Independence Day Special: The Rise Of The Indian Thought-Leaders - By Stuart Crainer & Des Dearlove

Even the brief love affair with Japanese business practices in the early 1980s was intellectually colonized by American thinkers such as W. Edwards Deming and Richard Pascale.

Now, change is in the air. A new generation of thinkers and ideas is emerging from India. Superstars in the business guru firmament include CK Prahalad, co-author of the bestselling Competing for the Future; itinerant executive coach, Ram Charan; Nobel laureate in economics, Amartya Sen; Vijay Govindarajan, professor of international business at Dartmouth Colleges Tuck School of Business; and would also have included London Business Schools Sumantra Ghoshal who tragically died in 2004.

CK Prahalad
The thinkers are often first generation immigrants to the West. Almost all have had first hand experience working in typically chaotic Indian businesses, says Dr. Gita Piramal, founder and managing editor of the Indian management magazine, The Smart Manager. Some, like Sumantra, worked in the public sector. CKs first job was in Union Carbides battery factory in Chennai, and he also worked in a company making pistons. Ram Charanwas born and brought up as part of an extended family of 13 that ran a shoe shop.All pulled themselvesout of India and many have a Harvard link.

Just below the established luminaries, too, is a group of up and coming stars. The faculty lists of the worlds most prestigious business schools contain an increasing number of academics with Indian roots. They include Rakesh Khurana, Nitin Nohria and Krishna Palepu at Harvard Business School; Jagdish Bhagawati at Columbia; Deepak Jain and Mohanbir Sawhney at Northwesterns Kellogg School; and Raj Reddy at Carnegie Mellon.

More will undoubtedly follow. The worlds MBA programs have a growing number of Indian students. This is not just an American phenomenon. For the first time this year, the biggest national contingent at Frances business school, INSEAD, is Indian. At the Swiss school IMD numbers of Indians on its MBA program are up 133 percent since 2001.

God does not discriminate across countries on intelligence. So, if you say that 20 percent of people are smart that means 200 million smart Indians and thats a lot of human capital, notes Tucks Vijay Govindarajan. At the same time, there is no doubt that Indians have had a disproportionate influence on management thinking and practice. As a percentage of the US population they are miniscule less than a single percent but then look at their representation in business schools. I remember when I got my job at Tuck 20 years ago, I was the first Indian faculty member. Now, its not unusual to see 20 percent of faculty with Indian roots and connections. This year alone we welcomed 40 Indians onto our MBA program.

Vijay Govindarajan
Indians also hold an array of senior executive positions at the worlds top corporations. Consider Arun Sarin at Vodafone; Pepsico president, Indra Nooyi; and the influence of Indian entrepreneurs in Silicon Valley -- Vinod Khosla, founding CEO of Sun Microsystems and now a leading venture capitalist with Kleiner, Perkins, Caufield & Byers; Ram Sriram, vice president of sales for Netscape; Desh Deshpande, founder and chairman of Sycamore Networks; Kanwal Rekhi, entrepreneur and the main force behind Indus Entrepreneurs (TiE) a Silicon Valley organization which promotes entrepreneurship among young people; and Romesh Wadhwani, serial entrepreneur and founder and managing partner of the Symphony Technology Group and president of the Wadhwani Foundation. And then there are people such as Rajat Gupta, former managing director of McKinsey & Company, and Raghuram Rajan, the IMFs chief economist.

And then theres the business media. There are a growing number of business journalists and commentators with Indian backgrounds, including a number of reporters on CNN and the writers for the opinion-forming newspapers and journals such as Tunku Varadarajan, op-ed editor for the Wall Street Journal.Parminder Bahra, now at the London Times, is another rising Indian business writer, and was influential in creating the methodology for the Financial Times business school rankings. The fact is that among the people who influence business thinking there is an increasingly Indian presence.

