A summary of the Keynote Address delivered by Mr Subodh Bhargava, Chairman, Videsh Sanchar Nigam Ltd (VSNL) at MMA Annual Convention held on 15 & 16 Feb 08 at Taj Coromandel Hotel, Chennai.

To me, the theme for the convention makes two statements.The first is that this global element is here and we cannot wish it away. It’s going to stay. The second statement it makes to me is that India has emerged; now one can have little nuances whether India is emerging or emerged, but it has certainly evolved and transformed from what we knew earlier.
Let me touch upon the first dimension of globalization and what I understand. This is something which has been a result of corporate offensive if I may use that word. Globalization is not driven by any laws or rules of nature; it is not being pushed by people; it is not being pushed by technology, in fact, if anything, it is been driven by powerful governments in different parts of the world whether it is North America or Europe and enforced through the muscle of the multinationals. The state of open markets, more growth, attacking poverty is absolutely right, there is no other alternative. Creating more wealth, generating more jobs, have growth is again right, but whether you look at it in the global, the national or local context, we have already experienced downsides of globalization. The downside is not that when America sneezes, the NYSE or BSE catches a cold, it is not because of the sub-prime crisis in the US or that Anil Ambani’s IPO tanks. The real downside is that inequalities are increasing. Amongst nations, the emerging developing nations are actually racing for the bottom amongst national, local, regional populations, rich are becoming richer and poor are becoming poorer. If not poorer, at least the difference is increasing and I would say that this is one challenge, perhaps the foremost challenge for the Indian corporates and aspiring Indian MNCs to reshape globalization. We can’t sit back. It is possible we can have strategies, policies and actions which would lead to reshaping globalization in its outcome, at least first in the country and then perhaps can think about taking it beyond.
Let me come to the second dimension of emergent India. I like to share with you a small story of how Indian business was seen prior to 1991 liberalization. Some of you might have heard that story about this eight year old boy Rahul who asked his father, “What do you do?” Father said, “I am in business.” “What business do you do?” asked Rahul. He said, “Look I buy and sell.” Rahul said, “But that is trading, not business.” Father thought for a minute and said “Let me explain. I bring money to the house, and so I am the capital. Your mother takes all the decisions, so she is the management. The maid carries out all the work in the house, so she is the labourer and you enjoy the fruits of the labour, capital and the management decisions. You are the consumer.” Rahul was bit satisfied and went off to sleep that night and suddenly he heard his little brother crying from the bed beside. He got up and found that the sibling had wet the bed and he wondered now what do I do? He thought best is to go to the management and seek directions. He went to the room, found his mother fast asleep. He tried to wake her up but didn’t succeed. He said, “Why am I wasting time with the management because ultimately the work has to be done by the maid? So let me call the maid and she will take care.” So he went to the maid’s room and as he opened the door there was light inside and he saw the maid was entertaining father. So he turned back, stood in the lobby of the house and said, “What sort of a business is this? Capital is exploiting the labourer, management is sleeping, consumer knows nothing and is confused and the future is lying in shit and crying.” Believe me ladies and gentlemen that is what Indian industry was, before 1991. We were in our cocoons, we thought that was business but what has happened since 1991 is a greater story and I think stalwarts like Mr Seshasayee and his predecessors and others who have been leaders in this transformation have enabled corporate India to stand on its own feet .
The first reaction to 1991 was sudden perception of death. But as we moved forward we learnt few very important lessons. The first was, whatever the outcome was, the management, whether owners or professionals, for the first time got the right to manage. They not only got the right to manage but they were accountable. They were to take decisions, earlier all decisions were taken in Delhi in Udyog Bhavan: which machine to buy, which raw material, what capacity, what product, what technology. Everything was decided by the Babus in Udyog Bhavan when suddenly we, as managers, were given the opportunity to take decisions. Second was, India got its entrepreneurship unleashed. We had the threat of competition, but then we had the opportunity and permission not needed to create competition if I had the confidence in myself. And that entrepreneurship is what has delivered so far. And third most important gain was that for the first time corporate India started thinking strategically. Earlier the strategy was to stop ‘so and so’s’ license for capacity, or ‘so and so’ license for import. There were hardly any other strategy. And suddenly Indian industry has to look for strategy directions, policies and actions.
Now with that learning, I think Indian Industry today stands at where we have a surplus of exchange of balance of payments. Indian products are no more recognized as cheap Indian products, the exports have grown 15% and I share the inadequacies and the journey which we still have to go in the concluding portions. But still, if the exports have grown both in service sector and re-emergence of manufacturing sector, it is not because the world was waiting for cheap Indian products. It is because India Inc has transformed itself successfully. And today where we are, I think the more important dimension is where do we go from here, what is the way forward and what are the challenges and I have thought of two different compartments of challenges: one is that of the mindset, the other is of competencies.
Let me talk about three or four mindset issues which I think we need to tackle. The first and foremost is the clarity. What do we want? We want poverty to be eradicated, we want corporate Indian MNCs and we want GDP growth of 10%. Is there one single anchor which can be drawn from our vision which will take us forward? And I believe there is only one thing which will give us everything else that we in India Inc need to continue to remain competitive: Keep on improving our competitiveness. Competitiveness is not just price, it’s a question of remaining, maintaining high quality, updating technology, eliminating waste, managing cost, remaining fit mentally, financially and physically all the time. The second mindset which we need to know consciously is that we are running a marathon, not a 100 metre dash and we need to stay the course. That staying the course will not happen if we become complacent or arrogant. And I think we need to recognize that it’s a long haul, long journey that we are on. The third element of mindset to my view is do we enjoy change? And I ask this question of those managers who are in the age group of 50 plus. We have changed but that’s not the end of the journey. The world is changing faster. The customer requirements might change, product definitions might change, technologies would change, rules and regulations in different parts of the world will change. They will continue to change, in some parts they will change in a rapid manner, some parts the change will come slowly and unless we are able to manage change, which we have done so far, I think the task in future is going to be even greater in terms of the ability to manage change and I can’t find a better word today to say that we must enjoy change. We must enjoy managing change and not take change as a stress.
