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7India Inc’s Most Powerful CEOs 2012{ }Corporate Dossier THE ECONOMIC TIMES
May 25, 20126
Amartya SenHarvard
University
Ram Charan
Vijay Govindarajan
Tuck Business Schiool
Pankaj Ghemawat
IESE Business School
Tarun KhannaHarvard
Business School
Jagdish ShethGoizueta
Business School
Nirmalya KumarLondon Business
School
Nitin NohriaHarvard
Business School
Bala Balachandran
Kellogg School of Management
Jagdish Bhagwati
Columbia University
StillOnTopContinued from pg 5
As the 2012 list shows, much of the lead-
ership of these firms has been trained in
the world's best business schools. Ratan
Tata has a degree from Cornell, Azim
Premji trained at Stanford, Anand
Mahindra has an MBA from the Harvard,
Kumar Mangalam Birla has a London
Business School degree.
These are not new groups, although
their business aggressiveness and their
ability to think in global terms is a new
phenomenon, which has been sharpened
by the more pro-business atmosphere of
the post 1980s. Not surprisingly many of
the larger groups have incorporated
managerial capitalism with family capi-
talism since at least the 1970s and have
thus been able to rise to the challenges of
liberalisation. Further, daughters are in-
creasingly becoming part of succession
planning, inheriting assets and entering
boardrooms. Prime examples would be
Manjushree Khaitan of the BK Birla
Group and Priya and Priti Paul of the
Apeejay Surendra Group.
What is clear is that business as an ac-
tor has been able to negotiate several dif-
ferent regimes - the Nehruvian period
was an especially difficult one when
business, which was hoping to be a play-
er in the newly independent nation state,
was sidelined by the general anti-busi-
ness rhetoric, the licenses and permits.
There was brief relief in the 1960s but it
proved to be too short lived. A worsening
atmosphere came thereafter epitomized
by Indira Gandhi's disdainful comments
such as 'our private enterprise is more
private than enterprising.' It is only with
liberalisation that the private sector is
beginning to be seen as a legitimate part-
ner by the state.
This new scenario has been enthusias-
tically received and channelised into
measures, which have made private en-
terprise globally competitive. These
measures include corporate restructur-
ing, focusing on core competencies, im-
plementing management changes and en-
hancing competitiveness as they aspire to
global status. Larger groups have shown
concerns that 'reputation' and 'high
brand equity' should not be compromised
in the face of rapid expansion and major
acquisitions.
Not surprisingly, the Tatas were among
the earliest groups to implement a new
code of ethics and 'brand equity Business
Promotion agreement' and a 'Tata Busi-
ness Excellence Model.' A confident pri-
vate sector has gone on a global acquisi-
tions spree with fierce aggressiveness.
The acquisitions are impressive especial-
ly. Amongst the most symbolic is the
takeover from Ford of Jaguar and Land
Rover which heralds the acquisition of a
'symbol of British style', the makers of
'James Bond's new wheels' and 'Inspector
Morse's classic.'
Godrej is aspiring to global status
through acquisitions of local brands in
the personal care line and the AV Birla
group in aluminum and carbon black.
However, this could only be maintained if
the pro-business atmosphere which was
inaugurated with the economic reforms
of the late 1980s and especially post 1991 is
sustained. Unfortunately, this seems to be
evaporating in the UPA II dispensation.
Family business has thrived under liber-
alisation and has been able to forge mean-
ingful links with MNCs in a confident way.
The next challenge that lies before fam-
ily business relates to what may happen
to the retail sector, particularly in the con-
text of the issue of entry of FDI. Walmart
and 'Mom and Pop' run retail shops need
not necessarily be adversaries. There
may exist develop complementarities
through the forging of relationships to
mutual advantage. In any case the invest-
ment in logistics and supply chain would
ultimately benefit the lower and medium
segments of the retail sector energizing
the vibrant bazaar component of the In-
dian economy.
The author is a business
historian based at the
National University of
Singapore. She has written
widely on Indian business
and has recently edited The
Oxford India Anthology of
Business History (Oxford
University Press, 2011)
Continued from pg 5
By the end of the 1700s, the Company had
undergone a curious change; it had begun-
to rule a part of India in the name of the
Mughal Emperor. This was the beginning
of the British Empire in South Asia. Why
did a group of foreigners succeed so dra-
matically as traders in the Indian Ocean?
And why did a group of traders decide to
capture power in a distant land? In the
1600s the Company was an upstart in In-
dia, smaller in scale than almost any of
the large Indian family firms operating
from the Indian coastal trading towns like
Surat, Masulipatnam, and Hooghly, and
desperately trying to defend its operations
against attacks by European rivals, the
Dutch and the Portuguese. An empire was
a prospect beyond dreams.
Yet, collectively, the Europeans did pos-
sess three strengths that the greatest Indian
firms did not have. First, the Europeans had
knowledge of long-distance navigation.
