Management guru Ram Charan on the nature of Indian business

If you are an Indian company in a large, free India, you have to be prepared for external factors like government policy that could be unstable

Ram Charan says the most important part for any company to succeed is to be externally oriented. Photo: Getty Images

Ram Charan says the most important part for any company to succeed is to be externally oriented. Photo: Getty Images

Ram Charan is one of the most influential chief executive officer (CEO) coaches; a consultant; a best-selling author of 15 books that have sold over two million copies in a dozen languages; a resident of Thinkers50, a listing of the people with the most potent ideas; a teacher; and a public speaker. In 2012, he teamed up with Sadhguru Jaggi Vasudev of the Isha Foundation to co-create a programme called Insight: The DNA of Success, which merges tools for professional and personal empowerment and was received to acclaim from an audience comprising entrepreneurs and CEOs. This year’s edition of the programme starts on 27 November (details at ishafoundation.org). Over the phone, his voice comes across as paternal and succinct as he took questions on the programme and the nature of Indian business. Edited excerpts from the interview:

What is it about Sadhguru Jaggi Vasudev that gets your attention?

You know his background. He is not only spiritual, he is practical and down to earth. He can talk on the same wavelength as business people. And his motive is very clear. It is to help, to do something useful and practical for the country, and young people. That is important to business people and connects very well with them.

Many of the participants at the programme you facilitate at the Isha Foundation come from family- managed businesses (FMBs). In your consulting experience, what kind of pain do these entities go through as they transition into professionally managed outfits?

In the first instance, no two families are the same. The founders need to come to terms with whether they want to, and if they do, how to pass ownership to the next generation. They need to plan that while they are alive. There are several ways to think about it.

One model is to train their children in professional schools and have them come back to run their business.

The second model is to have professionals run it. The children might need to be on the board. But to be there, they need an investors’ orientation. Then they can spend their time looking at the future of the business, managing its course, get actively involved in the board, selection of its members, and development of the executive team.

The key here is that the existing patriarch must come to terms with what is the real talent each of his children possesses. And how is that talent relevant for the future. He has to get that feedback and find the right fit. For those who do this, the company will perpetuate. For those who don’t, it will decline.

Recently a newspaper editor made an astute observation. His point was in the media business people have good instincts. But institutional frameworks are not in place. Is this an observation you can extrapolate across other Indian businesses? And as a corollary, are decisions made by Indian FMBs instinct-driven as opposed to the data-driven decisions of their Western counterparts?

I would like to turn the question to what is useful to the reader going forward. As you look at the next five years, what is more useful for decision-making in the executive suite in India.

I am very optimistic about the Narendra Modi government. I am beginning to see decisions moving. I see he has a broader vision. When it comes to the executive suite and making decisions, there are four things leaders need to practice. No matter whether you are in India, Thailand or China, these four things are imperative.

The first is, they have to be in tune with changes on the outside. If the speed of change is higher and you are unwilling to change, it will hurt. If you’re willing to keep pace, you will succeed.

But when it comes to predicting what happens in the future, not much data exists. You have to be perceptually very good. You need to be in the external circuit to know what is happening. You have to read a lot about what is causing the change. There are some factual data like demographics. But the most important part for any company to succeed is to be externally oriented.

Item number two is they have to set realistic goals. And if you are an Indian company in a large, free India, you have to be prepared for external factors like government policy that could be unstable. What would you do in an unstable regime? There are no facts on this.

There was no way for us to know the Supreme Court would annul coal licences. You have to have a balance sheet that can withstand such a shock. We did not have the facts that Prime Minister Modi would be elected, that he would move fast to Japan and come back with a high possibility of $35 billion investments into India. So you have to be on the move, on the attack to know what is happening. You can’t wait for a lot of facts or data on these things.

Number three, you have to have the right people in the right jobs. This rule is 10,000 years old. But it is violated quite a bit. Giving the right people the right job requires some data. But it also requires a lot of judgement, a lot of instinct.

And number four, how do you allocate resources. For this you need a lot of data and a lot of analysis. When you launch a product, you need data. You need research to look forward. So you must see what is the task, what parts require data and what parts you cannot get data for.

