Butterfly's Wings

Today, the world is witnessing companies that have created global scale and success without starting from their home base. Hegemony over knowledge has largely gone, thanks to both technological advances and trade agreements. This new breed of companies is not led by resources, but by ideas. They listen globally and project that knowledge back to a home base, from which they create strategy, build value as much as they fractalise that process across the world. These knowledge-driven organisations are the new meta-nationals.

Doz gives three examples. One is of Acer of Taiwan, considered a curious aberration when it started 20 years ago. It set up shop in the Silicon Valley to learn product packaging, went to study the needs of users in emerging markets like Mexico and thrust all that knowledge to the home base from which it built a multi-billion dollar business. In terms of process, Acer admired and learnt from McDonald’s, which created a uniform hamburger experience all over the world.

The second example is from the unlikely area of building guided missiles in Switzerland. Oerlikon had no access to either technology or market due to its national origin. It bought laser guidance technology from overseas and built leading-edge products for military use the world over.

The third is Shiseido, a global name in designer perfumes. Shiseido’s home base is Japan where perfumes are less than a percentage of toiletry purchases. In France, it is 40 per cent. So, the company started with a 50:50 JV in the perfume district of France, turning it into a wholly-owned subsidiary. This success story exemplifies the meta-national model that makes knowledge-gathering and building a product or a service out of that into a competitive advantage.

If knowledge is movable, everyone has a level playing field today. So, where is the competitive advantage? Everyone can move "easy knowledge" but, Doz says, truly valuable knowledge is both sticky and tacit. The trick therefore is to be able to sense and respond to unusual new knowledge and move that knowledge.

That ability is rare and genetically coded. One of the chief ingredients for it is diversity in thinking, delivered by diversity in composition. Doz argues that meta-nationals derive their power from diversity and not sameness. They often build on intelligence resident in the fringes, not at the core. They come from a fractal form of leadership in the organisation, as opposed to the pyramid-style command and control system which many Indian corporations are still comfortable with. The meta-national emergence creates both opportunities and impediments for Indian organisations. The opportunities emerge from the fact that the world is now an oyster and, in many ways, flattened. They are no longer resource-centric or determined by inheritance. The impediments emerge from traditional mindsets and inhibited learning capabilities in many entrenched businesses. This makes the possibilities very real; India could create many meta-national companies in the days to come.

The Indian IT industry is an interesting "proof-of-concept" in this direction. It was built with very little investment, an insignificant domestic opportunity and on "what" the pioneers knew. They were also possessed by an overreaching, aspirational desire to create something memorable and lasting out of India. They had a long view of time with which they built customer-centricity, unmatched process and many new, unusual values that created a brand for Indian software. The industry showed the path with shared wealth creation, corporate governance and a reasonable amount of risk-taking. The result has been the creation of companies like Infosys, Sasken, TCS, Wipro and, of course, MindTree.

If such organisations can come up so rapidly, what are the possibilities in areas where India has a "natural advantage"? Going by Doz, natural advantage is a misnomer; opportunities are everywhere. Meta-nationals seek them out globally, mobilise global resources and rapidly "operationalise"; I don’t think these are difficult-to-scale issues. They do require a shift from a short-term, domestically bred, profiteering mentality to an institution-building mindset.

While we will see increasing awareness and efforts in this direction, I do think that India will continue to face two major challenges that business alone cannot solve. These are poor physical infrastructure, and pervasive corruption. On both counts, we remain a nation in denial. While it is possible to create a globally valuable set of institutions in every possible field of business today, the nation must make up its mind on what it wants to stand for in the new meta-national context.

(Subroto Bagchi is co-founder and chief operating officer of MindTree Consulting.)