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Jugaad enters management jargon

Saturday, 10 April 2010 - 1:08am IST | Place: NEW YORK | Agency: dna

Business leaders around the world leapt to take a leaf out of Toyota’s playbook. The lean Japanese production methods pioneered by Toyota’s Eiji Toyoda originated in the austerity of post-war Japan.

Business leaders around the world leapt to take a leaf out of Toyota’s playbook. The lean Japanese production methods pioneered by Toyota’s Eiji Toyoda originated in the austerity of post-war Japan. Just as The Toyoto Way influenced global manufacturing, the authors of the The India Way say Indian management practices offer lessons to Western firms scrambling to adapt to a changing business landscape. “Indian companies are on a roll. If you look at Infosys, its growth is outstripping the 7-8% GDP of the country. It’s this stunning growth that gave us the idea for the book. We wanted to see what management practices from India are exportable,” said Wharton Business School professor Michael Useem, who has authored The India Way with Peter Cappelli, Harbir Singh, and Jitendra Singh. The book is due in May. Useem talked to Uttara Choudhury in New York about how Indian practices like jugaad are likely to enter the lexicon of western management consultants.

Your book talks about India’s genius in making something out of limited resources. How did India develop the jugaad mindset?
Jugaad is a virtue that’s evolved out of necessity. Adaptability and improvisation emerged as a response from conditions that were not directly related to business. During the license raj, the bureaucratic roadblocks were felt at every turn, and even today the infrastructural challenges are many.

As a result, Indian executives became adept at solving problems by improvising. In a complex, often volatile environment with few resources and much red tape, business leaders learned to rely on their wits to circumvent the hurdles they confronted. Adaptability and improvisation are now at the heart of the India Way. They have led to a willingness to plunge forward even when the territory is new.

Consider ICICI Bank. When it entered microfinance, there wasn’t a roadmap on how to do it. But ICICI executives, four of whom we interviewed, including CEO Chanda Kochhar and KV Kamath, said they simply had to invent their own path into the market. In doing so, they didn’t have a well-defined way forward, and moved “sideways” instead. They took a step, tested the field, found what worked and what didn’t, and adjusted their strategy. This is a distinctive Indian practice the West could learn from.

Do Indian companies have the jugaad or frugal engineering skills to create breakthrough products at low cost?
Yes, Indian business leaders have combined jugaad with frugal engineering to produce innovative products with good value at exceptionally low price. Tata Motors’ creation of the Nano is a good case in point. Not only does it sell for a fraction of what cars cost, but it is also available as a “kit” for assembling by local mechanics. I can’t image a Chevrolet or a Ford combining improvisation with thrift in quite the same manner.   

Is the India Way all that different from Western management practices?
We found an approach to business leadership that is indeed distinct from that prevailing in the West. It can be hard to grasp, but Western business leaders have much to learn from the India Way.
We “think in English and act in Indian,” observed R Gopalakrishnan, the executive director of Tata Sons. “For the Indian manager,” he explained, “his intellectual tradition, his y-axis, is Anglo-American, and his action vector, his x-axis, is in the Indian ethos. Many foreigners come to India, they talk to Indian managers, and they find them very articulate, very analytical, very smart, very intelligent — and then they can’t for the life of them figure out why the Indian manager can’t do what is prescribed by the analysis.”

What then are the principal practices of the India Way?
It took us a while to identify the features of that “x-axis.” But we found a unique mix of organisational capabilities and managerial methods — four leadership practices really stand out:
1. Holistic engagement with employees. Indian leaders view sustaining employee morale and building company culture as critical. People are viewed as assets to be developed, not costs to be reduced and as sources of creative ideas.
2. Improvisation and adaptability. Improvisation is also at the heart of the India Way. The Hindi term jugaad captures the mindset. Anyone who has seen outdated equipment nursed along a generation past its expected lifetime with retrofitted spare parts and jerry-rigged solutions has witnessed jugaad in action. Adaptability is crucial as well, and it is frequently referenced in an English-Hindi hybrid, adjust kar lenge — we will adjust.
3. Creative value propositions. Given the large domestic market with value-conscious customers, most of modest means, Indian business leaders have learned to be creative in developing their value propositions. They are inventing entirely new products and services.
4. Broad mission and purpose. Besides servicing the needs of their stockholders — a necessity of CEOs everywhere — Indian CEOs also stress broader societal purpose. They take pride in enterprise success — but also in family prosperity and national renaissance.

Bundled together, these principles constitute a distinctly Indian way of conducting business, one that contrasts with the United States, where the blend is centered more on delivering shareholder value. 

You didn’t feel they were just paying lip service to nation-building?

Indian corporations have succeeded while pursuing a social mission and taking care of their employees. The India Way appears to avoid some of the rapaciousness and excesses of the American model. Companies go beyond not doing harm to the social fabric to actively embracing social improvements, in some contexts more efficiently than the government. Consider the examples of Bharti Airtel, Tata Motors and Hindustan Unilever where they have provided inexpensive mobile services, cars and consumer goods to millions of traditionally underserved people of modest means.

But isn’t private gain still an important motivator? 

Self-interest is of course not far from the surface. For B Muthuraman of Tata Steel, social responsibility includes a reputational asset. “Our history in corporate social responsibility,” he affirmed, has “enhanced the group brand.” For others, acting responsibly in the eyes of the regulators may be a necessity. Obtaining industrial licenses in the US can be a straightforward, if technical, process, while in India it can also be dependent on a reputation for public responsibility.

But the commitment goes well beyond a private calculus. Indian executives put forward what is essentially an Indian version of the “stakeholder” model of corporate governance, where business decisions strike a balance between the interests of all those affected by the company. They carried a self-conscious commitment to give back to society. “The three P’s of the Indian style of management,” said Rakesh Mehrotra, managing director of Container Corporation of India, “are people, planet, and prosperity.” We found Indian industry had embraced a concern for multiple stakeholders, not just the narrower needs of shareholders.

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