During the last one month, I have met with 70 senior managers in a variety of organizations. 64 of them (over 90%) have been in their jobs for less than a year. Attrition is not a new phenomenon and people will continue looking for greener pastures. The scale of what is happening, however, is rather frightening.

Does this mean there is no longer any value attached to attributes like loyalty? Or is it that executives no longer care? What are organizations doing to retain human talent, which at the best of times is scarce anyway.

On the one hand, we lay so much emphasis on the value of human capital. Models are available to quantify it and many organizations even publish this value as an annexure to financial statements. On the other, we do not seem to be doing enough to nurture and retain talent in a manner that would enhance organizational performance and also make employees happy and contented.

Among the factors responsible for executives hopping from one job to another every year if not more frequently, we have identified the following as the top three:

1. Monetary considerations (unless you move, you won’t get more)


2. Work environment (organizational culture does not recognize performance)


3. Colleagues – bosses, peers and direct reports – there is no synergy with everyone working in silos

It has been established that between resources and capabilities, the latter are more difficult to imitate and hence are more sustainable. The source of many a capability is the human intellect. People generate ideas, people come up with new ways of doing things and ultimately it is people – not just technology or finance – who deliver results. Given this context, it is indeed paradoxical that organizations seem to be doing precious little to take care of the most critical asset they have.

One would like to imagine that all the answers have been found – 360 degree feedback systems, the balanced scorecard, the learning organization. How is it that in spite of all these powerful tools or techniques, organizations are still floundering when it comes to managing people?

One answer to this puzzle could be the relative dearth of leaders who can inspire and motivate; leaders who are so passionate about what they say and do that the effect rubs off on everyone else. Since leaders cannot be mass-produced, what is the way out?

Another answer could be in the human condition itself. The pursuit of materialistic possessions, while not inherently wrong in itself, has its limitations. We can easily satisfy our needs but we would be hard pressed to satisfy our greed. If key people happen to leave at regular intervals, how does the virtuous process of forget, borrow, and learn happen?

Organizations with high levels of attrition may be fighting fires most of the time instead of creating longterm value for the various stakeholders. Innovation, perhaps the most critical factor for business success, may be difficult if you have to constantly change gears in terms of the people you work with.

Any feasible solutions to solve the puzzle are most welcome.

India is seen as an emerging economy having registered impressive growth rates for over a decade. The services sector has been doing very well and manufacturing has not performed poorly. What must come as a sobering thought to a nation of a billion people is that the latest Fortune 500 list has just 7 Indian companies. Of these, five are state owned – four in the petroleum sector that is showing high revenues thanks to oil being on the boil and one bank. Only two companies are in the private sector – Reliance Industries and Tata Steel.

Reliance Industries would have been a much bigger player but for the split in the family that saw two brothers unable to see eye-to-eye on where the group should be headed. Tata Steel figures in the list primarily due to its acquisitions and not because of internal growth.

This brings us to the central question – what is the best method for growth and how far is it desirable for an organization to grow through acquisitions? While there cannot be a single or best answer to the question, some trends appear rather disturbing:

· Indian companies, perhaps in a hurry to make it to the big leagues, appear to be taking the acquisition route. The funds required for these acquisitions are largely from debt and very little from internal generation. Initially, this was confined to sectors like IT, biotechnology, and pharmaceuticals but is now spreading to commodities. IT companies have quadrupled revenues in a year through acquisitions. In the process, their share prices have tumbled down. Information today is ubiquitous; shareholders can easily see the dangers that a heavy debt burden can bring in its wake and are unforgiving of organizations that take this route. A similar trend can be expected in other sectors as well.

· Even more disturbing is the apparent lack of enthusiasm for R&D investments and for embracing concepts such as TQM and TPM. Although the concept of total quality was pioneered in the USA by the quality gurus starting with Deming, Japan was more agile in adopting the practices, and the country of origin label that was an embarrassment was soon transformed into a synonym for quality and reliability. Even with the problems that Japan has faced in the last few years, it is still commendable that 64 of the 500 largest companies emanate from the relatively small country. In a study conducted over a 11 year period, Ruth Lumb found (Indian Journal of Economics and Business, March 2006) that the perception of US consumers about Indian products was that they were technically less advanced; had a more common than exclusive image; were more for the middle and lower class than for the upper class, even while scoring better on reliability and recognizability.

· Despite having one of the largest pools of scientists and engineers, the concept-to-market cycle is too long for comfort. On the one hand, the Indian Space Research Organization recently celebrated the feat of placing a record number of satellites in orbit. On the other, the Light Combat Aircraft has been under development for over 20 years and by the time it is operational, the technology might be obsolete. The lack of a clear focus on policies affecting the nation and the consequent isolation from the rest of the world in areas of high-end technology have been primary drivers in this classic example of lethargy.

