indian management

E X C H A N G E

The India Way: Lessons for the U.S.by Peter Cappelli, Harbir Singh, Jitendra Singh, and Michael Useem

Executive OverviewWe describe a distinctive approach to business associated with the major corporations in India and contrastit with practices in the United States. Specifically, the Indian approach eschews the explicit pursuit ofshareholder value in favor of goals associated with a social mission. These companies make extraordinaryinvestments in their employees and empower them in decision making. These practices combine with adistinctively Indian approach to problem solving to create a competitive advantage that has led tospectacular business growth, not just within India but in international markets as well. A particularlyimportant lesson for the United States is that the major Indian companies are not succeeding despite thefact that they are pursuing a social mission and investing in their employees. They are succeeding preciselybecause they do so.

The contemporary U.S. model for business is introuble. That model asserts that maximizingshareholder value is the primary goal of busi-

ness—indeed, some would say the only goal ofcontemporary business. This model is fairly re-cent, however. Until the early 1980s, the domi-nant model in the United States was the “stake-holder” model, which asserts that business hasmany groups with an interest or stake in its oper-ations, and that the interests of these differentstakeholders have to be balanced. This model waspushed aside by theoretical arguments emanatingfrom the field of finance, which then played out inthe sphere of public policy beginning in the 1980s(Epstein, 2005; Williamson, 1993).

With respect to management practices, we be-lieve there are three additional elements at theheart of the contemporary U.S. model that aresignificantly different than practices elsewhere.The first concerns business strategy. The U.S.approach focuses attention outside the firm in thesearch for opportunities and, to a lesser extent, ina related search for competencies through mergersand acquisitions and joint ventures. The secondelement focuses on restructuring: When marketsor strategies change, U.S. companies lay off em-ployees to cut costs and then hire new ones toredirect the business toward new markets or tomeet new skill needs. The ability to restructure isseen as a key to competitiveness. Finally, in thismodel efforts to harness the motivation and abil-ities of employees tend to focus mainly at the top,with financial incentives (via equity) offered to

This article is based on ideas put forth by the authors in their recentbook, The India Way: How India’s Top Business Leaders Are RevolutionizingManagement, Harvard Business School Publishing, 2010.

* Peter Cappelli ([email protected]) is George W. Taylor Professor of Management and Director of the Center for HumanResources at The Wharton School of the University of Pennsylvania.Harbir Singh ([email protected]) is the Mack Professor, Professor of Management, Vice Dean for Global Initiatives, andCo-Director of the Mack Center for Technological Innovation at The Wharton School of the University of Pennsylvania.Jitendra Singh ([email protected]) is Saul P. Steinberg Professor of Management at The Wharton School of the University ofPennsylvania.Mike Useem ([email protected]) is the William and Jacalyn Egan Professor, Professor of Management, and Director of theCenter for Leadership and Change Management at The Wharton School of the University of Pennsylvania.

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executives and top managers. They, in turn, figureout how to motivate the rest of the workforce; thethreat of job loss is typically an important part ofthe mix.

There are three recent and important chal-lenges to these aspects of the U.S. model. The firstis that it has not worked well for employees,perhaps not surprisingly given that employees areno longer seen as explicit stakeholders whose in-terests have to be balanced against those of share-holders. Except for a brief period of very tightlabor markets at the end of the 1990s, employ-ment outcomes have advanced little in a genera-tion. Compared to previous decades, jobs aremuch less secure, wage growth is markedly lower,and at least by some measures, employee attitudestoward their jobs and their employers are worse.Specifically, evidence suggests that there hasbeen a long-term trend toward greater insecu-rity across most occupations and groups (Kalle-berg, in press), that even before the 2008 reces-sion outcomes for the “middle class” actuallydeclined slightly during the economic expan-sion from 2001 through 2007 (Mishel, Bern-stein, & Shierholz, 2009), and that outcomesand conditions worsened markedly for those atthe bottom of the income and occupationaldistribution (Bertrand, Mehta, & Mullainathan,2008). While interpreting longitudinal studiesof employee attitudes is at best difficult, thosethat exist show a downward trend (Franco, Gib-bons, & Barrington, 2010).

Second, U.S. corporate governance has beenplagued in recent years by a sharp increase inmalfeasance. There has been an unending (as ofthis date) stream of corporate financial scandalsthat began in the mid-1990s in which we sawexecutives manipulating finances to improveshare prices and pad their own pockets. The mostprominent of these were on such a monumentalscale that they literally brought down compa-nies—Enron, WorldCom, Adelphia, and GlobalCrossing (Markham, 2006). The list of compa-nies where financial malfeasance was bad butnot quite bad enough to force the failure of thecompany is much longer: Xerox, Sunbeam,Waste Management, Tyco, HealthSouth, andmany more. An objective marker for financial

irregularities is earnings restatements, seriousaccounting errors where companies are forced torevise earnings that had previously been pre-sented as accurate. These restatements, oncequite rare, grew by 145% from 1997 to 2001,and about 10% of all publicly traded companiesrestated earnings during that period (GeneralAccounting Office, 2002). The fact that thesescandals were so common in the United Statesand so much less so in other countries suggeststhat practices distinctive to the U.S. might beto blame (Coffee, 2005).

Then there is the 2007 financial meltdown,which started on Wall Street and led to a world-wide economic decline (see, e.g., Reinhardt &Rogoff, 2008) and then to profound concernsabout U.S business practices. At the 2010 meet-ing of the World Economic Forum in Davos,Switzerland, for example, any whiff of Americantriumphalism from the previous decades hadgiven way to U.S. contrition in the wake of thegreat financial crisis of 2008 –2009. Capturingthe essence of the mood, one of the event’sleading figures put it bluntly: The calamity wascaused by a “failure of leadership” in both fi-nancial services and government where the cen-ters were the United States and to a lesserextent the United Kingdom (Useem, 2010).

Third, and for our purposes most important,there are now alternative business models thatcan lay claim to being more successful. Evenputting aside the financial scandals, the overallU.S. economy and the corporate sector per-formed poorly this past decade, especially ascompared to international standards. In abso-lute terms, the U.S. now ranks 14th in percapita gross domestic product (World Bank,2009), with a growth rate over the 2000s of onlyabout 1.2% per year (U.S. Bureau of LaborStatistics, 2009). Equity prices for U.S. firms,the main measure of success in the corporateworld, lost 3.85% in nominal terms over thecourse of the decade, one of the worst perfor-mances in the industrialized world.

