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Chief Guest
K P Singh's speech to the Graduating Class of 2008
Chairman of the Governing Board, Mr Rajat Gupta, Dean of ISB Dr Rao, members of the ISB Board, eminent faculty of ISB, distinguished guests, ladies and gentlemen and most important of all the Graduating Class of 2008.
I consider it a great honour to address this graduating class of 2008 of a truly unique institution like the ISB, which has not only earned international recognition in an incredibly short span of time but also ranks among the top twenty business schools in the whole world. This is indeed an outstanding achievement and perhaps could have happened only because both the teachers and the taught of ISB are fired by an unquenchable thirst for knowledge and are committed to the pursuit of excellence.
Let me therefore begin by congratulating Rajat Gupta and all the founding members of ISB for their visionary initiative, and the eminent faculty led by Dean Rao who have translated that vision into reality. Let me also extend my heartiest congratulations to the Graduating Class of 2008 and their parents, friends and mentors. This is a very special day in your lives. I am sure all of you have gained immensely from the world class education that has been imparted here at the ISB, which in addition to your earlier working experience, has now made you ready to return to your careers fully equipped to take up the challenges and opportunities that you will face in the yeas ahead.
When Rajat invited me to attend your Convocation I felt honoured but at the same time wondered what I should speak to you about, because frankly unlike my children and grandchildren who have graduated from MIT and Wharton, I myself have not had the benefit of any formal management education. After ten years as an officer of the Indian Army I learnt the corporate ropes the hard way, inspired as I was, by the legendary Henry Ford’s philosophy that ‘lessons learned by failures are only opportunities to begin again more intelligently’. So I thought that perhaps it might be useful to share with you today some of my experiences along the way and also to share with you my perceptions of an area I have been actively associated with all my working life - that is the housing and development scenario in the country.
I believe circumstances and chance meeting have a great influence in charting the course of event of one’s life, but it is up to each one of us to translate these chances into opportunities to achieve personal success. At two important junctures of my life I was very fortunate to come into contact with two global corporate leaders. First in the early 60s George Hoddy of Universal Electric Company, and then two decades later Jack Welch of General Electric. Today I can say very honestly that almost everything that I initially learned about managing a business enterprise was due to my close association with them.
Let me first tell you about George Hoddy. The visionary who built a business empire that is stretched across the United States, Europe and Asia. His interest in India in the early 60s was kindled after reading a newspaper article about millions of young people in India looking for jobs that weren’t there. Therefore he looked for a partner in India and his company entered a joint venture with DLF to manufacture precision electric motors which we later named as American Universal Electric. Even though he was a 50 percent partner he took extraordinary interest in making this venture a success and in training people involved, especially me, a young person in the beginning of my career and the starting point of a learning curve. George had this uncanny knack of balancing macro objectives with micro reality. The speed with which he could achieve this balance, and therefore take a decision to go ahead with the project was backed up by his unique brand of determining those factors, risk factors, which could come in the way of achieving the laid-down goals and profit objectives. He termed this form of risk analysis as accountability programmes and he used to give almost equal priority to project reviews and his accountability programmes. His philosophy was that if you can take care of those factors where you can go wrong, and ensure that they don’t come in your way, success will invariably follow. The speed with which he used to balance project reviews with accountability reviews, blending micro issues into the macro picture, was something unique and amazing. I adopted this methodology into my way of working and I have always found it to be immensely useful in the past forty years of my business career. Incidentally George Hoddy celebrated his hundredth year just three years ago in March 2005, and when I called on him to offer my felicitations I was fascinated to see that even at the ripe age of 103, he is doing exactly the same thing on the philanthropic side now in the Michigan area as he used to do in his corporate career – going out of his way to take personal interest in the people around him and actively work for their welfare. George Hoddy undoubtedly had a great influence on my way of thinking and working.
After my long association with him I was indeed fortunate that my next transition in my life brought me in close contact a few years later with another living legend Jack Welch. My interaction with him. when he came to India the first time in mid eighties, was for me personally a turning point in the sense that it was the ultimate crash course in global management practices and perceptive especially after he inducted me as a member of GEs International Advisory Board.