Rising to the top
The reasons for the rise of Indian thinkers into positions of influence are explained by Vijay Govindarajan: Like other first generation immigrants we had a tremendous hunger to succeed. For us, there was no safety net.But, there are other elements to this.Indians have a strong work ethic, speak English, and have been traditionally influenced by American education and educational institutions.Indians are good at conceptual thinking and analysis. Another very important quality is that we tend to be very patient a great virtue in teaching. Govindarajan originally trained as a chartered accountant in India, won a Ford Foundation scholarship to Harvard, and is now one of the highest charging executive coaches and a prolific author his latest book is Ten Rules for Strategic Innovators (with Chris Trimble, Harvard Business School Press, 2005).

Another perspective comes from Professor Nirmalya Kumar of London Business School.Business is well respected in India, as it was the only way to make a decent living besides being a doctor until India reformed in 1990. Thus the talent pool that went into business PhDs in the United States from India was excellent. It became a preferred option to escape India after finishing at the countrys top technology schools. Some of these PhDs, of course, then became the gurus of today.

Personal ambition is a powerful driver. But what it doesnt explain is why Indian thinkers have become so influential with Western business audiences. It is one thing to become a Harvard professor, quite another to have the ear of Fortune 100 CEOs. Ram Charan, for example, was a confidant to Jack Welch when he was running GE, and co-author with Larry Bossidy of Execution: The Discipline of Getting Things Done.Sumantra Ghoshal, with co-author Chris Bartlett of Harvard, wrote Managing Across Borders: The Transnational Solution -- named by the Financial Times as one of the 50 most influential business books of the century. Rakesh Khurana was recently listed among the worlds leading business gurus by the French magazine LExpansion. The list goes on.

Ram Charan
So, what does this hill of ideas amount to?
An Indian school of management?

One obvious conclusion is that it signifies the development of a distinctively Indian school of management.But this tends to be played down by Indian thinkers.There appears to be no definitive Indian Way.

However, the increasing influence of Indian thinkers coincides with a period of introspection into the nature and purpose of Western capitalism. Post-Enron, there is a disillusionment with the individualistic model, a sense that corporate America has been a breeding ground for executives whose personal greed and egos eclipsed their sense of public duty. Indian thinking taps into this debate. Indias collectivist culture offers a foil to Americas rampant individualism. Among the Indian thinkers there is a keen sense of capitalisms ethical and societal obligations witness CK Prahalads recent book, The Fortune at the Bottom of the Pyramid, which advocates a new approach to business to take account of micro markets among the worlds poor.

The Future of Competition, the book Prahalad co-authored in 2004, also examines how the balance of power is changing between the rich and the poor. Described by Business Week as provocative, an important book full of disruptive ideas, the book is already translated into ten languages. In it, Prahalad is addressing deep-rooted issues, hitherto neglected by Western business thinkers. His ideas are both revelatory and challenging something that comes from an alternative perspective.
Many Indians growing up in the US detect an inconsistency or incoherence about modern life, which for Indian-born people like my parents is very, very difficult, says Harvard Business Schools Rakesh Khurana.Somehow you are supposed to be moral and generous in your private life but that doesnt apply when you go to work you dont have to be the same person. That kind of role fragmentation or inconsistency was really seen as profane. One must find a way that synthesizes both who you are in private and who you are in public life and work. One has to find a role that creates integrity. In India they are also dealing with the issue of how you reconcile traditionalism, where theres a lot of meaning and symbolism imbued in everyday life and family and community, with making sure you get the benefits and individual spark of modern society.

Khurana points to the fusion seen in Indian Bhangra music a synthesis of modern dance and traditional music and the questions raised in literature by Indian authors such as Nobel laureate V.S. Naipaul and Arundhati Roy. People are trying to find a synthesis between the benefits of modernity without losing the meaning associated with traditional structures such as family. A growing number of people are uncomfortable with the winner-take-all markets as they currently exist and that the indicator of ones worth in the world is perfectly correlated to the size of their bank accounts. Another key question for them is how do we enjoy the advantages of modernity -- but without a 50 percent divorce rate?
Raising such questions lies at the heart of much of Indian business thinking and practice.It is not that Indian thinkers are negative about the American business world. Indeed, they tend to be wholesome in their praise of the opportunities on offer. But, they offer a unique viewpoint; the best of both worlds.