When it comes to professionals who want to plunge into entrepreneurship, do you see any difference in the way they conduct business as opposed to second- and third-generation entrepreneurs who have been groomed by their patriarchs?

I think there are no general rules. It is up to the individual. If a family wants to give charge to an individual, you have to allow the person to take the plunge and test it out. Some of them may succeed and some may not. So you allow people to take chances. There have been many, many cases in the world where someone did not succeed until they finally did.

The founder of McDonald’s did not succeed until he was 48 years old. He tried many times. You have to allow people to test their abilities. Today you can be an entrepreneur with very limited resources. You have lots of examples in India I am sure.

There seems to be a perception in India that if you have succeeded beyond a certain boundary, then you’ve perhaps bent some rules. And everybody looks at you with a degree of suspicion.

No. I don’t think so. Sunil Mittal is a world-class entrepreneur. His company has succeeded in India, Bangladesh, Sri Lanka and 23 countries in the African continent. He is a role model. Entrepreneurs do not complain about the environment.

Let me give one more example. Kumar Mangalam Birla inherited the company when he was young. But he took it from $3 billion to $45 billion and went global. Look how well he has done. Or Kishore Biyani for that matter. We have entrepreneurs like him who are persistent and wired to win.

Another observation on Indian small and medium businesses and FMBs. They come across as insular and view partnerships suspiciously. What has your experience been when you have interacted with this community?

This is a sweeping generalization and it doesn’t help anybody. I would go case by case and suggest what to do. India has some very fine traditions of courageous entrepreneurs.

Sure, but let’s take the e-commerce space as a case in point. It seems like the kind of business where it is possible to make a general statement. It seems every retailer’s business model in this space is built on the back of price discounting.

Let me take you through some very important and simple items. Anything that is digitized and that is using analytics, the initial cost is high. Its replication cost is close to zero. And so those who are able to scale up very fast can capture the customer very fast. They have the advantage of setting a lower price because the replication cost is close to zero. That is how this business works.

Are there to your mind common sets of lessons an entity ought to keep in mind when scaling up after their start-up years, particularly in the Indian context?

Once again, it is difficult to generalize. There are nuances. Scaling up needs to be thought through from industry to industry and country to country. There are nuances. But that said, a few commonalities come to mind.

First, the CEO of an organization must learn to scale. If they cannot scale their personal outlook and capabilities, they are likely to stumble.

Second, internal systems must scale up. Most people scale up just one system. But they fail to see the whole picture of which systems need to be scaled up, particularly information technology (IT), the organizational structure and decision-making mechanisms.

And third, in the scaling-up process, attention must be paid to allocation of financial resources. In many cases, this is not done well. If you are a company that needs a lot of capital to scale up, you need to do the financing, talk to funders and figure out the sequence in which you scale up.

You spoke of Sunil Mittal, Kumar Mangalam Birla and Kishore Biyani. Looking forward, which Indian businesses or which sectors do you think have the most potential and who would you be willing to bet on?

We have very positive momentum in India. You have Japan coming in with $35 billion. The Chinese are coming in with $20 billion. I have no doubt the Americans will be coming here. The Koreans will be coming. Foreign direct investment has to increase.

We already have our software outsourcing business really growing. Almost 70-80% of their business is not from India. We are highly regarded. And we are profitable. So this is a new era for India, and the opportunity is there for anybody who can put a deliberate strategy in place and execute it. Look at each sector. It can be just about any sector.

The point you made about executing well. What does it take to do it well?

It is a basic discipline. You go from 50,000 ft to 50 ft. You focus on details. You assign people accountability and follow through.

Do you see a lot of people with that kind of discipline?

There are very good companies doing it in India. TCSWiproCognizant, they do it very well. These are the jewels of India. They are globally very good. Infosysdoes well, but it has some problems now. Outside the IT business, Bharti Airtelhas done very well. Birla’s Idea has done well. Hindalco is excellent in execution.Jaguar has excellent execution by the Tatas.

Is there something specific to their DNA that makes them special?

No, I think it is the simple things that I spoke of earlier. There is no rocket science here. Just like athletes practice, you practise. Just like football teams do, you execute.

How do you think the Indian experience has panned out compared with China or emerging economies in other parts of the world?

