Archives for posts with tag: GE

I can picture child labor returning. My daughter is a college sophomore hunting for internships. My high school senior son, seeking university admission is counseled that his lack of internship experience puts him at a disadvantage and he is only 17!

interns-wanted

I remember the time when as a returning sophomore at Williams, a freshman asked me about my summer holidays. I had spent the over 3 month vacation at home in Delhi, mostly relaxing with friends. My day started with a sumptuous breakfast that was followed by another round of sleep, wake up and meet friends, have lunch followed by an afternoon siesta and then again hang out with friends until dinner. My freshman American friend Hal was shocked. It was so unlike an American student’s summer break, often used to earn sufficiently for term-time pocket money. I was glad India was not fast paced then.

A few years ago, one of the students from Williams contacted me during her summer break, asking to meet me. When I met her at home, I learned she was already doing an internship with a leading consulting firm. What a shock! Americanization of the Indian summer break was at my doorstep.

My family has not remained untouched by this new-spreading norm and last summer I had to see my daughter spending her entire vacation as an intern in Gurgaon. It has become a norm in the current times. However, the internship is an added bonus on her resume while she sends off her cover letters. Proof of success is yet to be confirmed.

internship-pic

As my son applies to study Engineering at foreign universities, he was told that many successful applicants at leading programs demonstrate their interest through internships they have held. Does that mean that 16 year olds are interning at General Electric (GE) now? If not GE, well somebody must be accepting them. What starts as a favor to a friend’s son, will well soon enough open the floodgates for survival of the fittest.

This trend of organized child labor or internships is certainly advantageous and helps the youth in making informed choices based on firsthand experience. But will they not be sacrificing their youth experience, is one concern that still rings my thoughts…

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I read recently in the Economic Times that Unilever finds innovations that have marked its growth in India, are now more relevant than ever, in recession hit parts of the world such as Europe.

As the Unilever CEO, Paul Polman, has rightly mentioned, “Learnings” from India such as lower price points for products in smaller packages or sachets, is gaining acceptance in the European market, poverty has returned as the local economies continue to reel under recession.”

It is transferability of such learnings that makes knowledge of international business practices so valuable. I remember my time in Toyota where we applied our learnings from implementation of kaizen principles for just-in-time (JIT) logistics across countries. Thus, Oman could benefit from learnings from Poland, and in turn teach a lesson (or two) to Australia and South Africa.

According to the newspaper, Paulman, also highlighted the success of the affordable water purifying product, Pureit.The product entirely developed in India, is now being sold by Unilever in at least 15 other countries, where according to him, it has become a popular brand. “

This reminded me of the concept of “reverse innovation” that was popularized by GE. Why is it called reverse? Previously, innovation occurred in developed markets, and products were sold across the globe. However, those markets are now saturated, or even in decline as Unilever is discovering. Undiscovered markets lie in populous emerging markets like, China, India and Indonesia. Thus, there is profit to be made by innovating for these markets. And, what sells here can also be sold in the fast-becoming-poor markets of the developed world. Learning frugal engineering has become so important that Carlos Ghosn of Nissan Renault invested USD 1 billion for starting a greenfield factory in India.

I suspect, eventually, as this becomes the mainstream model, the “reverse” will then be dropped from the nomenclature.

Most of my writings to date have recommended a course of action on a general basis that challenges the status quo of International business in the current scenario. However, earlier today, when I read The Economist’s recent article on Hitachi, I was gladdened to see that President Hiroaki Nakanishi is following my prescriptions, points that I made repeatedly to my then boss Mr. Yasunori Taga, the Chief Executive for Asia (CEA).

When I had joined Hitachi India, the sub-continent subsidiary was controlled by Hitachi Asia in Singapore. Despite my strong desire to relocate to Singapore, I remember telling Mr. Taga (against my personal interest) that it would be difficult to control an emerging economy like India from a developed city-state Singapore. President Nakanishi, finally upgraded Hitachi India to a regional Head Office in 2011.

I also agree with Nakanishi’s reported goal of attracting the best talent and allowing them the freedom to move around across business units. Other MNCs would do well to adopt this strategy. I often see foreign companies preferring to do things “their original global way”.  It takes some longer than others but eventually they have to adapt to local ways. It is either adapt or accept losses.

