Ravi Venkatesan can face an audience and speak for more than 30 minutes without notes on the challenges and rewards of doing business in India.
His enthusiasm and in-depth knowledge might leave many in his audience with the conclusion that he’s quite bullish on the prospects there. But Venkatesan dismisses that assessment, describing himself as more of a pragmatist.
“I differentiate between the reality of what it’s like to do business there and live there, which is pretty rough,” he says in an interview following a recent presentation at NUS Business School.
“So as an Indian I’m guardedly hopeful but I wouldn’t necessarily characterise myself as an optimist on India’s future.”
Designing products that deliver 70-80 per cent of value or performance or whatever, but at 30 per cent of the price – this is very much in the Indian DNA
Venkatesan was chairman of Microsoft India from 2004 to 2011 and before that ran the Indian arm of US heavy equipment engineering firm Cummins, so he knows what it takes to run a multinational company there.
Based on this experience, along with case studies from other successful MNCs in India, Venkatesan recently authored a book, Conquering the Chaos: Win in India, Win Everywhere.
“I use the word ‘chaos’ as shorthand for corruption, bureaucracy, uncertainty of policies and volatility, bad infrastructure, all that sort of stuff, that cocktail of things,” he says.
Companies that are keeping away from India until these “things” improve are doing themselves a disservice, he says. Instead, multinationals that establish a foothold in the country and ride out the tough years will find themselves well placed to take advantage of the good times when they come.
“Every decade over the last two or three decades there have been spurts where the economy has grown really well and it’s sandwiched between six or seven years in every decade of relatively slower, muted growth,” he told the audience at NUS.
“If you’re willing to take a long-term view and hang in there during the tough times like what we’re going through right now, and sprint like crazy when the economy shows signs of life you can actually do very well.”
One of Venkatesan’s favorite examples is McDonald’s. The hamburger chain had to create a new menu for the mostly-vegetarian country, and develop a business model that allowed them to make money charging about 50 cents per item.
It’s a process he says took at least seven years and an investment of more than $100 million, adding uniquely Indian items such as the McAloo Tikki Burger, Chicken Maharaja Mac and Crispy Veggie Pops to the McDonald’s menu.
Aside from taking a long-term view, Venkatesan set out other steps MNCs can take to conquer the chaos. Among them: adapting to the Indian market rather than waiting for the market to adapt.
Apple, for example, has stood back, put off by an inefficient distribution system, lack of retail shops and low-wage population. “Meanwhile,” he says, “Samsung decides they’re not going to wait and they eat Apple’s lunch.”
Companies can also learn from the example of Indian businesses operating on a shoestring – particularly the increasingly popular concept of frugal innovation.
“Designing products that deliver 70-80 per cent of value or performance or whatever, but at 30 per cent of the price – this is very much in the Indian DNA,” says Venkatesan.
Even with all the best business practices in place, multinational companies in India still must overcome one of the biggest obstacles: India’s notorious corruption.
But using Transparency International’s “heat index” on corruption Venkatesan made the case that India is far from the only country beset by this problem.
“Almost all emerging markets suffer from very high levels of corruption,” he notes.
That leaves CEOs with two choices.
“You can say hey, I’m going to stay out of these countries and we’ll be back when they’re less corrupt. Or you could say we’ve got to figure out how to build successful businesses in highly corrupt environments without sacrificing our values.”
The payoff of conquering the chaos in India is spelled out in the book’s subtitle “Win in India, Win Everywhere.”
Venkatesan says all emerging markets are difficult, challenging and chaotic places, but lessons learned in a market as big and potentially rewarding as India can also be applied in markets from Russia to Nigeria.
“Extremely successful companies have this view, hey, how can we be global if we aren’t present in China, India and other such places? How can we be a leader in our industry if we’re not a leader in a country with 1.2 billion people?”
It will be a bumpy ride, no doubt. But Venkatesan says it’s one multinational companies need to take.
“It will take time, it may take longer than they ever imagined, but they understand why this is a prize worth winning.”