For some time now, the world has watched as Indian companies — once relatively unknown outside the country — have grown by leaps and bounds to become world-class competitors in many industries. It was high time that someone asked the obvious questions: Do Indian CEOs and business leaders operate in a way that is markedly different from those in other parts of the world? What is the source of their competitive advantage? Can other managers learn from their experiences?
Four Wharton professors set out to answer these questions in a new study titled, “The DNA of Indian Leadership: The Governance, Management and Leadership of Leading Indian Firms,” co-sponsored by India’s National Human Resources Development Network. Based on interviews with 100 chief executives of leading Indian companies, the researchers –management professorsPeter Cappelli, Harbir Singh, Jitendra Singh (now dean of the Nanyang business school in Singapore) and Michael Useem – concluded that while top Indian leaders do share several attributes with their U.S. counterparts, they also have distinctive characteristics.
In contrast to U.S. business leaders, Indian CEOs tend to be more preoccupied with internal management, long-term strategic vision and organizational culture. Financial matters, on the other hand, are not at the top of their agendas. In addition, the research showed that Indian leaders seem to care a good deal more about motivating employees and setting an example than about currying favor with shareholders or the markets.
In defining the scope of their research, the professors describe their objective as follows: “Our ultimate goal for the project is to see whether the practices and priorities of the [Indian] CEOs in our study suggest something like a different or distinctive model for leading and managing business enterprises. Since World War II, the study of business and especially of leadership has been dominated by models from the U.S. This reflected in large part the dominance of U.S. multinational companies. In the 1980s, the strong performance of the Japanese economy, particularly in international markets, led to greater interest in, and teaching about, a ‘Japanese’ model of management that was distinctive in its management of employees. The rise of the Indian economy, and especially the international competitiveness of Indian businesses now, raises the question as to whether there is a distinctive Indian model and, if so, what that model might be.”
Each CEO in the study was asked a set of questions about leadership competencies, competitive advantage and governance. When asked what they thought were the competencies most important to their success in the past five years, the Indian executives felt that shared values and vision, as well as building the top team, were some of the most important capacities.
For example, B. Muthuraman, managing director of Tata Steel — a company that has become widely known after its acquisition of Britain’s Corus Steel last year — talked about “being a visionary” as an important capacity: “By being visionary,” he said, “I mean somebody who is able to make people envision their future [as well as] energize, enthuse and empower them.” Such answers revealed a common interest in strategic thinking and talent management. The respondents also noted that leading from the front and leading by example were important personal characteristics.
In this respect, leaders like Muthuraman are like U.S. CEOs, who also emphasize the importance of vision to leadership. According to the report, “This is consistent with the views of their Western counterparts, such as IBM CEO Lou Gerstner and GE CEO Jack Welch, who placed great emphasis on company culture. A number of the Indian business leaders also stressed that their vision for the company should be rooted in its underlying values, and that the vision in turn should energize and excite the company’s employees.”
The researchers also asked how Indian leaders might be different from their Western counterparts. The CEOs responded that Indian business executives were marked by flexibility, being in a family ownership structure and entrepreneurship/risk-taking. The leaders noted that the strict regulatory climate and challenging infrastructure environment in India necessitated a capacity to be resilient, adapt and move forward in the face of adversity.
Subhash Chandra, chairman of Zee Entertainment Enterprises, believes that Indian leaders are “more flexible” than those in the U.S. “We can bring our level of thinking down and meet with a truck driver and deal with him at his level, and at the same time we can also bring ourselves up to the level of the head of the state if required and then deal with him at that level,” he told the researchers. (Of course, this trait is not unique among Indian CEOs; U.S. business leaders, such as Herb Kelleher of Southwest Airlines or Jon Huntsman, founder of Huntsman Industries, demonstrate the same ability in their dealings with people around them.)
Anu Aga, former chairperson of Thermax India, an energy and environment management firm, pointed to the many obstacles Indian companies have to deal with, such as “roads in terrible conditions” and “ports in terrible conditions.” Family ownership stakes sometimes helped leaders have a more long-term approach to strategy, reported the respondents. In addition, they noted that being entrepreneurial was important in order to get large companies to act nimbly and take advantage of the changing marketplace.
The CEOs believed that their firms’ competitive advantage lay in their high-performance culture, customer focus, innovation and entrepreneurship, and low cost. Even when asked how their roles are changing, they overwhelmingly noted that they spend more time these days setting strategy and dealing with customers rather than worrying about shareholders.