In a recent article from the Harvard Business Review, Deepa Prahalad and Kumaar Bagrodia analyze the “new normal” of the global economy with a focus on willingness to embrace change and how decisive leadership can make the “new normal” better than the old one.
The authors note, “As we watch business leaders struggling to adjust to the “new normal” of the global economy, we can’t help thinking of the economic transition India began almost 20 years ago. The changes that India struggled to cope with, such as slowing domestic growth, increasing globalization, and an uncertain political and regulatory environment, describe global markets today. No one has a perfect model for managing this level of uncertainty. However, we believe that India’s (incomplete) journey offers valuable lessons about managing growth and change.”
The article goes on to discuss the changes that Indian business leaders encountered while transitioning from a protected economy to a liberalizing one after a balance of payments crisis. Some of the challenges involved multinational competitors, banking and financial sector regulation changes, and even compare the then lower class consumer focus shift to today’s distribution to the mythical “last mile”. “Decisive leadership characterized all the firms that emerged as winners.”
Prahalad and Bagrodia note “The idea of “go big or go home” is a requirement in India. Meeting the challenges of scale, distribution and affordability forced fresh thinking.” One common trait amongst the Indian organizations that have emerged as winners was a concerted investment in people — from employees to channel partners. IT companies were the leaders, as much of their growth depended on work from outside India. The process also demanded strong corporate cultures.
“There are two predictable reactions to change — opposition and adaptation. India has demonstrated plenty of both. Globalization did not wipe out domestic industries — in many cases, they became stronger and more innovative. The economy grew at its highest rates since Independence. A less bureaucratic process has given rise to entrepreneurship — even outside the big cities.”
The article concludes by nothing that Indian society has shown a remarkable capacity for change, including new technology and a focus on innovation.
“Having faith in oneself, and others, is part of any successful change process. “
