Aravind Krishnan wrote recently in Poets & Quants about what he learned in earning an MBA from Harvard Business School. Here he writes about what he’ll do with the degree
Though Kerala, India is known for it natural beauty, it has also known poverty and socioeconomic upheaval. When factories close, families sufferWhen I informed people that I would be moving to India after my MBA from Harvard Business School, reactions varied from happiness to surprise to sympathy. A few of my well-wishers were simply disappointed that I was not taking up a high-paying job in the land of opportunity and dreams, the United States of America. This is my reasoning behind my decision to forego the American dream to build my career in India. I will limit this story to professional reasons, even though several personal reasons strongly influenced the decision.
I believe this is the most opportune time to launch a career in India and I believe I possess the most agency to make a difference in India than any other place in the world.
I recently paid a brief visit to the dilapidated manufacturing facility in the picture above. The facility, overgrown with shrubbery and resembling a metallic graveyard, was once the toast of the town. Within these ruins lie the reasons for my decision to make a difference in India
I hail from Kerala, the southernmost state in India. Apart from its pristine natural beauty, coconut trees, and beautiful beaches, Kerala is known as one of the last standing bastions of socialism.
I grew up in a family dedicated to safeguarding the environment. My parents built a company, Travancore Sulphates Limited (TSL), which was a pioneer in pollution abatement technology. Unfortunately, TSL failed within a decade, crippling my family financially, impoverishing a hundred employees and their families, and leaving many customers bereft of cost-effective effluent treatment. A diagnosis of TSL’s failure reveals the usual suspects: a hostile government, a corrupt bureaucracy, and lack of growth capital. This was an era when any form of equity funding, like venture capital or private equity, were alien concepts, businesses instead relying solely on debt as a source of external funding.
The image of a company being smothered out of life by an antagonistic political system and inefficient labor and financial markets left an indelible mark in my childhood, and, over time, shaped the purpose of my life.
My early initiation to the harsh realities of doing business in India could have had two effects on me: get tired of the system and escape to a better market, or stay home and try to change the system from the ground up. I chose the latter. While it is improbable that a few individuals can transform the political system or reform labor markets in such a huge and diverse country, it is possible for individuals like me to help build robust financial markets. And that is where I have decided to focus my efforts, at least during the initial years of my career.
I will be a private equity investor doing growth equity and buyout deals across industries in India. I hope to be a facilitator for infusing much-needed equity capital to fund prudent growth, while helping businesses establish more robust management systems and processes and improving corporate governance, thereby providing Indian companies the same resources that TSL didn’t have access to 25 years ago.
What Indian businesses need is not dumb money, but active investors who can not only provide capital but also be agents of transformation across key functions. Private equity as a business model relies on improving the underlying health of the business, and this can be leveraged to create world-class companies in India. An investor’s role doesn’t end with building better- run companies, but often creating entire industries, supply chains, and markets.
One of my biggest takeaways from Harvard Business School is the capacity of private enterprise to solve the most serious problems faced by the world today — poverty, malnutrition and diseases. NGOs and charities can bring to light many of these issues, but only companies that seek profits can have sustained impact at scale. I believe being an investor endows me with the agency to help build companies and create industries that can focus on solving many of the problems India faces today, especially in agriculture, food security, healthcare, and financial inclusion. My personal dream is to influence the creation of agriculture supply chains and technology-enabled healthcare delivery with the power of smart capital.
On the other end of the spectrum, private equity can also help revive struggling companies hurt by challenging macroeconomic conditions. Interestingly, the non-performing assets/loans problem that has afflicted the banking sector in India today can only be solved through fresh capital infusion, where the PE industry can play a leading role.
While I don’t have grandiose visions of being able to solve any of these problems on my own, I hope to be a catalyst in bringing about necessary changes.
"What Indian businesses need is not dumb money, but active investors who can not only provide capital but also be agents of transformation across key functions"
- Aravind Krishnan
The global economy has been challenged in the recent past by a rapidly aging population, a deflationary environment, and depressed oil prices. Growth has been hard to come by, with rates only marginally improving in early 2017. The long-revered principles of globalization are facing a crisis of faith as nationalistic sentiments take center stage, as evidenced by the U.S. presidential election and Brexit in 2016. As investors and managers search for the Holy Grail of growth, India with its 6% to 7% per annum GDP growth is a beacon in this rather gloomy global economy
As India assumes the mantle of fastest-growing major economy in the world (moving past China post-demonetization), it is expected to be a major driver of global growth. India is today the fifth-largest economy in the world in nominal terms and the third-largest on a purchasing
power parity-adjusted basis. India’s rich demographic dividend, with the world’s largest working population, a large and growing domestic market, expected productivity improvements, and a government-funded infrastructure investment drive position the country to grow in excess of 7% per annum over the next decade. Unlike the export-driven growth model of East and Southeast Asia, the bulk of India’s growth is going to come from its own burgeoning domestic market, insulating the economy to some degree-from worrying global trends like anti- globalization and nationalism.
