Research consistently shows the primary focus of western CEO’s is on the short term share price of their company, while their Indian counterparts are driven more by social responsibility, energising the team, managing stakeholders and developing inner strength.
These are significant differences in the way they think about business – and according to Korn Ferry, this difference explains why India is heading for continued business success.
To understand the impact of this stark contrast, consider the findings of The Marshmallow Test created in 1972. The marshmallow is that sweet confection of puffed balls of sugar, corn syrup and gelatine. In the test, four-year-old children were given one marshmallow, but if they could wait a short time to eat it, they would receive another.
Professor Walter Mischel, Stanford University, studied the progress of those who immediately ate the one marshmallow, compared with those who could wait for the reward – the choice of instant gratification versus delayed benefit.
Those who could wait were later on better psychologically adjusted, more dependable and achieved higher grades in education. Those who followed their impulse and ate the one marshmallow might make great explorers or entrepreneurs, but they were also more likely to have behavioural problems, lower grades and were less reliable.
You can see this effect at work in the contrasting styles of leadership between India and the west. The western leader’s preoccupation with short term share price is like the child who could not wait for a second marshmallow – concerning when you reflect the experiment showed that those who could not wait were ultimately “less reliable”.
The Indian leader in this experiment would wait for the second marshmallow - putting the role of the business in society, long term strategy, building talent and developing organisational culture ahead of the short term goal – the marshmallow – of share price. This explains why Korn/Ferry International feel Indian business leaders will have “the greatest impact” on future international business priorities.
This partly explains why Indian companies are expanding globally and taking over iconic brands like Jaguar and Land Rover. It underpins the success of Indian-origin CEOs in global companies, including Pepsico, McKinsey, Unilever, Deutsche Bank, Citibank, Standard Chartered and HP.
It also goes a long way towards explaining India’s rising middle class and substantial proportion of young and educated workforce. Significantly, Indian companies are increasingly being recognised globally for their achievements.
For example, Bengaluru-based biotechnology firm Biocon has been named by 'Science' magazine as one of the top 20 employers in global pharmaceutical sector. Biocon is the only Asian firm to make it to the top 20.
Is the CEO of Biocon celebrating short term impact on share price? Kiran Mazumdar-Shaw, Chair and Managing Director, Biocon Ltd, typifies a different approach: “I do hope I can inspire ordinary people to build enterprises from very little monetary resources but a rich mind to succeed. Biocon is really about building intellectual wealth and not about creating material wealth. It is the opportunity that the company has provided to hundreds of scientists that matter to me.”
Ratan Tata was, until recently, the Managing Director of Tata Group, overseeing the globalisation of this the largest Indian private corporation. He build a combination of confidence and humility into the management of the firm: “I do not know how history will judge me, but let me say that I’ve spent a lot of time and energy trying to transform the Tatas from a patriarchal concern to an institutional enterprise. It would, therefore, be a mark of failure on my part if it were perceived that Ratan Tata epitomises the Group’s success. What I have done is establish growth mechanisms, play down individuals and play up the team that has made the companies what they are. I, for one, am not the kind who loves dwelling on the ‘I’. If history remembers me at all, I hope it will be for this transformation.”
Like many other Indian business leaders, Tata also has a strong social and community conscience and is prepared to put shareholders money into good causes: “Some foreign investors accuse us of being unfair to shareholders by using our resources for community development. Yes, this is money that could have made for dividend payouts, but it also is money that’s uplifting and improving the quality of life of people in the rural areas where we operate and work. We owe them that.”
Kumar Mangalam Birla, Chairman of The Aditya Birla Group, also did not put share price at the pinnacle: “I think a leader has many roles to play. So, you know, one role is that of incubating talent, the other is that of being a strategist. It's a very interesting job I've got.”
Contrasting approaches to soft skills and personal development also highlight the difference between western and Indian business leadership. Mostly in the west soft skills have been seen as just another skill. But in India success comes by combining soft skills with attitude - the complete soft skills package is more than speaking, listening, presenting and leading. It is about your state of mind, your view of how the world really works and your connection with your heart.
Professor Heckman believes character skills are essential ingredients of success – and includes in these soft skills, personality, self-esteem, delayed gratification and motivation.
This Indian approach makes the corporation very good at facing challenges, building teams for the future while keeping an eye on the broader society.
It allows corporate leaders to balance impatience and patience, waiting for that second marshmallow. But always with a sense of action - Rabindranath Tagore said: “You can’t cross the sea merely by standing and staring at the water.”
Stephen Manallack is a published author, cross cultural trainer and speaker on doing business with India. His new book is Soft Skills for a Flat World (Tata McGraw-Hill). EMAIL stephen@manallack.com.au