A Committed Top Tier

Indian business leaders viewed building their top tier of managers as the single most important component of company architecture. A set of able, energetic direct reports was viewed as key, and most important of all was a commitment to the company’s vision and strategy.

Executive chairman Mukesh Ambani of Reliance Industries said that building a “transformational business model” was the first step in structuring his organization, but with that in place, “aligning the leadership team to have loyalty to the vision is the next step.” It was “very important,” he explained, “that everybody understands the execution pieces and stays on the same page. Especially in a fast-growth economy like India, where talent has huge amounts of opportunity, it is important that we create loyalty to the cause.” And then he added a thought rarely heard among western CEOs but commonly expressed within his Indian peer group: “For us, it has always been that the cause is much greater than making pure financial returns.”

Once the top team was in place, business leaders emphasized the importance of pinpointing responsibilities, providing the resources to perform, and then holding team members responsible for results without micromanaging the process. For S. Ramadorai, managing director and chief executive officer of Tata Consultancy Services Ltd., for instance, empowering his staff has been vital to aggressively growing his company. A. K. Balyan, executive director of Oil and Natural Gas Corporation, reported that as a result of the “highly decentralized decision-making” pyramid that he had created, his “key executives have to function as virtual CEOs of their divisions.” Fewer decisions come up to the chief executive since key executives take on their own decisions and are empowered to make them.

No Risk, No Reward

If product and service decisions were certain and risk-free, there would be no errors, but since the tumultuous Indian environment was anything but certain, Indian business leaders “have a much higher capacity to handle ambiguity in business situations,” in the words of Motor Industries Company Ltd.’s (MICO) M. Lakshminarayan, and thus “are very, very flexible in handling” problems.

The executive chairman of Shree Cement, B. G. Bangur, told us he considered creativity so critical to his company’s competitiveness that he had been explicitly working to ensure that his managers were comfortable with a certain error rate in their decisions. “If managers feel that failures will be a blot on their career, then most of the [innovative] projects die down because they want a very high rate of success.” In “our company we are saying that innovativeness in itself is success, whether you proceed and the project succeeds or not.” When a new project does not pan out, he said, “we never say it is a failure. We still say that we have learned one more way how the things will not work, and start all over again.”

For Zee Entertainment’s Subhash Chandra, decentralization of decision making and a tolerance for decision error had become building blocks of his company’s culture. “So far we have been a very entrepreneurial group in which we did not have the corporate hierarchy or divisions or that kind of a thing,” he said. Managers are encouraged to call executives for decision approval in the middle of the night, but they are also “encouraged to take decisions by themselves, without any kind” of formal authorization. That has been “the competitive advantage of our building the business so far,” Chandra said. When managers make a decision “that has resulted in losses, they have never been punished or asked to leave the job.” But, he added, “We do say, ‘Hey, don’t repeat the same mistake.’”

Pushing Decisions to the Front Lines

At some companies, tolerating errors in the name of risk taking was coupled with an architecture that pushed decisions out from under the shadow of headquarters, right into the hands of frontline employees. Nakul Anand—chief executive for the Hotels Division of ITC Ltd., one of India’s largest conglomerates, with interests in food, agriculture, and tobacco—had come up through the organization and knew from personal experience how stultifying the hierarchy can appear from below. His aim as division chief, he said, “had been really to make headquarters not a control body but the ‘help desk’ because the biggest competitive advantage are the ideas that flow from the field.”

Ajai Chowdhry, executive chairman of HCL Infosystems, India’s largest personal computer maker, likewise looked to his operating units for the formulation of competitive ideas. At monthly meetings of the heads of all the HCL businesses, Chowdhry observed, “we don’t discuss numbers, but we discuss breakthrough objectives.” For such meetings, he said, “each and every part of the business is encouraged to come up with its own new breakthrough objectives and strategies for this year and the next three to five years.” Kiran Mazumdar-Shaw, chairman and managing director of India’s first biotechnology start-up, Biocon, had built risk taking into her company’s culture through her own modeling—consistently pursuing biotechnology commercialization opportunities that looked exciting but also very risky.

