Seeking Alpha

Clark Troy's  Instablog

Clark Troy
Send Message
Clark Troy has worked in the financial services world since 2000, most recently for a registered investment advisor in Durham, NC, where he obtained a Series 65 license. He is currently working assiduously towards a CFP® certification. He worked for years as a management consultant in the... More
  • Book Review: The India Way 0 comments
    Sep 16, 2010 4:52 PM | about stocks: TTM, AV
    In their book, The India Way:  How India's Top Business Leaders Are Revolutionizing Management, authors Peter Cappelli, Harbir Singh, Jitendra Singh and Michael Useem attempt to distill the essence of what has made Indian corporate leaders able to manage their companies so successfully.  The authors, all professors at the University of Pennsylvania's Wharton School, seek to take the experience of India's heroes of industry and make it usable and applicable by Western business leaders.  To arrive at their conclusions, they utilized the access that their institutional affiliation provided them (see Wharton's Knowledge@India web site  -- interviews are also there but there's no navigation to interviews from the homepage or from the book's promo page) to interview more than a hundred truly senior Indian executives from a broad range of industries.

    Like any good management book, the authors lay out their basic premises and then hammer them home relentlessly, but congenially.  Conforming to good McKinsey doxa that their can be no more than five core points in any logical unit of an argument, our hosts maintain that the India Way consists of four high-level principles:
    1. Holistic engagement with employees -- Indian companies often put employees first, even before customers.
    2. Improvisation and adaptability -- Born of the necessity of operating in highly uncertain and bureaucratic environments, Indian executives and managers learn to adapt to fluid circumstances.
    3. Creative value propositions -- Particularly because they've had to sell to customers with less money in their pockets, Indian companies have been zealous in their ability to create value where others see none.
    4. Broad mission and purpose -- Unlike their Western counterparts, Indian leaders are not relentlessly focused on short-term results, but instead think strategically and in alignment with broader societal goals.
    In short, we learn that Indian business leaders succeed by doing all the things we would like business leaders to do. If the authors are to be believed, Indian leaders are basically good people who have figured out how to scale out their goodness to grow corporations.

    But therein lies the rub. Although our authors have certainly done prodigious legwork in interviewing lots of executives, they don't seem to have overtaxed their critical faculties. Take this, for example: 
    Anand Nayak, head of human resource development at ITC Ltd., told us that information technology companies in particular were able to take advantage of the skills inherent in a large pool of skilled manpower that was also fluent in English, especially since Western companies were simultaneously being pressure by investors and the financial markets to lower operating costs (p. 33).
    Having had this small taste of incisive analysis, I had no choice but to read on.

    As the book proceeds, it proves to be long on generalization and full of some good anecdotes and stories, but short on numerical evidence to back up its assertions.  Here's an exemplary, if extreme, passage:
    A second factor giving the India Way an advantage in performance has to do with customers.  Individuals have long memories, and doinng good things for people when they have no money and are not customers for your products can redound to a company's advantage when those individuals do have money and are in the market for your products.  We also know that consumers care about the values of the companies with which they do business -- witness the current rush of companies touting their "green" environmental practices (p. 196).
    These are all things that make sense and that we would like and hope to be true.  However, if a consultant or middle manager were to present such arguments to a senior executive without any hard numbers backing his/her claims, my guess is that the rest of the meeting and their day would be less than pleasant.

    One could argue that the proof is in the pudding, and that the very success of India's economy and its leading corporate lights demonstrates that the principles embodied in the India Way are true. But the authors never push back against the India Way with any vigor or consider alternative explanations for India's success. Without a doubt -- as they content -- economic liberalization has been a key success factor for the Indian economy. To what extent, though, can India's growth be put down to a simple combination of liberalization, favorable demographics, having the world's dominant business language as its language of state, and sheer drive and desire? How do India's conglomerates compare to the keiretsus and chaebols that helped Japan and Korea rise to eminence, and does India have governance checks and balances in place to avoid the difficulties that the former visited upon Japan from the early 90s forward? It's always difficult to answer these kinds of questions and demonstrate causality, but it's good to at least pose them and try.

    Moreover, the authors seem all too disposed to take the good faith evinced Indian executives at face value. Although I have never had the pleasure of visiting India, and therefore cannot comment in detail about the holistic civic-mindedness of its captains of industry, the one industry I have done some research in is retail financial  products, and mutual funds and life insurance in particular. And in this industry, at least, India has seen some rather traditional tooth and claw behavior on the part of large corporations.  Just last week, in fact, Vivek Law of CNBC's India affiliate reported that Aviva PLC's India joint venture was refunding insurance premiums to consumers who had been mis-sold variable life products by agents, apparently in accordance with a directive from senior management (go here, watch segment 3).  I am disinclined to believe that retail finance is the sole province of corporate misbehavior in India.

    All of this said, I by no means regret having read this book.  I learned a lot about India's business history and culture -- the Bharti Airtel story alone is almost worth the cost of admission, and HCL, the Tata Nano, and many other great narratives await readers.  The supplementary apparatus of interviews with executives could well prove a veritable gold mine for those interested in the cultures of specific enterprises.  The authors steer clear of the trap of national particularism or essentialism.  They legitimately seek to proffer the India Way as an alternative model for successful business enterprises. If they are right, and the principles espoused in the book become popular with non-Indian executives, we may expect that the world will become simultaneously more profitable and happier. But I'm not going to hold my breath.

    When he wrote War and Peace, Leo Tolstoy interlaced a good deal of historical rumination with his narrative, including a purely theoretical chapter which ran to 90 odd pages in my old Penguin addition. Presumably this is what Jeremy Grantham had in mind when, in a recent investor letter, he quipped that the book had "a great 600-page novel lurking inside it." Something similar might be said of The India Way.

    Disclosure: Index Funds only
    Themes: Indian industry Stocks: TTM, AV
Back To Clark Troy's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.