Getting China and India Right: A book review by Bob Morris

Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage
Anil K. Gupta and Haiyan Wang
Jossey-Bass (2009)

How to leverage the world’s fastest-growing economies for global advantage

In my review of Anil Gupta and Haiyan Wang’s previous book, The Quest for Global Dominance, co-authored with Vijay Govindarajan, I explain that they focus on four tasks essential for any company to emerge and stay as the globally dominant player within its industry:

1. “One, people must ensure that their company leads the industry in identifying new marketing opportunities worldwide and in pursuing these opportunities by establishing the necessary presence in all key markets.”

2. “Two, people must work relentlessly to convert global presence into global competitive advantage.”

3. “Three, people must cultivate a global mindset.”

4. “Four, in developing global strategies, people must take full account of the rapid growth of emerging markets, in particular the rise of China and India.”

In their latest book, Gupta and Wang note that, “Starkly put, China and India are changing the rules of the game” and many of the changes that have occurred in recent years are especially significant. The tasks are still important. However, with reference to the title of this book, Gupta and Wang point out that “being present in China and India [completing various tasks, however worthy they may be] is not the same as getting China and India right.” What to do and how to do it must be determined by different perspectives that are, in fact, the focus of this book.

Hence the importance of fully understanding that only these two countries in the world “simultaneously constitute four stories rolled into one, each of them with the potential to be game changing in its own right.” The authors’ use of the word “game” in Chapter 1 is apt because it denotes players, opponents, and field(s) of competition, rules, officials, and scores. The word also connotes relevant mental and physical skills, practice, preparation, and engagement with opponents. Given these meanings and implications of “game,” now consider the stories “rolled into one,” any one of which could be a game changer, if viewed from these perspectives: “(1) China and India as megamarkets for almost every product and service, (2)…as platforms to dramatic reduce a company’s global cost structure, (3)…as platforms to significantly boost a company’s global technology and innovation base, and (4)…as the springboards for the emergence of a new breed of fearsome global competitors.” Gupta and Haiyan Wang explain why building robust strategies for both countries requires that the company doing so address each of the four “stories” head-on.”

Then in the next four chapters, Gupta and Wang explain the mindset needed to think of both China and India (not of one or the other) as “cousins,” not “twins” (“Chindia”); to think in terms of megamarkets and microcustomers to dominate the competition; to think of leveraging both China and India for global advantage; and think of what competition with “dragons” and “tigers” requires on the global stage. When examining each mindset, the authors cite real-world examples of companies that have developed and then been guided and informed by it. For example, Haier (home appliances), Huawei (telecommunications equipment), and Lenovo (PCs) have a significant presence in India; Bharat Forge (auto components), Suzlon (wind tunnels), and Tata Consulting and Infosys (IT services) have a significant presence in China.

Readers will also appreciate how carefully Gupta and Wang organize and then present their material, especially their core concepts and key insights. In Chapter 4, for example, when explaining how to leverage both China and India for global advantage, they suggest that there are “three primary dimensions along which China and India are becoming central to global competitive advantage for a rapidly growing number of companies across a wide range of industries: cost arbitrage, talent arbitrage, and innovation. Each of the three sources of competitive advantage can be hugely important on its own. [That is also true of China and India.] However, if they can be leveraged in tandem, the impact can be especially powerful.”

They then create a statistical context, a frame-of-reference, for seven specific recommendations for making decisions and taking actions along several fronts (on Pages 107-108) when leveraging China and India as hubs for global advantage. They cite Eli Lilly & Co. and Portal Player as exemplary U.S. companies and explain why. Later in the chapter, they pose a critically important question: What is the optimal mix of global and local for a particular global hub? They then provide a set of five universal guidelines (on Pages 120-121) “that can be used to frame the analysis and discussions that lead to deriving the appropriate answer.”

