Shri Rajat Gupta, Chairman, Indian School of Business, Dean of Indian School of Business, Dean of MIT Sloan Business School, David Schmittlein, distinguished members of the Executive Board, distinguished members of the faculty, High Commissioner of Pakistan, distinguished guests, graduating students, parents, friends, distinguished members of the media, ladies and gentlemen!

We’ve heard the Dean talk about how well you have done, the levels of excellence that you have achieved and the fact that as you move out tomorrow into the world, you will move forward not just with confidence but with the fact that you have in fact graduated from perhaps one of the best schools in the world that gives me the confidence that you are going to be the leaders of tomorrow. I also heard Rajat talk about what you ought to do as you walk away from this evening’s graduation ceremony and the little tips that he has given you. But I have to say Rajat that I was thinking about one of the tips that you mentioned, namely that whenever you feel a little comfortable in your job, change it. And I have to honestly confess that I have felt very uncomfortable for the last six years. And I am sure that the next four years will be equally uncomfortable. I want to really talk about some macro issues. I know that you are going to get placements, I know that each of you will excel in whatever you do. I know that you are going to have a fat cash balance in your bank accounts. I have no doubts about that. But I want to address, given the opportunity, some of these macro issues that I feel are important as you begin a new life tomorrow morning. First of all I consider it both a single honour and a privilege to address you at this graduation day function. The Indian School of Business which started its eventful journey in 2001 with a hundred and twenty six students has come a long way. Today it is heralded as one of the finest B-Schools in the world with a quality of student network matching any other international B-School in all key parameters. It has been ranked twelfth in the Financial Times Global MBA rankings in 2010. Today we are celebrating the graduation of five hundred and sixty eight students of the Class of 2010.

Many of you graduating today might well ask yourself the question, as you slowly absorb the excitement of the occasion, what you might wish to do tomorrow. I believe that the pace at which the world around you changes and the nature of the challenges that you will confront as you move ahead will require you to answer that question. For most of us in diverse walks of life, the solutions of yesterday are inadequate to deal with the challenges of tomorrow. We need to invent and reinvent. We need to innovate and change track. We need to be supple in mind and action. We need new ways to manage both ourselves and the institutions in which we work. As I will never have such an opportunity in the near future to reflect with those who are destined to manage the world, let us consider the future of management institutions and graduates in a world which is poised between a collapsing past and an uncertain future.

I wonder if you have considered whether management institutions and professionals of your standing and others need a new definition of wealth. Is wealth in economic terms mere accumulation of capital or something more than that? Is wealth creation measured by the return on investment reflected in a corporate balance sheet or do we need to look beyond the balance sheet to truly understand the difference between capital accumulation and wealth? Is the purpose of wealth, the success of investment measured by the multiplier effect of the initial capital invested? Some of these questions worry me as a politician. Is my success measured by the position that I hold or the policy that I enunciate or is it to be measured by the effervescence of a national dialogue that brings about change of mindsets or should we look for evidence of its impact on the ground by measuring how it has changed the life of the common man? Is the cold print of numbers reflected on a sheet of paper the only evidence of prosperity? I do not quite know the answers to these questions. But I do believe that as you move out after having spent one year studying at the Center for Entrepreneurship Development, analyzing finance, looking at logistics, networked economies and emerging market solutions, you will ask some of these questions and find answers for yourselves. Remember your individual journeys are uniquely your own. Each of you must take responsibility for them. Your real success at the ISB will be reflected in your ability to ask the right question and as you move forward in your endeavors, figure out for yourself the right answer.

The meltdown of 2009 has shaken up the global financial world. We continue to analyse the reasons for the collapse of the financial markets and are groping to create the architecture of a more robust global market structure. We realise today that the world is not flat but both bumpy and uneven. The stock market symbolises a global regime in which the rich are networked to the rich. The recirculation of capital energises investments without reference to rational decision-making. I do not wish this to be regarded as a statement against or rejecting capitalism. It is symptomatic of the realisation that we need to restructure institutional mechanisms for the use of capital, its market functions and perhaps redefine its goals. Winston Churchill once said “the inherent vice of capitalism is the unequal sharing of blessings, the inherent vice of socialism is the equal sharing of miseries.” Even Mahatma Gandhi said that “Capital as such is not evil, it is its wrong use that is evil. Capital in some form or the other will always be needed.” What I mean to say is that given the importance of capital and its relation to prosperity as we understand it in classical terms, it is time for each of you, the graduating class to reflect on how capital is to be used not just for building a balance sheet but for building a social capital which will empower others, not necessarily those involved in your particular enterprise, to acquire the capacity to breed capital.

