03 Mar 2015 19:19 IST

Math-driven firms will change every industry: Ram Charan

Ram Charan, renowned business guru, at a press conference, in Chennai on Jan. 15, 2014. Photo : Bijoy Ghosh   -  Bijoy Ghosh

The decline in crude prices has created a great opportunity for India, says Ram Charan, business adviser and author

When Ram Charan speaks, it is impossible not to pay attention. In the 35 years of working with top companies, including GE, Bank of America, DuPont, Novartis, EMC, 3M, Verizon, Aditya Birla Group, Tata Group, GMR, and Max Group, he has gained valuable insights into how economies and leading companies operate. In Chennai, ahead of the release of his 15th book, The Attacker’s Advantage, he shared his ideas on a wide spectrum of topics ranging from the consequences of the oil price crash and the India-China equation to how the digital revolution is set to change the way businesses are run. Excerpts from an interview with BusinessLine:

What are some of the ideas that you see emerging from the current global environment?

The fall in crude prices has changed the political balance between the US and Saudi Arabia. As America pulls back from West Asia, at least economically, India has a great opportunity. Countries such as Venezuela, Russia and Nigeria are going to hurt very badly by the decline in crude. But India and China are still growing: 7 per cent growth in China on a $9-trillion base is very good. Indian economy is getting close to $2 trillion. I wouldn’t want to see 10 per cent growth in India; inflation will kill us if the economy grows at that pace. I am ok with 6 to 7 per cent.

I see Narendra Modi in a different light. I don’t know if he is doing it deliberately; for his swearing-in ceremony, he invited leaders from the SAARC countries. Within a month or two came a very senior guy from China, then the Japanese Prime Minister, and the US President followed. Now he has asked America to make India a part of APAC. He is building an economic zone that offers India a larger base to grow from. I see this new vision emerging and all my clients are getting used to it. If Modi survives politically you will see a different economic balance in the world.

Has the attitude and opportunities for India changed today among global investors?

In any organisation, company, nation or state, leadership matters. Gujarat’s economic prosperity was led by Modi. It’s the same leader now dealing with a larger scope and he’s doing a number of things, one of them is cleaning the plumbing. We have 100-year-old pipes that are rusted. He’s got to fix the system.

Press reports in foreign newspapers were earlier sceptical about Modi. Now they are getting more positive. But until we resolve the Vodafone tax kind of issues, the sentiment towards India is going to be negative because predictability is very important. American businesses prefer coming here for many reasons, we must give them a chance to do so. We have to demonstrate our intentions through examples. I know that everyone including the Japanese, the Koreans, the British and the Italians want to invest in India. There is no lack of desire. We just have to open it up.

You are an advocate of using Big Data to transform businesses. But data mining is at a very nascent stage in India. Is that an impediment?

This change has already begun. E-commerce companies such as Flipkart, Snapdeal and so on are already using it. When the change comes, it will be very fast. If you are behind, then you will have to pay a heavy price. Go on the attack, get some people to help you learn about it, and experiment. There are many Indians who have the skills to help you change. The Bansals are Indians, Kunal Bahl is an Indian.

The final goal is not to cull big data but to use the information in such a manner that the end-to-end consumer experience is enhanced.

The potential for transforming businesses with big data is not in B2C models alone. In B2B models too, the potential is huge. The entire research and development process, the logistics chain, everything can be transformed.

You think Indian manufacturing companies can do a GE?

GE is using Indian people, and GE is willing to work with you. GE now has products in this area that you can buy. It’s all there for B2B companies.

You do a lot of work in China. Does India have some advantage over China now?

Let us stop talking about India versus China and fix our house first. The starting point should be to understand why we have a sustained negative trade balance with China. And tell me, how is China preventing us from achieving our economic objective?

We have the brain power, we have the edge in making software, we can produce defence industry components, I think the Mahindras, the Munjals and the Bajajs are doing an excellent job in the automotive industry, they are world-class.

In your long consulting career, what, according to you, were some of the tectonic shifts for industries?

If we go back in history, some examples like the steam engine, the internal combustion engine, and the assembly line as Henry Ford commercialised it, changed the whole society. Then creation of disciplines like marketing evolved, then improvements in manufacturing happened, and then capital markets opened up. Just think, if we did not have currencies for our transactions, where would we be. More importantly, it was the invention of the micro processor and the printed circuits that revolutionised communication. There were inventions such as the transistor, the printed circuit and then the browser in the early 1990s.

Now technology is changing almost every field. There is this Chinese gentleman who showed me on a screen how cancer cells were moving in a patient. He has already built two companies and sold them for $2 billion each. He wants to put $5 billion into another such company. These are the people who do creative disruption.

Whenever you talk destruction it also means almost unlimited creation. The difference in the ongoing digital revolution is that there is a time gap between the job you do and the new jobs you create. The skill required is also much higher.

When the assembly line was introduced in automotive, it was not difficult to get the task done. But this time it’s different, you have to have skills.

Where does Ram Charan get ideas from?

I am always trying to learn from everybody I meet. I keep asking, “What’s on your mind, what’s your pain, what’s coming in the way, what do you see?” I don’t read many text books. My lab is in dealing with somebody somewhere, facing some kind of business challenge. From Jack Welch I learnt to ask, “What’s new?” That was the greatest learning without paying a tuition fee.

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