Indian Management: The Unseen Revolution

India has made a mark globally with its software skills. More recently, India has come into global reckoning for its manufacturing capabilities. In future, India will be the hub of infrastructure building. Consolidating the gains in services and products and making new gains in infrastructure, India will keep up its growth momentum. India’s economic growth could be upwards of 10 percent per annum in the years to come which could catapult India as the fourth largest economy in the world by 2030, after USA, Japan and China. In fact, the gap, if any, in terms of gross national product could be small within these four economies.

Indian management and global achievement

Science and technology power the economy as a chip powers the computer. Management drives the economy just as software programs the computer for performance. A unique way of Indian management has emerged over the last few decades of the independent India that is shaping the new economic revolution in India despite all the constraints that exist. The distinctive Indian management paradigm is a result of the multiple ownership and organizational formats, and the diverse organizational eco-systems that evolved over the years in India.

The Indian managerial alchemy is no longer a perception or an aspiration; it is a reality. If global scale is a metric, Indian management has proved itself with several Indian companies joining the Global 2000 Club (Forbes Asia, May 2010, Volume 6, Number 6). If global recognition is a metric, most Indian managed companies have proved themselves by exporting products and services, by becoming chosen partners and in some cases by being courted by global giants to add strength to their value chains. In fields as diverse as traditional arts and culture or modern science and technology, Indian management demonstrated a sure ability for global marksmanship.

The mix of Indian companies in the Forbes list or the Fortune list of the largest publicly traded companies of the world illustrates that it is not merely the Indian factor advantage but also a pan-industry managerial capability that helped India Inc power its way into the global club. The Indian companies in such global lists come from diverse business and industrial domains, to name a few: ACC (cement), Allahabad Bank, Axis Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Corporation Bank, HDFC Bank, ICICI Bank, IDBI Bank, Indian Bank, Indian Overseas Bank, Oriental Bank, PNB, State Bank and Syndicate Bank (banking), Bharat Electronics, Bharat Earth Movers and Bharat Heavy Electricals (equipment), Bharat Petroleum, GAIL, Hindustan Petroleum, Indian Oil, ONGC and Oil India (oil and gas), Bharti Airtel, Idea and Reliance Communications (telecommunications), DLF and HDFC (real estate), Grasim and Reliance Industries (diversified), HCL Technologies, Infosys Technologies, Tata Consultancy and Wipro (information technology), Jet Airways (airlines), Ashok Leyland, Bajaj Auto, Hero Honda, Mahindra & Mahindra and Tata Motors (automobiles), Hindalco, National Aluminium, NMDC, SAIL, Sterlite and Tata Steel (metals), ITC (FMCG), JP Industries, Larsen & Toubro and Reliance Infra (infrastructure), NHPC, NTPC, Power Finance, Power Grid, Rural Electrification, Tata Power (power), Cipla, Dr Reddy’s, Piramal, Ranbaxy and Sun Pharmaceuticals (pharmaceuticals) and United Breweries (spirits). In addition, several subsidiaries of multinationals in India, ABB, Siemens, Vodaphone, Hyundai, Unilever, Proctor & Gamble and IBM, to mention a few, have acquired statures of their own.

The high number of Indian banks in the global list illustrates the overall strength of the economy. The fact that no Indian bank failed when several global banks went into a tailspin in the global economic meltdown illustrates the financial management skills of Indian economists and banking managers. Similarly, the growing number and increasing scale of firms in growth sectors such as automobiles, telecommunications, infrastructure, oil and gas and metals illustrates the diversified managerial base. Several Indian subsidiaries of global multinationals such as Unilever, Hyundai, Proctor & Gamble have consistently provided a large Indian anchor to global operations. The ability of large Indian groups such as Tata, Bharti, and Reliance to acquire overseas firms reflects new confidence in globalization. Similarly the growth of large non-resident Indian groups such as the Hindujas and Mittals on a global scale illustrates the global entrepreneurship of Indian business groups. It is also interesting that some of the largest listed companies are government owned while several government owned corporations and departmental undertakings are unlisted but are very large, reflecting the management acumen in India that transcends public-private ownership differences.

On a different but allied plane, for over five decades, Indian academic scholors enriched the global technology and management scenario. In the US alone, more than 8000 professors are said to be making important contributions to the academic life. In the management and economics areas of reputed business schools, not limited to Harvard, Stanford, Kellogg, LBS and Wharton, Professors CK Prahalad, Sumantra Ghoshal, Marti Subrahmanyam, Bala Balachandran, Krishna Palepu, Pankaj Ghemawat, Raj Varadarajan, Nitin Nohria, Amartya Sen, Jagdish Bhagwati, Kasturi Rangan, and Jagmohan Raju made a mark as eminent exponents of management. In the global consulting firms such as McKinsey, BCG, Bain and PRTM as well, Indian management consultants have become an increasingly impactful fraternity.