There are many alternatives to the U.S. model,but the one from which U.S. corporations couldlearn the most, in our view, comes from India, thecountry with the second-fastest growth rates in

2010 7Cappelli, Singh, Singh, and Useem

the world over the past decade. During much ofthe 2000s, India’s GDP has risen by better than9% per year—several times that of the U.S. andnearly that of China. Foreign institutional anddirect investment has grown rapidly as well,rising by a factor of 13 from $4.9 billion in1995–1996 to $63.7 billion in 2007–2008 (Re-serve Bank of India, 2009b). A host of surveyshave confirmed that India has become one ofthe most favored destinations for direct invest-ment, behind China but ahead of the U.S. (In-dia Brand Equity Foundation, 2010). India’s for-eign exchange reserves rose from less than $1billion at their bottom in 1991 to more than$300 billion at the peak in 2008, and the valueof Indian exports increased by 2.5 times from2004 to 2008 (Reserve Bank of India, 2009a).And all this occurred despite the fact that theinfrastructure in India is by all accounts lessdeveloped than that in most Western nations(Hamm & Lakshman, 2007) and the challengesof doing business are great (see Figure 1).

Our interest in India is in the practices of itslarge corporations. Reliance, ICICI, Infosys, andhundreds of India’s other top companies have

been clambering on to the world stage to com-pete directly against Western multinationals invirtually all sectors, including those that hadbeen seen as the future of the U.S. economy:high-human-capital service businesses such asinformation technology, healthcare, and busi-ness services.

And Indian companies have become interna-tional acquirers, able to compete with the bestof enterprises and operating well beyond theboundaries of India. Tata Steel purchased theAnglo-Dutch Corus Steel in 2007 for $13.2billion, and aluminum producer Hindalcobought the Canadian aluminum maker Novelis(with executive offices in Atlanta, Georgia) thesame year for $6 billion (Economist.com, 2007).In collaboration with Steven Spielberg’s Dream-works, Reliance Entertainment in 2008 invested$1.2 billion in a new U.S. film company (Schuker,2008), and Tata Motors acquired the marqueeauto brands Jaguar and Land Rover from theAmerican Ford Motor Company in 2008 for $2.3billion (Spector & Bellman, 2008). When Indiancompanies took over publicly traded Americanfirms, the acquired firms increased both their ef-

Figure1Rankof theChallengesofDoingBusiness in Indiaand theU.S., 2008

Source: World Bank Group (2009).


ficiency and profitability (Chari, Chen, &Dominguez, 2009). And Indian executives are in-creasingly on the short lists of corporate recruitersseeking talent for Western companies (Yee,2007).

India shares a great many traits with theUnited States—including democratic principlesand the associated arrangements of civil societysuch as a free press, a strong and independentjudiciary, a highly diverse population, and opencapital and labor markets—and Indian businessleaders are well aware of the U.S. and otherWestern models. But they have blazed their ownpath in the area of business. For example, Indiawas largely able to sidestep the 2007 financialcrisis that brought most Western economies totheir knees. Though rooted in the traditionsand times of the subcontinent, the value of theirdistinctive path can, we believe, transcend themilieu from which it arose and offer lessons forcompanies elsewhere.

Our two-year study of Indian business in-volved interviews with the leaders of the 100largest companies in India as well as other datafrom them.1 We reached our conclusions aboutthe attributes of the Indian approach throughan inductive process that was aided by compar-isons with U.S. practices and the extensive ex-perience each author has with different aspectsof management in the United States. “The In-dia way,” as we see it, is characterized by anddistinct from the U.S. business model in four

fundamental ways (see also, Spencer, Rajah,Mohan, & Lahiri, 2008).

First, Indian companies see their most impor-tant goal as serving a social mission, not maxi-mizing shareholder value, as is the case in theUnited States. An advantage of this approachfor corporate performance is that it greatly en-hances the ability to motivate and engage em-ployees. As earlier work in job design estab-lished and more recent studies in positivepsychology affirm, seeing meaning in work is apowerful motivator.

Second, Indian companies take the manage-ment of human capital seriously. They invest inthe capabilities of their employees, promote in-ternally rather than relying on outside hiring,and engage employees with empowerment andsimilar arrangements. An indication of the factthat they take these issues seriously is that theymeasure and manage almost every aspect ofhuman resource practices and effectivenesscarefully, more so than U.S. firms do.

Third, the persistence of engaged employeescontributes to a uniquely Indian approach toproblem solving that we describe with the Hinditerm jugaad, banging away at hard problems witha trial-and-error approach that is deeply rooted ina culture of scarcity and constraints.

Fourth, these practices come together to createa unique approach to business strategy, one that isinternal and rests on innovations in the compa-nies’ value chains. They are much less interestedin acquiring competencies through mergers andacquisitions, joint ventures, or other externallyoriented approaches as compared to U.S. firms.And they are much more likely to stick withtraditional customers and search for better ways tomeet their long-term needs, as opposed to relyingon market research to find new opportunities.

We next delve deeper into each of these fouraspects of the “India Way.”

SocialMission TrumpsShareholderValue

Chief executives in publicly held Americancompanies are expected to say that maximizingshareholder value is their most important pri-

ority. Indeed, everything they do is justifiedagainst that goal. When we asked Indian business

1 Our project began with the National Human Resource DevelopmentNetwork, arguably the most influential business group in India. The net-work arranged interviews with the leaders of India’s largest publicly listedcompanies by market capitalization. We conducted structured interviewswith 105 leaders from 98 companies. Relatively few of these companies usethe CEO model. At 71 of them, the top executive is called the “managingdirector.” Leadership is shared at seven of them, so there we interviewedtwo leaders. We asked what qualities these executives saw as most vital totheir success, how they worked with their boards, and where they perceivedconvergence and divergence with Western practices. We asked how theyrecruited talent and managed teams, and what legacies they hoped to leavebehind. We also gathered survey data from the heads of HR at thesecompanies. We compared the responses to those in a series of surveys ofU.S. CEOs and HR executives. The most important data on U.S. CEOscome from a New York Stock Exchange survey, and most of the compar-ative data on HR practices come from surveys conducted by the Society forHuman Resources Management. We supplemented these data with infor-mation from previous studies and descriptive information and case studiesabout the practices in these companies.


leaders to rank their priorities (see list below),they placed maximizing shareholder value fourth,below the interests of employees. We also askedthe top human resource executives in the samecompanies to answer the same question abouttheir chief executives’ priorities, and their rankingwas virtually identical. No Indian business leadersin our conversations placed shareholder value asthe top company priority or advanced the viewthat investors were the most important stake-holder, which is notable given that many execu-tives were major holders of their company shares,and in some cases their companies are listed onU.S. stock exchanges.

Indian Business Leader Priorities

1. Chief input for business strategy2. Keeper of organizational culture3. Guide or teacher for employees4. Representative of owner and investor interests5. Representative of other stakeholders (e.g., em-

ployees and the community)6. Civic leadership within the business commu-

nity7. Civic leadership outside the business commu-

nity

Rank ordering from the top executives of 98 compa-nies.