From Risk to Speed

When uncertainty is high and risks abound, decision making can slow down due to fear of irreparable errors or career-ending blunders. To balance out that equation, several companies stressed the importance of timeliness in decision making. In the words of Anil Khandelwal, chairman and managing director of Bank of Baroda, “I think speed itself is a competitive advantage because I am competing with twenty-seven public-sector banks. Speed should become a competitive advantage—my capacity to do things faster, to execute faster, to come out with new products faster.”

The delegation of authority, devolution of responsibility, tolerance of errors—all built into a culture of frontline risk taking and innovation—brought disadvantages too, many of the Indian executives warned. Managers in such a regime acquire a built-in permission to make decisions that might not be fully in compliance with the company center, and inept or rogue managers can make a mess of things. On balance, though, most of the Indian business leaders had concluded that the decentralization of decision-making authority had become an essential foundation for making risky decisions in India’s inevitably unpredictable and fast-changing environment—a step, we should note, that is becoming the global norm in a flattened and competitive marketplace. Rather than India’s business norms converging on traditional Western standards, odds are that Indian methods are already where the world is now heading.

Customer Centricity, Indian-Style

Like their Western counterparts, Indian business leaders talked of a laserlike focus on customers, but with a subtle national twist. Traditionally, market-driven business strategy relies on research to identify the best customers who offer the highest profit margins, and the goal of companies is to move in that direction. The India Way companies took a very different approach. In many firms, leaders relied instead on their company’s culture to focus employee attention on customer service.

Consider, for example, the experience of Kishore Biyani, managing director of Pantaloon, India’s largest retailer, with more than a thousand stores across the country. The culture at Pantaloon asked all employees to put themselves in the shoes of grassroots customers and imagine the company and the shopping experience from their perspective, not just as potential buyers but as potential Indian buyers.

“Our biggest competitive advantage,” he said, “is our sense of Indianness in whatever we do, because we believe in India as a very different country, emerging in a different era.” He sought to foster “everyone’s ability to think as a customer at the caste and the community level.” The practical result had been to develop retail outlets (under names like Blue Sky, aLL, and Top 10) and products that were closely tuned to the interests of various segments of Indian customers and unlike the merchandising of their international competitors. Pantaloon worked “on the Indian ethos and Indian values,” he concluded, “and all our promotions are very Indian-like.”

Biyani’s emphasis on tailoring company culture to a specifically Indian market might seem like nothing more than an old chestnut—Who is against fostering company culture? Who does not want to meet their customers where they live?—but once again, the difference is a matter of degree, not kind, and it emerged as one of the more striking thematic differences.

Moving Sideways

The intense focus on customers carries a corollary. A company’s direction is set as much by what works with customers as by a preexisting strategy for what should work. Rather than moving linearly forward, then, many of the executives reported that they move more sideways. ICICI Bank’s deputy managing director, Nachiket Mor, expressed the concept well. “We are not great strategists,” Mor offered bluntly. “If you were to ask me, did we know in 1996 what we were going to do in 2006, I would say we hadn’t a clue. With hindsight we could always construct a story, but by foresight we hadn’t a clue. And if you were to ask me where we are going to be in 2016, other than describing it in kind of general terms of asset size and capital base and all of that, I wouldn’t be able to give you a more precise answer.”

Indeed, ICICI’s trial-and-error approach isn’t the sort of strategy a traditional consulting team is likely to recommend. Rather than moving linearly toward a preordained set of objectives, the bank has sidled into adjacencies where opportunities seemed to open. For that, ICICI needed more than a grandiose business plan; it required executives who could see and then seize those possibilities. The big objectives of fast growth and full services were clear; getting there was anything but.