It is therefore becoming increasing urgent for us to fundamentally re-examine theoretical frameworks, managerial mindsets and business models, to revitalise the capitalist structure for the purposes for which it is considered. In the words of Hernando De Soto, “as the only feasible way to rationally organise a modern economy”. We are in the midst of a corrupted version of capitalism. Necessarily, therefore, those who are in the forefront of the capitalist structure must be conscious of its societal objectives and set up new and innovative structures of management to realise them. You have to be sensitive, awake and mindful of your responsibilities.
A conscious business strategy with a socially relevant goal fosters both peace and prosperity. Therefore our management graduates as they move out cannot embrace business as usual. Business needs a paradigm shift where broader societal interests must be paramount. Public trust of business enterprises is at its nadir today and must be restored. The old operative system is no longer adequate and does not have the wherewithal to meet the challenges of tomorrow. We need to therefore rise above profit maximisation and must consciously evolve and dedicate ourselves to a higher purpose. All stakeholders must benefit in a company’s business operations. Such benefits must not be limited only to those who own equity. What we need is a philosophical framework of capitalism conscious of its responsibilities. The new business models must be inspirational and the measurement of the success of a business model must embrace new principles of accountancy which reflect in its balance sheet the purpose that transcends mere profit.

This is indeed a challenge which you as future leaders, I hope readily accept and thus become the harbingers of change. The heart of any business strategy is the fragmented nature of the market place. Manufacturers, vendors, suppliers, consumers and others, what we need is a holistic strategy which uplifts those at the bottom of the pyramid. If you as managers are able to uplift the travails or the burden of those who at the hands of society are effaced by the broad brush of poverty, if you are able to uplift their lives, you would have made good use of capital. It is the voiceless stakeholder who matters the most. He matters because empowering him with the ability to speak and to be heard enriches capitalism. The business model evolved around these principles will then become the foundation of a new capitalist structure. It goes without saying that companies that are guided by “stakeholder pluralism” will do much better than others- outperform those whose limited vision is bound by the mantra of ‘profit maximisation’.

So far, I have talked about the future journey of an enterprise. Hidden within that are your individual journeys. Having graduated from one of the finest graduate management institutions in the world, you have a splendid future awaiting you. Many of you will climb your way to the top of Future 500 companies. Some of you will have created them. Others might become charismatic, learned, university professors. Hopefully a few of you will choose to dedicate your lives to helping others through social work. What makes life exciting for you is that you have been provided, in the last one year with the requisite training with the enabling wherewithal to be successful in whatever you choose to do. The opportunities are endless, the avenues are wide open. It is time for you to explore. For being a successful explorer, you need to foresee change and change to remain relevant.

India in the 21st century will receive the recognition and space that is rightfully ours. We are destined to contribute in reshaping the world and we will have our voice in its future design and architecture. As you contemplate individually on your future course of action you will realise a minefield of opportunities that lie ahead waiting to be seized. As we build our infrastructure, our urban agglomerations, as we mobilize rural communities self-help groups, as we empower women, as we seek to garner resources as we use them though frugally to efficient systems of management you will be challenged. The corporate sector will too have to design new ways of empowering those who they reach out to. Not all management academic studies look at the opportunities available as the young get empowered through education and charter a course for themselves in an emerging economy. You as managers need to foresee that change. You need to realise which sectors of the economy will contribute to the wealth of the nation. You can play a vital role in developing management structures within complex globalised frameworks in which we are obligated to function. Let us take an example. The right to education act came into force on April 1, 2010. There is going to be a sea change in the various tiers in the education sector. Administrations will have to put systems in place to ensure access to the less privileged. This would require enormous investments in education and in turn cater to the development of leadership in the education sector. How do we develop such leadership? How does the administration manage such vast expansion? What management structure should be put in place in order to determine outcomes? What kind of public-private partnerships must emerge in order to ensure that all stakeholders participate in the system? How does the community at the panchayat level deal with the set of neighborhood schools and manage them? These are all issues that confront stakeholders in the education system. And you as managers have a significant role to play. This is an opportunity that needs to be seized by the private sector in order to ensure that we are able to create a critical mass of human resources to access higher education. What should be put in place to produce inspirational leaders at the level of the school system? What kind of training do they require? What will be the future issues that need to be addressed by the academic community at that level?