It is time that Indian industry woke up to the realities of a semi-globalized world and indulged in some serious introspection. In particular, the following dimensions are worth addressing in an accelerated time frame:

· Efficiency and capacity utilization: the waste levels for most industries are a cause for concern. Capacity utilization in key sectors is way below 70%. New capacity is not being created in vital sectors like energy.

· Quality: to be globally competitive, Indian companies must adopt the best practices in design, manufacture and services. Merely harping on the cost advantage may not take us far for long.

· Innovation: investment on R&D may hold the key to whether we remain an emerging economy or move on to be a developed country.

· Customer responsiveness: the lack of sensitivity among producers and service providers shows that we are yet to wholeheartedly accept the market economy concept.

· While acquisitions make sense during the shakeout stage of an industry, the desirability of this method as an engine of growth at other stages through debt requires serious reconsideration.

Organizations need to look at expanding their customer base and providing superior offerings if they wish to be significant players in the global arena.

When will we see 30 Indian companies on the list? Take a guess.

The United States of America celebrates Independence Day tomorrow. The achievements in many areas from science to engineering to medicine to business to the liberal arts have been quite spectacular. The universe has been explored like never before as recent photographs from the Hubble Telescope and the Cassini Mission to Saturn confirm. Diseases have been conquered. Wealth has been created beyond anyone’s imagination. To all the people involved directly or indirectly in this magnificent journey, we pay a humble tribute and wish that the next century would be even more exciting, challenging, and purposeful.

What does freedom mean to ordinary individuals? Does it mean freedom of speech, expression, and choice? As a young democracy, India has to learn a lot more in terms of striking a balance between the rights of individuals and the overall good of society and the nation. One of the major political parties has called for a nation-wide strike to protest against an incident that has happened in one state. Another set of parties is scheduled to call a similar strike to protest against rising prices.

The people most affected by such “forced stoppages of work” are also the most vulnerable sections of society – the daily wage earners, the small vendors, and the micro-entrepreneur. Is this an acceptable definition of freedom? The irony is that all this happens despite the highest court of the country having pronounced such strikes as illegal as they impinge on the rights of others.

Given the context, is it not time for us to also think of a universal set of obligations? David Resnik’s eight principles may form a good starting point:

• Non-malificence: Do not harm yourself or other people


• Beneficence: Help yourself and other people


• Autonomy: Allow rational individuals to make free and informed choices


• Justice: Treat people fairly; treat equals equally; unequals unequally.


• Utility: Maximize the ratio of benefits to harms for all people


• Fidelity: Keep your promises and agreements


• Honesty: Do not lie, defraud, deceive or mislead


• Privacy: Respect personal privacy and confidentiality

It is possible to debate the meaning of some of the terms. It is also possible that we would often face situations where one line of action, while upholding a principle, would contradict another. When faced with such dilemmas, after gathering information and exploring different options, a balanced decision could be made by evaluating the options in relation to the principles. This process has been called “moral reasoning” leading to a state of “reflective equilibrium” or balanced judgment.

Such an approach assumes significance in light of what we witness almost every day. Taking the lives of others whatever be the espoused cause or reason, violates the first principle. As a community, we have become so selfish that the thought of helping others rarely crosses our minds. State ownership of critical sectors robs people the right of informed choice. Justice is denied because it is delayed beyond reason. We have cases of thousands of people languishing in prison for over a decade without a trial. The rich and famous can get away with anything or so it seems.

Ten years after a fancy car mowed down a number of people sleeping on the pavement, we are yet to see justice delivered. Laws are enacted keeping in view “vote banks” rather than the welfare of the nation as a whole. Political parties make grand promises at the time of elections. The moment elections are over, the promises are conveniently forgotten. As for honesty, the less said the better. As a former prime minister once remarked rather (in) famously, corruption is a global phenomenon. And thanks to technology, every move that we make can be tracked.

Isn’t it time, even as we celebrate the spirit of freedom and all the positive attributes that freedom brings to individuals and to society, for us to ponder about our obligations as well and ensure that our duties and our rights always go in tandem?

Today marks the last working day for Bill Gates at Microsoft. So much has been written and spoken about him that another column appears redundant. Some people may even feel a tinge of happiness that they no longer have to contend with the ruthless businessman that Gates has been portrayed as. The purpose of this post is to analyze what can be learned by young people from perhaps the most successful entrepreneur of our times.

• Focus: Bill Gates has demonstrated over nearly thirty years the importance of clarity of thought and execution. Unlike many of his contemporaries, he did not move away from the domain he understood better than anything else – software. He has pursued the objective of dominance in software in general and operating systems in particular that has few parallels. Venturing into unfamiliar territory may be fashionable but carries a high degree of risk. If ever a need arises for an absolute example for what Peters and Waterman called “Stick to the Knitting” and Hamel and Prahalad termed core competence, one needs to look no further than Bill Gates and Microsoft. Focus also means the ability to pursue one’s goals whatever the obstacles may be. Such a degree of perseverance is hard to come by.

