By Vijay Govindarajan and Gunjan Bagla
After earning its freedom at midnight in 1947, India has seen a few false dawns from time to time. But 2015 could well be a turning point in India's economic development. Corporate India has tasted domestic and global success in recent years.
Today, Indian CEOs and entrepreneurs know that high domestic growth and a rising international profile are attainable. Yet as Vinay Agarwal of PGT Partners in Noida says, "Many Indian executives don't yet think in terms of scale. In so many big and small sectors we still see Chinese companies that are 10, even 100 times ours."
If Finance Minister Arun Jaitley delivers a dream budget next month and if Prime Minister Narendra Modi delivers on economic reforms, India will most definitely see unparalleled growth in the second half of 2015.
But we think that many structural and psychological factors have already created a positive tailwind in India's sails. Corporate India should not wait for Chief Ministers and the Prime Minister, to convert this goodwill into success early in 2015.
Tactics for Q1
In October, the Indian unit of St Gobain of France opened its largest glass manufacturing facility in the world, in Bhiwadi, Rajasthan. B Santhanam, who leads St Gobain's India unit from Chennai advises Indian corporates saying: "Don't wait for the tide to turn but go for growth and start scaling up."
In Mumbai, Tata Sons board member R. Gopalakrishnan is talking about the coming year. "Business leaders should revert back to running their companies tightly and efficiently. The balance must shift to implementation," says Gopalakrishnan.
Since the end of the old licence raj, India has seen the rise of many self-made entrepreneurs who have challenged the legacy family-held conglomerates. A great example is Manmohan Shetty, whose track record of boldness includes India's first IMAX theatre, India's first multiplex and now India's most modern 300 acre amusement theme park, Adlabs Imagica.
Shetty proposes, "We are called entrepreneurs, because we don't depend on the government." But he acknowledges that the government can create a favourable environment for foreign investment to flow in via single window clearances and a reduction in corruption.
Also Read: Turn work into a game in 2015
Strategy for 2015
At least three elements can be part of a bold Indian strategy for winning in 2015 and beyond. First, we now have a country where practically every adult has a mobile phone.
Further, India is the third largest market for smartphones and Apple plans to open 500 stores across the country. Any business that has customer data can mine it and leverage it to deliver much desired communications that its employees and customers would readily want. Solutions need to be developed in India for India by Indian companies.
In developed countries, smartphones are prevalent, so applications ("Apps") or programs that run on the handset are a big part of the solution. In India the solution may need to live almost entirely in the cloud, in order to apply to the 800 million Indians whose current handsets are not "smart."
Healthcare, retail, in fact any service business can probably leverage mobile connectivity by an order of magnitude to get ahead of their competition. Second, as the youngest country, with most of its population under 25 years of age, India can do more to build manufacturing where hardworking youth can be put to productive use.
India cannot support 200 million programmers working for the likes of TCS and Wipro. But if small manufacturers can think more like Taiwanese and German small companies and reach for larger global markets, this youth can start to be a true demographic dividend. Else rising expectations left unfulfilled can readily lead to a demographic disaster.
Yogi Deveshwar, Chairman of ITC Corporation envisions, "In 2015, Indian Business will have to redouble efforts to build extreme competitiveness of their enterprises to create larger value addition in the country." There was much talk about the BRIC economies over the last decade. But today, Russia is devastated by low oil prices, western sanctions and a plummeting rouble.
Brazil's economy is in the doldrums. China is slowing down and its expansionist muscle-flexing is causing Japanese, Korean and American companies to consider a China plus One approach.
Also Read: In 2015, create your own personal brand
So, India stands a good chance of being that Plus One and its entrepreneurs should seize any opportunity to win such business. Third, India needs to leverage its engineering and scientific capacity beyond the selling of billions of billable man-hours. Small countries such as Sweden and Switzerland have developed giant global corporations (including ABB, Electrolux, Ericsson, Nestle, Roche) in large part by leveraging patents and product design.
Over the last decade Indian engineers and scientists have created innovations while on the payrolls of Western multinationals at their captive R&D centres. But in this case the intellectual property (and the profits that accrue) belong to the MNCs.
Outside of pharma and automotive, there are few Indian examples of scale driven by R&D. This is a lost opportunity. "Despite a robust academic infrastructure, India ranks lower when it comes to innovation," notes the CEO of India's largest biofuels company, Pramod Chaudhari of Praj Industries. In 2015, he argues, "Indian companies can focus Research & Development."
R&D should be used to innovate good quality, but affordable products for the Indian consumer which can subsequently be sold in other developing markets, even in developed markets. Indian companies should lead reverse innovation.
"With rapidly changing consumer behaviour, the growth of the mobile internet, and the availability of both private equity and venture capital, India offers exciting opportunities for both start-ups and for established firms in 2015," says Ravi Venkatesan, Chairman of Social Venture Partners, who ran the India businesses for Cummins and Microsoft in the past.
Short and medium opportunities present themselves at corporate India today. A near perfect storm of domestic and global goodwill exists that may not last long. Corporate India should seize the moment.
(Vijay Govindarajanis the Coxe Distinguished Professor at the Tuck School at Dartmouth. Gunjan Bagla is Managing Director of Amritt, Inc.)
