I have been tracking some of the large and medium-sized Indian corporates for sometime to understand their long-term planning. Initially I used to focus mostly on IT companies, but later started looking at other sectors as well. To my surprise, I found that most of the Indian corporates don't do any strategic long-term planning at all!
Let me take some examples to illustrate my point. In the recent Hero Honda split up, I don't think Hero would have wanted the split. I strongly believe that it would have been initiated by Honda. Why? because, Indian 2-wheeler market has become too big to ignore, for Honda. They would have had limited growth if they stick to Hero. So, they would have initiated the split. Now that it is official, Honda can focus on selling bikes on its own. But what about Hero? If I were Hero group, I would have been ready with my own R&D team by now. I am sure it will take another 4-5 years for Hero group to have a good R&D set-up in place. I have my own doubts if they would seriously invest in R&D at all! In all probability, they would tie up with some chinese manufacturers & continue their business.
Take the case of defense deals which are up for grabs. This has been the situation for a long time now and will continue to be so further. This is completely dominated by overseas firms, absolutely no Indian representation. Indian companies knew this for a very long time. Why didn't they build the required expertise and lobby with the government to open up the defense production for the private sector in India? If we can buy from a foreign company & insist on 30% indigenization clause, why not buy the whole thing from the Indian companies? The plan & simple answer is that no Indian company is yet ready with the required expertise to manufacture such products. Companies like L&T, Tatas, Mahindra & Mahindra have been trying to enter this sector now, but don't seem to have any long-term strategy yet.
None of the Indian IT companies have a well defined India strategy yet, while most of the foreign MNCs have figured out how to take advantage of the Indian IT opportunity. In fact most of the large/key deals from both public & private domains have gone to foreign companies so far. The other day I heard Anand Mahindra tweeting in support of Rajat Gupta while one of his companies (Satyam) has been working with SEC for quick re listing in the US stock exchanges! While HCL & Wipro started making computers much before the entry of foreign MNCs like HP & DELL into India, they never leveraged their early mover advantage.
This is not to say that there are no exceptions. Bharti Airtel is one such exception. They not-only came up with lot of business model innovations which set the trend in the Indian telecom space, but what they did made the foreign telecom MNCs sit back and take notice.
In summary, it looks like most Indian corporates don't do long-term strategic planning. This will mean that they will always remain followers of foreign MNCs when it comes to business model innovation. So far, it is the foreign MNCs which are well placed to reap the benefits of the India story and not the Indian corporates. I am sure the Indian corporate realize it soon and start paying attention to long-term strategic planning.
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