Strategic planning for a distant future was sure to be quickly outdated by the market’s rapid progression, Mor explained. In “complex environments like India, where you know the environment changes fairly dramatically and fairly quickly,” there’s little benefit to “extremely long-term thinking.” His time frames for building and judging company programs ranged from three to six months, not twelve to eighteen. “The animal I like to compare ourselves with is more like a crab rather than a tiger or a leopard that moves quickly towards a very prespecified destination. We move sideways because the environment is too uncertain; it evolves too rapidly.” The bank did not spend much time, he said, “agonizing about core competency and what is the purpose of our business,” but it moved instead to simply and quickly “seize the opportunity.” The sideways movement was a product of necessity. “If you try to build a long-term plan around a certain model of the customer,” he warned from experience, “it is possible it could be completely wrong.”

The bank’s mind-set and pay scheme reinforced this thinking through an internal rewards system “geared towards people who can quickly spot immediate opportunities and capitalize on them. There aren’t a lot of rewards for people who do long-term strategic thinking. We are just much more short-term people.”

Given twenty potential initiatives for ICICI, Mor would try all twenty rather than bet on what seemed the best two or three. His preference was to “fail fast” and discover through trial and error what succeeded, logic Mor put to work in building a microfinance capacity for the bank. The plan was to expand rapidly—from 20,000 clients to 4 million clients and from a million dollars lending to a billion dollars in only three years. Mor tried a host of tactics at the same time: opening branches, partnering with nonprofit organizations, even buying another bank. Since most of the clients were borrowing for the first time, he had “no idea what they would do when given the money”—whether, for example, they would want health insurance or need rainfall guarantees. In general, he observed, it was “completely unknown territory.”

Not knowing precisely what the microfinance customers really needed, Mor sought to create a bank presence no more than 10 kilometers from any rural customer. Poor decisions were made, but they tended to be tactical errors. “There are clearly things that we did wrong,” Mor told us, “because we focused on what we saw rather than on what we might have seen.” At the same time, investors were relatively unconcerned about the sideways approach, giving the bank leeway that would be rare in the United States. Both domestic holders and international funds sought to understand how the top management team, and the CEO in particular, operated, but the lack of a specific strategy or a long-term plan did not seem a vexing concern for investors so long as they heard a company story that made sense and produced year-on-year double-digit growth. Much the same had been true of the bank’s relationship with its regulators.

Unlike in American management models, product decisions may have been opportunistic, but continuity was built into enduring relationships among ICICI executives. “American companies don’t really have long-term executives,” Nachiket Mor told us. As a result, “relationships with their own company, and therefore with the rest of the world, seem very transactional, very much day to day.” By contrast, in India, “we are going to be dealing with [the same] person for the next ten years, so no conversation is just one conversation.” Consequently, in dealing with a subordinate, colleague, or superior, personal anger and harsh language are best avoided, as are any actions that can cause humiliation or a loss of face. And indeed, long-term supportive and trusting relationships among the bank’s executives have proved an essential ingredient to its sideways strategy.

Winning by Losing

To achieve both scale and speed, Mittal shocked the telecommunications industry in 2004 by farming out the operation of his entire phone network in a $400 million contract to Ericsson, Nokia, and Siemens. He would no longer have to acquire and maintain equipment. He would instead simply pay a lump sum to the European vendors, according to the traffic they handled and the quality they provided. He also contracted out most of Bharti Airtel’s information technology services, ranging from customer billing to the company’s own intranet, in a $750 million deal with IBM. So comprehensive was the outsourcing that it left virtually no IT staff on Bharti Airtel’s payroll—though information technology is the very foundation of wireless telephony—and even Mittal’s own desktop computer was given over to IBM management.

Mittal appreciated the risk in outsourcing his firm’s core capabilities to larger and more powerful multinational companies. But he viewed the contracting firms as “the Rolls-Royces of the industry,” and in any case he had signed outsourcing contracts for renewable two-year periods with exit clauses if the providers ever turned “rogue.” He also concluded that the forecast growth of Bharti Airtel’s subscriber base was so great that the incentives for Nokia and IBM to continue their mutually advantageous relationship with Bharti would outweigh any temptation to exploit Bharti Airtel by withholding new equipment or ratcheting up fees.