The forth issue of mindset is that of leadership, governance and innovation. Leadership is a very complex, multidimensional issue and today’s manager has to lead both, morally and also simultaneously produce results. Everything needs to be called upon: cognitive skills, technical skills and emotional skills. But what is happening in this age of media? Like the political leaders, the corporate leaders are also becoming victim of wanting to work at the tip of the iceberg which is shining, which is in the public view all the time. But the real leaders work at the bottom of the iceberg. It is dark, it is cold, they keep on chipping away at the foundation to build the institution, the organization in order to take it forward during this global competitive environment and this leadership issue to my mind trickles down from the nation’s leadership and governance to corporate. Considering corporate governance we can talk about transparency, information and disclosures. Corporate governance also today to my mind would call upon very strongly recognition of various stakeholders. The owners, whether minority shareholders, promoters or majority shareholders, are not the only stakeholders. And I think today the list of stakeholders is expanding, it is no more business associates, customers and suppliers it is also not only media but environment, government, community and so on and so forth. And I think each corporate will have to identify its stakeholders and come out with a balanced strategic posture and results.
Innovation is another dimension I believe is not confined to product design. Corporate India has been innovating, business processes and approaches. Why can’t we think about the government of India doing the same? I am not going to talk about government, but I know one thing that in this global challenge whatever we have done so far taken out the slack or worked a little harder is not sustainable for our competitiveness unless government act in respect of infrastructure falls in place. Our competitiveness will be eroded despite your and my hard work if the government cannot deliver. Government keeps on promising, but I am afraid that’s one area where Corporate India or someone has to rebel and do something. You have no power, you have back up power, you have back up to back up power, you have time losses I mean I don’t think I have to elaborate that dimension to this very distinguished gathering.
Let me come to the last part which I would say are the challenges in respect of competences. The first and foremost I believe is technology. Technology is scarce, very expensive and I don’t think corporate India has yet recognized the need for deploying much greater resources, people, funds in developing and acquiring technology.
Second and very important challenge would be supply chain. Supply chain today is available the world over: natural resources, minerals from iron ore to others, of course, oil. The nation governments are becoming more and more restrictive in permitting and therefore I think corporate India would have to have strategies to or take the risk to own and control supply chain and I don’t mean supply chain is contradictory to outsourcing. I think supply chain partnership is one but I am talking about right down to the natural resources and if we are not able to maintain that supply chain, the value add would just stop.
Just as supply chain on one side, I think on the other side we need to develop Indian brands. I feel that the value of brands, we as consumers today recognize and therefore we have to build that. We need to acquire markets, to acquire customers and that brings me to one of the major reshaping of the globalization. It is mergers and acquisitions within the borders of India and cross border. It is happening, few have happened: not just Arcelor, Mittal or Corus, but many others but if they are done, if the acquisitions are with very strategic fit and backed by integration skills, mergers and acquisitions would be an essential inevitable part of corporate India’s strategy to move ahead. Selling out should not be an embarrassment to owners anymore. You have synergistic, strategic opportunities and we as managers need to encash those and not get involved in emotional dimensions of ‘how can I, my grandfather built that business, and how can I sell it’. I think if you don’t have the competence, if somebody else can run it better, for the sake of the institution those emotional elements have to be given secondary place.
Connected with this would be two other small dimensions. One is the operating abroad, and lastly I say in terms of competence is information technology and networking. We have given the world the best of the potential of IT, but in India IT has remained by and large as some sort of data storage and retrieval process, whether inventory management or some cases wages or few other receivables. But, the application of IT in terms of analysis and decision making, we haven’t moved there at all. We need to move. India today has the world’s largest under-the-sea cable and other network across the globe from point to point anywhere and we are the least connected corporates. Within India we are not connected, we have our plants in different parts of the country, we have our distribution channels, we have supply channel and this is not a commercial on behalf of BSNL, please believe me. There is an opportunity and I don’t think anyone would question the benefits of connectivity and communication, if you are having a merger and acquisition. If you have a multi location operation, the best way for integration is online communication. Even people sitting somewhere in Gurgaon if you have a factory, unless you do that you will find the value realized from the synergy is very limited
Finally, can we do it? I personally believe we can do it for only one factor and that’s the people. Amongst the young in India we have the potential talent which learns fast, which when given the space, given the empowerment, given the opportunity, given the trust has had a record of very high achievements and that gives me all the confidence that if we are focused on our human resource and related human resource policies, we will be able to move ahead. The only party pooper, the only thing which can come in the way is continuing inequity and inequality. And I think that’s the last thing I want to talk just for 30 seconds, because I don’t think it needs a definition.
We have heard and read about inclusive growth, but my understanding and I having worked with Mr Seshasayee’s appointed committee on affirmative action, I can’t tell you how disappointed everyone in the committee has been, including the Chairman of the committee Dr Irani, that the corporates have yet not recognized in their own self interest to take, have strategies, actions in ensuring inclusive growth because if it becomes a law it will not be a problem but I think fundamentally if the growth is not inclusive, we will get left behind. We will have problems. But, the bottom line I would still say, a miracle is still happening. India is moving ahead with confidence and I hope we will become Indian MNCs which would have reshaped the globalization model to make sure that the growth is inclusive, reaches out to all parts of the world and all parts of society. Thank you?