Book Excerpt: Riding the Tiger

How to Execute Business Strategy in India 

Published in December 2016, Riding the Tiger: How to Execute Business Strategy in India analyzes the Indian business landscape through the lens of India’s complex context and awe-inspiring growth trajectory. Authors Amit Kapoor and Wilfried Aulbur deftly articulate what it takes to be successful, “how to ride the tiger,” and why global companies should be mindful of the lessons for staying competitive in India as many of these will apply to the other emerging markets as well. The book presents a comprehensive review through case studies related to the successes and failures of leading multi-national companies that together highlight the nuances of business in Indian culture.


 

We live in a VUCA world—a world characterized by volatility, uncertainty, complexity and ambiguity. The Internet is (finally) revolutionizing the retail and media industries. Green technologies are shaping our growth path. Biotechnology and material science are on the verge of ever more fundamental breakthroughs. Digitalization and robotization are putting industrial capabilities at risk. Germany is about to switch off nuclear power. Europe is faced with a violent geopolitical conflict on her doorsteps. Britain just decided to leave the European Union (EU). The US has proclaimed the ‘Pacific Age’ and faces probably the most divisive presidential election campaign in its history. Unethical behaviour by bankers has not only led to the great financial crisis of 2008 but also to a series of scandals relating to Libor and exchange rate fixing. Car company executives have cheated on the emission values of their vehicles. Oil prices, exchange rates and stock markets have undergone fluctuations that have left even the hardiest investors breathless. The long list of facts that we would have at best considered as unlikely trends just a little while ago continues to grow longer at ever shorter time intervals.

Emerging markets, while often delivering higher growth rates than the so-called developed economies, tend to be more exposed to these critical uncertainties. Internal factors increase volatility and complexity beyond the levels seen in developed markets. Most emerging markets face key challenges; for instance, governance issues such as the recent corruption scandal in Brazil or the corruption scandals in India a couple of years ago. Rule of law is often either inadequate or not enforceable. Political uncertainty is high in both democratic and non-democratic emerging markets, often leading to internal and external tensions as witnessed by the Ukraine crisis, the current war in Yemen and the dangerous ongoing tensions in the South China Sea. Institutional voids prevent a simple application of global business models and sometimes imply that it is not the best contender but the best connected who wins. Operating in emerging markets does require a unique combination of stamina, commitment, flexibility and speed.

India is no exception. Just a couple of years ago, global coverage about India focused almost entirely on gaps in governance. Massive corruption scandals embroiled the government and the administration and led to extensive policy paralysis. At the height of the crisis, more than INR 6.2 trillion of projects were held up at various stages of the investment process with a corresponding negative impact on the overall economy. During the second half of the Congress-led United Progressive Alliance (UPA) government, sudden bans on iron ore and coal mining disrupted access to raw material for energy and steel producers. GDP growth slowed down to an unsatisfactory level of 4–5 per cent and growth-oriented companies were forced to focus on operational efficiency and cost savings as they struggled for survival. The sweeping win of the opposition National Democratic Alliance (NDA) in 2014 and the focus of the new government on investment and pro-business policies has created cautious optimism within India and abroad. However, it remains to be seen how many of the election promises will be executed on the ground.

Yet, despite these challenges, India’s democracy has enabled remarkable economic and political development. India managed to keep a collection of independent nations together in a single state after shaking off the yoke of foreign occupation. The current discussion in Europe around Greece, Britain and potentially other countries clearly serves as a reminder that this is no mean feat. India’s GDP is 4.3 times greater compared to 1991 and the country has pulled about 225 million citizens out of poverty. Telecommunications penetration has gone from 6 million in 1991 (1 per cent penetration) to 915 million in 2013 (73 per cent penetration). Between 1991 and 2013, 45,466 km of national highways were built, as compared to 13,839 km between 1951 and 1991. The addition since 1991 alone is four times the length of Germany’s total autobahn network.

Change and progress in India are palpable and visible everywhere. When I (Wilfried Aulbur) arrived in India for the first time in 1994, I was mesmerized by India’s colours and the diversity of her people. But I remember clearly the nagging thoughts and growing frustration that such a beautiful country did not seem to be able to offer exciting careers to her young people. Most of India’s best and brightest were determined to secure seats at US universities in the hope of settling there. Today, things have changed dramatically for the better. In most fields, careers in India are as exciting and fulfilling as in any other part of the world—with the challenges of operating in an emerging nation, probably even more exciting.

Today, India means opportunity. There are clearly significant business opportunities here that can and should be leveraged. Successfully riding the Indian tiger requires a sound, flexible strategy, operational excellence and a dedication to customer-centric innovation.

Successfully riding the Indian tiger requires a sound, flexible strategy, operational excellence and a dedication to customer-centric innovation.

Typical strategy frameworks that look at a ten-year planning horizon may not be applicable to emerging markets in general and India in particular. With doubts about the predictability of the future—new competitive dynamics driven by digitalization, frugal innovations and business models, fast-changing consumer needs and aspirations, etc.—strategic approaches in India require flexibility. While firmly centred on a common purpose, strategies and organizations need to be able to adapt quickly to changing market environments.

Besides strategy, operational excellence is of key importance to survive in the hyper-competitive Indian environment. Prices in India, such as those for passenger cars, are significantly lower than in developed and other emerging markets. While disposable income has increased significantly over the last few decades, large sections of the population remain very price-sensitive. The key challenge in providing value at a consumer-defined price point can only be met by companies that relentlessly pursue cost reductions and process improvements across the value chain.

Indian consumers are value-for-money devotees. Satisfying their demands for performance at acceptable price points drives business model and process innovations. Price/performance equations of products need to be constantly improved via frugal engineering in order to both secure existing markets and open up whole new market segments for consumption. Real technological innovation breakthroughs have been less prominent in the Indian market and are generally more relevant to furthering the global aspirations of Indian multinational companies (MNCs).

This excerpt of Riding the Tiger, owned by Penguin Random House, is reprinted here with permission. For more information, visit https://penguin.co.in/book/business/riding-the-tiger/


Wilfried Aulbur, Co-Author

Wilfried Aulbur, PhD, is a member of the global supervisory board for Roland Berger, chairman, Middle East and Africa, and managing partner, Roland Berger India. Previously, he was the CEO of Mercedes-Benz India. He has also held various positions with Daimler in the US, Europe, and India. Wilfried is an instructor with Harvard Business Publishing in the area of strategy, operations, and innovation.

 

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