Feb 07, 2014

    Why corporations love Indian CEOs

    WITH the appointment of Mr Satya Nadella as chief executive officer, Microsoft has joined a growing club of multinational corporations run by Indian-born managers.

    The list includes Pepsi, Deutsche Bank, MasterCard, Adobe Systems, Diageo, London-traded consumer goods giant Reckitt Benckiser and semiconductor maker GlobalFoundries.

    At first glance, the commonalities among Indian CEOs are not particularly informative. They are all in their late 40s and early 50s, the age when a successful manager's career can be expected to peak.

    All graduated from American or British universities, in addition to their Indian schools - no surprise, since all of them were immigrants who needed a stepping stone into a new culture.

    Those of them who had management experience in India started out with global corporations, which is logical, given that it would have been harder to make the leap to global prominence from one of the family-owned companies that comprise about two thirds of Indian businesses.

    At least three - Mr Nadella, Adobe CEO Shantanu Narayen and Mr Prem Watsa, who runs Fairfax Financial, the would-be saviour of BlackBerry - went to the same public school in Hyderabad, which experienced a technological boom around the turn of the century that included the establishment of Microsoft's first development centre outside the United States.

    By the time the boom developed, however, all three were long gone from their hometown.

    In other ways, the executives' backgrounds diverge significantly. They come from different parts of India - Jaipur, where Deutsche co-CEO Anshu Jain was born, is 2,000km away from Chennai, the birthplace of Pepsi's Indra Nooyi.

    A few of the CEOs - Ms Nooyi, Mr Ajay Banga of Mastercard and Mr Ivan Menezes of Diageo - went to the Indian Institutes of Management, business schools set up by the Indian government since the 1960s to create a local management elite.

    Most did not. Some, like Ms Nooyi, Mr Narayen, Benckiser's Rakesh Kapoor and Mr Nadella, studied engineering. Others, like Mr Jain, Mr Menezes and Mr Banga, are economics and business graduates.

    Yet there must be a reason why so many Indians, and not, say, Brazilians, Russians or Chinese, have made stellar corporate careers. The answer might be found in studies of the Indian management culture.

    According to research from St Gallen University in Switzerland, Indian executives are inclined towards participative management and building meaningful relationships with subordinates.

    "The leadership style traditionally employed in India fostered an emotional bond between superiors and subordinates," the 2004 study said. "The feeling that the company genuinely cares for its employees, provided a strong bond of loyalty that went beyond financial rewards."

    In the "Indian club", there are no executives known for a dictatorial management style.

    Ms Nooyi says: "You need to look at the employee and say, 'I value you as a person. I know that you have a life beyond PepsiCo, and I'm going to respect you for your entire life, not just treat you as employee No. 4,567.'"

    When Mr Nadella replaced Mr Steve Ballmer at the helm of Microsoft, his high standing with the company's rank and file was cited as a major reason for his promotion.

    A 2007 study by researchers at Southern New Hampshire University, which compared Indian managers to US ones, found the South Asians more humble. It is not by chance that Mr Nadella started his first e-mail to Microsoft employees as chief executive by saying, "This is a very humbling day for me."

    The study also found Indians to be particularly future-oriented, focused on long-term strategies.

    Mr Narayen says: "If you can connect all the dots between what you see today and where you want to go, then it's probably not ambitious enough or aspirational enough."

    In his e-mail message, Mr Nadella paraphrased an Oscar Wilde quote on the same point: "We need to believe in the impossible and remove the improbable."

    Perhaps most importantly, the Indian managers get to the top because they persevere. Most of those I mentioned had the patience to rise through the ranks at their companies, learning their business thoroughly from every angle.

    Ms Nooyi joined Pepsi in 1994, Mr Jain took his first job at Deutsche Bank a year later, Mr Menezes has been with Diageo since 1997, Mr Narayen was hired by Adobe in 1998, and Mr Nadella's appointment crowns a 22-year career with Microsoft.

    There is nothing specifically Indian about empathy, humility, patience and an ability to dream.

    Yet it is these qualities that appear to have created the "Indian club" of overachievers in global business.