ISSN 2321-9297

Trailblazers share thought-provoking views on Indian... Entrepreneurship & Jugaad Culture & will to Change Higher Education & Demographic Dividend Governance & Government Management & Mis-management

Vol 1. Issue 1. October-December 2013

Inaugural Issue Anil K. Gupta Anurag Batra The Arvind Rangaswamy Des Dearlove Devdutt Pattanaik Idea Jagdish Sheth Jan-Benedict E.M. Steenkamp Kevin Stolarick of Mark Esposito Navi Radjou Nila Madhab Panda India Nirmalya Kumar Pankaj Ghemawat Paranjoy Guha Thakurta Pramath Raj Sinha Prasad Kaipa Raj Sisodia Ravi Venkatesan Rishikesha T. Krishnan Roger Martin Sachin Garg Stuart Crainer Susan Zielinski Terence Tse Vijay Govindarajan Vineet Nayar Yogesh Kochhar Vol 1. Issue 1. October-December 2013 THINKERS tion e global brands te global tion in India isual imageries depicting India’s growing growing India’s isual imageries depicting merging market brands will become increasingly will become increasingly brands market Emerging to do so but in order global in the coming decade, to change they – China in particular – will have practices. certain existing 38 for Higher Three ideas Educa Raj Sinha By Pramath demand- and skewed access, of quality, Problems all supply within higher education in India, are made to put a a genuine effort were If too familiar. scenario would few ideas into action, the existing change. radically 20 t t) Exten The (Curren iza Urban a’s of Indi PhD Stolarick, By Kevin V far greater a creates the years urbanization over the same giving statistics impact than documented information. 28 idea of India Opening up the Ghemawat By Pankaj socio-economicSeveral that indicators suggest spot in terms of global a sweet India is far from for fast which is an imperative connectedness, growth. 32 t Four hurdles emerging marke to overcome firms have to crea Kumar By Nirmalya E.M. Steenkamp and Jan-Benedict S and estern framework framework estern rofessor aum 1924 Professor . D alley to Tokyo, companies are companies are alley to Tokyo, ollege, the latter talks artmouth College, t 66: odern management uses a W ijay Govindarajan, Earl C Govindarajan, ijay of International Business at the Tuck School of at the Tuck of International Business at D Business about higher education in India and the U innovation. reverse also the benefits of 16 Interview indarajan Gov Vijay Amit Kapoor and between In an interaction V 02 of Ideas The Power & Des Dearlove Crainer By Stuart V Silicon From 06 India a ixed-up story A mixed and m Guha Thakurta By Paranjoy envisioned Prime Minister first Independent India’s economy”a “mixed elements for India with the best socio-of capitalism and socialism. Looking at key is almost the verdict economic indicators today, of both worlds. took the worst unanimous: we 10 Indian Why bother with a very t? to managemen approach Pattanaik By Devdutt M united in a strong desire to innovate, though their to innovate, desire united in a strong vary. may to innovation approaches world, the around phenomenas cultural to explain have cultures the fact that different and overlooks from. they operate frameworks different td an Chief edia ice President artner ra at l ansa o esign & Strategy Pvt L orks Design & Strategy oj Kumar an Bigham anaging P anaging Director ammurabi & Solomon ammurabi & Solomon Consulting ammurabi ohit B M xchange4 V xecutive Tapscott Group Tapscott Man M Publisher for Competitiveness Institute Editorial Board alphabetical order In B Anurag MD and Editor-in- E B V Ra Editor Now Governance Jo M Global Solution Networks E H A NEERA VOHR Coordinator Program for Competitiveness Institute R CEO & Co-Founder Group India Strategy H Editor-in-Chief Kapoor Amit Editor Consulting hand ika C Malv By Designed W Idea Oscars of management thinking.” 500 agazine is now available available is now agazine ` 1500 ` Subscription includes: Subscription of print magazine In India, a copy and digital application international readers, For access to only digital application. Annual subscription | Price: $45 earlove, the and Des Dearlove, Crainer Stuart in 2001 by Created ranking of management global the first-ever was Thinkers50 the scope of Thinkers50 decade, In the intervening thinkers. that support its of activities to include a range has broadened management the best and sharing ranking mission of identifying, is widely recognized Thinkers50 Today, thinking in the world. ranking of the top 50 business thinkers, definitive as the world’s widely are Awards Achievement and the T50 Distinguished as the “ regarded , India is an international for Competitiveness Institute and purposeful in India, dedicated to enlarging centred initiative on knowledge and disseminating of the body of research , for Competitiveness Institute competition and strategy. offers India conducts and supports indigenous research, advisory services and provides courses, academic and executive studies The institute and the Governments. to the Corporate the strategy; competition and its implications for company & cities and thus generates regions of nations, competitiveness and suggests guidelines for businesses and those in governance; solutions for socio-economicand provides problems. nstitute Institute of India is a joint initiative Thinkers50 . Thinkers50 India and for Competitiveness, Thinkers50 India, which Thinkers50 of Thinkers, is a presentation addressing new thoughts, is about discussing new ideas, creating in the process paths, new forging challenging issues, synergy leadership and create of thought widening circle an ever the online and integrating in the thought leadership space by experiences. offline M Thinkers Single copy | Price: $14.99 in the following versions: following in the will be which to the print copy Print: Get access in India) only (Available place. to your delivered and enjoy the application Digital: Download device. on your it reading THINKERS owever, owever, otion and te otman School of ious udac esearch in M esearch artin, Dean of the R artin also serves on the Boards of Thomson on the Boards artin also serves anagement, the latter shares his view on the anagement, the latter shares orporation and R euters Corporation oger M is chair of Tennis Canada. is chair of Tennis M over. it is far from he believes and why India story Mr M R 112 Why India Must be A By Anil K. Gupta similar at a critical crossroad, stands India today wants the government to the one it did in 1991. If this into to seize the opportunity and transform moment” again, it will need to take a “golden the inside out. actions from concrete 116 CONTRIBUTORS 100 CoRpOra for CSR: A case tive SR or Collec Kochhar By Yogesh directs Companies Bill that The passage of the on of profit a percentage companies to spend H in the right direction. CSR is a big step efforts are needs to be done to ensure a lot more to their fruition. brought 104 My brand of challenges By Sachin Garg The ability to see challenges as opportunities is an essential quality needed and not problems in India. for entrepreneurs 108 Interview roger martin Amit Kapoor and between In an interaction R tem ys tion: tion S ction niversity, the latter talks about his idea niversity, all to A arketing in the Goizueta Business School at Business in the Goizueta arketing ish Sheth agd It is one thing to survive in the chaos called India, is one thing to survive It its condition of dishevelment, not correcting but by its potential. succeed in realizing India will never 94 Rethinking the Role ity in India’s of Qual Higher Educa Rangaswamy By Arvind in India need to Higher education institutes and particularly quality in multiple areas, improve high quality attracting around initiatives fast-track faculty. 78 78 Interview J Kapoor and Amit between In an interaction Chair of Sheth, Charles H. Kellstadt Jagdish M Emory U in behavioural in his expertise of India, weaving economics and management. 84 Innova Jugaad ity Converting Advers into Opportunity Radjou By Navi in is the gutsy art of spotting opportunities Jugaad and resourcefully circumstances adverse the most solutions using simple means. improvising 90 A C Venkatesan By Ravi arch 2013. 2013. arch ture! eview in M eview ing from ork: Mov t W ts: anding Marke cerpt ting and Leading with Wisdom t Exp as does not define business opportunities by FEM does not define business opportunities places boundaries but by geographical of opportunites. variety is a vast there where Smart to Wise Leadership Radjou and Navi Kaipa By Prasad and Buddha birth to the great In the land that gave it is baffling to see the paucity and lack Aryabhata, the who in fact have of acceptance of thinkers, and enrich the fabric of our capability to endow society. 70 70 Wisdom a Book Ex Wise: to From Smart Ac the need In this section, the authors talk about wisdom, and differentiate for leaders to exhibit smartness and wisdom. between 76 India needs a Thinking Cul Batra By Anurag 60 ing the economy Mov Zielinski By Susan the for India in opportunities many are There new mobility industry. global emerging 64 F ic A new needed econom t century lens in the 21s Mark Esposito Tse, By Terence for presented This seminal paper on FEM was R Business the European tic tema ys orld Class Companies , ability? ow W ow nity in Diversity’ outlined ap

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S an India build a al aaj aur kal! aur al aaj rofit from P from Profit a foundational work in explaining the precepts the precepts in explaining a foundational work and performance implications of pursuing to business. a conscious approach

In an interaction between Amit Kapoor and between In an interaction Raj Sisodia, one of the thought leaders of the the latter globally, Conscious Capitalism movement his view on this concept. His book Firms shares of Endearment: H 54 Interview Raj Sisodia

The concept of ‘U has leaders in the Constitution our great by India. in today’s meaning and relevance lost 50 K By Nila Madhab Panda

By Rishikesha T. Krishnan Krishnan T. By Rishikesha blocks which apparent Indian companies have but as some capability, inhibit their innovative steps can be taken specific shown companies have these problems. to successfully overcome 46 Jugaad: Going Beyond C omers second customers to employee- a customer-centric The journey from asking tough questions requires centric organization transformation. up with a cultural it and following Innova First Employees Nayar By Vineet 42 THINKERS an egards, R Consulting Editor eading these pieces, eading these pieces, ika Chand Malv TE ope you enjoy this issue, as much as we did putting did as much as we this issue, enjoy ope you As is commonly known, putting out a magazine As is commonly known, lots of resourcefulness, cooperation, speed, requires is magazine Thinkers of ideas. and a flow creativity, that is what a culmination of ideas and action and and for both the cerebrally trove it a treasure makes oriented. the result on this to work opportunity been a wonderful Its opinion to you issue of the magazine which brings who and leaders thinkers inspirational pieces by the walking because they are made a difference have be it for higher talk, in terms of putting their ideas, or education, management, social responsibility, R into action. entrepreneurship, did, that at the end of as we will feel hope you we they realists; each of the contributors are the day within their respective realities see clearly the hard painting them from stopped but that hasn’t domains, and a bold vision for a better towards and working brighter India. H it together. QUICK NO egards, ineet Amit Kapoor ijay Govindarajan Govindarajan ijay attanaik, sharing ground realities realities attanaik, sharing ground aturity, they say, comes from staying steadfast steadfast staying from comes they say, aturity, r The strength in our conviction for this type in our conviction The strength M forward look we and issue this reading for Thanks of doing business in India; and many many more more many of doing business in India; and many and essays five that encompass the about twenty the best brought have interviews in this edition–we issue on a topic a stellar minds together to make pertinent for our citizens. been more that has never humanities the theme of which – arts, of dialogue, issue of or science – will change with each what has is exactly India magazine, Thinker50 on; when well- us the determination to forge given friends and advisors have meaning and practical another launching yet us to re-think encouraged thus in India, publication when the media industry is going the global recession, far untouched by all platforms-television, a blood bath across through print and online. hits and of the numerous to the course irrespective This could not of life. the cycle that constitute highs, The true test true for India, than today. hold more how from will emerge of our maturity and freedom true conundrum of social, come out of the mostly we face today. we economic and political woes feedback. to your country; to academics such as V to country; their global sharing from and Arvind Rangaswamy the higher education bar in tips to raise experience such as V India; to management practitioners P Devdutt Nayar,

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W In my view, it is symbolic that the theme we are are the theme we it is symbolic that view, In my It is exactly this idea that has lead to the creation this idea that has lead to the creation is exactly It adhab P will adorn your coffee tables and book shelves for coffee tables and book shelves will adorn your eminent Indian intellectuals invited time to come, their idea of India, to share the world around from people From linking it to their domain of expertise. talking about the potential Kumar, Nirmalya like economies; to P of emerging Indian firms need to focus on sharing tips on how to Nila global connectedness to speed up growth; M exploring in our launch issue, “The Idea of India”– “The Idea in our launch issue, exploring what India was, areas, among many that examines what she is and what she could be – coincides of our the 66th year celebrate with the month we independence. of Thinkers50 India that seeks to expand and India that seeks to expand of Thinkers50 across thinkers and brightest the best celebrate online and offline through the Indian diaspora In that regard, platforms such as this magazine. issue of the inaugural to the you I welcome of debate the level magazine that seeks to raise innovation, technology, on matters of business, and thank and governance, culture sustainability, for joining and enhancing the conversation. you for the floundering unity of our the reasons maker At Thinkers50 India we are driven by simple but by driven are India we Thinkers50 At because powerful fundamental beliefs: that ideas are step that the first they can change the world; business, be it in building a better future, towards arts and entertainment; history economics; finance, infusing each with is by or governance and culture; and new ideas. fresh

ief in-Ch or- Edit No 2 3 T H The Thinkers50 has been scanning, ranking, and “Blame it on fickle consumers INK

sharing management ideas since 2001. Thinkers50 ER

India too shares our passion for and is the driving if you will, or blame it on progress, S force of the power and importance of ideas. Ideas are the vital fuel of innovation, and few in but there is a continuous ramping business or elsewhere would argue against the fact up of our expectations, and this that innovation matters now more than ever. CEOs, academics and politicians can be heard waxing has led to a heightening of our lyrical about the need for innovation in this or that expectations of innovation.” company, industry or even national economy. But why does innovation matter so much in today’s business world? vulnerable, some are soon consigned to history. The answer is surprisingly simple. Innovation A key part of the problem is that dealing The is where the worlds of business and creativity meet with discontinuity requires a very different to create new value. It really is as simple as that. set of capabilities. Organizing and managing Indeed, one definition of innovation is “the creation discontinuous innovation requires searching in of new value.” unlikely places, building links to new partners, The word innovate first appears in the mid- allocating resources to high risk ventures, and sixteenth century. It comes from the Latin “innovat” exploring new ways of looking at the business. meaning “renewed, altered,” from the verb These are very different to the conventional and “innovare” – from in (into) and novare (make new). traditional approach to innovation. Historically, In other words, innovation is all about finding new a company simply hired some very smart people, ways to change things. put them in an R&D lab, and let them get on with it. What makes this all the more relevant today That approach is no longer sufficient. Power is that we live in a world where we are constantly After the Japanese company Fujitsu was demanding new value from the products and acknowledged as having developed the world’s services we consume. Think about it. When did fastest supercomputer, we spent time talking to you last buy a new phone that boasted “the same those involved with its development to learn more old tried and tested technology,” or a car that about the reality of innovation. proclaimed itself “just as good as before.” The fact The computer was nicknamed K, a play on the is that our ancestors might have been persuaded Japanese word ‘kei’ for the number 10 to the power with claims of constancy and old-fashioned of 16. It is a big number and a big build with a consistency, but we demand more. $1 billion development budget and over 1,000 people Blame it on fickle consumers if you will, or blame involved. Development began in 2007 and ended it on progress, but there is a continuous ramping up in 2012 with the K being celebrated as the “fastest of Ideas of our expectations, and this has led to a heightening of the fastest”. By Stuart Crainer & Des Dearlove of our expectations of innovation. Companies are in We met with the managers and leaders involved the front line. in this huge project. We were struck by two things. And it isn’t just that the competition might add First, the down-to-earth nature of those involved. a new feature or button to an existing product. The Fujitsu team were not classic Silicon Valley Commercial life can be positively Hobbesian: Nasty. material. They were neither hip nor cool. There From Silicon Valley to Tokyo, companies are united Brutish. And, increasingly, short. Entire product were no jeans, not even chinos. No casual wear; in in a strong desire to innovate, though their approaches categories can disappear overnight. Remember fact nothing casual at all about them. Indeed, when the VHS player? Remember the cassette recorder? we met the overall project manager he looked like to innovation may vary. Remember buying film for your camera? a typical middle-aged Japanese corporate man One of the biggest innovation challenges is wearing a suit with a waistcoat to stave off the dealing with discontinuous innovation. When Tokyo winter chill. Ordinary people involved in technologies shift, or new markets emerge, or the an extraordinary project. regulatory rules of the game change, or someone The second thing that struck us was that despite introduces a new business model, many formerly their quiet and contained outward demeanor, these successful organizations suddenly become were men and women with a mission. We talked 4 5 T H INK

“Organizing and managing ER discontinuous innovation requires S searching in unlikely places, building links to new partners, allocating resources to high risk ventures, and exploring new ways of looking at the business.”

with Aiichirou Inoue, President of Fujitsu’s Next Generation Technical Computing Unit. When we spoke it was nearing the end of the project. The pressure was on. Inoue had been the driving force behind the company’s mainframe computer business for 27 years. Given his long service, Inoue could perhaps have been forgiven an air of ennui. In reality, he was a ball of creative energy, excited and under pressure in equal measure. “In my previous roles, I couldn’t do the things I wanted to do. I wanted to build something by myself, not just to use it, but to build it,” he explained. It was clear talking to Inoue and his colleagues that the innovative and groundbreaking K computer wasn’t an end in itself. There were many more important and motivational forces at work. “I want the young engineers working on this project to be excited and to enjoy their work,” said Inoue. “But, let’s be clear: the K Computer will make the future for Fujitsu, Japan, and for human beings. It will give us the ability to look at the weather of the future; and there are a huge number of healthcare uses. That’s what I mean about its power to change humanity. A computer is just a big box; what’s interesting is to see it as a tool to help mankind and societies around the world.” We walked away from the Fujitsu team and started thinking again about innovation. What we had encountered challenged our easily held stereotypes and assumptions. We learned that innovation is not practiced in isolation. Nor is it the work of supermen and women, though much of what they accomplish is superbly world changing. Innovation is ordinary, but the results extraordinary. Innovation changes reality, but is built from aspirations, dreams, ambitions, and visions. Innovation is vital. 6 7 T H The most commonly used cliché about India is that “One out of three computer INK

this is a country of crazy contrasts. The world’s ER

second most populous nation-state is very rich and software engineers in the world S very poor; it is extremely educated and extremely ignorant. India’s biggest achievement since it is a person of Indian origin. And became politically independent 66 years ago at so is one out of three persons midnight on 15 August 1947, is that it has remained united despite innumerable prognostications to on the planet who is poor, India at the contrary. The fact that India has remained undernourished and illiterate.” undivided is significant since this is arguably the world’s most heterogeneous, and at the same time deeply-divided, country – a nation that categorizes the planet’s second-most populous country. its peoples not only along traditional lines of Yes, India and the idea of India have prevailed. class, race, region, religion and language but also At the time of writing this article in the middle (uniquely superimposed on the other divisions) on of August 2013, the country’s economy was in By Paranjoy Guha Thakurta the basis of an ancient and oppressive caste system. pretty bad shape. The danger of the government One out of three computer software engineers defaulting on its international financial obligations in the world is a person of Indian origin. And so was not as palpable as it was in June 1991when is one out of three persons on the planet who is the present Prime Minister became the country’s poor, undernourished and illiterate. Coexisting Finance Minister in the P. V. Narasimha Rao Independent India’s in the country is a range of political and economic government. India’s foreign currency reserves have first Prime Minister systems including different forms of feudalism, not slumped to the equivalent of a fortnight’s import capitalism and socialism. The first Prime Minister requirements as it had 22 years ago, but there is envisioned a “mixed of independent India Jawaharlal Nehru wanted a new set of economic crises that seem equally economy” for India with India to have a “mixed economy”, one that would intractable and extremely painful to resolve. The the best elements of include the best elements of both capitalism and high current account deficit on the external balance socialism. More than six and half decades later, the of payments has contributed to a fast-falling rupee capitalism and socialism. verdict is almost unanimous: we took the worst of vis-a-vis the US dollar. On the domestic front, Looking at key socio- both worlds. Private enterprise (the hallmark of persistently-high food inflation and tardy creation economic indicators capitalism) was stifled by excessive bureaucratic of jobs has led to a widening of the gap between the controls. At the same time, the government could rich and the poor. today, the verdict is hardly provide quality health-care and elementary The government’s statistics indicate that 138 almost unanimous: education (that socialist societies sought to provide) million individuals have been “lifted” above the to the majority of its people. poverty line over a seven-year period between we took the worst Even if certain small sections of India’s 2004-05 and 2011-12 coinciding with the term of of both worlds. population have made considerable progress in the United Progressive Alliance coalition in office. recent years, the impact of economic development Academics and officials admit that the yardsticks has, by and large, been uneven. The overall used to measure poverty are inadequate and nationwide picture of growth indicators conceals contentious. Those who support the government’s sharp and increasing inequalities in income and claim that the proportion of Indians living below the social development. To claim that the world’s poverty line has come down dramatically from 37.2 largest democracy has made little progress since per cent in 2004-05 to 29.8 per cent in 2009-10 and the country became politically independent two- further to 21.9 per cent in 2011-12 – based on a daily thirds of a century ago, would be a travesty. But to per head consumption of Rs 33.40 in urban areas A mixed and argue that the country’s economy has “emerged” and Rs 27.20 in rural areas – argue that these figures from the shadows of under-development would be are not fudged. to gloss over reality. Many who live in politically They claim that the “internationally accepted” independent India are far from economically definition of a poverty line is US$1.25 per person independent. Hunger, malnutrition and per day on the basis of “purchasing power parity” unemployment gnaw at the economic freedom of at that better reflects standards of living than exchange mixed-up story least a quarter of the 1.2 billion people who inhabit rates. Thus, if one uses the current exchange rate 8 9 T H

of Rs 60 to one dollar, the internationally accepted years. Welfare schemes – including the Mahatma economic conditions currently prevailing. INK

poverty line would be Rs 75 per person per day. Gandhi National Rural Employment Guarantee As the experience of attracting FDI in multi-brand ER

If one deflates the figure using purchasing power scheme – are being implemented with varying retail should make amply clear, there is indeed S parity norms, the poverty line would be in the region degrees of efficiency and effectiveness in different many a slip between the cup and the lip. The key of Rs 30 (or 50 cents) per person per day. The same parts of the country. More welfare schemes are to issue the government has not been able to tackle set of data put out by the National Sample Survey be initiated soon, including the legislation on food is to convince India’s own entrepreneurs that they Organization (NSSO) can, however, be interpreted security. But all these efforts are being negated, should invest in their own country before seeking differently in a way that hardly shows up the if not neutralized, because of the government’s greener pastures overseas. government’s performance in good light. inability to control food inflation. Prime Minister Dr Manmohan Singh says The survey on consumption expenditure shows economic reforms cannot take place unless there is that overall spending by the richest 10 per cent of political consensus. The question, therefore, arises Indians living in urban areas went up by nearly two- “It is true that India at present is as to what are the reasons why the UPA government thirds (63 per cent) between 2000 and 2012 while failed to build the necessary political consensus. expenditure by the bottom five per cent rose by just having neither growth nor equity Finance Minister P. Chidambaram is openly angry a third (33 per cent), the corresponding figures for in adequate measure.” with some of the judges of the Supreme Court, the rural areas being roughly 60 per cent and 30 per Comptroller and Auditor General of India and even, cent respectively. The same set of data disclose that the Governor of the Reserve Bank of India, because the gap in spending by the richest and poorest in Since the country imports 80 per cent of its they have refused to toe the government’s line. urban India went up from twelve times to fifteen total requirements of crude oil and because the On the contrary, they have been often critical times in this period, while the gap in rural areas government has chosen to gradually equate of the policies, programmes and actions of the ruling increased from around seven times to nine times domestic energy prices (especially diesel, the most dispensation. By being critical of institutions that between 2000 and 2012. It is not as if the rich are widely-used petroleum product) with world prices, are responsible for strengthening democracy, the getting richer while the poor are getting poorer. what is essentially taking place is that we as a government has not been able to create consensus The undisputed fact about contemporary India country are importing inflation. The government in a highly-fractious polity such as ours. is that the gap between the rich and the poor has is unable to narrow the trade deficit which is the In the last fifteen general elections in India, widened significantly and continues to do so. principal reason why the current account deficit on there have been peaceful regime changes on no less The NSSO figures state that while the per person the external balance of payments has careened out than seven occasions. We seem to be on the cusp spending on milk and milk products went up by 58 of control. Many of our exports are highly import of another round of changes, brought about largely per cent for the poorest 30 per cent in rural areas intensive (for example, polished diamonds, gems by the arrogance and stupidity of those in positions and 111 per cent in urban areas, the corresponding and jewellery) while the markets for other labour- of power and authority. figures for the richest five per cent jumped by more intensive exports (including textiles, garments, than three times (331 per cent) in rural areas and leather, handicrafts and processed foods) have over four times (422 per cent ) in urban areas over shrunk on account of recessionary conditions in the this 12-year period. The same story gets repeated West. With imports inelastic and exports sluggish, across other commodity groups (such as fresh fruits it is hardly surprising that the government has no and vegetables, eggs, fish, poultry and meat) as well alternative but to depend on volatile flows of foreign as expenditure on education and medicines. capital to bridge the gap between inflows and At one level, the debate on the direction of outflows of foreign currencies. economic policies – epitomized by the acrimonious This is hardly a good situation to be in. The war of words between economists Amartya Sen and government belatedly decided to curb imports of Jagdish Bhagwati – has acquired a new urgency with gold and luxury products. But the problems will not everybody pitching in with her or his comments on disappear overnight. The reason why people have the relative importance or unimportance of growth been investing in (legal and illegal) gold is simply versus welfare (or redistribution) schemes. While because the yellow metal is perceived as the best this debate is undoubtedly important, it is also true hedge against inflation. In other words, the demand that India at present is having neither growth nor for gold from Indians will not be curtailed until the equity in adequate measure. The growth rate of root cause – that is, inflation – is first addressed. gross domestic product has slumped. Employment The government has gone on an overdrive hiking opportunities are being created very slowly despite the limits and caps on foreign direct investment the government’s claims of having sharply brought in various sectors. But this is not going to result in down the incidence of poverty over the last nine a flood of FDI flowing into the country given the v 10 11 T H

Modern management uses a Modern management as we know it today thrives These are shaped by Western cultures. Historically, INK

Western framework to explain on an assumption: that it is objective and rational. today’s management is influenced by principles of ER Of course, cutting edge thinkers know that it is not the Roman Army, Jesuit Missionaries, and Industrial S cultural phenomenas around so. But that management is objective and rational Engineering of the 19th century – all Western. It is the world, and overlooks the remains a dominant perception. not objective at all. It does not take worldviews of fact that different cultures Subjectivity plays a key role in management. And China and India into consideration to say the least. subjectivity is influenced strongly by culture. The It assumes itself as rational, independent of cultural have different frameworks they way we see the world is conditioned by the culture thinking. And that is its greatest shortcoming. operate from. we have been most exposed to since childhood. Mathematics and statistics may be universal A child brought up in Denmark, for example, all languages, but the way we read the results varies his life, has a very different understanding of life, with the cultural gaze embedded in the leadership. compared to a child brought up in India, Internet This understanding is critical in the new ‘post- notwithstanding. There will be many things in internet’ world order where everything is mingling common but there will also be many differences. and merging and we are realizing that all things How much focus do we pay to subjectivity relative Western are not necessarily modern, or complete, to objectivity, irrationality relative to rationality, or suitable for all contexts. It is important to re- in management thought? People are divided on this. evaluate our gaze. It is important to expand our We have been conditioned to look upon subjectivity mind, join more dots. and irrationality as wrong, even evil, the source of problems and the source of chaos. Yet, it remains a factor impacting business and can be a lever that “Emotions cannot be measured, can change the way we conduct business and solve problems we face today. imagination cannot be measured, In Denmark, one is exposed to an economy but these play a critical role in of 5 million people, 80% of the same ethnicity. In India, one is exposed to an economy of 1200 policy making and business million people, where less than 40% speak the decisions. We cannot be indifferent same language, and the remaining 60% speak 15 languages, and there is great diversity along to them simply because they defy economic, political, linguistic, educational, religious both measurement and rationality.” and caste lines. Management principles that will emerge from, and will be applicable to, Denmark may not work as well in India. This seems pretty Sun Tzu and the Art of War became popular obvious, but many people challenge this. Such in the 1980s because of the success of Japanese reaction reaffirms the idea that different people see corporations and it gave management thinkers all the world differently: the world is not a rational, over the world exposure to Chinese thought (Sun logical, objective space, where there is one truth. Tzu was not from Japan). Since India became a hub Why bother There are many truths. But some truths are more of outsourcing and a potential market for many in favoured and more dominant than others, and even Europe and America, people have been wondering positioned as THE truth. about Indian thought. Hence the proliferation of Belief is an assumption based on how many data books on Chanakya and Bhagavad Gita. points we are exposed to, and how we join these Chanakya appeals to the rationalist and Bhagavad By Devdutt Pattanaik with a very data points: the more the dots, the more complex Gita appeals to the philosopher. But neither takes the pattern. The more the experience, the more into consideration the vast body of knowledge ways we know to join the dots. And so belief keeps embedded in the stories, symbols and rituals of expanding. Like a business plan which changes India. Neither takes into consideration Lakshmi, the Indian approach when assumption changes, our understanding of restless but delightful goddess of wealth, the most business and management changes dramatically popular Goddess in India (not just amongst Hindus). when our belief changes, or rather expands. Perhaps this has something to do with 19th century Notions of business and management as we know disdain for all things ‘myth’ and an obsession for to management? it today comes primarily from USA and Europe. rationality and scientific thinking. 12 13 T Business Sutra H Emotions cannot be measured, Social scientists have used this NUANCES OF INK begins here imagination cannot be individual/collective framework DOING BUSINESS ER

