How to build a company - just look around you

By Paul Beckett

If you are trying to create the next General Electric, Samsung or Ambev in an emerging market, just look around you for inspiration.

Paul Beckett

That was the basic message from Tarun Khanna, Harvard Business School professor, speaking at Wednesday’s 8^th Annual India Business Forum at the London Business School.

The key in creating a giant of tomorrow lies not in copying the models that already exist – though adopting their best practices is obviously fine – but in finding “something rooted in the immediate economic ambience” that will bring “something completely new to the world stage.”

Brazil, for instance, has created the world’s most viable biofuels industry because of research done in recent decades into sugarcane, a very plentiful local crop, as an energy resource. That research was pushed by the government responding to the oil shock of the 1970s and was greeted with interest by entrepreneurs.

The result: 50% of “petrol” sales in Brazil are now biofuels, Prof. Khanna said. “It bred a class of fantastic companies that brings something unique to the table, coming out of something unique that is very hard to find somewhere else in the world” he said.

He noted that Africa is a laboratory for mobile phone innovation, with “dynamic tariffing” where charges vary depending on location – an inspiration from tribesmen customers who are constantly on the move. Teva in Israel grew into a pharmaceutical giant because of the high number of life sciences PhDs who moved there from the former Soviet Union. And in India there is the “Henry Ford of Heart Surgery,” as The Wall Street Journal dubbed Bangalore-based heart surgeon Devi Shetty.

Perhaps the greatest opportunity in India lies in its sheer mass of people, Prof. Khanna said, and especially in bringing the masses into the economic mainstream. He made the usual arguments about the prospect of a demographic dividend or a demographic albatross being a defining characteristic of India’s future growth prospects. But he also is developing a company with some partners to take advantage of India’s numbers.

He noted that big Indian companies, even when they consider themselves to be spreading the net broadly, typically only recruit from 50 or 100 colleges. But there are more than 20,000 colleges in India. Not all of them turning out viable graduates, to be sure, but there are inevitably some diamond employees hiding in the rough.

Hence Aspiring Minds, a Delhi-based employment exchange that uses technology to scout out good prospects from thousands of institutes of higher education and match them with companies who are looking to hire thousands of employees a year. “We are in the business of economic inclusion,” he said.

-Paul Beckett isthe WSJ’s bureau chief in New Delhi.