The Indian CEO

The Indian CEO A portrait of excellence9 | 2007 There is no doubting the economic potential of India. But can its leaders deliver on the country’s promise? And what can leaders around the world learn from India’s best? >>

ContentsWhat can we learn from India’s CEOs 1The research 2The market challenge 3Competencies for success 4Energizing the team 6Managing the environment 7Inner strength 8Areas for development for Indian business leaders 9

00 The Indian CEO: a portrait of excellence “ ...to succeed in India, international executives have to view the business landscape from an Indian perspective, recognizing that business is seen as a social good. ”©2007 Hay Group. All rights reserved

1What can we learn from India’s CEOs?A Hay Group/Bharat Petroleum study reveals thatoutstanding Indian CEOs have a powerful set of specificcompetencies. These strengths lie in the areas of sociallyresponsible business acumen, team leadership, innerstrength and the ability to manage a complex web ofexternal stakeholders.There is no doubting the economic Indian CEOs – the ability to ‘tunepotential of India. But can its in’ to others – is markedly lower inleaders deliver on the country’s outstanding Indian CEOs than inpromise? And what can leaders other international leaders. This has toaround the world learn from India’s be strengthened for Indian companiesbest? Gained through dealing with to sustain success on the global stage.bureaucracy which remains a dragon Indian business, these leadership So to succeed in India, internationalcompetencies will become increasingly executives have to view the businessimportant. This is becuase around landscape from an Indian perspective,the world organizations are grappling recognizing that business is seen aswith the challenges of globalization a social good. They can also leverageand social as well as environmental the undeniable and unique skill sets ofpressures. Indian leaders. In turn Indian CEOs must recognize specific areas forOur research also reveals that the development.‘interpersonal understanding’ of

2 00 The Indian CEO: a portrait of excellence The research Aiming to determine the competencies needed to be a successful CEO in India, the 18-month Hay Group/ Bharat Petroleum project began in August 2002 under the aegis of India’s Public Enterprises Selection Board. It centered on in- depth interviews with 30 outstanding Indian CEOs, covering accounts of recent critical business situations. Hay Group has a considerable research heritage, with experience dating back decades. We have collected over 5.5 million leadership survey responses to assess 516,000 individuals, including 46,000 executives, from 4,675 organizations. Using surveys, panel discussions and in-depth behavior event interviews, we have built over 1,100 competency models for our clients. Our managerial styles and organizational climate surveys are available in 28 languages. Through a process of in-depth behavioral event interviews the Hay Group/ Bharat Petroleum study compared Indian public and private-sector CEOs with each other as well as with a sample of European, American and Asia Pacific leaders from top companies. It also gathered insights from over 100 thought leaders from government, the media and academia, using panel discussions and meetings.©2007 Hay Group. All rights reserved

3 The market challenge One of the fastest growing economies With its educated, hard-workingTake IBM. Its 54,000 in the world, India is indisputably population and entrepreneurial spirit,employees in India will an engine for growth for many India is an exciting and thriving placesoon outnumber the global organizations. Whether they to do business. However, CEOs often are top manufacturing companies spend a disproportionate amountworkforce in its home or providers of outsourced business of time navigating through thecountry, the USA. processes, huge numbers of regulatory maze, coming up against corporations are investing in the the government, bureaucrats and country, transferring or building regulators, thus taking their eyes operations, establishing service off the market when they should be centres and finding new partners to managing their organisations. merge with or acquire. New research conducted jointly by Take IBM. Its 54,000 employees Hay Group and Bharat Petroleum, in India will soon outnumber the which has recently been published as workforce in its home country, the the book ‘The Indian CEO: a portrait USA. What’s more, major Indian of excellence’, addresses this last conglomerates such as the Tata question. In this paper we consider Group and the Aditya Birla Group the issues around Indian business are making major acquisitive plays leaders, looking at the challenges that are constantly extending the their specific style of leadership country’s corporate reach. presents as well as its characteristics for success. It concludes by suggesting So is India living up to its promise? how those looking to succeed in To what extent is its success – or India can manage and marshal their otherwise – dependent on the nature organization and leadership for and skill of its business leaders? maximum gain.

