When current issues can spark future opportunities
India has a vibrant economy, with a growth rhythm that out-pass China, and is full of absolute extremes and challenges. Facing a demographic boom that Europe cannot comprehend, India has right now 200 million kids at school that need education, and 1 million doctors that are not enough for its growing population. India’s provoking scale, provide the background that puts it in a direct competition with China, to share the economic leadership of the next decades.
In one of the first EMBA modules, Prof. Sue Dopson lectured about the importance of culture, and how is shaped by the leaders, followers and the context. This ideas took a new twist, when the entire Oxford EMBA cohort took a trip in Mumbai, under the supervision of Prof. Mari Sako, for the “Global Rules of the Game” session.
To have a better view, I took the freedom to explore the country with one week in advance. I visited New Delhi and spent time in the backside cities and rural villages, to get a feeling of the old Hindustan. I had a week to taste the genuine India, with its real life, where 58% of the population lives with less than 3 USD per day (World Bank, 2015). This contrasted against the pockets of wealth from the major cities, or versus the exquisite glamour of Mumbai’s Taj Palace, a beauty with colonial perfume, were our module took place.
The Taj Mahal Palace, hosted our one week long module in Mumbai, India
India has a poor infrastructure and this impacted the ability to produce and distribute goods. This impediment was the reason for its leap-frog directly to become a leading service provider. If China became “The Factory of the World”, India ensured its place as “The Global Business Outsource Center”.
All the major service companies are here. Amazon invests hugely in India in its capabilities, while Microsoft, Google, IBM or Accenture, employs tens of thousands of people. In the strategy of a global company, India is the perfect Low Cost Partner, or a Global Consolidator (Ramamurti and Singh, 2009).
Besides the poverty of the majority of the population, there are challenges: India has a low ability to provide or manage common goods, services or ensure that the rules are clear, foreseeable and respected.
At high level, important laws like those regarding Foreign Direct Investment can swing and change suddenly, influenced by political momentum. Local corruption can be an issue too.
At the everyday level, it is a small adventure to drive on the streets, to buy a ticket, or to redraw money from an ATM. There are rules, but few people follow them. The concept of having patience or stay in a que is not very familiar in a big city. One of the first local insights was related to the follow-up process required to ensure that something is “done-done”: a cycle of “understanding the issue”, “agreement of the solution”, “acceptance to do”.
If we think about Japan, as an extreme example of order and discipline, most probably, India stays in the other extreme. This cultural aspects impact somehow the equity and the perception quality of “Serviced in India”. No matter how high is the real level of the service, the perception remains that it should be rather cheap. From the Porter’s 3 strategic choices (cost leadership, specialist, differentiation through equity); Indian service companies positioned themselves as a low-cost partner.
However this positioning will be soon challenged by the Artificial Intelligence revolution which is waiting around the corner. This will wipe out a big slice from the bottom of the pyramid, impacting the majority of the low-cost services provided in India.
Facing with the future AI service disruption, Indian companies will be forced to rapidly evolve and transform towards higher equity brands and services, able to own unique benefits. In this way, create customer loyalty and build barriers to switch.
In the last decades, other countries and companies from Asia made a successful transformation: South Korea, Taiwan, China. Besides pure strengths like capital, know-how and management skills, there is a soft emotional link between countries perception and the perception of their leading brands, working in both ways.
Vibrant brands from these dynamic countries became aspirational to worldwide customers: Samsung from Korea (now a top ten global brand); Acer from Taiwan; or Lenovo, Huawei and HTC from China.
Now is the turn of India, and for its leading companies like Tata (now the owner of Jaguar & Land Rover), Mahindra, Infosys or Mittal, to create and leverage high equity global brands, at a more aggressive scale and with less time left.
The Oxford EMBA cohort left Mumbai, but most probably some of us will likely come back, just to become a part of India’s prodigious transformational story.