R Gopalakrishnan, the executive director of Tata Sons, sorts out the leadership and managerial qualities demanded by today's worldwide order of business

I have limited credentials to speak on a subject that is complex even for the experts; I am here because the organisers are generous as well as indulgent. I will stay within my boundaries by restricting myself, first, to some observations on globalisation based on history and, second, to a few personal anecdotes and learning from my professional career. Since much of my experience has been in Unilever, I may be pardoned if the examples relate to that company.

For hundreds of years before the 19th century, the world was pretty much globalised, but events since the late 1800s changed that globalised order. Why do I say this? Earlier, people could move about freely without passports and travel papers. They could acquire knowledge from anyone and they could trade with anyone. They could use any currency, because trade and supply / demand were the determinants of what money could buy. Unrestricted human movement, easy access to knowledge, the valuing of money and trade according to market rules — what else is globalisation?

Recall some facts from Indian and world history:

• Merchants from Harappa and Mohenjadaro were trading with Sumer as early as 2300 BC.
• The world's first university was established in Takshila in 700 BC; it taught 60 subjects and had 10,500 students from all over the world.
• Spinning and weaving were a premier economic activity in India for centuries, so too the export of textiles.
• Jesus Christ's apostle Saint Thomas arrived in Kerala in the 1st century AD and moved freely across South India. He died near Madras at San Thome, where his cemetery stands to this day.
• So many Roman coins from the 1st century AD have been found on the east coast of South India that it is suspected that the balance of trade favoured India at that time.
• Fa Hien and Hiuen Tsang travelled widely across India in the 7th century, writing their valuable observations about the country.
• In the 13th century, Marco Polo journeyed right across from Turkey to China, writing one of the most remarkable travelogues in history.
• In 1498, when Vasco da Gama sailed into Calicut, it was already a thriving port familiar to Arab and Chinese merchants.
• In 1608, an English captain, William Hawkins, dropped anchor at Surat, armed with 25,000 pieces of gold and a letter from King James I to Mughal emperor Jehangir. His tour report read, "Nothing that England makes at this time is really desired by Indian merchants or officials."
• For 80 years, from 1835 to 1915, India had a consistent and handsome trade surplus.
• As late as the 1920s, India was ranked fourth in world trade, with a market share of 2.5 per cent (it is well below 1per cent today).

The concept of the nation state developed as late as the 1860s. According to Hobsbawm¹, the Dictionary of the Royal Spanish Academy did not use the words 'nation' or 'state' till its edition of 1884. The concept of nation state changed the perception of self-interest and led to certain developments during the years between the two world wars. Scholars are divided on which is the cause and which is the effect: the wars or the inward-looking nature. The fact is that the idea of the nation state had taken root. Nationalistic and inward-looking policies were adopted and implemented by governments in a manner that took no cognisance of its potentially deleterious effect on other nations. This was part of the background of the two world wars.

There are two generic messages here and I will add a third that is specific to the Tatas. First, it is only in the last century that societies succeeded in abandoning the long-standing concept of globalisation, perhaps with the emergence of the nation state. Today everybody is working hard to reincarnate globalisation in a relevant and fresh form. Second, India was among the most prominent and globalised economies of the world for many centuries. The combination of colonialism and socialism over the last 150 years caused India to become insular and lose its global outlook. Globalisation is in the genes of Indians, but was perhaps subdued for six-seven generations. Third, globalisation is in the heritage of the Tata Group, essentially because Jamsetji Tata was himself a widely travelled and very global manager. Consider the evidence²:

• The first steamships with propellers appeared a year before Jamsetji's birth. These enabled him to make frequent trips abroad and these journeys were a source of inspiration and new ideas.
• Soon after he joined the business in 1857, 19-year-old Jamsetji was sent to the Far East by his father. He founded a firm in Hong Kong in partnership with his father and Premchand Roychand.
• From 1864 to 1868, Jamsetji (age 25-29) spent four years in England. He was much influenced by the people he met and the ideas he was exposed to.
• Exhibitions were to be his favourite visiting places. His imagination was kindled when he heard Thomas Carlyle say, "The nation that has steel will have the gold."
• From his trips abroad, he brought back to India whatever he found fascinating: from living creatures which he kept at his zoo in Navsari to spun-iron pillars which even today hold up the ballroom of the Taj Mahal hotel.
• Believing it to be key to his enterprise, Jamsetji found suitable people to run it. Jamsetji ascribed the success of Empress Mills to Bezonji Mehta, an ex-railway professional who became his right-hand man, and James Brooksby, an Englishman with sound technical knowledge of textiles.
• When the competitiveness of Swadeshi Mills textiles in the Far East was threatened by high freight costs charged by the P&O shipping company, Jamsetji went to Tokyo and made a better deal with Nippon Yusen Kaidea (NYK).
• Jamsetji was recognised as one of the most travelled Indians of his lifetime. It has been estimated that, between the age of 20 and 65, when he died, he was abroad for one of every three years.

