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Business News/ Opinion / Columns/  Opinion | Lessons that governments can learn from companies

Opinion | Lessons that governments can learn from companies

Reducing development to a ping-pong game between political parties is a luxury India cannot afford

Andhra Pradesh govt led by Jagan Mohan Reddy has scrapped the earlier govt’s decision to build Amaravati as its state capital and also cancelled some of the contracts awarded for the ambitious Polavaram dam project (Photo: Mint)Premium
Andhra Pradesh govt led by Jagan Mohan Reddy has scrapped the earlier govt’s decision to build Amaravati as its state capital and also cancelled some of the contracts awarded for the ambitious Polavaram dam project (Photo: Mint)

It is time governments start taking responsibility for the actions of their predecessors. We are paying a heavy price for the cycle of successor governments scrapping or going back on measures initiated by their forerunners. As our politics becomes increasingly polarized, this trend is acquiring ominous proportions.

We are seeing it in Andhra Pradesh, where the YSR Congress government led by Jagan Mohan Reddy has scrapped the earlier government’s decision to build Amaravati as its state capital, while also cancelling some of the contracts awarded for the ambitious Polavaram dam project. It may have good reasons for doing so, but there will be long-term consequences by way of cost and time overruns, besides casting a shadow on the terms of business for future investors. Among the first moves of Mamata Banerjee’s government in West Bengal, when it came to power in 2011, was to pass the Singur Land Rehabilitation and Development Bill and return the land acquired from farmers for an ambitious Tata Nano project. Banerjee was living up to her pre-election promise, but it effectively deprived the state of a real chance to rediscover its industrial base lost during Leftist misrule.

A government isn’t a political party and governing a country isn’t the same as managing a party at the hustings. Laws are made and passed by Parliament, which comprises all parties and not just the one in power. The money allocated and spent by the government belongs to the taxpayer, the citizens of the country, and not to the ruling party.

It’s a lesson that governments should take from the world of business. If there’s one principle that’s common to all great and long-lasting companies, it is consistency. Writes Jim Collins about his path breaking study of 1,435 companies, which led to his famous 2001 book, Good To Great: “In each of these dramatic, remarkable, good-to-great corporate transformations, we found the same thing: There was no miracle moment. Instead, a down-to-earth, pragmatic, committed-to-excellence process—a framework—kept each company, its leaders, and its people on track for the long haul."

That’s how the best companies function, on the basis of shared responsibility. Which is why when a new chief executive officer (CEO) takes over, scrapping projects undertaken by his predecessors isn’t one of her priorities. We don’t hear of a plant in the works being scrapped or a key product being withdrawn just because there’s been a change at the top. Companies recognize that resources are scarce and rolling back an allocation already made is a criminal waste, besides sending the wrong signal to the workforce.

Chip-maker Intel, one of the most successful corporations in the computer industry, has had just seven CEOs in the 51 years of its existence. Over these decades, the company has undergone a massive transformation, from focusing on semiconductors in its early years to leading the world into microprocessors, and then, finding itself behind the curve when the mobile revolution came. Last July, it was forced to sell its smartphone modem business to Apple, incurring massive losses in the process. However, even during a period of great instability in 2018, when its then CEO Brian Krzanich was forced to resign, the company’s board asserted the soundness of its long-term strategy. Microsoft CEO Satya Nadella, credited with turning around the software major’s fortunes over the last five years by turning the company on its head, gave his predecessor Steve Balmer the credit for its successful entry into the cloud business.

One could argue that a government needs the flexibility of withdrawing a particularly odious piece of regulation or scrapping a project that goes against its principles. Thus, in case the Democrats win power in the US in the election later this year, and Bernie Sanders is elected president, he would be justified in scrapping current President Donald Trump’s dubious move to permit new logging in Alaska’s pristine Tongass National Forest, since his position on protecting the environment is well known and clearly stated.

However, for that, a party should have unambiguously articulated its position on a subject before elections. At a minimum, its objections must be stated explicitly with reasons detailed. It isn’t enough to be a mere naysayer. The party must offer viable alternatives. If the Congress feels that high-speed bullet trains aren’t a good idea, it must state its recommendations for the form of locomotion that will achieve the same results.

In Andhra Pradesh, the new government’s decision to create three capitals for the state may actually be a pretty smart move to allow the development of different areas. However, all parties must sign up to it. The cost of rolling back such a massive decision five years later could cripple a state already reeling under a huge debt burden.

Given what we have seen in the past 10 years, it is also imperative now for a government to seek legal advice on large projects at the planning stage. In this, it has the services of the attorney general, who is, as per Article 76 and 78, “the highest law officer of the country" and “responsible to assist the government in all its legal matters".

India has fallen too far behind its major rival China in the race for growth to afford the luxury of development being reduced to a ping-pong game between political parties. Investments for the future need the comfort of long-term planning, uninfluenced by politics and populism.

Sundeep Khanna is former executive editor of Mint

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Published: 22 Jan 2020, 10:49 PM IST
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