India – What hinders its development?

Posted by on Monday, December 22, 2008 · Leave a Comment 

Some thoughts on the interesting book “In Spite of the Gods – The Strange Rise of Modern India” by Edward Luce, the former Financial Times’ Washington Bureau Chief. He was the FTs’ South Asia Bureau Chief based in New Delhi.

While his conclusion is that India will become an economic super power, its many negatives will delay its development.

Some of the negatives:

• Its massively ineffective and corrupt “quasi-socialist” political system.

• Labor laws are too restrictive, cannot fire or lay off any employees, even if they are criminals, which supports the case for outsourcing only and not investing in 100% owned operations.

• Literacy in China is 90%, in India it is 65% – female literacy is 48%. Focus in India is on university education, not elementary school education which China has focused on to build a viable work force. By comparison, the USA’s literacy rate was 90% during its industrial and economic ascendancy in the 1800s.

• India lacks investment in infrastructure, just starting to build roads and highways.

• Bulk of its population lives in small villages, not an urbanized country most developing countries tend toward. Of 1 billion population, 750 million live in small villages.

• People are not motivated to seek a better life, caste system is an obstacle, lack of ambition somewhat stifled by elite strata which are still very British oriented.

• Corruption is pervasive and extensive. Bribes are commonplace.

• A telling difference between China and India is that China has accepted capitalism. Surprisingly for China’s controlling government, its economy is based on market-driven industrialization. India has not accepted capitalism with its over-regulated private sector which is a draw back to growth and development.

An interesting fact:

India’s police have “encounter specialists” which are policemen who kill criminals the police decide are guilty – prior to a trial. India has a 27 million criminal and civil case backlog. Police kill criminals because evidence gets lost, witnesses die, low-paid judges are easy to bribe and it takes too long for cases to come to trial.

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The reason I wrote “Learn to Whisper”:

My conclusion after operating as a Turnaround Chief Executive Officer for more than twenty-five years is that the majority of this country’s top management is far from first-rate. In fact top management, particularly at the chief executive officer level, is at best average with a large number that can be rated mediocre. This lack of management competence has seen this country’s market leaders lose sizeable market share to foreign manufacturers able to export better quality and lower cost products to the USA. It has seen manufacturing and service operations unnecessarily moved to foreign countries. All of which has negatively affected the economy, severely damaged former blue-chip corporations and seen quality jobs lost.

It is quite common to discover that companies struggling with this inability to compete with foreign companies have been simply mismanaged. The once successful business deteriorated because of an incompetent chief executive officer and weak senior management

Why doesn’t this nation have first-rate management? Inadequate training. Chief executive officers and vice presidents learn “on the job”. A number get promoted based on personality, political connections and drive – not merit. They are not carefully screened for the potential to become successful at managing. For some all that is needed is a well-written resume, the right interviewing style and the inability of a new employer to accurately assess skills, performance and potential.

Compare this to the process doctors go through. From medical school to internship to residency to a senior role after years of education, experience and continuous training their progress and capabilities are constantly monitored even after they become senior in the profession. Generals and Admirals go through a similar protocol. They must prove themselves in low-level assignments before they are judged qualified for senior positions. Unqualified applicants in both professions are culled out. What can be done to improve management competence? Education, on-the-job training and job performance monitoring. My book will educate people on the subject of managing. Its 101 management lessons are separated into the 17 subjects managers need to know.