measured, but these play a to explain cultural phenomenon IN INDIA, CHINA, S critical role in policy making all over the world not realizing AND The WEST and business decisions. We this framework is Western, Human cannot be indifferent to them not global. Different cultures Belief Business simply because they defy both have different frameworks they Behaviour GAZE GOAL measurement and rationality. operate from. This is especially This measurement-celebrating true in China and India. China Western myth has resulted in values relationships and India placing more values on processes values contexts. Neither China Hermit Householder (measurable) than people (not nor India thinks in terms of tribe/ Management Science CHINA so measurable). We rely more on church/institutions although begins here institutions than on individuals. words like clan and caste do This has its roots in Biblical give the impression that they myth (one half of Western myth) do. Hence guanxi (special Mythology where the tribe or church is more relationships) are so critical important than the individual in Chinese business. Collective Individual Rule Keeper Rule Keeper Journey of this book member. We are constantly In Confucian China that seeking to institutionalize dominated the court culture, the WEST Steve Jobs of Apple and Mark focus is the relationship between Zuckerberg of Facebook. one and the other, not one Ironically, these two gentlemen and the many. This is a critical are embedded in the Greek myth difference. The Chinese does not (the other half of Western myth) think China, he thinks ‘boss’ or where glory comes from doing ‘subordinate’. The boss embodies WEST INDIA something extraordinary that China, until he is overthrown by Path chosen Path chosen challenges the status quo. They someone more noble and worthy. to outgrow INDIA in fear broke the prevalent assumptions People often equate Chinese fear of communication. They were with ants. Incidentally, the Goal-based Gaze-based what the Greeks called hero, men institutional model is also about who changed the rules of the ants. In the Chinese worldview, Over Lifetimes game, like Alexander, who were the pecking order of ants matter. then invited by the gods to the In the institutional worldview, Management special heaven called Elysium. the anthill matters more than Western management myth the ants. subscribes to the Biblical and India values neither ants nor Greek mythologies that are anthill. Great value is given to Of course, today social scientists know that ‘myth’ is essentially a similar to each other in that impermanence (think Buddha). cultural point of view that expresses itself through stories, symbols they value only one truth. They Nothing is fixed, except maybe and rituals: every society has its own myth. There is no culture that are also at odds with each gender and caste that are INDIA CHINA WEST has no myth. Western thought is also a myth that shapes the modern other: the one focuses on the determined at birth. Everything world; it is neither rational nor real. collective and the other focuses else, even family structures are Peace Order Truth The mythology of modern management is rooted in the belief that on the individual. Please note: continuously changing. So the ‘all that is measurable can be managed’. It lends itself (wrongly) to the Biblical mythology does not individual is continuously trying secondary assumption that ‘all that is not measurable does not exist’. mean the Christian Bible, it to figure out his relationship Why? How? What? A good scientist is acutely aware of this. But how many good scientists refers to a vast body of thought with the other in every context. They are obsessed They are speculative They are exotic are out there? Most scientists of the world do come from cultures that that emerged from Ancient Caste relationships, and village with things value monotheism (one god, one truth) over polytheism (many gods, Egypt, Mesopotamia, Persia and relationships, are more reliable I am focussed many truths). Even atheism is presented along monotheistic lines Levantine, where great value is than relationship with the I am pragmatic I am objective on thoughts where rationality is argued as a god. placed on central authority. government or someone far away. 14 15 T H

shareholder. Yes, we keep speaking of stakeholders, INK

“A simple tool to understand but the only action favouring stakeholders ER different cultures is to study the seems to be more rules: regulations protecting S environment, or workers and rules compelling the dominant mythology of the land: rich to be more charitable. The reliance is once the stories, symbols and rituals again on processes than people. The assumption is that the world can only be made a better place that are favoured by a society.” through commandments. The assumption is that democratically-generated policies are bound to be fair, just and good. The assumption is the Board In the realm of impermanent structures, there is of Directors are good or can be forced to be good no fixed institution (as in the West) or boss (as in through intervention of regulators and independent China); everything is changing and so one has to directors and other watchdogs. figure out at each interaction that status of the other, Modern management conversations rarely speak hence oneself. This creates a lot of ambiguity that of people, or rather it leans disproportionately exasperates people who do business in India. towards processes. When there are conversations A simple tool to understand different cultures about people, they tend to focus on what they is to study the dominant mythology of the land: have (think Mukesh Ambani) or what they do the stories, symbols and rituals that are favoured (think Warren Buffet), but never no who they by a society. Unlike psychoanalytical ‘archetype’ are. More often than not, the assumption is if you models that seek the common and the universal, are successful entrepreneur and have created an the approach needs to be more structural – seeking institution of enviable market capitalization, you differences. This reveals why the manager from must be a smart leader who inspires people (think Denmark is so different from the manager from Narayan Murthy). Who a person is cannot be India even though both are educated in the reliably measured. same B-schools and have gone through the same Personality tests, designed using Western induction and training programmes. The difference methodologies, map people in a vacuum and is not just because of personality (individual) or do not take contexts and relationships into the culture (collective) or institution (collective) consideration. They map people as ‘archetypes’ in but also because of relationships and context: the a fixed ‘template’, or as ‘pegs’ in a fixed set of ‘holes’. Danish manager will be very different in a roomful They do not consider relationships as in relational of Danes as compared to a roomful of Indians and databases (who is in the cell above and below). They vice versa. do not consider personality that keeps changing Biblical mythology celebrates rule-following according to desha (geography), kala (history) and prophets (Moses) and kings (Solomon) while patra (roles), which define a yuga (context). Thus Greek mythology celebrates rule-defying heroes we grapple with incomplete patterns. (Odysseus, Theseus, Jason, Hercules). Indian It is time to increase the dots and find more ways mythology has both rule-following Ram and rule- of joining the dots. It is time to look beyond known breaking Krishna, both of whom, are not two constellations to the billions of galaxies out there. different characters but the same character, Vishnu, It is time to also consider the very Indian approach in two different contexts: he follows rules as Ram in to management. Treta yuga and breaks rules of Krishna in Dvapara yuga. Then there is Shiva who is indifferent to all rules and who beheads Daksha who seeks to impose rules on others, for Shiva is more interested in the intention beyond the rules, beyond the processes, beyond the institution. In chasing the institutional model of modern management, we do not question its intention. It is structurally designed to celebrate greed: growth in profit quarter after quarter to satisfy the 16 17 T H

Could you give a brief insight of your academic What we need is latest technology in innovation, INK

journey and your notion of reverse innovation? which is at the cutting edge. For example, Narayana ER

Having grown up in India, I know that innovation Hrudayalaya hospital is an excellent hospital as they S is the solution for many of the country’s problems. have the latest equipment in cardiac surgery as you India has too many problems and we have too few would find in the US. Yet we are able to do cardiac resources and the only way to solve these problems surgeries for $2000 whereas in US it costs $150,000. is innovation. I committed myself to really studying Frugality is bringing that cost down to $2000 by innovation and I have always been interested in its using absolutely the greatest, latest and the most impact on the real world, but by doing really regular appropriate technology. What we really need is to research. When I came to America my study was marry technological powers in the US with frugality. really targeted at American companies and how they innovate. In the last 10 years or so I got interested THE in the notion of reverse innovation which is about innovating in a poor country like India and so that “The concept of a $300 home brought me full circle with regards to my ambition. or a $2000 cardiac surgery is

When you said you have come full circle moving not charity. Corporations should from India; working with American companies; clamor for this model, for its reach and now looking at India, what is the biggest maximization and not for profit Vijay learning that you drew from this country? I think there are three learnings that I got from maximization.” India. Firstly, the notion of frugal thinking that comes very naturally to us. Because the resources are limited and we want to be very efficient You wrote a very interesting piece in HBR in how we spend our resources and not waste wherein you talked about a $300 home. them. Secondly, we Indians emphasize a lot How can reverse innovation help us do that? Govindarajan on memorizing data which is not so in the US. When I wrote the article about $300 home it was It is dying even faster because of the advent of not about lowering cost but was about offering more computers, calculators and iPhones. US focuses value at a lower cost. I was challenging people to on critical thinking whereas in India we do not think about how more health, education, jobs can be focus on critical thinking. As I was brought up in offered in a $300 house. Take for instance health – India and was exposed to memorizing data, then health is not just delivered in hospitals, health is also INTERVIEW when I came to US and got the critical thinking delivered in a way you construct a house. In today’s part, it was a deadly combination as I had the data world there are three infectious diseases, which are By Amit Kapoor plus critical thinking orientation. Critical thinking killing millions of poor people all over the world without data is useless and data without critical - TB, Cholera and malaria. TB is air borne disease thinking is also useless. So, the second important and if we imagine a hut, which has no sunlight, no notion from India is data. The third thing is ventilation, and ten people sleeping then if one of diversity. India is such a diverse country and if them has TB the other nine would also be infected anyone has operated inside India, then he is well with it. So, why can’t we derive a $300 house with prepared to face the outside world. proper sunlight, ventilation and thereby decrease the incidents of TB. In an interaction between Amit Kapoor There is a misnomer amongst people who relate In a similar way cholera is water borne disease and Vijay Govindarajan, Earl C. Daum frugal innovation to Jugaad. How would you and we should look at designing a $300 house, react to this? which has portable drinking water. The last one is 1924 Professor of International Business at To me jugaad is absolutely the wrong way to go. malaria, which is caused by mosquitos, so the house the Tuck School of Business at Dartmouth Jugaad is different from frugal thinking. Frugality should be designed in such a way so that we can College, the latter talks about higher can co-exist with the latest technology. Jugaad is put up mosquito nets and decrease the incidents “The way people use it, improvise it, make it work of malaria. The point is to think about the housing education in India and the US and also and get the things done”. I think jugaad implies problem by using breakthrough thinking. We did a the benefits of reverse innovation. even inferior quality. That’s not what we need. project in Dartmouth wherein the participants were 18 19 T H

called from all across the globe and were given the How is your thinking emerging in the area basic research in India instead let the American need to create systems and process and structures INK

task of building a $300 house, which is earthquake/ of education as this is the foremost problem universities do the research. In this way we would which will harness the talent. We really need ER

hurricane resistant. By using local materials, the the world is facing? be able to eliminate the expense on research. someone to lead this talent. Youngsters need to step S local people could actually construct the house Let us think as to why education is so expensive in Secondly, we need to create a global university up and take the leadership forward. thereby creating jobs for themselves. This is really US. At Dartmouth the annual charges are $60,000 in India, which will have online courses in every about how do we include the poor people in the for tuition, boarding and lodging amounts to subject. Delivering courses online is not only low Everybody understands the way political innovation that we create. $200,000 – $250,000 for a 4-year course. Basically cost but also high quality. In higher education leadership has failed the country. Are saying that only the very rich can afford that kind of education there are two types of courses – transactional and even corporate leaders have failed? What we are saying is at what level we are able or very poor because they get scholarship. The transformational courses. Transactional courses My hope is corporate leadership. Since to give in hands to quality of life. middle class people get squeezed because they are better delivered through online platform independence we have had problems in political Yes that’s really the point. Ultra low cost housing make enough money so they are not entitled to and transformational courses are face-to-face leadership. There have been scandals, corruption is not a new topic as people talked about it for scholarship, but they can’t afford $250,000 so they interaction because it’s about application/ problem charges and lack of economic progress even on the decades but they talk about it as though it is a have to take a loan and hence pay for the rest of solving. So, we could have the best teachers in corporate side. We have had some success stories problem of charity. We somehow divided the world their lives. India create the best course in every area in the especially in the 90’s when the IT companies came of 7 billion people into two compartments. 1 billion transactional courses. The universities would only on board. We thought we were building a new who are consumers who have the purchasing power conduct the transformational experiences and then India, but it looks like we are back to the same and the rest 6 billion, the non-consumers, the “India has millions and millions we would create a third global university, which muck. Corruption and inefficiencies are cropping so-called poor, who we have left to be taken care would do the assessment. So the second university up, growth is slowing. We should have more of by charity. The problem of converting the of people who need education. We would take the assessment and third university experiments in the education industry like we have 6 billion non-consumers to consumers is not cannot follow the American model would do the certification. In certification we NH in health industry. Health alone could be a a question of charity but it is a challenge for need certified courses, which provide right kind huge industry in India. Presently, they are touching innovation because the reason they are non- of education as that model is based of knowledge and capabilities to do the right only about 1% of India; 99% of India does not have consumers is they can’t consume the products on exclusion and not on inclusion.” kind of job. proper health care. The health industry is one where the 1 billion consumers are consuming. we can employ a lot of people because it is a services In Narayana Hrudayalaya (NH) the same Do you think we can surmount the problem industry. We can solve our employment problem platform is used for doing surgeries for the people There are three reasons why education is expensive of critical thinking that India is lacking? and this is what I mean by, where is the corporate who are paying and also for the poor patients who in the US. Firstly, good institutions follow the The transformational courses are the ones from leadership? Similarly in infrastructure and either pay nothing or pay subsidized rates. The vertical integration strategy which means where the critical thinking comes from. And that’s transportation the gap is so big. Corporate leaders concept of a $300 home or a $2000 cardiac surgery knowledge creation is done by the faculty who why we have to have the broken model university need to step up and make their employees a part is not charity. Corporations should clamor for this do research and the same faculty disseminates system as well and hence the transactional courses of the wealth creation process. We certainly don’t model for its reach maximization and not for profit that knowledge to teach and the same faculty and transformational courses. The corporations seem to have that momentum to move forward. maximization. NH is also about reach maximization. does the assessment to grade the students for also need to step in and invest in human resources. The problems of education/ health/ transportation which the institute issues the certification. So My thinking is we have to fundamentally rethink can be solved by making it available to the once you pass these courses you get the certificate. the way we are attacking the education problem consumers and the non - consumers. So, having The cost rises with vertical integration. Secondly, in India. This is a great innovation opportunity a $300 home is a problem for the corporations to at Dartmouth everything is done on campus. to create a new model of education. solve and corporations would come in this space if Therefore, the infrastructure costs rises as lab, they find significant opportunity in this field and are dormitory, classes, faculty offices, cafeteria have When it comes down to it, what is pushing India able to make money. Looking at 6 billion populations to be built. Thirdly, colleges have an admission back and what really needs to be changed in this of non - consumers with an average of 6 people per policy called principle of inclusion and principle country to take it forward? household we would have an opportunity of $300 of exclusion. In Dartmouth we take a lot pride in When I look at India I look beyond the filth and billion. Similar is the case with Apple where it is not saying how many people we reject. About 95% of the poverty and at a huge human potential. The human able to sell its iPhone to 6 billion non- consumers, people who apply are rejected. So, we have built an potential in India is enormous and awesome. as they cannot afford it. If apple makes a $10 nano education industry in this country on these people Then I look at our accomplishments which are iPhone they would be looking at a $60 billion who are snubed. very disappointing. Of late I have become even opportunity. So, on a digital platform in the $300 India has millions and millions of people who more frustrated with the lack of progress in India. household one can deliver more education to the need education and we cannot follow the American So I look at what we have achieved and what we poor through eLearning, more health through tele model of education as that model is based on could achieve. The human potential is incredible, medicine, more banking through mobile banking exclusion and not on inclusion. Higher education is but we have fallen short. The problem is really the etc. All the above requires thinking and creativity very expensive in India so we have to disaggregate leadership gap. There is a real leadership deficit and leads to doing more with less. the value chain. We should not focus on the in India. If India has to realize its full potential we 20 21 T H Current estimates put India’s urban population at “With 11 million residents, INK

about 31% of the total population. Estimates from ER

the UN’s 2007 State of the World report estimates Delhi has been experiencing the S India’s urban population to be almost 41% by 2030. The UN Department of Economic and Social Affairs fastest urbanization rate in the estimates that over the next forty years, India will world according to the 2011 Census The add another 497 million to its urban population. McKinsey and Company in India’s urbanization: with a 4.1% increase in population A closer look says, “Urban expansion in India will from 2001.” happen at a speed quite unlike anything the country or the world has seen before. It took nearly 40 years ( from 1971 to 2008) for India’s urban population to to be appreciated. Ladies and Gentlemen, India’s rise by nearly 230 million; it will take only half that urbanization … (Current) time to add the next 250 million. This expansion will Figure 1 shows the nighttime lights for India and affect almost every state. For the first time in India’s surrounding countries from 1992. Figure 2 shows history, five of its largest states will have more of exactly the same geography but 18 years later. their population living in cities than in villages.” While the bright spots of Delhi and Kolkata and the While both the exuberance and alacrity surrounding Mumbai-Pune combination and the Hyderabad, India’s urbanization have been questioned, the Bangalore, Chennai triangle are all clearly visible reality of its occurrence is unquestionable. in 1992, they have all increased in intensity and size Extent The goal of this paper is to provide another view by 2010. And, a whole series of new constellations of the current extents of India’s urbanization – an have been added to the subcontinent. It’s not just aerial view (actually an orbital one). Since 1992, those few bright spots getting bigger and brighter – the Operational Linescan System (OLS) of the US it’s also a whole new collection of cities and towns Defense Meteorological Satellite Program (DMSP) increasing their visibility at night which not only has been collecting images of the world at night. means increased electrification but also larger and of India’s These images capture the nighttime lights generated more economically prosperous populations. on the ground. These images have been captured, Figures 3 and 4 show the nighttime lights for the processed, and analyzed for India and select Delhi region from 1992 to 2010. Figures 3a and 4a metropolitan regions for the past 20 years and show exactly the same but with a colour spectrum are presented below. used to show the intensity of the light instead of just The extent of India’s urbanization over the black and white. A more detailed discussion of the past 20 years may be well-understood and growth of urbanization of Delhi will be presented Urbanization documented, but the true scope must truly be seen below, but the transition from black and white to

By Kevin Stolarick

Visual imageries depicting India’s growing urbanization over the years creates a far greater impact than documented statistics giving the same information. Figure 1 – India at Night (1992) Figure 2 – India at Night (2010) 22 23 T H INK ER S

Figure 5 - Delhi (Top row - 1992, 94, 96, 98, 2000; Bottom row - 02, 04, 06, 08, 10)

Figure 3 – Delhi (1992) Figure 4 – Delhi (2010) area surrounding the most intense nighttime Figure 6 shows Mumbai and Pune (lower right) with lights has also increased significantly. Lights are 1992-2000 on the top row and 2002-2010 on the visible along the major road routes. The Yamuna bottom row. As both water and land can be dark at Expressway from Noida to Agra (south from Delhi) night, the coast is not shown. And, light reflected was completed in 2012 and so does not show up on off the water, or “overglow”, is shown so Front Bay the 2010 map. Delhi, like almost all metropolitan and Thane Creek do show nighttime light. The areas, expands along road access routes until it significant amount of growth and urbanization that reaches other cities that effectively become part of the larger metro. In 1992, Faridabad in the southeast was still slightly separated from the core “The satellite imagery for India of Delhi. By 2010, the growth of Noida is seen and Faridabad is strongly connected to the rest of the is very clear – urbanization metro. In 1992, Meerut northeast of the core is is a process of growth and Figure 3a – Delhi (1992) Figure 4a – Delhi (2010) separate as is the small blip of Modinagar on the Meerut road from Ghaziabad. By 2010, Ghaziabad intensification of existing settled is indistinguishable from the rest of Delhi; Meerut locations and not the formation of coloured mapping should be explained first. The Increased Urbanization of Selected Cities has grown considerably; Modinagar has stretched instrument used to collect the nighttime light data With over 12.5 million people in the metropolitan out more along the road; and the core urbanized new settlements, except around the is actually designed to collect the reflection of moon area, Mumbai has seen significant rural-urban portion of Delhi continues to grow. All around the edges of existing ones.” and starlight off of clouds (it is a meteorological migration and a 3.1% increase in population from Delhi region, the maps show the growth of not only satellite). As a result, the instrument is tuned 2001 to 2011. With 11 million residents, Delhi has the core of Delhi but also the surrounding cities and to detect very low levels of light and is quickly been experiencing the fastest urbanization rate in towns. Some like Bahadurgarh west of the core or has happened in the Mumbai metropolitan region is saturated by the light output of most major cities on the world according to the 2011 Census with Sonipat/Sector 15 to the north become part of the already well-documented but strikingly shown here. cloudless nights. The red areas in 3a and 4a which a 4.1% increase in population from 2001. Kolkata’s core while others like Aligarh (in the lower right While the maps show slight increases for Mumbai correspond to the brightest white areas of 3 and 4 16 million residents are the result of a 2% population corner) show significantly increased urbanization across the entire period, a large amount of grown are areas where saturation has occurred. However, increase. Hyderabad and Bangalore each house without becoming part of the Delhi metro. has been in the past few years. What hasn’t been as since the instrument can detect lower levels of light, around 10 million people. the fringes of urbanized areas are detected. These Figure 5 shows the nighttime lights for the areas are difficult to see on a greyscale map since Delhi region every two years from 1992 to 2000 there is little difference between very dark grey and (top row) and 2002 to 2010 (bottom row). It should black. However, when a colour spectrum is used, be noted that some of the year-to-year variation is those areas can be made more easily seen. The not actually from an increase and then decrease blue areas of Figures 3a and 4a are places where no in the visible lights detected but is a result of the nighttime light was collected, but everywhere else processing that is done to produce each annual shows where there are fairly significant sources of file. The light readings are not guaranteed to be light at night. As the spectrum runs from blue to consistent across the years, but the overall trend cyan to green to yellow to orange to red, the amount is consistent. Not only has the urbanized area of visible light detected by the satellite increases surrounding Delhi increased significantly over from total darkness to total saturation. this period, but the lower intensity lights in the Figure 6 - Mumbai-Pune (Top row - 1992, 94, 96, 98, 2000; Bottom row - 02, 04, 06, 08, 10) 24 25 T H INK ER S

Figure 7 - Kolkata (Top row - 1992, 94, 96, 98, 2000; Bottom row - 02, 04, 06, 08, 10) Figure 9 - Kolhapur-Ichalkaranji-Sangli/Maraji-Karad (Top row - 1992, 94, 96, 98, 2000; Bottom row - 02, 04, 06, 08, 10)

well-documented or discussed is the tremendous urbanization that is occurring across the region. growth of the Pune region. The tripling of area of When an area is more formally developed, the area in Shamshabad to the south of the core around except around the edges of existing ones. Places are saturated nighttime light for Pune is significant, and infrastructure, electrification, and nighttime lights the Rajiv Gandhi International Airport, which was not grown from scratch – they develop from much the region around Pune has also seen significantly are added that create the more saturated, brighter completed that year, is visible. By 2010, the entire smaller ones. increased urbanization. Urbanization has also (red) regions of the map. The growth of Haldia, area shows saturated light. increased along the Rasayani-Lonavala-Vadgaon closer to the Bay of Bengal, is shown at the bottom As indicated in the introduction and show in The (Current) Extents corridor between Mumbai and Pune. Limited by its of the map. Figures 1 and 2, the urbanization of India is not just The maps have shown how urbanization has coastline, Mumbai has grown north along the coast, Figure 8 shows Hyderabad with 1992-2000 restricted to the largest cities. Figure 9 shows the increased across India during the past 20 years. to the east, and towards a growing Pune. Vasai Creek on the top row and 2002-2010 on the bottom row. region around the cites of Kolhapur (bottom left), Delhi has seen a nearly fourfold increase in the total to the north of the core has not been a restrictive Either Hyderabad or Bangalore could have been Ichalkaranji (bottom center), Sangl/Miraji (bottom area of the city with the highest concentration of boundary as Nala Sopara and Vasai have grown shown. The pattern and growth for both regions right), and Karad (top of the triangle). These cities nighttime lights over the period, and most (if not all) considerably as have Uran and Nehru Port across is remarkably similar. Neither had any geological are in Maharashtra on the border with Karnataka of the other major cities of India have had similar Front Bay to the south. Increased urbanization restrictions to their growth, like Mumbai, and (the border between the two is shown) with 1992- or even larger increases. But, that growth is not pressures are leading to the expansion of places that both essentially just keep steadily getting bigger 2000 on the top row and 2002-2010 on the bottom restricted to just the largest cities. Smaller cities, had previously been considered inaccessible. and bigger – essentially a spiky circle following row. Kolhapur according to the 2011 Census had a some in areas immediately adjacent to metros, some Figure 7 shows Kolkata with 1992-2000 on the major roads, absorbing nearby cities and towns, population of just over half a million people. The neighbouring but not (yet) part of larger metros, top row and 2002-2010 on the bottom row. As with and growing outward. For Hyderabad (shown here), key thing to notice from this series of maps is how some in more remote locations, have also seen the other cities, the expansion of the urbanized the growth is mostly restricted to the city and the intensification of nighttime lights is increasing significant increases in their urbanization over the area of Kolkata is apparent. In addition to following immediately surrounding area. While Warangal, across the region. Not only is it increasing within same period. The implications of that increasing major roads, the spur to the north of the core shown in the upper right corner, shows some the triangle of cities in Maharashtra but also along and intensive urbanization in economic, social, follows a different transportation route, the Hooghly significant growth over the period, and a few the Krishna River in Karnataka. The number of environmental, and cultural terms have yet to be River. Kolkata, like Delhi, shows a great deal of of the smaller towns intensify their nighttime people living in the smaller cities and even towns fully understood, but the urbanization is happening. growth in the lower light intensity fringes of the city lights slightly, almost all of the growth is in and and villages is also increasing. And with that It is happening across the entire country, not just in in more recent years. These areas are likely home immediately around the core of Hyderabad. In 2008 increased population, the nighttime lights produced the biggest cities, and India’s urbanization is growth to much of the recent more “informal” growth and (bottom row, 4th) the intensification of light in the along with the prosperity of more remote regions is and intensification of existing locations. increasing as urbanization increases. Interestingly, this is an intensification process. Virtually no city appears de novo in the satellite imagery. Small settlements become villages which become towns then cities and eventually could become major metropolitan areas. Although the map shows much more nighttime light at the end of the period than at the beginning, it is from an increase in light from places that were already there in an early period but with less light produced. The satellite imagery for India is very clear – urbanization is a process of growth and intensification of existing settled Figure 8 - Hyderabad (Top row - 1992, 94, 96, 98, 2000; Bottom row - 02, 04, 06, 08, 10) locations and not the formation of new settlements, 26 27 T H References Letu, H., Hara, M. Yagi, H., Naoki, K., Tana, G., Nishio, INK

F., Shuhei, O. (2010) Estimating Energy Consumption ER

Chen, X., Nordhaus, W. D. (2011) Using luminosity data from Night-Time DMSP/OLS Imagery after Correction S as a proxy for economic Statistics, Proceedings of the for Saturation Effects, International Journal of Remote National Academy of Sciences, 108(21), pp. 8589-8594. Sensing, 31(16), pp. 4443-4458.

Doll, C. N. H., Muller, J. P., Elvidge, C. D. (2000) Night- Small, C., Elvidge, C. D., Balk, D., Montgomery, M. (2011) Time Imagery as a Tool for Global Mappingo of Socio- Spatial Scaling of Stable Night Lights, Remote Sensing of Economic Parameters and Greenhouse Gas Emissions, Environment, 115, pp. 269-280 Ambio, 29, pp. 157-162. Sutton, P., Roberts, C. Elvidge, C., Meij, H. (1997) Elvidge, C. D., Baugh, K. E., Kihn, E. A., Kroehl, H. W., A Comparison of Nighttime Satellite Imagery and Davis, E. R. (1997a) Mapping of City Lights Using DMSP Population Density for the Continental United States, Operational Linescan System Data, Photogrammetric Photogrammetric Engineering and Remote Sensing 63 Engineering and Remote Sensing, 63, pp 727-34. (11), pp. 1303-1313.

Elvidge, C. D., Baugh, K. E., Kihn, E. A., Kroehl, H. W., Sutton, P., Roberts, C. Elvidge, C., Baugh, K. (2001) Davis, E. R. (1997b) Relation between satellite observed Census from Heaven: An Estimate of the Global visible-near infrared emissions, population, and energy Human Population Using Night-Time Satellite Imagery, consumption, International Journal of Remote Sensing, International Journal of Remote Sensing, 22(16), pp. 18, pp. 1373-1379. 3061-3076.

Elvidge, C. D., Baugh, K. E., Dietz, J. B., Bland, T., Sutton, P. Sutton, P., Elvidge, C., Obremski, T. (2003) Building C., Kroehl, H. W. (1999) Radiance Calibration of DMSP- and Evaluating Models to Estimate Ambient Population OLS Low-light Imaging Data of Human Settlements, Density, Photogrammetric Engineering & Remote Sensing, Remote Sensing of Environment, 68(1), pp. 77-88. 69(5), pp. 545-553.

Elvidge, C. D., Sutton, P. C., Ghosh, T., Tuttle, B. T., Sutton, P., Elvidge, C., Ghosh, T. (2007) Estimation of Baugh, K. E., Bhanduri, B., Bright, E. (2009) A Global Gross Domestic Product at Sub-National Scales using Poverty Map Derived from Satellite Data, Computers & Nighttime Satellite Imagery, International Journal of Geosciences, 35(8), pp. 1652-1660. Ecological Economics & Statistics, 8, pp. 5-21.