What can be true about human talent is also true about products. International business giant McDonald’s is good at this. It adopted vegetarian menu for India right from the start, and additionally was quick to give up the mutton offerings, substituting them by the more popular chicken. It has taken longer for America’s Kentucky Fried Chicken, or more lovingly known as KFC, to abandon its “original recipe”; they now serve only “Indianized” versions: spicy chicken or fiery grill chicken. The choice is between “hot” and “very hot”.  Hitachi’s appliances business unit has its own development center outside Ahmedabad, in the rapidly industrializing state of Gujarat. GE, Denso, Bosch etc. are leading global companies that are going native and understanding India better.

As European, especially German, companies look to Asia to grow business they would do well to heed these points about local talent and local products. Remember Brand India is noted for affordable products and superior global managers. Hitachi took over 50 years to learn such important lessons for doing business in India. Fortunately for European followers, they have a visible short-cut.

I came across an article on the website of Times of India, “What’s on the to-do list of expat CEOs in India”, which discussed the Dos and Don’ts of expatriate CEOs in the Indian market. The article made an interesting read and also initiated an argument between my Indian self and my global self on the abilities of Indian managers in the global scenario and the need of an expat CEO, especially considering the recent Adidas/ Reebok fracas. Being a part of the current international business environment, it really intrigued my Indian self to the extent of questioning my Global self on these stances taken by MNCs driving on the road to success in the Indian market.

The conversation begins:

Indian Ashok: Does the Indian market really require an expat head?

Global Ashok: India as a huge market base comes with its own pros and cons. It is a part of the new growing world and a marketing strategy that has worked with others countries, might not work here. Every company/MNC planning to enter the Indian realms has to come up with a marketing strategy and road map exclusive for this country. Hiring an expat CEO or an Indian manager is a part of the same.

Indian Ashok: Is Maruti’s decision as an evolved company, to replace its Indian MD with a senior Japanese professional representative of a newer marketing strategy?

Global Ashok: Maruti/MUL replaced its Indian MD, Jagdish Khattar, by Japanese Shinzo Nakanishi. The step, it seems, was initiated to ensure that the company has a better leverage at its Japanese Head Office. Khattar played his role to establish the trust factor in the Indian audiences/customers and replacing him with a Japanese member was required for that cross-border coordination. In a masterstroke, Maruti brought back R C Bhargava as Chairman to retain communication with the Indian interface. Maruti is a perfect example of a company evolving leadership strategy as it matures in the marketplace.

Indian Ashok: In that case, why when there are companies with two or more heads representing the same section – one of them always seems to be an expatriate?

Global Ashok: Depending on the stage of its evolution and based on the strategy to meet business targets, a company might want to hire an expat Manager with more global experience and try to groom their local team to adapt to that corporate DNA. Many Japanese companies in India, from Toyota to Honda to Hitachi, have an expat head because the Indian managers have still not developed that global corporate DNA. However, some Japanese companies like the logistics leader Nittsu decided as a matter of strategy to hire an Indian to lead the company. Senior Japanese were appointed as segundos to ensure that the local flavour remained in harmony with the global.An expat head may well be removed when the MNC gets more comfortable and evolved in the new market.

When business was not moving fast enough due to Head Office resistance, GE brought in a senior person from USA and stationed him in India. The head was entrusted with the agenda of influencing Head Office business units to enter the market.

The above examples demonstrate that bringing an expat is purely dependent on what the company needs to do to grow in the market.

Indian Ashok: Do you really believe there is a trust factor involved in hiring expatriates for any company entering a new market (especially Indian market)?

Global Ashok: Keeping expat heads does also bring in the trust factor. Any company might want to start their work with people they already know and whose abilities they have seen over a period of time. Each company comes with a unique work culture and expat heads seem to be well aware of that. An expat CEO might align the subsidiary company in a better way to its parent.

Indian Ashok: Does keeping an international head bring in the idea of a better watch or supervision for the parent HQ?

Global Ashok: Yes, that’s another good aspect of keeping expat heads – it offers better supervision. An expat head might give out a signal of the subsidiary company to be under close supervision of its parent. There would be regular sharing of reports in a way that the parent would have a better understanding of the overall scenario. Of course this is not necessary, as the Nittsu example reveals.

Indian Ashok: Okay, I understand now that “Leadership is not about nationality but about business targets”. It is more about the company, its strategy and growth plans rather than an individual leader or their nationality. Hiring an expat CEO or an Indian head can only be decided as per the requirements of an organization and their level of evolution. And, now I think I can sleep with a clear mind.

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