Tata managers have it in their business heritage as well as in their genes to become fine global managers. But the development and maturing of this potential will not happen automatically. Modern-day Tata managers need to internalise afresh what it takes to be a global manager. I have no pretensions of being one, but shall now share some personal experiences from my managerial journey.

From domestic to global
Is there any difference between exceptional leadership in the domestic and global contexts? A manager must first be an exceptional leader in the domestic context before he or she can even come into the reckoning for global leadership. Domestic mediocrities do not become global leaders, but neither does domestic excellence guarantee global distinction.

I recall an outstanding young marketer, an Englishman sent to Hindustan Lever as the marketing director 25 years ago. He arrived in Mumbai with a huge reputation but, unfortunately, he turned out to be very poor in adaptability. He could not understand or tolerate the regional differences and biases he observed in the behaviour of colleagues. It was one of those cross-border expatriations that did not work well and he finally left Unilever. Yet, 25 years before him, in the 1950s, there came to India another young foreigner. David Orr, an Irishman, who went on to become the chairman of Unilever.

I have another failure-success example, this one involving the merger of Swedish pharmaceutical company Pharmacia with the American company Upjohn in 1995³. This merger, a likely winner on many counts, did not meet expectations initially. In 1996, its American chairman, John Zabriskie, departed. A frequently quoted reason was his inability to deal with cultural differences. In 1997, the board brought in Fred Hassan, an exceptional manager who was born in Pakistan, educated in England, and was an industry veteran. Hassan visited subsidiaries, he listened; he emphasised that as an outsider to both companies, Pharmacia and Upjohn, he had no favourites.

It has been commented that his urbane style, ability to reach out across cultures, adapt himself and his decisions to suit the circumstance, all contributed to a rapid improvement in performance and morale.

I had a fantastic learning in 1995, when I returned to India as managing director of Brooke Bond Lipton. Brooke Bond and Lipton were fierce rivals in the domestic tea market. They were globally acquired by Unilever, in 1973 and 1984 respectively, and were merged in India in 1994. My predecessor as managing director was Manfred Oeschger, a fine German manager from Unilever. He began to do a great job in the short time available to him, making my subsequent task interesting.

If there is a single trait that the domestic leader must demonstrate to be a global leader it is adaptability, which to me means displaying four distinct and increasingly difficult skills. First, the ability to operate across borders with confidence; second, to rise above the particularities of regions and cultures; third, to revel in diversity; fourth and most difficult, to operate in spite of high ambiguity and frustration. Aristotle wrote that the test of a first-class mind is the ability to hold two opposing ideas simultaneously and yet be able to function.

The expensive, the terrific and the disastrous
Managers often send capable but culturally illiterate people on overseas assignments. One piece of research shows that out of 100 managers sent abroad by US companies, 20 returned early because of job or location problems. Of the 80 who stayed, 25 did not perform up to expectations, leaving 55 who completed the assignment satisfactorily. Of these 55, 15 quit the company, leaving only 40 of the original 100. How can a company live with such a high attrition level? My experience suggests that companies must select managers with five characteristics for expatriation (there does seem to be some research⁴ to support this view).

A drive to communicate: Choose employees who are enthusiastic and extroverted in conversation, not afraid to try out their language skills, and who will go out of their way to communicate with local people. I once greeted my Saudi partner in my newly learned and well-rehearsed Arabic. He was stunned, then burst out laughing. "Your Arabic is perfect but archaic," he explained. It was like stopping somebody on Oxford Street, London, and saying "How art thou and whither must I go to reach Paddington?"

Broad-based sociability: Expats have a tendency to stick together. Successful global managers establish social ties with locals and other nationalities as it provides fresh and new insights. The Unilever board in Saudi Arabia had a Dutch technical director, a French finance director, Britons as marketing director and personnel director, and Indians as marketing director and sales director. My social circle comprised mostly Pakistanis. My insightful conversations were with Tunisian, Sudanese and Syrian managers, on Arabs, on Islam, on the role of women, etc. Most memorable was my Tunisian sales manager's advice, "Sir, never walk on the street with another man's wife," he told me. "If you laugh and enjoy a conversation with a woman on the streets, the muttawa (police) will immediately know that the woman cannot be your wife."

Cultural flexibility: Expats who add most value to their companies are those willing to experiment with local customs and allow these customs to influence them. Though a vegetarian, I discovered the pleasures of falafal and tabouli in gastronomy. My wife actually took private lessons in belly dancing for the heck of it; she also learnt the rakhas in namaz. We were fortunate to be able to travel from Casablanca to Damascus and Muscat, savouring the rich history of those places.

Cosmopolitan orientation: Companies that send the right people abroad have identified individuals who respect diverse viewpoints; they live and let live. Every manager recruited into Saudi Arabia was told, "Though liquor is unofficially available here, the company cannot and will not protect you if you are caught with alcohol. So you are advised against consumption of alcohol here." I myself avoided alcohol completely while in Saudi, but made up for the lack thereof in Doha or Dubai.

