Globalization in India has been accompanied by exponential growth, with Indian companies achieving double-digit growth over the past few years. While this is a positive achievement, it has given rise to a unique set of leadership challenges, and identifying individuals with the skills and vision to lead companies through uncharted waters has become a major concern.
Anjali Bansal is a consultant in Spencer Stuart’s Mumbai office
To succeed, innovation needs to be built into corporate culture, and senior management will need to encourage creativity, the expression of ideas, and the freedom to make mistakes and learn from them.
What works in India’s favour is an inherent focus on innovation, driven by the entrepreneurial nature of Indian businesses. The launch of the Tata Nano and the success of companies such as Infosys Technologies Ltd are examples.
This characteristic provides a distinct advantage, as individuals can go beyond the levels of organizational hierarchy if they have a creative idea and find a willing audience to make the decision as to whether it is good enough to fund and support.
Globally as well, firms such as 3M and Apple Inc. balance personal and professional development through strategies that encourage employees to pursue research and training opportunities that they feel drive theircareer development.
However, there is also a need to have a balance between processes and entrepreneurial freedom in order to nurture creativity and innovation within the organization, without losing track of strong execution.
As mergers and acquisitions become the norm for enabling rapid growth, a new issue has emerged: how to integrate acquired units in other countries when the parent is in India.
To successfully integrate two firms, it is vital to develop a level of cultural appreciation within an organization—about the other country, its culture and people, and their way of life. Realizing the value of such experiences, companies such as Citigroup Inc. and Procter and Gamble are adopting highly structured approaches to defining career progression within their organizations, making international experience mandatory for individuals wanting to be in key decision-making roles.
This understanding of global issues is equally true for individuals in Indian companies. Unless they are thinking globally, they will not be able to survive—even in Indian markets—since all companies work on global assignments today. And only experience and assignments can build this understanding, no matter how much cultural sensitivity training may be imparted.
Indian companies are at an advantage here, since they can learn from multinational companies’ (MNCs) experiences and ensure that their own visions and strategies are broader in nature.
In the case of MNCs, international experience helps when it comes to understanding the dynamics of the parent company. While empowerment in the local environment is essential, it is equally important not to undermine the larger culture of an organization, since that is what essentially drives the business.
MNCs such as Microsoft Corp. also believe in offering a high-quality work environment across their regional offices because they have seen that innovations in processes and quality of work are critical when it comes to attracting talent. So, whether the company is hiring expats for emerging job roles or developing talent from within, it is not enough to want the smartest global minds in the organization. It is just as important to offer challenging work that has the potential to make a difference within the organization, and even drive global strategy.
Various Indian companies have used different approaches. In recent situations, Indian companies such as the Tata group (Corus), Essar Group (Algoma) and Mahindra and Mahindra Ltd (Stokes Forgings, Jeco Holding AG) have left intact the management teams and operations of the overseas acquired companies, acknowledging the cultural context, resident skill sets, and the need to carefully evaluate and then integrate different aspects of the acquired business.
This is where Indian companies will be able to use past MNC experiences as indicators of success and failure. At the same time, companies will have to think through the consequences of every model before implementing it.
Key principles in terms of talent selection, talent development and leadership development are pretty consistent across industries and countries.
However, in the absence of a standard model that defines operational strategy in the global marketplace, the key to success is how the operations are managed, that is, how much authority is given, the level of centralization and standardization that is defined, and the products and services offered.
The conglomerate structure of many Indian business groups such as Essar and Birla—which, driven by the growth in the Indian economy, have recently diversified into a multitude of sectors—poses a challenge of balancing diversification with leadership in each business. Global business conglomerates such as General Electric Co., however, have restructured their businesses and are now very focused on core businesses and core categories, which are often global. It will be interesting to see India’s large businesses reinvent themselves into a new kind of modern, multinational portfolio group that can globalize.
In such a scenario, it is essential for companies to learn from past failures and recognize future opportunities and challenges. Though approaches for this will differ from company to company, the fundamental principles of talent development will remain the same. Therefore, if growth is to be sustained, it is critical for companies to focus on leadership development as a core area of corporate strategy—on a global and a local level.
Anjali Bansal is a consultant in Spencer Stuart’s Mumbai office, and leadsthe India practice for the firm
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