Opinion: Solving India’s tech industry woes by taking IBM’s lead

Photo credit: sapsiwai / 123RF Stock Photo.

If you are old enough to have witnessed India’s technology industry in the 1990s, you’d recall the mixed feeling of excitement and worry at that time.

There was a feeling of excitement because in the newly liberalized India (circa 1991), the tech industry then was the sunshine industry, providing the restless youth a path to realize their dreams. Double-digit growth rates, unheard of valuations, ESOPs, and US travel opportunities were just a few of the exciting opportunities facing the middle-class Indian workforce.

Shrouded in this excitement was a tinge of worry: IBM, the technology organization back then known for its consistent blue-chip performance, was in the doldrums and losing billions of dollars.

The present

Fast forward to 2017, and the picture has turned on its head. India’s now US$150 billion showpiece technology industry that employs 3 million people directly and at least an equal number indirectly is struggling whereas IBM is in the pink of its health. Although India’s technology industry isn’t losing billions yet, it is struggling to find its mojo and is besieged with problems—slowing growth, reduced margins, unfavorable visa policies, layoffs, and a changing technology landscape.

What happened in 25 years that led to this change in positions?

IBM

Back in the 1990s when IBM was in deep trouble, the company’s board made an unusual decision. Instead of choosing a stalwart from the technology world to turn the company around, it appointed non-tech-savvy, low-key Louis Gerstner as its CEO. The rationale for this was that IBM’s challenges were a result of strategy rather than technology failures. In hindsight, hiring a rank outsider like Gerstner made all the difference.

Without any historic or emotional attachment, Gerstner made several decisions:

1. He shut down the technically superior but financially failing OS/2 initiative. In the process, he ushered in a culture focused on results.
2. He steered the focus away from internal competition and promoted teamwork.
3. He changed the success metrics, infused a culture of execution, and brought an analytical rigor to decision making.
4. He stressed organization success as opposed to functional unit success, strengthening the focus on group vision and the big picture.
5. He reinforced positive aspects of IBM’s culture (its technological finesse) while also eliminating the unproductive ones (its consensus-driven bureaucratic decision making).
6. He laid people off but wisely identified and retained key advisors from inside and leveraged internal expertise.

What Gerstner realized was that IBM’s woes were driven less by technology or strategy failures but more by cultural ones. He overhauled IBM’s culture radically, which led to one of the greatest turnarounds in corporate history.

India’s technology industry

There are several parallels between IBM and India’s tech story.

The technology industry in the country started as a services business to handle outsourced work from Western organizations. Over the years, the entire organization ecosystem and its culture was optimized to meet that outcome.

Training

Since India’s education didn’t produce adequately skilled engineers, a huge training machinery was set up to build a quality workforce from the ground up. The thrust of the training was to help fresh engineers get up to speed with the existing technologies and to train high-class engineers to innovate on cutting-edge technologies. This led to a workforce focused on current rather than future technologies.

Fixing culture

Summing it up