• Thinking big: Along with focus, the ability to dream big and pursue that with single-minded determination sets Gates apart from other entrepreneurs. This is particularly true of entrepreneurs from emerging economies like India where an ultra-conservative attitude has stifled growth. Entrepreneurs need to develop confidence in themselves and their team that they can take on the world and come out winners.

• Passion: Simply put, if anything is worth doing, it is worth doing well. From a simple thank you note to a complex proposal, it is critical to place the stamp of excellence on whatever one undertakes. Equally important is the need to constantly innovate. Change is the only constant and the more agile and adaptive we are to change, the more successful we can be.

• Learning as a life-long process: Though dropping out of college to his dreams, Bill Gates has probably read and written more than most of us ever will. In the process, he has shown the limits of formal education. Important as formal education is, perhaps it is more important to realize that learning is a life-long process. Knowledge is infinite. Even if we keep assimilating it without a break throughout a lifetime, we would not have scratched the surface. Knowledge should lead to humility and wisdom – not arrogance and one-upmanship.

• Giving back to society: The Bill and Melinda Gates Foundation has provided a new dimension to philanthropy by addressing issues that are global in nature – malaria, cancer, AIDS. Feeling good by doing good may appear old-fashioned but this may yet be the best way forward in combating diseases that kill or maim millions of people every year. With friend and legendary investor Warren Buffet also joining hands, a formidable combination has been forged. Bill Gates has shown a remarkable degree of consistency both in his business goals and in his goals in philanthropy – he is a global citizen.

Although some Indian entrepreneurs have indeed espoused similar causes – Infosys Foundation, Azim Premji Foundation, and the House of Tata come to mind, a lot more can be done by successful Indian entrepreneurs. In fact, just 5% of the wealth of the 200 richest people can eradicate some of the most pressing problems that we face. Wealth should not be merely in terms of building the most flamboyant homes but in pursuing a higher calling. Where is the collective conscience of the rich who hav made it big due to the society that they are a part of?

As with any successful or great person, there will always be controversies. In an age where the distinction between means and ends is increasingly blurred, taking extreme positions hardly helps. One may not agree with Gates’ means for achieving what he has, but one would find it difficult to ignore his contributions to the IT industry. However, history and posterity will probably recognize him more for what he has decided to do – at a relatively young age – for the rest of his life. Combating hunger, fighting disease and educating the poor are truly lofty goals worth emulating by anyone who cares for humanity and for the quality of life on this planet. On this count, there cannot be many role models better than Bill Gates. The last thirty years have seen the emergence of an entrepreneur par excellence. The next thirty years will probably see the emergence of the greatest individual philanthropist – not necessarily in monetary terms – but in terms of the global issues addressed with dedication.

Since this is a discussion forum, two questions to readers:

• Why can’t governments spend 1% less on defense and use the money to improve living conditions for the poorest of the poor?

As the United States prepares for a Presidential election and general elections in India appear to be not far away, this may be a good time to look at the state of relations between the world’s greatest democracy and the world’s largest democracy.

It seems paradoxical that two nations that have so much in common in terms of values and cherished ideals cannot see eye to eye on critical issues. For a start, we can consider the nuclear deal. Despite continued and stubborn resistance from the left, the present government gave indications yesterday that it would like to see the deal through. The US government on its part has stated that the deal needs to be completed by January 20, 2009, thus providing India a leeway of over six months. For India to even hope of becoming a developed economy, energy would be a critical resource. With adequate safeguards, nuclear energy is a viable alternative.

Contrary to popular perception, a reactor built with due diligence is safer than what most people think. Except for Chernobyl that claimed an unspecified number of lives and Three-Mile Island that caused a scare, there have been no disasters on the nuclear energy front. Fatalities in conventional plants due to negligence and accidents far outnumber those from radiation or other hazards. Even if the deal goes through, it is not as if the US is waiting to push Uranium or nuclear technology down India’s throat. Conservative estimates have said that it will take 10 years before the first reactor starts producing electricity.

The gap between demand and supply would have reached alarming proportions. Large parts of rural India receive electricity for just 4 – 6 hours a day. Do we want to go back to the dark ages? Why doesn’t common sense and trust get the better of political expediency and rhetoric?

On a different note, a report received on June 17 highlighted the sentencing of a scientist – entrepreneur of Indian origin for allegedly selling microprocessors to two Indian entities on the restricted list. There can be no question whatsoever that the law of any land needs to be respected and anyone found having transgressed the law deserves to be punished. However, as several commentators have noted, the incident appears rather bizarre given the fact that the light combat aircraft into which the microprocessors are supposed to have gone, has General Electric engines and advanced avionics from the USA. GE has its largest research facility outside the US right here in Bangalore, India. Most of the employees are Indians.