Reading (and preferably re-reading) this book as well as others and also consulting several sources (such as the China India Institute) will help them to develop a global mindset but only if their cognitive lenses are focused on the future, not on the past. There are also several steps that a company’s decision-makers must take. Anil Gupta and Haiyan Wang suggest four near the conclusion of the final chapter, then share these observations about the successful global corporation of tomorrow: “Organizationally, it will be managed as a globally integrated enterprise rather than as a federation of regional or national fiefdoms. And it will be led by business leaders who have global mindsets and are masters at building bridges rather than moats.”

I highly recommend this book to senior-level executives in companies that are already competing in the global marketplace or are now planning to do so. I also recommend it to senior-level executives in other companies that are within the supply chains of current and imminent global players.

The Quest for Global Dominance:: A book review by Bob Morris

The Quest for Global Dominance: Transforming Global Presence into Global Competitive Advantage, Second Edition
Anil Gupta, Vijay Govindarajan, and Haiyan Wang
Jossey-Bass (2008

How to establish global presence, then achieve and sustain a competitive advantage

As Jeffrey Garten explains in the Foreword, this Second Edition offers “not only updates, not only new examples, and not only a more confident analysis. There are three entirely new chapters.” Given all that has happened since the first edition (2001), these are indeed welcome additions. Anil Gupta, Vijay Govindarajan, and Haiyan Wang focus on four tasks essential for any company to emerge and stay as the globally dominant player within its industry:

1. “One, people must ensure that their company leads the industry in identifying new marketing opportunities worldwide and in pursuing these opportunities by establishing the necessary presence in all key markets.”

2. “Two, people must work relentlessly to convert global presence into global competitive advantage.”

3. “Three, people must cultivate a global mindset.”

4. “Four, in developing global strategies, people must take full account of the rapid growth of emerging markets, in particular the rise of China and India.”

As the co-authors would be the first to acknowledge, it is quite easy to offer prescriptions such as these. Presumably they agree with Thomas Edison: “Vision without execution is hallucination.” After briefly but precisely identifying the “what” of “transforming global presence into global competitive advantage,” the authors devote the bulk of their attention to explaining the “how.” They intended that their book be broad in its coverage of issues relating to the creating and exploiting of global presence, and, that each chapter would focus on a specific action-oriented issue such as building global presence, cultivating a global mindset, or the dynamics of global business teams.

While citing real-world initiatives by several dozen exemplary companies (e.g. Cisco Systems, FedEx, Hewlett-Packard, IBM, Ikea, Marriott, Microsoft, Nucor, Procter & Gamble, and Wal-Mart), the authors address key questions, issues, and challenges such as these:

• Which five imperatives drive the pursuit of global expansion?
• Under which conditions is accelerated global expansion more appropriate?
• When location decisions are made, which criteria should be considered?
• Which four factors drive the speed with which to cultivate a global mindset?
• What are the most common barriers to effective and efficient knowledge transmission?
• What are the primary reasons for the failure of a global business team (GBT)?
• How to overcome communication barriers within a global organization?
• What is a “two-track strategy” and why should it be executed in both China and India?

Gupta, Govindarajan, and Wang are to be commended on the wealth of information they provide and, especially, on the rigor of their analysis of that information. All three are pragmatists. What has worked for other global companies that have transformed their global presence into global competitive advantage? What lessons can be learned from those initiatives? In this context, I am reminded of what Peter Drucker once observed: “We spend a lot of time teaching leaders what to do. We don’t spend enough time teaching leaders what to stop. Half the leaders I have met don’t need to learn what to do. They need to learn what to stop.”

All of the observations and suggestions that Gupta, Govindarajan, and Wang include throughout their narrative share a single purpose: To guide and inform the process by which correct decisions can be made, decisions that will address what not to do as well as what to do. Although their book is a “must read” for C-level executives in companies that seek to transform their global presence into competitive advantage, I think it should also be read by C-level executives in other (non-global) organizations that are within the supply/value chain of those companies.