CorporateGovernance

The single most distinctive feature of corporategovernance across the Indian companies we stud-ied was the determination to balance the interestsof the firm’s diverse stakeholders, all the groupsthat have a claim on what the company does.What was especially striking was the emphasis onthe interests of the broader community, whichextended from the immediate vicinity of the busi-ness out to encompass the entire nation (Singh,2009), reminiscent of the pre-1980s stakeholdermodels from the United States.

Corporate governance in India differs substan-tially from that of the United States in the own-ership structure of its firms, with many firms op-erating under the umbrella of business groups anda significant number of infrastructure firms ownedby the government (Chakrabarti, Megginson, &

Yadav, 2008). The firms we examined were pub-licly traded, but the ownership of many remainedconcentrated in the promoter family’s holdings.The priority of interests noted in the list above didnot vary noticeably with the ownership structureof the companies, however.

This is not to say that there are no problemswith governance in Indian firms. The rights ofminority shareholders have been a special con-cern, for example, in companies where concen-trated majority ownership and holding companystructures create incentives to shift assets inappro-priately across companies, a process known as“tunneling” (Bertrand et al., 2002; Sarkar &Sarkar, 2000). Board structure also varies acrosscompanies (Tuteja, 2006), and larger boards inparticular have been associated with lower perfor-mance (Ghosh, 2006). The independence of In-dian boards has been questioned, but board qualityrather than independence per se seems to be mostcorrelated with corporate performance (Sarkar,Sarkar, & Sen, 2008).

No matter the ownership or board structure,Indian executives generally placed less weight onthe board’s monitoring function than was com-mon in the West, at least in part because Indianfirms and their directors faced a less active marketfor corporate control than did their U.S. counter-parts (Morck & Steier, 2005; Reed & Mukherjee,2004). Indian boards as a rule monitor financesless than American ones because financial perfor-mance is less a concern for these corporations. AsB. Muthuraman, the managing director of TataSteel, explained, “The Tata Group is less rules-based and more values-based. We have alwaysbelieved you really cannot frame rules for corpo-rate governance.”2 Nonexecutive directors in In-dian boardrooms take more of a strategic partner-ship role with company executives, working withmanagement to create and market new productsand services, and comparatively less of a share-holder monitoring or rules-based role, as onewould see with the American approach. Protect-ing shareholder value is not ignored, but Indian

2 All quotes in the article unless indicated otherwise are from inter-views with the authors. Details about the interviews are outlined in Ap-pendix B of The India Way.


directors incorporate the concerns of a range ofconstituencies—just as Indian executives do—inreaching board decisions in partnership with man-agement.

Mission-Driven

Central to the distinctiveness of the Indian modelis the sense of mission, a social goal for the busi-ness that goes beyond making money and helpsemployees see a purpose in their work. Every com-pany we saw articulated a clear social mission fortheir business. ITC, a leading conglomerate, ech-oed the views of the companies we interviewed inthis statement describing the company’s purpose:“Envisioning a larger societal purpose has alwaysbeen a hallmark of ITC. The company sees noconflict between the twin goals of shareholdervalue enhancement and societal value creation”(ITC, 2010, p. 1).

U.S. companies talk about doing good in theircommunities, and many do. The difference is thatIndian companies describe their social missionpublicly as the purpose of the business, not just aseparate act of charity. Typically, that sense ofmission extends to helping India and its citizens.In that sense, they act quite differently from stan-dard notions of corporate social responsibility asself-regulation and a concern about doing goodwhile making money (see Williams and Aguilera,2008, for a comparative discussion of corporatesocial responsibility). The social mission forBharti Airtel, for example, was to get cell phonesinto the hands of the hundreds of millions ofpeople in India who otherwise had no way tocommunicate with each other; the Tata Nanostory had a similar goal with respect to providinglow-cost transportation (see below). The socialmission of the pharmaceutical and healthcarecompany Dr. Reddy’s Labs is to address the unmetmedical needs of the poor in India as well asaround the world. Hindustan Unilever’s ProjectShakti uses microfinance principles to create asales force in the poorest regions of the country.Some of these approaches build on the “fortune atthe bottom of the pyramid” approach, which em-phasizes business opportunities among the poor(Prahalad, 2004). But making money is neverpresented as the primary objective.

These companies also put their money wheretheir mouth is with respect to mission. Two thirdsof the profits of the Tata Group companies, forexample, go to its charitable foundations and thenback into Indian society. The Godrej Group hasconstructed schools, medical clinics, and livingfacilities for employees on a massive scale un-known among American companies, where direc-tors and executives are far more likely to seeemployee welfare as a drag on shareholder valuethan an asset for company growth. Dr. Reddy’sLabs guaranteed to meet the healthcare needs of40,000 children. Infosys has built and staffed en-tire hospitals, rolled out a nationwide curriculumfor school-age students in part to improve its fu-ture applicant pool, and engaged in hundreds ofother projects, all in the same year. ITC developeda rural initiative, Mission Sunehra Kal (theGolden Tomorrow), that includes knowledge por-tals to advise farmers, help for them to bandtogether to negotiate with suppliers, job opportu-nities for women, and expansion of education,involving five million people (Lakshman, 2009).Virtually every major company has similar effortsunder way. The focus on mission cuts across com-panies that are family or “promoter” controlled,companies that operate in international marketsand every other dimension we examined. Nodoubt the social needs are greater in India than inmost other countries, but the efforts of these com-panies to address them are nevertheless there forall to see.

TheMotivation forMission

The priority and value placed in India on serviceto others and the widely held belief that one’s goalin life should extend beyond oneself, especiallybeyond one’s material needs, is no doubt part ofthe driver for the sense of mission. The third ofthe four stages of Hindu life, the vanaprasthaashrama, focuses on the search for meaning, help-ing others, and a gradual withdrawal from thecompetitive business world, and it neatly coin-cides with the typical age (over 50) of seniorbusiness leaders. It is worth noting, however, thatthe concern about mission extends to companiesrun by non-Hindus as well. In comparative re-search on leadership, the Indian region scored the


highest of any area in desiring leaders who werehumane, compassionate, and generous (Javidan,Dorfman, De Luque, & House, 2006). That pref-erence fit nicely with the aspect of national cul-ture manifesting service to others as a source ofmotivation.

And some part of explanation for the missionfits this altruistic norm. Mallika Srinivasan, direc-tor of Tractors and Farm Equipment, told us thatalmost everywhere companies operate in Indiathey are encircled by throngs of destitute people,needs are stark, and government intervention isinadequate. Like many other big companies, Trac-tors and Farm Equipment maintains a first-world,campus-like facility within sight of third-worldslums. “Corporate social responsibility and goodgovernance are related to the state of the devel-opment of the country,” Srinivasan told us. “Weare all seeing these islands of prosperity sur-rounded by so much poverty.” Echoing a senti-ment we heard from many executives, Srinivasanexplained that her company feels duty bound to stepforward. Some of the social engagement is alsodriven by necessity. The rapid growth of the Indianmarket and the inadequate scale of health and edu-cation systems have forced companies to develophealthcare and classes for their own talent.

