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Coping with global uncertainties

business Updated: Dec 01, 2011 14:32 IST
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Stephen Kobrin, a professor of multinational management at the Wharton School of Management, USA, said global leadership "is not about doing business abroad but about managing an integrated enterprise across borders where you encounter different cultural, legal, regulatory and economic systems". In the Indian context, multiply this idea manifold, to understand the challenges the country faces as it seeks to gain global significance.

India's phoenix-like rise makes for fascinating conversations. Its seething contradictions make it quite the Rorschach test on the troubling question of globalisation. The very nature of this rise gives endless scope to re-examine traditional economic premises. India has not relied on global markets but on domestic consumption. It has skipped the Chinese model (which rides on mass manufacturing) and focused on services. It has eschewed labour-intensive industry for technology-powered production. It is perhaps one of the first developing nations to use knowledge capital rather than raw materials or labour to power its success.

http://www.hindustantimes.com/images/HTPopups/271111/27-11-pg11a.jpgIt stands to reason, therefore, that the leadership tools it employs have to be correspondingly unique if it intends to succeed. And since it is economic leadership that determines thought leadership, it becomes imperative to examine how prepared Indian businesses are.

India is transforming in a transforming world. Faced with a world economy fraught with uncertainties and changing home markets, understanding these challenges is imperative.

I have often been asked what special skills are required to turn around ailing businesses. My answer is simple. There are very few bad businesses, just poor leadership and management.

Indian businesses have been used to a low-competition, supply-driven, comfortable domestic market. Unlike some kinds of high-tech companies that are 'born global', like Apple, our manufacturing companies have to 'learn' to be global. Selling an iPod need not be significantly different from selling a motorcycle across cultures.

So, what skill sets do leaders need to succeed? First, be prepared for discontinuous change. Second, focus on deliverables instead of micro-managing.

Third, leverage our advantage of having been brought up in the homeland of 'frugal manufacture'. Fourth, hone the 'pioneer' instinct, the confidence to handle situations with no precedent.

Add to this the ability to combine multiple knowledge bases and multi-cultural experiences. And finally, learn humility because unless you are prepared to learn from every person and every experience, as well as from every failure, you cannot succeed.

J. Stewart Black of the INSEAD Centre for Human Resources in Asia has spoken of the "unique global mindset" of successful leaders. This mindset, according to him, is what makes them curious about new experiences and new cultures; to engage with the local shopkeeper and housewife. Black speaks of John Pepper, a Procter & Gamble leader, who always visited five local households in a new country to learn how they washed clothes or cleaned their house or brushed their teeth. Expand this to include studying local government policy, laws and customs, history and social infrastructure in the new country.

Successful global companies not only rotate their managers among various divisions but also among their overseas arms to build leadership skills. This ensures that they are constantly learning and are constantly prepared. What defines a good leader varies dramatically across cultures. The trick is to be able to develop and adapt leadership behaviour that will work across these cultures, while marrying the stabilising influence of family ownership and professional management.

Managements of Indian companies have definitely changed and adapted to the changing economy. I believe, the first steps have been taken to be able to compete globally. Our challenge is to use our home market advantage to our benefit in the global arena. This includes, above everything, the ability of our managers to learn to manage a far greater degree of complexity than they have been used to so far.

Good management combined with entrepreneurial risk-taking is a great combination. Finding the right blend and balance is a huge challenge. It is not accidental that 200 years ago India and China were the largest economies in the world. But history is no assurance of success, nor does it provide a template.

In adversity, there is opportunity. These are the times when companies can make their mark and earn recognition. The world economy as it is today presents perhaps the greatest opportunity for Indian companies to grow, consolidate and conquer. We have some that have succeeded. We need thousands more.

Gautam Thapar is chairman & CEO of Avantha Group

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