Lessons in Leadership from Indian Industry

In Leadership Shastra, Mr. Pradeep Chakravarthy examines how developing a comprehension of our past could be the key to understanding our own selves, our actions, motivations and of those around us. Mr S L Narayanan, Group Chief Financial Officer, Sun Group, led the discussion with Mr Pradeep Chakravarthy, Author; Mr R Seshasayee, Vice Chairman, Hinduja Group and Mr Venky Rajgopal, Managing Director, Indian Terrain Fashions Ltd.

S L Narayanan (SLN): You are from a family of very successful businessmen. Knowing the social milieu today, it is normal for boys from business families to get into either engineering or finance. You have chosen a very different path. What really were the motivations and how did this book on Leadership Shastra germinate?

Pradeep: Two things. One, I studied in a school called ‘The School’ run by Krishnamurti Foundation of India. In retrospect, I find that we were taught to make connections between things which people normally would not make connections. I have been able to connect leadership and history reasonably well. The second reason: my dad never had to run a company. It meant I had a lot more freedom. My first understanding of nuances in organizational culture came when I did my two years of internship at four different TVS companies, which was a remarkable blessing. In that two years of six months each, in four different companies, I understood that within the larger TVS culture, there were many differences as well. All of those experiences served me well, in putting two very seemingly disparate things together and putting a book out of it. I have been speaking about the applicability of history to management, self-awareness and leadership for about a decade now. I hear two answers: One, they say, “I hated history in school. It was irrelevant and boring. Why do I need to know when a king died and when he lived?” Two, the other group of people said, “I loved history in school. The teacher made it interesting with the stories.” So it seemed that the story telling ability of the teacher mattered more than history itself.

So I suddenly saw history was very similar and very different. It goes back to Yudhishtra’s quote, “The most wonderful thing in the world is that everyday people are dying, but the people who live think that’s not going to happen to them.”

Similar, yet different
My understanding of history was very different. I had the privilege of spending summer vacations in Tirunelveli, my mother’s ancestral house and I was the sixth generation to live in that. It was about 10,000 square feet. It still stands and the upstairs alone was about 5,000 square feet. It was filled with junk that belonged to six generations before me and I very vividly remember a math notebook that was from about 1900, where some ancestor of mine in an ink pen had scribbled about how he or she hated math and had drawn a little doodle. Such visuals are powerful, aren’t they? It showed me that here was someone who did not like math like I did; also, the style of the writing, the doodle, the text, the font and the paper were very different from mine. So I suddenly saw history was very similar and very different. It goes back to Yudhishtra’s quote, “The most wonderful thing in the world is that everyday people are dying, but the people who live think that’s not going to happen to them.”

The Deccan Sultans and Unity of Command
SLN: The chapter on the Deccan Sultanates talks about five kings who were constantly at loggerheads with each other and, therefore, they could never vanquish the Vijayanagar empire under Krishna Deva Raya and his successor Rama Raya. Then one fine morning, they sank their differences, presented a united front, went with a vengeance and ran over their neighbour leaving the once magnificent city of Hampi in ruins. With that as the context, I want Mr Seshsayee with his iconic experience in Unilever and Ashok Leyland, to throw some light on how simple things like unity of command or a constancy of purpose play a key role in organizational effect.

Seshasayee: It is very critical to have unity of purpose or unity of command and consistency of purpose. That’s fundamental to not merely success, but even survival. The Indian corporate history is replete with instances of family groups within a company fighting with each other or looking at cross purposes, creating a lot of friction and eventually impacting the company and its very survival. With the exception of a few, like the TVS group, large businesses which were started by families across the world have found that it’s very difficult to take them forward successfully beyond the fourth or fifth generation. A common purpose is important but having said that, I want to make some provocative observations. It is not about just the unity people or groups of people working for a common purpose but the need for alignment of different aspects of running a business—the strategy, structure, people and processes—all have to come together for a common purpose in a seamless fashion.

If you find that the structure is not appropriate to the strategy or the processes are not in place, sooner or later, that business will get into trouble. But it is not necessary that all of them must have equal importance. Sometimes strategy becomes extremely critical and even a little bit of weaknesses or lapses in the processes or the structure could be more than made good by a wonderful strategy. I have seen a telecom company that was extremely successful as it captured the imagination of the market. Their back office was in a mess for quite some years. They made aggressive moves on strategy and then managed to get the back office in shape.

In Tamil literature, there is a story about poetess Avaiyar and King Athiyaman, who was the chieftain of a small fiefdom. She was very friendly with the king and admired his winning the battles and the way he was expanding his kingdom and sang richly in his praise. His rival king who became jealous of the way that Avaiyar praised his counterpart, asked the poetess to visit his fiefdom as well. She finally relented. The rival chieftain took her around his palace and armoury. Avaiyar saw all that, came back and said, “Everything is wonderful. The weapons are in the right places and polished very well. But Athiyaman’s armoury is completely in a shambles, with weapons strewn all over the place and not organized as well as you’ve done. But, you know, he wins wars. His weapons are constantly in use.”

