A few good capitalists

Dhiraj Nayyar is chief economist, Vedanta Ltd, and the author of Modi and Markets: Arguments for Transformation
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Profiles of business leaders whose examples of success are crucial now more than ever before for India’s future as a market economy
Mantras for Success: India’s Greatest CEOs Tell You How to Win | 30 Women in Power: Their Voices, Their Stories | Profiles in Enterprise: Inspiring Stories of India’s Business Leaders
If India’s relative economic success over the past two decades has been a direct consequence of adopting capitalism instead of socialism, its relative failure to truly take off (in the last half-decade in particular ) is a consequence of the (mal)practices of some of its capitalists. The ones that have preferred to take the shortest, most convenient way to wealth, instead of the longer, rule-bound path—depending largely on their crony proximity to those who run the Indian State—have damaged the case for capitalism in India. The country is at the crossroads. There is a strong backlash against a crony capitalist economy and yet going back to state-driven socialism or semi-capitalism is not an option, given the gross corruption and inefficiency of the public sector. It’s time now to make a case for, and implement in no uncertain terms, a rule-based market economy, a capitalism that isn’t captured by a few bad capitalists.

It isn’t easy to make that case in the abstract. India’s political economy has never quite outgrown its Nehruvian antipathy to profit. Crony capitalists have played an equal part with politicians in preserving old perceptions about business. Fortunately, India has plenty of role model capitalists who have, by and large, built empires based on their skills of entrepreneurship and management—of their businesses, not government connections. It is their stories which need a wider audience in India, which is used to hearing more about the mismanagement of Vijay Mallya and the fraud of B Ramalinga Raju than the vision of Anand Mahindra or the skills and risk-taking of Ratan Tata.

Three new books—Mantras for Success, Profiles in Enterprise and 30 Women in Power—fill an important gap in the discourse of India’s experiment with capitalism. None of these books is an academic project. They would not necessarily qualify even as semi-scholarly work that the story of Indian capitalists deserves. A cursory glance at the authors/editors— Suhel Seth, Peter Church and Naina Lal Kidwai—may even result in their being dismissed as ‘puff jobs’ meant to flatter those who lead Indian Inc. While some of this criticism may have some merit, it should not distract from the fact that these books collate the stories, visions and strategies of pretty much every important Indian businessperson (mostly entrepreneurs but also professional managers, though you could quibble with some choices) in a manner that’s easily accessible to scholars and especially to future entrepreneurs who will eventually determine India’s economic tale.

Suhel Seth’s Mantras for Success: India’s Greatest CEOs Tell You How to Win (co-authored with Sunny Sen; Rupa; 259 pages; Rs 500) promises to reveal the mantras of 20 top honchos. What strikes the reader right through this well- written breezy book—the chapters are reasonably short and the mantras summed up at the end of each—is that there is no single formula for success. In some cases, what works for someone is a bane for another. Ratan Tata’s success at the Tata Group, which he helmed for over two decades, was hardly guaranteed at the start of his innings even though he was inheriting a big empire from his uncle JRD Tata. Other than the fact that Indian business was set to face external competition for the first time after 1991 (the year he took over), Ratan Tata was challenged by powerful satraps within the Group who commanded its major enterprises under JRD’s reign. The Group was too decentralised for Ratan to make an impact. He moved to ease out the satraps and concentrate power with himself before appointing a new generation of leaders, none of whom had quite the same authority.

Anand Mahindra’s experience has been different from Ratan Tata’s. Mahindra, who like Tata inherited the mantle from his uncle, chose a highly decentralised approach, leaving the management of key parts of his group—such as automobiles and information technology—to carefully selected managers. While Tata had to centralise authority, Mahindra had to aggressively farm it out. What both had in common with each other—and indeed with many of the others whose stories are told in all three books—is the ability to take real risks. Ratan Tata gambled by buying an ailing Jaguar Land Rover, a move that paid handsome returns after an initial struggle. Anand Mahindra took a big risk in buying a discredited Satyam, but then presided over its highly successful merger with his own Tech Mahindra. These are the kind of risks entrepreneurs must take, the kind which can’t be hedged by knowing some higher-up in the Government. Their success or failure will be judged in the market place by forces of competition.