On the flip side, the single biggest drag on growth in India is abysmally low investment levels, both public and private. The stressed balance sheets of India Inc. and the bad loan problems faced by Indian banks have put a straitjacket on the private sector to deploy capital. Long-term capital is, therefore, essential for the investment cycle to pick up. I believe PE firms like the one I am going to work for should be in the vanguard of this effort to improve long-term investment, especially in manufacturing and infrastructure.
Markets and business can thrive only in the presence of a strong, supportive government and effective regulation. I have never been more confident in the effectiveness of government in India than I am today. I believe the biggest success of the government to date is not in reforms or governance, but in the confidence it has inspired among the youth of the nation. The current regime has often been criticized for focusing on form over substance. But the intangible benefits of form should not be overlooked. By running successful marketing campaigns around snazzy initiatives like “Make in India” and “Swachh Bharat Abhiyan” (Clean India Movement), promoting a sense of national pride, and undertaking bold moves like demonetization, the government has been successful in (a) motivating a generation of young Indians to work hard and contribute to the national cause and (b) inspiring confidence in domestic and global companies alike.
I believe the government has been able to back up the form with real substance in the form of progressive reforms, better governance, higher transparency, and a rigorous focus on improving the business climate in India. The highlight of the first three years of the National Democratic Alliance government has certainly been the rollout of the Goods and Services Tax to create the single largest market in the world, while the opening up of sectors like insurance, real estate, and defense have provided the appetite for investment. While the botched execution of demonetization cost India dearly in terms of short-term growth and caused endless hassles to its people, the long-term benefits of pushing hundreds of millions of Indians into the digital economy are astounding. However, the government has significant ground to cover in land and labor reforms, solving India’s ballooning bad loan problem and building world-class infrastructure.
"The global economy has been challenged in the recent past by a rapidly aging population, a deflationary environment, and depressed oil prices. Growth has been hard to come by, with rates only marginally improving in early 2017"
The Indian diaspora - a few classmates from Aravind’s Harvard Business School sectionHistory has thrown up several exceptional luminaries who have been able to change people’s lives globally. While global impact is a great end-state to aspire toward, I want to start by targeting smaller communities. I have spent all my life with the exception of two years at Harvard Business School — in India. I believe, given my background, networks, and cultural context, that I can perform the best to my capabilities and have the most impact within India.
We can always descend to displacing and diffusing responsibility and expect someone else to transform the country. “Why should I leave my cushy job in Silicon Valley and start a company in India? Someone else will do it.” In response, I ask, “If not you, then who?” One can also come up with reasons to delay a move back to India, but I strongly endorse the idea that the best time is now.
Let me be honest in saying that my motivations are not purely selfless or altruistic. I concur that along with potential impact on society, my chances of personal success are also enhanced if I work in India, making it a win-win proposition.
I have been immensely lucky in the educational and professional opportunities I’ve received. I couldn’t have been better positioned to pay it forward than I am today. And I choose to start paying it forward to the communities I grew up in, the institutions that shaped me, the people who contributed to my success, and the country that spent hard-earned taxpayers’ money to pave the path I have taken. These contributions should not be taken for granted.
I actively post on social media about India and the Indian government, mostly its positive attributes. While this could be perceived by some as bordering on firebrand nationalism, frankly it comes from a place of gratitude and love for the nation. I consider myself lucky to have gotten the opportunity to start a career trajectory in India from which I can have significant impact. I hope I can contribute to India’s growth as a stronger, more equal nation while flourishing as a professional and individual. I aspire to help transform India into a country where ordinary citizens can dream to make a difference, where meritocracy trumps caste and religion, and where people can cross social class lines through hard work and determination. I long for the creation of the Indian Dream.
(This article was originally published in www.poetsandquants. com and the link to the article is: https:// poetsandquants.com/2017/07/11/why-i-returned-toindia- with-my-harvard-mba/)
Dr. (Col.) A Balasubramanian
