Words of Ravi Venkatesan, former Chairman of Microsoft India.
He is a great thinker and a teacher as he finds himself..
Excerpts that have interesting insights that I really liked..in snippets..bite-size.
Country of origin also makes a difference. Western European countries, particularly Sweden, Germany, France and the U.K. have a history of being global. They also tend to take a longer-term view.
Scandinavian firms place a very high level of trust in their local managers and therefore are more willing to do things differently. American firms are globally oriented, but many of them are very arrogant. They take a very export-oriented and a one-size-fits-all approach. Korean [firms, such as] Hyundai and Samsung, do extremely well because they are willing to make big preemptive investments to win in India. Japanese firms, with a few exceptions, do badly; they are ultra-cautious and lack trust.
India is important not just because it is a big market. India is important because it is a litmus test for your company’s success in emerging markets.
Most emerging markets look like India – they have uncertainty, corruption, poor infrastructure and chaos. It could be Brazil, Indonesia or Nigeria. But few have the same potential, so India is in many ways a lead case for emerging markets.
Right now, multinational corporations have two choices. They can either not grow, or they can embrace the chaos of emerging markets. Europe is not going to sort itself out anytime soon – they need to learn to deal with these situations. If you think you can escape chaos, you’re sadly mistaken.
The performance of most multinational companies in emerging markets is poor, except for those led by a few great chief executives, like I.B.M., JCB or Schneider Electric, whose C.E.O. moved to Hong Kong because he realized that Asia was where the action was going to be for the next few years.
If you’re working for an American company, and you are a mid-level sales manager, typically headquarters makes all the decisions. The model you need if you want to play the big game is you need someone with a track record in the company, who is trusted, in emerging markets.
For example, Nestlé, which recognizes that all food is local — Indians like to eat Indian food, and you need to do food R.& D. in India. They sent a global R.& D. guy to run India. He comes here, and quickly realizes they need Indian flavors, and you’ve got Maggi Masala and a shiny new R.& D. Center in Delhi.
They need to be an entrepreneur, to build the business, not a bureaucrat. For example, McDonald’s: How did a beef hamburger company come to India, a vegetarian country where the cow is sacred, and make a profit selling Happy Meals for 25 rupees [about 50 U.S. cents] ?
About 10 years ago, McDonald’s decided “we’re not a hamburger company, we’re a global brand, a supply chain expert and we know how to run a chain of family restaurants.” They hired two entrepreneurs as joint venture partners; these two guys leveraged the brand and the capabilities of McDonald’s but developed a completely Indian menu and a completely local business model.
You need a person with a passion for India. The country manager job in India is one of the toughest in the world. You get crushed between the bureaucracy of India and the bureaucracy in your headquarters. You need passion, and you need to stay for five to seven years. If you stay for two or three years, you’re part of a revolving door, and you won’t get anywhere.
You need someone with courage, who is willing to ask forgiveness, not permission, and the tenacity to deal with situations never dealt with before. You need people who embrace chaos and uncertainty.
Basically, there are two types of expats in India, those who dive into the chaos and those who put the biggest wall they can create between themselves and the environment. You want the first type.
On the other hand, Sir Andrew Witty, the chief executive of GlaxoSmithKline, loves emerging markets having worked in Africa, India, Pakistan. He has said publicly that the Western pharmaceutical model of spending a billion dollars to bring a drug to market and then charging high prices is unacceptable. Well, GSK is doing brilliantly in emerging markets including India.
If the chief executive is not one who is open-minded, culturally curious and willing to embrace these markets, and learn about them, you are basically not going to win in markets like India.
Look what happened with Microsoft. Bill Gates loves crazy places. His family vacations in Nigeria, and when he comes to India he spends time in Bihar. No wonder Microsoft did well entering these markets on his watch. But for most C.E.O.’s, their entire experience is in the developed world. Take a great guy like Tim Cook of Apple, who has no experience in emerging markets, and has allowed Samsung to run away with the market.