this:Has the India Way been revolutionizing management as the authors claim? I personally don't think so.Of course, there are lots of opportunities for Indian companies and leaders to revolutionize the discipline and practice of management.But, that is yet to happen.
The book is wonderfully written and will showcase the Indian leadership to the rest of the world. The testimonials for the book, though mostly written by the leaders who find a mention in the book, will vouch that that the “India Way “ is different from the West and will definitely kindle interest in managers from all other countries. The book emphasizes that the India Way is different from the Western and especially the US way in that in the west, managers are preoccupied with the shareholder concerns, Indian leaders are more concerned about the societal good that is expected to be delivered by the business.
The authors identify four principal practices that identify the India Way as:1.Holistic engagement with employees;2.Improvisation and adaptability;3.Creative value propositions; and 4.Broad mission and purpose. The importance given for training and development and especially the development of a second line is well highlighted. The Bharti Airtel example of structure forcing strategy and not the other way round as is commonly propagated by strategy stalwarts, provides a different view of strategy. And the authors bring out very clearly the efforts by Indian companies and leaders in putting customer delight as a key driver of business sustainability. The book also narrates well the changes that have happened in the economy over a period of about 60 years since independence.
But, my appreciation for the book and its contents stop there. Are the four practices anything unique and not attempted by managers anywhere?Many of the comparisons the authors make are not necessarily valid or right. For example, the authors provide a table on How Indian and US business leaders have changed their allocation of time over the past three years? By the very nature of ownership, US companies have to spend more time on reporting to the board and maintain good shareholder relations as management is usually different from owners. In India, management is usually vested with the owners who also sit on the boards and thereby reducing their need to report to the board and also maintain good shareholder relations. May be during the last three years, US managers might have become more concerned about governance issues as a fall out of rising concerns on governance and stringent implementation of Sarbanes-Oxley. In India, promoters have been continuously increasing their stakes and most of the promoters today have attained very dominant holdings if not majority holding in their companies.
As already mentioned in my April 5 post, the sample looks to be very small considering that there are about 6000 listed companies in India. And the quality of leadership should be assessed not by interviewing leaders but by interviewing those who get inspired by leadership. Leadership is defined by followers and not by leaders themselves. The survey should have covered employees from lower down.
While talking about governance, the authors stress on the point that Indian companies have adopted more of value-based governance in comparison with their US counterparts where the stress is on compliance. The authors state that a large percentage of leaders felt that the Indian governance is in a state of transition and is a distinctive product of the country’s regulatory regime or ownership structure. Are they? Because, whatever corporate governance regulations we have adopted so far are mostly based on Cadbury report and SOX. And if Indian industry felt that we want a distinct governance model for us, why is it that industry bodies like FICCI, CII or Assocham not pushing for a different governance model? The authors state that the changes in the governance norms were not entirely welcome, but it might please be noted that the committees which were set up by SEBI for evolving corporate governance guidelines were mostly headed by industrialists who have only tried to draw from UK or US guidelines rather than going for a unique Indian governance model.
Authors also state that the issue of governance is not considered as a serious issue by Indian leaders. Is it because typical governance issues (as a result of agency conflicts) don’t arise because owners and agents are the same? But, this can become a deadly combination(agent and owner being the same)as it happened in the case of Satyam. Of course, in the case of Satyam, the promoter owners held a very small percentage and had to step back fro their decisions under pressure from other major shareholders. But in a majority of the major companies, the promoters may be able to push for their ways since they command very high stakes.
Authors also point to Indian firms looking at depth rather than breadth. But is it necessarily giving them any edge? The research conducted by Palepu and Khanna show that if companies in emerging markets want reasonable growth, looking at depth in one area may not be sufficient as that area alone might not offer enough opportunities for big growth. Emerging markets have specific characteristics that necessitate companies to look broadly than deep.
And the authors very often highlight that Indian growth far outstrips the US growth. This comparison of growth rates is not correct because US GDP which is about $ 15 trillions has a very big base and it is very difficult for such a big base to grow at rates at which developing countries like India grow.
One question puzzling my mind has been this:Has the India Way been revolutionizing management as the authors claim? I personally don't think so.Of course, there are lots of opportunities for Indian companies and leaders to revolutionize the discipline and practice of management.But, that is yet to happen.
