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Last Updated : Feb 11, 2019 06:17 PM IST | Source:

Book Excerpt: R Gopalakrishnan on the cultures of Unilever and Tata Group

While Unilever is highly process-oriented and goal-driven, reveals the author, while Tata Sons is very Indian and highly relationship-oriented.

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Former Tata Sons director R Gopalakrishnan, in his new book titled The Made in India Manager, uses anecdotes to explain the difference in decision-making between Unilever and Tata Sons. Here are excerpts from the book that have been reproduced with permission from publisher Hachette India.

When the vectors of thought and action are aligned, you get the best possible combination of efficiency and effectiveness. The concept appears to be axiomatic, and three examples might help to illustrate the point. First, if the mindset in an organization dictates that differences with senior colleagues must not be expressed openly, and that is aligned with the action vector, you can get an outcome that is effective and efficient within that context. Of course, that does not mean that the outcome is a good one. Take the case of Korean Air, which faced frequent air crashes between 1988 and 1998. When an enquiry was finally conducted it turned out that the chief pilot’s social status was so high in Korean society that junior officers would usually be oblique in their communication with him, even in cases that required direct and urgent action. In many instances this led to dire consequences as co-pilots would simply allow the pilot to take major decisions even if they were questionable. Second, under the leadership of Jack Welch, General Electric (GE) decided that a rigorous portfolio analysis with a transparent methodology was essential to enhance shareholder value. This mindset, combined with their capability for disciplined execution, delivered hugely positive outcomes which have been well documented. Third, public-sector banks in India are known to have the persistent problem of non-performing assets (NPAs). Publicly available commentaries display a high level of skill in data-gathering, analysis and policy options, but the execution of those ideas gets bogged down in socio-cultural issues such as a politician–businessman nexus, deference to authority and an orientation towards relationships rather than discipline when it comes to making decisions.

What are the manifestations of a two-axis manager? How does it show up in business conduct? Here are some examples that illustrate the various ways in which Indian managers sometimes think in English but act in Indian.

For the first, we draw on one of the authors’ (Gopal) personal experiences in corporate India. ‘From my personal experience, I worked in Unilever for three decades and in Tata Sons for almost two. I survived and grew in both because I adapted to their unique cultures. My comments are not intended to suggest that one is superior to the other. The observations below are just what they are – they provide a contrast. ‘Unilever is highly process-oriented and goal-driven in articulating ambitions and getting things done. It is very Anglo-American in its approach in that it tries to cut out unnecessary issues around a problem, focus on the essentials and address relevant issues efficiently. Unilever neither encouraged nor tolerated ambiguity; in fact, the organization did all it could to distance itself from ambiguity.

The Made in India Manager

‘In contrast, Tata Sons is very Indian and highly relationship-oriented. Goals are relatively fuzzy and the accountability of getting things done is not always clear. While an analytical approach is encouraged, it provides room for ambiguity and accepts the view that the problem need not be stripped to its bare bones. The space to take a more holistic view of the many related issues surrounding the task is always present.

'At Unilever and Tata Sons, I experienced two similar disciplinary cases with different outcomes. At Unilever, a long-serving field supervisor was proven to have fudged his expense statement for a small sum. He had travelled in a lower-class compartment in a train, but had claimed a higherclass fare. The investigation system worked with finesse, and after all the facts were gathered and the supervisor was given the opportunity to explain himself, he was fired. The thinking vector stated that dishonesty is what it is, regardless of how much money was involved. The action vector had to
be consistent with this.

‘At Tata Sons, an employee inflated a medical claim by adding a zero to the top left of the 100-rupee expense incurred, making it appear like 900 rupees were spent. The matter was detected, the employee was confronted and a confession obtained. The decision on the punishment, however, went
through a complex process of referrals, consultations and discussions. Finally, from a compassionate perspective, the employee was given a warning, denied two increments but allowed to continue working for Tata Sons.

‘To take another example, both companies have a retirement age for employees. In Unilever, there are virtually no cases of extension of employment or post-retirement advisory positions. The thinking vector of the organization dictates that since there is no uncertainty about retirement, the management had best plan succession well.