In a dramatic change, even the multinational corporations known for their fiercely US or European headquarter-centric structures and talent management models are beginning to engage Indian management talent in localized corporate roles. While Indian Americans have been occupying high positions in the global headquarters, global multinational corporations in diversified fields are now choosing to build new regionalized centers of excellence and corporate divisions around Indian, and on a broader base around Asian talent. This represents a paradigm shift in the MNC way of thinking on globalization of talent. The new paradigm is that true globalization extends beyond seeking wider markets or factor inputs and focuses on building global centers of excellence around proven local talent.

What do these results and trends, at both corporate and individual professional levels, portray? While modern management no doubt has its origins in the Western schools, Indian companies and managers have developed their own indigenized management alchemy based on the specific characteristics of the Indian situation.

Indian management evolution

Indian organizations typically reflect one of the three types: the government civil organizations, including the Indian Administrative Services (IAS), the government owned public sector undertakings, including those set up to own the commanding heights of economy, some of which are listed in the stock exchanges (PSUs), and the private sector companies, most of them publicly listed in stock exchanges (PSCs). The IAS typically attracted top talent that was service oriented. The PSUs attracted talent that liked industrialization with scale and scope. PSCs attracted talent that believed in capitalistic growth despite constraints. Different ownership formats and organizational templates typically created different managerial dynamics and led to multiple managerial genres.

Five major forces silently shaped Indian management to a global top spot over the decades. The first is the coexistence of, and osmosis between, the three genres of management styles: the IAS, the PSU and the PSC styles. The second is the induction of multiple technologies and with them related management concepts, from different countries as part of the industrialization from 1947; British, European, American, Japanese and Korean, to name a few. The third is the unique Indian social psyche that adapts to imposition as much as it demands independence, and that encourages creative chaos as much as it respects rigid compliance. The fourth is the motivation to do better and match the best; starting with fierce competition from the school days. The fifth is the proliferation of engineering and management education in India, with a strong influx of engineers into management. These five forces have created a unique Indian managerial alchemy.

Capable administrators from the IAS moved through public sector to private sector to leverage their skills for unfettered growth of institutions. Public and private sector managers learnt the art of positioning corporate strategies in alignment with national needs and bureaucratic challenges. This facilitated a multi-pronged osmosis of managerial aspirations, thoughts and styles. The multiplicity of behavioral approaches was sharpened with engineered precision of a liberal managerial culture. The resultant Indian management style is a unique one that combines administrative efficiency, national passion and material pursuit.

Some of the above are practical hypotheses that are built upon the proven and highly visible successes of the Indian industrial scenario. The author had personal experiences with several such leaders. Stalwarts such as V Krishnamurthy, a PSU technocrat and SVS Raghavan, an IAS bureaucrat built Bharat Heavy Electricals as a leader in power equipment. Again, V Krishnamurthy and later RC Bhargava and Jagdish Khattar, both IAS professionals built Maruti Suzuki as an automobile firm of global repute, even outshining the Japanese parent in certain aspects. S Soundararajan who turned around a sick Garden Reach and TS Kannan who repositioned NSIDC were other IAS professionals. Government-owned insurance giant, Life Insurance Corporation of India had leaders like R Narayanan who built huge strengths in the institution. The list of Indian leaders who built PSU and PSC behemoths and ran departmental undertakings with great vision and success is indeed large.

India’s private sector benefitted from the leadership of several enterprising visionaries. N Vaghul and KV Kamath who built ICICI Bank into a first class private sector bank, Deepak Parekh who built HDFC as a role model in housing finance, Dhirubhai Ambani who built India’s new generation conglomerate, the Reliance Group, JRD Tata and Ratan Tata who revved up and reshaped the Tata group, S Moolgaokar who made Tata Motors (then Telco) the first visible sign of indigenous technological capability, RJ Shahaney and R Seshasayee who unlocked value of a slow-grown British subsidiary, Ashok Leyland, Rahul Bajaj who provided an Indian techno-marketing paradigm in two-wheeler industry with Bajaj Auto, Subir Raha who globalized ONGC, Kurien who made Amul the largest milk cooperative in the world, Anand Mahindra who transformed Mahindra & Mahindra, a tractor and Jeep company into a diversified group, Kishore Biyani who built a hugely successful Indian model of retail business, Pantaloons and Big Bazaar, NS Narayana Murthy and Azim Premzi who built India’s famous global IT companies, Infosys and Wipro respectively, Anji Reddy who demonstrated to the world a new Indian pharmaceutical paradigm, Pratap Reddy who built a world-class hospitals network and K Raghavendra Rao who became a rare-in-class first generation entrepreneur in global pharmaceuticals business reflect the myriad hues of the uniquely Indian management paradigm. There are also several brilliant scientists, technologists and strategists who provided the core competencies for Indian firms and supported the leaders in their global visions; like V Sumatran who helped Tata Motors realize the first indigenous small car dream, leading the multi-faceted Indica passenger car design team, and RS Prasad who helped Anji Reddy and K Raghavendra Rao realize their global generics dreams, building world-class pharmaceutical research and manufacturing infrastructure with first-to-file capabilities. Each of the leaders mentioned above, and not mentioned above brought a uniquely Indian perspective as to how from highly modest and severely resource constrained beginnings world-class corporations could be built in India, irrespective of the ownership.

