Foreigners often remind us that Indians are a bright people. But foreigners are too polite to add that Indians can also be ‘over-smart’, and this creates its own problems. We think and argue too much, see too many angles, and don’t act enough. It makes hiring and recruiting talent particularly difficult, for all Indians come out sounding well in an interview, and how do you separate the doers from the talkers?
National stereotyping can be dangerous and is usually wrong. We have learned this only too well from the history of the violent 20th century. Hence, I prefer to rely on institutions and economic laws to explain human behaviour rather than national character. However, the gap between thought and action is so pervasive in Indian life that I have begun to despair in recent months and I wonder if our weakness in execution is, in fact, a deficit in character.
My experience with dozens of Indian companies in the past decade is that while most have acquired a reasonably robust strategy, they implement poorly. I am also associated with a venture capital fund that has invested in 15 Indian I.T. companies, and its experience is that the best firms are not the ones with the best business model but the best execution ability. This may appear tautological — we perform poorly because of poor performance — but it isn’t.
McKinsey, the respected management consultant, has found the same weakness. In a survey of 35 major companies and interviews with more than 600 executives, it has concluded that “while many Indian companies perform well on strategy, there are lagging in execution”. It conducted similar studies around the world, and its international data shows that the best performing companies in the world distinguish themselves from mediocre ones in their ability to execute. High performers, such as General Electric, Sony, and Singapore Airlines, consistently implement better and this is ultimately reflected in their market share, profitability,
and share price.
Does our national bias against action explain why there isn’t a single Indian company with a global presence? Is this also the reason why so many Indian companies are floundering ten years after the reforms? While it is tempting to blame character, the culprit, I am afraid, is more mundane — it is poor skills. And the reason is the historic lack of competition in our market. These skills are learned typically when rivalry is intense and survival is at stake. We have only had real competition in the last decade. So perhaps, it’s early. Hence, our business leaders should stop crying for protection, honestly face up to poor execution as the cause of their troubles, and go to the real world school of competition and learn these skills.
There are outstanding Indian performers, to be sure, but they are exceptions. Reliance owes its consistent success, partially at least, to its awesome project management skills, which allows it to build plants faster than anyone does. A few years ago I was on the jury to select the best among 40 Aditya Birla’s companies and I observed the same execution excellence in company after company. No wonder, Hindalco for example, has become a world class aluminium producer. It is the same with Jet Airways. Ask its passengers–they will tell you that it is always on time. HDFC and Sundaram Finance have consistently demonstrated outstanding service levels for decades. A jewel of a company in Bangalore, Himatsingka Seide, is able to command Rs 8,000 per metre for its luxurious silks in Europe and America because it consistently delivers defect-free fabric and always on time.
Why do these companies have executional ability when the majority does not? It begins at the top. Their leaders, I have observed, are not content with laying broad policies, but insist on getting into the messy details of the business — monitoring day to day performance, removing obstacles, staying close to employees and motivating them. They reward managers who act and take initiative, and punish those who play safe and behave like bureaucrats. They set clear, measurable goals and create small implementation teams so that people become accountable. Reliance’s top management, for instance, monitors daily the number of kilometres of optic fibre that its telecom teams lay on the ground, and motivates them to improve the next day’s performance. Thus, these companies get ordinary people to do extraordinary things.
Successful executives follow the British scientist, Jacob Bronowski’s advice that the world is not understood by contemplation but by action — “the hand is the cutting edge of the mind”. The best lesson I learned at Procter and Gamble was how to write its legendary one-page memo, which was its language of action. Good executives, I have observed, do few things. They make sure they are the right things, and they do them brilliantly.