India’s enigmatic corporate landscape continues to pose problems for multinational corporations looking for success in a market characterized by its overwhelming potential.
The opportunity is superficially compelling, with India poised to become the world’s largest economy in the next two decades, and a GDP growth rate expected to reach 5.6% in 2014 (Source: UNCTAD). Its population is set to increase to 1.45 billion people in 2028 at which point it will overtake China as the largest population in the world (Source: United Nations). A demographic engine of working-age people will fuel this growth, an engine that is forecast to increase by 11.6% by 2020. The same working-age population in China is predicted to decrease by 3.1% over the same period (Source: Euromonitor).
India is already a leader in several product and market categories. Technology will continue to drive the Indian economy – India is tipped to account for more than 20% of global revenue growth in mobile handsets over the next decade. Significant investment in physical, social and agricultural infrastructure will secure India’s place among the global economic powerhouses.
It is therefore seemingly obvious that commercial success in India is key to remaining relevant on the global economic stage; however, many multinational companies (‘MNCs’) are struggling to achieve this success.
So, where are MNCs going wrong? How can they do better?
We have been talking to Dr. Devdutt Pattanaik, renowned author, mythologist, leadership consultant and Ted talker to shed light on some of these questions. Dr. Pattanaik’s reflections on the relevance of mythology in business and management combined with his unconventional and engaging approach to lecturing have earned him global acclaim.
To succeed in India, MNCs have to do things the Indian way. All too often they approach India like a child approaches a jigsaw puzzle and like a new homeowner approaches a flat-pack bed from Ikea – there is a problem that needs solving or, to borrow the title of Ravi Venkatesan’s aptly titled book, ‘Chaos that needs Conquering’. This ‘savior’ mindset, as coined by Dr. Pattanaik, does not work; it does not take into consideration the subjectivity of the term ‘order’. In many cultures order has become synonymous with efficiency leading to and exclusive mode of thinking that has no place in the Indian cultural landscape. MNCs who seek to exclude what they deem ‘inefficient’ and impose global business models and practices on the local Indian market don’t see India for what it is – rather, they see it as what it (in their eyes) should be.
India is intrinsically heterogeneous. It is a country made up of a disparate concoction of states and regions, and there is no ‘one-stop’ way to approach India, no simple formula to crack the cultural code. Such extreme segmentation demands adaption from MNCs who have to be dynamic enough to let regional parties work independently – with the condition that provided financial hygiene remains, anything goes. There is no room for institutional thinking.
MNCs can often fall victim to a lack of commitment to country-specific operations. A recent McKinsey report accurately points out that short-term rotation cycles, whereby ‘state visits’ by global CEOs and chairman, inhibit the execution of long-term strategy. Long-term investment ahead of the market is key, with the retraining of managerial infrastructure being one area on which MNCs should focus. The most successful MNCs in India simultaneously allow for country specific operations on a regional basis whilst retraining employees to align them with international thinking.
Why is retraining so important? Education and by extension what it means to be ‘educated’, takes on a different meaning in India. To borrow Dr. Pattanaik’s phrase, “in India one can be ‘educated’ and made unwise.” An Indian understanding of education goes beyond one of vocation; it refers to a deeper understanding of life through knowledge and wisdom. Perhaps this, as some experts suggest, explains the differing paths of economic development in India and China that have seen China continue to drive growth through blue-collar industry whereas India has invested in a white-collar infrastructure focusing on education and knowledge. As Jiddu Krishnamurti famously wrote, ‘The right education should help the student, not only to develop his capacities, but to understand his own highest interest’.
In India, short-term profit and long-term growth tend to be mutually exclusive. If MNCs are serious about maximizing potential in India then short-term gains must be sacrificed for a longer-term strategy. The problem solving ‘savior’ should go elsewhere – what India requires is a committed plan sensitive to Indian culture. So, if you are an MNC looking for expansion in India then put your tool kit away and get comfortable – you may be there for some time.