Conquering the Chaos: Win in India, Win Everywhere by Ravi Venkatesan Read Free Book Online Page A

affluent world, growing their presence
     across developed countries and then across the developing world. Their success has
     come largely from an export-driven approach in which they targeted the affluent in
     every country and replicated their products, business models, and management systems
     and practices across countries. However, this model of skimming the top has limits.
     It is less successful in reaching the next billion emerging middle-class customers
     who are far less affluent and who live in countries that, like India, have poor infrastructure,
     skill shortages, rampant corruption, and very high volatility and uncertainty.
    Cracking this segment requires a new model of globalization that is radically, not
     incrementally, different. In a prescient article in Harvard Business Review , the late C. K. Prahalad wrote:
When large Western companies rushed to enter emerging markets 20 years ago, they were
     guided by a narrow and often arrogant perspective. They tended to see countries like
     China and India simply as targets—vast agglomerations of would-be consumers hungry
     for modern goods and services. This “corporate imperialism” has distorted the operating,
     marketing, and distribution decisions multinationals have made in serving developing
     countries. In particular, these companies have tended to gear their products and pitches
     to small segments of relatively affluent buyers—those who, not surprisingly, most
     resemble the prototypical Western consumer. They have missed, as a result, the very
     real opportunity to reach much larger markets further down the socioeconomic pyramid.
     Succeeding in these broader markets requires companies to spend time building a deep
     and unbiased understanding of the unique characteristics and needs of developing countries
     and their peoples. But such time is well spent. Not only will it unlock new sources
     of revenue, it will also force big companies to innovate in ways that will benefit
     their operations throughout the world. 7
    However, the mind-set and behavior change that Prahalad refers to is a paradigm shift,
     which is, by definition, destabilizing and threatening. Think about the implications
     of the new model. The dominant hub-and-spoke architecture of a company with an all-knowing,
     all-powerful headquarters instructing and supervising the geographical subsidiaries
     gives way to a new architecture of multiple hubs, including China and India, that
     is run as real profit-and-loss businesses with significant operating freedom. Innovation
     happens not just in product divisions and at headquarters but in geographic areas,
     too. Executive leaders don’t just live at headquarters; many operate out of hubs.
     The company has to cut investments in the rich, slowing markets of Europe and in product
     divisions or strategic business units in order to fund investments in key emerging
     markets. It also has to have the patience and tenacity to wait for these investments
     to pay back. It has to prioritize markets, not on the basis of revenues but on opportunity.
     This requires new capabilities, such as the ability to operate in places that are
     corrupt, volatile, and uncertain. The company has to behave with humility, responsibility,
     and open-mindedness in all countries. Poor safety and environmental practices, monopolistic
     pricing, and the dumping of obsolete or banned products in emerging markets won’t
     go unchallenged.
    No wonder it’s easier to be an ostrich and simply execute the old model better.
    Companies often tread cautiously and reluctantly in markets like India. The reluctance
     could prove costly. Many industry leaders could be replaced by smaller competitors
     or newer players from emerging markets that embrace the next wave of globalization
     faster. Paradigm shifts invariably reorder leadership; incumbent leaders are slower
     to adapt than hungry underdogs or new players. Just think of how Apple, Google, and
     Samsung have devastated