‘In Tata companies, cases of retirements being deferred or advisory positions created to extend terms of employment are far more frequent. The thinking vector here states that the person possesses valuable expertise, which will not dissipate after retirement, and may work to the benefit of the competition, so why not retain such expertise for a few more years?

‘Given the cultures of the individual organizations, former Unilever executives regard themselves (on a voluntary basis) as alumni and behave like the alumni of an educational institution. They carry fond memories of their days at Unilever, maintain a few work friendships, demonstrate a
benign interest in current events at the organization, but cut themselves off from it, which, for the most part, is actively encouraged. It is less so at Tata Sons. Former employees speak of their association with a sticky warmth, recall their own contributions and experience with great emotion and actively seek to know what is going on in the group after their departure. The organization also values former relationships and does not disassociate itself from former employees, though it is not necessarily welcoming of too
much interest either, which is as it should be.’

Now take the instance of Infosys. As a company, Infosys is very proud of its humble Indian roots, established as it was by a few cash-strapped professionals who got together in 1981 to create a world-class IT services company. For them, their workplace and their enterprise was their temple,
the software business was their religion, and though they were pursuing wealth for all it was subordinate to their morals (dharma). The founders were proud to maintain values of austerity, humility, respect for money and a singleminded focus on customer service. However, in terms of  organizational efficiency, they were smart enough to adopt international benchmarks in organizational design, humanresource practices and corporate governance. Although they  had mainly foreign customers during their first 20 years, they continued to provide their services from India, with Indian talent. However, a few things changed for the company once
it was listed in NASDAQ.

It began with the leaders thinking and talking about going global. The company was presented as having an international flavour and foreign nationals were recruited into its workforce. European, American and non-resident Indian nationals were invited to join the board. Retirement
and board-renewal policies were adopted from international practices; governance practices were benchmarked with international corporations. The humble and austere founders were now capitalist owners of considerable financial assets. Infosys was talked about as a paragon of transparent virtue, comparable to the best international corporations. It just happened to be of Indian origin. After the founders had all taken a sequential strike from the CEO crease, the board looked outside, not just in India but globally, to find a CEO. They found Vishal Sikka, the archetype of a made-in-India global manager.

Against all of this thinking in English, however, transactional anomalies typical to India will soon emerge. When it had come to CEO succession, the group of founders had acted like a family business, taking over sequentially
from each other until they could not do so any more without seriously damaging the fibre and future of the company. For a couple of years, the patriarch of the company N.R. Narayana Murthy even inducted his son as his personal assistant – an anathema in a global corporation. On the other hand, Sikka, a professional manager, was hired at a much higher salary because he was Indian-American. When Sikka was introduced to the shareholders under the watchful eye of eager television crews, he did a very Indian thing: he advanced towards Murthy and bent to touch his feet! In a
Western-oriented corporate environment, it was an amazing
act of thinking in English and acting in Indian.

Murthy welcomed Vishal Sikka with the warmth that patriarchs are expected to display. With wide-eyed humour, he said, ‘I understand Vishal means big, and Sikka means money. So now Infosys shareholders can expect big money through Vishal Sikka.’ This was an expression of a very
typical Indian sentiment, repeated when sons and grandsons
seek the blessings of the elders before embarking on a career
or business venture.

Encouraged by the English-thinking sentiments, the English-minded Sikka did English-minded things that any global CEO would do. But soon he found his feet caught up in the quagmire of the Indian action soil. Whispers, whistles, rumours, intrigue and exposure through the media started
distracting the board and the management. Eventually, matters took a grave turn, resulting in Sikka quitting his post within three years of being at the helm.

We have so far seen the rich historical, cultural and individual influences that have shaped the Indian manager of today. To take our argument further and assess our claim that a series of factors come together in a constantly evolving way to make the made-in-India manager and thinker a force to reckon with in the future, we must first understand the forces that will shape the world of tomorrow and then situate a future made-in-India manager in this context.

First Published on Feb 11, 2019 06:17 pm
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