Sanjiv Puri, Chief Executive Officer of ITC, was in conversation with American economist and management guru Michael Porter, Professor, Harvard Business School, at the recent #PorterPrize awards event in Mumbai. Here are excerpts from their discussion on the Indian economy, its many complexities, its future and demographic strength…
Sanjiv Puri: I understand you are visiting India after a gap of 14 years. What are your first impressions coming to India now? And how excited are you about the future of India?
Michael Porter: That’s a big question but I am not an expert on India. However, I think the country is in a far better place than it was 14 years ago, so that’s good. I remember back then, we were still talking about electricity and connectivity. Now I think the difference between India and China is fast closing. Many of the steps that the Government is taking are critical and crucial and in the right direction, and the momentum is there. There is a lot of work to be done. There is still too much complexity in doing business here. You need to create one Indian economy. The implementation of a harmonized tax system is important in a big economy like India’s. The country can be successful only if it is broken down into smaller units where you have leaders not looking at the country as a whole but rather at smaller, broken down units. The question for the country is how do we keep pushing reforms and building on the deficits that still exist and keep simplifying the game and the rules. And, hopefully we can all keep the unity and not get tangled up in internal divisions. We in the United States are in a difficult period right now because we are fighting among ourselves. We are not the united country that we historically have been. We are in a very divisive period and as a result we are not making progress. We have got to make sure that we don’t fall into the trap of divisiveness and fighting among ourselves.
Sanjiv Puri: It’s so true what you are saying, we are actually seeing it play out in India in various States. Now the reforms that the Government has effected in the last 2-3 years have helped very well in improving administrative processes at the Central and State level. So now, I am touching upon a specific issue as far as India is concerned, but it’s actually a global issue as well. We have a lot of youth coming into the job market. But what we are experiencing is a jobless growth because of various factors, particularly technology. And the marketplace is getting even more competitive. Every enterprise is saying that it must be extremely competitive to survive. During your talk, you mentioned the interaction and connection between corporates, businesses and society; we at ITC call that ‘responsible competitiveness’. There is a challenge that enterprises face today in the area of dealing with the societal challenge of creating jobs, and being competitive. So what kind of strategic options should enterprises have before them in overcoming the challenge of competiveness and addressing this societal issue of employment?
Michael Porter: I think you are absolutely right that India in a way has great strength because you have got demographic growth. You have a workforce that is poised to grow. You have got young people and tenacity. You know a lot of countries in Europe are shrinking; and shrinking sounds nice for a while but, you know it’s hard. In the US, we still have demographic growth that I think is one of our great strengths. In India, the population growth is still high. It seems the rate of growth is slowing down, and that’s a very positive sign and an actual reflection of education and better opportunity and hopefully that transformation will continue. But still you’ve got a lot of people that need jobs. And there is a lot of concern right now in the world and not just India about jobs. And most people think the issue is technology and that’s true to an extent. But, I have been telling you that from my perspective that a country with a GDP per capita at your level and with all of these 1.3 billion people in India, there are a lot of needs to meet. There are a lot of services that need to be better. There are needs for better housing, health and services. So, what you’ve got to do is get the ball rolling to create underpinnings of greater prosperity. This engine has not been cranked yet, but you are growing. The first order is to create a great economy and companies to start meeting those needs. A large part of those needs are services, and robots don’t do services. We have to create a skilled workforce and start that positive cycle of meeting needs and this country has a long way to go and it is only going to get better. We need to keep that growth rate moving in a positive direction. In order to do that, we need to get all the obstacles out of the way and open up to competition. Don’t let politics and divisiveness defeat the country like it is doing in America. There is a very bright future for this country and the Government is taking some very forceful action that I believe is on the right track. So let’s build that incredible economy with these incredibly talented people.
Sanjiv Puri: Those are very encouraging words. One of the choices we made is that when we look at our business objectives in an economy like India, we look at inclusive growth. So, how do you work with the entire community to improve their productivity and their earning power?
Michael Porter: I think one of the problems we have seen across the world in the last four to five years is that the positive cycle with the community has been slowing down. The community is getting anxious and businesses have unfortunately taken a narrower view of how to optimize their performance. I think we have to understand that every time we are depressed about the job situation, just think about how many needs are there to serve. There are global needs. We have needs in the US that we are still not meeting; so it is not the lack of demand. It’s about making ourselves effective, holistic and inclusive as you say, and improving our services.
Sanjiv Puri: I’m going to leave you with one question. It is about the whole issue of responsible competitiveness and there are some fine examples around the world. So, how do you create markets that incentivize responsible competitiveness and accelerate the pace? How will you get consumers? How will you get investors? How will you get policy-makers?
Michael Porter: What really changes the world in my experience is ideas. Responsible competitiveness is an area where we can get the business community to see the opportunity to really make a difference.