If the Seth and Sen book is about discovering the success formulae of India’s top CEOs, Peter Church’s Profiles in Enterprise: Inspiring Stories of India’s Business Leaders (Lotus Roli; 349 pages, Rs 395) is about understanding the lives—personal and professional—of 23 top entrepreneurs; for good measure, he has added a couple of social entrepreneurs like Ela Bhatt of SEWA and Sunita Narain of Centre for Science and Environment (CSE). The book’s main value comes from the access the author has to the people he has profiled—the stories have an element of authenticity.

Church’s chapter on Sanjiv Goenka, promoter of the RP-Sanjiv Goenka Group (full disclosure: the group owns Open) is instructive. Goenka is also featured in Suhel Seth’s book, but the focus there is primarily on his business strategies: how he acquired and turned around Calcutta Electricity Supply Corp (CESC), his aggressive retail foray, his interest in the media and so on. Church’s book is a good complement because it delivers details of Goenka’s Marwari lineage, his upbringing, his family and even the historical divisions in the family business. The approach, evident throughout the book, adds a certain richness to the understanding of Indian capitalism. In Goenka’s case, it is interesting to note the frugal and regimented upbringing he and his siblings had despite the family’s wealth. Like many others originally from Marwar, the Goenkas have a long history of doing business. Like many business families, the empire was divided more than once over the generations. In their case, these divisions worked out well, quelling the notion that business families would eventually destroy themselves by dividing their empires into smaller, less-viable bits.

Not all the stories are about people who inherited empires. The stories of first-generation entrepreneurs like Subroto Bagchi of Mindtree are compelling; these are what would interest those who do not have family businesses to join. Bagchi grew up in a well educated but hardly wealth family. He worked his way up the corporate ladder, sensing early the opportunity in the infotech sector when he first joined DCM and then HCL in the late 1970s and early 1980s. After working at other infotech companies, Bagchi was one of the co-founders of Mindtree and the driving force behind it. His is a story of a middle-class professional turning to entrepreneurship later in life. For many young Indians who don’t have access to capital early in life, this is a potentially fruitful path to follow: from manager to entrepreneur.

The most glaring omission in the books by Seth and Church is of women in business. Seth’s 20 profiles include just one woman—Biocon’s Kiran Mazumdar Shaw. Church’s 23 profiles include just three women, of whom only Shobhana Bhartia of Hindustan Times qualifies as a capitalist; the other two run NGOs. That may well be a reflection of the continuing patriarchal nature of India’s family businesses; in most cases, it is male heirs who inherit empires. It may also be a reflection of glass ceilings at the management level—fewer women make it to the corner office, perhaps with the exception of banking, which has a lot of women CEOs. So it is only fitting that 30 Women in Power: Their Voices, Their Stories (Rupa; 291 pages; Rs 500) is edited by Naina Lal Kidwai, one of India’s most successful bankers.

Of course, this book isn’t solely about women in business. It includes leaders of Indian bureaucracy, journalism, law and NGOs. What it shows is how women have broken glass ceilings across the board, and not just in banking. Just as Zia Mody is a name to reckon with in the male-dominated world of corporate law, Kirthiga Reddy, the head of Facebook in India, is a prominent woman in a world dominated by men. This book can be forgiven its ‘celebratory’ air. It shows women—half of India—who haven’t always had the best of opportunity despite the liberalisation of the economy and society over the last two decades, that no ceiling is too high.

The next time Suhel Seth and Peter Church write a book on Indian capitalists, one would hope that women would occupy more than a token presence in the narrative of Indian capitalism. At any rate, the story of Indian capitalism still has many chapters to go. For the sake of prosperity, India needs to embrace the good capitalists while shunning the cronies.