10 Commandments for business success in India - lessons from GMs India exit.

Shock and awe has come to fore with General Motors' announcement to cease India operations. Associate businesses are adversely impacted. Employees, direct and indirect, left fending for themselves. Customers wondering what they will do to service their cars. In all, not good news.

But, in my view the right decision from a business perspective.

I personally had many years of association building GMs various brands with and memories and some great work. I also owned two GM cars. But business is not run by emotion or ego. Its is run by sound business logic. Consider this

1. GM India was in operation for almost 25 years.
2. Company never made profit
3. Market grew almost 20 X but they could not gain share of more than 1%
4. Many competitors came after and were successful
5. The brand never gained trust from auto buyers despite some
6. Like many other MNCs they kept looking at India as the next big opportunity hence kept investing without success.

In hindsight a lot of auto and business experts have lots to say about company's product, service, business model and sundry. I certainly don't consider myself an expert on any of these matters so am unable to comment on any of these aspects. But what I can say for sure is that GM India is not alone in this situation. There are a lot of other MNCs and globally funded companies (ecomm, travel etc) which have found the going tough in India after being here for decades. Most MNCs, including auto and other categories, continue to mount losses in billions, sometimes despite having significant market shares. Asian MNCs seem to be performing a lot better then the western ones.

The reason is that there is no pot of gold at the end of the India market rainbow.

1. India is one market where all global MNCs from west and east came in almost at the same in a span of 10 years. Add the local companies which have become fairly competent at defending their turf at the low and mid end of the market. No other market has seen entry of so many players at the same time.
2. In most categories, market size remains small, with low product penetration and low per capita consumption. This is because buying power of the masses has not improved significantly while options to spend the money have grown dramatically.
3. This leads to the consumer demanding ridiculous value from their purchases - a car with the performance of a sports car, ruggedness of a tank and fuel economy of a bicycle. Thus every consumer remains dissatisfied with whatever purschases they make.
4. The only solace is the premium/ luxury segment of products where the customer values status above anything else. Problem is these customers are not loyal at all, chasing one status symbol after next.
5. Govt. policy, administration, infrastructure all prove failures
6. Cost management remains a big challenge. Western MNCs specially bring in huge overhead, sourcing and royalty costs to local operations. They try to build offices and staff here as if they were in Manhattan, at those costs. Business operations in India simply cannot afford them. But who cares since the global and local managers are playing musical chairs at the expense of their shareholders.
7. Indian workforce productivity is very low. Lack of focus and discipline on task at hand plagues all corporations. I have seen so many corporations, the problem is widespread. Management productivity is even lower. Thus ballooning senior management costs.
8. The two significant skills I see across Indian managers at all levels is a) Building a case to hire more workers and b) Building detailed and logical arguments on why they could not do the job given to them. (I know many people will want to beat me up for saying this but we have to face the facts). No wonder most Asian MNCs are bringing in more and more foreign managers to run India business.
9. Most western MNCs come in with the mindset that we will teach Indians about our product/ category. Bring in their 'best practices' and 'think global act local' philosophy After spending years, they relent with small 'localisations' - Chicken Tikka Pizza. The problem is that Indians engage better with products and brands which seem Indian at core. (e.g. Local India eateries continue to sell many more Pizzas than global chains - and they all make money. else they will shut down)

Here are my 10 Commandments for any company looking to grow business in India or invest in Indian companies.

1. Stop comparing India to China. We will never be.
2. Think small. Big will follow. Our consuming population is 10 ~ 100 M not 250 M or 1.3 B like a consultant will make you believe.
3. Don't confuse our enthusiasm and curiosity for genuine interest in you. If we are really interested, you will know.
4. Don't try to teach us. We don't learn easy. Understand the local consumer and build your business around it. Think local, act local.
5. Respect the fact that we don't have enough money and are proud of it. Despite what Eric Spiegel may say. (How many people can ever afford a 10k, 25k shoe?)
6. Learn to live with our policy and infrastructure. Its not going to change anytime soon.
7. Build short term plans. A lot changes in the long run. Forget your 5 yr / 10 yr plans of colonisation.
8. Be frugal. Like us. If you act rich, we don't like you much. We think you are getting rich at our expense.
9. Don't pamper our workforce. W work best under pressure. Look at what wonders we do when we work in the Valley, under pressure and discipline.
10. Stop listening to our employees. They are great at debating. Haven't you read the Argumentative Indian?

If you look at the journey of most Korean MNCs, they have followed the above and have proven to be the most successful new business (MNC or startup) in the last 2 decades. I am certain if any company, business, investor or startup is willing to follow these 10 commandments, you will have a great business in this country. Need help? Contact us at The Growth Labs. We know how to make business great.

Look forward to comments and pushback. Do read the Economic Times article on 'what makes Indian market tough for big auto companies'.