Why it’s so hard to be a business leader in India

June 17, 2013

India may be one of the toughest markets in the world for a global company, but this also makes it one of the best incubators for next-generation global leaders. Adversity, after all, breeds leadership. This fact is not lost on major companies like GE and Nestle, which are using the role of India head to groom their rising executives.

Yet many companies, put off by the country’s chaos and adversity, are redirecting their efforts and investments elsewhere. It’s hard to build a global business in India, and much of the success or failure hinges on getting the right leaders in place who can tackle the country’s unique challenges—the first being the structure of the market.


Rajanish Kakade/AP

India has a small affluent segment that is quite well served by global products at global prices, but to become relevant and really succeed in India, executives need the patience and perseverance to crack the large, fast-growing middle market. This can be a long and expensive journey.

Indian consumers expect to pay $75 for basic smart phones, 1 cent per minute for calls, $500 for open-heart surgeries and $5,000 for an entry-level car. To compete at these prices requires a very different mindset and approach to innovation that most companies find challenging. For example, today India is one of McDonald's fastest growing markets, but it took the company nearly a decade to nail its menu, business model and supply chain. Any executive of a multinational has to be bifocal: faithfully replicating the company’s established business model at the high end, while also entrepreneurially leading a long-term, company-wide assault on the middle market.

The second leadership challenge is managing chaos. To succeed in India, you need to cope with pervasive corruption where there is a “price list” for even routine approvals and transactions. In industries like telecom or infrastructure, where the government controls access to resources or contracts, bribery is an integral element of the business model. Moreover, government policies are highly uncertain, making it difficult for companies to plan major decisions. Is software going to be treated as a product or as a service for the purposes of import duties? Is the government going to dramatically increase the price of diesel? Is it going to retroactively change tax laws? Is it going to revoke telecom licenses and put them up for auction again?

The bureaucracy can be mindboggling, as routine approvals and decisions get deferred by months if not years. Transportation strikes, harassment by tax authorities, woeful infrastructure are all part of the game.

Building a capable organization is in my view the third greatest challenge. When a company has 20-percent growth and 15-percent attrition, as many companies do, it essentially has to hire and onboard a third of itsentire workforce every year. This is no ordinary HR task. Capabilities that are taken for granted in developed markets—project managers, supply-chain experts, sales managers who can close a million-dollar deal, competent people managers—are quite scarce.

Even hard-working and smart employees often struggle with teamwork and personal accountability. Indian culture places an emphasis on individual achievement right from childhood, which tends to breed workers who are capable, but competitive rather than collaborative. Successful company leaders have little option but to fill in all these gaps personally, by constantly teaching, inspiring and driving performance.


Prashanth Vishwanathan/BLOOMBERG

Finally there is the challenge of managing headquarters. How do you run fast when even the smallest decisions need to be vetted outside India, and when most of your team doesn’t report to you but to someone far away? You need to convince people at headquarters, whose entire experience is in the developed world, to look past the chaos of India and bet on her potential—making large investments ahead of the market and waiting several years for the return. You also need to convince headquarters that India, like China, merits a unique approach rather than a cookie-cutter replication of the global model. Oh, and you have to do all this even when much news out of India is bad.

The ones who succeed against these odds are the ones who are able to earn the trust and confidence of the global CEO. It takes a resilient and tenacious leader with unbounded passion for the role, who refuses to beground down between the bureaucracy of India and the internal bureaucracy of the company. You need to see India not as a stepping stone to the big job but as a big job in itself, and therefore be willing to commit five to ten years to build the business even if going back to Paris, Tokyo or Chicago is a quicker route up the ladder.

It takes courage to always think through what is right rather than what is expedient, and to resist the pull to blindly follow what headquarters expects you to do. That means being willing to ask for forgiveness rather than permission.

Of course, leaders who are courageous, resilient and entrepreneurial are exactly what companies need not only in India but across this increasingly complex world. That is why India, because of its challenges, is such a good managerial testing ground. There are few challenges in a company where the bar for leadership is so high. Moreover, India may be the only country where all the company’s parts—all of its products, brands, functions—are fully present. It is a microcosm of the whole firm, and the country leader role is a microcosm of the CEO job. The prize for succeeding? Nothing less than leadership of one of the world’s biggest markets, and new personal capabilities that are essential for succeeding anywhere.

Ravi Venkatesan is the former chairman of Microsoft India and author of the book "Conquering the Chaos: Win in India, Win Everywhere," released this June by Harvard Business Review Publishing.

 

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