But a far greater relevance, for India’s future development, was the impact that Jack Welch had on the then Prime Minister Rajiv Gandhi. I would go so far to say that it was the significant turning point in India’s history. In keeping with the stature, Jack was given a rousing red carpet welcome in India but he kept asking everyone he met “Why is India moving so slowly?” The answer he would invariably get from senior bureaucrats and political leaders alike was that the slow pace of development was inevitable for a developing democracy. Even Rajiv Gandhi responded to Jack’s question in a similar way. “India is just a developing democracy” he said. “Mr. Welch, things do take time”. That was when Jack came up with an observation which had a big impact on the mindset of policy makers of India including the young Prime Minister. He said “Mr. Prime Minister, may I suggest that you should start thinking of India as a ‘Developing Democracy’ with a highly developed intellectual infrastructure. Some of the smartest managers of my company are Indians. The day you begin to harness your intellectual resources, India will become an economic superpower of the world”. This simple truth had been eluding the Indian leadership till then, the truth that India’s strength and India’s destiny lies in its own intellectual potential. That the key to transforming the country into an economic powerhouse is to recognize, harness and exploit the international resources of our own people. I am convinced that Jack Welch inspired the young Prime Minister to push ahead with greater confidence towards greater reforms on modernisation. If India is now being recognised and projected as one of the fastest growing economies and most attractive investment destinations of the world, it only reflects the reality on the ground today whereas visionaries like Jack Welch saw it twenty years ago. In fact it is perhaps not very well known that it was Jack Welch who pioneered the Business Process Outsourcing (BPO) phenomenon in India. It was after his meeting with the then Prime Minister that General Electric gave an initial order of US $ 10 million for getting its first outsourcing done in India. This single step subsequently became a pace setter for orders worth billions of dollars from other global corporations. The rest is history and today India is the number one BPO destination in the world.
Indeed although conventional wisdom is that the era of India’s economic reforms began only in 1991 during the Narasimha Rao-Manmohan Singh regime, I personally believe that the seeds of liberalisation were first sown in Rajiv Gandhi’s time in mid 80s leading him to begin the process of correcting the mistakes of the past and launching India on a course correction trajectory.
In many ways the history of India’s economic development, since gaining freedom in 1947, has been a story of mistakes made and lessons learnt. Perhaps a model of a controlled economy was relevant at that time. Nobody can deny that the socialistic pattern of development followed for the first four decades brought about certain very significant gains on many fronts, mostly notably the Green Revolution which brought about self-sufficiency in food, the creation of institutes of higher learning like the IIT and also the fillip given to the small-scale industry which enabled the emergence of a vast and vibrant entrepreneurial base. But if you make a fair appraisal of our economic and social performance over the past sixty years, we will be forced to admit the stark contrast to the major gains. There is a long list of failures and unfinished tasks.
Look around you my young friends, and you will see that in spite of the dramatic progress that we have made we are still a nation in transition caught on the razor’s edge between two conflicting mind-sets, one still pushing an old outmoded pattern of development and which is not quite dead yet, and another young and vibrant mind-set which is still struggling to be born, advocating a new model of growth.
