India’s so-called growth story was more an infatuation, and the proclamation that we are as good, or nearly as good as China was a sheer case of hubris overriding reality. This is starting point of Ravi Venkatesan’s book, Conquering the Chaos. The Indian business environment is characterised by the acronym VUCCA—volatility, uncertainty, complexity, corruption and ambiguity. To succeed one has to get past all these barriers, which is not easy and this is why only some companies succeed, while others give up. These problems, though distinct in India, would also exist in varying degrees in other emerging markets. But in case one can win in India, you can anywhere else. Hence, operating in India is a litmus test for any MNC.
Some of the success stories are companies like Unilever, Deere, Vodafone etc, which actually were able to adapt, by changing their mindset and displaying commitment to the market. Blindly replicating business models in home territory does not work in India because of both the VUCCA effect, as well as the nature of the market. India has the advantages of talent, markets, strong economy but also the weaknesses of functioning anarchy characterised by corruption, governance, patronage, crony capitalism etc. The Vodafone case is used to show how policy changes can be daunting. Shell, HP and Nokia also went through similar harassment. The trick is to get around the negatives and leverage the positives. Venkatesan brings with the famous NCAER consumption pyramid to show what goes wrong for several MNCs. Business needs to straddle the entire pyramid of consumers that are to be targeted—there are 16 million affluent, 160 million middle class, 350 aspiring class and 684 million deprived people. Usually companies target the top, also called Australia, stagnate and then exit falling into the ‘midway trap’. The companies that succeed have moved down the pyramid and followed the policy of 70% of value at 30% price. Microsoft did it to address the issue of piracy. Deere did it for tractors, and Nokia, learning late, went in for lower price sets with dual SIMs. HLL did it with Pureit water filter. More importantly, MNCs should basically be serious about India in terms of long-term commitment and greater trust in local leadership, which is not always there. Curiously, according to the author, not more than 1% of income or profit for most global players comes from India. In terms of basic objectives, Venkatesan says companies should target one of the following—being leader in India, get 10-20% growth from India or use India to win markets elsewhere. Only then can they actually go about doing business with commitment. The book turns slightly monotonous when the author describes the qualities require din the leader and it reads like any book on leadership—ambition, passion, entrepreneurship with learning agility and people skills. He gets pedantic about how leaders should be groomed and espouses the HUL model here. He prefers a model where everyone reports to the country manager who is in touch with headquarters, which is committed to India and trusts the local leaders. Some of his thoughts are like 70% of management should be filled from within and the development of leaders should be from within. The book turns interesting when the author is candid in his views on the chaotic environment that can be caused by a Maoist attack or a bandh when an actor dies of natural causes, or deals with public sector coming to a halt on account of fear of corruption, uncertain tax laws and so on. Here he feels that local leadership is better able to tune to such uncertainty or ambiguity rather than home leaders who have a different mindset on how to deal with political and legal environment. There are, however, several challenges in this uncertain environment. One needs to distinguish between speed money and grease payments. How do we stop data theft or deal with piracy? Should we be using agents to cover up some of these operations given that a MNC operating in India has to abide by rules in their home country? How do you deal with extortion from bureaucrats or politicians? Some successful companies have actually stood their ground and established that they cannot be driven to use of such methods and hence have shown character. The author has his experiences with JVs in India, which become necessary given the regulatory hurdles in the country. Often they fail when there is absence of complementarities (Volvo-Eicher). At times the MNC is not willing to adapt to the Indian situation (Renault-Mahindra). Globally, 60% of JVs have failed in emerging economies and he does not have faith in acquisitions too. Problems that afflict such deals are absence of trust, payment of a high price with low value and poor governance. His mantra for success under VUCCA is to follow what he calls—glocalisation, which McDonald has done in a country where $1 means a lot. A company that was famous for being the largest dealer of beef and pork runs a successful business in India which uses neither, and sells at a low cost and yet is profitable. Cummins brought in the small DG set while Deere adapted with small tractors so that Indian farmers with small size farms had use for them. The path to be followed is to have a start-up culture, create a profitable model through experimentation and the right mindset by creating an aspiration brand. Also they should clearly have a no-exit policy. The real takeaway is that if one can win in India, you can win anywhere; and more importantly such companies are automatically viewed differently in the global arena as they become role models for others to emulate. How would one rate this book? It is largely interesting, especially when real life examples are provided. At times it meanders into clichés as there is overemphasis on change of mindsets, leadership traits and trust, which get repetitive. Since it is based on interviews with the companies concerned it would have been even more exciting if he gave examples of how these companies actually confronted the VUCCA situations and got past successfully—like how did they deal with a bribe or a threat, so that it would have given lessons to take home for several other companies that are still trying to find pragmatic solutions to these problems.
