As the globalisation take a full-fledged shape and with domestic markets in the developed countries more or less saturated, the companies especially in the developed world are forced to look out for opportunities beyond their home nation and go global. The realities of globalisation coupled with increasing emphasis on the emerging markets has presented corporation with enormous challenges of developing and finding leaders who can manage a global entity. Many of the Multi-National Companies (MNCs) still concentrate vital decisions in the hands of a few trusted leaders from their home country. They hire local experts, technician and country managers but rarely promote them to corporate bodies. However, this trend is fast changing. As long as the companies were selling standardised products in the developed nations, the strategy worked. But when it comes selling of customised products and the companies which have emerging markets as the main engine of growth the above approach turned out to be far from adequate.
In a situation like this, the company is required to adapt to local culture and market needs. To make sound decisions, companies need a diverse set of leaders, comprising diverse nationalities, who have deep understanding of the local cultures – especially the emerging markets. In this context, Atlanta-based soft-drinks company Coca-Cola has been a pioneer in geographic diversity. As early as in the 1960s, the company was run by a South African – Paul Austin. Since then Cuban, Australian, Irish and Turky-American was at the helm of the corporate leader at Coca-Cola. In the same lines, Swiss company Nestle’s executive board comprises of personalities from ten different nationalities whereas 80% of Norvatis executives come from outside Switzerland.
Interestingly, leaving all the other nationalities from emerging markets behind, it’s the Indians who were once deemed as slow moving executives good only at taking directions and executing orders, are coming to the foray to establish themselves as global leaders and mounting to the top of the corporate ladder at the big MNCs. As per a study conducted by Egon Zehnder, “S&P 500 companies have more Indian CEOs than any other nationality except American.” Similar trend echoes at another study conducted by two professors from Wharton and China Europe International Business School – C-suite executives in the 2009 Fortune 500 list comprised of 13 Indians as compared to two mainland Chinese and two North American Chinese. From Vikram Pandit at Citi Group to Indra Nooyi at PepsiCo to Anshu Jain at Deutsche Bank, Ajay Banga at Mastercard, Harish Manwani at Unilever and Rakesh Kapoor at Reckitt Benckiser the management story of the last decade can, arguably, be labelled as the story of the Indian manager breaking through the glass ceiling at global companies. India’s 10 prominent leaders at the helm of MNCs together manage business worth over $400 billion – almost double the total export of India in a year.
This phenomenon raises a question – why are the Indians being preferred as a CEO, COO or for the top leadership position in these global corporations? To understand this one needs to be clear about the role of a global leader is ought to play. Global leadership is not entirely about doing business abroad but it's more about managing an integrated enterprise across borders where the corporations are more likely to encounter different cultural, legal, regulatory and economic systems and the hurdles of overcoming these barriers. Lack of adaptability may prove costly for a company as was found out by Wal-Mart in Germany and South Korea where the company eventually had to exit from the market in 2006.
What are the rationale behind Indians performing better than the rest in this race? According to global HR major Hay Group, the technical skills and the behavioural patterns of Indians make them adaptable to any kind of situation they come across. First, to successfully manage such an entity requires a global mindset and one of the key traits that define global mindset is ‘inquisitiveness’. Interestingly, this basic orientation towards new experiences is more of an inborn trait rather than being a learnable one. Indians score very high on this particular skill-set being born in a multicultural nation where they are born and bought up in a particular culture (say east), relocate to another cultural region (say north) for studies and then end up starting their career in another cultural region (say south). Consequently, the Indians are found to be more inquisitive in nature. They have to adapt to new friends, new places and these provide with the perfect breeding ground for global executives who would be facing new markets and uncertain conditions. Vindi Banga (who was on the executive board of Unilever and currently a Partner at Clayton, Dubilier & Rice) and Ajay Banga (CEO of MasterCard) had a similar story to tell. Being son of a lieutenant general in the Indian army, they moved to their father’s new postings every couple of years which turned out to be the perfect training for becoming a global leader.
Second, organisations worldwide have widened the range of their search for the perfect leader to run the business entity. Earlier markets were comfortable and so they were confined to their own countries. Now they are making a deep search and are looking at talent outside their countries. They now need persons with global experience and leadership qualities to handle tough and fast changing markets. Indians fit in the bill because of the rigorous education systems and increasing global opportunities at work.
Third, we are witnessing a paradigm shift in the global economic order with the developing countries especially the BRICS (Brazil, Russia, India, China, and South Africa) nations becoming the key driver of growth in the 21st Century. These markets provide with enormous opportunities for the corporations worldwide. However, the skill-sets required in running operations in these countries are very different than those required in running business in the developed nations. As India and China are one of the fastest growing economies, it makes sense to have a leader from these two nations. However, China is a unique country and there would be more countries that have similarities with Indian business environment than nations similar to China. Additionally, India is much tougher market to crack. While Chinese government works towards making the process predictable, India is much more volatile. There is an old say about Asian business cultures – the Chinese roll out the red carpet; Indians roll out the red tape. Unlike the Chinese, Indian counterparts have to deal with its byzantine bureaucracy. Therefore capabilities build in doing business in India will help you win all over the world. In the words of Stephen Elop – CEO of Nokia, “India is like a petri dish for innovation. If we win here, we can win everywhere. Conversely, if we lose here, we could end up losing in lots of other markets.”
Fourth, Indian CEOs are used to working in a resource constraint environment. They always try to do more with less. They understand the real value of resources and always try to make optimum usage of the scarce resources. Growing up in a nation where resources are often tight "forces you to blow through the constraints and find the answer," says Nikesh Arora, Google's senior vice president and chief business officer.
Fifth, Indian CEOs are more focused on returns and executions. The Indian business scenario is dominated by family run businesses which are niggardly in the allocation of capital, thus managers tend to have a value orientation and a strong focus on return on equity.
Sixth, Indian managers have a better overview of the whole business and always tend to look at the bigger picture while taking an important decision than their western counterparts. Indian CEOs work more towards execution rather than just giving direction. Additionally, Indian CEOs tend to put long term goals ahead of short term gains. How Vikram Pandit bailed the Citicorp out of recession would be a case in point here. Although one can argue that he ended up destroying the company’s value as the share price has fallen from around $350 to $30 during his tenure; but the real fact is that it was largely because of his predecessor’s over enthusiastic eagerness in investing in complex derivative instrument. On the contrary, Pandit, to his credit, not only pledged to draw a salary of $1 till the time company turns profitable before the Congress but successfully delivered five consecutive quarterly profits before drawing any compensation from the company.
Additionally, innovations and creative thinking coupled with their expertise in the language of global business – English, helped their cause further. Moreover, Indians have a strong business ethics and a sense towards the greater good. A leadership survey conducted by the Hay Group revealed that Catholic nuns and monks are the only group that scored as high as Indian CEOs on inner strength and moral values. So, is sky the limit for Indian CEOs? Not so fast, they have a lot to learn still. Among others, the most important thing for them is to understand that what works well on home will work abroad too – a mistake that most of the expat CEOs in India made. Moreover, the number of CEOs capable of making the transition to being a global CEO is also a matter of worry with the gap between top quality corporate leaders and median CEOs widening. If Indians can take care of these few concerns, we would see more and more Indian CEOs storming the corporate boardroom across the world.