Collaborative negotiation: This is most important. Each society has its own way of making deals and expats tend to do it their own way. My Saudi partner, Wahib Binzagr, always said, "I prefer to negotiate with you because Indians think and behave in our kind of deal-making mode; they go round and round before getting to the point gradually. These Englishmen want to get to the point straightaway." (Wahib was educated in England and was married to a Brazilian.)

The globalisation philosophy
Management literature on this subject is copious and makes fine distinctions between globalisation and internationalisation, transnationals and multinationals, etc. To avoid jargon traps, I do not use these words in any purist sense. Jacques Manardo, European chairman of Deloitte, said in 1999, "Globalisation is a hollow word. There is no generally accepted understanding of what it means."

For each company, it is important to pin down the specific fruits it seeks, thus defining globalisation in its own context to solve a defined problem or tap an opportunity. I quite like the generic benefit term called CONELEARN, coined by two European thinkers⁵. They argue that there are three generic benefits: COst advantages, NEtwork benefits, LEARNing opportunities.

When I was the chairman of Unilever Arabia from 1990 to 1994, I also chaired Unilever Middle East, a regional group comprising North Africa, West Asia and the Gulf Cooperation Council countries. I found it difficult at the time to derive cost advantages through purchasing or better factory utilisation because of the tariff barriers in these geographies.

On the other hand, my European colleagues found lots of leverage on the pooled buying and cost side. However, Unilever Middle East could target network benefits, for example, in attracting international advertising agencies to set up offices in a difficult territory, creating pan-Arabic advertising campaigns, buying media on Arab channels. Pooled market research created rich learning opportunities about Arab attitudes and habits, commonalities and differences among Arab consumer segments, etc. Thus, the Middle East got a lot out of NE and LEARN, whereas Europe derived plenty from CO and NE.

My learning is that globalisation is a philosophy, not a dogma. Think and debate the 'whys and whats' as uniquely applicable to your company's position.

Globalisation and national identity
Unilever always wanted to be seen as a local company with an Anglo-Dutch parentage. This is reflected in the names of its subsidiaries: Hindustan Lever, Nippon Lever, Unilever Arabia, Lever Malaysia and so on. More often than not, Unilever appointed local managers at the senior-most levels as early as possible and this laudable motivation drove its talent-management process. Within 12 months of establishing Unilever Arabia, I had a three-day visit from Chairman Floris Maljers, whose central enquiry was "Gopal, what are you doing to ensure that in the next 10 years we have an Arab as chairman here?"

In spite of such a strong drive for decades, Unilever is still referred to by newspapers as an 'Anglo-Dutch multinational'. Should one fight this image? Perhaps not. I have been much influenced by a book⁶ which correctly argues that although we club multinationals together, there are enormous differences that can be traced to the unique political and economic characteristics of the home countries of these multinationals. For example, US companies' corporate governance practices are heavily influenced by stock prices, a consequence of their ownership patterns. Not so in Japan and Germany, where banks have a very strong role to play; likewise with respect to research and development. American companies often aim for breakthroughs in science-based industries. If they succeed, the rewards are enormous; if they fail, there is a financial consequence but no labour overhang as labour markets are quite deregulated. The situation is different on this score in Japan and Germany, where ownership structures and labour restrictions cause companies to favour incremental and diffusible technology adoption.

Global companies are not rootless entities agnostic to nationality. In general terms, they bear the imprint of their national origins, though they may strive to minimise that influence in day-to-day operations.

The early bird…
Aldous Huxley once observed: "Experience is not what happens to a man; it is what a man does with what happens to him." The development of global leaders requires early and multiple exposures across functions, across geographies and across industry segments. One's approach varies depending on whether one's business development is in the mode of pioneer, settler, cultivator or harvester.

If I have to mention something simple about what a company can consider to develop a global skill base, it would be to take care of the fours Ts, early and across borders: training, transfer, teams and travel. These are not by themselves sufficient for success, but they are necessary conditions for success.

Reflect again about the career of the great Jamsetji Tata. He was trained on the job; he worked with teams that included the likes of his two sons, Dorab and Ratan Tata, with Bezonji Mehta, James Brooksby and RD Tata; he travelled all over the world. Let us do what Jamsetji did, but set in the context of the 21st century.

References
1. Nations and Nationalism since 1780 by EJ Hobsbawm
2. For the Love of India by Russi Lala
3. Organisation 21 C edited by Subir Chowdhury
4. The Right Way to Manage Expats by Stewart Black and Hal Gregerson, Harvard Business Review March-April 1999
5. From Local Champions to Global Masters by Paul Verdin and Nick van Heek
6. The Myth of the Global Corporation by Paul Doremus, William Keller, Louis Pauly and Simon Reich

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Uploaded on May 13, 2005