4 00 The Indian CEO: a portrait of excellence The Indian CEO: competencies for success The Hay Group/Bharat Petroleum There are two or three discrete study shows that the best Indian competencies within each of these leaders execute effectively in very areas; and while all leaders showed challenging situations by using a strength in each area, they did particular set of competencies that not always display every single clearly work in the Indian business competency. environment. Whilst not exclusive to Indian business leaders these skills However Indian leaders do show are the core strengths of Indian a striking, single-minded focus on leadership. growth, not just in relation to their own company but to the Indian Understanding and learning from economy as a whole. Their willingness these competencies, in the context to take risks is founded on their of the specific issues faced by Indian concern for the development of their business leaders, can lead us to a country. Compared with peers in model for future success. other countries, Indian leaders show an unusually persistent and pervasive The best Indian CEOs have concern for their nation. As a result competencies in four general areas: they focus strongly on goods and services that benefit everyone, such • socially responsible business as utilities; or that enhance India’s excellence global status – such as high-tech projects. • energizing the team Furthermore, India’s CEOs • managing the environment demonstrate extraordinary energy and persistence in overcoming the • inner strength challenges they face. CEOs must be recognized in terms of whether they are creating value as opposed to extracting value from the business©2007 Hay Group. All rights reserved

5 This is an area of strength frequently These competencies are most effective displayed by the Indian CEO. It in turnaround and startup situations, manifests itself in business acumen where ‘adaptive thinking’ is key. and the ability to make hard decisions However if the leader focuses too about strategy, execution and resource much on the personal aspects of this allocation. It is the founding skill competency set, especially during for Indian CEOs and contains three times of incremental improvement, specific competencies: they may risk alienating their team. This is beacuse they may not be • adaptive thinking: strategic spending the required amount of time insight into the business and coaching their teams and creating adapting innovative methods conditions for team effectiveness. and technology to the Indian market What our study revealed is that this skill set is least effective in dealing • entrepreneurial drive: unleashing with government, where business the entrepreneurial spirit to find thinking is best set aside. Overall, new growth however, when compared with Hay Group databases of the best • excellence in execution: the international CEOs, outstanding ability to bridge the gap between Indian leaders show higher levels of the blueprint and the results. adaptive thinking and entrepreneurial drive, but a lower level of excellence in execution. How many CEOs showed generic competencies related to leading teams? n Best Indian n Best international n Typical international90%80%70%60%50%40%30%20%10%0% Interpersonal understanding Team facilitation

6 00 The Indian CEO: a portrait of excellence Energizing the team The difference between a good leader In our study, successful Indian leaders and a great one is that the latter showed an unusually consistent not only realizes the importance of and logical pattern of leadership directing the team’s current activities, throughout the change process. but also of building their capabilities for the future. Indian CEOs The ‘empowerment’ competency demonstrate a clear understanding of was also used by certain CEOs to this. The specific skills they display in help organizations deal with the this area include: issue of ‘stakeholder management’, which we address later in this paper. • team leadership: inspiring and In such instances, leaders gave protecting the team to drive authority to teams of experts and performance then protected them from outside influences. Overall, Indian leaders • driving change: personal presented their change agenda in a leadership of the organization to straightforward manner with much embed sustainable change less reliance on personal charisma than western leaders. • empowerment with accountability: the ability to However Indian CEOs exhibited delegate so that others can act less evidence of interpersonal with accountability. understanding and team facilitation than their western counterparts. This focus on leadership is of Enhancing these competencies could particular importance in change strengthen their effectiveness. situations. CEOs should make it visible to others (walk the talk) that meritocracy is given due respect… only then would people see the relevance of human resource systems such as appraisal, training etc.©2007 Hay Group. All rights reserved

Managing the environment With both private and public ‘boundary management’ – the time-This study shows sectors dealing with a complex consuming concerns of stakeholderthat opacity and web of external stakeholders, the groups which we explain below (onunpredictability are ability to effectively manage outside page 9.) However such competencies relationships is crucial to success in could also focus on other challengesmajor barriers to entry Indian business. CEOs demonstrated to positive effect.and a hurdle for growth three competencies within this areaof our enterprises that help them to deal with the Indian leaders network in a bold, uniquely tough problem they face: targeted way which is focusedRasthrapati BhavanIndian Prime Minister effectively on tackling the specific • networking: reaching out to challenges that they and their a wide network for ideas and organizations face. What’s more, problem-solving they network without the quasi- social motives of their international • organizational awareness: counterparts. Their organizational understanding how things get awareness skills are focused mainly decided and done in a particular on coping with external politics, organization but could be as effective if they were deployed more within their • stakeholder influence: the ability organizations. Moreover, in India to persuade specific stakeholders. stakeholder influence focuses mainly on influencing government. Overall Coming into play primarily when Indian leaders’ are excellent at dealing with the government and managing the environment, but such the media, these skills are often strength is often dedicated to dealing needed to protect the enterprise from with the country’s tough ‘boundary the difficulties and distractions of management’ issues.