But social investment pays off for these com-panies as well. For B. Muthuraman, the managingdirector of Tata Steel, efforts to aid the broadercommunity create a reputational asset. “Our his-tory in corporate social responsibility,” he ac-knowledged, “has enhanced the group brand.”That has proved invaluable for recruiting andretaining employees at Tata Steel. A recent studyof employee turnover in India found, for example,that the perception of a company’s social respon-sibility is one of the main factors in retainingtalent (Grant, E., 2008). Acting responsibly mayalso pay off especially in dealing with regulators:Obtaining industrial licenses and environmentalclearance in India can depend on being known forpublic responsibility.

Mission as a business goal also affects relation-ships with customers. Individuals have long mem-ories, and doing good things for people when theyhave no money and are not customers can re-dound to a company’s advantage when those in-

dividuals do have money and are in the market foryour products. We also know that consumers careabout the values of the companies with whichthey do business—witness the current rush ofcompanies touting their “green” environmentalpractices. At least some substantial share of cus-tomers would rather do business with companiesthat do good things for the community (Lev,Petrovits, & Radhakrishnan, 2010). R. Go-palakrishnan, executive director of Tata Sons,said that he believed the Tata Group was loved bythe people in India, not just by their employees,for the contributions their companies have madeto Indian society. How many companies anywherecould make that claim?

Most important, using a social mission is apowerful way to motivate employees. We knowfrom the original work on job design that theconnection individuals see between the tasks theyperform and the overall product or outcome of theorganization is an important source of positiveemployee outcomes (Hackman & Oldham, 1975).More recent work shows that the effects of tasksignificance on job performance are much morepowerful when they contribute to helping others,and social impact more generally can lead to per-formance outcomes that are orders of magnitudegreater (Grant, A. M., 2008). The focus on help-ing fellow Indians as the social mission makes thisconnection between the work one does and help-ing others very clear. There is every reason tobelieve it leads to the same increases in perfor-mance in these companies as research studies havedocumented elsewhere.

SocialMissionVersus theU.S.Model

Contrast this Indian model, where a company’sbusiness goal is seen as bettering society, with theU.S. model, where we try to motivate employeesaround the corporate goal of making shareholdersrich. The U.S. approach is at a sizable disadvan-tage because it is difficult for most people to seemaking money for shareholders as a goal that ispersonally meaningful. While it is possible to tiepay to shareholder value, it is extremely expensiveto pay the average employee enough in share-based incentives to get him or her to focus onshareholder value.


The overwhelming focus on creating share-holder value in the United States has led execu-tives to concentrate on the interests of their ownenterprise and devote less attention to the welfareof the community or society. This could be seen inthe recent U.S. financial crisis, where virtually noexecutives were willing to take measures beyondtheir own company’s self-interest that might havehelped avert the 2007 financial meltdown andsubsequent recession. When Bear Stearns nearedcollapse in March 2008, one bank acquired thefirm at the behest of the U.S. Treasury to avoidbroader disruption to the economy, but whenLehman was on the verge of bankruptcy in Sep-tember of the same year, no banks stepped forwardto help resolve a far bigger threat to the system.With narrow self-interest prevailing, Lehmanfailed, the stock market plunged, financial insti-tutions such as AIG and Merrill Lynch buckled,the economy went into reverse, and unemploy-ment soared around the world (Paulson, 2010;Sorkin, 2009). Shareholder capitalism had pre-dictably led most bankers to focus entirely on theirown immediate welfare, even at a moment whentheir common interest would have pointed tocollective intervention. The fact that Bill Gatesand Warren Buffet stand out so prominently fortheir interest in improving society is because sofew other American business leaders have compa-rably stood forward. Indian executives, by con-trast, are willing not only to articulate societalinterests but to act on them.

The focus on mission may also relate to differ-ences in leadership style. We used the most widelyused assessment of leadership in the UnitedStates, the Multifactor Leadership Questionnaire(MLQ), to examine the leadership styles of theseIndian leaders (Antonakis, Avolio, & Sivasubra-maniam, 2003; Bass & Avolio, 2004). We askedthe heads of human resources at the companieswhose executives we interviewed to assess theleadership style of their top bosses. Not surpris-ingly given the picture of Indian business leader-ship already described—actively engaged in build-ing mission-driven organizations—the executivesscored low on passive and avoidance practices.Nor were we surprised to see that Indian businessleaders ranked highest in practices that fall gen-

erally under “transformational style”: inspirationalmotivation, idealized influence, intellectual stim-ulation, and individual consideration. On thetransactional side, Indian leaders, like their Amer-ican counterparts, are quick to use contingentrewards—that is, rewards based on performance—but less prone to manage by exception or look formistakes.

When we compared these results with thosefrom a sample of 48 chief executives of U.S. For-tune 500 companies, however, we found that theAmerican leaders were significantly more likely touse “transactional leadership” styles that tie per-formance to rewards than were our Indian execu-tives. Comparisons with a different study of 56American chief executives also suggested thatIndian executives create a significantly greatersense of empowerment among employees, scoringhigher, for instance, on the “intellectual stimula-tion” category (Waldman, Ramirez, House, &Puranam, 2001).

TakingHumanCapital Seriously

Beyond the sense of mission lies the actual man-agement of employees. Indian companies, wefound, built employee commitment by creat-

ing a sense of reciprocity with the workforce,looking after their interests and those of theirfamilies and implicitly asking employees to lookafter the firm’s interests in return. To translatecommitment into action, the business leaderswent to extraordinary lengths to empower em-ployees in a way that often conflicted with histor-ical and cultural norms, giving them the freedomto plunge into problems they encountered andcreate their own solutions. Then they devoted agreat deal of executive attention and resources tothe practices that support this approach, such asfinding the right people to hire, developing theminternally, and improving morale. Business leadersdirected their attention to building organizationalculture, their number-two priority, which showsemployees how to behave, and to demonstratingthe connection between employee competenciesand business strategies.

Figure 2 compares the results of our survey ofthese top 100 Indian companies concerning theirhuman resource practices to a similar survey of


U.S. companies. The Indian firms were morelikely to measure and track all human resourceoutcomes than were U.S. firms. Given that it isdifficult to manage and take seriously issues thatare not measured, these results are consistent withthe notion that HR functions in India were atleast taken more seriously and are arguably moresophisticated than those in the United States.Companies in the U.S. clearly know how to trackthese outcomes. They just choose not to.

The biggest differences in measurement had todo with investments in the development of em-ployees: 62% of the Indian firms frequentlytracked progress in overall talent management,compared with only 26% in the U.S.; 65% fre-quently measured the development of skills ofemployees, versus only 21% in the U.S.; 45%frequently tracked the ability to promote fromwithin through succession, versus 21% in theU.S.; and 46% frequently used metrics to assessthe development of leaders, versus 28% in theU.S. Despite high turnover in the red-hot Indianlabor market, these leading firms seem dedicatedto policies of promotion from within (SHRM In-dia, 2008).

