Sunday, June 6, 2010

Why Indian Managers Succeed Overseas? - R Gopalkrishnan

A famous person said that the measure of a society is how it converts its pain and suffering into something meaningful and useful. India has done that through the remarkable success of its overseas managers.

Indians are rightly jubilant with the overseas success of their compatriots, for example, when Nitin Nohria was appointed Dean of Harvard Business School (HBS); or earlier, when Subra Suresh became Dean of MIT or when Arun Sarin and Vikram Pandit rose to the top of their companies. The positive emotion often has a trace of India Rising.

The achievers are humble about their success. Adobe CEO Shantanu Narayen nonchalantly says, “It is not a big deal, because America is an egalitarian and meritocratic environment.” HBS’ Nitin Nohria gives credit to IIT. Pepsico’s Indra Nooyi modestly says, “I am a mother first and then a CEO.”

Do India-born managers possess something distinctive? Do they achieve more success abroad than other immigrants? It is tempting to think so and, indeed, there are many views. One view is that Indian managers are no different from similarly-educated managers from elsewhere. Another is that Indians have always done well overseas, but media coverage has brought visibility and celebration.

A third view is reflected in a recent book, The India way: How India’s top business leaders are revolutionalizing management, in which Wharton professors Peter Cappelli, Harbir Singh, Jitendra Singh and Michael Useem identify four distinctive Indian practices: holistic engagement with employees, improvisation and adaptability, creative value propositions and broad mission and purpose.

Whichever may be correct, the upbringing of India-born managers quite unintentionally prepares them for a good chance of success overseas. As author Sanjaya Baru wrote in March this year in Careers 360, “Stories of extreme hardship, braving impossible odds and innumerable sacrifices, abound in the lives of nearly 90% of the students in the country.

But among them, some perform exceptionally well. Their academic laurels are so brilliant, that at times their CV looks intimidating. And each one acknowledges that it’s the right education that made them what they are today.” India-born managers are products of four unique circumstances.

Competitive education: IIT/IIM effect
Thanks to subsidies, higher education is accessible to middle-class people. When viewed with the cultural propensity to acquire degrees, this fact results in an avalanche of several thousand applying for every college seat. Higher education is crushingly competitive. Bright Indian children who do not get into IIT effortlessly secure admission into an Ivy League College! In the US, this has repositioned IIT as a genius factory, and IIT alumni promote this assiduously.

The graduates of India’s institutions have been psychologically autoclaved through high-pressure competition. They emerge with insatiate ambition that vastly exceeds their intellectual or financial resources. This stretch between resource and unreasonable ambition is significant: recall the late Prof C KPrahalad, “It is essential for top management to set out an aspiration that creates, by design, a chasm between ambition and resources.” The Indian system creates in many graduates a chasm between aspiration and resource, but quite unintentionally.

Accelerated learning
Life for the student is a struggle in India compared to elsewhere: commuting in chaotic cities, inadequate privacy and lebensraum to study at home, facilities for sports and libraries, and a crushing burden of exams. Almost every student has faced early setbacks: inadequate marks in exams, a lost college admission or a limited job choice. Chance plays too important a role in the Indian student’s life, making it quite stressful, hence youngsters just have to learn to face setbacks early on. They learn to be persistent and to fight with a never-say-die attitude.

Research indicates that extraordinary setbacks accelerate personal learning. Duke Corporate Education board member Judy Rosenblum wrote in 2009 in the Financial Times, “In order for people to develop as professionals, they need to be immersed in problems. A problem provides the opportunity to grapple with and test one’s ability to adapt.”

Although family and peer pressure are high, they also provide the required support to handle the stress. Fortunately, the influence of parents is prolonged and significant. Sir Winston Churchill told the English people, “Never give in, never, never, never, never” for the war years. The Indian student practices this all through life. Success is not just about being ambitious, it is about overcoming adversity.

Hard work plus creativity
It is not that other nationalities are lazy. It is just that overcoming shortcomings of infrastructure requires Indians to expend energy that could otherwise have been productively deployed. The educated youngster is forced to develop the traits of hard work like east Asians who naturally derive it from their Confucian ethos.

