The Future of Indian Corporates

NITI Aayog seeks to be engaged in strategic policy and policy planning together with creating institutions that will enable the private sector, states and villages to do their own planning in line with the national agenda adopted.

It remains to be seen how governments, in future, will respond to serving the needs of the more than 50 million SMEs, close to 6,48,867 villages in India with more than 100,000 in UP alone. To be included are the desired transformations of the more than 1600 cities and towns in India into world class metropolises and smart cities. Undoubtedly, these cities and towns will be the nerve centres for the transformation of India as a Major Global Power.

Needless to say, the organisational culture is yet feudal and the organisation’s hierarchy far too militaristic and unsuitable for the modern business environment under globalism. This must change though new values-innovations.

In essence, NITI will overtly move away from the legacies of the Nehruvian ‘commanding heights of the economy’ (which was the primary rationale for the NPC to be set up in 1950) towards the market mechanism for resource mobilization, allocation and distribution (should corporates strategize along lines of C K Prahalad’s ‘fortune at the bottom of the pyramid’ vision and create jobs for the masses.

In short, NITI will be engaged in strategy and not processes as was the case in the past. One would expect that strategy making will be in the context of ‘Asia Rising’ and India’s national interest as a Global Economic Super Power. Not, as in the past, pursuant to the borrowed think derived, as in the past from the extraneous Washington consensus.

The thrust point we wish to make is this: given this fundamental shift in planning and governance style, it needs be asked whether the private sector, far too long living in a culture of crony capitalism and semi feudalism, will not have to change in order to live up to the strategic expectations and aspirations of Narendra Modi and to make India an economic Super Power by 2030. This article seeks to point out areas where the Indian Corporate Business Houses need to change.

Corporate Change Agenda

(a) The foremost change will have to, in our judgment, be to stop faking ‘Profit & Loss’ and other financial statements and commence with paying due taxes and levies to governments and, thus, eradicate black money and the shadow economy.

(b) Equally important is to upgrade the status and role of HRM in corporates towards Strategic HRM (SHRM) by empowering this function with equal status to Production, Finance, Marketing and Logistics. Corporates must invest heavily in human capital by creating their own universities and institutes. Not least, they should start paying living wages by themselves improving human capital productivity by leaps and bound. SHRM must, at all times, seek to create High Performance Work Organizations (HPWOs) though innovations in organisation structures as well as procedures and methods. Maximising creativity in the organisation, promoting and protecting the dignity of labour and constantly enhancing human capital productivity should be its over riding mission.

Needless to say, the organisational culture is yet feudal and the organisation’s hierarchy far too militaristic and unsuitable for the modern business environment under globalism. This must change though new values-innovations. Vineet Nayer’s ‘Employees First and Customer’s Second’, a less-practised philosophy, must be seriously considered by all corporates.

(c) Developing the capacity for tolerance for losses is a fundamental attitudinal change that any change management initiative needs to inculcate. For this, corporates, like governments, also will have to think long term. Here, to facilitate them to do so, governments should allow loss making companies to be listed in the stock market. So, also, infrastructure companies be allowed to raise stocks and bonds at any time they deem desirable to cope with the constraints of long term financial capital.

(d) Bring in more women leaders to bring the right yin-yang balance in corporate culture and thereby gift to corporations a compassionate soul.

(e) Remodel the revenue ideology: for this, get out of the old habit of leveraging low wages to achieve comparative advantages towards thinking in terms of deriving competitive advantage and creating supply chains by aggressively developing people-public-private-partnerships (4Ps not just 3Ps).

(f) Get out of the CSR mindset towards using social capital to develop social entrepreneurs for transformation of society. Create micro venture capital funds to develop technology for local use in local communities.

(g) Develop the mindset that change is the only constant. Master the technology and adapt it to develop economies of scale and scope; value chains and waste eradication.

(h) Captains of industry and commerce, especially Indian corporates, must develop their mindset to think regional and act local to harness the ‘fortune at the bottom of the pyramid’ in South Asia itself and not venture into Africa and Latin America before exhausting the full potential of the sub continent’s geography potentials and its demographic dividend. Here it is high time that Indian MNCs took the leadership to, jointly with their South Asian counterparts, came forth with the Economic Agenda for South Asia with the vision to make it by 2050mas the world’s Economic Super Power of the 21st century.

(i) Manufacture and promote Indian branded products and services at home and globally. In short, Make in India.

(j) Advertise aggressively using digital media.

(k) Create jobs and distribute wealth through maximization of shareholder participation in corporate affairs as well as maximization of community participation in the business model adopting the 4P framework.

Analysts ask: should the change will be towards the American corporate model? We believe it will—and should — be distinct from either the American, European, Japanese, Korean or Chinese corporate models in substance and style. Hopefully, Indian Corporates will, as they stride the globe, inculcate the South Asian ethos to make them distinct commercial enterprises capable of effectively leading and managing the threats from future ecological, political, economic, financial and technological risks and challenges.

Profile photo of Madhukar SJB Rana and Atul K. Thakur
Madhukar SJB Rana is the former finance minister of Nepal and an economist and Atul K. Thakur is a New Delhi-based journalist.