While we can justifiably take pride in the rising curve of our GDP growth rate, let us not forget that we have still not succeeded in providing a basic minimum level of livelihood for the millions of our fellow-citizens, especially in the rural areas. Even in our cities and towns the human condition is far from satisfactory. Fifty percent of urban population are slum dwellers lacking even the basic hygiene facilities, the living standards fall to the lowest levels, the slum children the citizens of tomorrow are growing up in an environment where character has no place. We must realize that cities are drivers of economic growth providing employment opportunities that attract human resources but clearly our big cities are unable to cope with the barging population and the growth that is taking place. Our urban infrastructure is crumbling, everything is in short supply whether you talk of housing, power supply, roads or transportation. I analysed this anomaly deeply and came to the conclusion that it was due primarily to one fundamental mistake made by policy makers after independence, which was to completely eliminate the private sector from the housing development scenario ,and for the state to totally take it over as a monopoly . This led to the elimination of professional developers of the day and the vacuum created by the professional developers was filled in the mushrooming growth of thousands of fly-by-night builders who made rampant unauthorized constructions all over the country. The result of which you see all around you today. There is no city, which we can be proud of. Everywhere you see shanty towns and slums, invariably unauthorized and sub-standard urban infrastructure. This is the outcome of one fundamental mistake made at that time. It became evident to me in the early 80s itself that while the urban population was increasing eight and a half times, urban housing was growing two and a half times and cities were getting choked and over-crowded. That was when I decided to take it upon myself to pioneer a change in the country and that is how the idea of Gurgaon was born. I was fortunate at that time to come into close contact with the late Rajiv Gandhi who was very supportive of my efforts to get housing sector opened up again. But it proved to be a long and arduous exercise since not only had the cobwebs of archaic laws to be done away with, but old outdated mindsets needed to be changed. What should have taken 3-5 years has taken almost 25 years. Unfortunately even today old mindsets still come in the way and there are many outdated laws still on the statute books. But the good thing is that at least today it is being recognized that the private sector has a role to play in the development of infrastructure and housing in the country.
My young friends, as I see today there are two basic issues before the country, one is the colossal task of making growth inclusive by bringing about a transformation in the rural economy which the government is now rightly attending to, and the other is revamping the entire housing and urban infrastructure not only to meet the future challenges which are gigantic, but also to clear the backlog. The question is how this can be done. As I said first and foremost there has to be change in mindsets. This is where strategic educations come into play. I believe that institutions like the ISB, and indeed all colleges and universities in the country, should include a new subject in their curriculum, an important subject on real estate housing and urban development which has not got the kind of recognition that is vitally necessary in a country like India. Whereas India can be rightly proud of its industrial development, whether you look at telecommunication or manufacturing, we certainly cannot be proud of our urban development and housing scenario. To rectify the situation we have to make a new beginning, we have to begin again more intelligently. And we can begin by changing, as I said earlier, the curriculum, in your educational institutes. I would even suggest that the curriculum of institutes for training our bureaucrats and policy makers like the IAS Academy should be enlarged toe include Urban Development and Housing as an integral part of the syllabus. This will bring about a new awakening, a new realization, so that over a period of time mindsets would start changing, because today policy formulations are governed by old mindsets and that is why such big mistakes have been made and unfortunately continue to be made. We must realize that when major conceptual mistakes are made in Urban Development and Housing, future generations get affected. Unlike in industry where errors can be rectified relatively easily, in urban infrastructure and real estate development mistakes cannot be undone without colossal loss of time, money, and effort and in some cases involving demolition of existing structure.
That is why I believe there has to be a national movement to bring about changes in education, training, and in attitudes. This is where talented young men and women like you, equipped with the best education from the very best institution like the ISB, have a role to play by bringing about a change in the mental attitudes. As future captains of the industry all of you have the collective responsibility to guide the destiny of this great country along the right path.
The challenge is not just achieving growth. Growth will happen in our country regardless of which political system is in power. The challenge is to manage growth in a manner which makes it truly inclusive, the challenge is to change mindsets so that the policy-makers, bureaucrats and corporate leaders alike stop ‘Thinking Small’ and ‘Managing Shortages’ and instead now should start thinking big and creating surpluses so that all sections of society can share the benefits of our growth. As each one of you steps into the world to pursue your individual careers your collective mission, in my opinion, is to play a dominant role in helping to bring about a new vision of India where living and working standards become comparable with the best in the world. Men and women of destiny, as you all are, I know not the contours of the future, I know not if we are witnessing the dawn of an Indian century, I know not how many Indian billionaires there will be in the years ahead but I do know that India is fast emerging as a land of opportunities, not only to foreign investors but equally also to all corporate managers, leaders and innovative thinkers from all corners of the world. In that sense each one of you will be living and working in a truly global century in which India will contribute significantly towards making this planet a better place to live in. And each one of you will be called upon to assume leadership roles to make that happen with a difference. I wish you all a glorious and successful career. Congratulations once again to the class of 2008. Thank you.
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