The last decade or so has seen India emerging from the shadows and rising to become one of the fastest growing economies of the world. It is a journey that has not always been smooth and, as Indian companies strengthen their global footprint in these challenging times, there is belief, curiosity and even some amount of doubt regarding their capability to become truly global players.
India’s potential to develop and mature to become a leader in the global arena of business is enormous. We have the world’s youngest workforce, a growing consumer market, a vibrant economy and, most importantly, an inherent entrepreneurial mindset.
In spite of these positives, however, the global community has always viewed the “Indian way of doing business” with wariness. There has been a lot of discussion regarding the different styles of leadership in India, especially in family-run businesses.
Discussion topics have covered systems and processes, decision-making, the level of transparency in business processes and control by family members in the absence of “objective” professional management. There is also a feeling that the business environment, at times, runs on unspoken family “rules” that may not be the most transparent.
One of the unique circumstances that family businesses find themselves in is balancing internal goals and aspirations with the requirements of the external market—a situation where, more often than not, the former takes precedence over the latter. A strong sense of ownership also makes families very protective of their businesses, and exiting through sale or dilution of holding is not an attractive proposition to the majority.
Illistration: Malay Karmakar / Mint)
While the above points are noteworthy and clearly deserve attention, one cannot ignore the fact that this so-called “Indian” entrepreneurial system seems to have worked in the country. With 17 out of the 30 companies listed on the Bombay Stock Exchange’s Sensex index being family-owned, there is clearly something in the leadership strategy that is working, and working effectively.
Companies such as Infosys Technologies Ltd, Reliance Industries Ltd, the Tata group, Mahindra and Mahindra Ltd and DLF Ltd are recognized as leaders in their respective fields, have created an identity for themselves beyond Indian borders and have successfully implemented organic and inorganic strategies that have resulted in a healthy rate of growth. Which makes us ask ourselves—this notion of a professional systematic management style, is it a requirement for growth and success in the Indian environment?
While the past performance of Indian companies has been positive, the future is a new world altogether. India is experiencing, and is being exposed to, forces that were absent in the old days—be it aggressive global competition, highly aware consumers with shorter attention spans, high focus on quality and transparency and, most importantly, a faster-than-ever pace of change.
As a result, family businesses are entering an unfamiliar realm that is characterized by an unprecedented scaling up of units—in terms of both products and geography.
Large Indian family businesses are now diversifying into unrelated products and services, each with its unique set of challenges and opportunities.
At the same time, interacting in a global world has given rise to new cultural dimensions, where an expatriate leads a division in India, while an Indian manager works with a team in a foreign country, miles away from home.
This exposure to the global corporate world has resulted in an increase in the importance given to the inclusion of governance, ethics and social responsibility in overall corporate strategy—a phenomenon new to most Indian family-owned businesses.
All of this has given rise to a new definition for successful leadership— global vision with a local flavour, strategy balanced with cultural sensitivity, multi-industry focus across geographies, to name a few.
However, to be effective in India, this would need to be combined with our innate spirit of entrepreneurship and risk-taking. Also required will be the continued high level of senior management involvement and responsibility in the centralized control model, which cuts through processes and leads to uniform—though not always unbiased— decision-making.
This focus on establishing formal policies, procedures and business methods could be considered bureaucratic. However, in a globalizing environment, it is also such practices that provide clarity, predictability and guidance to employees and establish the rules of engagement.
In spite of the flux many businesses find themselves in, what is clear is that there is a case in the present to analyse leadership approaches in India and abroad, and draw upon the positives of both to arrive at a unique formula for corporate leadership in India.
India is a natural location for this amalgamation, given the country’s history as a melting pot of cultures.
Over the years, India has grown by embracing outside influences and merging them with its internal strengths, only to emerge stronger. So, whether it was converting its conquerors into its citizens or believing in cultural inclusiveness by opening its doors to the Portuguese, the Persians and the English, India has always attempted to grow through inclusion. Diversity is a way of life in the country, and this is probably its greatest strength as well.
Is it possible to replicate this highly successful strategy and create our own brand of Indian leadership—one that is appropriate to the Indian context and takes into account the merits of our history and experience?
There is no “right” answer, but there are numerous possibilities; and we are eagerly waiting to see how Indian family businesses approach this amalgamation, which will capture the best of both worlds.
Send your comments to firstname.lastname@example.org
Anjali Bansal is a consultant in Spencer Stuart’s Mumbai office and leads the India practice for the firm.
To access more thought leadership from Spencer Stuart, visit www.spencerstuart.com