(Author’s note: In fact, this blog feels humble that it is too inadequate to accommodate the list of top leaders of the IAS, PSU and PSC streams which is so large, running into thousands. Omissions, therefore, are inevitable but are certainly neither intentional nor reflective of any priority.)

The Indian management alchemy

What do these several named, and unnamed, Indian managerial stalwarts have in common? They have, in fact, a lot in common, even if they pursued diverse business and operational models. First, as leaders all of them sought to grow their companies as the best-in-class companies. Second, they believed in Indian talent and indigenization, even if they had to rely on certain imported technologies from time to time. Third, they possessed exceptional personal and professional attributes combining intellect, grasp, memory, speed, passion and accuracy for unique managerial delivery. Fourth, they combined leadership with mentorship, building successive generations of leaders to keep up growth momentum. Fifth, they believed in empowerment of people and teams to drive into new growth horizons. Sixth, they combined global aspiration with Indian patriotism. As a result, each of the leaders could establish or grow companies which held, and continue to hold, Indian flag high.

If the above are the common characteristics of Indian leaders, what then are the common features of Indian management that helped the firms make a global mark? First, Indian management is not deterred by resource constraints. Dreaming big despite a small resource base brings out the best stretch in Indian firms, from strategic innovation to operational excellence. Second, Indian management is sensitive to national imperatives. As a result, Indian firms built unique business models on twin pillars of catering to domestic consumption and generating export revenues. Third, Indian management is a multi-tasking paradigm with low respect for robotic sequencing of events and high passion for simultaneous pursuit of activities. This helps Indian firms cut down development cycles and time to market. Fourth, Indian management looks for delivery leaders rather than deliberative teams. As a result, Indian companies have fairly simple organizational structures that have as little clutter as possible and as many single point responsibilities as can be reasonable. Fifth, Indian management is reflective of the Indian society in terms of frugality and conservation. This naturally induces Indian engineers to come up with functional and utilitarian plant designs that are cost-competitive. Sixth, Indian management is conscious of the need to build and retain reputation. This motivates employees to work on the safe side to meet future quality and regulatory requirements. Seventh, Indian management is impatient, functioning almost from thought to action, skirting elaborate planning rituals. This helps Indian firms beat the competition on speed of delivery, even on a global scale. Eighth, Indian management protects jobs as much as it can. Indian organizations typically stay together in bad times retaining the flexibility to take off when good times return. Ninth, Indian management focuses on organizational and career growth as a base motivator. This provides leaders with multiple avenues for talent management. Tenth, Indian management is intrinsically entrepreneurial and opportunistic. As a result, Indian firms are quick to capitalize on market opportunities. Evidently, some of the above characteristics have contradictory potentialities; the success of Indian management lies in its ability to harmonize the multifarious tendencies for synergy.

Probably, not all aspects of Indian management are flawless. Things possibly could be even better with stronger internal and external collaboration, clearer communication and negotiation, broader application of analytics, stronger grassroots leadership, closer alignment of aspirations and resources, greater openness to indigenous consolidation, higher belief in innovation, lower emphasis on followership, and so on. Several top rung companies not only hire the best talent from leading institutes but also have elaborate in-house leadership development programs to address the residual concerns. The forecast tripling of top-notch engineering and management institutes in India such as the Indian Institutes of Technology and the Indian Institutes of Management in the next few years would provide further reinforcement to the Indian talent pool. As Indian management globalizes and absorbs some of the finer nuances of competitive global management, and appreciates the need for innovation, scale and scope to stay on top globally, the fundamental strengths of “value with vision” and “speed with passion” that uniquely characterize Indian management would be reinforced to an even greater extent.

Posted by Dr CB Rao on May 31, 2010