India shows the path

The India Way: How India's Top Business Leaders are Revolutionizing Management presents a radical argument to global businesses: Learn from the management style of India's corporate leaders. The hypothesis is based on interviews of more than 100 CEOs of large Indian companies. Exclusive excerpts from the book, hitting the stands soon:

Why the West Should Care
When Westerners think of India, names like Bajaj Auto and Dr Reddy's Laboratories are hardly the first to come to mind. The Taj Mahal's beauty and Calcutta's squalor are far more defining, with the vale of Kashmir and bustling bazaars of Chandni Chowk in New Delhi not far behind. Yet increasingly, India is also a world leader in business, with everything from medical procedures to investment banking either migrating from the US and elsewhere to India or springing up from within.

Simultaneously, Reliance, ICICI, Infosys, and hundreds of India's other top companies have been clambering on to the world stage to compete directly against Western multinationals. In mastering the art of high-quality and efficient production—and in developing unique ways of managing people and assets to achieve it—Indian executives have delivered growth rates that would be the envy of any Western executive. Many of the nation's premier companies—the focus of our inquiry— reported that they were growing at twice the rate of the general economy, or more.

We have come to believe that under-girding the rapid expansion of the Indian economy—and above all the stunning growth of its largest companies—is an innovative and exportable way of doing business. Though well aware of Western methods, Indian business leaders have been blazing much their own path. If business leadership around the world is converging, it may come to be as much on Indian terms as on those from the West. Simply put, if Indian business leaders can build their distinctive methods so rapidly, over just the past two decades, and if they can learn to manage diversity so effectively in one of the world's most complexly diverse societies, business leaders in other countries could surely do so as well.

Will (the India Way) challenge what has been the dominant model for business in many parts of the world, that of the US? An earlier generation of US executives would have been perfectly comfortable with the India Way's need for executives to balance the often competing interests of "stakeholders" in the business, especially employees, the community, and shareholders. The assertion that shareholder's interests were absolutely primary was something new and became known as "financialisation" because of the emphasis on financial goals and shareholder value. (Chapter 1, Indian Business Rising))

Contrast with the US Model
(But) by early 2009, the extent to which much of the rest of the world blamed US business practices and government policies for the 2008 financial crisis and subsequent world recession was palpable. As a result, much of the world is ready to look past the US for business models. The National Intelligence Council develops probable scenarios for world events.

It argues that the fastest growing economies in the near future will likely rebuff the US model. Where will they turn? "State capitalism" as expressed in the Chinese model is thought to be the leading contender, where government intervenes directly and frequently in business affairs. Yet systems where government has the ability to intervene in this manner have generally not had a good track record elsewhere either in terms of economic success (exceptions include Singapore and the UAE) or especially in terms of liberty.

In this context, the India Way represents an especially compelling alternative. It preserves the logic of free markets and real entrepreneurship within the context of democratic institutions. In essence, it preserves the heart of the capitalist model. At the same time, it appears to avoid some of the apparent rapaciousness and excesses of the American model that are redressed at best imperfectly via government regulation.

The most important lesson from the India Way might therefore be the light it shines on the American Way, at the moment arguably the dominant model for business. The India Way demonstrates the power of collective calling over private purpose, of transcendent value over shareholder value. (Chapter 7, Learning from the India Way).

(Reprinted by permission of Harvard Business Press. All Rights Reserved)