HAVE A CLEAR AND COMMITTED STRATEGY
India is often described in different ways, a fitting reflection of its complexity and colour and summed up perfectly in its prescient tourism slogan, Incredible India. Indeed, in the news, India is scribed in extremes, ranging from its record-breaking space satellite launches to some of the saddest human tragedies. As the second most populous country in the world, I think India is more effectively described by numbers – a 5,000-year-old civilisation dating back to 3,000 BCE (Indus Valley Civilisation), and a population of 1.3 billion people growing annually at 1.2%, placing it as the most populated country in the world by 2022, according to UN estimates. Economically, India’s GDP is ranked seventh globally at US$2.2 trillion; it is expected to advance to fifth place, overtaking France and the UK. Looking eastward, India’s economic linkages with Asia are significant and growing, reporting a total trade value of US$71 billion for India-ASEAN and US$84 billion for China, India’s largest trading partner.
When asked to share my thoughts about doing business in India, I felt that I was to be one more voice among the swell of literature and anecdotal accounts on India. But like the parable of the blind man and the elephant, this personal perspective may make all the difference to a reader in search of this view. So, I shall attempt to make three points for such a reader, based on my personal experiences and observations from having worked in Mumbai and New Delhi in India since 2010.
COMMITTED MANAGEMENT UNDERGIRDS STRATEGY
There are no shortcuts to doing business in India. Having a clear and committed strategy for the market is critical to success. While this may be said to be true for many markets, it is emphatically so for India. Over the years, I find that many professionals and business leaders often talk about India as a “strategic market” with broad points made as to how it is deemed strategic. In such instances, market strategy has a tendency for being broad-brush, leaving out small but potentially adverse and harmful details which need to be addressed from the onset.
This happens predictably often when new entrants to India make errors of setting a business strategy for India with fairly high-level goals, and expecting minimal deviation. In my observation, these assumptions are often fuelled by over-simplification to the analysis coupled with simplistic or wry generalisations on how to overcome obstacles along the lines of “prepare to double the time and cost” or “be thankful if you get half the expected returns”.
While the market opportunities are many, it is crucial to establish a strong foundation when doing business in India. Here, I think that the larger companies tend to have a better handle on this and would serve as good examples. Such companies invariably have a committed strategy to adopt a long-term view of India, gaining depth and scale as they grow while seeking stable returns over a more sustained period. An often-quoted example is the TATA group, a US$100-billion conglomerate often cited as one of India’s leading business houses, with a widely-known reputation for getting things done right.
What does it mean then to “get it right”? I have found that getting things done right often requires detailed discussions and securing a good understanding of the fundamentals of existing regulations, regulatory framework and policy intent of any specific domains relating to the business before decisions are made. Such discussions tend to yield meaningful outcomes when they involve a clear strategy backed by committed management in taking a keen interest to explore the interstices and intricacies to seek the best possible solutions. Without such commitment and a strong dose of patience, the lack of clarity and nuanced market understanding can derail efforts significantly. Companies seeking to do business in India must therefore be careful to maintain sufficient bench strength within the business to commit to the business cause.
BLENDING PEOPLE AND PROCESSES
Perhaps one of the most challenging areas of doing business in India would be that of talent management and organisation. The workplace is often a dynamic blend of people and processes shaped by both formal and informal patterns of interaction. Adding demography, gender, caste and class to the mix, you find yourself managing the microcosm of a full-fledged democracy, much like the country itself.
Faced with such conditions, I observe that organisational processes often have to be designed for a broad cross section for it to be effectively adopted. To set up and implement systems and processes with little sensitivity to the cultural context is perhaps why many companies often wonder why organisational systems fail to deliver intended results for the business, despite them being so “well defined” and “rational”.
I have found that a practical way to implement organisational processes would be to begin with a set of rules and adjust the rules based on feedback as they are being implemented. This often leads to an evolved outcome, which on the ground works better than a fancy management theory. I have found in some instances that the result of following such a method is refreshingly more efficient than originally planned.
Recalling an instance that happened several years ago, I had instructed my HR manager to place a staff attendance register at the reception desk of the office, thinking that it would be the first place that all staff would stop to sign in for the day. A few months later, I noticed that the register was no longer at the reception but instead had been shifted to somewhere in the middle of the office floor. When asked about it, my HR manager responded that she received feedback from staff that they preferred to place their bags down at their desks before signing in and by general consensus, many felt that it would be both best and “fair” if placed in the middle of the office. While the impact of this outcome was small, it was in some way analogous to how rules and processes can take shape in India. In sum, the reflexive nature of the people-process dynamic requires an entrepreneurial approach for establishing highly functional and effective teams.
STRUCTURE FOLLOWS STRATEGY
In my earlier point, I touched on the need to have committed management to undergird strategy, focusing on addressing strategy down to its last details while supporting the setup of a robust foundation for the business to deliver as it develops both depth and scale. I then turned my attention to the dynamics of blending people and processes into effective teams, which should be allowed to evolve reflexively, resulting in higher levels of adoption and ownership.
My third point relates to implementation. Here, my point is perhaps best encapsulated by the theory of business historian Alfred Chandler, when he postulated that structure follows strategy. Chandler’s theory, which advocated that business structure is a consequence of business strategy, is very much relevant to the India context. From my observations, some businesses (and business advisors) advocate structuring around cost or tax-consideration efficiency to the extent that it becomes a primary concern, sometimes becoming a strategy in itself. While the case for that may be arguable, excessive focus on the bottom line could come at the cost of losing sight of the strategy plot. Over the years, India has seen a number of businesses seek transactional gains along tax incentives and structures which change as regulations change. Special Economic Zones, Accelerated Depreciation for Renewable Energy investments and more recently, Limited Liability Partnership structures are such examples.
From a strategy perspective, the question of where and how value is captured, how the business will be financed, and how profits will be retained or distributed should be carefully weighed against short- and long-term objectives. Here, I notice that businesses that grow well in India have a high tendency to focus on growing top line aggressively while keeping the business structures operating well within regulatory boundaries. And so the answer to structure when thinking about India fundamentally begins with the classic question, “What business are we in?”
India’s ascension to the top five economies in the coming years will create many opportunities for companies seeking to develop and capture value from the market. It is vital that businesses approach the market with well-clarified strategies and a committed management, and focus on building highly-functional and effective teams as a foundation for establishing and doing business in India.
Based in India, Benjamin Yap is CEO for the Andhra Pradesh (Amaravati) Project at Ascendas-Singbridge.