In the charming Steven Spielberg comedy The Hundred-Foot Journey, an Indian culinary genius played by Manish Dayal gets stuck in the beautiful south of France with his family. His father (Om Puri), still wrestling with the traumatic loss of the family’s mother, decides to open an Indian restaurant in the picturesque French countryside that dances in front of our eyes across the silver screen.

Trouble starts for the family when the icy French patron (played by Helen Mirren) of a Michelin-star restaurant smells a business threat in their presence. The film bustles with warmth. It builds upon the love for pure ingredients and mother nature’s generosity in providing them, which can take almost religious forms in the south of France, and how that love transcends cultures.

I was reminded of the movie when making a mundane broccoli soup for my children this Sunday. I am a terrible cook. But the recipe was by Gordon Ramsay, a three-star chef from the UK, and I knew it was infallibly simple because I had cooked it before in Amsterdam. The broccoli was organic, from one of the top supermarkets in Vasant Kunj in Delhi. The broccoli turns to a beautiful deep green when boiled fast, and the goodness of the vegetable is captured in the water. Like the theme of the movie, one brings the purity of broccoli to life in a way that tantalizes the senses. When done well it really is a kind of magic. To put it slightly unromantically, one creates exquisite value out of a mundane vegetable.

But that only works when you do not compromise on the quality of the inputs. A bad broccoli cannot tantalize the senses, however great the chef. Upon unwrapping, the organic ones I had bought looked not green but yellow. Rather than full of life, they looked starved. Tired, exhausted even, as if they had suffered hardship. How is this possible, I thought? When I marched back to the store, I saw that all broccolis were like mine. Apparently, the farmers cultivate them not to create supreme market value by making flourishing vegetables. They focus on giving as little as they could possibly get away with. Their strategy is to create value through extraction. The end result was that my broccoli soup was simply inedible.

This small culinary detour, my dear reader, is only intended as an hors d’oeuvre, as I believe it holds a broader lesson. There are three broad ways of creating value. The first is to maximize the quality of our product or service, to exceed expectations, so that we can ask the highest premium price for our offerings. The second way is to minimize the costs of creating the product, while maintaining an acceptable quality so that we only have to charge a modest price to make a good margin.

The third way, which is often overlooked, is to focus on the portion of the value we create for customers that we can command and actually charge. Let me give an example of the latter. The value of a good car over its lifetime far exceeds the price we pay for it. What it really gives us in the form of freedom of movement, safety, holiday experiences, protection from injuries, status, etc., over its lifetime might run into the tens of crores of rupees. Yet we pay only a fraction of this value to the car maker. In other words, car makers do not capture the full proportion of the value they create for us.

But this is precisely what makes buying a car a win-win arrangement. Because we pay less than the value we receive, we gain enormously from the transaction. And the car makers do, too, because we are willing to pay far more than their cost of making the car—precisely because we gain so much excess value from buying it. There is an implicit agreement on this arrangement.

That is where my broccoli experience went sour. The broccoli sellers did not create a win-win arrangement. They were so focused on capturing value that the buyer did not gain any more. They can get away with it because no competitor offers a better alternative.

Here is a colossal problem in large parts of the Indian economy, at least as I see it. Many entrepreneurs are not focused on maximizing the quality of their product, exceeding customer expectations, developing a high willingness to pay among their customers and then capturing a good portion of the value they create, leaving the rest to their buyer. Instead, they focus on creating win-lose arrangements, where they extract as much value out of customers as they possibly can get away with, leaving as little as possible to their buyers. It not only works like this in commodity industries like rice, wheat and sugar, but also in telecom, hospitality, retailing, real estate and others.

Buyers respond by also focusing on creating a win-lose arrangement by bargaining away every rupee of the price they possibly can so as to get at least some value out of the transaction. The result is a low-quality, low-value, lose-lose economy. The extractive mentality behind it has become almost part of national culture.

It is so ingrained and so unquestioned that it prevents large parts of the Indian economy from investing in the upgrading that is necessary to build sustainable and growing prosperity.

It also means fewer innovative jobs are created and young talent is not rewarded for constructive creativity, but for more jugaad, cheating and extractive skills. There are fabulous exceptions in both service and manufacturing sectors, with highly value-creating companies exporting globally. But unfortunately, they are that—exceptions. And they are not studied enough by other companies in India to learn from.

Most commentators at home and abroad usually focus on corruption, bureaucracy and a slow or fuzzy legal process as India’s barriers to growth and investment. They are not wrong. But equally problematic—and perhaps more so—is the extractive, lose-lose mentality in which many companies and customers in India keep each other strangled. Because it has become second nature and there is pride in playing the game well, it holds the country far below its potential. And it keeps me searching on for the perfect broccoli.

Tjaco Walvis is managing director of brand consulting and advertising agency THEY India, and a speaker at the Outstanding Speakers’ Bureau. He writes a fortnightly column on the softer cultural aspects of marketing that often tend to be ignored by marketers.

Close