Training

They are also investing heavily in their employ-ees, especially their new hires. One study of prac-tices in India found that the IT industry providesnew hires with more than 60 days of formal train-ing—about 12 weeks of classroom training, a mas-sive investment given that employees are paidduring that time. Some companies do even more:Tata Consultancy Services, for example, has aseven-month training program for science gradu-ates being converted into business consultantroles, and everyone in the company gets 14 days offormal training each year. MindTree Consulting,another IT company, combines classroom train-ing, mentoring, and peer-based learning commu-nities. Even relatively low-skill industries such asbusiness process outsourcing and call centers pro-vide something like 30 days of training, and retailcompanies require about 20 days (Wadhwa, deVitton, & Gereffi, 2008).

New recruits for clerks and other front-line jobsat Pantaloon, a leading retailer, receive six weeksof training, including five and a half days in resi-dence at a company training center followed by

Figure2CompanyUseofHumanResourceMetrics

Sources: Survey of Indian companies, and Society for Human Resource Management, 2006.


five weeks of on-the-job training directed by localstore managers. Kishore Biyani, Pantaloon’s chiefexecutive, explains that much of their traininggoes beyond practical job skills: “We run a pro-gram in the organization which everyone has to gothrough, called ‘design management,’ which basi-cally trains people to use both sides of the brain,”both “the visual and aesthetic side and the logical-rational.” After that, store staff receive a week ofnew training each year (Wadhwa et al., 2008).Training is one way the company develops a shop-ping experience more suited to customers. Evenexperienced hires get training. Dr. Reddy’s Labo-ratories puts all its outside hires, including thosewith substantial experience, through a one-yeartraining program that includes ten weeks of as-signments abroad as well as a culminating cross-functional project presented to the top executives.Again, these investments occur in the context oftight labor markets and high turnover, factors thatare often used to explain the lack of training inthe U.S.

Systematic data on training among U.S. com-panies is hard to come by, but the available sta-tistics suggest that 23% of new hires received notraining of any kind from their employer in thefirst two years of employment, while the averageamount of training received for new hires—thosewith two years or less of tenure—was about 24hours per year in those first two years (U.S. Bureauof Labor Statistics, 1995).

EmployeeAppreciation

A different measure of the priority that India Waycompanies place on their employees comes fromwhat they tell shareholders and the broader com-munity about their operations. An interestingstudy of the annual reports in the Indian informa-tion technology industry found that the mostcommon mention of any human resource is-sue—so common, in fact, that it happened onaverage more than once in each report—was tothank employees for their contributions. The sec-ond most common HR mention was to highlightindividual employees, typically for their specialcontributions or sometimes for their life experi-ences. That was followed in frequency by men-tions of employee capabilities and efforts to train

and develop employees. And the fourth mostcommon mention was to discuss contributionsemployees were making to the broader commu-nity, outside of their work tasks (Murthy & Abey-sekera, 2007). By contrast, the annual reports ofthe leading U.S. information-technology compa-nies contained nary a mention of the employees.This is the case for the 2007 annual reports for thefive biggest IT employers in the U.S.: IBM, HP,Microsoft, Oracle, and Cisco. The closest state-ment to the India model is a reasonably genericsentence in Cisco’s shareholder letter that says,“While we’re proud of the financial results wedelivered,” we “are also very proud of our people,our culture, and the way Cisco operates as a com-pany” (Chambers, 2007). (See Appendix A for abrief discussion of how Infosys trains its new re-cruits.)

The reason Indian companies invest in their em-ployees is that they see employees as key to buildingthe organizational capabilities that drive competi-tiveness. Four of five of the top Indian human re-source executives reported that building capabilitiesfor the organization was an important purpose foremployee learning. A meager 4% of their Americancounterparts in training and learning roles said thesame thing (see Figure 3). In fact, capability buildingranked next to the bottom on the list of U.S. out-comes, a stunning difference. In general, the Amer-ican executives rarely saw learning as serving strate-gic-level goals for the organization. The outcomeAmerican executives reported most frequently asthe purpose of employee learning was to better exe-cute existing strategies: “Learning” seemed more liketraining, designed to improve performance on exist-ing tasks. Even then it was embraced by only 14% ofrespondents.

Much like Japanese companies, the Indian cor-porations also take pains to protect those invest-ments in employees. Keshub Mahindra, chairman ofthe Mahindra Group, told us that they contem-plated laying off workers in the recent downturn butdecided against it in large measure because theyknew that for every employee laid off, there were fivefamily members who would suffer alongside. Theycould not in good conscience do this to their loyalemployees. So they put their otherwise redundantemployees to work in the company gardens. With


some satisfaction, he added that the company nowhas some of the finest gardens in India!

EmployeeEmpowermentandTransparency

Having motivated and skilled employees mightnot matter if they were not given the opportunityto use those skills. The software company Mind-Tree has adopted a host of innovative methods forfostering ideas and execution, beginning with anentire menu of ways for the employees to givefeedback to executives. Among the arrangements:monthly updates called Snapshots that describethe competitive environment and the state of thecompany; All Minds Meet, a regular open housewith the company’s leadership where all questionsare tackled on the spot; People Net intranet,where grievances are addressed; and Petals, a blog-ging site (MindTree, 2010b). But the most un-usual aspect of the MindTree approach, both intransparency and role modeling, can be found inthe company’s integrity policy. MindTree posts onits Web site accounts of ethical failures and vio-lations of company policies, and the lessons thefirm has learned from each (MindTree, 2010a).

The idea is that by acknowledging mistakes, espe-cially those made by leaders, the company encour-ages others to admit theirs and to follow its lead inmaking changes.

The high-water mark for a culture of opennessand flat hierarchy probably goes to the SaskenCorporation, which Rajiv Mody started in SiliconValley and moved back to his home in Bangalorein 1991. The company’s “single-status” policymeans that all employees, from entry-level toMody himself, are treated identically—same of-fices, same travel policies (coach class), same cri-teria for compensation (no separate executivecompensation policies). While the company isknown for being cheap in the area of compensa-tion, it is otherwise extremely employee-friendly,with policies that include extensive programs forleaves, including a six-week sabbatical after fouryears of employment (Express Computer, 2007).

As an example of empowerment, Vineet Na-yar, the CEO of HCL Technologies, has becomewell-known for his motto of “employee first, cus-tomer second.” The point, Nayar said, is that “ifyou are willing to be accountable to your employ-

Figure3Howthe LearningFunctionProvides Strategic Value to theOrganization

Sources: Survey of Indian Companies, and American Society for Training and Development, 2006.


ees, then the way the employee behaves with thecustomer is with a high degree of ownership.” AtHCL, Nayar contended, “command and control”is giving way to “collaborative management.” Tothat end, he has pushed for ever “smaller units ofdecision makers for faster speed and higher accu-racy in decisions” to provide HCL’s customerswith more timely and customized service.