As we move into higher education, whether we like it or not, it is a national imperative to ensure that the gross enrollment ratio which is presently 12.4% reaches 30% by 2020. Let me just tell you what this number is all about. As it was mentioned to you, you perhaps are the privileged of the privileged few. There are two hundred and twenty million children who go to school. Only eighteen million reach college. That is 12.4% out of every hundred children who pass out of high school between the ages of 18 to 24 ever reach college. The difference between the developed world and the developing world is that in the developed world the gross enrolled ratio instead of 12.4% is 40%, not less than 40%. So the gap is enormous. And you are part of that 12.4% and of that 12.4% you are perhaps at the higher end, part of that 0.5% of that 12.4%. That is how privileged you are. Do not waste your privilege as you move forward. If you increase the gross enrollment ratio, we will require setting up of hundreds of universities and thousands of colleges. It will also require management solutions. You need to realise that some of these opportunities and challenges are uniquely Indian and in the context of our diversity and the richness of our culture, disparate and complex nature of our democracy, the solutions that we evolve need to be Indian. Such solutions need to address the concerns of a society half of which is steeped in poverty. The administration itself needs to be empowered. Governments can provide finances and administrative structures along with where possible necessary infrastructure. That by itself cannot provide solutions. Solutions must emerge from a collaborative effort. And one of the key stakeholders in such a national endeavor is business managers, that is you. The best of minds are gathered here today. In your own little way you need to participate in this venture to realise a nation’s dreams.

I took the example of education because I am somewhat familiar with it. But the same logic will apply to rural development. Putting in place systems in the field of agriculture both in terms of inputs and delivery for public distribution networks and systems of accountability required while taking care of outcomes. Our administrative systems need to be energised to function as effective instruments of change. It will require the use of technology, the identification of appropriate sustainable technologies, affordable technologies, accessible technologies, the need to develop solutions which are affordable and accessible and therefore in that context to provide for management systems that have the capacity to deliver. The opportunities as I said are endless and as you walk out into the world you need to free your mind of the text book solutions that you have learnt over the years. In a sense it might be easier for you because each of you has had experience of either three or five years before you entered this institution. You are familiar both with the world of academics and its occasional mismatch with reality. You need to understand the reality of India to discover the solutions for her. Some of you are destined to provide those solutions.

For those of you who foresee the challenges that I have already referred to, you need to change your mindset to confront them. That is how you and the solutions you offer will be relevant. Jamshedji Tata was a 19th century pioneer in this direction. He believed that a visibly flourishing and growing corporate unit could never be an island unto itself. It was always part of the society in which it was placed, drawing much of its sustenance from it - skills, labour, political support, good will, besides many services. Yet every new generation needs a new mantra for change. In the late ‘60s and ‘70s we all know that Japan became a tough competitor to the Americans. This is because Japan focused on quality and non-material values which had material manifestations. But quality alone did not determine the ability of the Japanese to compete. The Japanese sought inspiration and strength based on a value system which at the heart was Japanese culture. The interest of the community were paramount, those of the individuals, subservient. The ethos of Japan with emphasis on quality standards transformed it into a power to be reckoned with. In the late ‘70s and ‘80s and even in ‘90s we saw the success of the Asian Tigers including Singapore, Taiwan, Hong Kong, Thailand, Indonesia, South Korea and Malaysia. That was the time when Lee Kwan Yew talked about Asian values, success of the market place was not based on cut-throat competition but on collaborative value system. We therefore witnessed both the South Asian miracle economies as well as their collapse. This was because the system got corrupted through crony capitalism in which nepotism and the primacy of self interest became paramount.

