India's Leading Export: CEOs

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From Left: Mastercard; Ramin Talaie / Corbis

MasterCard CEO Ajay Banga, left, and his brother Vindi Banga, right, a partner at Clayton Dubilier & Rice, both earned M.B.A.s at the elite Indian Institute of Management at Ahmedabad

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Competition starts early in India, as students vie for admission to the state-funded Indian Institute of Technology and the Indian Institute of Management. The system produces a self-selecting and highly disciplined elite; there are tales of children starting to study at age 7 for the exam they take a decade later. When the current crop of CEOs came of age, it was typical for 300,000 applicants to vie for 2,000 places. "People in India think Harvard and MIT are second choices and an IIT is their first," says Spencer. (Ajay Banga, an IIM alum, just like his brother, disagrees: "I'd have given my right arm to go to a Harvard or MIT!")

There's a spartan quality to these institutions, including shabby buildings and tiny dorm rooms. Two years ago, 1,500 IIT faculty members went on a Gandhian fast to protest their low pay. But what the institutions lack in glamour they make up in prestige and a tight-knit global network. "They all still know each other's test scores and class rank when they're 60 years old!" says Spencer.

Once they leave and begin climbing the ranks, Indian managers tend to look abroad — or to multinationals within their country — more than their Chinese peers do. "In China a lot of the senior executives are political appointees," says Ader. "You get much more credibility leading a Chinese organization. If I call a Chinese candidate and say, 'Do you want to go on a board in the U.K. or U.S.?' they say, 'Why would I?' If you call an Indian, they will." The HayGroup study on the Indian CEO found Indian leaders' networking to be particularly "bold and focused," with the intent of obtaining useful information.

One of Indian managers' great advantages is their native disadvantage: they have learned their skills in a country with huge aspirations but an often faulty infrastructure. Ajay remembers his first day at Citibank in Chennai, when he wondered what the banks of machines "big enough to power jet engines" did — preserve data in case of power cuts — and then found out that this was only the first line of defense. "I learned that not only do you need a backup, you need a backup to the backup to the backup," he says. "That's not a bad way to think about management. You've got to have a Plan B and a Plan C, and they have to be somewhat robust."

Indian managers suit tough times, accustomed as they are to making complex systems work, even with finite resources. For Indians, "navigating uncertainties is an art, not a source of complaint," says INSEAD's dean, Dipak Jain. "We have the training to deal with complexities." Growing up in a nation where resources are often tight "forces you to blow through the constraints and find the answer," agrees Nikesh Arora, Google's senior vice president and chief business officer. "You tend to take a look at the problem, argue about the constraints, argue about the boundaries and see how to solve it within those boundaries."

Early in the 1980s, when Ajay Banga was first working at Nestlé, he had the job of selling chocolate in India, where temperatures can hover above 38°C for months. Try selling Kit Kats in towns that don't have electricity, let alone refrigeration. Banga ended up having to create a refrigerated supply chain — with specially designed carts for cooling the chocolate en route to villages — then installing generators to run the air conditioners to keep shop storage spaces cool. "And we were doing it having been schooled in the fact that 'You will not compromise on the Nestlé products or value,'" recalls Banga. "Think about that. Think about trying to live that dichotomy!"

In Hindi, such adaptability using finite resources has a name: jugaad. Jugaad is the spirit behind Indian products like the $2,500 Nano car, designed to be assembled using chemical glues rather than expensive factory-based welding. It's also what Vindi Banga employed when trying to figure out how to sell Unilever products to rural Indian women. Instead of spending on advertising, the company established the women as small-business operators, providing loans to buy Unilever products and resell them in their communities. The women got jobs, and Unilever got a new distribution channel, notes Banga. "These ladies became brand ambassadors, brand teachers and brand distributors — all in one."

It is not surprising that Indian executives tend to pay particular attention to the lower-middle-class consumer and the so-called bottom billion, the poorest customers. After all, more Indians live on $2 or less a day than don't. But attention to value pays dividends when profit margins — and pocketbooks — are shrinking. "In emerging markets, companies work very hard to get the value equation right," Vindi observes. That's an ever more valuable skill in a climate where even wealthy consumers are looking for value.

Another reason Indian executives are thriving in a world traumatized by the global meltdown: a sense that businesses need to do more than just make money. "When you talk to these top CEOs, there's a sense that the corporation is embedded in society," says Harbir Singh, a Wharton professor and a co-author of The India Way. "Most of the executives we surveyed said, 'You cannot succeed if you don't help society around you to have a better life.'"

Research on top executives shows South Asians tend to be guided less by the bottom line than by a bigger goal. "They think about what will not only benefit them but the greater good," says Spencer. "When they make business decisions, they take that seriously into account. You interview an American CEO and it's classic McKinsey strategic thinking: How do we make money in this market? But the Indians are showing us a level of business ethics that we don't see in the West."

Those ethics may get tested as Indians wrestle with the demands of institutional shareholders in the large corporations they are now running. But the HayGroup's leadership survey includes an inner-strength category, examining how morals and values affect leadership. The only groups that scored as high on inner strength as Indian CEOs did? Catholic nuns and monks.

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