They understood charts, maps, ocean cur-
rents, instruments, routes, and the tech-
nique of making sturdier and larger ships
carrying guns on board much better than
did the Indian seafaring merchants. The Eu-
ropeans, thus, had developed a truly global
understanding of the oceans long before the
other ocean-bound cultures. Indians were
good navigators, but they did not venture be-
yond the Indian Ocean. Second, the Compa-
ny could procure lots of Spanish silver. In
turn, their capacity to do so had owed to the
presence of well-developed financial mar-
kets in Europe of this time. In India, bank-
ing was less developed, money changed few-
er hands, and interest rates were higher.
The biggest advantage the Company pos-
sessed stemmed from its identity as a joint
stock firm. In Asia, the biggest firms fi-
nanced investments with their own money,
family savings, or at the most, money bor-
rowed from members of the same caste or
community. The idea of the joint stock was
unknown. That idea allowed the East India
Company to pool in huge amounts of mon-
ey, and make use of the economies of scale
available in overseas trade. It could build
an elaborate infrastructure consisting of
forts, factories, harbours, and ships. Joint
stock also made them better risk-takers.
The Indian traders spread risks by dealing
in a variety of goods in auction-type ex-
changes. They were what the Dutch histo-
rian Jacob van Leur had called 'peddlers' of
the oceans. The Company, thanks to its ca-
pacity to absorb risks, dealt in a few goods,
which it bought on large scale. Being spe-
cialised, it needed to contract with a specif-
ic set of suppliers year after year and to pay
out vast sums of money as advances.
Contractual sale of goods was not un-
known in India before, but contractual
sale on such a scale by a single firm had no
precedent. The need to protect its ports
and harbours from numerous enemies
made the Company keen to own ports. The
three leading examples, Madras, Bombay,
and Calcutta, represented quite a differ-
ent business culture in coastal India.
Whereas Surat and Masulipatnam had be-
longed to states that lived mainly on land
taxes, the Company towns were ocean-
bound, and had no ties with land. Bombay,
Calcutta, and Madras were no ordinary
ports. They were ports where seafaring
merchants, rather than landlords and
warlords, made laws. The Company
towns, therefore, were attractive to Indian
merchants as well. In the 1700s when the
Mughal Empire started breaking up and
warfare broke out in the interior, hun-
dreds of wealthy Indian merchants and
bankers fled to the Company towns. They
were a huge source of support for the
Company's political adventures.
We need not overdraw these strengths.
The Company's own business privileges,
which were a monopoly granted by the
British Crown, were constantly under at-
tack fromprivate traders and even its own
employees. The relation between Indian
firms and the Indian rulers was based on
informal understanding, but the Euro-
peans did not enjoy such trust and good-
will. They had to take out license to trade,
and pay massive bribes to the Indian kings
and their henchmen. They also had to
keep an army of paid agents to procure
goods. These contracts had no Indian
precedents, and therefore, they were not
protected by any Indian law.
Contracts were broken often, and the
Company could do little when they were
broken. In order to avoid such situations,
the Company recruited its chief agents
carefully. They were often individuals who
held power over the textile artisans. At the
same time, they were more knowledgeable
about India than were the Company's own
officers. The Company officers disliked
this dependence and hated the agents.
Lastly, unlike a modern firm, the Compa-
ny did not have a unitary command-and-
control structure. Its overseas enterprise
was a peculiar combination of modern
joint stock principle in raising money and
pre-modern partnership in management.
The two partners were the sedentary City
merchants and peripatetic sailors and sol-
diers. These two classes were not friendly
at home. But the sailors and soldiers
joined the venture on the promise that
they could trade a little on the side.
Still, it was the latter that had to deal
with hostile kings and untrustworthy
agents in India, which made them more ag-
gressive and opportunistic than the share-
holders back home. The sailors and sol-
diers were the people who made the moves
that led to the empire in India, often against
the instructions of the shareholders.
The Company's success, in conclusion,
had much in common with the ingredi-
entsthat many modern multinational
make use of - capacity to absorb risks, ca-
pacity to think on a world scale, access to
deep financial markets, and access to in-
formation. Its weaknesses too were sur-
prisingly modern in character - miscalcu-
lation of political risks and unreliable lo-
cal partners. But the Company was also
quite unique. For one thing, it was a firm
with a split personality, torn between mer-
chants and soldiers. For another, it
reached its peak during an unusual mo-
ment in Indian history that saw the col-
lapse of a great medieval empire. That mo-
ment gave the sailors and soldiers the
chance to take hold of the reins of the
Company, giving birth to
another empire.
The author is Professor of
Economic History, London
School of Economics and
author of The East India
Company...The World’s Most
Powerful Corporation
The First Multinational The Economic Times, in partnership
with IMRB International, has been
conducting comprehensive surveys to
ascertain the 'Most Powerful CEOs' of
India, for the past few years. The survey has en-
deavored to identify the business leaders who
are well-recognised by people for their efforts
in shaping Corporate India.