Florida, R., Gulden, T., Mellander, C. (2008) The Rise Townsend, A.C., Bruce, D.A. (2010) The use of night- of the Mega-Region, Cambridge Journal of Regions, time lights satellite imagery as a measure of Australia’s Economy and Society, 1, pp. 459-476. regional electricity consumption and population distribution, International Journal of Remote Sensing, Florida, R., Mellander, C., Gulden, T. (2012) Global 31(16), pp.4459–4480. metropolis: assessing economic activity in urban centers based on nighttime satellite images, Professional Zhang, Q., Schaaf, C., Seto, K. C. (2013) The Vegetation Geographer 64(2), pp. 178–187. Adjusted NTL Urban Index: A New Approach to Reduce Saturation and Increase Variation in Nighttime Henderson, V., Storeygard, A., Weil, D. N. (2011) A Bright Luminosity, Remote Sensing of Environment, 129, pp. Idea for Measuring Economic Growth, The American 32-41. Economic Review, 101(3), pp. 194-199. Zhuo, L., Ichinose, T., Zheng, J., Chen, J., Shi, P. J., Li, X. Imhoff, M. L., Lawrence, W. T., Stutzer, D. C., Elvidge, C. (2009) Modeling the population density of China at the D. (1997) A Technique for Using Composite DMSP/OLS pixel level based on DMSP/OLS non-radiance-calibrated “City Lights” Satellite Data to Map Urban Area, Remote night-time light images, International Journal of Remote Sensing of Environment, 3, pp. 361-370. Sensing, 30(4), pp. 1003-1018. 28 29 T H

I can think of no better place to begin a Thinkers50 INK

India reflection on the Idea of India than with “The ratio of India’s exports to ER the late C. K. Prahalad’s comments about India to its GDP has tripled over the past S Thinkers50 co-founder Des Dearlove in 2009. He said that, “Growing up in India is an extraordinary two decades, but across a broader preparation for management,” and listed first among his reasons for that view, “India is a very diverse range of indicators, the depth culture, in terms of languages, religions and income of India’s global connectedness levels—so you start adjusting and coping with diversity at a very personal level as a child.”1 Other still ranks only 119th out of research backs up at least C.K.’s view about India’s 140 countries.” diversity: among 160 countries, India ranks 5th Several socio-economic on cultural and 17th on ethnic “fractionalization.”2 decades, but across a broader range of indicators, indicators suggest that India is The contrast between diversity, which most the depth of India’s global connectedness still ranks of us learned growing up to view as a strength, and only 119th out of 140 countries. far from a sweet spot in terms of fractionalization, which sounds rather nasty and On trade, India still falls in the bottom 25%. global connectedness, which is comes up in research on civil conflicts among other (The accompanying map helps visualize this—the an imperative for fast growth. topics, leads me to reflect on another curious and vast majority of India’s economic output stays in related contrast about India. In a 2007 Pew survey, India.) On capital flows, India ranks near the middle 93% of Indians agreed with the statement, “Our of the pack, but that is driven almost entirely by people are not perfect, but our culture is superior outward FDI from India and inward portfolio equity to others” and 92% agreed that “Our way of life needs investment. On inward FDI stock as a percentage of to be protected against foreign influence.” India had GDP, India is still in the bottom 10%. On information the dubious distinction of ranking first in the world flows, India ranks in the bottom 20%, and on people on both questions.3 If India’s culture, incorporating flows, India ranks second from last. all of its diversity, is really as great as we proclaim, Why does the depth of global connectedness why don’t we feel confident enough in its merit matter? There is a strong positive correlation across to let it stand on its own without demanding countries between the depth of a country’s global protection against foreign influences? connectedness and measures of its prosperity, such Prahalad’s India, with diversity as a great as GDP per capita and the UN’s Human Development strength, is presumably an India whose ability Index. Of course, correlation is not the same as to assimilate new ideas should make it an open causation, but statistical analysis does indicate that country, an India that should welcome competition, after controlling for initial income levels, countries Opening up the idea of confident in its ability to hold its own and ultimately with deeper global connectedness have tended to earn its rightful place among the world’s best. Yet, to grow faster than less connected countries. By Pankaj Ghemawat the battle over FDI in retail reflects the more fearful The reasons for India’s dismal depth scores are India that shows up on the Pew survey—an India also far from mysterious—one doesn’t need the extra marked more by fractionalization than what I like creativity that diversity is supposed to produce to think of as diversity. to figure it out—just a little of “the ability to think My own research on India’s openness for the clearly” which F.C. Kohli, one of the founders of DHL Global Connectedness Index, which I prepare India’s IT Services miracle as former vice-chairman with my IESE business school colleague Steven of Tata Consultancy Services, affirmed that Indians A. Altman, indicates that India is still a relatively “have in abundance.”5 Regarding trade, we don’t closed country in many aspects.4 The ratio of India’s exports to its GDP has tripled over the past two 5 From Kohli’s 1975 speech to the Computer Society of India. He said, “Many years ago, there was an industrial revolution; we missed it for 1 Des Dearlove (Spring 2009). “On the verge of something extraordinary”. reasons beyond our control. Today there is a new revolution – a revolution Business Strategy Review (London Business School): 17–20 in information technology, which requires neither mechanical bias nor 2 http://telematica.politicas.unam.mx/biblioteca/archivos/040107017.pdf mechanical temperament. Primarily it requires the ability to think clearly. 3 The Pew Global Attitudes Project, World Publics Welcome Trade—But Not This we have in abundance. We have the opportunity to participate in this Immigration (Washington, DC: Pew Research Center, October 4, 2007). revolution on an equal basis; we have an opportunity, even, to assume 4 http://www.dhl.com/content/dam/flash/g0/gci_2012/download/dhl_ leadership in this revolution. If we miss this opportunity, those who follow us gci_2012_complete_study.pdf will not forgive us for our tardiness and negligence.” 30 31 T H “If we integrate India internally, of 50 countries on what I call the “distance I believe India does have tremendous cultural riches INK

sensitivity of trust,” which I measure according and probably more untapped business potential than ER

building trust among cultural to the ratio of trust in people in your own in any other single country in the world. But until S neighborhood versus trust in people of another we open up with confidence to each other and to the groups and cutting state-level nationality using data from the World Values Survey. world, we will continue to fall too far short of our barriers to trade, then one India, Human progress, as I elaborate in my 2007 book, potential. If we integrate India internally, building World 3.0: Global Prosperity and How to Achieve trust among cultural groups and cutting state- united in its diversity, can surely it, has been spurred over the millennia by people level barriers to trade, then one India, united in its thrive in global competition.” expanding their circles of trust to make them less diversity, can surely thrive in global competition. sensitive to distance, national borders, religious If we remain fractionalized and fearful of each differences, and so on — an idea that dates back other, we have no one to blame but ourselves for have to look farther than India’s third-from-last at least to the Greek philosopher Hierocles. our continued stagnation. ranking for Market Access on the World Economic Forum’s 2012 Enabling Trade Index. And for FDI, India ranks in the bottom 10% of countries the 50 analyzed by the OECD in terms of openness to FDI. One could go on to cite infrastructure gaps, ease of doing business and many other indicators, but I will add just one more ranking because, having started with comments about India’s culture, it always provokes argument about whether it is really a cultural or an institutional variable: corruption. India ranks 94th on Transparency International’s Corruption Perception Index. Since India’s rank isn’t too far away from Mexico’s, it’s worth noting that according to one study, an increase in corruption from the level of Singapore to that of Mexico has the same negative effect on INDIA inward FDI as raising the tax rate by over fifty percentage points!6 Breaking the back of corruption in India will require tackling it from both policy and cultural perspectives. Government should take (and enforce) bold steps, but as long as young Indian business people are told by their mentors, as many are today, that “I don’t like it but the reality of business is that you have to be willing to break at least a few rules along the way if you want to succeed,” little will change. Anyone with influence in India — entertainers, executives, politicians, religious leaders, and — if I may — even academics, should ask themselves whether the examples they are setting are contributing to an India characterized by more trust or less. To circle back to where I started, the difference between diversity and fractionalization and between open confidence and closed fear has India Share of Imports a great deal to do with trust. India ranks 44th out World Map with Countries Scaled According to India’s Exports to them and Colored based 30% 12% 8% 4% 3% 2% unknown 6 on India’s Share of their Imports (India Scaled Shang-Jin Wei,” How Taxing is Corruption on International Investors?,” The Source: UN Comtrade Database, Review of Economics and Statistics, February 2000, Vol. 82, No. 1, Pages 1-11 According to its GDP minus Exports) World Bank World Development Indicators 32 33 T H

It is a widely held belief that emerging market it was impossible to penetrate the opaque INK

companies will not be a threat to existing global - ownership structures that went through a mother ER

largely Western - powerhouses. In our new book, company (parent) and several daughter companies S Brand Blowback: How Emerging Market Brands (subsidiaries), some of which might be listed. Will Go Global, we question this conventional At one listed company, we learnt that the listed wisdom. The top leadership of corporations in the portion referred to only one factory for one product West grew up in a world in which their competitors category. Most of these related companies transact were all very well-known and because of that many significant business with each other. Sometimes, CEOs, marketing practitioners, and even business the entire raw materials or key inputs for a listed school students believe that a poor perception of firm may come from another non-listed firm in the hurdles products from these countries, combined with a lack network. In such a case, unless the transfer price of marketing experience, will doom such brands mechanism is known and market-compliant, the from becoming global players. profits in the listed firm are subject to a degree emerging We are however advocates of “brand breakout”; of arbitrariness. Indian firms used to have such and believe that, in the coming decade, emerging complex shareholding patterns before the reforms market brands will become increasingly global of 1991, but in the last decade they have made and present in the Western world. Our conviction considerable strides in unraveling them. market is based on three fundamental observations. First, the push to global sourcing means leading emerging market firms, especially in China, have “There is no historical precedence firms now built world-class manufacturing capabilities. Second, the traditional emerging markets model for a major country that has come based on low-cost labor is breaking down, again to economic prominence that has especially in China. The time when emerging have to market companies could rely on low cost products not also developed strong brands.” for export growth has ended. Turning products into globally recognized consumer brands, supported by The composition and profiles of the members overcome innovation and marketing has become the ultimate of the board of directors is sketchy. As a result, goal for many emerging market firms. Topping it we were unable to gain a full grasp of the ownership off, emerging markets now account for over half of and governance structures of Chinese firms. In fact, global GDP and 80% of global growth. Economic we were often advised not to raise the ownership to create might will translate into market might. In fact, there issue in our interviews as it would jeopardize the is no historical precedence for a major country that entire interview. Even when brought up with senior has come to economic prominence that has not also Western managers of Chinese firms, it was clear global developed strong brands. they were uneasy discussing this issue. Greater However, while we are optimistic about the probing led us to believe that it was not that these potential of emerging market companies to build executives did not wish to reveal the ownership, global consumer brands, we are not wearing rose- but that they were ignorant of it. The state and brands colored glasses. Our research has shown that the Communist Party not only control many of the there are at four significant hurdles emerging state-owned firms and their top leadership (which market companies have to overcome for their true are typically appointments approved by the Party), branding potential to be unleashed. While these but, one suspects, also exert significant influence four obstacles can be observed in many emerging on the behavior of private companies. Illustrative By Nirmalya Kumar Emerging market brands will become markets, Chinese firms in particular need to of this is a 2012 front-page article in the leading increasingly global in the coming confront them. newspaper China Daily with the headline “Party and Jan-Benedict E.M. Steenkamp continues to expand,” celebrating that, to date, close decade, but in order to do so, they- Hurdle 1 to one million companies (including 47,000 foreign China in particular- will have to Improve transparency firms) have set established Party organizations in Many Chinese firms lack transparency, particularly their companies. This, according to Wang Jingqing, change certain existing practices. with respect to ownership structures and vice-minister of the Organization Department of the governance standards. Despite our best efforts, Communist Party of China Central Committee, has 34 35 T H

“helped companies learn about the latest national forces are also encouraging Chinese firms to INK

policies and [has] improved relations between change in this respect in order to succeed in their ER

employers and employees.” Perhaps. But a less quest to become more global. For example, in 2013, S benign explanation is that the hand of the Party is the Financial Times reported that “Huawei has never far away. pledged to start disclosing more detailed financial Russia is the other significant emerging market information and shareholding information as the where one also gets this feeling of the hand of the Chinese telecom equipment maker tries to dispel State. Just ask Shell or British Petroleum (BP). Yet fears about suspected ties to China’s military that Russia is more privatized than China. It should be are hampering its global expansion.” All that was noted that Western governments are not without known until then was that the founder owned fault either, as exemplified by the recent NSA 1.4 percent, with the rest in the hands of a “body eavesdropping scandal and extortionate demands representing 65,000 Huawei staff.” for compensation on BP after the Deepwater Horizon oil spill. Nevertheless, the hand of the State Hurdle 2 weighs more heavily in emerging markets where the Enhance profitability and integrity Rule of Law often is less firmly established. of financial statements The lack of transparency is endemic to China Many large Chinese firms seem to operate on low as its political system attempts to control the flows profit margins. For example, despite having about of information in society. In Beijing, we were unable similar levels of market share in the PC business, to access Facebook and Twitter as well as many Lenovo’s operating margins in 2012 were a quarter other websites. How do you build a global brand of Hewlett-Packard’s. This led The Economist to in today’s world without social media? The desire observe that the Asian model of capitalism “prizes to release limited information spills over into the market share over profits.” But profits are necessary corporate sector. Most of the corporate websites too if one is to invest into building global brands. are of poor quality, providing minimal information, The low profit margins lead one to question the “Maybe there’s a good reason why no on else has broken into this market.” and some have not updated their English-language returns to capital at many Chinese firms, especially websites in years despite being having annual in light of the preferential land and capital they revenues running into billions of dollars. receive by being “favored firms” in China. The same Many companies are supposedly owned by the article in The Economist went on state: “the state market problem. Scandals such as those of Enron, innovation. They have to offer a differentiated employees. For example, the two listed companies draws up long term plans, funnels cash to industries WorldCom, and Lehman Brothers as well as fraud product and proposition to the Western consumers. that comprise Haier claim to be a collective that is it deems strategic and works hand-in-glove with with Greek official statistical data have highlighted This requires building and acquiring both research employee owned, yet the employees do not know national champions, like Huawei and Haier.” If these that the integrity of financial statements is a and development (R&D) and marketing capabilities, exactly what they own, nor do they appear to subsidies were to disappear, and this were combined worldwide concern. Yet, relatively, emerging market as well as an organizational culture that encourages receive dividends. We believe that it is more difficult with increasing Chinese labor costs, one has to firms need to make greater strides on this front. bottom-up ideas. for state-run and state-employee-managed firms wonder whether the Chinese business model would Brands are about trust; and everything that a firm The highly hierarchical and family-controlled to build global consumer brands. The investment be sustainable. At a minimum, we believe that this does, enhances or detracts from the brand. culture that dominates many emerging market firms in the marketing efforts required to build brands, model will have to evolve and we are skeptical is not always conducive to innovation and branding. where the returns cannot be demonstrated as easily of a unique “Asian business model.” Hurdle 3 Some state planners in China and family business as say in building a factory, is always suspect. Who Beyond the low profit margins, there is the Move from imitation to innovation heads in India love to think that this is the route to owns the cash flows being generated by the firm question of integrity of financial statements. Results For years, brands from emerging markets focused on world beating innovation and brands. But apart from and who can make the decisions on whether to pay for firms are often released far after the end of the the domestic market. In a relatively closed economy, a few high-profile exceptions, this thinking is mostly them as dividends or invest in the softer aspects of financial year. For some major, publicly listed firms, they usually mimicked the products of Western or delusional. Innovation and branding as sustained building a global brand is unclear. the results for 2011 are still not available! Numbers, Japanese firms. The term “reverse-engineering” was capabilities are best nurtured in professionally An important item on the Chinese corporate often round numbers, projected by leaders of common in India to describe the process of figuring managed firms rather than left to the vagaries of manifesto for the future must be to open the these firms during the year have an uncanny way out how to manufacture innovative products from state bureaucrats or the offspring of exceptional ownership structure up to scrutiny. We are of being met. While many of the firms are audited the West. Like the Japanese and Koreans before entrepreneurs. hopeful that this will happen. One way to do this by international firms, the problems at India’s them, Chinese firms are masters at this. In the early Investments in innovation and brands are rational is to get listed on Western stock exchanges. Our Satyam demonstrate that this does not always guard stages of a company, it can grow by merely imitating only if intellectual property (IP) is protected and field research revealed that Chinese companies against errors and fraud. We want to emphasize Western products and brands. But as emerging the protections are enforced. In our work, we have are increasingly becoming aware that improving here that the integrity of financial statements is not market companies grow and rise to prominence, noticed numerous examples of the blatant copying transparency will be beneficial to them. External merely a problem in China, or even an emerging they must make the transition from imitation to of Western products, brand names, and brand logos. 36

into their top management. There is little history “Innovation and branding as in many of these countries of multicultural sustained capabilities are management teams. Given the structure of their societies, companies best nurtured in professionally from Brazil, India, and South Africa have some managed firms rather than left to advantage on this front. Firms from these countries are already used to dealing with a top management the vagaries of state bureaucrats team that looks different from each other despite or the offspring of exceptional sharing a common nationality. Indian and South African companies are also used to doing business entrepreneurs.” in English, even if their mother tongue may be Hindi, Bengali, Afrikaans, or Xhosa. We do If emerging market firms would take these global, recognize that the top management of firms from they would open their companies up to expensive these countries is still overwhelmingly from the international lawsuits. Hopefully, this situation will home country. But at least they can potentially work improve as emerging market companies mature and with a more multinational top management team. realize that it is in their own interest to support IP China, on the other hand, is culturally and protection and enforcement. linguistically more homogeneous. The language On this front, one sees great leaps forward in barrier also makes it harder to incorporate China. Companies such as Huawei, Galanz, Haier, foreigners. Chinese firms aspiring to build global and ZTE have global R&D operations with centers brands will have to follow German multinationals in Americas, Europe, and Japan. The push to such as Allianz, Daimler, and Siemens, where all register patents abroad is starting to increase among documents are written in English, which is the Chinese firms, and has made some of these firms company’s working language. Even French firms into large filers in the US patent regime. While like Alcatel-Lucent have now adopted English as foreign patent applications by Chinese firms still their working language. Like it or not, the global lag applications by Western firms, the writing business language does not seem destined to change is on the wall. The Economist cautions “Geeks even if this turns out to be the Chinese century. in the West should not relax.” The R&D facilities It is Chinese firms that will have to change. There of companies such as Lenovo that we visited were are encouraging signs, however, as Lenovo has impressive. Lenovo’s Shanghai R&D facility is one adopted English as its official internal language. of four in China and works closely with the firm’s Looking ahead R&D centers in Yokohama (Japan) and Raleigh In sum, significant hurdles remain on the path (NC, USA). They actively rotate people across these to global success. But Western managers should centers and encourage diversity. not be lulled into complacency. They have done that before, and it did not turn out well. Previously, Hurdle 4 Western managers have been blindsided for first Accept management diversity underestimating the Japanese brands (e.g., Toyota, and a global mindset Sony, and Canon), and subsequently the Korean Building a global brand in today’s world with brands (e.g., Hyundai, LG, and Samsung), who distributed economic power requires managing swept aside supposedly invulnerable incumbents across many countries. The consumer insights like Philips, Thomson, General Motors, Ford, and needed from the different parts of the world require RCA. They surely do not want to be blindsided a global mindset in the top management teams a third time. The threat is most aptly described of the firm. This is of course not a problem unique by the mantra of Chinese domestic-appliance to emerging market firms as French, Japanese, and manufacturer Midea “Never give up, no matter even British firms struggle to incorporate emerging what.” In the inimitable words of The Economist: market talent into their top management teams. “The great Western brands should listen to those Emerging market firms desiring to build global words and tremble.” brands in Western countries face the opposite problem of how to get Westerners integrated 38 39 T H We are all familiar with the challenges for higher “We are, in effect, outsourcing INK education in India. Not enough capacity – the ER danger that we will not be able to cope with sheer higher education to the US, UK, S numbers and provide direly needed education to the majority of our young in the years to come, turning Australia and New Zealand.” our so called demographic dividend into a disaster. Very poor quality – our existing institutions are in decline and the quality of new institutions are is “twinning programmes” where you study in an ideas generally sub-par. Obsession with specialisation – in Indian university for 2 years and then complete your a society hankering for employment the emphasis on graduation and get a degree in the foreign university. studying engineering, management, law, medicine, Singapore and Dubai are ostensibly building commerce, etc. is creating legions of trained education hubs for Asia, but the reality is that it is for manpower rather than problem-solvers and leaders. Indian students hungry for a good education who The government is making tremendous efforts to are swarming new institutions in these locations. expand capacity by creating greenfield institutions, The tragedy is that home-grown public and but there is only so much the government can do. private institutions are now setting up campuses Higher It needs to be given a leg up by the private sector, in neighbouring and far-away foreign locations to but deplorably the regulatory environment remains escape overpowering local regulatory constraints. constraining even for legitimate private players to In effect, even though we can ill-afford to, as a set up institutions – most private institutions tend to country, we are outsourcing, and increasingly so, Education be perceived as money-making rackets, with little or our higher education to the West. no concern for their students. Given that both the supply of students and the In this context, much has been written and said demand for college graduates are right here in India, about how to solve India’s higher education mess. why not replicate the “overseas and higher-quality” in India Let me suggest three ideas that could radically experience in India by creating SEdZs along the change our country’s trajectory. While these ideas lines of the manufacturing SEZs. may seem far-fetched, I believe we, other than any Interestingly, the concept of SEZs for education By Pramath Raj Sinha country, have the opportunity to innovate in higher first seemed to have surfaced in 2004. In a then op- education and, in fact, have no choice but to do so. ed, the erstwhile Commerce Secretary P.P. Prabhu • Create education SEZs had made a case vigorously for SEdZs saying, “The • Offer surplus land within existing public Special Education Zone (SEdZ) institution...should Problems of quality, institutions to new public or private institutions be treated as though it is deemed to have been access, and skewed • Rapidly expand Massive Open Online Courses) established in a foreign enclave, and, therefore, demand-supply within (MOOCs ) freed from all domestic controls and restrictions. An SEdZ institution...should not be required to seek higher education in India, Creating SEdZs any approvals for its courses; it would need to be are all too familiar. Creating Special Education Zones (SEdZs) akin allowed to charge any fees, follow its own admission If a genuine effort were to the industrial Special Economic Zones (SEZs) criteria and award its own degrees, and so on. can transform access to and the quality of higher However, if an SEdZ institution wants recognition made to put a few ideas education in this country. of its degrees and diplomas in our country, it would into action, the existing Every year hundreds of thousands of our bright be required to meet the standards and conditions scenario would radically young students have no choice but to go abroad of affiliation and recognition.” for higher studies. They spend billions of dollars change. and thousands of crores to get this education. Leveraging surplus land in existing institutions What is worse, a simple demand-supply analysis of I have recently been part of an effort to build a higher education suggests that these numbers will new private university in India. With our poor continue to grow, and grow exponentially. We are, infrastructure it is impossible to build a high-quality in effect, outsourcing higher education to the US, institution away from a large urban centre in India. UK, Australia and New Zealand. Recently, one of my Faculty are unwilling to teach and live in a place that employees sent her son to study dentistry in Russia does not offer employment opportunities for their even though she could ill-afford it. The new craze spouses and an excellent school for their children. 40 41 T H

A case in point are the new IITs and IIMs several get subsidized and free land from the Government. online education only adds to what already exists INK

of which, established in far-flung areas of the Even so, most urban centres do not have unutilised (more like education for the educated), in India ER

country on vast tracts of land in isolated settings, are land that the Government can allot for higher it has the potential to be the first port of call for S struggling to attract faculty for the lack education. millions of students who are currently left out of the of adequate social infrastructure around their By contrast several central universities and higher education system, or are having to settle for campuses. Clearly, for new institutions, urban institutes have vast tracts of land within urban lower quality alternatives. Even if this model is the or suburban locations make most sense. areas that are underutilised. As an example, the second or third choice for developed countries, it Jawaharlal Nehru University (JNU) in Delhi has a is a luxury for India to spurn it out of hand. In fact, 1000-acre campus that is largely unused. Osmania many young Indians are already taking to MOOCs “With our poor infrastructure University in Hyderabad has a 2000-acre campus. in a big way. At roughly 10%, Indian students form Why not allow new institutions to co-build and the second-largest group on Coursera, the biggest it is impossible to build co-habit campuses for a fee and ensure more US-based MOOC which has 4.3 million enrolments a high-quality institution away efficient utilisation of scarce and precious space. from over 190 countries. On Udacity and EdX, the The “rentals” for the land will help supplement and other top-3 MOOCs, Indians represent equally large from a large urban centre in India. improve the funding of existing institutions and proportions. Faculty are unwilling to teach and not needing to spend their initial capital on land Clearly, innumerable Indian students see great acquisition will help the new institution, in addition value in MOOCs since the demand for education, live in a place that does not offer to giving them an attractive location to launch from. particularly high-quality education, is way higher employment opportunities for their At the very least, the government should expand than supply and availability. At the very least, online capacity and diversify areas of study in its central education provides another chance to students spouses and an excellent school and public universities and institutes of national who cannot understand or clear a course in the first for their children.” importance situated in central urban locations and attempt, and acts as a great democratiser. built on vast tracts of land. Agreed that distance or online learning is not the newest idea on the block – it has been around for Urban and suburban locations make sense also Rapidly scaling up Massive Open Online Courses a while. There are 176 institutes in India that offer because of the emerging trend of inner-city (MOOCs) distance learning programmes and 26% students university campuses that are tightly integrated with India has no option but to embrace online education are enrolled in them. However, there is a need to their host cities. As Kerstin Hoeger, Full Professor in a big way. This is because MOOCs are capable deregulate and scale up the distance/online learning of architecture and urban design at Norwegian of solving two of India’s most pressing constraints model to be much larger than what it currently is. University of Science and Technology points out, at once – access and quality. It is near impossible If we are ever to achieve quality with access, there “Worldwide, universities and their host cities are for the country to provide a high-quality university is also a need to mainstream this sort of learning. evolving into ‘knowledge cities’.” She and others education to the millions of deserving students with The ideal solution has to be a blend where online in the field argue that the erstwhile ideal of a the existing numbers and quality of faculty. Current education plays an important role in mainstream monofunctional and isolated greenfield campus faculty-student ratios will just not get us there. The education. removed from the city, providing academics and only way to fundamentally shift that ratio is to have students the distance to reflect on humanity, is “massive” classes made possible by the new MOOCs. fast becoming obsolete in the context of modern In online education, unlike in traditional knowledge societies, and is giving way instead to education, a few high-quality professors can reach open campuses that share a close relationship with manifold students. Of course, people will get into their host city. In fact, when seen today many of the a debate whether this has the potential to replace top 50 universities of the world – for instance, MIT, teachers but we have also seen developments like LSE, Harvard and TU Berlin to name a few – are Kindle and music players which have redefined embedded in such ‘knowledge ecosystems’ enabling usage patterns. There is also the classic intellectual them to perform better. debate about whether online education will work However, the model demands tracts of centrally- in isolation, in the absence of a classroom full located urban or semi-urban land that are of students, peers and teachers, but new theories increasingly hard to come by and come at exorbitant show that self-learning is a new model whose time prices. For a new university to incur the high cost of has come. land acquisition in its early stages is crippling – most But more importantly, we need to ask ourselves new institutions end up investing large amounts in if we can afford to engage in such debates. India real estate even before they get started, unless they seemingly has no choice! Unlike in the West where 42 43 T H At one of the most popular tribal crafts carnival “Mirror Mirror” is a simple exercise INK

in India I once had an experience of watching an ER

unusual puppet show. Normally the puppets are the that forced us to have frequent, S only things you see on stage and the people who are handling them are hidden behind a canopy. But this open and honest conversations one had the puppeteers completely exposed and to identify where we were and they emoted and acted in synch with their puppets. The show ended with a rapturous applause from where we were headed.” the audience and in no time a swarm of kids had Employees collected around the puppet crew. Even as the kids At HCL we decided to take the leap of faith. We chatted excitedly with the puppeteers, I could not realized that, something had to change - but what help but strike a conversation with a person who and how? To find out the answer it was important seemed like the head of the group. to ask some tough questions. This exercise of “Any particular reason why you bring the crew introspection led to the following discoveries: up front?” I asked. “Because they are the ones who • In the business of IT services, it was evident that run the show”, he said dissolving back into the value no longer lay in the technology itself and , sea of little admirers, even as those simple lines certainly not in any particular hardware First spoken in a most nonchalant way sunk deep into or software. my ears, settling into that portion of memory which • We observed that maximum value was created bookmarks some important learnings of life. at the employee-customer interface, called the Many years later when I started my own start-up “value zone”, where frontline employees created called Comnet, which is now a $1.4 billion company, customized solutions for customers. I was to have the same déjà vu moment when at a • In order to maximize value creation for meeting, a customer spent most of the time praising customers, the role of managers needed to be the project team who had accompanied me and redefined - which would be to encourage, enthuse Customers completely ignored me, the CEO! That was to be the and empower employees. start point of many such meetings, experiences and incidents which kept pointing to the same message This was the light bulb moment. By putting – magic happens when employees at the frontline employees first, and customers second, we began rise up to deliver the show! our journey of transformation. And in the process This realization was to eventually become of doing so we became one of the fastest growing the fuel of a new philosophy of organizational and most successful IT service providers in the transformation that came to be known as Employees world. But this didn’t happen overnight, it was a Second First, Customers Second or EFCS. More about that cultural-transformation journey which required later; let me first begin at the beginning. moving through several stages. By Vineet Nayar The year was 2005, when I was asked to lead The first stage was M“ irror, Mirror” or “Creating HCL Technologies. I found the company in a the need for change”. “Mirror Mirror” is a simple peculiar position then. While all seemed fine on exercise that forced us to have frequent, open, and the surface, we were rapidly expanding our global honest conversations to identify where we were and The journey from footprint, both in our customer base and operations where we were headed. It helped us define point A, a customer-centric and growing at a cumulative average of 30%. Yet the truth and reality of our situation today, before to employee-centric under this veneer of success, all was not well. moving towards the destination or Point B. By taking In fact, we were growing slower than our rivals a closer look at ourselves and defining point A, we organization requires and steadily losing market share, mindshare and believed we would be able to connect the dots to asking tough questions “talent share.” What would be the right response Point B. and following in such a situation? Do we play safe? Or take the The second stage involved building trust plunge into the unknown? It’s like finding yourself through transparency or “creating the culture for it up with a cultural on the ledge of a building on fire. In that moment change”. Identifying the need for change was just transformation. you have only two choices, either wait to be rescued, the beginning. For change to happen, it became or decide to take matters into your own hands and necessary for every employee to participate leap to safety. in the process. This would be possible only by 44 45 T H

building trust not just in leadership or strategy, but CEO”. In this final stage of the journey, we were Meme is our in-house social and professional INK

throughout HCL. set to transfer the responsibility for change from networking platform created by Gen Y employees ER

We realized that to build trust we had to push the the management to employees. We did this by which cuts across age, location and function S envelope of transparency. One of the first steps we recasting the role of the CEO and transferring the barriers. Today it has more than 70,000 members took towards creating transparency was to open the responsibility of change to the employees. That was and is a vital hub for ideas and collaboration. window of financial information to our employees. the only way to sustain change. By doing all these radical initiatives HCL was able By sharing both the good and bad, we strengthened One of the initiatives, the Employee Passion to unleash the energy of thousands of employees. the culture of trust, just like in a strong family. Indicative Count (EPIC) identified the main drivers And the results were for all to see. Ever since By building initiatives that would promote of employees’ passion and organized them into three the launch of the EFCS philosophy at HCL, the transparency, we ensured that employees clearly core themes, around which a survey was created. company has seen its revenues and market cap grow understood the organization vision, and how they This helped us identify and understand the core by six times, the active customer base has doubled as individuals contributed to its goals. Another way values that drive their potential to act passionately and the employee base has quadrupled. we built transparency was by trying to build an open both personally and professionally. But the biggest return has been the change of office environment. This led to the creation of the mindset we had been able to trigger in the company U&I portal, an online forum where any employee at all levels. An empowered and transformed could post any questions, which I along with my “An empowered and transformed employee thinks in a very different way, than one leadership team would answer. The idea was to who is driven purely by monetary compensations. replace rumors and misinformation with a culture employee thinks in a very different He is eager to contribute value, he thinks long-term, of open conversation. way, than one who is driven purely and he exceeds his own expectations. The third stage was all about “Inverting the I think that is what makes for the foundation of Organizational Pyramid”. Once employees had by monetary compensations. He is sustainable and successful enterprises–one that puts accepted the call for change, and there was a culture eager to contribute value, he thinks humans at the very heart of business and makes the of trust that motivated them to embrace change, world a better place to live for millions and billions there was a need to establish the structure for long-term and he exceeds his own of employees who come to work every day. change. expectations.” I think we all deserve a better place to live. We realized that making small, incremental changes here and there would not work. It was necessary to challenge the traditional pyramid Transferring the responsibility of change didn’t organizational structure itself, to ensure that change stop here. The “Value Portal” was created where would touch every aspect of our business. This is ideas could be shared by employees with customers when we thought about inverting the pyramid – and based on a feedback and review process, would and reverse accountability became a key building go onto to be implemented. Then we took an even block for the new structure. This meant that bigger leap. We launched “My BluePrint” program, certain elements of the hierarchy had to become through which 300 managers recorded their more accountable to the value zone. We started business plans which were then hosted on a portal. with enabling functions – such as finance, human These plans were reviewed by 8,000 managers. By resources, administration etc, and decided to make transforming the business plan review process from them more accountable to the employees they a top-down judgment to a peer-peer review, we had were supporting through initiatives like Smart taken a big step in creating a company which is in Service Desk to find permanent fixes to common many ways self- run and self-governing. problem tickets. But the journey isn’t over. Employees First is Next, we decided to take a closer look at the a living concept that continues to evolve. While performance of managers across these enabling Employees First 1.0 was “management driven, functions. What started as feedback from the employee embraced” - a contemporary version manager’s immediate span of control, went onto is emerging today. – Employees First 2.0 which become a 360 degree performance review. In one is “employee driven, management embraced.” single instance every employee could view the Manifestations of this are evident in initiatives strengths and gaps of their managers, including like MAD JAM which is an internal crowd source the CEO, evidently making management truly initiative for frontline employees that enable accountable to the employees micro innovations to gather greater momentum The last stage was “Recasting the Role of the and become employee led business lines. Similarly 46 47 T H