To make this happen, he spends as much ashalf his time in town hall meetings with thecompany’s employees, communicating this visionfor the company and managing the corporate cul-ture. He makes it a personal goal to shake thehand of every employee every year, and whenasked what he would like to be his greatest legacyto the company in five years, Nayar respondedwithout missing a beat: “They would say that Ihave destroyed the office of the CEO.” Pressed toexplain, he said he sought so much “transparency”and “empowerment” in the company that “deci-sions would be made at the points where thedecisions should be made”—that is, where thecompany meets the client. The “organizationwould be inverted, where the top is accountable tothe bottom, and therefore the CEO’s office willbecome irrelevant.” His public blogs on the com-pany website include a 2008 post titled “Destroy-ing the office of the CEO” (Nayar, 2008).

HCL seeks to invert the organizational pyramidby making, as Vineet Nayar told us, “our managersaccountable to our employees.” One tactic fordoing so is to encourage employees to submitelectronic “tickets” on what needs to be changedor fixed, even the very personal, which haveranged from “I have a problem with my bonus” to“my boss sucks.” An even more unusual tactic is torequire 360-degree feedback reports on the 1,500most senior company managers worldwide, includ-ing the chief executive himself. Employees havethe option of evaluating not just their boss butalso their boss’s boss and three other managers.And the 360-degree feedback, including Nayar’sown, is posted on an intranet site within severalweeks for all employees to see—all of it, the goodand the bad. As he told us, “our competitivedifferentiation should be the fact that we are moretransparent than anybody else in our industry andtherefore the customer likes us because of trans-

parency; employees like us because there are nohidden secrets. So we built transparency.” Theidea of performance improvement has becomemore broadly acceptable, and the heightened per-sonal transparency at the top serves to reduce thesense of vertical separation (Som, 2006).

JugaadandAdaptability

The Hindi term jugaad describes the ability toimprovise and find a way around problems,often using trial and error methods. The

unique cultural context of learning to work in atough, resource-constrained country where theability to make do and improvise with what littlewas available created the necessity for jugaad.Keeping old equipment running with improvisedspare parts is the classic example. In these moderncorporations, though, the jugaad phenomenonplays out through motivated and committed em-ployees hammering away at tough problems, per-sisting until they find creative solutions and work-arounds. What makes them willing to do that?Again, having a sense of mission and social goalfor the organization helps employees see a purposein their work that goes beyond their immediateself-interest, beyond the achievements of the firmand its owners. And empowerment provides theopportunity to make use of that motivation.When we combine jugaad with the unique Indianapproach to strategy, we get a sense of how thesefirms are competing and winning on the interna-tional stage.

Creative adaptation, not weary resignation, iscentral to the Indian approach to management.Vijay Mahajan, chief executive of Basix, a micro-finance organization, argued for many in offeringhis explanation of the power of jugaad, an ability“to manage somehow, in spite of lack of re-sources.” It constitutes a cornerstone of Indianenterprise, in his view, and the “spirit of jugaad hasenabled the Indian businessman to survive and getby” in an economy that was until the late 1990soppressed by controls and stymied by a lack ofwidespread purchasing power.

The English word adjust is also spoken in var-ious local accents in India. It is used in a widerange of situations, usually with a plaintive smile.One can use it in a crowded bus, where three


people are already seated on a seat for two, re-questing them to “adjust” to accommodate afourth person. Or, it is used by businessmen whenthey meet government officials, seeking to “ad-just” various regulations, obviously for a consider-ation, to speed up the myriad permissions stillrequired to do anything in India.

DoingMoreWith Less, Strategically

Consider also the better known example of theTata Nano, the pint-sized car built by Tata Mo-tors, India’s largest maker of automobiles andtrucks. Conventional market strategy would havesuggested staying away from the low end of themarket, where Japanese quality and prices domi-nated. But realizing that India’s mass market hun-gered for even lower cost transportation, Tata setout to engineer an automobile whose price wouldnot just be marginally lower than the lowest endexisting products but radically lower, 75% belowthe cheapest competitor. Here as well, the busi-ness goal involved a social mission: creating trans-portation for the poorest consumers. Meeting thisextraordinary challenge for its traditional custom-ers required an extensive application of jugaad.

Tata Motors knew that it would have to do theengineering largely on its own, without the ben-efit of the research and development that onemight find in universities and government labo-ratories in other countries. It also knew that theNano would have to be developed on a shortercycle. “We can’t have 48 or 36 months to bringout the new products,” said Tata Motors executivedirector for finance Praveen Kadle; now it’s just 24or 18 months. With all that in mind, Tata Motorsswiftly designed the Nano from a clean sheet ofpaper to meet what appeared to be an impossiblylow price point: 100,000 rupees per car, about$2,500 at the time. That figure was not generatedby market research. It came about as an off-the-cuff estimate by Ratan Tata, which generatedhuge attention, and so he decided to make it thetarget price point (ICFAI, 2008). Presented as theworld’s most inexpensive car when unveiled inJanuary 2008, its sticker price was to be on parwith the cost of a DVD-player option in luxuryWestern autos (Kurczewski, 2009). It achievedthis price point not through technological inno-

vation but by a completely new approach thatclosely resembles the jugaad concept: deep frugal-ity, a willingness to challenge conventional wis-dom, and a single-minded determination by Tata’stop managers to work through the many con-straints and challenges of operating in the Indianenvironment. They designed everything in theNano from scratch, and they deleted features thatwere taken for granted by other carmakers, includ-ing air conditioning, power brakes, and radios.

The long-run plan for the Nano also includesan important innovation in the value chain: Kitsof components are to be sold en masse for assem-bly and distribution by local entrepreneurs. RatanTata talked about “creating entrepreneurs acrossthe country that would produce the car . . . , myidea of dispersing wealth” (Surender & Bose,2008, p. 1). Tata even anticipated providing thetools for local mechanics to assemble the car inexisting auto shops or new garages created to caterto rural customers. Termed “open distribution in-novation” by Business Week, the method couldcreate not only the world’s least expensive auto-mobile but also its largest selling one. “Tata Mo-tors has built up a position,” said Gopalakrishnan,“where international car companies are not ableto compete with us.” And that, in essence, is alarge part of what the India Way is all about: astrategy of focusing the energy and attention ofcompany managers on the hard and persistentneeds of their customers, achieving outcomes thatbreak through traditional standards of productsand services.