To successfully meet the challenges that we face each of you needs to move away from the western model of management and evolve a model that is distinctly Indian based on our own value system. This is where Indian philosophy which balances the pursuit of wealth and material success with the mastery of the self and the quest for inner happiness comes in offering as it does, an alternative to greed is good ethos that has characterised the neoconservative economic thinking pervading the corporate corridors of the US and much of the western world. The deeply introspective yet practical wisdom contained in ancient Indian wisdom and texts such as the Bhagwad Gita, the Mahabarat and the Vedas also stand in stark contrast to the language of conquests popularised by management theories based on Sun Tzu's 6th century BC classic, “The Art of War.” The ethos which you need can best be exemplified by the phrase Yatho Dharma Thatho Jaya which means true victory comes from righteous conduct only. We need to understand that the pursuit of artha (wealth) and kaam (pleasure) should be in tandem with dharma (righteousness) and moksh (liberation). Pursuit of the first two without liberation of the conscience leads to imbalance and chaos.

We also need to keep in mind the values of equanimity in pain and pleasure; being steady when changes around you are large and intense. It is only then that business managers will have the ability to make the most appropriate decisions. You will need to focus on efforts and not results. You need to develop clarity of intention with clearly defined goals communicated with equal clarity. Appreciate others work and focus on encouraging optimism. Customise offerings for customers and cater to their unique requirements. You need to develop leadership qualities that encourage leaders to see things from others perspectives. Never shun maithri (true friendship), Karuna (compassion), Mudita (sympathy). Exercise self control when you feel that you are fully empowered, while feeling vulnerable give to others what you want most. Be humble, that is a quality of good leadership. The self in you must look within you with a critical eye. It is the introspection of the self that will help you make the right decisions.

All this does not mean that the business must stop or that you should not make profit. But as I said in the beginning having defined profit differently you will pursue a goal larger than the corporation that you serve. Beyond the self that is the center of the world. You may call this inclusive capitalism, conscious capitalism or give it any other name. But whatever name you call it the path must be different from that which was followed for centuries gone by. At the end of the journey you will have to ask the question to yourself, did I let myself down? You will know the answer to your question. Then alone you will have the satisfaction of sleeping in peace.

Before I end and this is really a coincidence, when the financial markets collapsed and there was a global meltdown and when the symbols of the business world collapsed I was sitting in my office thinking about it and I penned a few lines which are going to appear in my next book on poetry. And they relate to the global meltdown. And they have a small lesson for all of you. Let me read that for you as a personal gift to you today.
The meltdown of 2009, its genesis, mortgage, subprime,
The financial world fell at a loss, global leaders met at Lagos,
The mood effete somber with gloom, step needed to avert a doom,
Global markets in recession, much like the ‘30s great depression,
This laissez-faire has come apart, the end is here, rebuild and start,
Late Adam Smith cannot provide a recipe to turn the tide,
The Kantian way might help revive; our ailing banks their erstwhile pride,
Toxic assets to be excised, from balance sheets and kept aside.
Capitalise the banks to see a beginning of a lending spree,
Restore the trust consumers need; with new money let assets breed,
Help another spiral to start, that too in years will come apart,
The greenback with its ways will harken back the good old days,
Borrow before you earn and spend, consumption is the only end,,
Indebted you might be, so what? You are still a most happy lot,
Deficits reflect growing demand, the market is the magic wand,
That has collapsed, values are bust, and bankers too have lost all trust,
The world has changed since Breton’s Wood,
Redesign finance for global good,
Our Wall Street czars must tread with care for Main Street is the real player,
Regulation provides the real key coupled with real transparency,
Investment banks attempt to lure,
Profit noted distilled and pure,
Financial structures when put in place need to display a human face,
Rich must prosper so must the poor,
Our thoughts alone will not ensure; new global banks must help sustain
those affected by financial strain.
Prevent collapse and devastation, financial systems aberration,
The corporate world must take the lead
And this is for you,
The corporate world must take the lead,
The corporate world must take the lead,
And seek wealth without --- and greed,
Dupe not holders of equity, the key word is integrity,
Values, ethics must underscore the desire to acquire more,
Reform, revamp, inspire trust, ensure the system is robust.
That is what you need to do, inspire trust and ensure that the system is robust. It is now time for you to open your eyes to the challenges that you will face. Good luck to you in your ventures and adventures. Don’t let your country down. Your conquest that you will celebrate in the years to come must be beyond the self. Once again, congratulations to all the graduating students. I wish you all good luck for your endeavors. The evening is over. A new life awaits you. Thank you.