If you find that the structure is not appropriate to the strategy or the processes are not in place, sooner or later, that business will get into trouble. ~ Seshasayee

This is a very important lesson for leaders to focus on strategy, much more than spending time in housekeeping. There was a company that I greatly revered. In the 90s, I took my senior management for a visit to this company because it is one of the champions of TPM. I wanted my colleagues to learn from this company as to how they did that. After spending almost day, we came back and said, ‘Excellent.

This is really the way that we should go about.’ However, that company ran into trouble pretty soon because the leadership was too focused on the processes, somewhat like Motorola, which pioneered the concept of Six Sigma. This is not to mean that the processes are unimportant. They are very critical, but sometimes strategy is more important than structures; sometimes structures and people are more important than processes; and sometimes, the process becomes very critical. You need to look at the context in that moment and decide on the most important thing to do.

You have to bring to the table everything that you have and it is not just courage and blind optimism. It is the determination to build something which will last. ~ Venky

SLN: Let me share my own experience from my days in HCL Technologies Limited. HCL Technologies was a listed company, which was mostly into outsourced R&D services. There was another company called HCL Infosystems, which is their hardware company. There was a joint venture with Perot Systems of Dallas, which is called HCL Perot systems. The three companies had HCL prefix and all three competed in the market.

As long as the Y2K boom was there, there was enough pie for every company. So it really didn’t bother. Post-9/11, when the market went for a toss, there was a lot of negative feedback from prospective customers. The ERP business of HCL Infosystems, which is an island of software business in a largely hardware company, was butting heads with the ERP business of HCL Tech and which ran into trouble with another team from HCL Perot systems. So Mr Shiv Nadar decided to demerge the ERP business of HCL Info systems and merged it with HCL Tech; HCL Infosystems became a pure play hardware company after that. He divested the 50% stake that HCL Tech had in HCL Perot Systems and after that, they never really looked back, as there was a unified offering. So, at a time when the market was big, there was some creative tension inside the HCL organisation where everybody was competing with each other and then came a day, when the unified front made more sense and the company restructured pretty quickly.

Malik Ambar and Indian Terrain
SLN: Venky, you had a remarkable career starting off as an IPS officer, then as an entrepreneur. I just couldn’t help draw a parallel with the life of Malik Ambar, which has been narrated beautifully by Pradeep. Malik Ambar is a slave from somewhere in Africa and landed in Arabia. He was traded and some other former slave bought him. Finally, he wins his release. He lands up in India and with his charisma, builds an army of mercenaries. He was extremely effective as a local warlord, supplementing the aggression of rulers and kings who hired him. I’m not saying that you’re a mercenary! (laughs) But somewhere I saw that you started your career as an IPS officer and then morphed into an entrepreneur and a hugely successful one at that. Can you share some of your experiences?

Venky: Malik Ambar is a character that inspires tremendous curiosity. How did a black man—a slave from Ethiopia come to India as a slave, remained a slave for 20 years of his life and then break free to become a leader and ruler? Given the circumstances of that time, stitching the resources to lead is a remarkable story. Perhaps, the difference between him and me, on a lighter note is that he started as a slave and all that lay ahead of him was his ambition, desire and determination to become what he eventually became. In my case, at least, that’s how my parents thought, I started as a prince—a fourth-generation police officer and ended up as a slave—an entrepreneur!

We are family of civil servants, typical Delhi University students where every other guy along with me wanted to join the IAS, IPS and IFS, that was the creme de la creme as we were told in the academy at that time. To give that up after 11 years was like choosing to become a slave!

Adversity is a word used in every in every context, whether it is in battle or life. How do you really overcome it and over a period of time, consistently establish a situation where that adversity no longer is at your doorstep? That transformation needs a level of perseverance, determination and courage, which sees you through that period. Let me tell you a little story which best enumerates this.

Celebrity Fashion was a minuscule apparel manufacturing set up in the year 1990. Twelve months into its existence, the company was nearly extinguished. I had no money and no background. It clearly was a bad idea. At that point, a friend of mine, who later went on to become the Indian ambassador to the US and who knew about my quitting the IPS job and now going bankrupt as an entrepreneur, asked me, “Why don’t you try Moscow? Russia is a destination to get some business.”

It’s a long story and eventually I managed to reach Moscow to participate in an exhibition for apparel export to Russia. The export was completely cartelised. There were only six guys from India who managed to control that entire thousand—odd crores of rupees trade of garment export to Russia. My reaching Moscow itself was absolutely intolerable for them because I presented a threat.

The day I reached Moscow—my first travel overseas—it was around minus 20 degrees. The Customs there were told to vandalize my samples as if they were checking it. They gave me an accommodation to stay and I had no idea about it and ended up 40 kilometres outside Moscow City. When I finally found my way to the venue where the exhibition was to take place, the organizers looked at my invitation and said, “Sorry we don’t have your name here. So we can’t give you accommodation or a place to put up your products in the exhibition.”