As individuals, Indians are resourceful, creative and as jugaad. While jugaad may be attractive to large INK

smart. In a supportive context, such as Silicon Valley multinational firms whose processes have become ER

they have shown that they can play critical roles in too rigid and inflexible, Indian firms (with a few S the most innovative companies. But, here in India, notable exceptions) face the opposite challenge Indian companies have our innovation output is significantly below our – their innovation processes are too fluid and potential. My work on innovation has focused on under-developed to facilitate the transformation Going apparent blocks which identifying the barriers to innovation in India, and of the creative energies of their employees into a inhibit their innovative seeking pathways at the level of both the nation and steady stream of innovative products and services. capability but as some the firm to channelize our creative potential into a Unfortunately, while multinational R&D and more systematic and sustainable innovation output. engineering subsidiaries in India have the potential companies have shown to do more innovative work, their innovation specific steps can be The Big Picture tends to be circumscribed by the roles mandated taken to successfully International comparative studies of innovation by their parents. Beyond consistently place India far below the top of the Why don’t Indian organizations spend more overcome these innovation charts. In the latest INSEAD-WIPO effort in developing better innovation capabilities? problems. Global Innovation Index (2013), India ranks #66. Family ownership appears to be a barrier, unless Rather than going up the ladder, India is actually the family members involved in the business have a sliding down – we slipped two positions in the last penchant for innovation (e.g. Dr. Anji Reddy and Dr. year and, this is in spite of the Government of India Parvinder Singh at DRL and Ranbaxy respectively). Jugaad: declaring this the decade of innovation! More traditional family owners lack a deep A simple way of understanding innovation output understanding of either technology or customer is to think in terms of supply side factors, processes needs, two of the key starting points for innovation. and capabilities, and demand side factors. At the national level, since liberalization began over two decade ago, the demand for innovation has grown. “India’s research output is not Disposable incomes are up, the government is Can India looking for low cost solutions to knotty public cited at a level above the global problems, and the legal systems for protection average in a single academic of inventors’ rights, are now better aligned with those in rest of the world. But India still faces discipline.” challenges on the supply side, and in the capabilities By Rishikesha T. Krishnan of organizations to use the inputs available for But there are also social and cultural forces at work build a innovative outcomes. that impede the creation of systematic innovation Supply side issues include the failure of the capabilities within firms. Research on management education system to rise up to the challenge in India has shown that Indian companies’ efforts of building a well-trained work force that can at innovation are impeded by poor teamwork; undertake creative problem-solving, lack of the enduring importance of upward hierarchical adequate seed capital to take ideas to prototypes, progression in a traditional society that leads to and the absence of a supportive infrastructure for individuals moving out of individual contributor Systematic innovation. But, perhaps the biggest supply side roles too early; a “brahminical attitude” that problem is India’s poor research base – a recent gives brainwork a superior position over physical study commissioned by India’s Department of work and results in ideation being lionised but Science & Technology shows that India’s research experimentation looked down upon. Additionally, output is not cited at a level above the global average a weak systems and strategic orientation that results in a single academic discipline. in the absence of appropriate change paradigms; Innovation The main agent of innovation in a capitalist a low tolerance of failure; a lack of confidence economy is the firm. This is the entity that links in innovation capabilities; a failure to positively ideas with the market. Unfortunately, firms reinforce innovation efforts; and a strong need in India have been slow to develop systematic for control that comes in the way of joint working innovation capabilities, preferring to rely on with other organisations, all are impediments to Capability? traditional methods of creative improvisation such innovation in India. 48 49 T H

Accelerating the Pace of Change they have managed to create a stream of ideas, but technology, production, and commercialization. INK

Some of these factors are changing over time, but that many of the ideas seem to get lost in the system Once a proof-of-concept has been established, ER

the change is slow. What can India do to accelerate – this is the source of a second problem that we the barrier often shifts to the resources needed to S the pace of change? call the velocity problem. A set of companies more take the innovation forward. Champions provide I believe there are four priorities starting with mature in the innovation process told us that their credibility and support and help overcome this a focus on the creation of a critical mass of new challenge is different – this is the third problem that barrier. Moving towards commercialization generation firms, started by young entrepreneurs. we call the batting average problem, i.e., the absence is helped by applying the principles of These youngsters would be relatively free of the of adequate business impact of innovation. experimentation to the business model as well. baggage of our past and therefore more inclined Getting a bigger bang out of innovation – to take on the challenge of genuine innovation. or enhancing the batting average as we call it These firms need to be in sectors and application – depends on two sets of actions. The first set areas that go well beyond our traditional strengths “Ideas don’t move forward is related to making the innovation successful, like IT and services. because they remain untried and and consists of the use of innovation sandbox The second priority is to provide the right approaches to do intense experimentation within incentives for institutions of higher education untested. The solution to this is the tight expectations of the market; the use of to change to become more research-oriented to encourage and support quick, platform approaches to help capture value from and more practice-oriented. one innovation across multiple application areas; The third priority is to change the nature low-cost experimentation to test and sourcing ideas from outside the company (open of government’s support for research and assumptions related to need, innovation) to complement the company’s ideas development. The traditional model of government- and complete the innovation process. The second owned, financed, and run research institutions technology, production, and set relates to managing risk. Understanding the needs to be replaced by competitive government commercialization.” history of similar innovations, awareness of the grants to support R&D in private institutions and baseline success rate of such innovations, and doing small firms. The feasibility of this has already been a premortem are some useful ways of managing the proven by the schemes and programmes of the Our 8 step framework seeks to address these risk involved. Other approaches include a portfolio Department of Biotechnology, such as SBIRI and three big problems. Building a pipeline involves orientation and having a vigorous pipeline to avoid BIRAC. Such an approach needs to be extended getting more people across the organization to see over-dependence on a single innovation. to other sectors as well. innovation as a part of their job and to make it easy We found successful Indian companies practising The last but certainly not the least priority is to for them to share their ideas with the company. several of the approaches we have described above. move India towards being a more knowledge-driven To facilitate this, we advocate 3 steps. The first is Bajaj Auto has been very effective at defining the and science-intensive society. The solution to this to lay the foundation for innovation. This is achieved right challenge book leading to market-dominating problem lies as much with individuals as with the by designing an idea management system that is products such as the Pulsar. Titan Industries has government. The next time your child has a project aligned with the company’s culture, conducting been a leader in training employees to participate from school, get her to do it rather than doing it for periodic campaigns that create excitement and in the innovation process and launching annual her. Don’t accept superstitions and baseless rituals. involvement around innovation, and training people campaigns. Cognizant Technology Solutions has Embrace the scientific method. in creative problem solving methods to help them also been strong on participation, and has trained unleash their creative potential. The second step is an impressive “army” of catalysts. Tata Motors Building Innovation Capabilities: to create a “challenge book” – identify the problems has used innovation sandboxes effectively, Infosys The 8 Steps Approach on which the company should focus its innovation has a portfolio of effective innovation platforms, The other part of the puzzle is building strong efforts. The third step is to encourage participation and Eureka Forbes has used open innovation organizational innovation capabilities. Some in innovation. Some of the ways of achieving this to its advantage. Clearly where there is a will, Indian companies have already shown how this are identification and recognition of innovation Indian companies have found a way to build their can be done. Vinay Dabholkar and I have captured role models; forming communities of practice; innovative capabilities. the essence of these practices in our 8 Steps to identifying and training innovation catalysts who Innovation framework. can help people with ideas take these ideas forward; In our interaction with Indian companies, and judicious use of rewards and recognition to get we learnt that they faced three major problems people involved. in making innovation a sustained activity. The first Ideas don’t move forward because they is what we call the pipeline problem – the absence remain untried and untested. The solution to of a steady stream of ideas that can drive their this is to encourage and support quick, low-cost innovation engine. Some companies told us that experimentation to test assumptions related to need, 50 51 T H You often hear people confer over India divided into “It is during tough times, when INK two factions – ‘Do Bharat’ – but I always maintain ER

that India has three parts; yesterday, today and we have to make tough choices S tomorrow. As a child, back in my village in Odisha, I saw that we come face to face with my father and his generation struggle every day. who we truly are.” We barely managed two meals a day for the entire family. There would be major calculations and second thoughts at every level, every decision, today, an independent filmmaker, social activist, whether it was the marriage of my two sisters, entrepreneur, I have seen a lot of change in my or our education. I remember my father making immediate surroundings, and I can see for myself a lot of tough choices, selling off land, my mother’s how my son cannot possibly relate to my childhood jewellery and what not, to make ends meet. But it in this day and age. It becomes very conflicting is during tough times, when we have to make tough for me to see everything we valued at the time, choices that we come face to face with who we truly become redundant and obsolete like archiving old are. And I like who we were back then. photographs in an album, rather than actually living There was a rawness about us, an unabashed those values. I guess even I have come so far, that goodness and vulnerability that I miss today. We a part of me cannot recognize my roots anymore. were people of small means, but I believe we had These changes are what make me wonder today, the judgment to know the important things in life. about what our country could become tomorrow. I’m not sure I can say the same about our present. Of course, development is a natural process, but is We knew how to value things and people, resources that what you would call this? An unprecedented The concept – water, food, land – the earth, our environment, influx of new money and no value system to call of ‘Unity in relationships. Today, we seem to be going off in our own, is this the idea behind ‘India Shining’ Diversity’ a different direction. Not just wandering, but or ‘Bharat Nirmaan’? Who are Indians – who ostensibly lost. are we? More than two-third of the population outlined by our Joint families back then were a blessing. They that lives in abject poverty, compared with the great leaders in might not have seemed like one, of course there 100-150 corporations that run this country? were fights and altercations, but what it gave us The ‘philanthropic’ bureaucrats and politicians, the Constitution was a sense of family, of belonging, a set of values compared with the ‘altruistic’ urban elite artists and has lost meaning instilled in us from day one. In fact, not just families, celebrities? It is this schizophrenic identity of India and relevance there was a sense of community among neighbours. that continues to cause disintegration of our borders Whether in our village or in small towns or even as well as our people. Are newer states and further in today’s India. in small societies in the cities, there was a support fragmentation of our people the only answer we system that helped us grow as individuals not are left with? I doubt this is what our Constitution in isolation, but together, as one. Now that is a means when it says ‘Unity in Diversity’. country I can call my own – Unity in Diversity, isn’t Till date, there exists a fierce struggle for every that how our great leaders envisioned India post- basic human need, whether food, water or shelter. independence? Yet another need that has cropped up in recent When one talks of Indian values and heritage, times, and is sure to increase over the next years, I believe this is what they mean. But alas, today, is the lack of farmland. There is neither enough we are so far away from it that it seems like a green cover, nor enough fertile land to do anything mythical and strange, quite like stories from about it, in this race to industrialize and privatize all Mahabharata or Ramayana would seem to our resources. This is going to soon lead to a nationwide future generations. When I tell my nine-year-old food crisis, in addition to the existing water crisis, son stories from my village as a kid, he doesn’t both man-made. We are simply paying for our believe them and you can’t blame him, because we exploitation all these years. have rid ourselves of even the faintest footprints of Imagine a country that was once known for its the past. That glorious India has disappeared within beauty and treasures, even called the ‘Golden Bird’ By Nila Madhab Panda a span of the last 10-15 years, not even two decades. for its heritage and wealth, has been brought to Whatever I have managed to make of myself utter ruin, first at the hands of colonialism, and ever 52 53 T H

And of course, as mentioned before, the right INK

“Imagine a country that was once value system. Like former President of India, ER known for its beauty and treasures, Dr. APJ Abdul Kalam always maintains, we have S become nuclearized living in this nuclear family even called the ‘Golden Bird’ for structure; each person has become nuclearized its heritage and wealth, has been from their own selves. A very dark issue that is born out of this indifference is child labour, which brought to utter ruin, first at the I have researched and worked on extensively. hands of colonialism, and ever Findings prove that India will never be able to get out of this stranglehold, not because of desperate since, at the hands of our very circumstances or poverty, but solely due to habit, clubbed with indifference. One, there is a hangover own people.” of oppression in our veins, we as a nation are too used to being on either side of it, it has become since, at the hands of our very own people. What we something we cannot do without anymore. Two, continue to do, without fail, is depend on Westerners there is a major lack of respect for any human life for all advice and counsel, instead of looking back in India, especially the two ends of the spectrum – at our own legacy. Look at our fashion, for example. children and old people. We live in a country where every 100 kilometres, When we talk of our future, the dream of a new colour changes, landscape changes, people change, India, it is only our children who can make that clothes change, but does any of that reflect in our dream come true. It is not about money or power fashion trends? It is a miserable state of affairs that or politics, but about going back to that value system we choose to look outward, towards the West once that we once had and cherished from ancient times. again, instead of inward for inspiration. As an Indian, what are we doing for our country? It is true that India has developed by leaps and Going further down India’s schizophrenic bounds as far as communication is concerned. We lanes, we are a country of extremes. The richest have come a long way in a short span of time, but man constructs one of the tallest buildings in the once again, the implementation of that technology country to reside in the same city that houses one is disastrous. Today, there are more mobile phones of the largest slums in the world. Both Delhi and than people in India. Isn’t that an interesting fact Mumbai have become two of the richest cities with about a country with close to 300 million people increasingly fast property rates that are at par with going without food? India, the hunger capital of property rates in New York and Manhattan. All the world, home to about one-third of the world’s these statistics and facts have resulted in an India hungry poor. that is a living paradox for the world to watch, and The world is laughing at us. Growing at a rate maybe take down notes on ‘how not to do things’. of 1.4 percent per year, India will soon beat China It is the feudalistic system that we need to get rid to become the country with the largest population in of. Overcoming this great imbalance between the the world. But it is like somebody said – population rich and the poor should be our first and foremost is an asset. Look at how China has used it as a tool to priority, and not the biggest brands like Starbucks, create some of the largest manufacturing industries or the biggest chain like Walmart, or the biggest and production plants in existence, making the FDI like POSCO coming to the country. We need rest of the world completely dependent on their to realize the value of a person, a human life, and products. Look at some of the European countries respect ourselves, be proud of our heritage, and not – they are tired of giving retirement salary to its ape outsiders. Follow our own ancestors’ footsteps citizens. What India needs to realize is the power instead of others. Else, we will soon be heading of its youth; a young population automatically means towards a recession similar to the one experienced a more productive country, both intellectually and by the West, where we can see entire nations otherwise. What we need to concentrate on is giving collapsing economically, through disasters, natural them the right healthcare, the right education, and and man-made, in addition to constant wars outside the right opportunities, and then nothing can stop and inside. this country from flourishing. 54 55 T H Could you share a brief overview of your “The phrase ‘conscious capitalism’ INK academic journey thus far, from The Rule ER of Three to 4 A’s of Marketing and now is a natural coming together of S Conscious Capitalism? I did my engineering and MBA in India, my two great traditions of capitalism PhD in marketing from Columbia University and – American -the epitome of global started teaching in 1985. My focus initially was on marketing of services, marketing of information capitalism and Indian, the fountain technology and then evolved over time into areas of consciousness.” such as marketing productivity and also strategy, which is where the Rule of Three book came in. I always had a broad perspective and was not is given to us and I realize that every truly great THE focused on sub-disciplines within marketing. enterprise starts with a purpose and transcends Looking at business gently; marketing is a function with it and makes it an enduring company. This of efficiency and effectiveness. journey led us to non-profit conscious capitalism I did a lot of research projects on the image link that is finding global resonance, as the of marketing and the negative feeling that people ideas are quite universal. The phrase “conscious have about marketing and came to the conclusion capitalism” is a natural coming together of two great that not only we have problems of efficiency and traditions of capitalism; American–the epitome raj productiveness but also in terms of public trust. of global capitalism and Indian, the fountain of This led to a project that was tentatively called “In consciousness. The combination is very powerful as Search of Marketing Excellence” which looked for there is real natural synergy in terms of India and companies that spent less money than their peers the perspectives from the US. Countries like South in marketing and still had higher levels of customer Africa and Korea have responded very positively loyalty, trust and satisfaction. Most of the companies to this. are opposite of that. Companies spend a lot of sisodia money but don’t have high level of customer loyalty How exactly are you looking at this synergy? and trust. So that project led us to a number of There is a growing realization that there is a great companies which we had to examine in more detail wisdom that is embodied in the ancient traditions and we found that what was true of customers was in general and which the world of modern business true of employees. In other words the employees has tended to ignore or relegate to the sidelines. also had high level of loyalty and trust towards the This was brought home most compellingly when INTERVIEW suppliers and they had a strong deeply embedded I published “Firms of Endearment”. I have been presence within their communities. The other studying the Bhagvad Gita for twenty years and By Amit Kapoor unique thing was that there was a sense of higher most of the wisdom that we think there is today purpose that they were in business to do something is actually been written about very deeply by some beyond the ordinary industry. Also these companies of the ancient sages. I believe in the theory of Karma In an interaction between Amit Kapoor had leaders who were more driven by their purpose and almost called this karma capitalism rather and Raj Sisodia, one of the thought and less so by power and personal enrichment. This than conscious capitalism. There should be focus led to the book “Firms of Endearment”. on community and actions without thinking of the leaders of the Conscious Capitalism The other book was Rule of Three and the book outcome. Like wise the qualities of a conscious movement globally, the latter shares on globalization, which was called “Tectonic Shift” leader – and the idea of dharma or duty - are very his view on this concept. His book that was published in 2006. I also developed a powerful notions and resonate very well with new framework for marketing called the 4 A’s of audiences. Firms of Endearment: How World Class Marketing which came out in 2011 which addresses During my talks in India, two common themes Companies Profit from Passion and many problems that one faces in terms of efficiency emerged – one was an advanced form of capitalism Purpose is considered a foundational and effectiveness. It is a way of making sure that our means we are still going through the growing pains work in explaining the precepts and marketing efforts are creating value for customers of capitalism and this would take some time maybe and for companies and ultimately for society. 10-20 years when we are ready for this. We need to performance implications of pursuing I have been talking business for 20 years without learn from mistakes of others rather than learning a conscious approach to business. even using the word “purpose” because the purpose from our own mistakes. The second was that it was 56 57 T H entirely consistent with institutional wisdom. In the the emotional and the spiritual dimension are two “I think the emotional and the It is shocking to see that such few people have INK

future we expect lot of value and wisdom coming important ways in which conscious capitalism is an understanding of systems. Many institutes do ER

out of India, from scholars in India who will enrich beyond the idea of shared value. spiritual dimension are two not offer courses on systems and yet every problem S our understanding of consciousness idea. that we deal with in the world is systems problem. Many western CEOs are into meditation and yoga How would you react to the exploitative important ways in which conscious When we don’t have the systems perspectives and which makes them highly effective leaders. There is behaviour of organizations? capitalism is beyond the idea start to think of it as a cause and effect problem a group of about thirty people from different walks As a generalization, businesses operate with a then we ultimately end up with the opposite of life who have come in as collaborators and set up narrow perspective and a lot of it has to do with the of shared value.” results. When we understand the whole system that “conscious collaborators” or “prasanga”. They view wholesale importing of the old American style of applies to business, health care etc., we know every each other as travellers rather than competitors capitalism. We have got this paradoxical situation set of activities that the government must do like sector has tremendous need for systems thinking. and this has a very important role to play. So many in a country where we are running into the same providing infrastructure, ensuring lawfulness, That’s something that we need to do. Of course our Indian academics who are in the US are using kinds of problems that other companies have faced. security etc. and also fulfilling the needs of business schools have an important role to play. some of that wisdom in the work that they are So we have to raise the consciousness about this to the society as a whole. That’s where you find I think India has a high number of consciousness doing with MNCs. get people to see that this is not about sacrificing efficiency and effectiveness. I think in our system, b-schools like the “School of Inspired Leadership” performance for the sake of these other things but the government does a lot of things and there is in Gurgaon. We need to change the education Shared value suggests that corporates should its about aligning all the forces together so that tremendous scope in efficiency and effectiveness. system to incorporate training in these skills and share wealth while building enterprise and you actually create a lot more value for everybody Along with this also comes tremendous corruption. there is still a long way to go. creating wealth for people around. How would including westerners. We really have a significant All businesses can get corrupted in a country where you compare the two concepts of Shared Value challenge to change those mental models that government has too much of a role. It becomes and Conscious Capitalism? people have about business. I think a separation a gatekeeper. The shared value is consistent with conscious of work from rest of life is really probably much capitalism but I don’t think it goes as far. It really more pronounced in India. Where people behave You said that civil society is the third pillar refers to a pragmatic approach that says if you one way in mission of work and money and then in for the whole system. How do you expect civil want a license to operate in the future you cannot an entire other way in their personal lives. We can society to react? be creating prosperity for shareholders while you blend self-interest with the need to care. I think it’s My advice to members of civil society who want to are creating consciousness for society. The western a big part of the journey in India. We have all the start non-profits is to start something which could analogy is very practical as it says that we should wisdom that we need. generate some profits. If you can create a for-profit figure out a way to do what is good for the society entity that can accomplish the same needs that as that would be good for you. The deeper spiritual How can the government learn from the you are trying to meet, then-in-then the business is dimension is a part of conscious capitalism and in principles of conscious capitalism and become sustainable and scalable in the long term. However other words it provides a meaning and purpose in a conscious government? there would still remain things that cannot churn our lives. I am working with a couple of co-authors on out profit, therefore, they have to be done by real There is a whole new deeper dimension if “Building of a Conscious Society” that’s about taking people who have a passion to serve. That’s where you look at the difference between profit driven the ideas of conscious capitalism from the domain non-profits would continue to have a role. I think organizations and self-driven organizations. of business and broadening them to other sectors the key thing for non-profits is they have a sense Conscious capitalism is having that real tangible that touch society. So, we need to have a higher of purpose but many of them don’t really operate sense of high purpose, which includes society as consciousness in all the sections of society whether in an efficient way. I think non-profits need to learn one of the staples. I think the spiritual dimension government, private, civil society, non-profits or a from the world of business. is meaning and purpose at an individual level, public sector. Every sector needs to operate with a I also think there is a lot of potential for cross which is conscious capitalism and conscious high level of consciousness for its specific role and sector collaboration, through markets that require businesses operate on the idea of love and care. purpose. I think the unfortunate legacy in India is the coming together of for-profit businesses and There is an atmosphere of love and care and the government, which we have inherited from the non-profits. There is a lot of potential for creative absence of fear. People can truly flower and bring British. Earlier, the government was there not to collaboration across sectors. out their creativity. serve but to control, especially the administrative, When we operate out of fear we are in a survival the Indian Civil Service which finally got changed What are some of the critical changes you mode. Take as example, General Electric which to IAS but the emphasis remained on controlling would recommend for the education sector? has the rule that bottom 10% people get fired every and not serving. People who work in the I do think that we also need to change our education year. The fact is there is tremendous amount of government service really need to have that sector. From an early age, one has to incorporate fear within the organization as 30%-40% think higher sense of purpose. wisdom; the ideas that make for a meaningful life; they might get fired. Then they start to behave in I think one of the challenges that India faces technical skills. I do think we also need to teach the defensive ways by not helping other people. I think is the socialist way of thinking. There is a certain skills that constitute “systems thinking”. Davos-Klosters, Switzerland 22-25 Jan 2014

At Davos, the world’s most Davos is the planet’s most high profile Connect with the world’s most Once a year important decision makers with powerful business leaders global brand display shelf. And an our strategically located billboards your brand meet to brainstorm the opportunity for your brand to say, or host them at exclusive venues biggest and the boldest ideas. “We care about the future.” on Promenade, Davos. must keep quiet Make sure your brand is Because when your brand stops Call or mail Amit Shahi +91-9810001985 and listen... around. Listening. Learning. to listen at Davos, the world stops [email protected] Connecting. to listen to your brand. www.theideaworks.in 60 61 T H A multitude of new services, products, technologies, “At its most basic level, a new INK

and infrastructures have been bubbling up over the ER

past decade or so to supply the next generation of mobility grid is simply a network S transportation, for an increasingly complex and urbanizing world. of places across a community This evolution is highly diversified; information where transportation modes and technology (IT)-driven; and service-oriented, creating unique business opportunities (both for services physically connect.” local application and export) in sectors as wide ranging as telecommunications, manufacturing, to play a key role in the new mobility industry energy, utilities, service and retail, tourism, real cluster leadership. estate, logistics, urban design, infrastructure and This brief offers a status update on the rapidly more. This emerging “new mobility market” is evolving global new mobility industry, related new already generating new meta-opportunities to business models (big and small), public-private provide seamless door-to-door transportation innovation and new integration models, and new systems for moving people, moving goods, and narratives and policy architectures around the moving less; customized to just about any region future of transportation and the economy that or community. supplies it. It then shifts the focus to innovation and Moving The leadership opportunities for Indian industry and enterprise.