Peter Drucker’s Recommendations for Summer Reading: Five Management Classics

I receive countless requests for summer reading suggestions and when I offer them, the frequent response is, “Haven’t heard of them. Are they bestsellers? I’m only interested in the best ever.” Well OK, but a majority of the bestsellers (whatever the year) are neither the best ever nor even the best that year. Like sparklers, they dazzle briefly, attract attention, and then….

Many book buyers resemble lemmings in their purchase decisions that are wholly determined by what “they say” (i.e. bestseller lists). I prefer books that resemble Bunsen burners but apparently my opinion means little, if anything, when juxtaposed with what “they” say.

But who wishes to take on Peter Drucker? By all means be my guest.

Here is an excerpt from an article written by Rick Wartzman and published in Bloomberg Businessweek. To read the complete article, please click here.

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Peter Drucker looked to the following still-oh-so-relevant books, published between 1911 and 1941, for guidance and edification

Although Peter Drucker was a self-described workaholic, he did take time off each summer to hike amid the peaks of Colorado, reflect on the previous year’s successes and failures, and, of course, read.

As you head to the beach or the mountains with your own stack of books (or your Kindle, Nook, or iPad), keep in mind five classics about management and leadership that Drucker himself loved. All appeared before his own landmark The Practice of Management was published in 1954. “Every one of these books,” Drucker noted, “laid firm and lasting foundations.”

1. The Principles of Scientific Management by Frederick Winslow Taylor

Although it has become fashionable to disparage Taylor and his methods for spurring industrial efficiency, Drucker never wavered in his admiration for the mechanical engineer or his ideas. Indeed, Drucker asserted that scientific management may well be the greatest “contribution America has made to Western thought since the Federalist Papers.” And he believed that Taylor’s concepts weren’t just instrumental for raising the productivity of those in factories; they’re crucial as well, Drucker said, “to learn how to make knowledge-work productive.” It is also worth pointing out, in an age when many top executives have enjoyed skyrocketing pay packages while their employees’ incomes have stagnated, that Taylor urged a more equitable structure. “The principal object of management,” he declared at the start of The Principles of Scientific Management, published in 1911, “should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity for each employee.”

2. Industrial and General Administration by Henri Fayol

Originally published in 1916, Fayol’s writings reflect the mind not only of a sage theorist but that of an able practitioner; for many years, he ran a French mining company with about 1,000 employees. Fayol’s contributions include laying out a fundamental framework for administration: forecasting, planning, organizing, coordinating, commanding, and controlling. Drucker said that although “Fayol’s language is outdated … his insights into the work of management and its organization are still fresh and original.” In fact, many businesses would do well to study Fayol’s notions of generating esprit de corps and getting the most out of employees up and down the organization. “Every intermediate link in the chain,” Fayol wrote, “can and must be a source of energy and ideas; there is, in each of these links, or men, a power of initiative, which, if properly used, can considerably extend a manager’s range of activity.”

3. The Human Problems of an Industrial Civilization by Elton Mayo

Decades before today’s management consultants began speaking of the need to engage all employees and ensure that everyone across the enterprise is aligned around a common set of big-picture goals, Mayo called for the same basic approach in this 1933 book. “It is not enough to have an enlightened company policy, a carefully devised (and blueprinted) plan,” Mayo wrote. “To stop at this point … has much the same effect as administering medicine to a recalcitrant patient. It may be good for him, but he is not persuaded. … This is the essential nature of the human; with all the will in the world to cooperate, he finds it difficult to persist in action for an end he cannot dimly see.” Although Drucker praised Mayo’s book, the two men got into it during an address that Mayo delivered at Harvard Business School in 1947. Drucker questioned Mayo’s philosophy, and Mayo thumbed his nose, literally, at Drucker. The two quickly apologized to each other.

Happy summer. Happy reading.

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To read the complete article, please click here.

Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University.