Transformational Leadership - The Indian Entrepreneurs’ Story
Companies should have the ability to change to stay ahead
In my 40 years in the lending business, I have seen a continuous flow of entrepreneurs. There have always been people who have been able to spot opportunities that were appropriate to the time of the day.
The top 20 companies in each decade have changed completely in India. Only a few have been able to change enough to survive. This shows that the entrepreneurial spirit is alive and throws up newer challengers. In mature economies like the United States, many companies like IBM, have been able endure for over a century. Not everyone grows at the same pace. Great companies in India are still being formed. We can take a look at how good leadership has helped companies transform and thrive.
Pre-Liberalisation
During this time, Indian entrepreneurs had to hone their skills in a relatively hostile environment. The license raj, shortages, limited access to capital — all these were a constraint on entrepreneurial capitalism. Despite these problems, business took root and some people were able to succeed. But it was a limited success and not surprisingly they began pushing for reforms in government policy.
Yet, when reforms were unleashed in 1991, the change was not understood immediately. It took four to five years for entrepreneurs to adapt to the new situation. They came under huge pressure at this time. Their protected turfs were suddenly opened up to competition not only from Indian companies, but also foreign players. Leadership and thinking had to change. After 2000, the true fighting spirit was in evidence everywhere. The companies had started competing in earnest — whether it was with the Chinese in textiles and heavy industry or elsewhere. Entrepreneurs started building up their own efficiencies, and became cost-competitive. In some cases, this was by building up scale, in others, it was by getting the quality right or by buying technology from abroad.
The IT Revolution
In the mid-nineties, the major transformation was the development of the knowledge industry. This provided the entrepreneurial platform to hundreds of people. They adopted an entirely different path to growth, compared to the traditional industry.
It is interesting to study how poor countries around the world have found their own roads out of poverty. In countries like Japan, China, Taiwan and South Korea, the driver was manufacturing. In Singapore, it was trading and services. Yet, no one had attempted it with a billion people. India is attempting to leverage the fruits of the billion — harnessing so many minds to drive out poverty. We began this with the knowledge industry [IT] and have moved on to manufacturing.
The New Century
By 2002-03, the interest rates had fallen and the per capita income had increased. This spurred demand for more homes, cars and hundreds of other consumer goods. An entrepreneur used to working under constraints for all these years was suddenly dazzled by the opportunities. Many seized them and there are so many stories of people who started small during that period and have now achieved size and scale.
From 2005 onwards, the paradigm changed again. Access to minerals, spectrum, forests, land and resources was the new challenge. Anyone who could manage this could create wealth. This is also entrepreneurial dynamism. Today, these norms are being challenged again. New checks and balances are being introduced.
What Does It Take To Make It?
The landscape now is like an open field. A newer/better/cheaper product scores over the old. Entrepreneurs no longer have the luxury of resting on their victories. In the new India, per capita income has gone up from $500 to $1,000. This will surely grow even more and maybe go up to $10,000 (on a purchasing parity basis). There is an enormous opportunity. We don’t know what comes next, so we can dream big and can create something global.
Being lean, hungry and poor helps. For a fighter, there is only one way to go — and that is up. Leanness gives the entrepreneur sinews to do what is needed. Many level-off when their hunger/aspiration is met. How do you endure? The answer is to remain hungry and lean. You have to reinvent yourself ever so often. When there is stress in the system, a new leader with more hunger comes to the fore. When your back is against the wall, the only way is to fight it out and emerge stronger. We have seen examples globally of companies that have shed fat (people) in tough times and become meaner. You need a change agent. And this is transformational leadership. The ability to change — to be able to stay lean and hungry.
(As told to Cuckoo Paul)
K. Vaman Kamath is the chairman of Infosys and the non-executive chairman of ICICI Bank Limited, India's second largest bank. He has a degree in mechanical engineering and did his management studies at the Indian Institute of Management, Ahmedabad. He started his career in 1971 at ICICI, an Indian financial institution that founded ICICI Bank and merged with it in 2002. In 1988, he moved to the Asian Development Bank and spent several years in South-East Asia before returning to ICICI as its Managing Director & CEO in 1996. Under his leadership, the ICICI Group transformed itself into a diversified, technology-driven financial services group that has leadership positions across banking, insurance and asset management in India, and an international presence. He retired as Managing Director & CEO in April 2009, and took up his present position effective May 1, 2009.
Kamath was conferred with the Padma Bhushan, one of India's highest civilian honours, in 2008. He is also an independent Director on the Board of Directors of Infosys Technologies Limited, Lupin Limited, The Great Eastern Shipping Company Limited and Schlumberger Limited.