What does New Mobility Look Like? New Integration Models and Public-Private Innovation Imagine a day when from steps of your door, or even from inside your home or office, you could enter a vital network or grid of new mobility points, places that connect any of a range of transport amenities including buses, trains, streetcars, clean fuel taxis, auto rickshaws and car share or bike share vehicles, and in some cases, day care, satellite offices, cafes, shops and entertainment. At its most basic level, a new mobility grid is simply a network of places across a community where transportation modes and services physically connect. At the next level up, this is all brought together On first glance it may appear that India, with its and enhanced by a telecommunications framework growing and increasingly congested cities, sits on that offers real-time information on arrival and By Susan Zielinski the demand side – not the solution or supply side departure times and availability (either through ECONOMY– of the new mobility continuum. But on closer kiosks at hubs or through mobile phones), examination the situation may be quite the opposite. as well as access to other information. The India may well be endowed with key elements of a telecommunications framework also allows you to There are many opportunities for India in the emerging global robust new mobility industry cluster - both in the quickly and easily pay for these affordable modes new mobility industry big business and the entrepreneurial space, and and services with a single click or a wave past poised to accelerate the array of opportunities. the reader through a mobile phone or a card or a Building on early global new mobility cluster kiosk. This way you can transfer seamlessly from work by Moving the Economy in 2002, and in the one mode of transportation to the other, informed context of a Rockefeller Foundation-supported of schedules and options as you go, using the best project by SMART at the University of Michigan, mode for the purpose, gaining access to car share at Dr. Amit Kapoor and Dr. Sankalp Sharma have one hub, and dropping it off at another to pick up a recently explored emerging opportunities for India waiting bus or train. 62 63 T H In practice, it’s much like a customized mobility space needs to increase in support of multi- “The opportunities exist on many • the new urban mobility could serve a range INK

communications portfolio, in which laptop or faceted solutions that meet a range of needs. of classes of consumers ER

tablet connects to desktop, camera, TV, printer, fronts be it mobility solutions for • a combination of awareness, marketing, S search engine, and more, all talking to each other New Narratives, New Policy Landscapes, technology and policy could help scale emerging seamlessly regardless of brand. It doesn’t mean and New Supporting Platforms urban poor (whose volumes are innovative enterprises abandoning your desktop computer—it just means Recent studies have begun to show a slight decline massive) or IT solutions for the • enabling infrastructure is needed merging it with a more diverse and connected in interest in car ownership by the younger • there is a need for skilling the labour force for portfolio, allowing you to choose the best option for generation known as “millenials” – aged 18 – 35. mobility platforms (GIS/ GPS integrated project operations & implementation each task. While the jury is still out, this trend is attributed to for tracking MRTS system) • testing facilities are needed For the user, it’s easy, convenient, affordable and a number of social and economic factors including • IT and new transit solutions are having an effect accessible. For government leaders, this begins to a preference for IT over automobile ownership. to having an IT blueprint of a city.” • the future of the new mobility cluster in India is address social, environmental, and economic goals, As such a new narrative (with related business exciting fostering livability, social equity, green industry opportunity) seems to be arising featuring a next urban mobility clusters in India and the shape In summary, the white paper says: “India has and green jobs. See “Connecting and Transforming generation that seeks access to mobility without the of things to come in the future. In a nutshell they been at the forefront of technology development the Future of Transportation” : http://deepblue.lib. necessity of ownership. found that: (at least since 1993 for this specific industry) and umich.edu/handle/2027.42/85216 At the same time, technology and innovation “.. the opportunities exist on many fronts be it has been able to keep down the costs and deliver have begun to outpace the capacity to make policies mobility solutions for urban poor (whose volumes are superior performance to customers. At present What New Business Models Will Support that apply to them. As such new policy landscapes massive) or IT solutions for the mobility platforms urban mobility is severely hampered in India due the Transformation? are emerging to be more nimble and dynamic, (GIS/ GPS for tracking MRTS system) to having an to improper planning and development. Investments Some of the greatest benefits of the burgeoning with less emphasis on heavy and capital intensive IT blueprint of a city. The urban mobility clusters in transportation technology will hold the key for New Mobility will be economic. For example, approaches to infrastructure, decision making, and would also create a huge number of jobs, which a new urban transportation cluster. Sustainable established players have already begun to mine the financing. In some cases frameworks and incentives would promote a more robust and inclusive economic technology for transportation could show the way opportunities offered by the fast-growing next- aim to reduce or replace detailed regulation with growth.” for other countries. If India focuses only on fossil generation transportation market: witness the urban collaborative, multi-stakeholder, integrated, and fuel technologies the movement away from these mobility initiative of Ford Motor Company, as well regionally customized solutions. The white paper also offers important context for would have significant barriers, which will be as smart city businesses of Ashok Leyland, Infosys, New public sector roles are in some cases opening proactive industry cluster development in India, difficult to break … The agglomeration factors for Cisco Systems, IBM, Siemens, and more. up to include convening, incenting, open system highlighting the following points: a cluster arises primarily from knowledge spillovers Meanwhile innovative small enterprises are framework-setting, and the building of big data • India has significant metropolitanization in and lead to enhanced productivity and faster already beginning to grow up around the new platforms and professional networks that serve not addition to rapid urbanization innovation cycles, which help the region grow and mobility ecosystem. For example, companies that only transportation users, but also transportation • there are many newer smaller cities that are prosper. The primary focus is to enhance design offer fractional- use services such as car share, leaders and new mobility businesses and enterprises growing faster and innovation capacity to achieve international bike share, and customized shuttles, as well as alike. Through the Rockefeller Foundation- • there is a growing number and size of cities competitiveness” mobile-phone journey-planning applications and supported work on catalyzing the new mobility in • technology is driving change multimodal fare-payment technologies, are finding cities, the Mobi Prize and platform was developed to • solutions need to be customized innovative ways to profit from the new-mobility crowdsource, profile, link and support new mobility • there is an increase in smaller cars, longer grid. Examples of such innovative enterprise in entrepreneurs worldwide (see www.mobiprize. weekend drives, demand for transit, more India include Red Bus, Eco-Cabs Dial A Rickshaw, com). New skills and capacities are also needed transport options G-Auto, SMV Wheels Pvt. Ltd., Transparent specific to implementing integrated systems and • high productivity losses are due to transportation Chennai, Ideophone, Yo Bykes, Jan Bas, and more. innovating sustainable and exportable solutions. • the city cannot afford to cater to private cars and Taken together, as industry clusters that two wheelers cater to the emerging global transportation Outlook for India: The Way Ahead in India • much needs to be done if public transport market are nurtured, they can enhance regional and Beyond (and other options) are to play a significant role competitiveness and spur job creation. For this According to Dr. Amit Kapoor and Dr. Sankalp • spending on transport is driven by political to be most effective, a culture of “Public Private Sharma of the Competitiveness Institute: prestige Innovation” is emerging in some of the more “One could say that the quality of life plus • there is a lack of adequate policies for urban successful regions, engaging and convening public efficiency of travel would define the future of travel transportation sector, private sector, and non profit entities early in India” • the Indian auto industry is “glocal”, powerful, and often to refine the new mobility use cases They recently developed a white paper and evolving and needs to be integrated into new as they benefit people, cities and economies. As focused specifally on India entitled “State of mobility industry cluster development urban complexity and traffic volume increases, the the New Mobility Industry in India” to support • service orientation and the power of IT in “surface area” between the major movers in the new understanding of the growth and trajectory of the transportation is increasing 64 65 T H

Where will we find growth opportunities, the kind to borrow the money that we didn’t have. Over- INK

that will take our businesses to the next level? The stretching was the name of the game for many ER

usual and popular choice of terms we use when households as well as businesses. It was S looking at current markets and potential ones a tremendously prosperous period for everyone. often include “developed markets” and “emerging But it was also a grand house of cards, potentially economies”, which have inspired new golden age exposed to a drastic fall. of race to the new treasure, hidden in the capacities And now, just a few short years later, the “golden of these markets. But we find these terms limiting, decade” has already been consigned to history. perhaps even deficient and definitely distractive Given the financial meltdown and the subsequent Fast in most part. Is a term really that important, you economic crisis, we now live in a world in which may ask? We think it’s vital. Here’s why. The terms people have no choice but to start (belatedly) themselves focus only on markets at the country exercising financial discipline. Additionally, many level. But what if you’ve got a rapidly growing companies and businesses have shifted their focus market opportunity that exists on a supranational, away from profitability to simply ensuring their national, regional, industry, cluster or even firm economic survival, primarily by cutting costs. level? We found that the ability of a term to address Additionally, like every fashionable trend, the a new economic complexity is missing and for too concept of “insourcing” back to the countries many years we have simplified the premises of the that pioneered outsourcing in the previous decades emerging economy within a confined use of a term. is becoming an increasingly adopted practice. Expandi To take these different levels of analysis into But are these the best tactics for businesses to take ng account, we propose a new term called “Fast- in order for the general economy and the business Expanding Markets” (FEM). themselves to turnaround? These markets are not restricted to traditionally defined boundaries, such as geographical, industrial or firm boundaries. It is possible to argue that the term is too broad to pinpoint real economic drivers “Thinking along the lines of and determinants of growth, but we believe that it is also this unique characteristic that allows managers FEM frees our minds to wave off Markets and policy makers to find new sources of wealth the restrictions and boundaries and prosperity. Thinking along the lines of FEM frees our minds to wave off the restrictions and of geographies or industries, boundaries of geographies or industries, in order in order to find new ways of A new needed to find new ways of achieving economic growth. As a positive side effect, FEM liberate us from a achieving economic growth.” rigid classification of countries performances and rankings, which speak little about the real state economic lens of things at the market level. We believe that the answer is no. We think it is far more important for firms to concentrate on top-line Revenue growth and not just cost cutting growth rather than on lowering costs. While cost But before looking into the future, let us go back cutting can lead to an immediate increase in profit, in the 21st century in time. From the end of the dot-com crash in 2001 an expansion of the sources of revenue will lead to the beginning of the financial crisis in the first to far more sustainable advantages in the future. decade of this century, markets blossomed and A company cannot cost-cut its way to prosperity. new business opportunities emerged around the New markets and new market opportunities must By Terence Tse, Mark Esposito world. We could be and certainly felt enveloped by be found in paths less traveled. prosperity, which could have led to over-spending While the current economic outlook remains This seminal paper on FEM was presented for the European and over-consumption – which in turn fueled more bleak, we do not believe that the situation is all Business Review in March 2013. FEM does not define business new business opportunities than ever before. The “doom and gloom.” We understand why some fires of commerce raged on. companies have adopted a policy of retrenchment opportunities by geographical boundaries but by places We – the general public and businesses – found in response to a real economic recession. In difficult where there is a vast variety of opportunites. it easy to part with our money, and just as easy times, firms usually tend to favor business processes 66 67 T H focused on “re-engineering,” “streamlining,” markets and new market spaces due to the fact limitations, inherent in the existing terminologies “Fast-Expanding Markets” refers INK “re-structuring,” re-organizing,” “optimizing” that FEM represent potentially extremely lucrative and the prevalent conservative views on growth, ER

“downsizing,” and “outsourcing” in order to markets that many people are unaware of or have play important roles. Thus far, people have to any rapidly growing opportunity S maintain profitability. Indeed, they are (much) overlooked. associated such expressions as “emerging markets,” easier to pursue because of their linearity than To better understand FEM, we conducted “emerging economies,” “frontier markets,” and in which the market is the focal revenue growth, which requires growing existing extensive pilot research in an attempt to identify “developing markets/economies” with growth point. Such a market may exist markets or discovering new ones. But cutting and markets that could expand by more than 15% per opportunities. In our view, such concepts suffer simultaneously growing are not easy feats. year over a period of three to five years. This time from various shortcomings when describing new at the supranational, national, And one more thing: we were steadfast in our span enabled us to exclude distortions arising from growth opportunities. regional, industrial, cluster, sector, view that cost reduction is a short-term solution speculative behavior, which can be recursive in The term “emerging markets” traditionally that temporarily boosts earnings. It produces few several prime and equity markets. refers to countries or regions with inadequate corporate or product level. FEM are benefits in the long run because it relies on a strict To our surprise, the markets that we identified economic welfare and structures – but it has become everywhere.” accountancy perspective: costs can only be slashed as “fast” and “expanding” were much more misleading. The label is also applied to those to a certain point without causing unintended “fast and furious” than we initially assumed. For economies that have already “emerged.” consequences. example, the bio-stoves market in Kenya has been Confused? Here’s an example. Until recently, experiencing marginal growth, at best. “Emerging” For example, in order to cut costs, many growing by at least 300% annually for the last three The Economist viewed Singapore and Hong Kong countries have experienced above-average, if not companies have moved production to countries years, with growth peaking at 500% in 2012. This as emerging economies, and the FTSE labels them substantial, GDP growth in recent years, although with less-expensive labor. This, however, does discovery led us to acknowledge that not only does as “advanced emerging markets.” But according to part of this has been the result of starting from a not necessarily lower costs. Lower and lost labor the environment benefit from the growth of this the World Bank, the purchasing-power-adjusted lower base. Clearly, a new term is needed to describe efficiency alone might cancel out anticipated market but also entire territories, which are spread per capita GDPs of Singapore and Hong Kong in growth markets, hence FEM. The fact that The savings. Similarly, reducing costs for parts can have out across the country. Similarly, in Uganda, money 2010 were USD 43,867 and USD 31,758, respectively. Economist uses the term “emerging markets” while counter-productive effects: cheap parts usually transfers made through SMS-based technologies On this basis, Singapore exceeded Japan, Germany, it simultaneously calls for a halt in the use of the result in an increase in costs associated with totaled USD 17.5 billion in the last five years, with France and the UK, and both economies ranked term highlights the genuine need for new term to quality, service, operations and overhead. These annual growth peaks ranging from 200% to 290%. above Spain, Israel and Portugal. In contrast, describe up-and-coming markets. It is a good thing are all causes for concerns because in economically This highlights an opportunity to turn the cancerous numerous “advanced”, “emerged” and “developed” that we came along! difficult times customer retention becomes even nature of an informal economy into something economies, such as Greece, Spain and Italy, are on But perhaps the greatest problem with the term more important. Our bottom line: it is far more formal. We also investigated whether a form of the verge of economic contraction. They might even “emerging markets” is that as long as markets are paramount for businesses to concentrate on top-line FEM could be found in agriculture. We found that, be described as “submerging” markets! maintained as the critical unit of analysis, at the growth than on lowering costs. for example, Bolivia’s economy has been supported Moreover, the stigma once attached to the country level, it is easy to miss growth markets by the rapid increase in demand for quinoa, which concept of “emerging markets” is really no longer in countries with lackluster overall economic Fast-Expanding Markets resulted in an annual growth rate of 26% for the last valid. Emerging countries tend to be seen as performance. If we only conduct analyses at the We know that new ways of lifting sales in tough three to five years. This FEM was not only inspired possessing small equity markets with levels of macroeconomic level, many growing business times have been widely discussed in the past, but by technological innovation but also by a truly liquidity and price fluctuations typical of inefficient opportunities that have yet to contribute we think the answer lies looking at markets in a territorial emergence across a number of organised capital markets. In reality, however, equity markets substantially to a country’s GDP will go unnoticed. different way. To identify potential opportunities economic complexities. Even better than this, FEM in some “emerging” countries are sufficiently It is exactly the identification of markets that are for top line revenue we propose looking at do not follow any traditional reflection of the GDP sizeable, with liquidity and volatility levels that “off the radar” that create businesses advantages “Fast-Expanding Markets” (FEM), that we want rankings, as a market could grow exponentially match those of their more “advanced” counterparts. for companies. to position as a new economic lens of intelligence rapidly over our cycle of three to five years, literally At the same time, the level of corporate governance For example, many researchers have viewed for the understanding of markets in the 21st century. anywhere in the world. Put in perspective, FEM in various “emerging markets” is moving close to, if Japan as a languishing economy for the past two Put simply, “Fast-Expanding Markets” refers do not behave through the traditional phases not surpassing, levels seen in developed markets.1 As decades. Its traditional businesses are facing ever- to any rapidly growing opportunity in which the of economic development, from resource-based the distinction between “emerging” and “developed” mounting cut-throat competition from China and market is the focal point. Such a market may exist economies, all the way to innovation driven. markets blurs, the applicability of these descriptions Korea, and it ranks low in competitiveness.2 From at the supranational, national, regional, industrial, They tend to generate acceleration beyond the becomes increasingly limited. It is no wonder then this perspective, it may be tempting to view Japan cluster, sector, corporate or product level. FEM current standing of the economy in which they that The Economist called for the term “emerging as a nation in continuous decline with few growth are everywhere. At times, they grow intuitively, operate, so they are unpredictable in most of its markets” to be rendered obsolete. prospects and to discount it as a potential source while at other times they grow counter-intuitively, behavioral emergences. “Emerging” markets are the engines of the of new opportunities. However, this view reflects so that the application of traditional market and world economy, while “developed” economies are a focus on the country’s macroeconomic situations. economic theories is often inappropriate, which Why FEM is a better term to describe new place in forecast and predictability a quintessential growth opportunities 2 According to the IMD World Competitiveness Yearbook (2011), Japan 1 Everest Capital (2009) “The End of Emerging Markets,” November, ranks twenty-sixth, putting it behind Qatar (8), Malaysia (16), China (19) part of how value is generated. FEM are distinct Why have we not looked at potential markets this http://evcapan.com/documents/TheEndofEmergingMarkets.pdf, accessed and Korea (22), and just marginally above Thailand (27), the UAE (28), from some of the previous concepts related to new way before? We believe that a combination of on 7 November 2011. Chile (29) and India (32). 68

If we look deep enough, pockets of exceptional nothing more than conjectures, as forecasting growth can be observed. Whereas Japan’s naturally entails disappointments. This may be true consumer-electronic industry may appear to have – admittedly, not every FEM will deliver promising passed its prime, its pop-culture industry has been results. However, analyses of the FEM phenomena expanding in the global market. should help us prepare for the future. In a sense, For instance, the popularity of Japanese comics, these markets are similar to a compass. While they or manga, has been booming in the US for the past may not provide enough information to pinpoint decade, even though this genre is culturally distinct exactly what lies in the future, they can generate from mainstream US comics.3 The same is true opportunities that honor real economy as the agency Porter Prize 2013 of “cosplay”, a sub-culture originating from Japan of development. It is a brave new world where our Recognizing the Strategic Acumen of Corporates in India in which people dress in costumes and take on the global economy is concerned and it begs for a new roles of various characters from animated series term to help us evolve with it. or computer games. In Japan alone, the cosplay October 11, 2013 costume industry grew by 5% in 2009 to around The Leela Kempinski, Gurgaon, Delhi NCR USD $500M.4 Cosplay is becoming an important part of Japan’s pop-culture exports. Indeed, a “World Cosplay Summit”, which was sponsored Discussions, Talks, Interactions and Awards in part by Japan’s Trade Ministry and publicized by Japan’s Ministry of Foreign Affairs, has been held annually for nine years. This example illustrates that new opportunities exist at more Porter Prize is named after the Award Categories Partner with Porter Prize renowned thinker, Harvard faculty • Porter Prize for Industry contact: granular levels, even in countries with stagnant [email protected] or faltering economies. member and Father of the modern Architectural Shift www.porterprize.in We can discover a new configuration for how strategic field Professor Michael • Porter Prize for Creating www.competitiveness.in E. Porter. He is a leading Distinctive Value markets emerge by focusing on the pockets of Register Here authority on competitive strategy, • Porter Prize for Leveraging http://www.porterprize.in/register growth that develop in a much more spontaneous Unique Activites competitiveness and economic manner than what we have been trained to Follow us on development of nations, states and • Porter Prize for Exploiting anticipate. Pockets are spontaneous in nature, Trade offs @ arthsastra regions, and the application of rebellious in behavior, and expanding at a rate that • Porter Prize for Creating competitive principles to social would impress in terms of traditional indicators and Shared Value www.facebook.com/kautiliya problems such as health care, analysis. Pockets of growth are cells of FEMs in that • Porter Prize for Creating Value  www.linkedin.com/in/competitiveness they are embryonic transporters of new business environment, and corporate Based Health Care Delivery opportunities that are often untapped responsibility. www.youtube.com/arthsastra and undetected. Some may suggest that the term FEM is too broad to be useful. But we believe that it is exactly this characteristic that allows the term to encompass a vast variety of business opportunities and new sources of wealth, which could truly shape new seeds of prosperity. It is only by broadening our horizons that we can break away from the limitations imposed by such popular terms as “emerging”, “developing/developed” or “frontier” markets. Moreover, some may argue that FEMs are

3 Matsui, Takashi (2009) “The Diffusion of Foreign Cultural Products: The Case Analysis of Japanese Comics (Manga) Market in the US“, Working Paper #37, Center for Arts and Cultural Policy Studies, Princeton University, Spring. 4 The Economist (2011) “Cosplay with me,” 10 August, http://www. economist.com/blogs/schumpeter/2011/08/japanese-pop-culture, accessed on 9 November 2011. 70 71 T H Why do we need wisdom at work? “The more flexible and dynamic INK

Complexity—magnified by globalization and ER

information technology—is fundamentally changing your state of mind, the greater S the business context in which organizations operate. Such changes in business context intimidate access you would enjoy to most leaders who tend to respond to—or rather wisdom—and the more successful Wisdom counter—these changes by reusing past success formulas. They get overwhelmed by complexity you will be in a complex business and hunker down and are unable to expose their setting.” vulnerability and ask for help: they prefer to fight or flee complexity rather than surrender to it—and learn from it. Current leadership approaches are no in today’s unpredictable and interconnected global at Work longer sufficient in today’s interconnected social economy; b) focus, more often than not, primarily on networking era. We need an integral—or wise— optimizing shareholder value—and driving business leadership approach that embraces complexity— growth—without sufficient consideration of other rather than shying away from it—and that gives stakeholders and sustainability issues (business, leaders the flexibility and fluidity to think and find environment and culture); c) excel at managing solutions. Let us explore specifically what new people and resources in organizations—but not Moving from competencies leaders need to effectively cope at “leading from behind” and building grassroots with—and thrive in—complex settings. coalitions (and ad-hoc networks) that embody the fluidity of social media networks. Soft skills and smart leaders But, this smart leadership model can’t fully equip According to a 2004 survey done by Nigel Andrews leaders with the broad range of capabilities they and Laura Tyson1, CEOs want to hire managers need to cope with the challenges lying ahead in the Smart to Wise who not only boast strong functional skills but also global business environment. The need of the hour soft skills—i.e., integrity, perseverance, intuition, is for a well-rounded, holistic leadership model passion, self-awareness, creativity, and desire to that can effectively help organizations navigate learn—which are often not given sufficient attention complexity. What the world desperately needs now in management schools. In the complex global is wise leadership. environment that we live in, these soft leadership skills are becoming paramount for success. Wise Leadership: Leading with Practical Leadership Unfortunately, in terms of knowledge, skills and Wisdom attitude, there is growing gap between what will be What is wise leadership? It consists in “playing in demanded of future leaders to effectively navigate the middle of the court,” to quote Warren Buffett, Book Excerpt complexity and what business schools are teaching and not too close to the boundary lines.2 It is about today. Take majority of current MBA programs: cultivating a resting place within you, where you they continue to produce smart leaders. These can introspect before arriving at your next decision. From Smart to Wise: smart leaders have highly developed analytical It is about anticipating and responding to external capabilities but have gaps in soft skills profile. events pro-actively instead of reacting to them in a They are like athletes who over-exercise specific knee-jerk fashion. It is about setting high standards muscles in their body, rather than developing their both for yourself and others and operating out of Acting and Leading with Wisdom entire musculature. As a result of this skewed “values that create value” for your shareholders leadership education—which gets reinforced as well as the society at large. In an increasingly through early experiences in organizations—these complex world, we need more wise leaders who smart leaders tend to: a) over-rely on analytical can help navigate organizations through turbulent By Prasad Kaipa and Navi Radjou skills and logic—or smartness—to make rational times. Leaders who can flex their state of mind decisions at the expense of intuition and empathy, gain access to something far more valuable—and which are becoming valuable leadership qualities

In this section, the authors talk about the need for leaders to 2 How Warren Buffet’s protégé David Sokol lost his way Business Week, 1 Andrews, N. and Tyson, L. D. “The Upwardly Global MBA.” April 28, 2011 http://www.businessweek.com/magazine/content/11_19/ exhibit wisdom, and differentiate between smartness and wisdom. strategy + business, Issue 36, Autumn 2004. b4227050988120.htm 72 73 T H rewarding—in today’s complex environment than that they helped transform for the better but they “Smartness is grounded in Practical Wisdom INK

smartness: wisdom. were detached from the fruits of their actions Aristotle called practical wisdom Phronesis—and ER

What is wisdom? Wisdom is a critical capacity (i.e., they didn’t seek personal glory). As such, application of intelligence differentiated it from the philosophical wisdom, S that gives you the discernment to choose appropriate they practiced what one might call detached which he called Sophia.3 Aristotle, in his book actions and make sound decisions in response to engagement. for self interest while practical Nicomachean Ethics, describes phronesis as a swiftly changing external context. The more • Wisdom cannot exist without spirituality: We wisdom is grounded in taking “figuring out the right way to do the right thing in flexible and dynamic your state of mind, the greater have come across many wise people who are a particular circumstance, with a particular person access you would enjoy to wisdom—and the more atheists, agnostics and have not had any spiritual ethical action for the larger good.” at a particular time.” While Aristotle identified many successful you will be in a complex business setting. grounding who rely on their “practical wisdom”— virtues like loyalty, self-control, courage, fairness, which Coleridge calls the “uncommon common addressed the topic of wisdom in the East. For generosity, perseverance, integrity, kindness, There are many preconceived notions about sense”—to make farsighted decisions and take instance, the Greek Aristotelian tradition deems truthfulness, the master virtue (arête) was practical wisdom—which we will address in this article. Here enlightened actions. We also noted that this wisdom as the mother of all virtues—and Confucius wisdom.4 are ten popular “myths” about wisdom: “practical wisdom” gets enriched when informed had famously said: “By three methods, we may Practical wisdom, according to Nonaka and • Wisdom can only be discussed by wise people: and grounded in spirituality. learn wisdom: First, by reflection, which is noblest; Takeuchi, Japanese concept of toku—a virtue Should a world class food critic or a ‘foodie’ be • Only a few “chosen” people have access to Second, by imitation, which is easiest; and third by that leads a person to pursue the common good a world class cook? You can experience others wisdom: While it appears that way because there experience, which is the bitterest.” and moral excellence as a way of life.5 In Hindu wisdom and recognize wise leaders without being are very few names that come to our mind when Likewise, wisdom has also been intimately tradition, this practical wisdom could be equated one. In fact, we encourage you to listen, discuss one is asked to identify wise leaders. Still, we connected with all major religions: Judaism, to, in Sanskrit, yukta-ayukta vichakshana—which and read about wisdom and wise leaders and found that all of us can have access to wisdom Hinduism, Buddhism, Christianity, Islam, and means having the intelligence to discern what engage in learning best practices from them. within—although many of us are unwilling to Taoism all refer to wisdom in more ways than is right and appropriate and what is wrong and • Wisdom only comes with age/experience: invest energy and time to discover and connect one. When the religious perspectives (world view inappropriate in taking action for the larger good. Wisdom is perceived as good wine that matures with our inner-wisdom. or dogma depending on whom you ask) translate While knowledge is connected with static intellect well with age. While many wise people matured • Smart people cannot be wise and wise people into spiritual values and ethics (such as the Ten (leading to smartness), wisdom is connected to in age and experience before they were called cannot be smart: Smartness and wisdom are not Commandments or Manu Dharma Shastra of Hindu dynamic intelligence (leading to context sensitivity). wise, there are others who rapidly develop mutually exclusive. In fact, smart people can religion) and personal daily practices (rituals, In other words, practical wisdom is about taking their wisdom at a young age and in a short time. have a quicker access to wisdom if they put in recommended behaviors), you have a structure actions, making judgments (using discernment), and Young entrepreneurs and executives—such as the same intensity and energy that they invest in for practicing religion. This religious wisdom is fulfilling a noble purpose (perspective). In Bhagavad Mark Zuckerberg, founder of Facebook—have staying smart. Wisdom helps elevate smartness bounded by the religion’s worldview. For example, Gita, a Hindu religious text is considered to be demonstrated wisdom by making some to the next level by enriching/fortifying it with according to Hindu worldview, we have multiple a book of practical wisdom for Hindus and wise remarkable contributions to their organizations valuable skills and attributes—such as context lives and according to many other religions, we only leadership is meant to be balancing the extremes and societies. sensitivity, humility, openness, discernment, and have one life. Similarly, in one religion, heaven is and acting from an equanimity state of mind.6 • People are born with wisdom and wisdom cannot commitment to action. the highest goal whereas for another religion, self- Through our research and consulting work, be developed: We have seen more examples of • Can everybody become wise? It is unlikely knowledge could be the highest goal. For a third we have identified some key attributes of practical people who developed wisdom than being born though hypothetically, it is possible. It is just religion, it could be removing suffering for all living wisdom: with it. like losing weight – everybody can by watching beings. With such different worldviews, principles • It is grounded in action and lived experience • Wisdom is a luxury (because it takes time to what they eat and doing appropriate exercise and practices sometimes we bump against the • It gives you context sensitivity—so you can develop) that we can’t afford in our busy work regularly—but most people don’t succeed worldviews that prevent us from adopting wisdom make decisions with discernment and take lives: We argue that the time taken for developing or even if they do, they don’t sustain the principles and practices from different religions. “appropriate” action wisdom is mostly for getting rid of old habits and weight loss. Let us explore what wisdom is For example, meditation or yoga could be a taboo • It gives you the intuitive intelligence to unlearning what is not wise! in more detail. for some religious followers even though they might modulate your responses dynamically to • Wisdom is not practical: If there is one thing offer practical help for their body or mind. changing circumstances rather than reacting to we learned about wisdom, it is pragmatic and Source of Wisdom Spiritual wisdom has broader reach because circumstances in a knee-jerk fashion or “as per grounded in action more than thought. While Wisdom has been a subject of study for philosophers practitioners might mix and match principles and the book” wisdom gives you long-term perspective it can for thousands of years. (Philosophy is, interestingly, practices from different traditions and work with • It is unique to you: you don’t learn about practical also help you with your everyday decisions. defined as the “love of wisdom”.) In the West, Plato wise teachers to help their journeys. wisdom by reading about it in books or observing • Wise people are detached from society: Wisdom and Socrates are well known philosophers who In this article, however, which is steeped in the other leaders who embody and practice it. might be connected more closely with noble explored the topic of wisdom while Confucius, business context, we will be covering what we call

purpose and common good. That does not mean Adi Sankara (founder of the Advaita (Non-dual) practical wisdom. 4 Ibit, page 6. And Aristotle, Nicomachean Ethics translated by martin that wise people are detached. In fact, many wise Vedanta school of philosophy), Vyasa (the author Oswald (1962) 5 I. Nonaka and H. Takeuchi, “Big Idea: The Wise Leader” HBR May 2011 leaders—such as Mahatma Gandhi and Martin of Mahabharata — a Hindu epic that is the second 6 Bhagavad Gita – chapter II:55-72. Meaning is loosely translated from Luther King—were actively engaged in the society longest in the world) are eminent minds who 3 Aristole. Nicomachean Ethics. Book 6. Sanskrit text by the authors 74 75 T H