The hospital group Narayana Hrudayalaya of-fers a similar story of jugaad and strategy. It wasfounded by Devi Shetty to help the thousands ofIndian children who need cardiac surgery andcannot afford it. The group discovered that theonly way to provide quality operations cheapenough for the masses to afford (a challenge yet tobe mastered in the West) was to standardize andeffectively automate them. So it set about learningto perform them at scale, changing the way sur-gery is performed. It now performs more thantwice as many cardiac surgeries as the biggest U.S.hospital, with outcomes as good and at aboutone-tenth the cost as the best U.S. provider. Itsprofit margins are slightly above those of its U.S.


peers, and it is now planning hospitals outsideIndia, including one not far from Miami, Florida(Narayana Hrudayalaya Hospitals, 2010).

ICICI Bank did something similar for ruralbanking. Whereas a typical savings account in theWest might be $10,000, a typical one in urbanIndia was apt to be no more than $1,000, and inrural India only a tenth of that. That meant op-erating expenses had to be pared down propor-tionately: Urban banking in India had to be con-ducted at one-tenth the cost of banking in theWest, and rural banking at one-hundredth. “Weneed to be able to conceptualize how to delivervalue to this market at an extremely low cost,”ICICI chief executive K.V. Kamath said. “That’swhere the challenge is, as well as the opportunityand the excitement.” A scaled-down urbanbranch model was still prohibitively expensive forrural banking, so Kamath and his team turned toalternative, far less costly avenues for reaching thepoor, ranging from nonprofit microfinance groupsto using local fertilizer distributors as agents.

StrategyFromWithin

None of the Indian business leaders we inter-viewed claimed that his company succeededbased on his own cleverness or even on the

efforts of a top team. Almost without exception,Indian business leaders—and the industry analystsand business journalists who follow their compa-nies—described the source of comparative advan-tage as coming from deep inside the company,from motivated employees, new and better ideas,and superior execution. And these outcomes, inturn, were traced to the positive attitudes andbehaviors of employees. The obvious conclusion:Strategy in these companies comes from internalcapabilities. The source of the distinctiveness ofthe India Way and the ability to focus the businesson solving hard problems rests heavily on themanagement of people: They invest in them, usesocial mission to create motivation, empowerthem, and tap into the cultural aspect of jugaad tohammer away at hard problems until they breakthrough.

As noted earlier, our interviewees saw beingthe “chief input to strategy” as their most impor-tant task. Strategy is often seen as a staff function

in U.S. companies, and in that sense the fact thatthe number-one priority for the Indian CEOs wasto be the main input into strategy may seem likea puzzle. But it makes perfect sense given that thesources of strategy among the Indian corporationswe examined are deeply rooted within the firms,supported by a set of attributes such as organiza-tional culture and practices around managing peo-ple that help drive their strategies. Building strat-egy means building these capabilities and stressingalignment within the organization, ensuring thatmany separate practices are consistent with oneanother and mutually reinforcing. In this context,being the “chief input into the strategy process”means that the CEOs monitor and maintain theinfrastructure of their organizations, the firms’ ar-chitecture and culture and systems for investing inand engaging their employees.

While most mainstream U.S. corporations areorganized into strategic business units each re-sponsible for its own strategy, in these Indianfirms, the leaders own a significant part of thestrategy function for the entire company, settingthe agenda and taking a visible role in the strat-egies developed in various units. The focus forthem is less on the analytics behind the strategiesand more on creating the context: designing theincentive structures, managing the organizationalculture, and in turn, shaping the strategies thatmanagers then develop. Their view of strategy istherefore as a set of enduring principles, an ap-proach to business that they can encode into thefirms’ responses to market opportunities. This ap-proach to strategy allows for improvisation andflexibility in unit-level practices while incorporat-ing interventions and inputs from the CEOs intothe strategies of various businesses.

Other differences related to strategy concernthe identification of opportunities in the market.U.S. companies are inclined to begin the strategyprocess with market research to identify new cus-tomers and opportunities that offer superior profitopportunities. The India Way companies, in con-trast, are much more likely to stick with theirtraditional customers and take on the long-term,persistent challenges those customers face. Table1 shows comparative data on how these top exec-utives in India and their U.S. counterparts have


changed their allocation of time in recent years,an indication of priorities. Indian leaders saw thebiggest increases in strategy and in customer rela-tionships. Customer relationships were the areaof largest net decline for U.S. CEOs, and theirincreased focus was all on factors outside thefirm. Indian leaders report the biggest declinesin their time in the area of day-to-day manage-ment, giving more autonomy to lower manage-ment. (Careful readers will see that leaders in bothcountries paradoxically report they were devotingmore time to just about every priority in the pastthree years.)

An even more telling discrepancy emerged in a2007 Conference Board survey of chief executivesworldwide. When asked to identify their mostcritical challenges from among several dozen, Amer-ican executives ranked “consistent execution ofstrategy” considerably above “speed, flexibility, [and]adaptability to change” (Baranowska, 2007). TheirIndian counterparts reversed the ranking. For them,speed, flexibility, and adaptability were at the heartof strategy and the greater priority.

We also asked Indian business leaders to iden-tify the capacities that have been most critical tothe leadership of the firm over the past five years.They placed their greatest stress on four capacities:visioning, architecture and culture of the firm, per-sonal qualities, and human resource issues. This isconsistent with the notion that developing enduringcapabilities is the key to success.

Strategy in the Indian context, then, is aboutthe CEO’s involvement in setting the core busi-ness principles by which the firm or business groupwill compete in the marketplace. CEOs recog-nized the need for capability development as themarket opened up postreform. Beyond setting thearchitecture of the firm, CEOs provide input intostrategies developed in the units reporting to themto a far greater extent than we see in U.S. corpo-rations, making sure those strategies remain con-sistent with the core business principles. Adapta-tion, improvisation (jugaad), and doing more withless characterize key elements of strategy. TheTata Nano example and others above illustratethis adaptability and creative extension and utili-zation of resources. There is always the risk thatquality could be compromised in this search forever more creative ways of competing. But atheme present throughout is an emphasis on ca-pability development and on resilience in a rap-idly changing environment.

The process of driving strategy through coreprinciples, especially social mission, also helps thesecompanies find opportunities where no one else waslooking. Hindustan Unilever’s (HUL) developmentof a system for selling products through rural self-help groups illustrates how new structures made itpossible to address a new market. HUL challengedhead-on the assumption that standardized consumerproducts could not be sold to lower income consum-ers. Although a subsidiary of a multinational con-

Table1HowIndianandAmericanBusiness LeadersHaveChangedTheirAllocationof TimeOver thePastThreeYears(Items in bold: More than half of the executives affirmed)

Leadership Tasks

U.S. India

% More Time % Less Time % More Time % Less Time1. Regulatory/compliance issues 98 2 41 242. Reporting to the board 72 1 41 173. Shareholder relations 58 4 41 314. Setting strategy 47 9 93 05. Media relations 31 11 31 176. Day-to-day management 28 27 24 557. Fostering workplace diversity 26 13 21 418. Customer relations 22 27 62 7

U.S. figures from N.Y. Stock Exchange (2006) survey. Omitted column is “no change.”


sumer products company, HUL was also very muchan Indian company with many products unique toIndia. That helped it to look past Western businessmodels that use standard marketing and supply-chain practices.

