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Take India to $10 trillion: India Inc must establish a cadre of companies that are the world’s most innovative

18 February 2015 | Source: Times of India

By Vineet Nayar and Gary Hamel

The economic progress of any nation is closely entwined with the aspirations and capabilities of its corporate sector. That’s why the success of India is inseparable from the success of India Inc. Economic juggernauts like the US and Germany owe their prosperity to a cadre of companies that, decade after decade, took the lead in staking out the future.

GE, Ford, Procter & Gamble, Amazon, Apple, Google, Siemens, Airbus, BMW and SAP are just a few of the leading American and European companies that have created enormous wealth for their countries while addressing global needs. In the developing world Haier and Alibaba in China, along with Hyundai and Samsung in Korea, are other examples of ambitious contenders who parlayed national strengths into global success.

To help build a $10 trillion economy India’s businesses must become the most progressive in the world, fully prepared for the unprecedented challenges of the 21st century. In practice, this means addressing three urgent questions around strategy, organisation and leadership.

Strategy: Are we capable of continuously inventing new industries and reinventing old ones — leveraging the game-changing potential of digital technologies?

Organisation: Can we change as fast as the world around us — by excising bureaucracy and building an ‘evolutionary advantage’?

Leadership: Do we have inspirational leaders in every part of the organisation who are genuinely worth following?

Over the past few decades many cost-advantaged Indian businesses, led by IT and auto industries, built a global footprint, but globalisation is just the beginning. Today, global presence and cost efficiency are no more than table stakes — necessary, but not sufficient prerequisites for success. To intercept the future, Indian companies must build tomorrow’s best practices today.

Truth is, even the world’s most admired companies often suffer from three incompetencies. First, they are too incremental. While they may have been innovative once, they haven’t made innovation a deeply embedded capability.

As a result, few employees believe they have a responsibility to innovate, few leaders are held accountable for innovation, and there is little in the culture that supports breakout thinking and rapid experimentation. That’s why the future usually gets invented by newcomers rather than incumbents. The challenge for India Inc: How to make innovation both instinctive and intrinsic?

Second, they are too inertial. Top-heavy management structures and a snarl of red tape undermine responsiveness. In most companies, there are few incentives for risk-taking and few mechanisms that support internal activism.

Change, when it happens, is belated, episodic and convulsive. As the pace of change accelerates, the bar for adaptability will continue to rise. The challenge for India Inc: How to build companies that forever out-run change?

Finally, most companies are uninspiring. How else do you explain the fact that even in the most advanced economies, less than one-third of employees are emotionally engaged in their work? The figure for East Asia is 6%.

It was long assumed that the culprit here was uninspiring work, but that’s not the case. The real problem is leaders who fail to inform, involve and heed the led. If workers are discouraged, it’s because they are disempowered.

Shrink someone’s autonomy, and you shrink their creativity, initiative and passion. The challenge for India Inc: How to create work environments that encourage and inspire extraordinary contribution?

Here and there, a few bold companies are already working to overcome these disabilities. To do so, they are abandoning the bureaucracy-infused practices of ‘Management 1.0’. India Inc must do likewise.

Do you believe that senior executives should set strategy? Think again. One multi-billion dollar software company crowdsources its strategy development to its entire workforce.

Do you believe that power trickles down? Well, maybe it should trickle up. In one of the world’s most innovative companies, employees choose their leaders and can ‘unchoose’ them as well.

Do you believe employees need a boss to keep them in line? Perhaps not. Peek inside one of the world’s most advanced manufacturing facilities and you’ll find a 1-400 span of control.

These are the bleeding-edge practices of a small but growing group of ‘post-bureaucratic’ organisations. These companies are in the forefront of what’s shaping up to be the most fundamental reinvention of work, organisation and leadership since the industrial revolution. If India Inc is going to vault its many rivals, it needs to join the vanguard.

The world is excited about India, and it’s time for India Inc to be excited about India. If India’s going to achieve its growth aspirations, India Inc must dream bigger and bolder. It must be a global force for ‘creative destruction’.

It must tear down pyramidal power structures and embrace new network-centric management models. It must help millions of young people to not only find work, but to find meaning in their work. This is what it means to lead in the 21st century.

Vineet Nayar is former CEO of HCL Technologies. Gary Hamel is a visiting Professor at London Business School.