In fact, developing practical wisdom requires you universally applicable. The wisdom gained by access to practical wisdom, leaders will be able to Conclusion INK

to unlearn the conditioned responses and practice practicing those universal values without being better address complexity: they will be able to better In this article, we made a case that existing models ER

it using your own counter intuitive logic that you limited by the absolute perspective of any individual exercise the leadership capability that is available of leadership are insufficient for dealing with issues S develop iteratively. religion could be called spiritual wisdom. to all of us. In our book, we highlight six key of complexity, globalization and technology in the • It can’t be gained overnight: you need to practice Practical wisdom aligns, when matured, leadership capabilities that are critical to cope with world place. Religious wisdom approaches from it diligently and with self-discipline. with spiritual wisdom. Practical wisdom begins complexity—and we describe and exemplify how faith-based traditions do not appeal to business • It is about having a noble purpose and taking subjectively with personal benefit as the driving leaders use these capabilities differently depending leaders as much as practical wisdom approaches. action for the larger good. Enlightened self- force whereas spiritual wisdom begins objectively on the state of mind they are operating from – with We believe that wise leadership of 21st century will interest and self-less interest are sometimes with common good as the driving force. Values serve wisdom or with smartness: bridge the needs of today with values and practices guiding forces that help a leader develop practical as the bridge between the spiritual wisdom and In particular, we will show how practical wisdom of ancient wisdom, and wisdom at work is the need wisdom. practical wisdom (Figure 2). gives leaders the: of the hour. • ability to gain unified perspective so they make At this stage, it’s worth briefly exploring the Figure 2. Values bridge spiritual wisdom the most out of diversity differences—and complementarity—between and practical wisdom • humility and integrity to leverage religious wisdom and practical wisdom. The interconnectivity more effectively causality of religious wisdom is top down: the Common Personal • stability to deal with velocity religious perspective is objective and absolute Goods Benefit • clarity to deal with ambiguity and gives way to values and practices (rituals) that • resourceful creativity to deal with resource are consistent with the absolute perspective. The scarcity. religious perspective is objective and immutable. Spiritual Practical On the other hand, the causality of practical wisdom Wisdom Values Wisdom In that sense, wise leadership is leveraging is bottom up – when personal experiences and smartness for the greater good through reflection, individual actions are observed consciously one introspection and ethical clarity (in contrast with recognizes patterns and derive guiding principles smart leadership, which is the application of empirically. When these principles and experiences smartness and action in service of personal gain.) are interpreted and discernment is applied, one As a smart leader, once you let practical wisdom The wisdom anchor helps us to shift focus from could evolve a new worldview (Figure 1). This guide your actions, you will begin to appreciate using our smartness for our own benefit with a zero worldview is context-sensitive and subjective and the different states of mind that help you deal with sum mindset to using it for creating new value for after testing it over time and experiencing success complexity. You will learn to flex your “wisdom a higher purpose. We can reach this middle ground with it, it evolves into a wisdom logic. muscle”—rather than being stuck in the smart between the smartness extremes through reflection leadership mode all the time. and introspection, which are gateways to find Figure 1. Practical Wisdom vs. Religious Wisdom ethical clarity. Wise Leadership: The Antidote to Complexity In the context of complex world, the journey Practical Wisdom Smartness is grounded in application of intelligence from smart to wise is the movement from a rational Perspectives (subjective and context-sensitive) for self interest while practical wisdom is grounded and logical way of focusing on what is tangible and in taking ethical action for the larger good. When personally beneficial, to finding an authentic way of you become sensitive to the changing context, you paying attention to intangibles such as shared values Values Worldview begin to see that smartness has multiple shades and ethics for the greater good. Those intangibles and two extreme positions of smartness represent allow us to avoid attachment to either edge, and two significantly different contexts – functional build a capacity to leverage the entire spectrum Practices Principles knowledge and expertise (functional smartness) of smartness. To ignore the intangibles is to miss and business knowledge and expertise (business the invisible middle, which leaves us stuck with smartness). Practical wisdom is being able to take one kind of smartness or the other, but without Religious Wisdom Experiences advantage of the entire spectrum of smartness from discovering the middle ground of wise leadership. (objective and absolute) functional end to business end. Instead of being The journey to wise leadership is not just about stuck in one kind of smart leadership, you gain discovering the middle ground and staying there, access to all of smartness and depending on the but using that middle ground as an anchor or It’s important to clarify that religious wisdom and context, you bring forth appropriate intelligence fulcrum to dynamically move between the two edges practical wisdom are not contradictory in essence. with discernment to act and grow in practical of the spectrum. Indeed, there are values and principles that are wisdom. common and shared across all religions and are By consciously cultivating and continually gaining 76 77 T H “You and I are not what we eat; we are what we “Thinkers are original. Thinkers INK

think. “ said Walter Anderson in The Confidence ER

Course, 1997 contribute a fresh angle or a fresh S When I was in business school almost 20 years ago, there was this saying or shall I say quip, perspective or a never thought of “Those who can do, do and become managers before approach to, fundamental and entrepreneurs, those who cannot do become teachers, and those who cannot do and cannot teach aspects of our lives and humanity.” become consultants .” India Can we say the same about thinkers ? What are the similarities between thinkers and consultants ? to think tanks? The answers to both will be bleak When I was part of the management consulting at best. We have to stop looking at think tanks and team of my business school the joke about thinkers as irritants or people challenging the status consultants was, consultants are people whom quo. We have to make thinkers the starting point when you ask the time, they look at your watch, of our plans, our ideation, and our futuristic goals. tell you the time and take the watch away. Thinkers When will that happen in India? In the land of are not the same. Thinkers are original. Thinkers Buddha and the land of Aryabhata. contribute a fresh angle or a fresh perspective or Whichever way you look at it, we need more needs a never thought of before approach to, fundamental thinkers in India. When I think of thinkers, I think aspects of our lives and humanity. Thinkers dare of the following words: I say, change the world. “...the thoughtful excitement of lonely rambles, We in India do not encourage thinkers and the of gardening, and of other like occupations, where thinking culture because to sustain thinkers we the mind has leisure to must during the healthful need to give them an environment where they can activity of the body, with the fresh and wakeful blossom by challenging existing paradigms; where breezes blowing round it...” said Augustus William they are left alone and allowed to experiment. Hare and Julius Charles Hare, Guesses at Truth, a Thinking Thinkers are like R&D heads at pharma companies; by Two Brothers, 1827 sometimes it takes them a lot of time to find their Are institutions and authorities afraid of eureka moments. thinkers in India? In my view involving thinkers When you think of a thinker, you think of an in governance would lead to better governance. erudite person, with a beard, sipping tea and “Men fear thought as they fear nothing else on reclining in his chair or leaning forward on his table earth, more than ruin, more even than death. and in a “thought mudra”. Thought is subversive and revolutionary, destructive India is facing so many dilemmas; only sustained, and terrible, thought is merciless to privilege, Culture! systematic thinking followed by action can make established institutions, and comfortable habit. sure India and Indians realise their dreams. The Thought looks into the pit of hell and is not afraid. words of Voltaire have never rung more true, than Thought is great and swift and free, the light of the they do today: No problem can withstand the assault world, and the chief glory of man.” said Bertrand of sustained thinking. Russell By Anurag Batra The Indian government and our great institutions Some of the thinkers quoted were great doers have to encourage the thinking culture. What is a also, they visualised and they achieved. It is said, thinking culture ? In my view the thinking culture “Thinkers think and doers do. But until the thinkers is where very exceptionally talented professionals do and the doers think, progress will be just another from various walks of life are left to do their own word in the already overburdened vocabulary of the thing without expecting much. It’s like drug talkers who talk”. The Thinkers50 is a celebration In the land that gave birth to the great Buddha and discovery. The thinking culture nurtures contrarian of ideas, of action led movements, and individuals and sometimes impractical ideas. The thinking whose thoughts will shape the future of India. Aryabhata, it is baffling to see the paucity and lack of culture encourages individuals to think of ideas that acceptance of thinkers, who in fact have the capability may not be practical at first glance. to endow and enrich the fabric of our society. Let’s do a reality check. How many think tanks exist in India? Do we institutionally provide funding 78 79 T H Congratulations for being on the T50 list! Could “The tectonic shift about how a INK you share the broad ideas behind your academic ER work over the years? discipline would shift its paradigm S My academic journey was accidental. I went to America to do my MBA in production management. is not a linear model, not even an There I was exposed to the theory of hierarchy exponential model, but a curvilinear of needs. My academic career primarily began in studying psychology of consumers and also model wherein new ideas are born physiological aspects, which is called behavioral and there are bunch of people who economics. I began with this concept 50 years ago and it has evolved with time. The most definitive challenge the thoughts.” theory called the “Harvard shift theory of consumer THE behavior” became the foundation in the marketing Heights” which talks about future of emerging discipline. It actually became a paradigm shift markets inspired me and then I went into the because rather than taking a market perspective; Chindia Rising state. Even today I believe that the customer’s perspective was taken. In economics, resource advantage is a very cheap theory, instead the consumer must make choices and maximize the we have to look at resource advantage that the utility for the price they pay. This theory also says nation can create. that consumers become loyal to a brand and this JAGDISH becomes a habit rather than a result of cognitive What was the biggest challenge that you faced? thinking. So this model is very much based on My main challenge was to motivate the academic several factors of psychology that are integrated into community to shift their thinking as academics tend a common framework. to be lot more orthodox – they are the orthodoxy of thoughts. The tectonic shift about how a discipline What propelled you to move from consumer would shift its paradigm is not a linear model, not behavior to economics? even an exponential model, but a curvilinear model SHETH In 1968, I was a visiting professor at IIM Calcutta wherein new ideas are born and there are bunch of and taught international marketing in addition to people who challenge the thoughts. If we challenge consumer psychology. While teaching international the new classical economics towards behavioral marketing I was exposed to managerial issues as economics, the editors of the journals don’t accept compared to consumer issues. So, the principles the thinking as the reviewers are all trained with of economics in marketing began to shift towards the previous thinking. So this is one of the major INTERVIEW managerial marketing. Immediately after that challenges that I found as to how to push the followed managerial economics. In my thesis traditional journal to accept this framework. By Amit Kapoor work, beside behavioral, I also expanded into Right now emerging markets is one, which I am multimedia statistics and created a whole wave. propagating heavily and very well accepted by In a mutual economy, we began to understand known universities. that in large organizations customer reaches Overall, I would say, the challenges have not were more important than customer acquisition. been as many as the opportunities that I have got. So I started looking at the whole notion of I became an administrator in 1971 -72. Because relationship marketing. My theory was again of lack of leadership I learnt quite a lot of parallel to the theory of hierarchy but more on administrative aspects. In the academic study In an interaction between Amit Kapoor behavioral perspective. As transition economies I became like a director - more like a department and Jagdish Sheth, Charles H. Kellstadt were becoming a dominant domain, relationship head. Chair of Marketing in the Goizueta became more critical. There are two things that are hugely affecting Business School at Emory University, What was the idea when you moved into academics. One as you say is orthodoxy the latter talks about his idea of India, working on Chindia? of thought and the other is how to manage My giving into Chindia Rising was almost at the the faculty or resources. How do you react weaving in his expertise in behavioural nation level and also more policy oriented as to this in the Indian context? economics and management. compared to behavioral. The book “Commanding I would make comments at three levels. At the 80 81 T H

macro level I was an advisor to the ministry of India after the quick success of 1991 transformation How would you look at India going through the notion of policy in the govt thinking, as most of them INK

education, to bring about higher education reforms became very arrogant. They thought they were whole idea of social inclusion and the idea of are trained in the traditional economic thinking. ER

from a policy perspective. We all agree that there bigger than life and the media unfortunately societal value? To nurture capitalism in the positive way the S is a need for a perfect system but there was the amplified this idea. India went through an I think that this is a worldwide movement wherein governance mechanism should be inclined towards AICTE. Apparently there was a policy document accidental success and was not able to rationalize its the senior most management is convinced that the citizens; otherwise revolts would be there. that went to Sam Pitroda, Chairman of the National success. Most success happens accidentally. People if we don’t have a healthy society we cannot have Though people want to participate in government, Knowledge Commission and the PMO. So, from this are at the right place at the right time, but you can’t a healthy corporation. I think the shared value the politicians have not allowed them to participate, you can see that you cannot change the orthodoxy. say to the world I am just a lucky guy – nobody article that Michael Porter wrote has become the instead they have allowed them to represent them. The private universities, the deemed universities would bet their money on you then. He has to way of thinking now. I am very grateful because you After representation, the citizen feels that he is not and all educational institutes register with AICTE. rationalize – why he succeeded – he has to have an do need leaders like Michael Porter who have the participating. So Government should encourage The second loophole was that the AICTE, in the explanation why he succeeded. I think India went credibility and access to government leaders. citizen participation and this would make the legislative process, anchored everything to the through that. The last one is complacency. There I think you need people like Ram Charan to validate, government look very different 50 years from now. management process. So for instance, a one-year is no sense of urgency in India at all. legitimate and propagate ideas. My book in 2007 program was there instead of a two year program I think all that I can map is competitive myopia. called the “Sense of Endearment” with Raj Sisodia and there was nobody in charge of regulation. The We are always comparing ourselves to China all has now transformed into second book called “Most success happens third issue is Section 25 company wherein the the time without being aware of other competitors “Conscious Capitalism”. This whole movement of dividends are not distributed and this is a huge which may even be coming from advanced conscious capitalism very much matches Porter’s accidentally. People are at the right loophole in AICTE legislation. countries. The last one is competence dependence. idea of the shared value . place at the right time, but you At the university level I find there are four I found that whatever one is very good at, when that approaches. The first approach is to start something becomes irrelevant we are already trapped into that, So you do agree that societal value would have can’t say to the world I am just a fresh new and try to break the traditional legacy and our competency itself becomes our liability. So to be created by companies across the board? lucky guy – nobody would bet their of an IIM or IIT. It’s hard to change the faculty that’s the one bad habit I am watching about India. Absolutely. The reason is the government is the and which is also mentioned in my book “The Self Whatever we are competent in now is keeping us enterprise and does not allow the private sector money on you then.” Destructive Habits of Good Companies”. This book behind to go where we need to go. to nationalize. So government enterprise provide came out on a one to one meeting with the CEO economic livelihood through employment in rail when he asked the question – “Why good companies Where do you see India becoming complacent? roads, the telephone companies and telegraph How will principles of capitalism change? fail?” It took me 10 years of research to come out The complacency is happening because of the which are all government enterprises. Second thing The principles of capitalism will change and it with this book. sudden success of the educated class. There is a was social investment, which means wherever I will happen either through external compliance; The most common is denial of new realities, new generational shift and the young educated class get my income from I need to subsidize the poor. reservation; or internal self-enlightenment as arrogance, and compliance. In many ways do not work as hard as their fathers did and do not Third measure was economic development in other capitalism becomes self enlightened eventually. Self- traditional, well-respected universities will work on weekends as they have to maintain work- words how do I lift people from poverty through enlightenment is a better theory of capitalism rather probably become self-destructive. The dramatic life balance. The instinct for survival for livelihood government policy/resources/budget and the fourth than self-interest. The self-enlightenment is that the transformation is already taking place. The faculty is moving away, except in the poor class. Today measure is defence – i.e how do I protect my nation. huge disparity of wages/salaries in organizations is becoming competitive, as they don’t need an a young person is not bothered even if he leaves Most governments are finding that they cannot is in our hands to control. From the lowest paid institution anymore. They do independent work his job in four days. Though his father might have do all four anymore because of the bandwidth / category - from the managerial class to the help and come out with enormous research whether worked in a company with a very clear sense of resources etc. Defense is non negotiable so we begin line supervisor to the highest paid person CEO in science, technology, medical and now in obligation since he would be the only breadwinner to exit other endeavors. or chairman the whole range should no more than management. of the family. So that’s a part of complacency coming So, NGO’s were created to do the social service. 20 times. Similarly, in the factory, the person who in. Complacency also comes in terms of energy. The charitable activities done by the government works in the factory from the plant manager level How would you look at India on the aspect of If I feel good - like with success I would splurge like subsidizing education etc were given to the the range should not be more than 10 times. We will denial, arrogance and complacency? And how and be focused about what I want to do. So there foundations. The industry people know how to learn to establish our own jurisdiction to say that if would you really define the India growth story? are components of complacency. leverage it and they are passing on their wealth to we increase the range of salaries / compensations If we have to map India into those seven bad habits, society and doing a social contribution. Government it would be creating immediate revolt within the it is endowed with four of them. The first and As an academic, people do not want to hear does not know how to leverage it. Lot of foundations organizations. The people will sense lack of equity. biggest one is internal thought wars. In other words criticism in this country. How would you has given billion of dollars to education and health. The rich are getting richer within the company one ministry against the other ministry. We are overcome that? The third thing is to privatize everything. There and the poor are getting poorer. So that’s one-way not aligned amongst ourselves towards a common It is very painful to see that we as a nation are very are two roles that the government would have capitalism won’t respond when one company does goal or a common approach. Internal thought wars judgmental as people. We can make a comment in near future - defense and domestic security. it quite often. I believe that this kind of imitative always happen within larger institutions. on somebody with a political correctness. But if Government needs to be a policy maker rather behavior created by outside consultants on how you Second one is denial of new realities. I think India somebody else makes a comment on us we get very than a political model. The current policy is one should compensate is one way in which capitalism as a nation is in a denial stage. I also believe that angry and agitated. of compliance, one of watchdog. This changes the would become self enlightened. 82

Also the shareholder would hold the corporation responsible to do good for the community/ suppliers who are involved in value creation. It’s a shared value kind of concept. We encourage corporations not to give out as charity but whenever we create any value, x% only goes to the shareholder of 100% and y% will be redistributed value. It is basically the same as value redistribution; what governments do with taxes and the monetary policy system. But here it is done by corporations through its own distribution mechanisms.

What is your idea of India and how do you think we can achieve it? I can tell you one punch line, “The rest of the world needs India in many ways more than India even thinks.” Rest of the world thinks that India is a very strategic nation. Not from the traditional view or the colonial view of resource rich continent in agriculture, animals, human, natural resources. I don’t think they are looking at India from a resource exploitation/ access point of view. India is a market and as a market it is so important in the global architecture of competitors that they have to focus on it whether they like it or not. 84 85 T H

We are entering an Age of Complexity manifested most adverse circumstances and resourcefully INK

by intensified economic unpredictability, tectonic improvising solutions using simple means. Jugaad ER

demographic and technological shifts, and is about seeing the glass always half-full. S accelerating scarcity of resources. Adversity has become the new normal. The good news is that Jugaad Innovators: The Modern Day Alchemists we humans are typically good at coping with Jugaad is practised by almost all Indians in their adversity. From a biological perspective, humans daily lives to make the most of what they have. are pre-programmed to react predictably to Jugaad applications include finding new shrewd adverse—and even hostile—situations thanks to uses for everyday objects—Indian kitchens are our well-perfected “fight-or-flight” instinct. Sadly, replete with empty soft drink or pickle bottles however, this preconditioned “fight-or-flight” reused as containers for water, spices, or lentils— reaction fails to produce optimal responses in or inventing new utilitarian applications and today’s complex world. ingenious solutions with everyday objects, like using When we face an intractable problem many cellphones to make “missed calls”. of us tend to throw in the towel quickly or keep on fighting the issue wishing it will vanish. Now visualize this: what if you could transcend this “The jugaad innovators we studied binary “fight-or-flight” reaction and uncover a “third way”—a new outlook that empowers you to all hail from different cultures see adversity as an opportunity for personal and and social and professional collective growth? Adversity will suddenly morph into your ally—an ally that can ignite your ingenuity backgrounds. Yet they all share Converting Adversity Into Opportunity and drive you to the unearthing of revolutionary one unique quality: their uncanny solutions that yield amazing value for yourselves and for humanity. You will become a modern- ability to “make lemonade with day alchemist—one who can literally transmute any lemon” they are given.” adversity into opportunity. Such alchemists do exist—and many of them live in emerging markets like India. Take Kanak The entrepreneurial spirit of jugaad is not limited Das, a young man who lives in Morigaon, a remote to India. It is widely practised across all emerging village in the northeast Indian state of Assam. economies such as China, Africa, and Brazil, where Das got sick of riding his bicycle on poor village resilient entrepreneurs are also pursuing growth in roads filled with potholes and bumps. Assume difficult circumstances. The Brazilians have their you were an R&D engineer who works for Ford, own word for this resourceful approach: jeitinho. BMW, or Toyota trying to design a car that can ride The Chinese call it zizhu chuangxin, or indigenous By Navi Radjou smoothly on such potholes-filled roads: your “fight” innovation (in contrast with shanzhai, meaning instinct would have told you to design better shock copycat versions of foreign-made products). absorbers to overcome the bumps. But Das didn’t The Kenyans refer to it as jua kali. “fight” the bumps: instead, he used this constraint In our book Jugaad Innovation, my co-authors to his advantage by equipping his bicycle with a and I delved into the frugal and flexible mindset makeshift device that converts the shocks it gets of thousands of ingenious entrepreneurs and into acceleration energy—enabling his bicycle to run enterprises around the world practicing jugaad to faster on bumpy roads! Das literally transformed creatively address critical socio-economic issues adversity into an opportunity to innovate and in their communities. In Kenya, for instance, extract value from the very problem he confronted. entrepreneurs have invented a device that enables Das epitomizes the spirit of jugaad. Jugaad bicycle riders to charge their cellphones while is a Hindi word meaning an innovative fix or an pedalling. In the Philippines, Illac Diaz invented improvised solution born from ingenuity and A Litre of Light—a recycled plastic bottle containing cleverness. Jugaad is, quite simply, a unique way bleach-processed water that refracts sunlight, Jugaad is the gutsy art of spotting opportunities in the most adverse circumstances of thinking and acting in response to challenges; producing the equivalent of a 55-watt light bulb. and resourcefully improvising solutions using simple means. it is the gutsy art of spotting opportunities in the This product—which costs only $1—is a boon for 86 87 T H

scores of Filipino families living in makeshift houses “a better world”. This higher purpose provides Pensée Sauvage. According to Lévi-Strauss, barriers” for a larger number of users. For INK

in off-the-grid shantytowns. And in Lima, Peru (a them great ethical clarity and serves as an inner- a bricoleur taps into existing resources to quickly example, Eko’s mobile banking and payment ER

country with 98% humidity that receives only 1 inch compass that guides all their decisions and actions. solve a problem—unlike an engineer who goes services can be accessed using even the most basic S of rain a year), the local University of Engineering For instance, brothers Abhishek Sinha and Abhinav searching for the best resources available to design mobile handset. This ease of use is a key success and Technology (UTEC) has designed advertising Sinha cofounded Eko to make financial services a perfect solution. Mansukh Prajapati is one such factor of Eko’s service which today counts 2 billboards that can generate up to 100 litres of affordable and accessible to the 600 million Indians bricoleur: a potter by training, he created MittiCool, million clients. potable water out of humid air each day. who can’t avail of banking services. Eko enables low- the world’s “greenest” fridge made entirely of • They are inclusive: The solutions make critical The jugaad innovators we studied all hail from income people to open a savings account in a kirana clay that consumes no electricity and is 100% products and services available and accessible different cultures and social and professional (neighborhood retail store) and then merely use a biodegradable. to “marginal segments” of the society—e.g., low- backgrounds. Yet they all share one unique quality: mobile phone to deposit/withdraw cash as well as income people, the elderly, ethnic minorities— their uncanny ability to “make lemonade with send/receive money. They are adaptable who traditionally couldn’t afford or access these any lemon” they are given. They are resilient Jugaad innovators possess an agile mindset that products/services due their high cost or high entrepreneurs who overcame tremendous enables them to rapidly shift course and reach complexity. For example, SELCO’s solar lighting difficulties to invent ingenious solutions to vexing “Renault-Nissan’s CEO Carlos Ghosn their objectives by trying out various approaches. systems are now used by over 125,000 rural issues afflicting our societies. Like magicians, they They are not wedded to any specific approach or households across India (SELCO aims to serve conjured up these innovative solutions out of thin famously coined the term “frugal tool to solving problems. Their sense of purpose 200,00 households by 2013). air—using meager resources. Just as an alchemist engineering” in 2006 to describe is steadfast (“Make the world a better place”) but • They are sustainable: The solutions are both can convert low-value metal into high-value gold, their method to serving that purpose is dynamic and environmentally and socially sustainable. First, these frugal innovators can “do more with less”: they the Indian engineers’ unique ability constantly evolving. Hence, they are resilient and these solutions are eco-friendly and minimize can create lot more value using far fewer resources. to conceive high-quality solutions can “reinvent” themselves continually. For example, use of natural resources. Second, these solutions Harish Hande founded SELCO in 1995 to debunk contribute to the social sustainability of local What Makes Jugaad Innovators— faster, better, and cheaper.” the myths that poor people can’t afford solar energy communities by spawning new “ecosystems” that And Their Solutions—Unique? and cannot maintain sustainable technologies. create new jobs, etc.—thus catalyzing a virtuous Despite their diversity, all the jugaad innovators—be Conservative banks refused to fund his startup and cycle of enduring socio-economic growth. they entrepreneurs or corporate leaders—we studied They are nonconformists he initially struggled to convince rural consumers to For instance, Mansukh Prajapati involves many in India and other emerging markets all have the Jugaad innovators boldly challenge the status- switch from cheap-but-polluting kerosene to solar women in his village in Gujarat to produce his following unique personality traits in common: quo by relentlessly posing the question: “Why systems. But Hande applied his flexible thinking MittiCools, thus creating gainful employment not?”. They exhibit what Samuel Taylor Coleridge to improvise an ingenious solution that involves a for local community members. They are empathetic calls “uncommon common sense”: they develop grassroots network of micro-entrepreneurs who They recognize that their fellow citizens are counterintuitive solutions that flout conventional charge, install, maintain, and collect payment for The Rise of Jugaad Innovation In The West suffering from adverse circumstances (e.g., poor wisdom or even turn it on its head. For example, solar lighting systems that they rent to people in The developed world, like emerging economies, is access to healthcare or education services) and when Ratan Tata announced his decision to produce remote villages. increasingly facing its own problems in areas such strive to lessen their pain. It is this compassion the Nano industry experts and media analysts These personality traits of jugaad innovators also as healthcare, education, finance, and community for other beings that sparks their own passion to scoffed at the idea of making a $2,000 car, for which pervade the clever solutions they conceive. All their development. Cash-strapped Western governments, discovering pertinent solutions to issues afflicting they believed there would be no market. But the astute solutions (products or services) share the however, are unable to deal with these challenges others. For instance, Jane Chen, a Stanford MBA, maverick Tata stuck to his counterintuitive decision following attributes: on their own. In this context, a new wave of flexible- was deeply moved by the fact that 20 million babies and he ended up creating not only a breakthrough • They deliver more value at less cost: Their minded jugaad innovators in the US and Europe are are born prematurely or with a low birth weight car but he also shaped an entire new market for sub- ingenious solutions are low-cost (or much less emerging. These nonconformists are turning the each year worldwide, and four million of them die, compact cars that Western automakers are jumping expensive than alternative solutions in the conventional practices of many industries upside most in developing nations, because their parents into lately. market) and yet they offer much greater value down, and in the process creating affordable and can’t afford to maintain them in baby incubators, for users. As a result, these solutions deliver sustainable products and services for more citizens. which are too expensive. To address this issue, They are ingeniously resourceful “more value for less”. For instance, the Embrace For instance, Sal Khan founded Khan Academy to Jane co-founded Embrace, which makes Just like MacGyver (the famed TV action hero portable infant warmer costs less than $200—or democratize access to education and make learning inexpensive portable infant warmers that low- who can escape from any predicament by 1% of the cost of Western baby incubators priced more fun for kids. He has created over 4,000 video income mothers in rural India, China, and Africa improvising solutions using just his Swiss Army at $20,000. More importantly, mothers can now tutorials for math, sciences, and engineering that are can use to keep their premature babies warm, and knife) jugaad innovators display great ingenuity in hold against them their premature babies— freely available on YouTube and are today viewed by thus save their lives. the face of challenges. They leverage their (inner) dramatically boosting their chances of survival. over 6 million users a month. Similarly, Erik Douglas resourcefulness when they have no external That’s real value! co-founded CellScope, a startup that converts They are driven by a higher purpose resources to tap into. They embody the frugal • They are simple to use and maintain: The your smartphone into a medical diagnosis tool so Jugaad innovators are not driven by fame or money. “bricoleurs” whom the legendary anthropologist solutions are designed to be incredibly simple to you can do ear, throat, and skin exams at home Rather, they are motivated by the aspiration to build Claude Lévi-Strauss lauded in his seminal book La use and maintain, thus lowering their “adoption without having to visit an expensive lab. CellScope 88 89 T H is a boon for the 50 million Americans who lack his decision to produce the Nano industry experts SIDEBAR: THE WISE AND UNWISE USE OF JUGAAD INK medical insurance. And to meet the needs of the and media analysts scoffed at the idea of making ER

68 million Americans today who are unbanked or a $2,000 car, for which they believed there would In the Indian context, the word jugaad carries a slightly negative connotation for some. That’s because the jugaad S underbanked, Danny Shader founded PayNearMe, be no market. But the maverick Tata stuck to his mindset can also be applied to find an ingenious way to either game an existing system or even violate it. But by and which enables US citizens without credit/debit counterintuitive decision and he ended up creating large, the entrepreneurial spirit of jugaad is practiced by millions in India and in other emerging markets simply to cards to pay for online transactions by cash in local not only a breakthrough car but he also shaped improvise completely legitimate solutions to everyday problems. The figure below captures the three ways jugaad can convenient stores. an entire new market for sub-compact cars that be used based on the nobility of the intent (Sankalpa in Sanskrit) of the person using jugaad and the societal impact Universities too are joining this jugaad innovation Western automakers are jumping into lately. (Karma in Sanskrit) created by his/her actions: movement in the West. Several higher education They are ingeniously resourceful: Just like institutions in the US and Europe are training a MacGyver (the famed TV action hero who can new breed of engineers and managers to design escape from any predicament by improvising next-generation products and services that can solutions using just his Swiss Army knife)

deal with scarcity in a frugal and sustainable jugaad innovators display great ingenuity in the Positive Improve existing system or create new system manner. For instance, Stanford runs a very popular face of challenges. They leverage their (inner) • Nano multidisciplinary program called Entrepreneurial resourcefulness when they have no external • Mobile Banking Design for Extreme Affordability. And MIT, with resources to tap into. They embody the frugal • Distributed solar energy funding from Ratan Tata, recently launched the “bricoleurs” whom the legendary anthropologist Tata Center for Technology and Design to train Claude Lévi-Strauss lauded in his seminal book Game or future generation of engineers and business leaders La Pensée Sauvage. According to Lévi-Strauss, a circumvent existing system to create affordable technologies and inclusive bricoleur taps into existing resources to quickly mpact • Missed calls

systems that meet the needs of resource-constrained solve a problem—unlike an engineer who goes I • Electricity theft communities in the developing world. searching for the best resources available to design Finally, several vanguard Western corporations— a perfect solution. Mansukh Prajapati is one such helmed by visionary CEOs—are pioneering the bricoleur: a potter by training, he created MittiCool, adoption of jugaad innovation. The most notable the world’s “greenest” fridge made entirely of ocietal

of them is the global carmaker Renault-Nissan, clay that consumes no electricity and is 100% S Abuse or violate whose CEO Carlos Ghosn famously coined the term biodegradable. existing system • Bribery “frugal engineering” in 2006 to describe the Indian Ultimately, the ingenious solutions devised by • Nepotism engineers’ unique ability to conceive high-quality these audacious jugaad innovators—our modern- (e.g. Commonwealth solutions faster, better, and cheaper. Ghosn is a big day alchemists—in emerging markets as well as Games) admirer of the jugaad mindset. As he puts it: “In in developed economies stand out not because Negative Selfish NOBILITY OF INTENT Altruistic the West, when we face huge problems and we lack they are “clever” but because they bring hope resources, we tend to give up (too) easily. Jugaad to millions around the world. In today’s morose © Navi Radjou is about never giving up!” In 2012, he sent Gérard economic climate and challenging social context, Detourbet, a senior French executive in charge of these alchemists help transmute pessimism into Figure 1. The Various Uses Of Jugaad legitimate solutions that improve deficient existing Renault’s entry-level car business, to India. From optimism—and that, by itself, is priceless. These In Figure 1 (depicted above), the red zone depicts the systems (in healthcare, energy, education, retail, his new R&D center in Chennai, Detourbet will be ingenious alchemists—and their frugal and agile “negative” use of jugaad by unwise leaders—especially finance)—or aim to create entirely new systems that designing and producing several vehicles—all built jugaad mindset—not only represent the hope for in political and business circles—for selfish purpose: are highly efficient and bring greater benefits to a large on the ultra-low-cost “A-Entry” platform—that humanity but they also help restore our faith in they abuse or violate existing systems (think of the number of people (think of the Nano car, mobile banking will first be launched in India and then marketed humanity. Commonwealth Games debacle), hence generating applications like Eko, or distributed solar energy systems in Brazil and South Africa. There is no doubt that negative societal impact. like SELCO). when Detourbet returns to Renault’s headquarters This article is partially adapted from the book The blue zone represents the “neutral” use of jugaad The Buddhists have a saying: “A knife in the hands of in Paris, he will carry with him the flexible jugaad Jugaad Innovation: A Frugal And Flexible by someone who tries to “game” or circumvent an a thief is life-threatening; but the same knife in the hands mindset he acquired in India. Approach To Innovation For The 21st Century existing system—like in the case of “missed calls”—but of a surgeon is life-giving.” Jugaad is like that knife. It’s They are nonconformists: Jugaad innovators (Random House India, 2012). that person is not ill-intentioned. In this context, a person merely a tool. What matters is why use the tool—and boldly challenge the status-quo by relentlessly may even create a jugaad solution that seemingly is how wisely you use it. My book Jugaad Innovation deals posing the question: “Why not?”. They exhibit what illegitimate but do so with the motivation to help others with wise entrepreneurs and firms worldwide who are Samuel Taylor Coleridge calls “uncommon common (e.g., a rural youth siphoning off electricity from power using the jugaad mindset with sense”: they develop counterintuitive solutions lines to bring energy to his off-the-grid village) a noble intent to make positive societal impact that flout conventional wisdom or even turn it on Finally, the green zone represents the “positive” use on a large scale. its head. For example, when Ratan Tata announced of jugaad by ingenious entrepreneurs inventing totally 90 91 T H By Ravi Venkatesan Three months on the road, promoting my new and attract FDI, it certainly needs to make India INK