Mittal also met directly with the IBM chief executive because of the risks involved, and the IBM CEO assured Mittal that he would personally monitor the project. Our “partners are actually a very, very important part of our future,” Manoj Kohli said, and “therefore being respectful of them, being transparent with our dealings” with them, “and of course having full faith in them is important.” The new arrangement also required fast creation of a capacity to both oversee and collaborate with their partners, which Kohli frankly admitted they did not have at the outset.

Radical Outsourcing

Beyond doubt, Bharti Airtel’s outsourcing moves defied conventional logic. Since core competencies are widely viewed as the value drivers of a firm, peripheral functions ranging from property management to employee benefits—so goes the reasoning—could, and should, be handed over to other firms for which such functions are their core competencies. But in outsourcing its telephone network and customer infrastructures, Mittal appeared to be placing Bharti Airtel’s value drivers outside the company. “People gasped in horror,” he told a reporter. “I got calls from around the world saying, ‘You’ve gone nuts! This is the lifeline of your business, something you can’t afford to lose!’ ”⁴

A major European CEO telephoned Mittal to warn, “You’re giving your life, the very heart of your business, into the hands of outsiders. You’ll regret this because nobody has ever done it and nobody will ever do it.” In response, Mittal noted that, while Bharti Airtel so far had hired only 237 people into its information technology operation, the company of the caller employed 8,000. Mittal suggested to the European executive that his 8,000 staffers would never allow him to outsource his IT function even if he wanted to do so later on. But Mittal could still do so now given his far smaller number of IT staffers, and swift outsourcing was necessitated in any case, Mittal concluded, by the imperative of scale and speed.

Managing Rampant Growth

As Sunil Mittal explained to us, a key driver in his reverse outsourcing was the constrained human resource position in which the company found itself as it was rapidly ramping up. Bharti Airtel’s initial “in-house” business model had been targeting 25 million customers, but after comparing his company’s operations with the few companies worldwide that were already servicing 25 million customers, Mittal doubted he could build the structure fast enough to service that large a base.

“We clearly saw that the way we were structured and the way we operated would not allow us to satisfactorily come to that point.” With few employees and a still modest user base, you could “practically run the company the way you wanted,” he said, but hiring the 30,000 employees he estimated to be requisite for servicing 25 million customers required a far larger and more complex structure.

Even worse, Mittal anticipated reaching 75 million to 100 million users within several additional years. In some months, Bharti Airtel was already signing up a million or more customers. Airtel could not have hired, he concluded, the more than 10,000 required employees technically trained in network and information technologies and then retain them, since other companies, like Infosys and Wipro, were also exploding in size and were often proving to be more attractive destinations for engineers than Bharti Airtel. After meeting with several large European mobile-phone companies, including Vodafone and T-Mobile, to learn how they operated, Mittal told a reporter, “I saw that these were huge companies, hugely resourced. And it began to dawn on me: I have to be like them. But could I afford to be like them? Did we have the resources to do that? Were we the best company to attract that kind of talent? The answer, clearly, was no.”⁵

Moreover, it had become a convention in the Indian telecom industry to build out 30 to 40 percent excess capacity on any new network to anticipate further short-term growth. Given its burgeoning scale, that meant that Bharti Airtel would have to spend another $300 million to $400 million over the next several years to create its extracapacity networks. Worse, Reliance Infocom, the brainchild of Anil Ambani, planned to enter the cellular market, and Mittal feared that it would choose to jump-start its services by offering extremely low rates that would have been “unthinkable” until then. Because such rock-bottom prices posed the potential of slowing or even shutting down Bharti Airtel, Mittal recalled, the possibility sent “shivers down the company’s spine.” Time was in short supply, too: “Given that we had about eighteen months to figure this out and compete with Reliance, we had no time to induct ten thousand people, train them, and make them think our way.”

Innovating on the Value Chain

To compete on price, Bharti Airtel would have to ensure that its cost structure was held tight and would not inflate with customer growth. To compete on time, the company would also have to find some way of radically expanding in an extremely competitive labor market for telecom specialists. Thus, Mittal turned to reverse outsourcing to keep Airtel’s up-front investments low, since he would not have to build more capacity than it needed at the moment, and to keep its recruitment at realistic levels, since it did not have to find the thousands of engineers who would otherwise be required. By circumventing capital spending and hiring constraints, Mittal found he could then focus the company on understanding customer preferences, regulatory barriers, and emerging markets, ranging from BlackBerry service to digital television.

