Indian firms should bring order to operations: U.S. expert

Thursday, 13 March 2003, 20:30 IST
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CHENNAI: Some of the biggest Indian corporates still have miles to go in telling the world what they are all about and bringing order to their operations, says a leading U.S. management guru. Charles Fombrun, professor at Stern School of Business in New York University, told India Inc. a few home truths during a lecture here Wednesday evening. Even the biggest Indian names have miles to go in telling the world what they are all about, said Fombrun, adding that only select Indian firms like Infosys, Tata, Wipro and Reliance have made it to the leadership chart. On the distinctiveness meter, "India is heavily tilted towards the hi-tech sector, showing a lack of uniform growth". On the authenticity count, Indian firms suffer from duality, "which is the real India, what is the real India?" India is "chaotic" and "low on the consistency factor" and India Inc. has "enormous potential for growth by bringing order to their operations", he said. Calling for parameters to test quality, Fombrun said: "The higher the discloser, the lesser the market risk". Rating India in this context, he said firms are still "low on transparency and it is hard to tell their stand, who they are". Fombrun, founder director of the Reputation Institute, New York, also spoke of how reputation plays a key role in firms, contrary to popular belief. "Earlier models and economic theories which dictated that only investor profit mattered can no longer hold good in today's rapidly changing world," he said. "The corporate thinking model we are operating is fundamentally flawed", he said, adding that this was a problem not only in the U.S. but also in the world. He gave examples of Capital One in the U.S., Credit Suisse in Switzerland, Vivendi in France, corruption rocking Turkey wanting to join the European Union and the corruption scandal involving organisers of the Olympic games in Greece. WorldCom, Enron, Adelphia, all showed "a meltdown of the management systems, causing a great deal of embarrassment to those who create these hotshot managers -- us, at business schools", Fombrun said. "Activist shareholders and stakeholders" are the most powerful, he explained to Indian corporate leaders gathered to hear him. Shareholders of just five shares can "now stand up at board meetings and, seizing the microphone, demand an explanation from the company on how it is functioning". "If a company is unable to do adequate crisis management, there is something wrong with the way it is doing things", he said, emphasising that "a revolution is on the way and if companies cannot see it they have no future". "How the company treats people" has become the most important factor in reputation management and "this intangible asset constitutes over 55 percent of their market value". Explaining how Johnson & Johnson had topped the reputation charts worldwide for four years in a row, he said the company's core values not only included ethical and absolutely transparent business practices but also social practices that concentrated on women and children. The firm built and capitalised on a mother and child image, a loving caring image though not all its products were baby products, he said. He was giving the first speech of the "Reputation Matters" series of lectures, launched by Indian reputation managing firm Imagequity that has clients like Pizza Corner, Moksha Technologies, Polaris Software and AirTel Communications. Imagequity is marking seven years of operations in India. Having invited audience members from firms like Sify, Lowe and Cockeman, Imagequity officials said that in India the corporate sector was still not able to distinguish between "brand" and "reputation". Imagequity director Vaani Anand noted that "in the years to come corporate social responsibility will eventually determine the reputation of companies in India just as it was happening the world over". Fombrun will speak to India Inc. in Bangalore this weekend.
Source: IANS