book in America, Singapore and Europe have a less hostile place. But my point is that even in a ER

been an extraordinarily eye-opening experience. tough market and a slowing economy, it is possible S In this book, called “Conquering the Chaos; Win at the firm level to carve out a very successful It is one thing to survive in the chaos in India, Win Everywhere”, I look at why most business. And this is what companies like Samsung called India, but by not correcting its MNCs have failed to make India an important have shown. However I wasn’t prepared for one condition of dishevelment, India will market and what might be the consequences of question which really flummoxed me; it came from this. Most MNCs in India are part of a “1 percent a wise former US Ambassador to India. “So what never succeed in realizing its potential. club” where India contributes an irrelevant 1% or you are saying in effect is that India will continue less of their global profits. They tend to blame this to be a lower middle income country, like much on the challenges of doing business in India. A key of Africa and South America instead of someday point in the book is that chaotic India is in fact catching up with Europe or even China; isn’t that highly representative of most emerging markets. a rather tragic scenario for a country with such Corruption, bureaucracy, policy uncertainty and amazing potential?”, he asked. A volatility, harassment by the taxman, inadequate protection for IP, poor infrastructure etc. are not unique to India alone; they are characteristics “Companies that have done of all emerging markets and MNCs can’t escape this chaos in Brazil, Indonesia or Nigeria as well. spectacularly well in India such Companies that have done spectacularly well in as Suzuki, Unilever, JCB, Cummins, India such as Suzuki, Unilever, JCB, Cummins, Nokia, Standard Chartered, Hyundai or Schneider Nokia, Standard Chartered, Hyundai Electric have learned to thrive in the midst of chaos or Schneider Electric have learned and having succeeded in India, they find that they have developed the capabilities, mindset, talent and to thrive in the midst of chaos and innovative products and business models that help having succeeded in India, they them succeed elsewhere. This is why the subtitle of Call the book is “Win in India, win everywhere”. These find that they have developed the companies are not waiting for India to get better or capabilities, mindset, talent and look like a more developed market; they are instead adapting themselves and their business model to the innovative products and business realities of India and being richly rewarded for this. models that help them succeed I contrast their approach with that of companies like Apple or Caterpillar who hesitate to commit to elsewhere.” India until things get better allowing competitors like Samsung or JCB to eat their lunch. While India The question stopped me in my tracks and has is a very challenging market, the bigger challenge rankled ever since. It’s fine to dish out advice to for many MNCs is their own headquarters mindset. companies on how to prosper despite the chaos but Such companies will find the going to be tough not what about India itself? As an Indian, I had sort just in India but all emerging markets. of come to believe the rhetoric of Incredible India. to Since our economy is in such dire straits and our I had come to believe that despite all our many reputation as a rising nation so tarnished, I was challenges we would stumble our way forward-if fully prepared for a lot of pushback and criticism not to great power status, at least to the status of a of my rather contrarian views. In fact, I was developed nation. Rather naively, I had thought this surprised by the fairly ready acceptance of my might happen even in my lifetime, but as I reflected thesis. The only pushback I got was, “Are you letting on the question and on the events playing out in the government of India off the hook too easily?” our country, it struck me that the good Ambassador It is certainly true that India is one of the toughest had in fact asked the most relevant question. It’s not places in the world for a business (ranked 132 out about our potential but rather how much of it we are of 200 countries according to the World Bank). If likely to realize. Action the government wants to jump start the economy As a CEO who has run large companies, I have 92 93 T H learned that sustained performance has less to do “I have learned that sustained This brings me to the matter of leadership. honest civil servant for instance. Activism matters INK

with ambition, opportunities, or resources; long Human nature is not fundamentally different more than we might think; Jessica Lal’s murderer ER

term performance is in fact the outcome of strategic performance has less to do around the world. If people in Singapore or would still be free if it weren’t for activism. India S choices, organizational capabilities, company Switzerland follow the rules diligently, pay taxes, would not have an antirape Act if it weren’t for culture, and above all, leadership. Over time, I have with ambition, opportunities, and don’t litter, it isn’t because they are different activism. We could donate generously and support realized that this is true not just for a company, but or resources; long term or better. It’s because these countries have the small number of individuals and non-profit for any organization and perhaps even for a country. rules, regulations, and laws and swift and equal organizations who are fighting courageously for And this framework highlights India’s problems. performance is in fact the consequences for violating them. This happens better governance. And finally, handful of us could For a start, we cannot agree on ideas let alone outcome of strategic choices, because they have built strong institutions and a muster up the courage to jump into politics and tip strategies for anything. What should our policy strong culture which in turn are a product of good the balance in favour of good. be towards Pakistan? Towards China? Towards organizational capabilities, governance and good leadership. The ultimate Progress has always hinged on the forces of good America? What is our strategy for economic company culture, and above failure in our country is one of leadership and being stronger than the dark forces. Once we make development? How are we going to balance growth governance. It is impossible for India to make a decision to be a force for good, we are limited only and the need for more equitable distribution? Is all, leadership.” any progress on any front when self-interest by our imagination. It is the educated middle class globalization positive for India or not? Are we going trumps national interest every time. We have that ultimately determines the future of a society. to welcome foreign companies and the investments, father of our Constitution, recognized that we are gradually allowed our country and our society to It is time for us to step up. technology, and jobs that they bring or are we going a fundamentally undemocratic and amoral culture. be hijacked by people who are criminals at worst to remain distrustful of them? Indeed are we going Take corruption. It’s very easy to blame the person and self-serving at best. For the most part, those to be welcoming of businessmen and entrepreneurs asking for the bribe, but what about the person at the helm of affairs today have little interest in or go back to Nehruvian distrust that crushed our paying it? Why pay a fine for running a traffic light India’s development. 30% of Lok Sabha members economic potential? How are basic healthcare and when you can get away by offering Rs 100? Why are criminals; 369 MPs and MLAs have been education going to be delivered? How much should suffer a delay of some months getting a property convicted of crimes against women. 100% of our be left to the private sector? How are we going transaction registered when you can pay a bribe parliamentarians under the age of 30 are children to improve our infrastructure? On any number and get it done today? Most of us have become so of politicians; so are 2/3rds of those under the age of fundamental questions, there isn’t coherent used to corruption that we fail to see much wrong of 40. These aren’t the people focused on the thinking; we simply muddle along. with it. The whole pond has now got poisoned and country’s development. This extraordinary The issue of institutional capabilities is even it is hard to find a single sphere of activity that isn’t corruption and selfishness is true not just in more troubling. We could have all the ambition highly corrupt-business, civil society, education, politics and not just in the civil services or judiciary. and even strategic clarity but without strong even religion. No act is now so brazen as to be truly It is equally true in business where much of institutional capabilities, nothing can happen. shocking. Lack of concern for the commons, evident the prosperity has been created more by crony “It’s like trying to go to the moon on a bullock cart; from the condition of our public spaces, for instance, capitalism than real entrepreneurship. And to an no matter how much you flog the bulls, you won’t is another striking feature. I couldn’t help but notice extent it applies to all of us, the urban middle class, get there.” says spiritual leader Jaggi Vasudev. We that in New York City, every little public space who have chosen to stay disengaged and simply have to upgrade our capability from bullock cart has a small little garden or flower patch tended feather our own nests. to spacecraft. Many of our institutions are still in by volunteers. In India, every one of those would I cannot claim to have a good solution but it the 19t century; perhaps some like the ICS were likely be a garbage dump. What about dodging does strike me that we have a few choices. Some stronger then than today. Harvard economist taxes? In a country of nearly 100 official billionaires of us can emigrate-as many did in the seventies and Lant Pritchett points to rampant absenteeism, and zooming luxury car sales, is it not egregious eighties. Others can erect stronger moats around indifference, incompetence and corruption in many that only 40,000 people, almost all of whom are our gated communities and try to keep the chaos of our institutions and suggests India is a ‘flailing professionals with tax deducted at source, have a at bay. We could turn to religion and pray for things state”. How can we reasonably expect anything to be declared income of over INR 1 crore? After visiting to get better. We can pray for a savior like Mahatma implemented when our implementation capabilities Europe many times, I cannot but be impressed Gandhi to arise and lead us to a better future. Or at are so compromised? Historian Ram Guha points to by the extent to which European society focuses least a benevolent strongman like Lee Kwan Yew the deliberate and systematic erosion of many of our on the rights and needs of its weakest and most though India seems much too complex to be led critical institutions–law enforcement, judiciary–and marginalized members of society. Yet we dismiss by a strongman. Or more of us could step up and posits that instability may be India’s destiny. them as weak society in terminal decline even as demonstrate greater public spirit and leadership How about culture? It is easy to blame the we shrug indifferently at the death of children in and try to reclaim India’s future. We could start current situation on politicians and babus, but Bihar who were fed a poisoned midday meal or at by being good citizens-law abiding, paying taxes, what about us? While there are indeed incredible the countless daily acts of violence against women. voting in elections, refusing to pay bribes. We could aspects to our culture, there are some things that Which is the better society? Where would you join hands and protest strongly, publicly, peacefully are truly shameful. Even Dr B.R. Ambedkar, the rather live? against injustice-the suspension or transfer of an 94 95 T H I am a product of the Indian higher education “India produces less than half the INK

system. I am also a product of the American ER

educational system. And, I have been teaching in number of PhD’s as do China and S universities in the U.S. for about 30 years. Thus, nearly my entire adult life has been involved in some the U.S. This number is grossly way with the education sector. Over the past few inadequate, even ignoring quality years, I have had several occasions to get a closer look at the many facets of India’s higher education differences.” Rethinking system. In 2009, Penn State University (www.psu. edu), where I am employed, asked me to co-chair Quality faculty a committee to explore strategic opportunities In a speech in 2007, Prime Minister Manmohan for Penn State to engage with Indian universities Singh noted that about 67% of Indian universities to enhance our own research, teaching, and and 90% of Indian colleges are of poor quality. global footprint. To implement this committee’s At the core, the quality of an educational institution recommendations, I have since engaged with (and consequently, its reputation) depends on the the Role officials in India’s Ministry of Human Resources quality of the students, the quality of the faculty, and Development, and with several higher education the quality of the educational experience, i.e., the institutions in India, such as IITD, IITM, TISS, magic that happens when quality students interact MDI, and IIMB. In this article, I want to share my with quality faculty. I have no doubt that Indian observations about the role of faculty quality in students have the intrinsic ability to hold their own enhancing the overall quality of Indian universities. against students from other countries if they have Much has been written by many experts and access to a good-quality education. However, when government-appointed commissions about the it comes to the quality of faculty and the quality of Quality state of Indian higher education, its shortcomings, of the educational experience, there is much that and potential ways to fix the problems. While is lacking, especially when one ventures outside there are many overall goals that have been of the IIT’s, IIM’s and the central universities. proposed for India’s higher education system, As someone put it well, in India we have “A” three goals seem to be central: (1) Make higher students taught by “B” faculty working for an education more accessible to more students “F” administration. In the rest of this article, I will so that Gross Enrollment Ratio (GER) reaches focus only on issues pertaining to enhancing the in India’s levels that are comparable to those of developed quality of faculty, and will not discuss issues related economies, (2) Ensure equity so that poor and to enhancing the quality of education in general socially disadvantaged groups gain access to (which is a major subject worthy of a separate higher education, and (3) Enhance the quality and article). I will also not address issues related to the By Arvind Rangaswamy excellence of the education available to students. policy goals of educational access and equity. Although it is often assumed by policy makers that One could view every good university as a all three goals could be simultaneously pursued unique aggregator of faculty talent. And, the top Higher with equal vigor, that is not so. For example, high universities of the world are defined by having quality often means careful selection and exclusion high-quality faculty that cannot be duplicated by of many students, i.e., less access. In 2012, only others. In this sense, there can be only one Harvard 9,647 out of 512,000 test takers were admitted to University, because its unique faculty talent cannot one of the IITs (less than 2%). In fact, increasing be replicated. In a FICCI meeting a few years ago, a access (i.e., providing college degrees) without speaker suggested that a country of India’s size and substantial increases in quality will lead to adverse capabilities should be able to create 10 Harvard’s in Higher education institutes social consequences by raising expectations but not ten years. That, of course, is a pipedream, because Educationin India need to improve employment outcomes. Recently, Infosys sorted there cannot be two Harvard universities, or for that quality in multiple areas, through 1.3 million applicants only to find around matter, two IITM’s. And, further, not all universities 2% that were qualified for jobs, not unlike the 2% can, or should, aim for the highest levels of faculty and particularly fast-track admit rate to IIT’s. talent. By necessity, there is a segmentation of initiatives around attracting faculty talent, with different types of educational System high quality faculty. institutions attracting different segments of faculty. 96 97 T H

Quality is non-additive, which means we cannot in conferences in China, some have been offered or other affiliations of the source of an argument education is not just about learning content, but is INK

simply add up the work of two average faculty faculty positions on the spot under the Talent or piece of knowledge. They will encourage wide more importantly a way to also learn how to convert ER

members and get the results delivered by one Programs, based on recommendations from their sharing of knowledge both within the university content into beneficial actions and outcomes, and S high-quality faculty member. This also means Chinese colleagues. Recruiting top talent in such a and in the local economy in terms of curriculum, for gaining useful life experiences, such as finding that increases in quality of education will involve proactive manner is a must. Most such scholars are research, and teaching. As a result, strong academic strong mentors from within a collective learning disproportionate increases in costs for realizing the not going to respond to recruitment ads, certainly values have the potential to become institutional community, building lifelong friendships, becoming higher quality, a cost structure that is less palatable not to the type of bureaucratic ads for faculty norms, and to not remain as just the private values a better person, learning to thrive in competitive than the linear increase in costs associated with positions that I see in Indian newspapers. Perhaps of a few motivated faculty members. Traditional intellectual environments, gaining hands-on skills, increasing the access to education. But, we need the “National Professor” program currently in place academic values are under threat even in Western and the like. There is a real danger that the allure to get the quality initiatives started. Where should could be greatly expanded for this purpose. countries because it is becoming harder to justify and reliance on online education will lead to we start? My contention is that the source of the funding for educational institutions without a two-tier society with the well-to-do students quality bottleneck is at the very top, and that is associating those funds with specific performance getting a more complete and meaningful higher- where we need to focus our attention first. Don’t “Education, it is said, is not the outcomes. But, instilling strong academic values is quality educational experience in the offline world, get me wrong. There are some outstanding scholars a foundational requirement at a time when India and the poor being reduced to getting an online at Indian universities who can compete with the filling of a pail, but the lighting is in the process of transforming its entire higher education. very best in the world. But, there are not enough of a fire. Without high-quality education enterprise. When top academic leaders Attracting top faculty and academic leadership of them. We need many more high-quality faculty participate in the apex bodies that set or implement talent, even if this approach is successful, is less than and administrators to provide the intellectual and faculty, we will merely be filling higher education policies and funding guidelines, or half the story. It is difficult to put academic values administrative leadership for many existing and new the pail, and not lighting the fire establish the norms associated with accreditation, into action, even if those values are shared by an educational institutions that are emerging. the entire system will benefit. entire community, but it is an even bigger challenge Today, it is a global market for faculty talent. This within the students who want to All of this will cost a substantial amount of in the presence of a perceived elite group, which means that a world-class university has to recruit in money. Even if India was able to recruit only 100 could engender envy, resentment, and system- the global market for relatively scarce talent, which reach for something more in life such faculty/academic leaders per year over the level dysfunctions. Therefore, an environment is the obverse of the situation in which widely for themselves and for others.” next five years, my rough estimate is that the cost has to be created so top talent can thrive, and in distributed talent can be obtained from outsourced of this effort would be $600 - 750 million (3,600 to turn, recruit additional talent to reinforce the locations at lower costs. It often takes several years 4,500 crores) over the first five years of recruitment, learning communities that keep feeding the quality beyond a Master’s degree for someone to obtain a Leadership in higher education with continuing expenses of $200 million per year multiplier. While there are many things that need PhD and become eligible to be part of the global Even more important for removing the quality thereafter. However, the “quality multiplier” effect to be carefully thought through to create such a faculty talent pool. The PhD education process is bottleneck, India needs a large number of leaders of this group should be very high, helping to diffuse conducive environment (e.g., academic freedom, not scalable because it requires a lot of expensive for its educational establishments (particularly quality throughout the educational system. In any strong PhD program), I would like to focus here on one-on-one mentoring. India produces less than Deans and Vice-Chancellors), who have had case, the talent recruiting effort could be started the need for a clear and detailed quality assessment half the number of PhD’s as do China and the U.S. experience at the world’s leading universities. as an experiment on a limited scale the first couple system. Greater rewards should be subject to stricter This number is grossly inadequate, even ignoring This recruiting of academic leaders would be well of years, and then expanded when the return on accountability. Typically, top universities in the U.S. quality differences. Thus, building a university with worth the investment and effort because such investment is established on a firmer basis. use a combination of the following four criteria for top faculty could take years, or even generations, leaders could help leverage scarce resources and It is fashionable these days to talk about evaluating faculty scholarship (teaching quality is unless the university adopts fast-track processes direct them to uses better aligned with the future, online education as a way to resolve the “quality” measured via other metrics): for recruiting talent, and has the resources to pay than if the funds were to continue to be disbursed problem without incurring substantial costs. A • Quality of the journals in which the faculty roughly equivalent global prices for that talent. through the current entrenched system of grants single superstar faculty member can indeed reach member publishes his/her work (the top China has tried to speed up the process via such and excessive government regulations. The recent millions of students and inspire them, but does universities expect a significant number of initiatives as the “Thousand Talent Program” which appointment of Raghuram Rajan as Governor of that necessarily give them a high quality education publications in “A” journals, especially for junior provides substantial funds for recruiting up to 1,000 the Reserve Bank of India is perhaps an indication (ignore, for a moment, the credential value of a faculty). star faculty from foreign countries in a span of five that the Indian government might be willing to take well-established traditional university)? I do not • Impact measures associated with published years. Many regions have set up their own Talent similar bold steps with appointments to academic doubt the value of widely distributing knowledge articles (typically, this is based on citation counts, Programs to attract star faculty to their locations. institutions. Another hopeful sign is that the number in an understandable manner, and the online and the types of papers that cite the work of the Likewise, the Indian government, perhaps in of visas granted to Americans to work in India has medium may even work well for providing quality author)1. partnership with Indian industries, should establish increased substantially in recent years (New York educational experiences to the masses in a few topic and fund programs for attracting a significant Times, Feb 12, 2012). areas. But there are many subject areas where the 1 A recent bibliometric analysis of India’s scientific publications revealed number of faculty stars from abroad who would Top academic leaders from Western educational online medium fails if it is the primary medium of that the indexed average citations per paper published by a researcher from serve to raise aspirations and set quality standards institutions bring with them strong academic education (e.g., medicine, architecture, chemistry). India increased from 0.35 in 1981-85 to 0.68 in 2006-2010 (compared to the world benchmark figure of 1.0). The indexed average U.S. citation rate for for entire disciplines and professions. When values and experiences that promote disinterested Gaining knowledge is necessary, but not sufficient, the corresponding periods were 1.41 and 1.37 (www.dst.gov.in/whats_new/ well-known foreign scholars have participated scholarship without regard to the religious, political for getting a good education in those areas. Also, whats_new12/report.pdf). 98

• Visibility of faculty member in his/her field (e.g., honors, author of widely-adopted textbook, editorial appointments in prestigious journals, board memberships in companies and professional associations in areas of expertise). • Productivity (regular contributions to the scholarship of a field, in terms of the number of publications and other measures of output).

Even when all of this information is available about a faculty member, it requires special expertise to judge the quality of scholarship. While it is possible for faculty members to game some of these metrics, typically these metrics are not directly under their control (e.g., citations and honors are decisions made by others). Thus, we can bring a measure of objectivity to the difficult task of assessing faculty contributions. Academic leaders could also be evaluated on the same four metrics, but as they apply to the entire faculty for which they provide leadership (in addition to other metrics of leadership performance). Management and information systems are needed for the collection and use of such metrics for every faculty member at an educational institution. In fact, a customizable system could be designed by an apex body of academicians for use in all educational institutions in India. For example, companies such as DigitalMeasures.com have developed flexible IT systems for this purpose, which are used in several U.S. universities. Finally, I would like to point out that the true test of the quality of a university is the employability of its students by industries, governments, and educational institutions, and for that matter, employability in the global labor markets. In this sense, faculty quality is a means to an end – to produce students who embody good values, have a passion for learning, and are well-prepared for the jobs of tomorrow. Education, it is said, is not the filling of a pail, but the lighting of a fire. Without high-quality faculty, we will merely be filling the pail, and not lighting the fire within the students who want to reach for something more in life for themselves and for others. It is time to re-kindle the spirit that built the great Nalanda University 2,600 years ago, which in its time was among the very best “universities” of the world and served as a source of inspiration and as a magnet for top students pursuing many different fields of study. 100 101 T H Backdrop and the current law “A recent report by National INK Indian markets offer an exciting opportunity with ER its billion+ and growing population. We have Sample Survey Organization (NSSO), S one third of America’s area and four times its population, and offer twelve times more customers based on a comparison of data to any prospective entrant with its bags of goods on household spending patterns and services. While the opportunity to work CSR: with the economies of scale on the logistics and for 1999-2000 and 2011-12, distribution side of the trade offers an attractive indicates that in rural areas the arbitrage; however, such an entrant also examines the encompassing hygiene that shall ensure the disparity between the haves and sustainability and growth of its business. Thus, the the have-nots increased nine times legal structure, the political, economic and social stability or uncertainties; are equally of paramount in these 12 years.” A case for importance. The reality also is that the surface area of commercial opportunity today in India is under Thus, not only will there be an account of what threat, with 25% of it compromised. What with over is spent; it will also cover the geo-spread of that 170 districts out of 640 notified as terror ridden. spend. If a corporate entity sells its goods and Clearly that indicates a view of the parched land, services in an area, howsoever remote, it is equally CoRpOrate unaddressed aspirations with lack of opportunity its responsibility to contribute to the sustainability that rants, cries out, and raises its head in the form in the area. For, that alone can be surmised as of terror outfits. The income disparities are only responsible selling or it is undue profiteering. widening and leading up to serious repercussions The new law also reflects and affirms India’s of unease, unrest, and restive populations. A recent intent to be counted as more than a mere statistic in report by National Sample Survey Organization the Millenium Development Goals (MDG) rankings or (NSSO), based on a comparison of data on of the United Nations Global Compact (UNGC); household spending patterns for 1999-2000 and and improve its stock to reduce disparities, improve 2011-12, indicates that in rural areas the disparity governance, and attract investment and growth. between the haves and the have-nots increased nine In effect, it is evident that both the UNGC and the times in these 12 years. These are the disparities that MDGs in the Indian context, translated in the form manifest as open wounds and as a result we have of the new law (Clause 135 read with Schedule VII naxals and Maoists etc festering on our country. To of the Bill), deals with the concept of CSR and even call them outlaws would be to live in denial. These identifies activities and expenses that shall qualify Collective SR need to be treated and can’t be surgically removed. as valid spend on CSR. These should be read and Let’s look at a different perspective now. If run, hand in glove with the UNGC and the MDGs. the Companies Bill 1956 produced landlords, the This heralds a new era for corporate India--for Companies Bill 2012 looks to empower the LAN to corporate governance, shareholders, stake holders, lord over its stock. The Local Area Network gets employees, customers, and markets. The bill has By Yogesh Kochhar a shot in the arm. If the goals and objectives of a landed and revealed truth or Satyam. company are self-centered, as it may be, it’s her radius that shall matter now! The Law mandates Companies Bill: Its executable challenges companies to spend an average @2% of profit after In order for the law to be executed well, it must set tax of the preceding three years on CSR, the lowest standards that define, measure, analyze, improve, common denominator being a company that makes and control adequately because as philanthropist a profit of rupees five crores annually. What the Rohini Nilekeni has said, “Since the money on the The passage of the Companies Bill that directs companies to spend Bill does to India, with her official GDP of USD 1.8 table could equate a large nationwide program a percentage of profit on CSR is a big step in the right direction. trillion and GDP based on PPP of USD 4.7 trillion, is involving billions of dollars.” It is imperative now that it directs the flow of this 2% of profit. more than ever earlier. However, a lot more needs to be done to ensure efforts are brought The Bill in its fine print, mandates that the said While the companies start following this, it shall to their fruition. 2% be spent in the area of company’s operations. at best remain a disparate story, with each company 102 103 T H

identifying and pulling their stock behind such blind people around the elephant each of whom the schedule VII, the CS Registry will help identify INK

issues as they deem fit, without considering work feel sure in their respective description. resources available in such a block. ER

undertaken by the others or impact created or There is a good chance that a primary school with S studied. This requires a shepherd’s crook, to ensure Way forward five classrooms can be created in a remote block that initiatives several as they are, don’t run all over Corporate houses are ever willing to ‘seek’ of the nation, through SUPPORT coming from the place. CSR Initiatives and interventions must opportunities, while on the other hand the companies registered on the CS registry that sell serve the objective of rearing and grooming India several NGOs and Trusts are ever willing to help cement, steel, computers, electrical and hardware, in a manner that’s equitable and equanimous. This communities ‘soak’ that giving. What is needed is a Soaps, TVs, gensets, inverters and batteries, tiles calls for collective wisdom and endeavor. collaborative platform that helps them conjoin their and knobs and the like. To lead, it is possible that a Before we address as to how it can be managed, strengths and re-discover the extent and economies business house with its offices there can second an lets use an illustration. On a recent visit to of scale and scope in their grass root engagements. engineer who builds that school. Puduchery, I saw hundreds of boats littered on the It follows logically, thus, that there could be beach at Mammalapuram on the east coast road several seekers and soakers working in each block from Chennai to Puduchery; a post Tsunami result “If a corporate entity sells its in disparate streams oblivious of other seekers of supposedly well-meaning CSR. It isn’t difficult and soakers presence, all keen to collaborate, all for those of us that have gone there in recent times goods and services in an area, blissfully unaware of each other. to imagine that fishing villages that may have had a howsoever remote, it is equally Through an electronic CS Registry, we can 100 fishermen and 10 boats Pre-Tsunami perhaps identify need gaps in any geography with the returned Post-Tsunami only with a 100 boats and its responsibility to contribute help of the BDO and a Lead Corporate and go on 10 fishermen. That happens due to no metrics or to the sustainability in the area. to execute, measure, monitor, control and grow measures available. However most donors while sustainably, even as we exploit economies of scale they are happy having done their bit, do rarely go For, that alone can be surmised and economies of scope. beyond accounting their contributions in their Thus, it can be ensured that a boat to that fishing books; while what is needed is to study impact of as responsible selling or it is hamlet is taken only if it needs it and its provisioning such spend and check if this is leading to colossal undue profiteering.” there does not lead to the econometrics getting overstuffing waste or duplication of efforts. Absence confounded, compromised, or complicated. For that of cohesion; dispersed; diverse; and all kinds of may mean, creation of a sum of its parts that’s better initiatives being undertaken by the corporates in It is precisely here that there is need to set up than the whole, through a mechanism that has silos largely add up to nothing even as these are an electronic CSRealm or CS Registry under the metrics built into it. If a company can sell in an area individually reported in their annual reports. It is Ministry of Corporate Affairs, in the form of a one that is terror ridden, it must equally contribute to also here that UNGC and MDGs or now our CSR page view that identifies spaces for interventions, CSR there. How good is seeking without soaking. law shall become casualties. creates a database, catalyses CSR partners, and gives Equally pertinent is the need to develop metrics Thus a corporate entity’s challenges and such initiatives both a deeper and a wider scale that assess the spend and the spread. Only a method limitations in line with the breadth of their and scope. Thus, identify and plot the spread and that helps measure the spend and the spread will pay operations are: cascade of ‘seekers’ and ‘soakers’ with exactitude in the long run. Example, if one sold its goods across • To scope their areas of contribution, in as much on an electronic platform across the states, districts, 2100 blocks and one’s CSR interventions were spread as any single corporate can, given that it can only and blocks. It would deliver a package that’s better only across 30 blocks, its effective contribution is provide its own finished goods and services. (e.g: a than the sum of its parts. Thus on such an e-registry, 1.43%. That’s opportunity for improvement (OFI) Telco can provide bandwidth alone, which cannot it would be possible to identify ‘seekers’ and of upto 98.57% where one still sold and never build a school from ground upwards) ‘soakers’ that can: supported. Lack of information pertaining to other • To scale their CSR outreach. This can only be • ‘LEAD’ an initiative if it has its own offices likely partners in such deficient geographies and a limited to a certain radius where it may have or establishment down from its head offices mechanism to deliver, restrains intervention across access based on its presence by virtue of its across the states to the various districts all the such 98.57%. What counts must also be counted. offices and employees, all in an effort to capture way to the block level. Block, since it is the last That Columbus discovered America is not to a few human interest stories and be seen as good administrative outpost of the government, or disregard that America existed before he set foot corporate citizens. • ‘SUPPORT’ an initiative if it has its products and on it. This act of discovery does not lie in looking • To align itself with all the MDGs, due to its services selling through dealers, distributors, and for new lands alone, it lies equally in looking with marginal ability to identify partners and franchisees. new eyes. Lack of evidence does not mean lack collaborations, to optimize investment returns on If such initiatives can in turn be identified of existence. CSR is a marketplace. CSR, and increase the surface of its contribution with the help of the ‘soakers’ and the BDO (block There is a space in the market and there and impact. The scenario is similar to the eight development officer) in the backdrop of MDGs or is a market in the space. 104 105 T H