The survey was conducted through a five-
step process:
A. Collating the list of CEOs across sectors
B. Setting evaluation parameters
C. Calculating the parameter-scores
D. Free association & rating of CEOs on each
evaluation parameter
E. Ranking of CEOs at an overall level
The team at IMRB International was provid-
ed with a list of CEOs, collated mainly from
this year's ET 500 rankings as well as previous
years' rankings of 'Most Powerful CEOs' with
relevant additions and removals in line with
the current corporate scenario. The aim was to
arrive at a final short-list of top 100 CEOs to be
crowned as the 'Most Powerful CEOs' of corpo-
rate India for the current year.
The CEOs were then evaluated by corporate
people in senior/middle management roles on
six important parameters - 'Leadership', 'Strat-
egy & Innovation', 'Performance', 'Stature', 'So-
cial Contribution/ Sustainability', and 'Gover-
nance'. The respondents were from large com-
panies selected by referring to databases like
the ET-500. The respondents were requested to
participate through an invite from The Eco-
nomic Times.
The corporate respondents were divided
into sector-wise panels, and each panel was in-
vited to share their feedback on CEOs from
their sector. In order to control respondent
bias, we discounted the respondent's opinions
on his/ her own company's CEO. The respon-
dents were asked for their inputs using a small
survey-instrument, which could be self-admin-
istered or administered face-to-face by sea-
soned interviewers. The survey-instrument
captured inputs on the respondent's CEO-asso-
ciations across each parameter. The respon-
dents were also invited to add one CEO (to the
list) that he/she considers as
most powerful. This ensured
that the opinion of the respon-
dent was not restricted to the
given list of CEO's.
PROCESS:
The respondents were first
asked to allocate points to the
six parameters, which would
add up to a total of 100. The
points were allocated on the ba-
sis of importance of each at-
tribute as per their opinion.
This helped us to arrive at the
sector-wise and overall param-
eters-weights which were used
in the final analysis. For deriv-
ing the weights we considered
only those scores which were
obtained from management re-
spondents belonging to the
senior corporate profiles, like
the Vice President, Asst. Vice
President, General Manager
and the like.
After determining the pa-
rameter-scores, we
checked for the respon-
dent's familiarity with
each of the CEOs given in
their specific survey-in-
strument. For CEOs the re-
spondent was adequately
familiar with, opinion on
each parameter was cap-
tured using the 'free associ-
ation method' followed by a
rating on a 3-point associa-
tion-scale. In this, respon-
dents were given a parame-
ter and were then requested
to mention which of the
CEOs in the list they associate
that parameter with. The re-
spondents had the freedom to associate as
many CEOs that they felt could be associated.
Once they have associated the CEOs for that
particular parameter, they are then asked to
rate each CEO on a scale of 1 to 3, wherein 1 sig-
nifies a weak association, 2 signifies a moder-
ate association and 3 signifies a strong associa-
tion.
Then for each CEO a composite score was
calculated at a respondent level. Across re-
spondents, the sum of these composite scores
gave us the power score for the respective CEO.
The higher the power score, the higher the
rank assigned to the CEO.
Finally, we obtained a cross-sector ranking
of the CEOs. For this, we indexed the scores for
the CEOs across sectors and thereby obtained
the master list of top 100 CEOs.
METHODOLOGY
Chanda KochharICICI Bank
Kiran M ShawBiocon
Shobhana BhartiaHT Media
Shikha Sharma
Axis Bank
Naina Lal KidwaiHSBC India
Kalpana MorpariaJP Morgan India
Mallika SrinivasanTAFE
Roopa KudvaCRISIL
Preetha ReddyApollo Hospitals
POWERPLAY
Global Indian
ThoughtLeaders
Global Indian Business Leaders
1 2 3 4 5 6 7 8 9 10LN
MittalArcelorMittal
Indra NooyiPepsiCo
Nikesh AroraGoogle
Vikram PanditCitigroup
Harish Manwani
Unilever
Anshu Jain
Deutsche Bank
Ajit Jain
Berkshire HathawayReinsurance Group
Shantanu Narayen
Adobe Systems
Vinod Khosla
Khosla Ventures
RakeshKapoor
Reckitt Benckiser
1 2 3 4 5 6 7 8 9 10
Nitin Paranjpe Hindustan Unilever
D Shivakumar Nokia-India,
Middle East & Africa
Rajan Anandan Google India
Bhaskar Pramanik Microsoft India
Naina Lal KidwaiHSBC India
Kalpana Morparia JP Morgan India
John FlanneryGE India
Neelam Dhawan Hewlett-Packard India
Shanker Annaswamy IBM India
Sanjeev ChadhaPepsiCo Middle East & Africa
1
1 3 5
2 4 6 8 10
2 3 4 5 6 7 8 9 10
Top Women CEOs
Most Powerful MNC CEOsNeelam Dhawan
Hewlett-PackardIndia
97
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