But there is a difference: the Indian has a low aptitude for repetitive tasks. The Indian will try to do the repetitive task differently and creatively: in short, he works hard and creatively, a brilliant combination. The serious student works and sweats as if on an academic treadmill and business executives do the same in their workplace.

Indians’ propensity for hard work was grudgingly acknowledged by Abraham Pinkusewitz while explaining how the Gujaratis managed to capture 70% of the diamond trade in the Antwerp market, “Indians succeed because business is all they have in their lives. If needed, they will work 24 hours per day.”

Young Indians have also to adapt to challenges arising from diversity, which is quite different from, for example, the Chinese: learning several Indian languages, adapting to school systems while transferring with parents, and coping with variable teaching quality.

Howard Gardner, Harvard academic on Cognition and Education, points out, “The only reliable way to determining whether understanding has truly been achieved is to pose a new question or puzzle on in which individuals have not been coached and to see how they fare.” Indian students are wired to work very hard, with passion and creatively.

Thinking in English
Where else in the world would a temple be constructed for Goddess English? On October 25, 2010, the birthday of Babington Macaulay, such a temple will be inaugurated in Uttar Pradesh. English is being installed as a deity there so that those who pray to her can be blessed with progress.

Uniquely, Indian managers think in English, the test being that they use English to express fine points. Many don’t comprehend the nuances of a vernacular paper. The manager’s professional education has almost certainly been in English, case studies have been Anglo-American, language proficiency has played an important role in success and socialisation, and the language of business is English. As a result, the Indian manager abroad is quite analytical, linear-thinking , and articulate in his intellectual skills. She hits the ground running in any overseas employment.

Unintended consequence
These four circumstances produce a sufficient number of highly-competitive , creative and competent students! Followed by a career in a relatively-orderly work environment with process-orientation in the west, the career manager goes Boom, Boom. She becomes productive early on because of lower frictional losses and obstacles.

Many, many Indians are successful abroad, not just the few that the media write about. I know from my Unilever experience that Indians are prized as much in India as in Peru, Poland and the Philippines.

These facts about the Indian manager ignore the harsh reality that many do not make it through the obstacle race. This has unfortunate social consequences. But for those that do, the probability of success abroad improves a lot. A concurrent trend is that foreign business leaders are joining Indian companies: Carl-Peter Forster in Tata Motors, Marten Pieters at Vodafone Essar, Wolfgang Prock-Schauer at Jet Airways and Raymond Bickson at Indian Hotels.

In short, Indian managers are rapidly globalising, and that must be a good thing for the future.

(The author is executive director at Tata Sons. Views are personal.)

http://economictimes.indiatimes.com/Why-Indian-managers-succeed-overseas/articleshow/6018548.cms

Wednesday, June 2, 2010

Shale Gas transforms Geopolitics, Energy

For decades, India has kowtowed to Gulf countries, notably Iran. With large shale gas deposits and new technology to extract it, India can afford to act tough, says Swaminathan S Anklesaria Aiyar.

