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The Rediff Business Special/C K Prahalad

'Indian managers must learn to look at the stars and count the grains of sand'

Emerging conglomerate discount in India

India is experimenting

A new opportunity for entrepreneurs

Transformations cannot take place without a fundamental re-examination of the management approaches that were appropriate in the older, more contained regime.

The emerging market place in India will provide a premium for those who are willing and able to innovate. Innovations in products and services, in distribution, in technology are critical.

But most importantly, innovations in the way we manage are at the core of success in the new environment.

The managerial revolution in India must start with a clear understanding of the latent market opportunity as well the increasing intensity of competition. It must be sensitive to new pitfalls -- volatility, speed of change, and a new and demanding consumer. Indian managers must start with the following goals for growth and survival:

1. Operational excellence: Whether it is quality levels, logistics, costs, scale, working capital management, or capital efficiency, there is no room for the second best. Good is not good enough anymore.

2. Performance orientation: Management must be performance oriented. Meritocracy, stretch targets, clear measurements and rewards based on contribution are the keys to a high performance culture.

3. Innovation: Indian industry has, as a rule, under invests in innovation. The number of patents filed by Indian firms, a simple measure of managerial commitment to technology and innovation, does not present a pretty picture. Between 1974-94, ten of the top Indian firms received less than 100 patents. Without a deep commitment to innovative, high technology, low-cost solutions, Indian industry cannot exploit the opportunities available in India today.

4. Commitment to speed: Given the nature of rapid change in technologies, markets around the world, speed of reaction is critical. Even in industries such as banking and financial services, the speed of change in India is palpable. Once the telecom network is in place -- the Internet, broadband access, cellular phones -- the spread of non-branch oriented banking cannot be far-off. The capacity to adapt, reorient and recombine resources to address the fast-moving competitive landscape, within India and in the global market place, is critical.

5. Commitment to globality: Commitment to exploiting global marketplace is not a choice. The desire to avoid volatility, the need to sense emerging trends, to benchmark oneself against the best of the breed, requires a commitment to compete not only here in India but around the globe. For example, firms that have registered growth and profit improvements in the automotive components sector last year were those who had a significant export presence.

6. Commitment to growth and new market creation: A commitment to lead in the creation of new opportunities -- an opportunity-led management system -- is critical. Most often, managers change in reaction to a crisis or a problem, not in search of opportunities. India provides opportunities for rapid growth -- two-wheelers, cars, appliances, TVs, personal care products, retailing are but a few examples.

7. Commitment to talent: None of the above can be accomplished without a burning desire to attract, retain and use the best talent available in India and the rest of the world. The paradox of Indian industry is that it has access to the best raw talent in the world and at the same time suffers from poor management. Indian managers and scientists have received recognition around the world, especially in the USA. We must ask ourselves: 'Why not here?'

Managing differently -- leveraging:

The opportunities for profitable growth, for creation of new markets, and to become globally recognised exist in India. The forces unleashed during the last decade, after a slow start, have started to show signs of rapid acceleration. The consumers are increasingly in charge. The common man, not the CEOs, secretaries to the government of India, or the politicians, will shape the economic landscape. It should not surprise us.

The common man, with good leadership, fought for and won independence for India. We tend to forget the role of millions of ordinary people in the freedom struggle. I believe that the same will be true in our fight for economic independence. Managing differently calls for a major shift in mindset.

The new world will be characterised by different assumptions about management. For example, we will move from: focus on skills at entry to commitment to personal excellence; from managers to entrepreneurs; from laboratory versus management to teams; from defending markets to creating markets; from domestic scale to global-scale; from benchmarks to best of breed; from wages to ownership and options; from plant and equipment to intellectual property; from administrative leaders to contributors; from hierarchy to distributed leadership; from vertical integration to partnership; and from conflict avoidance to conflict resolution.

Managing differently calls for a major revolution in the way we perceive our own roles as managers. The biggest transition that needs to be made is to move away from managing to leading, from administration to entrepreneurship.

The changes of this magnitude -- in skills, in orientation and personal commitment -- cannot come without deep soul searching. It cannot be sustained without a commitment to a dream -- a dream of what India could become.

Leaders do not allow themselves to be weighed down by the difficulties of the present but are focused on the possibilities of the future. Instinct, passion, courage and confidence are the precious ingredients of managing differently. A vision of the future is critical to motivate people to become innovative.

Being anchored in reality and taking small steps towards that vision is equally critical. We have to learn to look at the stars and count the grains of sand at the same time. But we need a dream; a dream worthy of a great civilisation.

C K Prahalad is Harvey C Fruehauf Professor of Business Administration at the University of Michigan Business School. The article is based on his address at a symposium organised by the CII Western Region in Bombay on April 7.

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