I don’t make such comparisons. China is not one place. The people in Sichuan are very different from the people in Beijing. It’s the same thing here. These comparisons are for academics, not business people. Don’t make these comparisons. It loses the practical focus.

What will it take to foster scientific entrepreneurship in much the same way that the IT services and software space has taken of?

The whole thing got big with the private sector. If the private sector moves into the defence industry, you will get scientists. If they move into pharmaceuticals, people will come. If the private sector becomes big, you will have entrepreneurs coming in.

The average Indian scientist takes home $1,000 per month compared with the West where they take home multiples of that. Would you agree these disparities have a negative impact on science-driven entrepreneurship in the country?

Don’t go there. As private businesses grow, it will attract appropriate talent and provide appropriate rewards.

This interview was first published in Mint on October 15, 2014. All copy rights vest with the newspaper & no parts may be reproduced without explicit permission

Sadhguru Jaggi Vasudev highlights the danger of individualism in business

In our country, we largely depend on doing the right things using individual values, morals and ethics, which is dangerous

Sadhguru Jaggi Vasudev

Sadhguru Jaggi Vasudev

Companies, chief executive officers (CEOs), wannabe-CEOs, just about everyone is in search of a purpose. Every year, Sadhguru Jaggi Vasudev’s Isha Foundation conducts a leadership programme for entrepreneurs and CEOs at its ashram in Coimbatore. Conceptualized and conducted by him, and facilitated by people like Dr Ram Charan, an acclaimed CEO coach to Fortune 500 companies, the residential programme hosts entrepreneurs and CXOs in search of meaning. They learn from other CEOs and leaders who serve as mentors or share their stories. Over the years, the programme and Vasudev himself have become destination points for CXOs looking for meaning. This interviewer attended one of Isha Foundation’s first such programmes two years ago and was impressed. One, the programme offered deep insights into the nature of the self and business. Two, it combined wisdom and pragmatism of the kind I hadn’t encountered at a B-school. Ahead of the next such programme, which will be held between 27 and 30 November (details at ishafoundation.org), this writer interviewed Vasudev. Apart from Vasudev and Charan, Tata Sons’ chairman emeritus Ratan Tata and Dr Reddy’s Laboratories Ltd’s co-chairman and CEOG.V. Prasad are key “resource leaders” for the programme. Edited excerpts:

As an entrepreneur, how should you measure your life? What is the value you bring to the table as an entrepreneur?

Some entrepreneurs take to entrepreneurship as a mission and others because nobody is willing to employ them—not necessarily because of incompetence, but because they are not structured to fit in as an employee. Employment is a way of boxing somebody into something to produce results. There may be people who cannot be boxed or are not shaped to fit a box. They choose self-employment. They may become big employers depending on their levels of success.

Eventually what begins as an economic activity becomes a passion. If you are employed in a company, you may work 8-10 hours. If you are self-employed though, you may have to put in 18-20 hours. You might as well learn to deploy this time into your growth and well-being.

There is a certain heady feeling about being an entrepreneur. That you are successful by your own means gives a man a sense of pride. But I am not interested in that. It is the sense of involvement that comes with being an entrepreneur that is transformative.

Are you suggesting here it is difficult for somebody who is not an entrepreneur to get the same heady feeling of being involved?

I am not suggesting that. You can be a volunteer at the Isha Yoga Center. Volunteers have nothing to gain. But they are involved. To be a volunteer means to be willing. There is nobody to whip you to run at full speed. You go at full speed because you said a big “Yes” to life.

I am not saying an employee cannot feel that way either. But unfortunately many don’t because there is no sense of belonging. This is one thing I am always trying to instil in people. If you want to do something, do it. But don’t shift your focus every other day. If you put your heart and soul into what you are doing, that is a great thing to do. Is it the best thing to do? No. But it is a great thing to do.

Why do you say it is not the best thing to do?

If I say there is a best thing, then what I do is better than what you’re doing. That is not a good way to approach life. What I am doing is a great thing to do in my experience. It can become in your experience as well if you give yourself totally to what you are doing. Entrepreneurs do that because of the atmosphere they live in.

In the past, you’ve spoken of compromises an entrepreneur has to make. We all agree it is not easy to be idealistic. But being idealistic may not be wise either. How do you be pragmatic, do the right thing and still do good business?