FIGURE 5-1

Bharti Airtel annual revenue and number of employees, 2003–2008

Source: Company records.

As shown in figure 5-1, the result borders on a miracle: the company slowed its own hiring without retarding its customer expansion, making it India’s number one telecom provider by 2008, with more than 75 million customers, up from none a little more than a decade earlier. With revenues of $6 billion, Bharti Airtel had come to lead the pack in the Indian wireless industry, outselling its closest (and once feared) competitor, Reliance Infocom, by over 40 percent. Airtel alone accounted for more than 40 percent of the Indian wireless market share and nearly 60 percent of the market capitalization of the country’s telecommunications service industry.

Improvisation and Adaptability

Bharti Airtel’s massive reverse outsourcing brought another, more personal advantage, Sunil Mittal confessed. He and his brother, Rajan Mittal, also in top management, used to sit down during the company’s annual budget review to decide how much to allocate to network and information technology. The “techies” already on board were “just making us look silly in those discussions because we were both incompetent to discuss those issues,” Mittal said. Contracting with the outside parties eliminated the necessity of having to endure such an unhappy annual budgeting ritual. Even more important from his point of view, outsourcing meant he could still run the company in a hands-on fashion.

Unable to build an organizational structure of the usual kind that would properly service the strategy that he was bent on pursuing, Mittal transformed his strategy and organization, opting to create value and defeat rivals through company brand and customer relations rather than through his own technologies. Improvising and adapting along the way, he proved that sometimes structure is not determined by strategy, but quite the opposite, with organizational constraints resulting in a redefined strategy.

Onshore Service, Offshore Cost

The first important decision Cognizant made was to steer away from acquiring new customers. The alternative strategy was to develop deeper relationships with fewer customers. To pursue that end, Cognizant converted the concept of global outsourcing into a combination of on-site service and international work. Cognizant jettisoned the conventional model of Indian IT outsourcers with headquarters in India and satellite offices near client locations in the United States and elsewhere. Instead, the company opted to be headquartered in New Jersey. Narayanan explained: “We felt that since there are a number of India-based companies who are providing these services, to differentiate ourselves we’ll flip the model and be closer to the customers that we serve.”

To reinforce the U.S.-centeredness, he listed the company on NASDAQ and hired many people in the United States. At the same time, he kept Cognizant an essentially Indian company, with the bulk of its software engineers and other employees still working on Indian pay scales. Of its 60,700 employees at the end of 2008, up from a handful in 2000, more than 70 percent were still based in India, including three-quarters of its engineers (see figure 5-2).

FIGURE 5-2

Cognizant Technology Solutions Corporation, annual revenue and number of employees, 2000–2008

Source: Company records.

Compared with its Indian competitors, Cognizant’s initial margins were thinner because it delivered more premium services, but over time that served to build enduring rather than spot relations with clients, relationships that in turn became a driver of sustained growth. Rapid expansion in turn became a magnet for quality talent. “When we go to market and hire talent,” said Narayanan, we “emphasize that we are the fastest-growing company. ‘If you come to our company, you will grow faster than anywhere else.’” The result, according to Narayanan: Cognizant was able to attract “the best and the brightest talent,” and the superior talent meant superior service.

The Charlie’s Angels Dilemma

Cognizant also devolved more power and responsibility into the hands of the managers who were geographically closest to its customers. This was required by the market, Narayanan explained, because sourcing projects was becoming more complex, requiring more sophisticated and responsive contracting managers who appreciated the industry’s and clients’ unique requirements. Still, most of the work was performed by employees in India, and that created a new challenge for the customer-facing on-site managers. The latter were increasingly working late into the night—India is ten and a half hours ahead of New York and thirteen and a half hours ahead of San Francisco—to resolve issues with the Indian-based bulk of their teams. “It was a little bit like Charlie’s Angels” for the U.S.-based managers, recalled Francisco D’Souza. When “you wake up in the morning, a voice on the phone tells you what to do.”⁷

