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Alan Iny | Indian CEOs must realize that no good idea lasts forever

LiveMint logoLiveMint 13-05-2014 P.R. Sanjai

Alan Iny, senior specialist for creativity and scenario planning at the Boston Consulting Group, says India will see something like the failure of one of the chaebols (business families) of South Korea unless its leaders recognize that no good idea lasts forever. Iny, who is the author of Thinking in New Boxes, said in an interview that India should applaud new product ideas and not allow uncompetitive businesses to flourish through subsidies. Edited excerpts:

Is bankruptcy or demise of a well-known company happening in India?

Companies with fragile business models or less innovation leading to a lost customer base are bound to lose market share, and over a period of time fade into oblivion. It is part of the natural ebb and flow of the business cycle. For example, Nokia lost market to Samsung and other smartphone manufacturers, TV manufacturers lost the battle against LEDs (light-emitting diodes), and companies who focus on producing desktops and laptops are battling for market share with tablets and smart phones.

As for India, will we see something like the failure of one of the chaebols of South Korea? Absolutely, unless leaders recognize that no good idea will last forever, that the world is constantly changing and, hence, we need to regularly change our boxes (mental models) and business models accordingly.

Are ideas creating companies and headlines in India?

As a thought exercise, pick any newspaper headline. What are the boxes and assumptions held by the key protagonists? Different party leaders clamouring for attention have very different mental models about what the people want, and the right way to move forward. A new chief executive officer (CEO), the latest movie or music star, all of them have specific mental models being proposed to us.

Leading Indian companies have been personality driven. Is the CEO phenomenon getting demolished in India?

Over time, we are seeing regulators in India putting more emphasis on the duties of board members and shareholders to prevent a runaway train, which means that India seems to be progressing to a more balanced system as opposed to purely star CEOs. This progress enables CEOs to take calculated risks and move forward with more confidence. Of course, there’s nothing wrong with a star CEO per se. The problem happens when someone believes they are infallible and is unwilling to doubt, to recognize that they are using mental models that are only working hypotheses, just like every other human being. That is among the keys to being a successful CEO.

Indeed, as a thought exercise, imagine a company where everyone in every department is doing their job very well. What is the job of the CEO in that case? The sole task for the CEO in that case, and the most important one in a normal case, is to determine what the next box should be, and when.

Graft is taking centre stage in Indian companies too, the coal block and spectrum allocation scams, for instance. Do you think that political gridlock is affecting Indian companies?

Political issues affect companies the world over. I live in the US where the level of partisan tension in Washington DC as well as many states has reached new heights in recent years. Still, in India there seems to be a fundamental belief that there is a democratic system that is self-correcting, meaning people can raise their voice in peaceful ways, and government officials can raise their voice too as witnessed by the CAG (Comptroller and Auditor General of India) reports highlighting the issue of corruption and underutilization of natural resources. The change in political atmosphere, while affected by a wide range of trends in the economy, technology and more, is a normal process in a democratic country, even if sometimes we wish that reforms were speedier.

Are there any instances where you are convinced about Indian companies thinking creatively about the future?

Absolutely. We have been excited by many Indian examples of companies thinking creatively about the future. We have seen IndiGo build on the successful new business model that low-cost airlines have used around the world, while going beyond just low-cost and efficiency to focus on the customer as well, unlike other low-cost airlines which are hated by customers, but still do well purely by being cheap.

Bajaj Auto thought creatively about the future, leading them to become a successful two-wheeler manufacturer. Some Indian newspapers are moving rapidly into digitization as that is where the future lies, although The New York Times remains the gold standard here. Titan’s way of selling jewellery, watches and other adjacent products to Indian millennials is an example of creativity in sales. Microfinance players and other financial institutions are thinking creatively about including more and more people in the financial system. And Amul has developed an interesting and creative business model tailored to the Indian environment, by protecting its suppliers/owners, focusing on the customer, and being very efficient in marketing and backward integration, sparking the White Revolution of India.

Are you seeing the trend where Indian companies are saying, ‘it’s not a failure to fail’?

It is a very human thing to view failure negatively, particularly within companies. It is easy to claim to view it as a natural part of the creative process, but those places where there is a genuine acceptance of this principle, where failure that occurs after thoughtful effort is not a torpedo to one’s career path, will be advantaged. In India, as well as Western Europe and the US, there is still room for improvement within many individual companies on this dimension, in our view.

Someone who comes up with a wide range of new product ideas through a creative process, many of which fail, should in general be applauded, not punished, especially in an era where change is speedier and the lifespan of a good idea is shorter than ever before. At a more macro level, by the way, allowing uncompetitive businesses to flourish through subsidies is a similar phenomenon which happens in India and other places—but in India, it has been seen to drive civil unrest and political headwinds. It will generally not last long in a democracy.

Are Indian firms bringing in fresh thoughts?

Several trends, all tied to boxes and mental models, are emerging in the Indian market. Some examples: there is a move in many places from family-owned businesses to companies run by non-family players; this is a common thing as wealth moves from generation to generation and families expand, but it also provides many fresh perspectives and incentives.

Also, consulting as an industry has seen rapid growth in India, suggesting the willingness of managers to hire specialized know-how to grow and deliver value, and a change in the box with which consultants are viewed. Finally, trends around millennials, their habits and their spending power are redefining how many companies in India think about marketing and other aspects of their business. These are but three examples, but in each case they demonstrate the power of thinking in fresh ways, of challenging assumptions and finding useful new boxes.

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