Two-way learning
India itself is also going through a critical transformation. It is an emergent nation. Increasing Indian economic prosperity has posed new questions for accepted Western business best practices.The abundance of fresh material from India is challenging and reshaping existing thinking.Business thinkers with Indian experience and sensibilities are readily placed to make sense of this.

It is clear that the flow of knowledge has changed. Indian business people traditionally learned from American business schools.The flow of knowledge is now two-way. The assumption in the past was that other emerging markets could learn from India. Now, it is recognized that Western companies and executives can also learn from India.

India is an extremely interesting laboratory right now, says Gita Paramel. Customers do not know how to be customers, and hence react in completely unexpected ways. The heavy use of SMS (short messaging services) by mobile users is one illustration. Putting automobile tires on typical Indian carts is a rural example. Managers in India have to be able to deal with the unexpected and be flexible to a far greater degree than in developed countries. This may be why somany Indian managers from Hindustan Lever [Unilevers subsidiary in India], have risen to senior levels inUnilever. For the Ram Charans of the world, this laboratory acts as a refresher. The Indian business thinkers who are making their mark in the West keep a pulse on India and what is happening here.

A number of the leading Indian thinkers remain in close contact with their home country. The late Sumantra Ghoshal, for example, was the founding dean of the Indian School of Business in Hyderabad.C.K. Prahalad also remains acutely aware of his Indian roots. Prahalad has drawn attention to the worlds four billion poorest consumers who earn less than $1,500 a year, but who are aspiring to a better life and demanding more goods and services (260 million of them are Indian). This situation represents a huge opportunity for companies to change their mind-sets and their business models (e.g., the poor cant afford or have no use for consumer products, or we cant make money in this market), he says.

Late Sumantra Ghoshal
In 1995, for example, Hindustan Lever (HLL) drastically altered the management of its value chain so it could sell a detergent, called Wheel, to the poor. HLL decentralized its production, marketing, and distribution and quickly established sales channels through thousands of small storefronts. HLL adjusted the cost structure of its detergent business so it could sell Wheel at a very low price point and still make money. It subsequently achieved gross margins and a return on capital as good as, or better than, HLLs higher-end cleaning products. Unilever has used this business model to create a new detergent market in Brazil.

Such imaginative business practice is where the real lessons from India appear to lie.Indian thinking challenges existing business practice and received wisdom.Many American companies say they have globalized but they are really international rather than global. They are beginning to realize that the center of gravity cannot simply be the United States. They have traditionally developed products for the US market and then try to export them to other markets. That is increasingly obsolete. To conquer markets like India requires sophisticated thinking, says Vijay Govindarajan who takes a group of 50 American executives to India every year.

He cites a meeting between a group of US executives and an Infosys executive. One of the Americans asked: Arent you afraid that IBM or Accenture who you compete against might acquire your company? The Indian looked thoughtful.But, perhaps Infosys could acquire IBM or Accenture, came the reply.In the past, people stood up at the very name of IBM and you certainly wouldnt have mentioned an Indian company in the same sentence, says Professor Govindarajam, Now anything is possible. The Infosys executive wasnt being arrogant after all when he spoke Infosys market capitalization was some $21 billion against Accentures $22 billion and IBMs $85 billion. Given that Infosys has a PE (price to earnings) multiple much greater than IBMs it is not impossible that this could happen. Infosys has IBM on its radar screen. Is the opposite true?

A passage to India
Some US companies appear to have recognized the shifting intellectual tide. A number now regularly second people to India, reversing the traditional flow of corporate knowledge.Infosys, for example, runs an intern program in which Americans go to work in India. U.S. companies are also becoming more attuned to Indian culture.

