Conquering the Chaos: Win in India, Win Everywhere by Ravi Venkatesan Page A
Authors: Ravi Venkatesan
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India. (In chapter 6 , I will discuss the use of JVs and acquisitions in greater depth.)
Finally, growth in markets like India often occurs in unpredictable spurts, rather
than in a continuous fashion (see figure 4-2 ). Few people anticipated how the economy would lift off in 2004–2005; fewer anticipated
the rapid deceleration in 2011. A company needs to position itself well, and when
the spurt starts, give it everything it has and ride the tiger. This is not the time
to hold back or limit investments or support. Later in this chapter, I will describe
how JCB seized the moment. Another company might have celebrated 40 percent growth
and been satisfied. But what if there is an opportunity to be growing at 100 percent?
It’s important to floor it. Most races are won in the turns; anyone can floor it on
the straights. So it was at JCB, where the whole company exerted itself to push the
limits in India. The results were amazing.
FIGURE 4-2
Growth in India happens in spurts followed by periods of slowdown (compared with China)
Source: International Monetary Fund, World Economic Outlook Database, April 2012.
2. Keeping the Structure Simple and Accountable
As I conducted my research, I discovered that any discussion about organizational
structures touched a nerve in nearly every company I visited. In most multinationals,
there are global divisions and functional organizations in each region. So the HR,
finance, and legal departments in India report to their global counterparts functionally,
as do the different business units. This is often taken to an extreme, where different
parts of finance—tax, treasury, and accounting, for instance—report separately to
different heads. In HR, training, compensation, and benefits also report globally,
rather than to the India HR head. The strong country organizations of the 1960s, led
by powerful managers who ran their operations with a lot of freedom, have given way
to stronger global product divisions and global functions.
There are several reasons for this approach, but the fact is that in many companies,
the dominant axis is the business unit or product division; those businesses are global
and their presidents are accountable for financial results. They naturally want control
and linkages with their businesses in every country. In theory, these linkages are
important for understanding local opportunities, developing local talent and capability,
and supporting the local business with deep expertise, investments, and resources.
It’s a sensible way to run a global business.
Unsurprisingly, most country managers hate matrixed organizations with dual reporting
relationships. This is not an issue of control or ego; the problem is that since India
contributes only 1 percent of global revenues, it gets 1 percent of the attention
of the senior people at headquarters and even less of the investment. They can meet
global targets without paying much attention to their business in India, which will
stay stuck in the midway trap that I described in chapter 2 . Dual reporting often leads to confusion, turf battles, unclear accountability, and
enormous amounts of time spent in negotiating simple decisions. There is a high risk
of losing flexibility and speed, especially in geographies where the confusion is
exacerbated by language, time zone, cultural, and hierarchical barriers.
Senior leaders in multinational companies are ambivalent about creating straight-line
in-country reporting and accountability for all businesses, pointing out that there
is no ideal structure. Whichever axis a company organizes around—product, geography,
or segment—it has no choice but to make the other two axes work. In their seminal
book Managing Across Borders: The Transnational Solution 2002 , Sumantra Ghoshal and Chris Bartlett argue that matrix organizations are a frame
of mind rather than a structure. 3 Companies need general
Finally, growth in markets like India often occurs in unpredictable spurts, rather
than in a continuous fashion (see figure 4-2 ). Few people anticipated how the economy would lift off in 2004–2005; fewer anticipated
the rapid deceleration in 2011. A company needs to position itself well, and when
the spurt starts, give it everything it has and ride the tiger. This is not the time
to hold back or limit investments or support. Later in this chapter, I will describe
how JCB seized the moment. Another company might have celebrated 40 percent growth
and been satisfied. But what if there is an opportunity to be growing at 100 percent?
It’s important to floor it. Most races are won in the turns; anyone can floor it on
the straights. So it was at JCB, where the whole company exerted itself to push the
limits in India. The results were amazing.
FIGURE 4-2
Growth in India happens in spurts followed by periods of slowdown (compared with China)
Source: International Monetary Fund, World Economic Outlook Database, April 2012.
2. Keeping the Structure Simple and Accountable
As I conducted my research, I discovered that any discussion about organizational
structures touched a nerve in nearly every company I visited. In most multinationals,
there are global divisions and functional organizations in each region. So the HR,
finance, and legal departments in India report to their global counterparts functionally,
as do the different business units. This is often taken to an extreme, where different
parts of finance—tax, treasury, and accounting, for instance—report separately to
different heads. In HR, training, compensation, and benefits also report globally,
rather than to the India HR head. The strong country organizations of the 1960s, led
by powerful managers who ran their operations with a lot of freedom, have given way
to stronger global product divisions and global functions.
There are several reasons for this approach, but the fact is that in many companies,
the dominant axis is the business unit or product division; those businesses are global
and their presidents are accountable for financial results. They naturally want control
and linkages with their businesses in every country. In theory, these linkages are
important for understanding local opportunities, developing local talent and capability,
and supporting the local business with deep expertise, investments, and resources.
It’s a sensible way to run a global business.
Unsurprisingly, most country managers hate matrixed organizations with dual reporting
relationships. This is not an issue of control or ego; the problem is that since India
contributes only 1 percent of global revenues, it gets 1 percent of the attention
of the senior people at headquarters and even less of the investment. They can meet
global targets without paying much attention to their business in India, which will
stay stuck in the midway trap that I described in chapter 2 . Dual reporting often leads to confusion, turf battles, unclear accountability, and
enormous amounts of time spent in negotiating simple decisions. There is a high risk
of losing flexibility and speed, especially in geographies where the confusion is
exacerbated by language, time zone, cultural, and hierarchical barriers.
Senior leaders in multinational companies are ambivalent about creating straight-line
in-country reporting and accountability for all businesses, pointing out that there
is no ideal structure. Whichever axis a company organizes around—product, geography,
or segment—it has no choice but to make the other two axes work. In their seminal
book Managing Across Borders: The Transnational Solution 2002 , Sumantra Ghoshal and Chris Bartlett argue that matrix organizations are a frame
of mind rather than a structure. 3 Companies need general
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