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Wednesday, March 31, 2010

Managing 'the India way'

It strikes Wharton management professor Jitendra Singh as ironic that most of India’s top executives were trained in management schools that based their educational philosophies on lessons from American big business.

As America’s companies struggled with the downturn, the India economy did not see even one negative quarter and Indian businesses reported increased revenues and profits.

Maybe, Jitendra Singh and three of his Wharton colleagues believe, America could learn a lesson from how Indian chief executives view their responsibilities.

That’s the opinion they express in their recently released book, The India Way: How India’s Top Business Leaders are Revolutionizing Management. Singh and one of his coauthors, Harbir Singh, presented their findings last weekend at a daylong Wharton-sponsored conference in Philadelphia on Indian business practices. The other authors are management profs Peter Cappelli and Michael Useem.

The four interviewed 150 top Indian executives. A stunning finding: They do not consider their top priority to be maximizing shareholder value. That’s number five. Number one is a feeling of responsibility to all stakeholders — employees, shareholders, their communities and the nation.

“I think in the U.S., chief executives have gone overboard” in their emphasis on shareholder value, Jitendra Singh said. The growing trend of tying executive compensation to share price gives them an incentive to take short-term actions that benefit them, but might not necessarily have the long-term interests of the company at heart, he said.

Useem suggests a small, but courageous, step for CEOs that would help them escape the Wall Street treadmill:
Stop offering guidance, at least for the quarter. How often do share prices swing wildly for no concrete business reason other than they are within points of Wall Street expectations?

Today is March 31, the close of the first quarter and earnings season is nigh. Maybe it is time to try the Indian way. Instead of “guiding” Wall Street, execs might focus on “guiding” their companies by taking a longer-range view.
 

Contact staff writer Jane M. Von Bergen at 215-854-2980 or marmstrong@phillynews.com.
See her blog at go.philly.com/jobbing.
Posted by Jane M. Von Bergen @ 3:10 AM  Permalink | File Under: Consumer Products | | People | 4 comments
Comments   
  • 0 like this / 0 don't   •   Posted 8:25 AM, 03/31/2010
    It is ironic, that the 21st century begins with another periodic collapse of capitalism among what are supposed to be the developed nations, the one's with long standing experience and depth of institutional resilience to ride out bumps in the business cycles. Only this time, the business cycle was a self inflicted irrational bubble magnified by corrupt financial innovations. The US economy is literally a paper tiger, while India produces more steel than we do. Free enterprise does seem more like feudal enterprise with regular oaths of allegiance to Wall Street overlords. American management has been reduced to tautological bromide that the purpose of their business, fill in the blank, any business will do, is to make money. Wrong, the purpose of the business is to produce what you went into business to do, like make cars, build houses. That is what differentiates one business from another. They all have to make money but they are not producers of money. Refocus on what you produce, and not quarterly paper chase reports to another set of managers looking for paper profits, instead of real economic production.
    — Fernando08
  • 0 like this / 0 don't   •   Posted 12:10 PM, 03/31/2010
    W. Edwards Deming, the guru of Japan’s postwar economic miracle, help transform many American companies, including Ford, after 1980. I believe that it is no coincidence that Ford, the U.S. auto maker that embraced Dr. Deming’s philosophy the most, did not need a 2009 U.S. Government bailout for survival. Companies from India have won Japan’s Deming prize for quality than companies from all other counties combined (2000 through 2008). Our businesses, federal government, state governments and NGOs may want consider the Deming blueprint for transformation to help them meet today’s challenges.
    — Hugh.J.Campbell
  • 0 like this / 0 don't   •   Posted 12:44 PM, 03/31/2010
    Here's another idea for a "small step" that American CEOs could try: stop outsourcing American jobs to INDIA. Will we hear that suggestion from India's top executives anytime soon?
    — nephillygirl
  • 0 like this / 0 don't   •   Posted 9:01 PM, 03/31/2010
    How about paying your Indian workers competitive wages rather than wages 1/4 of what U.S workers make!! Then try and underbid to get the jobs. If you don't pay your workers a fair wage, it is really easy to entice cost consious CEO's to ship jobs overseas.
    — Daddio


4 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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