Nowhere is the growing influence of Indian thinking and attitudes felt more keenly than Silicon Valley. With an estimated 400,000 Indian nationals working in the Valley and roughly a third of the 65,000 new H-1B visa issued by the United States in 2004 going to Indians, Americas high-tech sector now relies on Indian intellectual capital. It has been said that the Valley would grind to a halt if the Indians pulled out. Such is the Indian influence that Intel now offers its employees an optional training course in Indian cultural nuances. Entitled Working With India, participants on the course, run by the training firm Charis Intercultural, study the subtle dietary differences between Hinduism and Jainism, Indian political history and the cinematic delights of Bollywood movies.

Intel is not alone. Other high-tech firms including Adaptec, AMD, Intuit, and Rockwell Automation also offer Indian cultural lessons to their employees. Unlike some diversity training, which is aimed at avoiding law suits, Indian cultural programs are specifically aimed at boosting performance. Some companies, like chipmaker AMD, have gone further. For its Indian Global Immersion Program, the firm flew teams of Indian workers at $17,000 per person to Sunnyvale, California, and Austin, Texas, for a month of cultural training with US managers.

Two eyes in India
Such initiatives suggest Western eyes are being opened to India and its role in the global economy. The new generation of Indian thinkers offers a challenge to the conventional view of globalization.Globalization was previously seen as the triad of US-Europe-Asia (meaning mainly Japan). India was usually overlooked as a hapless economic pygmy, filed under emerging slowly. Now, the Indian thinkers are helping executives see globalization in its totality.
Theres a much greater sensitivity and sense that the centers of the economic future may be more than simply the traditional Western European and North American nexus, observes Rakesh Khurana.

Rakesh Khurana
Adds Vijay Govindarajan: The US and Europe are congested and highly contested markets. In China and India there is still virgin territory. As markets and sources of ideas and innovation they need to be taken seriously. Thirty years ago he took his first plane journey from Madras to Boston. Now, it is Spring in New Hampshire. My market value is going up. India is on the radar screen, he says.

The fact that the radar screen now extends beyond Americas borders is itself an important development. Perhaps the true appeal of the Indian gurus is that they do not automatically regard the U.S. as the center of the commercial universe. They offer a different lens through which to look at issues such as globalization and shareholder value -- and even the purpose of business itself. In doing so they pose questions that Americans are often blind to.

As the late Sumantra Ghoshal observed: A very different management philosophy is arising and will become dominant the purpose, process, people philosophy. We are moving beyond strategy to purpose; beyond structure to process; and beyond systems to people. This will shift the basic doctrine of shareholder capitalism, and moderate it so that if people are adding the most value then people will increasingly have to be seen as investors not as employees. Shareholders invest money and expect a return on their money and expect capital growth. People will be seen in the same way. So they will invest their human capital in the company, will expect a return on it, and expect growth of that capital.

Ghoshals legacy lives on. He mentored and then extensively co-authored with Harvards Nitin Nohria, and inspired his students toward a more holistic view of management and leadership and how it is linked to broader society. Nitin and I have been co-authoring papers and cases on management as a profession, says Khurana. A profession, not simply in a technical sense, but in a normative sense which considers thinks like responsibility, mutual respect for the various constituents in a business enterprise, such as employees and customers, and accountability. Ideas which were catalyzed through discussions with Sumantra. Indeed, my current research and forthcoming book project is on management as a profession as developed through a sociological analysis of elite, U.S. business schools.

In the increasingly global world of business thinking, an American Spring could be followed by an Indian Summer.

Stuart Crainer and Des Dearlove are the founders of Suntop Media. Their Thinkers 50 list of most influential global business thought-leaders is a definitive bi-annual guide with endorsement from European Foundation of Management Development (EFMD). www.thinkers50.com Their business book publishing company London Business Press was launched in 2005.