8 00 The Indian CEO: a portrait of excellence Inner strength Inner strength is the leader’s moral This quality is crucial in establishing compass, guiding their most difficult a leader’s personal credibility and is decisions. Within this area the two underpinned by both religious and specific competencies are: non-religious beliefs. Inner strength is especially important in startup • executive maturity: the emotional and turnaround situations. Indian wisdom to embody and model the leaders show a striking level of focus organization’s values on the greater good of the country and its population as a motivation for • transcending self: the courageous difficult or risky decisions. Overall, dedication to ‘super-ordinate’ they excel in this area compared to goals: ‘doing what is right for leaders in other countries and are India’ unique both in the intensity of this quality and its national focus. How many CEOs showed inner strength competencies n Best Indian n Best international n Typical international 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Networking vs Networking vs Organizational awareness Stakeholder influence information seeking relationship building©2007 Hay Group. All rights reserved

Areas for development for Indian business leaders Indian business leaders consistently Stakeholder or boundaryThe CEO should build display strengths of socially managementpassion around the goals responsible business excellence,of the organization and energizing the team, managing the Our research highlighted the environment and inner strength. fact that Indian leaders spend abond the team through disproportionate amount of theirsustaining values. However the Hay Group/Bharat time coping with regulation and Petroleum research uncovered some governance as well as dealing with leadership competences that are less government, quasi-government in evidence than amongst Western organizations and NGOs. Whilst business leaders. If developed by public sector organizations suffer Indian CEOs, these skills would this more than those in the private benefit their organizations. sector, even private-sector companies experience significantly more Two factors were identified as ‘stakeholder management’ issues to inhibiting the ability of CEOs to tackle compared with their overseas execute. The first could be termed peers. either ‘stakeholder’ or ‘boundary’ management. The second is By way of an example, not one of interpersonal understanding. equivalent samples of international and of Chinese CEOs had anything At a time when three of the world’s to say about difficulties with most successful companies in the government and regulators; whereas industrial, communications and 50 per cent of participants in the consumer goods sectors are led by India study, without prompting, told Indians: Arcelor Mittal by L.N. detailed stories of their problems. Mittal; Vodafone by Arun Sarin and Even more mentioned it as an issue. PepsiCo by Indra Nooyi, this might appear to be a paradox. Leaders are being held back by the sheer number and intricacy of However the academics, CEOs, governmental constraints, the lack of public officials and media clarity, timeliness and predictability professionals we studied were almost in getting permission or license to do unanimous in their view that anything, and a lack of consistency Indian leaders were characterized by in enforcing existing laws. Dr. ‘great thinking but little execution’. Manmohan Singh, prime minister Their views reflect the experience of India, made a point of addressing of organizations doing business in this concern in his speech on July 18, India that find their investments take 2007. longer than expected to pay back.

10 00 The Indian CEO: a portrait of excellence The first factor inhibiting execution Seen as a foundational competency may be external and beyond their for the contemporary business immediate control. However the leader, interpersonal understanding second comes from within and could is consistently displayed in 75 per be addressed by the individual and cent of behavioural interviews with the organization. ‘outstanding’ CEOs worldwide. Yet only 12 per cent of outstanding Interpersonal understanding Indian business leaders demonstrated such an ability to ‘tune in’, The social and business context in highlighting an area in which there is India sets a great deal of store by clear room for improvement. IQ. The Indian system is set up to deliver this: witness, for example, Whilst a core group of Indian the rigorous entry standards for IITs leaders has been exceptionally and IIMs (Institutes of Technology successful, the study suggests that as Management). organizations become more complex and the competitive landscape more As a result, outstanding Indian threatening, Indian leaders will CEOs excel in analytic and strategic need to balance their formidable thinking. However, Indian leaders’ intellectual and entrepreneurial skills excellence in intelligence and with the ability to accomplish results innovation is often matched by through others. shortcomings in ‘tuning in’ to others.©2007 Hay Group. All rights reserved

“ Outstanding Indian CEOs excel in analytic ” and strategic thinking.

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The Indian CEO

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