Why ‘lala companies’ must transform to compete globally

Unless the middle sector transforms from desi to world class, and unleashes the full potential of Indian genius, we will continue to be copycats and not innovative leaders.

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Modi’s five trillion dollar economy now seems like a pipedream post Corona, given the number of years we’ve gone back in terms of GDP figures. Even though a ‘V’ or ‘U-shaped’ recovery, fired by an animal spirit of slumdog resurrection cannot be ruled out, the fact remains that our land, labour, systems and laws are not entirely geared to support exponential growth. While the Government may address liquidity in the short term, fiscal deficit targets are hard to ignore.

Beyond these core pillars, as defined by the Government, lie several other impediments. Corporate governance, entrepreneurial freedom and organisational culture are areas where the bulk of the Indian industry still fares poorly. As home-grown businesses graduate to MSME status and eventually list on stock exchanges, somewhere along the way, the founder-promoters forget to let go. As a result, we have a whole lot of midcaps, which continue to run as family shops and will probably never make it big. If they do not lose money, they will sit on shareholder wealth and offer earnings less than the fixed deposit rates of banks.

Unless this middle sector transforms from desi to world class, and unleashes the full potential of Indian genius, we will continue to be followers and copycats and not innovative leaders. When we talk of going from ‘local to global’ and globalising Indian brands, we must understand that nothing short of the best talent and best corporate practices will get us there. And that, for all our companies from ‘lala’ land, means changing themselves to address these pivotal issues:

Corporate governance

Founder-promoters must give up operational command and progressively retreat into non-executive positions when they secure substantial public funding. Given that they will almost always misuse coercive or referent power to dictate decisions to the company management, they should voluntarily destroy this remote control. After all, the public does not invest in a personality or industrialist, howsoever iconic he may be. The public invests in a sector and in a business that can milk the opportunities to offer high returns. The promoters owe it to the public to hire the best management and let them drive the business.

Entrepreneurial freedom:

Key appointments of leaders, such as the CEO, CFO and CHRO, should be based on merit and results and not on whom the promoter can trust to implement his agenda. Top management that has global exposure and is sensitive to modern, evolving industrial practices and workforce rights can make a huge difference, if empowered. This is especially effective in the manufacturing sector, where old ways of doing things need to be radically overhauled — the top leadership must exercise entrepreneurial freedom even at the cost of a few quarters’ profits.

Organisational culture:

Why should employees be at the beck and call of their bosses, or the management or the promoters? Don’t they have a life beyond work? Does this contribute to agility, resilience and productivity? No. That is as far from the truth as we are from Pluto. This behaviour is just one symptom of the disease called ’corporate slavery’ that emanates from the master-servant relationship implied in a hiring. When the person at the helm thinks in terms of ‘my company, my money and my workers’, he perpetuates a culture of sycophancy and predatory politics. Even in MNCs, such behaviour is common among regional or divisional heads if overall governance is indifferent or weak. The Organisational Culture Inventory or OCI tool calls it a red culture. As a result, the best talent stays away and what remains is deadwood, which is well past its ‘best before’ date.

Employers of choice trust and respect their employees and offer unlimited freedom to enable their best. Compare how Google and Facebook announced work from home till 2021 with how a few companies forced HR and marketing to attend office during the lockdown. The social media is abuzz with such examples.

Millions of youth joining the workforce today have grown up in new millennia with little tolerance for veneration, hierarchy or unearned credit. They do not see an appointment letter as a favour rendered. As Indian society is transforming, so must our ‘Lala’ companies.

1 COMMENT

  1. First thing, comically ‘pigeon-holed’ Lala Companies are no more so.
    Most of the so-called Lala Companies have strategically prompted the stipulation for redesigning their structural and business operations. Honestly, there is hardly any ‘desi’ left in word ‘desi’ in India.
    Besides, transformation is much beyond what is listed in the article. It is much beyond shapes and forms. Multifaceted transformation ambitions are typically characterized by plateaus that have differentiating markers to accomplish. Undertaking an evocative business transformation necessitates a company to rethink all aspects of doing business. Therefore, to efficaciously transform a business demands challenging your unique business strategy, business model, and dominant culture which is often pivots around the internal and external stakeholders.

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