THE Indian government remains asleep to the revolutionary potential of shale gas, which promises to revolutionise both the world energy scene and global geopolitics. Russia, Iran and Opec are going to be greatly weakened, while the US, Europe and China will be greatly strengthened. India can be a major beneficiary.
First, shale is a common sedimentary rock found in most countries, so shale gas can hugely reduce the dependence of most countries (including India) on imported energy. Second, the geopolitical clout of major gas exporters — Russia, Iran, Algeria, Bolivia — will fall dramatically. Third, some countries may start converting their transport fleets into gas-based ones, hitting the demand for and prices of petrol and diesel. Fourth, converting gas into oil will become economic.
Shale has long been known to contain natural gas, but this was not worth extracting with conventional technology. Now a new technology, ‘fracking', plus horizontal drilling, have greatly increased shale gas productivity, so extraction is now viable at $3-4/mmbtu. The new technology has been pioneered in the US so successfully that the US has overtaken Russia as the world's biggest gas producer. US gas reserves have increased from 30 years consumption to 100 years consumption. Port terminals to import LNG (liquefied natural gas) into the US will instead export LNG to Japan.
The US dream of energy independence remains fanciful, but its dependence can indeed fall dramatically. Historically, the price of gas was linked to that of oil: gas cost one-sixth to oneseventh the price of oil. That equation has been smashed in the US, where oil costs $72/barrel but gas costs one-eighteenth as much ($4/mmbtu).
Poland and Ukraine, totally dependent on Russian gas, are rushing to find shale gas and free themselves from Moscow. Georgia, another Russian dependent, also seeks energy freedom. Russia has an iron grip on its ‘near abroad', countries that used to be part of the USSR. But that grip will loosen dramatically if shale gas is found in large quantities in Eastern Europe.
Many Western European countries are rushing to acquire shale gas technology. Exxon Mobil is the front-runner in European exploration, but Shell is following suit. This dismays Algeria, a major supplier to Western Europe, which wants to create a gas cartel like Opec. The chances of this are zero. Indeed, LNG facilities created in the Persian Gulf to supply the US are becoming redundant, so supplies will have to be dumped on Europe and Asia. India must take advantage of this.
Gazprom, the Russian gas monopolist, admits that it has been forced to delink 15% of its supplies from the price of oil, and instead accept links to spot gas prices at trading hubs like Louisiana's Henry Hub, which sets the US benchmark price. Holland has a gas hub at Zeebrugge and Britain at National Balancing Point, and a new hub is coming up in Germany. At these hubs the spot price is determined by the interaction of multiple buyers and sellers, replacing the old prices linked to oil. The Financial Timesreports that half the gas contracts in Western Europe are now linked to spot prices.
PETROCHINA estimates that China may have 45,000 billion cubic metres of shale gas, more than Russia's proven conventional gas reserves. China used to be an oil exporter but in recent decades has become a major importer of oil and LNG. Chinese demand helped push oil to $150/barrel in 2008. In the next 10 years, shale gas may significantly reduce China's import demand. World oil prices may keep rising for another five years, but could plateau or fall after that. China is also exploiting its coal-bed methane reserves of 170 billion cubic metres.
Gas can readily substitute fuel oil in industry and power generation, and kerosene in cooking. But the bulk of oil consumption is in transport. Compressed natural gas (CNG) is powering buses and three-wheelers in Delhi and other cities. However, setting up CNG facilities across countries and converting vehicles to run on CNG remains a major challenge. It may never happen in the US. Authoritarian China, however, will surely push through such a change. This may be phased over a decade or more, but the price impact will start showing up earlier.
India has large shale deposits, with good prospects in the Gangetic plain, Punjab, Rajasthan, Gujarat. Tamil Nadu, Andhra and the north-east. India must get cracking on seismic surveys followed by allotment of exploratory blocks. Companies should be able to acquire blocks any time based on a predetermined revenue-sharing formula. Mukesh Ambani will probably be the first to start exploration, but others will follow quickly, including Anil Ambani (who is already in unconventional gas through coal-bed methane).
Large shale gas discoveries should embolden India to convert transport fleets in all cities from petrol and diesel to CNG. That will reduce not only energy dependence but pollution too.
Reliance has considered converting some KG gas into oil. Now that gas has become cheap relative to oil, it should go ahead. Other refiners — Essar, IOC, BPCL and HPCL — should consider this option too.
For decades India has kowtowed to Gulf countries, notably Iran. It can now afford to act much tougher. Iran supported Pakistan in Indo-Pak wars, and blasted India for Pokharan-II, and demanded that India sign the NPT. Iran nationalised the Rostam and Raksh oilfields in which the ONGC had a stake. It reneged on a contract to supply cheap LNG top India after Ahmedinejad came to power. Despite this India has been deferential to this potentially powerful energy supplier.
That must now change. India must tell all Gulf producers that it will pay gas prices linked not to oil but to the Henry Hub price. The best starting point is not Iran but Qatar, which has just completed a gigantic expansion to become the world's largest LNG supplier. This is now in surplus. Qatar wants $10/ mmbtu. India must offer just $4. Once Qatar gives way, so will other LNG exporters, including Australia.

http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/Shale-gas-transforms-geopolitics-energy/articleshow/6001231.cms