The export was completely cartelised. There were only six guys from India who managed to control that entire thousand—odd crores of rupees trade of garment export to Russia. My reaching Moscow itself was absolutely intolerable for them because I presented a threat. ~ Venky

Just imagine! It was one year after having quit the IPS. I had two kids and was on the verge of bankruptcy. This was my last attempt and here there was this cartel which prevented me from accomplishing whatever I had gone there to do. This is where perhaps my background, the training of the Indian Police Service helped me.

At that time, I did not feel fear. I felt extreme anger at what these people were doing. And I said, ‘Listen, I’m an Indian citizen and I have to be protected.’ I marched to the residence of the Indian Ambassador. He was a dramatic personality in the Indian Foreign Service then. I somehow persuaded him to see me. And I vividly remember that moment. It was an afternoon in Moscow. I was unbathed for three days and I had no place to stay. I told him the story and beseeched him saying, “If you are an ambassador and protecting us, you have to ensure that I am allowed to present what I came here for.” Now it could have gone anyway. I remember he was smoking a pipe. He put it down and said, “If you can go and have a shave and wear a suit, come to the Embassy for dinner.”

That night, I had dinner with him where he introduced me to the Russian Trade Commissioner to India and that was all that was needed in the next 24 hours. I got a place to display. The Ambassador himself accompanied the Trade Commissioner to visit my minuscule stall and destiny worked. I managed to find a small foothold in business in Russia.

I always tell my colleagues, “Never, ever fail to try because you think this is not a solution or it is beyond you.” That moment which started off as perhaps the most adverse circumstance, ended up being my first win, so to speak like Malik Ambar’s first win. It was my first bridgehead to learn how to transform myself from being a civil servant into an entrepreneur.

What Malik Ambar story shows is that human spirit can overcome or overwhelm you. Once you’ve embarked on a journey, you can be very sure that adversity is your first companion. You have to bring to the table everything that you have and it is not just courage and blind optimism. It is the determination to build something which will last.

Aurangazeb and Unwieldy Companies
SLN: The Mughal empire under Aurangazeb extended from Kabul on the west to Chittagong in the east and from Kashmir to Cauvery. But despite the massive land mass under his control, things became too unwieldy to control from Delhi and a lot of local satraps were a law unto themselves. Over time things, started unravelling. Many iconic corporations have bit the dust—from Polaroid and Kodak to more recently Enron, Lehman Brothers and in our own country, there was the time when the Dalmia group was big and more recently, the Jaypee Group, the Anil Ambani Group and Bhushan Steel. There are several stories of large companies going down the tube.

Governance is also a very vital issue and I don’t hope to see any company survive with poor governance practices for long. Not having the right values in the company and a leader who does not believe in and act based on those values can take the company to a failure. ~ Seshasayee

Seshasayee: While success is somewhat boringly uniform, failures are startlingly different. Each has a different cause. If your business is out of context, not moving in the same direction as that of the customers, what you have built will collapse and that is one big reason why businesses fail. You have to constantly be ahead of your time and align with market changes, technology changes, etc.

Unwieldy companies can become dysfunctional. When I joined Ashok Leland, the British Leyland was unwieldy and faced lots of labour problems. They had 143 companies then. Every year, they had to do wage settlements with the Unions for about 70 companies. It became a mess and they brought a South African CEO to head it.

He had a single objective of making British Leyland completely independent of support from the government and attracting capital from the competitive market. Prior to that, the vision statement ran into a few pages. He wrote a book, ‘Back from the Brink.’

Governance is also a very vital issue and I don’t hope to see any company survive with poor governance practices for long. Not having the right values in the company and a leader who does not believe in and act based on those values can take the company to a failure.

SLN: How does Indian Terrain, the underdog compete with the giants in the market?
Venky: The most visible brand of Indian history is Chhatrapati Shivaji. His story resonated with me, especially the manner in which he took the big bullies on. He wanted Swaraj and he is a shining example of what it means to be a leader. I wanted my brand to be Indian national in character. People wondered what our USP was. Getting retail space was a challenge. Salience was very important.

Times of India started trading advertising space for company equity and I jumped at their proposal, much against many people’s advice. It was the best thing I did and Times gave me great visibility for two years in all their publications. The blitz we created in those two years helped establish Indian Terrain, in a small manner, though. We were able to make a marker!

All our competitors are western inspired. Though we had our name as Indian Terrain, our stores and models were all western. In 2004 or 2005, when I went to a fair in Italy, I was introduced to the iconic Italian brand owner Mr Brunello Cucinelli who runs a billion dollar garment business.

He made me realise that Indian Terrain must be Indian in character to connect with Indian customers. From then on, we are proud of being a Chennai company and connecting with Indian ethos. That was a single biggest differentiator for us that made us survive and made our customers like us.