To reduce the “Charlie’s Angels” factor, the company created a new structure to bridge the time-geography divide, formally capturing what had already emerged informally. Cognizant instituted a “comanager” scheme in which two equally responsible managers led the sourcing team, one close to the customer and one close to the employees in India. Though separated by more than ten time zones, the comanagers were held equally to task for services results, customer satisfaction, and project revenue. The joint leadership deliberately ran against management orthodoxy positing that responsibility should be pinpointed in a single office, and Cognizant watched to make sure that the traditional tenets did not get in the way. With a new development office in Shanghai, the company even began experimenting with “three in a box” teams, with equally powerful managers at the client site, in India, and now in China as well.

At the same time, Cognizant sought to build a “global mind-set” throughout the company to support its international strategy, with new customers coming from outside India and the United States. “We changed the model,” explained Narayanan. “We started expanding into Europe. One of the key things that we learned during our formative years working with D&B was to get a global mind-set,” which required us “to think about people, to think about anything that we do from a global perspective and not specifically a U.S. perspective or an Indian perspective.” To drive a broader perspective deep into Cognizant’s makeup, the company recruited managers from many countries and assigned them to work in many other countries. In Narayanan’s view, this became a key competitive advantage for the company.

Bringing the Board on Board

The company also built a culture that placed a premium on intense and enduring relations with customers. Part of that strategy involved turning away a certain number of prospective customers in favor of deepening partnerships with existing clients, and that in turn proved to be a platform for lateral expansion. “If you have delighted your customer, they will be willing to try you out in other areas, which means they will buy other service areas and other products that you produce,” Narayanan told us. “Customers participating in industry seminars will say, ‘We have succeeded in partnering with Cognizant, [and] I would encourage you to partner with Cognizant.’”

So strong had the culture become, that Cognizant’s board of directors increasingly wanted to hear about customer satisfaction and retention rates rather than revenue growth and profit figures. The directors could see that those two parameters drove the firm’s financials, and they sought to know more. As Narayanan told us, “We have a unique event every year [where] we review the strategy of the company, and the board invites certain customers to come and participate and give the board and the senior management team direct feedback. They spend some time exclusively with the board and tell us, should we continue on the strategy, [or] should we change the landscape?”

Cognizant’s strategy drove its structure, but with a pioneering twist. Differentiating itself from both high-end outsourcing providers in the United States and low-end providers in India, it sought to combine high-end services with low-end costs, creating in the process an appealing value proposition. But to achieve that seemingly contradictory duality, it devised a bifurcated architecture that invested coequal authority in two managers, one outward facing and the other inward managing, and it instilled a culture that channeled energy in both directions. Together, they provided for an innovative way of creating value and “allowed us to extend the business model for the changing business environment,” D’Souza concluded.⁸

Creative Value Propositions: Selling Beyond the Media’s Reach

Manvinder Banga, the former chief executive of Hindustan Unilever, observed that one of the greatest challenges for selling in India is that the conventional media reaches only half the population, thus leaving more than 500 million people largely in the dark about a company’s product or brand. The rural population is scattered in some 600,000 villages that are not connected to urban centers by newspapers, electronic media, rail, or even, in more than half the cases, by road. Consequently, companies that want to grow beyond urban and semiurban India to access rural customers have had to devise innovative ways to get their attention.

Enter Project Shakti, launched in 2000. (The name references strength, power, or empowerment in several Indian languages.) At the time, Hindustan Unilever was already engaged in price wars with Procter & Gamble in product markets such as fabric wash and personal care; the growth of urban markets was slowing; and the company realized that long-run survival would require opening new markets. To this end, it developed its Shakti initiative to reach fresh customers in the fast-moving consumer goods market where competition was most pitched. The concept was to draw upon women’s self-help groups that had already been set up by various nongovernmental organizations and rural agencies in India. Typically comprising ten to fifteen women from a single village, these self-help groups operated as mutual thrift societies. They would combine small amounts of cash toward a common pool. Microcredit agencies such as rural development banks would then offer additional funds to finance approved microcommercial initiatives.

