Companies should engage with anti-corruption activists as both depend on the same constituency: the middle class
By Mohan Sule
Countries, industries and companies often have to confront with disruptive forces that challenge the existing equation. Outsourcing has wiped out thousands of blue- and white-collar jobs in the developed world, especially in the US. Brick-and-mortar businesses are fighting the onslaught of e-commerce as the penetration of Internet becomes pervasive. The CEO of Nokia, which till recently was the world’s largest seller of mobile phones, likened the situation his company is facing to an oil rig up in flames as smartphones and tablets upended its dominance. Closer home, Bajaj Auto had to jettison assembling scooters as new entrant Hero Honda’s motorcycles cornered a larger market share. The automobile industry in the US is in a decline since the 1973 oil shock after it did not embrace buyers’ preference for fuel-efficient imports. The labor-intensive textile sector in India is still on life support for failing to adapt to new technology and tastes. Once-upon-a-time leader in the watch segment PSU HMT was slow in responding to changes in consumer preference to viewing watches as feel-good accessories from merely functional timepieces. On the other side, some companies are displaying flexibility to catch the tailwinds. IBM got out of personal computing to focus on the big picture. The domestic drug industry is tapping the outsourcing segment to bypass stiff domestic regulations. The HCL group has successfully made the transition from a computer hardware producer to a leading software services provider.
A typical reaction to disruptive forces is to hunker down, hoping the storm will pass. In the aftermath, companies undergo the three classical symptoms of loss: denial, anger and, finally, acceptance. At the global level, the changes are more profound with the entire edifice of capitalism, of choice, of personal well being put on the block for review. The US electorate has cautiously but surely backed government’s role in determining the way healthcare is going to reach patients, in bailing out sick units like General Motors and Chrysler and Wall Street banks, and in responding to natural disasters like hurricanes. Right now, the Indian political class is in the second stage, after realising that their denial of charges of corruption and crony capitalism leveled by the civil society, led by Arvind Kejriwal, is not convincing the electorate to shrug off the muck-raking as inconsequential. The current strategy seems to discredit the accusers as unreliable and accusations as without substance, and credit unnamed ‘vested interests’ for the campaign of calumny. After pointing to the rot at the top of Congress and BJP, the anti-graft activists’ target of late has encompassed companies, too. Reliance Industries Chairman Mukesh Ambani is supposed to be holding the levers of power in India to the extent of influencing gas pricing and cabinet posts and HSBC is alleged to have acted as a conduit for black money into Swiss accounts. Both the companies predictably have dismissed the charges as baseless. What is surprising is the reaction of some other corporate bosses. Infosys co-founder-turned-philanthropist N R Narayan Murthy sought to put himself at arm’s length from the widening scope of the agitation by noting his charitable giveaway was to help Kejriwal’s apolitical NGO to raise awareness about the Right to Information Act. Contrary to Murthy’s assertion, the Tata group has denied that its social welfare trust gave any donation.
The attempt of Corporate India to distance itself from the anti-corruption campaign demonstrates that company bosses still believe caution is the best defence. It is essential that they engage with Kejriwal as his soon-to-be-formed political party might even hold the balance of power after the next election. Promoters should impress upon him the difficulties of doing business in an environment that encourages party leaders and their relatives to act as facilitators. They should probe the crusader-turn-politician’s views on the economy. Does he want to go back to the past when everything was rationed and subsidised and PSUs were the major job creators? Companies have to recognise that he represents the same constituency that they woo to sell products and services and raise funds: the middle class, whose size is going to explode as India rapidly urbanises. The contradiction should be emphasised: the middle class, which is propelling the ongoing wave of anger against the politician-business nexus, is the biggest beneficiary of the opening of the economy by gradual elimination of the role of government. At the same time, Kejriwal should heed to the advice Secretary of State Colin Powell gave to President George W Bush in 2001 on why the US should not invade Iraq: “You break (the system), you own it.”
By Mohan Sule
Countries, industries and companies often have to confront with disruptive forces that challenge the existing equation. Outsourcing has wiped out thousands of blue- and white-collar jobs in the developed world, especially in the US. Brick-and-mortar businesses are fighting the onslaught of e-commerce as the penetration of Internet becomes pervasive. The CEO of Nokia, which till recently was the world’s largest seller of mobile phones, likened the situation his company is facing to an oil rig up in flames as smartphones and tablets upended its dominance. Closer home, Bajaj Auto had to jettison assembling scooters as new entrant Hero Honda’s motorcycles cornered a larger market share. The automobile industry in the US is in a decline since the 1973 oil shock after it did not embrace buyers’ preference for fuel-efficient imports. The labor-intensive textile sector in India is still on life support for failing to adapt to new technology and tastes. Once-upon-a-time leader in the watch segment PSU HMT was slow in responding to changes in consumer preference to viewing watches as feel-good accessories from merely functional timepieces. On the other side, some companies are displaying flexibility to catch the tailwinds. IBM got out of personal computing to focus on the big picture. The domestic drug industry is tapping the outsourcing segment to bypass stiff domestic regulations. The HCL group has successfully made the transition from a computer hardware producer to a leading software services provider.
A typical reaction to disruptive forces is to hunker down, hoping the storm will pass. In the aftermath, companies undergo the three classical symptoms of loss: denial, anger and, finally, acceptance. At the global level, the changes are more profound with the entire edifice of capitalism, of choice, of personal well being put on the block for review. The US electorate has cautiously but surely backed government’s role in determining the way healthcare is going to reach patients, in bailing out sick units like General Motors and Chrysler and Wall Street banks, and in responding to natural disasters like hurricanes. Right now, the Indian political class is in the second stage, after realising that their denial of charges of corruption and crony capitalism leveled by the civil society, led by Arvind Kejriwal, is not convincing the electorate to shrug off the muck-raking as inconsequential. The current strategy seems to discredit the accusers as unreliable and accusations as without substance, and credit unnamed ‘vested interests’ for the campaign of calumny. After pointing to the rot at the top of Congress and BJP, the anti-graft activists’ target of late has encompassed companies, too. Reliance Industries Chairman Mukesh Ambani is supposed to be holding the levers of power in India to the extent of influencing gas pricing and cabinet posts and HSBC is alleged to have acted as a conduit for black money into Swiss accounts. Both the companies predictably have dismissed the charges as baseless. What is surprising is the reaction of some other corporate bosses. Infosys co-founder-turned-philanthropist N R Narayan Murthy sought to put himself at arm’s length from the widening scope of the agitation by noting his charitable giveaway was to help Kejriwal’s apolitical NGO to raise awareness about the Right to Information Act. Contrary to Murthy’s assertion, the Tata group has denied that its social welfare trust gave any donation.
The attempt of Corporate India to distance itself from the anti-corruption campaign demonstrates that company bosses still believe caution is the best defence. It is essential that they engage with Kejriwal as his soon-to-be-formed political party might even hold the balance of power after the next election. Promoters should impress upon him the difficulties of doing business in an environment that encourages party leaders and their relatives to act as facilitators. They should probe the crusader-turn-politician’s views on the economy. Does he want to go back to the past when everything was rationed and subsidised and PSUs were the major job creators? Companies have to recognise that he represents the same constituency that they woo to sell products and services and raise funds: the middle class, whose size is going to explode as India rapidly urbanises. The contradiction should be emphasised: the middle class, which is propelling the ongoing wave of anger against the politician-business nexus, is the biggest beneficiary of the opening of the economy by gradual elimination of the role of government. At the same time, Kejriwal should heed to the advice Secretary of State Colin Powell gave to President George W Bush in 2001 on why the US should not invade Iraq: “You break (the system), you own it.”
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