A persistent and previously unsolved problemfor retail in India is that the rural market is scat-tered in some 600,000 villages, more than half ofwhich were not effectively connected to urbancenters by electronic media, newspapers, and rail.Project Shakti (meaning strength or empower-ment), launched in 2000, was designed to addressthis gap. With rising competition from Procterand Gamble and local competitors in traditionalmarkets, HUL realized that opening new marketswas a way to create new opportunities. The projectaimed at the most remote and lowest income con-sumers to extend the firm’s reach beyond traditionalmarketing channels. They reached the new marketthrough women’s self-help groups. These groups, setup by nongovernmental organizations, typicallycomprise 10 to 15 women from a single village. Theyoperate as mutual thrift societies, combining smallamounts of cash toward a common pool. Microcreditagencies then lend additional funds to finance ap-proved microcommercial initiatives.

Shakti entrepreneurs borrow money from theirself-help groups, apply it to the purchase of HULproducts, and then resell them to their neighbors.As most of the women in the self-help groups haveno prior sales or business experience, HUL hiresrural-sales promoters to coach the nascent entrepre-neurs. The self-help-group entrepreneurs work associal influencers, increasing local awareness andchanging attitudes toward usage of various products,mostly those targeted at women. At the same time,Shakti creates jobs for the rural women. HUL hasextended Shakti to 15 states, and by the end of 2010,the company plans to have more than 100,000Shakti entrepreneurs covering 500,000 villages.

Rootsof the IndiaWay: Can It Translate?

Is the India Way so unique to the Indian contextthat it cannot apply elsewhere? It has aspectsthat are consistent with traditional Indian cul-

ture, especially Hindi culture, such as obligationsto the community, but it is nothing like a simpleapplication of Indian cultural norms or business

practices to modern corporations. In fact, themodel looks relatively little like the practices ofcompanies before the 1990 economic reforms.The new generation of leaders who created theIndia Way for the most part did not come from theexecutive ranks of the legacy companies. Theywere by and large entrepreneurs who started fromscratch or, in the case of existing companies suchas the Bank of Baroda, leaders with a mandate toreshape the drawing board. The India Way modelthey created responded to the remarkably differentenvironment for business offered up by the eco-nomic reforms and more open markets after 1990.

The India Way is unique, but the set of prac-tices that comprise it are not necessarily depen-dent on the Indian context. At least some of thepractices, such as stakeholder-based governanceand investments in employees, were part of theU.S. model in a previous generation. While itmight be tempting to think that Indian practicesmight over time evolve into something closer tothe current U.S. model, there are no apparentforces to drive such an evolution: The Indianfirms are already exposed to the international in-vestment industry—several are listed on U.S.stock markets—and they are succeeding mightilyin international competition. It is more likely, weargue, that the India Way should serve as a modelfor other countries in part because it addresses theintense pressures for greater social responsibilitybut most importantly because it is succeeding inthe competitive environment with a competitiveadvantage that appears to be sustainable in thelong run. (See Appendix B about the acceptedviews on Indian culture as they relate to business.)

Conclusions

We understand that not all Indian businessleaders are saints, not all Indian companiespursue the practices we describe here, and

that even for these leading companies, we may bedescribing their best attributes. But the same canbe said for accounts of companies in other con-texts as well. Models are built on archetypes andthe attributes that distinguish them from othermodels. While there are bits and pieces of the IndiaWay in other contexts, the complete package of theIndia Way could be found nowhere else. Some parts


of the system, like jugaad, seem unique; others, suchas the dedication to a social mission, are practicedelsewhere but not at the level we see in India.

Clearly there are limits to the transferability ofthe India Way to other contexts. The fact that somany of the current business leaders in India werealso founders of their companies gives them influ-ence over organizational culture and companygoals that professional executives of long-estab-lished firms do not have. The spectacular growthof Indian corporations may also make it easier tofind resources for pursuing social missions, and theextraordinary problems of Indian society make theneed for such missions much more urgent than inthe West. And the fact that so many leadingcompanies are all going down the path we describecreates normative comparisons that make it easierto keep going in that direction.

As concerns about current U.S. corporate prac-tices mount, it is especially important to look atother models. The India Way offers a compellingexample of a model that succeeds financiallywhile succeeding socially. Indeed, we argue thatits success is precisely because of its social mission.While the culture and context of India may seemquite foreign to the U.S., the practices that makeup the India Way are easily recognizable to man-agers anywhere and indeed may not be all thatdifferent from what we might have seen in U.S.corporations a generation ago. It is time to take acloser look at those practices.

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AppendicesAppendixA: Trainingat Infosys

Once hired at Infosys, new recruits move to the largestcorporate training facility in the world, just short of 300

acres outside of Mysore. The facility can handle 6,000 train-ees at a time, with plans to quadruple in size. The trainingcenter was designed to feel like a college campus. When wevisited, we were struck by how much the training-sessionrooms resembled typical college classrooms, a similarity thatmakes the transition from college to the company as smoothas possible. The 14-week training regimen includes regularexams and assessments that the new hires must pass tocontinue in the program. Candidates hired from outsideIndia receive even longer training, six months, to help themadapt to the Indian and Infosys cultures. Company managersare assessed based on the percentage of new hires in theirgroup who achieve an A grade on these tests, the numberwho achieve various competency certifications, and thepercentage of outside or lateral hires who are rated as “good”in their first reviews. More senior managers are assessedbased on the job satisfaction of their employees and thepercentage of leadership positions that have an identifiedinternal successor. Holding supervisors similarly responsiblefor the achievements of their subordinates was quite com-mon in the U.S. before the mid-1980s but is now extremelyrare (Rao & Hoyt, 2007).

AppendixB: IndianNational CultureandBusiness

Suresh Gopalan and Joan Rivera (1997) summarized theaccepted views about Indian national culture as they relateto business as follows: The Hindu religion’s belief in predes-tination reduces personal ambition and persistence; thecountry’s deep historical orientation leads to conformitywith the past and resistance to change; a long tradition ofhierarchical social relations make individual leaders moreimportant than the goals they pursue. Others have madesimilar arguments, for example, that Indian salespersonsperform better under more hierarchical authority arrange-ments than do their U.S. counterparts and that the greaterpower imbalance between superiors and subordinates inIndian society requires leadership styles that are much moretask-oriented, leaving little room for individual autonomy.These views of Indian culture, however, are hard to recon-cile with the fast-moving, innovative Indian business scene,empowered employees, and ambitious leaders who populatethe India Way.


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