Some of the success stories are companies like Unilever, Deere, Vodafone etc, which actually were able to adapt, by changing their mindset and displaying commitment to the market. Blindly replicating business models in home territory does not work in India because of both the VUCCA effect, as well as the nature of the market. India has the advantages of talent, markets, strong economy but also the weaknesses of functioning anarchy characterised by corruption, governance, patronage, crony capitalism etc. The Vodafone case is used to show how policy changes can be daunting. Shell, HP and Nokia also went through similar harassment. The trick is to get around the negatives and leverage the positives. Venkatesan brings with the famous NCAER consumption pyramid to show what goes wrong for several MNCs. Business needs to straddle the entire pyramid of consumers that are to be targeted—there are 16 million affluent, 160 million middle class, 350 aspiring class and 684 million deprived people. Usually companies target the top, also called Australia, stagnate and then exit falling into the ‘midway trap’. The companies that succeed have moved down the pyramid and followed the policy of 70% of value at 30% price. Microsoft did it to address the issue of piracy. Deere did it for tractors, and Nokia, learning late, went in for lower price sets with dual SIMs. HLL did it with Pureit water filter. More importantly, MNCs should basically be serious about India in terms of long-term commitment and greater trust in local leadership, which is not always there. Curiously, according to the author, not more than 1% of income or profit for most global players comes from India. In terms of basic objectives, Venkatesan says companies should target one of the following—being leader in India, get 10-20% growth from India or use India to win markets elsewhere. Only then can they actually go about doing business with commitment. The book turns slightly monotonous when the author describes the qualities require din the leader and it reads like any book on leadership—ambition, passion, entrepreneurship with learning agility and people skills. He gets pedantic about how leaders should be groomed and espouses the HUL model here. He prefers a model where everyone reports to the country manager who is in touch with headquarters, which is committed to India and trusts the local leaders. Some of his thoughts are like 70% of management should be filled from within and the development of leaders should be from within. The book turns interesting when the author is candid in his views on the chaotic environment that can be caused by a Maoist attack or a bandh when an actor dies of natural causes, or deals with public sector coming to a halt on account of fear of corruption, uncertain tax laws and so on. Here he feels that local leadership is better able to tune to such uncertainty or ambiguity rather than home leaders who have a different mindset on how to deal with political and legal environment. There are, however, several challenges in this uncertain environment. One needs to distinguish between speed money and grease payments. How do we stop data theft or deal with piracy? Should we be using agents to cover up some of these operations given that a MNC operating in India has to abide by rules in their home country? How do you deal with extortion from bureaucrats or politicians? Some successful companies have actually stood their ground and established that they cannot be driven to use of such methods and hence have shown character. The author has his experiences with JVs in India, which become necessary given the regulatory hurdles in the country. Often they fail when there is absence of complementarities (Volvo-Eicher). At times the MNC is not willing to adapt to the Indian situation (Renault-Mahindra). Globally, 60% of JVs have failed in emerging economies and he does not have faith in acquisitions too. Problems that afflict such deals are absence of trust, payment of a high price with low value and poor governance. His mantra for success under VUCCA is to follow what he calls—glocalisation, which McDonald has done in a country where $1 means a lot. A company that was famous for being the largest dealer of beef and pork runs a successful business in India which uses neither, and sells at a low cost and yet is profitable. Cummins brought in the small DG set while Deere adapted with small tractors so that Indian farmers with small size farms had use for them. The path to be followed is to have a start-up culture, create a profitable model through experimentation and the right mindset by creating an aspiration brand. Also they should clearly have a no-exit policy. The real takeaway is that if one can win in India, you can win anywhere; and more importantly such companies are automatically viewed differently in the global arena as they become role models for others to emulate. How would one rate this book? It is largely interesting, especially when real life examples are provided. At times it meanders into clichés as there is overemphasis on change of mindsets, leadership traits and trust, which get repetitive. Since it is based on interviews with the companies concerned it would have been even more exciting if he gave examples of how these companies actually confronted the VUCCA situations and got past successfully—like how did they deal with a bribe or a threat, so that it would have given lessons to take home for several other companies that are still trying to find pragmatic solutions to these problems.
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