Roger Martin is dean of the Rotman School of Management at the University of Toronto. A frequent visitor to India since the past two decades, he has been tracking local companies since his first visit in 1990.
Martin was formerly a director of Monitor Company, a global strategy consulting firm based in Cambridge, Massachusetts, and the author of The Design Business: Why Design Thinking is the Next Competitive Advantage.
He is also a close associate of Alan Lafley, CEO of Procter & Gamble (P&G), the consumer goods giant and an independent director on the board of Research in Motion, the firm that makes Blackberry smartphones.
His upcoming book, Fixing the Game, is about the two biggest market crashes in 2001 and 2008 and what caused them. In this,
Martin will reveal the culprit: the tight coupling of the ‘real’ market (business) with the ‘expectations’ market (the stock market).
In an interview with DNA, Martin says Americans aren’t much bothered about the recent corruption scandals in India. They were more concerned when a group of Americans were killed at the Taj Mahal Hotel, he says. Excerpts:
What kind of changes have you seen in Indian companies in the two decades you have been visiting India?
Two decades ago there weren’t many Indian companies with an international exposure. Now there are so many of them. This morning, (December 15th), I spent time with the top management of Tata Consultancy Services (TCS). With Chandra (N Chandrasekharan, CEO of TCS) and his key management. They are not afraid of foreign competition. It’s a sense of … we have the companies, the brains and the capital to go after markets internationally. That’s different from the nineties.
Twenty years ago, at least my recollection is India had much more of an import-substitution mentality. What can we do to produce domestically stuff so that we don’t have to import it? It was the ethos of the place. Now Indian businesses think of what do I do that can make us dominate the world? That’s the mentality now. What can we buy now? The way (Lakshmi Niwas) Mittal did — buying up global steel companies — I cannot ever imagine Indian companies like that 20 years ago. Mittal bought Arcelor and moved to London — that’s the biggest difference.
When did Indian companies come of age? Was it when the economy opened up a bit in the early nineties?You have to walk first, then jog and then run. Some Indian companies put their head into the international world, a little by little bit, by taking small bets and when that worked out, believed they can do more. I am not sure that TCS or Infosys or Wipro talked of being giants of the size of IBM when they started. When they started, they turned out to be an attractive product and service offering. They just went from there.
Are Indian companies in the jog phase or are they really sprinting now, when you compare them with global peers?
There are different groups doing different things. There are groups that are sprinting. For instance, the Tatas are interesting and gigantic. But they were not so international before TCS was, but with the automobiles and steel they now have an international presence. But to say that TCS is doing anything but sprinting will be a mistake. What I can tell is that they are one of the firms in the world in their sector to watch out for. They have an outpost in Latin America served by Latin Americans and not by the Indians. They have built the entire supply chain there. They are aggressive.
What are the challenges before Indian companies such as TCS? Sooner than later, labour arbitrage would cease to be an advantage…
The best thing that ever happened to Japan was their labour getting expensive. They were forced to add value in a more sophisticated way. They were forced to invest in R&D and I think that is the challenge. The cost advantage has narrowed dramatically. The challenge now is building the brand, as something more than an Indian sweatshop. Building a brand is important. Close to my heart is a strategy study we did to convince Arthur Anderson to create what was first called a systems integration practice within it. It then became Andersen Consulting, which became Accenture, an independent company. We created that with them. It was a first of kind company. I think Accenture has created a brand imagery that’s different from TCS. I think TCS has probably got like-to-like good capabilities as Accenture has, to add value to clients, but I think Accenture gets paid more for it.
Why is that so?
Because they have established their brand as a sophisticated systems integration firm. Whereas TCS and Infosys started off with the premise we can do at half the cost. It will take a while to build on that to create an impact. That’s clearly a challenge.
Between, Accenture and TCS, is there a disparity in pricing?
When I talked to these guys they say the price realisation of IBM Global Services and Accenture is higher but they say their hours of work and output are the same.
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