After earning its freedom at midnight in 1947, India has seen a few false dawns from time to time. But 2015 could well be a turning point in India's economic development. Corporate India has tasted domestic and global success in recent years.
Today, Indian CEOs and entrepreneurs know that high domestic growth and a rising international profile are attainable. Yet as Vinay Agarwal of PGT Partners in Noida says, "Many Indian executives don't yet think in terms of scale. In so many big and small sectors we still see Chinese companies that are 10, even 100 times ours."
If Finance Minister Arun Jaitley delivers a dream budget next month and if Prime Minister Narendra Modi delivers on economic reforms, India will most definitely see unparalleled growth in the second half of 2015.
But we think that many structural and psychological factors have already created a positive tailwind in India's sails. Corporate India should not wait for Chief Ministers and the Prime Minister, to convert this goodwill into success early in 2015.
Tactics for Q1
In October, the Indian unit of St Gobain of France opened its largest glass manufacturing facility in the world, in Bhiwadi, Rajasthan. B Santhanam, who leads St Gobain's India unit from Chennai advises Indian corporates saying: "Don't wait for the tide to turn but go for growth and start scaling up."
In Mumbai, Tata Sons board member R. Gopalakrishnan is talking about the coming year. "Business leaders should revert back to running their companies tightly and efficiently. The balance must shift to implementation," says Gopalakrishnan.
Since the end of the old licence raj, India has seen the rise of many self-made entrepreneurs who have challenged the legacy family-held conglomerates. A great example is Manmohan Shetty, whose track record of boldness includes India's first IMAX theatre, India's first multiplex and now India's most modern 300 acre amusement theme park, Adlabs Imagica.
Shetty proposes, "We are called entrepreneurs, because we don't depend on the government." But he acknowledges that the government can create a favourable environment for foreign investment to flow in via single window clearances and a reduction in corruption.
Also Read: Turn work into a game in 2015
At least three elements can be part of a bold Indian strategy for winning in 2015 and beyond. First, we now have a country where practically every adult has a mobile phone.
Further, India is the third largest market for smartphones and Apple plans to open 500 stores across the country. Any business that has customer data can mine it and leverage it to deliver much desired communications that its employees and customers would readily want. Solutions need to be developed in India for India by Indian companies.
In developed countries, smartphones are prevalent, so applications ("Apps") or programs that run on the handset are a big part of the solution. In India the solution may need to live almost entirely in the cloud, in order to apply to the 800 million Indians whose current handsets are not "smart."
Healthcare, retail, in fact any service business can probably leverage mobile connectivity by an order of magnitude to get ahead of their competition. Second, as the youngest country, with most of its population under 25 years of age, India can do more to build manufacturing where hardworking youth can be put to productive use.
India cannot support 200 million programmers working for the likes of TCS and Wipro. But if small manufacturers can think more like Taiwanese and German small companies and reach for larger global markets, this youth can start to be a true demographic dividend. Else rising expectations left unfulfilled can readily lead to a demographic disaster.
Yogi Deveshwar, Chairman of ITC Corporation envisions, "In 2015, Indian Business will have to redouble efforts to build extreme competitiveness of their enterprises to create larger value addition in the country." There was much talk about the BRIC economies over the last decade. But today, Russia is devastated by low oil prices, western sanctions and a plummeting rouble.
Brazil's economy is in the doldrums. China is slowing down and its expansionist muscle-flexing is causing Japanese, Korean and American companies to consider a China plus One approach.
Also Read: In 2015, create your own personal brand
So, India stands a good chance of being that Plus One and its entrepreneurs should seize any opportunity to win such business. Third, India needs to leverage its engineering and scientific capacity beyond the selling of billions of billable man-hours. Small countries such as Sweden and Switzerland have developed giant global corporations (including ABB, Electrolux, Ericsson, Nestle, Roche) in large part by leveraging patents and product design.
Over the last decade Indian engineers and scientists have created innovations while on the payrolls of Western multinationals at their captive R&D centres. But in this case the intellectual property (and the profits that accrue) belong to the MNCs.
Outside of pharma and automotive, there are few Indian examples of scale driven by R&D. This is a lost opportunity. "Despite a robust academic infrastructure, India ranks lower when it comes to innovation," notes the CEO of India's largest biofuels company, Pramod Chaudhari of Praj Industries. In 2015, he argues, "Indian companies can focus Research & Development."
R&D should be used to innovate good quality, but affordable products for the Indian consumer which can subsequently be sold in other developing markets, even in developed markets. Indian companies should lead reverse innovation.
"With rapidly changing consumer behaviour, the growth of the mobile internet, and the availability of both private equity and venture capital, India offers exciting opportunities for both start-ups and for established firms in 2015," says Ravi Venkatesan, Chairman of Social Venture Partners, who ran the India businesses for Cummins and Microsoft in the past.
Short and medium opportunities present themselves at corporate India today. A near perfect storm of domestic and global goodwill exists that may not last long. Corporate India should seize the moment.
(Vijay Govindarajanis the Coxe Distinguished Professor at the Tuck School at Dartmouth. Gunjan Bagla is Managing Director of Amritt, Inc.)
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