Opinion | What Azim Premji’s brand of capitalism is truly worth4 min read . Updated: 26 Jun 2019, 02:19 PM IST
Premji has always made a clear distinction between his personal wealth and that of Wipro
The handshake was firm, the voice soft but steely: “Thank you for covering us." It was typical of the man, a few words and no beating around the bush. It was the first time I was meeting Azim Premji, India’s most famous philanthropist, and it was for a story in Business Today, the magazine that paid my bills those days. Aptly, the story about Wipro was titled The Ethical Corporation. The meeting was in his office in Mumbai, some years before he moved to Bengaluru.
I was told before the meeting that he had been in a foul mood and his corporate communications manager informed me it was over the small matter of a staffer fudging a train bill. For Premji, though, this was no small matter. Integrity was an article of faith for him. Working for a media house where it was equally valued, it wasn’t as difficult for me to understand this then as it is in today’s more muddied times.
Significantly, his gratitude for the coverage was expressed even before the story had appeared. After it did, I got a call from Ashok Soota, who was then the president of Wipro Infotech. He said he didn’t agree with some of the issues I had raised about the company’s strategy and would like to discuss those with me on my next trip to Bangalore, but it was what he said next that amazed me. “Thanks for pointing out our deficiencies. For the good things we have our ad agency," were his parting words. In today’s business environment, with armies of image managers zealously guarding corporate reputations, such a remark would be unthinkable. However, that’s the culture Wipro and its great rival across the street, Infosys Ltd., fostered in the early 1990s.
Wipro went on to spawn a whole host of entrepreneurs. Each of these former Wipro managers upheld that same value system.
Companies that tolerate minor misdemeanours within are also those that perpetrate major frauds without. A tolerance for minor acts of corruption comes from a culture that perceives market manipulation as a legitimate business strategy. Enough companies doing that under the benign or even complicit watch of governments makes for the crony capitalism that we have seen in India over the years. Corruption distorts markets and leads to unproductive and wasteful deployment of resources. It may serve the interests of one tycoon or his companies, but it grievously hurts the whole market economy system on which capitalism rests. Premji’s lifelong battle against corruption in all its forms needs to be seen against this backdrop.
I have met Premji only one more time after that, at an India economic summit in the capital, and it occasions another great story about him, one that adds a few more brush strokes to our sketch of this enigmatic man. He could come across as unreasonable, as when Kingfisher upgraded his seat on a flight from Bangalore to Delhi. For the newly minted airline, it was a minor coup having him on board, and the upgrade was a natural move. For Premji, who insisted on travelling economy class, this was unacceptable, and as he thought one of his own executives was responsible, he gave her an earful. After he was told that she had nothing to do with it, he went off on a long walk, presumably to work his temper off. Other executives have talked about how he can be demanding and even unreasonable on such issues, but each of them says that’s because he genuinely believes the company’s money belongs to its shareholders and needs to be spent wisely.
It is noteworthy that, over the years, his philanthropy hasn’t ever been targeted by critics and investors and that is because he has always made a clear distinction between his personal wealth and that of Wipro. In that, he has been true to the letter and spirit of Milton Friedman’s dictum that a business isn’t about charity. Friedman elaborated: “The corporation is an instrument of the stockholders who own it. If the corporation makes a contribution, it prevents the individual stockholder from himself deciding how he should dispose of his funds." That’s the reason why Premji worked hard over the years to keep upping his stake in the company, mostly by using his dividends to buy more stock.
The consolidation of his shareholding was meant to ensure that when the right moment came, his munificence could be meaningful.
Now that he has fulfilled his pledge and given away $21 billion to the Azim Premji Foundation, it is with the intention of doing something significant about the appalling standards of teaching in government schools across the country.
Some years ago, Business Insider worked with Wealth X, a company that researches and collates data of ultra high-net worth individuals, to develop a Generosity Index, defined as the ratio of lifetime donations made by billionaires to their current net worth. That methodology would rank Premji among the top philanthropists in the world today.
It is this sheer scale of Premji’s giving that places him in a different orbit, but what’s more important is that it helps restore some of capitalism’s lost sheen.
Millennials are increasingly rejecting capitalism without a clear idea of what should succeed it and this is markedly so in the US, the home of capitalism. By earning his billions fairly and then giving them away generously for a cause as worthy as education, Premji has shown us the enlightened face of capitalism.
Sundeep Khanna is executive editor at Mint and oversees the newsroom’s corporate coverage