We need to keep forgetting our old ways

21st July, 2016

The Economic Times
21 July 2016

As the next leg of India's development journey unravels, I see a phenomenal transformation ahead, says Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group

I vividly recall sitting with my father, Aditya Birla, listening intently to the then finance minister's budget speech, centred on liberalisation. My father strongly believed that India should integrate with the world economy. Way back in the mid-1960s, my father, a graduate from MIT, had felt totally shackled by the Licence Raj. Perforce, he turned his gaze away from India to Southeast Asia.

There he built world-class companies that won respect for him and his country.

Naturally, when we witnessed this burst of liberalisation, it seemed a turning point. Liberalisation would change the rules of the game, and usher in severe competition and an extremely tough business environment. Foreign business, products, and services would now have a free play in the country. My father and I discussed these and many other business-related issues, and what impact these would have.

I remember the late CK Prahalad saying: "If you do not start with a legacy mindset, you can innovate like crazy. Do not worry about the learning curve. Worry about the forgetting curve. Forgetting may be more difficult than learning."

So the first change that liberalisation entailed was a change in mindset, forgetting old ways of running business, given that protectionism was now passe. With the removal of the licence, entrepreneurial activity and competition became the new buzzwords. Organisations that failed to adapt to the tectonic shifts would fall by the wayside. Economic reforms removed barriers like industrial licensing. But they also removed barriers for foreign competitors. It opened opportunities, but also unleashed fiercely competitive conditions. Ultimately, both proved beneficial to consumers, producers and the entire economy.

Growth markers have changed remarkably. Earlier growth revolved around securing licences. Post-1991, strategic thinking holds the key.

The end of the licensed era saw growth markers change phenomenally. Earlier, growth revolved around securing licences. Post-1991, strategic thinking holds the key. The craft of thinking strategically was sharpened. What now came to the fore was leveraging on core competencies, building a competitive advantage and differentiating. The name of the game is how to build a leadership position in each of the businesses, how to be the last man standing. Growth, just for the sake of growth, was out. Yet another major change in the mindset of Indian organisations was from local to global. This is consistent with the shift in strategic thinking, which is grounded on the framework of global competitiveness. Moreover, the idea of global is not narrow, but comprehensive. Today, being global entails not just having a manufacturing base or sales presence in other countries. It's about being global across parameters such as financing, shareholder base, market share, scale, quality, production, logistics, R&D and, of course, talent. It is this mindset that has been instrumental in propelling Indian companies to become a global force, in several industries.

A major shift in the post-liberalisation era has been the rise of people power. Talent has become the organisation's most critical asset. Surprising as it may sound, I spend about 40% of my time on people-related issues. This is important for me. I track about 150 people closely, in terms of what they are doing, what is happening to their careers, career-planning for them, succession planning and so on.

I focus on the most important positions in the company and the highest performers across the group. This is normally the pool from which we would draw our future leadership. The focus has shifted on building a galaxy of stars — star teams, rather than individual stars. India today has emerged as one of the brightest spots in a global economy stuck on the slow track. India's entrepreneurs have played a crucial role in this economic resurgence.

Indian business decisively silenced the skeptics who feared that opening up the economy to foreign competition would spell doom. The corporate sector adapted to the changes adroitly. They cleaned their balance sheets, optimised capacities, and increased the global footprint through acquisitions, with a dare.

As the next leg of India's development journey unravels, I see a phenomenal transformation ahead. No doubt economic reforms are always an unfinished journey. However, the impact of reforms so far is truly stunning. Most importantly, they have given Indian entrepreneurs the confidence that they can take on the world. The coming decades are certainly India's to grab.