All of these are unnecessary. In our country, we largely depend on doing the right things using individual values, morals and ethics. That is dangerous because all of these can be bent and reshaped to fit your situation.

This is because the laws that govern business in our country are not clear. People know that within the boundaries of law, they can do many wrong things and then fix them with their own morals and ethics. This is not a reliable way of doing business. My values are for my own aesthetic, not for business.

Law should govern business. It is like playing football. You can kick the ball any which way you want to. But you can’t touch it with your hands.

Because laws have not been framed properly, people never thought of a nation as an entrepreneurial venture. We thought by agitating we can build a nation. Only now we are figuring out that if we are to flourish, we need business and need proper legislation. If laws are enforceable, I don’t have to worry whether you are good or bad. That’s not my business. There should be no question of personal reliability. The laws must be clear that if somebody breaks them, they must pay for it. Then all this talk of values will go away.

What kind of people ought to be framing these laws?

People with business sense! Not idealistic people. You can’t do business with that. Who can conduct any business in India without paying somebody something? Even a beggar pays somebody to squat at a prime location. In a temple, people bribe the priest to get a ringside view.

Is it morally imperative for business to grow? Growth can benefit the most number of people. But growth and greed are seen as partners.

When you grow, it is growth. When somebody else grows, it is greed. It’s time we acknowledge that when somebody else grows, that is also growth. There is no room for greed.

Because our values are driven by economics, we think of growth in economic terms. If you thought of growth as human consciousness, human capability and economic growth, then growth wouldn’t be a problem. Right now, growth is unipolar. This is the first generation where conversations around dinner and tea are about the economy. Nobody ever did that 25 years ago, except the Americans.

Growth has to be multi-dimensional. Then greed is good. I want all spiritual seekers as greedy as possible, as lustful if you ask me. I use the word lust because people don’t understand the word “desire” strongly enough. That is why we are trying to bring spiritual processes into business. If they can see something valuable in it, then they will pursue it as well.

In family-managed businesses (FMBs), is there a breakdown of trust between generations? The younger generation wants a Google kind of culture, while the patriarchs see it as an infringement. How can this chasm be crossed?

I won’t bring trust into this. The younger generation inherited a business that got successful by using certain methods. The patriarchs trust that method because it produced results. As you get older, you don’t want new things. This is because there is a certain depletion of the mind and a lack of integrity in the body.

The younger generation is usually trying to imitate someone else’s success. You said “of the Google kind”, but at Google, fun is on the surface. Else it is dead serious. For instance, Chade-Meng Tan there is formally designated as the Jolly Good Fellow of Google. He is a jolly guy who talks to you about nothing around work. But this is to soften you up before you go in for a meeting.

Being cool is fashionable. Whatever is fashionable in America becomes fashionable everywhere. But in America the “Thank God it’s Friday” culture pervades. That means nobody likes the five days they work. The culture of “weekend is life and the rest of the week is torture” has gone deep into the American psyche. This culture is growing in cities in India.

So if the younger generation tries something for the sake of it, it can be disastrous. But if they really have a better way of doing things, they must be allowed to do it. They will either transform their parents, or themselves or perhaps just quit their inheritance and find some ways to do things that work for them.

If there were a tool kit that you could offer the older generation at FMBs, what would it be?

There are no formulas to success. What has worked in one situation will not work in another. As an entrepreneur, you must show interest not just in your business, but everything. You pay attention indiscriminately to everything and provide the same level of attention to everything you see. It is very important if you want to craft something of significance.

If you have to become a successful entrepreneur, this is something you have to cultivate. Only then are you an unprejudiced being. If you have different levels of attention to what is yours and what is not yours, you’re gone. Yes, there are some you have to do more with and some you have to do less with. But in terms of attention, there should be no discrimination. That is when your life will be a continuous process of growth.

When FMBs come to you for advice, what strikes you the most?

Don’t forget, entrepreneurship is an economic activity. It need not be raised to Heaven. It must be conducted on Earth to the extent it is necessary for you and me. That is why I say no entrepreneur should become unipolar.

I have met enough people from the older generation who have worked hard to get to where they are. So those who created have a different sense of everything from those who landed into comfort. Therefore, it is very important that the older generation seeks sensible cooperation from the younger generation.

