We Can Learn from ET 500

(Published in Banking Services Chronicle June 2001)

Numbers and data. Figures and records. They often confuse us Indians, who as a nation revel more in subjectivity. We still lack Francis Galtons in our society. Galton, a self-made scientist of the Victorian era, had observed in 1863: “Some people hate the very name of statistics, but I find them full of beauty and interest.”

However, things are on the ascendant. Thanks to Prannoy Roy, one of the most well-known faces on the Indian electronic media, the average educated person is no more scared of figures. Roy with his graphs and swings infused life into the figures, which otherwise appeared in illegible clutters in black and white.

And so when publications like ET 500 see the light of day, generalists like me also get interested. Because along with the data we get analysis. What are the changes that have crept into the top 500 Indian companies? What are the lessons that the corporate world can take?

Interestingly, I found the inferences and suggestions to be as much applicable to the corporates as to the individuals. Candidates aspiring for jobs stand to gain much if they imbibe these qualities.

Lesson #1: Build your brand. Smithkline Beecham, the ‘Horlicks’ company, tops the list in brand-intensive businesses. It controls over 70 per cent of malted foods segment. What happens when you build a brand? People begin to identify themselves with it. For example, you brush your teeth every morning with Colgate, not with a toothpaste. If you need to know the meaning of a word, you look into the Oxford dictionary, not a dictionary.

Once you are a leader in the market, you can command a higher profitability. Similarly, if you are in a job, you must build yourself as a brand. Suppose you are in management. And personnel is your area. Then your work should excel such that whenever people think of a personnel manager, they should think of you.

Lesson #2: People power. A look at the software companies—SSI, Visualsoft, Infosys, Wipro, etc—clearly indicates that the asset they value most is the people power. It is not for nothing that the infotech guys command astronomical salaries. In spite of the American dream turning sour, techies still are way ahead of their counterparts in other sectors.

It is interesting to note how the attention has shifted from capital to labour. Or, to use the capitalists’ phrase, “human capital”. Because it is the mind that generates wealth in this sector and the mechanical requirements are limited. If you lose an employee, you lose wealth.

How does this make sense for an individual? In the same way as it does for a company or a country. That is, spend on health and education. A healthy mind and a healthy body is much more capable of generating wealth than inanimate assets are.

Lesson #3: Focus. Corporates, instead of diversifying too much, are paying attention to their key products. Hero Honda is focussing on four-stroke motorcycles, Asian Paints on decorative paints, and Smithkline Beecham Consumer Healthcare on nutritional foods.

Besides, companies focus on profits rather than on growth. Merely enhancing assets or sales in no more a commendable sign in itself. In today’s world, you are what you have. So Pfizer launches only 3-4 products a year. Hindustan Lever Ltd (HLL) wants to reduce the no. of brands in its portfolio from 110 to 30.

Similarly, individuals must also learn to develop a focus. If you want to be everything, chances are you will end up being nothing. So find out what are good at. And then try to develop this niche area of yours. Sailing without a target makes little sense.

There are other lessons also that can be taken from ET 500. But it is better if we learn to concentrate on these three. Let us learn to live with the changing times. Don’t forget that Tata Steel, which was the largest private sector company by market capital a decade ago, is down to No. 28 this time.