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| STRATEGIZING INDIAN FIRMS |
Managing global businesses has been a business challenge for centuries. Despite the recent economic downturn, India is still highly diverse and one of the fastest growing economies in the world. The inherent strength of the country’s economy can be gauged from the fact that indigenous businesses are alive and healthy. Every major family-run business in India, like Mahindra's, Tata's, Birla's, Ambani's, and Ruia's (Essar Group) is in more businesses today than ever before. They have successfully forayed into steel, shipping, oil, real estate, power, telecom, consumer goods, pharmaceuticals, retail - you name it and they are into it. And it is not that they are restricting themselves to within the geographical boundaries. They’re making their mark abroad, too and are aggressively entering into Joint Ventures and Alliances with the foreign counterparts. Wherever they are finding an opportunity, 100 percent acquisition is the route being adopted. For e.g.: Tata bought the troubled Jaguar Land Rover in 2008 and turned it around successfully, Mahindra's bought 70% controlling stake in Korean Ssangyong and have successfully placed themselves on a Global Map.
The growing complexities in business arena is giving the strongest push to young corporates in India to carefully strategize and plan their every business move. The core competencies of the business have to be protected intelligently to fend off fear of getting acquired by your competitors. One bad or delayed move in this dynamic business world can cost your existing successful business dearly and can put the same in jeopardy at worst. A live clear example to this fact is Nokia's delayed response to smartphones (once a world leader in mobile phone handsets got acquired by Microsoft in Sep-2013) and Kodak's delayed response to emerging digital photography (once a worldwide leader in photographic films filed its bankruptcy in Jan-2012). It is imperative that Indian business houses continue to act locally but think globally.
Undoubtedly, with the Indian economy opening up, foreign companies are evincing greater interest in the India and are trying to make their entry into their own areas of expertise. However, presently the local firms are far better at overcoming issues such as poor logistics network, poor infrastructure, frequently changing regulations etc. than multinationals. This is not because they’ve somehow developed a superior operating model but simply because they’re often still run by their founder members: well-connected industry veterans who are adept at finding practical work-around solutions and still make most important decisions by themselves. In contrast, multinationals lack the local market understanding and personal relationships with government officials and other stakeholders, and are often hindered by their own time-consuming global decision-making processes. One thing which has to be kept in mind is that these one-time fixes pile up to create a hotchpotch of ill-fitting processes and ad-hoc solutions. Without a solid foundation and carefully planned strategy, the companies will soon begin to experience operational problems, such as poor quality, customer defections, low employee morale, and poor management.
Indian corporates must understand the importance of linking industry to academic institutes. India is proud of its world class institutions like IITs and IIMs. To leverage on the research going on at these institutes, the futuristic Indian MNC's must come forward and start engaging brightest minds at these institutions at a much higher level by exposing them to real time unsolved business problems. This will in turn groom and better prepare the talent coming out of these colleges to be productive when making an entry into industry. To succeed not just in global markets but even at home, these companies must combine their traditional advantages - the vision, risk tolerance, flexibility, and speed needed to capture early-mover gains - with a relentless focus on developing the capabilities required to catch up with world-class competitors elsewhere. The leadership succession has to be well planned so as to avoid getting into the problem of leadership vacuum. In other words, Indian companies must master a new form of strategic and organizational ambidexterity that goes far beyond execution alone.
Undoubtedly, with the Indian economy opening up, foreign companies are evincing greater interest in the India and are trying to make their entry into their own areas of expertise. However, presently the local firms are far better at overcoming issues such as poor logistics network, poor infrastructure, frequently changing regulations etc. than multinationals. This is not because they’ve somehow developed a superior operating model but simply because they’re often still run by their founder members: well-connected industry veterans who are adept at finding practical work-around solutions and still make most important decisions by themselves. In contrast, multinationals lack the local market understanding and personal relationships with government officials and other stakeholders, and are often hindered by their own time-consuming global decision-making processes. One thing which has to be kept in mind is that these one-time fixes pile up to create a hotchpotch of ill-fitting processes and ad-hoc solutions. Without a solid foundation and carefully planned strategy, the companies will soon begin to experience operational problems, such as poor quality, customer defections, low employee morale, and poor management.
Indian corporates must understand the importance of linking industry to academic institutes. India is proud of its world class institutions like IITs and IIMs. To leverage on the research going on at these institutes, the futuristic Indian MNC's must come forward and start engaging brightest minds at these institutions at a much higher level by exposing them to real time unsolved business problems. This will in turn groom and better prepare the talent coming out of these colleges to be productive when making an entry into industry. To succeed not just in global markets but even at home, these companies must combine their traditional advantages - the vision, risk tolerance, flexibility, and speed needed to capture early-mover gains - with a relentless focus on developing the capabilities required to catch up with world-class competitors elsewhere. The leadership succession has to be well planned so as to avoid getting into the problem of leadership vacuum. In other words, Indian companies must master a new form of strategic and organizational ambidexterity that goes far beyond execution alone.
Abishek Mittal
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