There is always the risk they may fail. But the risk that you could have failed also existed when you started. It’s just that you succeeded. But if you don’t create a challenge, they will not understand what you are talking about. Only then, they will become entrepreneurs. Else, they will become landlords. They need to be on their toes, not on their backsides.

Is there a uniquely Indian way of doing things for FMBs that we have not looked at?

How business transitions in India is very different. In the West, it transitions from the first generation to professionals. In India, it generally moves to the second generation whether they are fit for it or not. They don’t know how to professionalize because they don’t trust anybody other than their blood. So the purity of pedigree creates certain problems. This is a very small resource you are looking at. If you have two or three children, you are trying to find a leader within the three instead of looking at 500 and picking up the best.

In the past, Indian families used to groom them in-house, at least the boys, when they were as young as 7-8 years old. They’d start writing accounts and observe everything, but never get to touch the money until they turned 18. By then, they understood the ins and outs of business. These are not processes that can be written down in a book because every business is run secretively in India. It is changing now. It is being corporatized.

How does an individual know what kind of a leadership style to adopt in any given situation?

There is no such thing as leadership style. If you are a true leader, you don’t think you are a leader. People think you are one. You just do what you have to do. The style of functioning today is according to the reality of today. If today people are sensitive, you operate accordingly. Tomorrow if you are dealing with a bunch of donkeys, you can’t operate in the same way. But whatever you do, do it in style.

Where do ideas like philanthropy and corporate social responsibility (CSR) stand in your scheme of things?

What CSR means is that the government expects a business to do what it is failing at. Non-governmental organizations would not exist if the government works at its best. If we are playing a game, the rules should stay in place. It can’t change in the middle of the game.

You said 30% income tax. If I am paying that, leave me alone. Don’t tell me I must start a school, a hospital, etc. Don’t try to make me feel guilty about my success. That is not good for a market economy.

How do you develop a strategy to learn from others on the one hand and go with your gut on the other?

The gut is not the most important part of your body. It’s full of shit. It’s a fact. This feeling from your gut comes because when faced with indecisiveness, fear accompanies. When fear comes, it begins to function in your gut because fear and bowel movement are connected. That’s why you say “shit scared”. So when indecisiveness, trepidation and a little bit of fear enter you, there will be movement in your belly. Don’t think it is an intelligent movement. But at the same time when fear comes, you perceive danger. That’s when you become alert. When danger is there, people experience more alertness than they ever know in their whole life. Because of that you may see better than what you may otherwise. So that is how this gut thing has come.

But I would much rather use my brain. When you use your brain, there is a certain level of intelligence that tries to work through a situation and there is information from others.

After weighing these inputs, you decide whether to use your intelligence or information. Choosing one over the other in every situation is foolish. To what extent is your intelligence better than the information you have on hand is a judgment you arrive at. When I am driving in a strange country, I just listen to the lady’s voice on the global positioning system. I don’t use my intelligence. So that’s a judgment you make.

This interview originally appeared in Mint on October 14, 2014. All copyrights vest with Mint

The Old Lady of Boribunder...

...Or the Times of India group as we all know it, just instituted one of the most bizarre policies I've ever heard of in a long, long time. Quartz India reports

"Hundreds of journalists working at the Times of India and its sister publications have received a peculiar request from their employer: hand over your Twitter and Facebook passwords and let us post for you.

Even after you leave the company.

Under a contract unveiled to employees last week, Bennett, Coleman and Company Ltd—India’s largest media conglomerate and publisher of the Times of India, Economic Times, among many other properties—told staffers they are not to post any news links on their personal Twitter and Facebook accounts. This runs counter to many social-media policies in newsrooms across the world, which often encourage journalists to share content widely.

But BCCL, as the company is known, is telling journalists that they must start a company-authorised account on various social media platforms. They also have the option of converting existing personal social media accounts to company accounts. On these, they are free to discuss news and related material. The company will possess log-in credentials to such accounts and will be free to post any material to the account without journalists’ knowledge. It is now also mandatory to disclose all personal social-media accounts held by the journalist to the company."

My reaction to this ordinance is summed up by this quote @shiningpath1 posted on Twitter

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