Hindustan Unilever built upon this infrastructure by offering entrepreneurial opportunities for group members to sell HUL products directly to fellow villagers. Shakti entrepreneurs would borrow money from their self-help groups, apply it to the purchase of HUL products, and then resell them to their neighbors. Because most of the women in the self-help groups had no prior sales or business experience, HUL hired rural-sales promoters to coach the nascent entrepreneurs. For the first several months, the Shakti villagers were rewarded with cash incentives for making a certain number of home sales calls, regardless of the amount actually sold. HUL also arranged for local banks to provide the Shakti groups with microcredit, with the proviso that the first installment toward repayment of loans did not begin immediately. The company also worked with local government departments to build acceptance of Shakti as an economic opportunity benefiting the entire community.

Broader Social Purpose and Business Growth

With Shakti, Hindustan Unilever sought to achieve its dual objectives of social impact and business growth. The self-help-group entrepreneurs worked as social influencers, increasing local awareness and changing attitudes toward usage of various products, mostly those targeted for women. At the same time, Shakti provided sustainable livelihood opportunities for the rural women. Hindustan Lever first piloted the project in fifty villages based in the state of Andhra Pradesh, and it has since extended Shakti to fourteen other states, with forty thousand new entrepreneurs as part of the program by the end of 2008. By 2010, the company planned to recruit more than a hundred thousand Shakti entrepreneurs covering five hundred thousand villages, touching the lives of more than 500 million people.

By devising a new and self-sustaining channel for reaching Indian countryside masses, Hindustan Unilever has been able to open a new market for its long-standing products. Again, a creative combination of a new structure with a fresh strategy allowed the company to achieve what conventional wisdom would have doubted. Just as with Bharti Airtel’s reverse outsourcing, Hindustan Unilever’s Project Shakti made the counterintuitive intuitive. And in doing so, it contributed to a mission far broader than simply its own bottom line, providing fresh livelihood to large numbers of underserved women in the countryside.

Fresh Ideas, Long-Haul Thinking

Humility, innovation, counterintuitive thinking—none of them are guarantees of success, nor is present success a guarantee of future earnings. Circumstances change; operational steps have to be effectively executed. But when it comes to competitive advantage, large Indian companies are giving birth to fresh business ideas that combine a transcendent company vision, fresh value propositions for reaching new customers, innovative value chains for producing and distributing products and services, and a strong emphasis on building architectural and cultural capabilities for the long haul.

Like those in most national settings, Indian business leaders placed a premium on strategy. Yet they viewed strategy as a general set of enduring principles for competing, an approach to business that they deeply encoded in the architecture and culture of the company. Since so many of the executives had helped drive a meteoric growth in their firm—overseeing workforces at the time of our interviews that were sometimes larger by a factor of five or more, compared with those in the early part of the decade—they had come to view both architecture and culture as the necessary vehicles through which their leadership could be exercised and their strategy realized as their firms continued to expand.

The most important component of the architecture, the company executives said, was their top team, which they saw as an extension of their own leadership. The company culture constituted a further extension, allowing the executives to reach and align the thousands of employees on the payroll that they and their top team could no longer personally direct. Each company had developed its own unique blend of values and norms that defined its culture and its own unique way of organizing its work, but three distinctive themes in culture and organization stood out.

First, leaders emphasized a broader mission and purpose that enhanced both corporate agendas and development of the Indian market. Company leaders tended to downplay a focus on investors and shareholders, eschewing a short-term drive for quarterly results in favor of building innovative strategies and structures for longer-term growth, as evident in Hindustan Unilever’s outreach to the rural countryside. Second, company executives brought substantial innovation to the value proposition, as seen in Cognizant’s quality service at moderate cost. And third, the Indian business leaders emphasized holistic employee engagement with customers, a mind-set by which frontline employees would hear and provide what customers really sought, as shown by Bharti Airtel’s placement of mobile phones at low prices into the hands of millions of new consumers. This is the India Way.