Before I became an entrepreneur, I thought my person faces and to some extent, I expected to have INK

work-station at a Fortune 500 company was the best my own tryst with them. But this article is not about ER

I could have carved out for myself after four years them. This article is about the challenges which I S of engineering and an MBA. Even though it was not could never have predicted. Let me take you through a sophisticated glass-clad workplace, one would a few of them –I probably wouldn’t shy away from find in the imposing niches of DLF Cyber City in saying– they are very Indian. Allow me to cruise you Gurgaon or Bandra-Kurla complex in Mumbai, it through the story of my venture – Grapevine India was my own cubicle nonetheless. It was a cubicle in Publishers Pvt Ltd. My a steel plant at the most significant mining district The first thing I realized was that I had grossly of India – Bellary. underestimated the challenge of being a first Vis-à-vis my batch-mates from MDI, for the first generation entrepreneur in a market which is almost few weeks, I felt chuffed and blessed to be at that completely occupied by international players. I gave sought-after position. Wherever I looked, there myself three months to learn the ropes and started were systems and methods, discipline and structure. traveling to every street, trying to tap the thriving I was finally living the hectic corporate life I had unorganized market, where publishers/ distributors brand grown up hearing about from seniors and mentors. lived, only to realize that there are way too many But, something started snapping. Eventually, streets like that in India. the evenness and the unsatisfactory tenor of the profession started taking a toll. Then onwards, almost every morning I would reach office, look “I gave myself three months at my work and tell myself the same thing – I can do better. to learn the ropes and started So one day, in the year 2011, at twenty four years traveling to every street, trying of of age, I decided to not subdue that ambitious part of me anymore. Rock steady and unshakably cool, I to tap the thriving unorganized woke up and succumbed to the entrepreneurial bug market, where publishers/ in me: I resigned from my job. Along with seeing me back in Delhi, my parents distributors lived, only to realize also saw crashing the two principal dreams they had that there are way too many streets for their son—of being a flat owner and a husband. I didn’t have any entrepreneur friends at the like that in India.” challenges time when I resigned, but I had read a lot of stories. Everybody unanimously claimed that it was difficult. Contrary to how glamorous the word We had to scale up and build a team. We are a talent sounds, entrepreneurship I knew would be difficult. driven company; if we don’t have good editors, By Sachin Garg I decided to roll my sleeves and throw back the our handicap is almost like a technology company question– “how unusual can it get?” at people who not having enough technological capability. I had tried to intimidate me. It’s been two years since I visited a few colleges to hire editors and marketing started treading on this unusual path and nothing professionals. Two trends took me by surprise: can get you an answer better than actually being an firstly, their flawed understanding of the concept of The ability to see challenges as opportunities entrepreneur in India. a job and lack of proper skill set. And secondly, their and not problems is an essential quality needed It’s no joke being an entrepreneur in this country. unrealistically high expectations of salary and perks. Suddenly, the structure and the processes I had In June 2011, I started to look for an office. for entrepreneurs in India. gotten used to were out of the window. Even though A real estate broker told me there was this space in I wasn’t a big fan of my boss, it was disconcerting a village in North Delhi called Pandav Nagar which to have nobody to go to with my questions now. had everything I was asking for, which was: lots Having to start a brand from scratch, facing of space at a low rent. I reached this place and the competition from the ever dominating and powerful board in front of the two storey building on a rather international competitors, arranging initial capital, shabby road read: “Yaha par gaadi churana mana keeping track of accounts and taxes et all, these are hai” (Translation: It’s not allowed to steal cars the challenges that every first generation business in this place). 106 107 T H

he continues to pay a steady EMI to get his father’s Definitely, I hate it when I get stuck in a INK

“When an entrepreneur looks at fields back. Ram’s story is often a microcosm for traffic jam induced by India’s poor infrastructure. ER his industry, he does not let the rural India for me: It’s not he who brings the gun to I loathe the law of bribe being a rule rather than S office. It’s the gun who brings him to office. an exception in my country. But, I also get amount of work which has already So yeah, the roads will always be broken, the extremely happy when my ideas catch on because happened before him overwhelm government processes will always be slow, people of the scope of things in the country. So trust me, and promises would dither, the talent in colleges I don’t mind being stuck in a traffic jam in him. He sees the huge gaps will always be substandard, criticism would be comparison to the up sides. which are still to be filled and unsettling, policies of bureaucracy will always “He became a millionaire overnight” and “he be unfavourable, and the list would be definitely just cooked anything and it is selling like hot cakes” the innovations that will always endless. This is the downside and yes, they are are oft heard lines from armchair critics. There are be welcomed.” exasperating. I cringe whenever I come face to face infinite hours of hard work behind every success with any of these vexing limitations. story. We started as publishers of fiction – mostly But then, let’s talk about the flip side. What commercial romances, which we extensively We did take the place and started setting up happens when you get around these road blocks, diversified at a later stage. Absolutely every book we the operations. In 2011, we applied for a list of really put your foot down and decide to become released became ‘a national bestseller’ and many of International Standard Book Numbers (ISBN), an entrepreneur? Trusted sources will tell you our authors have become youth icons in their own which were supposed to reach our office in Pandav that the first thing an entrepreneur needs is an right. Within a span of two years, we became India’s Nagar by government post in a week. Finally, after idea or an opportunity and that is what India has most frequented publisher in the Nielsen list of top waiting for almost two months, we went to the post in abundance. When an entrepreneur looks at his selling 250 books in India. office to inquire about the letter. And clearly, the industry, he does not let the amount of work which Today, I can accurately pin down the avid postman wanted ‘chai-pani’ to recognize our office has already happened before him overwhelm him. dissatisfaction with my college placement as an as a valid address, and gave us a list of documents He sees the huge gaps which are still to be filled MBA graduate – I was merely being a job seeker like Board Resolution and Rent Agreement which he and the innovations that will always be welcomed. and not a job creator. I look at my team of ten in needed before he could start delivering posts. I had What looks like the darkest shade of red to the office and know that their lives, sleep, and pay no idea what had hit me. I wanted to be operational an outsider looks like the bluest ocean to an cheques are hinged on my performance in any given by now, but I was struck with a fifty-year-old entrepreneur with a vision. month. I try to attend as many launch events as postman who wanted me to compromise on a very I can to share their happiness and my experiences. basic value I had set for myself. I feel the repercussions of my decisions across In despondence, I tweeted my experience and Survival tips for entrepreneurs in India many families. I am supposed to take on the likes asked for guidance. The advice was unanimous and of Hachette and Harper Collins. I am doing work I was introduced to the concept of actually using • Don’t get carried away by the glorification of ‘jugaad’ which is increasing the scope of the Indian market an RTI. Three days later, we had the letter in our in entrepreneurship. An entrepreneur is made by the in a significant sector. Now when I look back, hands. In August 2013, after having spent two years systems and processes he builds. Jugaad comes in I know that I couldn’t have ever achieved this there, we moved out of Pandav Nagar and took when systems don’t work. contentment, bond, and sense of control anywhere a bigger and prettier office. We got the interiors • Success is seldom permanent and neither is failure. otherwise. designed and had an exclusive pantry of our own. It is important to not lose your head when either lasts We also needed a new watchman and we too long. hired Ram Narain. Ram is from Siwan District in • It is important to respect your peers /competitors. Northern Jharkhand. Ram’s father never had much Ups and downs will come and go but it is important expectations from him. In Siwan, most people don’t to win respect from your peers as a person. study beyond the third grade and if a kid reaches • Help people. Invest your time in helping others adulthood without going to jail once, the kid is a without any ulterior motive or expectations in good one. exchange. Good things happen to people who help Ram’s father’s dream was that his son goes others. onto become a security guard. The prerequisite to • Meet people. People unlike you who would have become one was to possess a licensed gun, which perspectives different from yours. People senior would cost rupees two lakh. He had to mortgage his to you, junior to you, related to work, completely field to buy the gun, which Ram brought to office unrelated to work. It will help you become a well every day. Owning a gun gave him assurance of a rounded person. lifelong job as a security guard, and from his salary, 108 109 T H What do you think about India’s “There was almost no projection INK competitiveness? ER I find it very exciting that India has woken up to of India out into the world 20 years S the fact that it can be a consequential country in the world. Initially, the focus was people and the idea of back. Now, India has projected economic upheaval was on the sidelines. At present, itself into the world whether it has a bunch of companies that play successfully in the global economy. It is this mindset change, which it is through TCS, ICICI, Infosys, is exciting to see. or Wipro.”

Are we over-emphasizing the idea of India? India is just 2.5% of the global GDP. Where labour arbitrage game. On the flip side, it provides THE do you see India? the incentive to do something else, like what Japan I think in the modern world, it really matters the did when faced with a similar situation. Japan degree to which we can create something that not today cannot play the labour arbitrage game that only citizens want, but also to evaluate how we they played 50 years ago. Because their wages are are able to project that into the world. There was as high as American wages so they have to compete almost no projection of India out into the world 20 on a more sophisticated basis. Upgradation and years back. Now, India has projected itself into the economic change is as much a stick-based as a Roger world whether it is through TCS, ICICI, Infosys, carrot-based game. And I assume that is going to or Wipro. I don’t think that the sole criterion for happen with India, as its human resources get more judgment should be a country GDP vis-a-vis world expensive. GDP. One needs to look at the progress that India has made in the past. Canada is just 3 % of the world What do you think are the few steps that the GDP and does contribute to the global economy in governments need to take to come out of global various fields with companies like Bombardier, Four economic slowdown? Martin Seasons and McCain. Japan grew at astonishing rates in the past. So it is not new that India and China are not going to return You have given a very interesting example to a 10 % GDP per capita growth and it is partially of McCain Foods, which is a very product centric because when a country grows fast its labour company, but in India we haven’t really seen the arbitrage opportunity gets smaller and that makes it emergence of products. What’s your view on the harder to grow that fast consistently. If I would be INTERVIEW reasons for this? the Indian government, I would be planning to grow As the world is increasingly becoming a service more like 5% than 10% and going forward trying to By Amit Kapoor oriented economy, India is being very modern as it spur it to get to it to 8%. 10% is just unbelievably fast is trading more in services than in products. Jobs economic growth, something that rarely happens in manufacturing are going down. China’s share of in the course of human endeavors and I don’t think manufacturing as a percentage of manufacturing is one would wishfully want to bet on that. 5% growth going down even though they are the manufacturing is fantastic. hub of the world. I do not think that it is a negative In an interaction between Amit Kapoor for India that it is figuring out how to have 5 % growth seems very scary in case of India as international trade in services. we would not be creating enough jobs. Wouldn’t and Roger Martin, Dean of the Rotman you say that 5 % is acceptable for larger School of Management, the latter shares As India is primarily a factor driven economy economies with smaller bases? his view on the India story and why he and there is labour arbitrage. How could India Certainly, this way India would pull more people and other emerging economies move up in the out of poverty faster. Trying to artificially grow believes it is far from over. Mr Martin future? economies faster than they can grow does not get also serves on the Boards of Thomson The key factors of production, which are selling more people out of poverty. It creates cycles of boom internationally, are human resources like skilled and bust and people who suffer most in downturns Reuters Corporation and Research in engineers that are getting expensive. Their costs are are poor people. The best way for India and India’s Motion and is chair of Tennis Canada. inflating and it hampers India’s ability to play the poor is to be on a stable growth path that does not 110 111 T H have a lot of ups and downs and overheating in the corruption capability. That is the frustration to “I think it is dangerous to allow INK

economy. I do think, that there is always a macro companies trying to do plain ordinary business. ER

tradeoff that all the countries governance bodies a country to buy your companies S have to make, which is how much of the resources Could you give an insight as to how corruption are we going to spend on consuming current reduces a country’s competitiveness? Why is it when you can’t buy theirs.” prosperity versus investing in future prosperity. important to really rein it in? And in North America governments have tilted It is a case of classic rent-seeking behavior. There benefits. If we have net benefits as our criteria considerably in favour of consuming more of current are people who are positioned at various points in every economic system would fail. In various GATT prosperity rather than investing in future prosperity the economic chain who engage in rent-seeking. rounds we lower our tariffs, all of us, some of those and that is what India should really be careful about. Dollars are being spent by companies to pay people tariff reductions would produce net detriments but off for activities that have no value whatsoever for if you look across all sectors it would provide a net How do you think India needs to invest in future consumers. Companies are paying for the right-to- benefit. This whole thing where you are looking prosperity? offer. It is just a drain on the creation of consumer one-by-one and asking whether there is net benefit I think physical infrastructure is the one thing to value and that is a sad thing. or not is I think absolutely flawed. If this happened focus on. Education is the other enabler for future the country that would be maddest is China because prosperity. When we talk about corruption it is often they think they can buy anybody else’s company but thought that governments are always wrong, do they will not allow a single one of their companies Going deeper into the idea of India and India’s you think and see corporates doing this as well? to be bought. They are not showing any reciprocity competitiveness, do you look at India as a whole When I say corruption, it is not only government in foreign direct investment and they are basically or should one look at the sub-national level, say and its rent-seeking behavior by various people. buying stuff up. I think it is dangerous to allow provincial level as we move on in the future? Freer markets provided a sort of an antiseptic a country to buy your companies when you can’t I think you have to look at both because India has to corruption. I do think it helps corruption if buy theirs. a central government and has one currency, that is markets are trained in some manner. It is a fact one perspective to look at; but it is regions, which that corruption is high in various places around the How do you think the government in a place like are dominating the world economy. So that is world where there are constrained markets. India should actually look at this opportunity of another perspective. India is a classic case of both creating systems, which is going to be beneficial perspectives. When you say constrained markets what you to corporates? mean is overregulated markets. So what we need I think in my country as in any other, government How do you get the right balance to work on is freer markets and capability to does not get close enough to companies to of perspectives? make products and services? really understand how it can be really helpful to You can only try to be always aware of the need Yes. although given North American experience, companies. Part of the problem is they are fearful of balance and recognize when you are getting out free markets have some connotations, which people they will work in their own self-interest and not of balance. There is no mechanism that I have seen do not necessarily like. The financial crisis came in the interest of the country. In not having robust which allows you to stay in balance. because of freer markets and looser regulation. dialogue with individual companies it is hard for But I think we can solve this by having a clever the government to really understand what these There has been a lot of talk about India versus and precise regulation. I think regulation is good companies need. China. Where do you think the difference lies but regulators need to regulate using the lightest and what is the future of the country? touch. Figuring out the lightest touch possible to The really big difference is infrastructure. China is accomplishing the goal is the key. investing in the physical infrastructure and building fantastic infrastructure. Their highways, trains and India is having a huge debate on what sectors airports are better than American highways, trains to open to FDI like FDI in retail, etc. Are you and airports. In India, infrastructure seems largely professing that India should look at more open in disarray though the airports are in order now. markets? There is also a gigantic difference between the two Yes. Though with regards to FDI, I am a great in language skills. It makes it easier for companies critique of the current theories of how you monitor from the west to do business in India, which is a and regulate FDI. In merchandise and service substantial English speaking country. India is more trade the underlying philosophy is reciprocity. chaotic than China and Chinese have got this kind That’s the nature of trade agreements. And in FDI of state capitalism. Sadly, both India and China the conceptual underpinning of the regulation is have one thing in common which is world-class that there is no need for reciprocity, it is just net 112 113 T H

At its India Summit in 2010, the World Economic INK

Forum invited me to join a televised debate on “Along with China and the United ER “What kind of a superpower will India be.” The States, India is the only country S other esteemed panelists included BBC’s Nick Gowing and several prominent Indians – from the in the world that has the size and industry, the government, and the NGO sector. the structural foundations to Featuring a bunch of argumentative Indians, the debate was, not surprisingly, quite lively. To me, become a superpower and to stay Why India however, a shocking surprise was that several of that way for the next two thousand my Indian colleagues questioned rather openly as to why India should aim to be a superpower at all. years and beyond.” Since then, I have had this question posed to me on at least five other occasions by prominent Indians level of economic development, urbanization, belonging to either the government or the NGO literacy and digital connectedness, this is inevitable. sector. Talk of low ambitions! What remains unclear is whether the transition will Other than sheer random luck (you dig for be peaceful or traumatic. In that sense, politically, water and out comes black gold), no individual, India is already future-ready. It is also encouraging Must be organization, or country has ever gotten anywhere that, although coalition politics is here to stay without dreaming of touching the sky. Ambition for the foreseeable future, two major parties – on fuels daring. It also fuels action. If all you aim for opposite sides of the center – have emerged as the is to become a little bit better off than yesterday, torchbearers for the citizens’ differing ideologies. almost anything might work – including going to Importantly too, state governments are now sleep on your job as our current political leaders beginning to compete with each other for better appear to have done in recent years. governance and economic development. India had the good fortune to be “born” as one Second, along with the US and China, India has of the greatest countries on earth. It maintained built one of the strongest higher education systems Audacious that status for more than two thousand years. in the world. Graduates of India’s top colleges The last two centuries, however, have transformed and graduate schools contribute mightily to the the giant into a pigmy. Instead for accounting for country’s pool of leadership talent. In addition, by about 25 percent of the world’s GDP (which India rising to the CEO position in several of the world’s did until the early 19th century), our contribution largest corporations, many of them also help make now is a little over 2 percent. Given the country’s the case for India in corporate boardrooms and the inherent strengths, it does not have to stay that way. financial community globally. Along with China and the United States, India is Third, like the US and Europe but unlike China, the only country in the world that has the size and India has a very strong private sector and a large the structural foundations to become a superpower pool of extremely well-managed multi-billion and to stay that way for the next two thousand years dollar companies. These companies are as good and beyond. However, as the current crisis amply as or better than their Western peers in the quality illustrates, we will have to strive and work hard for of leadership and management. India is also home it. Greatness is unlikely to be thrust upon us. to a growing pool of technology entrepreneurs. One should add, however, that the size of annual venture India’s Fundamental Strengths capital investment in India remains a fraction of that By Anil K. Gupta India enjoys five major strengths – a blessing that in the US or China. none of the other BRIC nations (not even China) Fourth, reflecting its Asian heritage, India enjoys share. These are the foundations on which we need one of the highest rates of savings in the world. to build the castles of tomorrow. This is particularly noteworthy given that India is India today stands at a critical crossroad, similar to the one First, India has a stable democracy that has still one of the poorest nations in Asia; thus, a large it did in 1991. If the government wants to seize the opportunity withstood the test of extreme diversity, several wars, chunk of the country’s population is forced to spend and economic turmoil. Sometime in the next decade almost the entire bulk of their meager earnings on and transform this into a “golden moment” again, it will need or two (perhaps sooner), China will be forced to bare necessities such as food and shelter. to take concrete actions from the inside out. confront a transition to democracy. Given China’s Fifth, India enjoys strong backing from some 114 115 T H

very powerful allies – notably the US, Japan, and While official numbers may indicate a 7.5% growth INK

Europe. All of these powers accept the reality of “Rather than pretending that global rate in GDP for 2013, many economists believe that ER China’s ascendance. They also realize that China is integration is a side-show, the the actual figure may be closer to 6-6.5%. According S more likely to adopt an assertive non-compromising to World Bank estimates, China’s likely growth rate “China First” role in international affairs. Thus, country’s leaders need to focus for the next ten years will be around 6% - at best. unless a friendly India rises up to become an on how to help India leverage global Should India get its house in order, it could easily economic (and thereby geopolitical) power to rival be the world’s fastest growing economy for the next China, the global baton will eventually pass from the integration for advantage instead 20 years. US as the world’s sole superpower to China in this of heightened vulnerability.” My own discussions with senior executives in role. The rich countries appear to have concluded several of the world’s largest corporations suggest that it is in their own strategic interests to help that MNCs are sitting on billions of dollars of India’s economic rise. Why else would George W. citizens should focus on India’s internal strengths investable cash and are wary of putting all of their Bush go out of his way to ensure passage of the US- rather than on actions by the Federal Reserve in eggs in just one or two baskets even if those are India Civil Nuclear Agreement? Why else would the US, a far-away land 10,000 miles away. This is big baskets such as the US and China. India is the Japan be so eager to help India build the Delhi- nonsensical. In 2012, India’s total trade in goods and only other large economy with the ability to soak in Mumbai Industrial Corridor? services as a ratio of GDP came to 55.3% vs. 26.5% several hundred billion dollars of the world’s capital. in 2000 and a paltry 15.2% in 1990. It would have As the CEO of a Fortune 50 multinational said to me, What Ails India? been utterly impossible for India to achieve the 7.6% “We are ready to invest. Is India ready to welcome us?” At the core, India’s problems appear to be rooted average annual growth in GDP that it did during The immediate task for the government is to in a seeming lack of realization by the country’s 2000-2010 without access to global capital, global stabilize the rupee. As proposed by IHS Asia, the leaders that “what got you here won’t get you there.” resources, global technology and global markets. incoming RBI governor could do this quickly In real terms, India’s GDP in 2010 was twice as Rather than pretending that global integration is a through a combination of two measures – a $30 large as in 2000 and almost four times as large as side-show, the country’s leaders need to focus on billion swap line with the US Federal Reserve and in 1990. When the economy was smaller and had how to help India leverage global integration for the issuance of NRI bonds. suffered from low growth for several decades, it was advantage instead of heightened vulnerability. Beyond the immediate stabilization measures, relatively easy to kick-start higher growth by picking Another major impediment to India’s growth the government needs to focus on removing the low hanging fruit. In the case of India in 1990, is the persistence of a colonial hangover and bottlenecks to investment by India’s own companies. this meant the removal of many mindless handcuffs continuing distrust of foreign multinationals. Yes, The finance minister has been making the rounds that had kept companies and entrepreneurs British colonization of India was reprehensible of the world’s economic centers to drum up FDI. shackled. in every imaginable way. Worse, the imperial rule This is sheer waste of time. Foreign investors pay Given today’s much larger economy, the grew out of initial encroachments by The East India far greater attention to the decisions and actions government’s role needs to become that of a Company, a foreign multinational. We must never of India’s own companies than they do to ministers’ proactive enabler. The infrastructure of 2000 is forget this nasty period in the country’s history. assurances. Why would foreign companies ramp up totally inadequate for the current size of India’s At the same time, we gain nothing by mortgaging investment in India when India’s own companies economy. No large country has ever relied largely the country’s future to its past. The days of MNCs are ramping down? The starting point has to on the private sector to finance or build the being able to behave like The East India Company be the removal of domestic bottlenecks faced country’s infrastructure. Look at the US in the 1950s are long gone. Today’s MNCs bring not just capital by Indian companies, especially those focused and 1960s and China over the last two decades. Yet, but “smart” capital i.e., capital backed up with on infrastructure. As these bottlenecks begin to instead of focusing on infrastructure as Job 1, India’s technology, managerial know-how and global dissipate, the domestic stock market will start leaders have chosen to focus on giving handouts networks. Bulk of the value that they create is perking up. Combined with a stabilization of the as the government’s primary mission. Boosting absorbed by the host country. This is the pragmatic rupee, that in turn will trigger inflows of both demand without removing supply-side constraints reason why, aggregated across the economy (rather FII and FDI capital. With the right set of policies, begets higher inflation. That leads the central than sector by sector), even the Communist Party the current vicious cycle can be transformed into bank to jack up interest rates which in turn deters of China has been friendlier to foreign MNCs than a virtuous one. companies from making investments - a classic India’s leaders. As Deng Xiao Ping famously said, Will India’s leaders be up to the task? I remain vicious cycle. “It doesn’t matter whether the cat is black or white. optimistic. India has a history of not waking up until A second important respect in which today’s As long as it catches mice, it’s a good cat.” forced to do so by a serious crisis. Like 1991, now India is dramatically different from that in 1990 could again be one of those golden moments. (or even 2000) is the level of the country’s global Could This Be India’s Golden Moment? integration. The honorable prime minister and The next ten years have the potential to be India’s finance minister keep saying that investors and golden moment. China is slowing down rapidly. 117 T H CONTRIBUTORS Anil K. Gupta Jagdish Sheth Nirmalya Kumar INK The author is the Michel D. Dingman Chair in Jagdish Sheth is the Charles H. Kellstadt Chair The author is Member-Group Executive Council ER Strategy, Globalization, and Entrepreneurship of Marketing in the Goizueta Business School at Tata Sons & Professor of Marketing, London S at the Smith School of Business, The University Emory University. He is widely acclaimed as a Business School. He has co-authored, Brand of Maryland and a Visiting Professor of Strategy renowned scholar and world authority in the field Breakout: How Emerging Market Brands Will at INSEAD. A graduate of IIT Kanpur and IIM of marketing. Go Global (Palgrave-Macmillan). Ahmedabad, Gupta earned his PhD from Harvard University. His most recent book is Global Strategies for Emerging Asia (Wiley, 2012). Jan-Benedict E.M. Steenkamp Pankaj Ghemawat Jan-Benedict Steenkamp is C. Knox Massey The author is the Anselmo Rubiralta Professor Distinguished Professor of Marketing at Kenan- of Global Strategy at IESE Business School. Anurag Batra Flager Business School, University of North He is author of the book World 3.0: Global The author is an entrepreneur, media observer Carolina. He has co-authored, Brand Breakout: Prosperity and How to Achieve it. Between 1983 and a journalist rolled into one. He is the Managing How Emerging Market Brands Will Go Global and 2008, he was on the faculty at the Harvard Director and Editor-in-Chief of exchange4media (Palgrave-Macmillan). Business School where, in 1991, he became the group which includes exchange4media.com, youngest person in the school’s history to be PITCH, IMPACT, Realty Plus and Franchise Plus. appointed a full professor. He is a B. Tech in Computer Science. Kevin Stolarick The author is research director at The Martin Prosperity Institute at the Rotman School of Management, University of Toronto and the Paranjoy Guha Thakurta Arvind Rangaswamy Inaugural Walton Distinguished Visiting Fellow The author is an independent journalist and an The author is Anchel Professor of Marketing in Sustainability at the School of Sustainability, educator. His work experience, spanning over 36 Penn State University. His research is focused Arizona State University. years, cuts across different media, including, print, on developing concepts, methods and models radio, television and documentary cinema. His main to improve the efficiency and effectiveness of areas of interest are the working of the political marketing using information technologies, an area economy and the media in India and the world, in which he is internationally recognized. Mark Esposito on which he has authored/co-authored books and Mark Esposito is Professor of Economic Strategy directed/produced documentary films. at Grenoble Graduate School of Business and Des Dearlove Instructor at Harvard University Extension. The author is one of the founders of the Thinkers50. Pramath Raj Sinha He is co founder of the media content, concepts Navi Radjou The author is Founder and Managing Director and consulting firm Suntop Media. He writes on The author is an innovation and leadership of 9.9 Media. He has also served as the Founding business issues for magazines and newspapers strategist based in Silicon Valley. He is a Fellow Dean of the Indian School of Business (ISB). throughout the world, including The Times, at Judge Business School, University of Cambridge He previously led the ABP Group, one of India’s American Management Review and is a contributing and a member of World Economic Forum’s leading and most diversified media conglomerates. editor to the US magazine Strategy+Business. Global Agenda Council on Design Innovation. He is co-author of the best selling Jugaad Innovation and From Smart To Wise: Acting and Prasad Kaipa Devdutt Pattanaik Leading with Wisdom. Prasad Kaipa is an executive coach, mentor, author The author is Chief Belief Officer of Future Group and founder and executive director (2007–2009) (Big Bazaar), TED speaker, and columnist with of the Centre for Leadership, Innovation and Corporate Dossier, which is the supplement of Nila Madhab Panda Change at the Indian School of Business. He is Economic Times. His book ‘Business Sutra: a very The author is one of India’s emerging and innovative co-author of the book, From Smart To Wise: Acting Indian approach to Management’ was published young filmmaker with international success with and Leading with Wisdom. in 2013. his debut feature film “I Am Kalam”, produced by NGO Smile Foundation and presented by Smile Foundation and Century Ply in association with Surya World. 118 Stuart Crainer Raj Sisodia The author is one of the founders of the Raj Sisodia is one of the thought leaders of the Thinkers50. He is a partner at Crainer Dearlove Conscious Capitalism movement globally. His book and also an editor of Business Strategy Review. Firms of Endearment: How World Class Companies His books include, “Key Management Ideas,” Profit from Passion and Purpose is considered a “The Management Century,” “The Ultimate foundational work in explaining the precepts and Business Library,” and “The Tom Peters performance implications of pursuing a conscious Phenomenon.” approach to business. Susan Zielinski Ravi Venkatesan The author is managing director of SMART Ravi Venkatesan is the author of the critically (Sustainable Mobility & Accessibility Research acclaimed book “Conquering the Chaos: Win & Transformation), a unique global new mobility In India, Win Everywhere” published by Harvard tech transfer / applied research initiative of the Business Review Press. He is the former Chairman University of Michigan. Just before joining SMART, of Microsoft India and Cummins India, and Susan was awarded a Harvard Loeb Fellowship currently is a member of the Boards of Infosys Ltd based on her trailblazing work in sustainable and AB Volvo, and Chairman of Social Venture transportation systems and in naming, framing, Partners, India. and advancing the emerging new mobility cluster through public-private innovation. Rishikesha T. Krishnan The author is currently a Visiting Fellow at the Terence Tse Indian School of Business (ISB), Hyderabad, and Terence Tse is Professor of Finance at ESCP Europe Professor of Corporate Strategy & Policy at the and Director at i7 Institute for Innovation and Indian Institute of Management, Bangalore (IIMB), Competitiveness in Paris. India. Vijay Govindarajan Roger Martin Vijay Govindarajan is Earl C. Daum 1924 Roger Martin is Dean of the Rotman School of Professor of International Business at the Management. Mr. Martin also serves on the Boards Tuck School of Business at Dartmouth College. of Thomson Reuters Corporation and Research in He is widely regarded as one of the world’s leading Motion and is chair of Tennis Canada. experts on strategy and innovation

Sachin Garg Vineet Nayar Sachin Garg is a young author, entrepreneur and a The author is vice chairman, HCL Technologies; sought after speaker at B-school events. Recognized founder Sampark Foundation; and author as a distinguished alumnus of Delhi College of of ‘Employees First, Customers Second’. Engineering (now DTU) and an MBA graduate from MDI, Gurgaon, he is one of the highest selling authors in India, known for a strong connect with the youth of the country. Yogesh Kochhar The author is Director-Policy, Microsoft Corp India. Views in the article are personal. Thinkers Magazine is now available in the following versions: Print: Get access to the print copy which will be delivered to your place. (Available only in India) Digital: Download the application and enjoy reading it on your device.

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