It has also been pointed out that the microprocessors in question could be bought from any store such as Circuit City at a dollar apiece and no one would be any the worse or wiser for it. The restrictions on certain entities may have been placed in a different context and a different era. A laptop today has microprocessors that are much faster and better than the ones in question. Isn’t it time to adapt to the changing environment and move on? This is not an excuse for wrongdoing of any kind but only an appeal to look at the motives and outcomes if any instead of merely looking at the letters of a rule or regulation.

At regular intervals, there are shrill cries about outsourcing and its possible effects on the US economy. In contrast, Indian engineers and technologists continue to garner the maximum number of H1B visas year after year. Institutions of higher learning like the Indian Institutes of Technology have become such centers of excellence that there have been instances of students who could not make it to these institutions obtaining admission along with scholarships into some of the most prestigious of US universities.

India has demonstrated, despite hiccups now and then that it is a mature democracy and is on a growth trajectory having embraced the broad contours of a market economy. With almost 1/6th of the world’s population, India cannot be ignored. It is a supreme irony that the only pre-eminent superpower in the world has not thought it fit to bestow MFN status on India. Almost in retaliation, India refuses to throw its doors open to investment in several sectors that could propel the country on the fast-forward track of growth.

It is time both countries realized that the ideals that both hold so dear can best be achieved through cooperation, not confrontation. It is also time to look at the “big picture” and stop nitpicking on trivial issues. Who will take the first step?

Until yesterday, Ranbaxy was India’s No. 1 pharmaceutical company, with grand visions of becoming a global player. Now, a relatively unknown Japanese company, Daiichi Sankyo, has bought out the founders’ stake (35%) for $4.6 billion, recasting the Indian pharmaceutical industry and anticipating its future. The founders have been turned into billionaires, the present CEO (from the founders’ family) retains his position and at a 30% premium, experts are saying it is a good deal. The markets are not so enthused. On the other hand, stocks of other major players shot up by over 10% in the expectation that more takeovers are around the corner.

For decades, the Indian pharmaceutical industry was happily producing generic drugs and combination medicines of questionable efficacy and raking in huge profits. The phasing out of process patents in 2005 changed the landscape. The pharmaceutical companies were forced to look at R&D, something they had long neglected. R&D in pharmaceuticals is particularly difficult for two reasons – development costs that can run up to $300 million and time-to-market that can be as long as a decade. The risks involved are too high for anyone’s comfort. If a blockbuster drug is developed, the organization can make billions. If nothing is developed or what is developed is not approved by the regulator, the organization may sink. Faced with this situation, the big players started looking at acquisitions of companies that had a decent track record in R&D as the only way out of a possible crisis.

What was probably overlooked in the process was that not many path-breaking drugs have come out of small laboratories. Proprietary drug development is a big and serious business. It requires concepts like concurrent engineering that require major attitudinal changes (internal competition) and outlays that are multiples of normal R&D investments. As a result, nothing much of significance has come out of the acquisitions of small companies by Indian pharmaceutical players.

The other major problem that the industry has to contend with is fragmentation. A focus on generics has meant a spawning of entities – most of them small – that together churn out some 20,000 drugs – both single and combination. Compare this with the 200 drugs that the WHO has recommended as being vital for a nation’s well-being and you get an idea of the perils of needless proliferation. It is quite remarkable that a country like Bangladesh has been able to follow the WHO guidelines.

This brings us to the question – what is in store for the Indian pharmaceutical industry?

• We can expect a significant level of consolidation – a major portion of small players are likely to be wiped out.

• Many of the existing players are family owned businesses. No one should be surprised if many more deals on the lines of the Ranbaxy- Daiichi deal come through. It is the classic “bird in the hand” principle – if the founders can earn a few billions without too much effort, why should they spend hundreds of millions and ten years or more in trying to develop new drugs?

• The present scenario presents an excellent opportunity for multinational enterprises to establish manufacturing bases in India through the take-over route. The availability of talented scientists at a relatively low cost makes India an ideal location for manufacturing quality drugs. A word of caution is necessary though; such enterprises may have to follow a dual pricing policy, one for the local market and another for the global market.

• The Indian government would do well to take another look at its lop-sided policies. Where is the incentive for companies to invest in new drugs? The corporations engaged in R&D need tax breaks and innovative incentives.

Not long ago, in a scathing attack in Forbes magazine, Sramana Mitra termed India the back office for the global IT industry. Is the pharmaceutical industry the next in line for this rather dubious distinction? Or is this the revised version of a flat world: Indian companies eyeing the world for acquisitions, while global companies take over Indian companies. Time alone can provide an answer.