T N Ninan: Core virtues

WEEKEND RUMINATIONS

This week saw two larger-than-life business personalities from Britain visit India and give lectures. Anita Roddick of Body Shop fame was here for the Hindustan Times' "Leadership" series, and Richard Branson, the world's most famous non-Virgin, was here to give the Madhavrao Scindia memorial lecture. Both spoke passionately, including about their businesses, and the many Indian speakers at the proliferating number of Indian business conferences could learn a thing or two from them, on how to hold an audience's attention and perhaps also how to make money (Branson was recently listed as Britain's seventh richest individual).

Roddick outshone Sunil Mittal, with whom she shared the stage, in a session on corporate social responsibility. But I think she was wrong and Mittal was right. Roddick talked about the virtues of investing in communities, of paying fair wages and ethical buying""as you would have expected, and no one has a problem with any of this. She gave her appealing message with conviction and flair""which made Mittal's message look staid and uninspiring. But I think Mittal's message is more valid in the Indian context. It is more important for us to have telephone connectivity (it dramatically changes lives, and improves productivity) at a fraction of the cost elsewhere, than to make sure that Bharti Enterprises buys the steel for its towers from an ethical producer. It is of course better PR to say that you buy steel from a company that does not pollute the environment (if that is possible), but for most companies PR is not at the heart of their business strategy. Also, I would venture to suggest that in a capital-scarce economy, one of the greatest social virtues that a businessman can claim is the efficient use of capital. If all of industry did that, the country would become less poor faster""but this does not have the emotional ring that getting involved with the AIDS campaign does.

I am more in agreement with Roddick when she lambasts Wal-Mart, because it gives its employees a hard time when it can easily afford to be more generous with them. Failure to do that shows a failure of spirit, especially when the Walton family is not short of money. But it is also true (and Roddick did not say this) that Wal-Mart has made ordinary products cheaper for millions of consumers by driving out trade inefficiencies and forcing producers to cut costs, and there is no reason to decry that achievement, because it is a social virtue to have done that. Indeed, Roddick went on to declare that she didn't care for the price of her company's share. If so, why did she ask the public to invest in her company?

I have a similar problem with some of the assertions by Branson, who said that he takes care of his employees first, then his customers and only then everybody else. That sounds very good and every employee in every company will cheer, but I would like to know whether Branson pays his staff more than, say, British Airways. Also, there is surely a contradiction when Branson simultaneously quotes Gandhi on his eloquent statement that the customer is the reason for our business, not an interruption, and so on.

It may be dangerous to take on icons like Roddick and Branson because you could be alone in what you are saying (I surfed the Net and found no negative references to either). But it is relevant to point out that there are businesses which use PR powerfully as a tool, and those that don't. The stock market recognises one kind of social responsibility (efficient use of capital, good governance standards, and so on), but the public places greater value on issues that are unconnected with financial returns. So, sure, you can use PR as a good differentiator when you are going head to head as a start-up against established companies, and Infosys has shown that even in a tech field like software services, good PR can get you ahead of the competition. But I would think it is important to keep your eye on the main issue. Branson and Infosys are where they are because they run businesses well. The PR may be a tool which serves that objective, but let us not confuse the icing with the real thing.