'Purposeful' deergha ayush: Long life is no virtue for an incapable company

The debate about family-managed versus professional companies is fruitless. The debate is between well-managed and poorly managed companies. The future leader will be a “professional entrepreneurial manager”.

 

I participated in a panel discussion on “long-life companies” in the 2024 Drucker Forum in Vienna.  One fellow-panelist was Adrian Wooldridge, who writes for Bloomberg and The Economist. Adrian strongly refuted my plea for long-life companies by quoting the Schumpeter creative destruction principle that companies without capability or purpose should be allowed to die, that long life is no virtue for an incapable company. Of course, that is true. Adrian readily accepted the desirability of long-life enterprises if they renew and have a “purposeful deergha ayush”. This is how we wish a long and healthy life for the family and elderly. Hence purposeful deergha ayush.

 

My deep commitment to purposeful deergha ayush enterprises is rooted in their significant social value in addition to their economic value. I am reminded of the energetic correspondence between economics student B Mukherjee and Cambridge economist Alfred Marshall over a century ago. On October 22, 1910, Marshall replied to Mukherjee about what India should do to become a “great nation”. “If India had a score or more of men like Mr Tata (Jamshetji), and thousands of men with Japanese interest in realities, with virile contempt of speech-making in politics and law courts, India would soon be a great nation.”

 

This requires Indian policy that nurtures purposeful deergha ayush companies in hundreds if not thousands. I feel that Indian industrial policy missed this aspect because a control/animal spirit mindset does not support the building of virtue.

 

My positive models are enterprises I know — such as Unilever, Tata, Godrej, and Birla. I also, along with six academics, researched and wrote about six middle-aged and potentially purposeful deergha ayush enterprises such as Biocon, Marico, Kotak Mahindra Bank, and HDFC Bank.

 

On the other hand, I am familiar with organisations that weakened their strategic strength to near extinction, for example, Imperial Chemical Industries, Jet Airways, Kingfisher Airlines, and Credit Suisse. It is devastating and expensive for society to support and extend the life of a company that is no longer capable and purposeful. A recent book on Credit Suisse offers some sharp lessons (Melt Down, Duncan Mavin, Macmillan Business, 2024).

 

Credit Suisse is biologically a deergha ayush company, having been founded by Alfred Escher at about the same time as when Jamsetji Tata founded his enterprise. If an Indian horoscope were to be cast, Credit Suisse must have been born during Amavasya. Its history is a long one of relentless wrongdoing. It did not die in a day; its ruin stretched back into decades. Curiously, it did not die for want of capital but due to want of trust. Escher was primarily a politician who funnelled money and favours to his business, an act which was admired initially but decried later. Can you think of contemporary corporate use of public policy to advantage some businesses?

 

Credit Suisse’s mergers read like a culture-contorting thriller, mixing misplaced Swiss secrecy with brash American bank greed. A chapter titled “Spygate” brings out lurid tales of how in 2015, Credit Suisse recruited as chief executive officer (CEO) a talented Ivory Coast national, Tidjane Thiam, who was leading a British insurance firm. Mr Thiam developed an inexplicable relationship with a flamboyant Pakistani-origin Iqbal Khan, who soon emerged as the most trusted lieutenant of the CEO. Then they built adjacent houses, where their respective partners got embroiled in misunderstanding, and Mr Thiam and Mr Khan had an acrimonious falling-out. The Financial Times observed: “The US, a ground zero for the financial crises, has jailed just one banker for issues relating to the crisis. Former Credit Suisse trader Kareem Serageldin was sentenced to thirty months in prison for artificially inflating the price of subprime mortgages, a financial product at the very heart of Wall Street’s unravelling.” The book has more sleaze, but my goal is to explore only purposeful deergha ayush enterprises.

 

Credit Suisse was always in controversy and rarely behaved as a purposeful deergha ayush enterprise. Deergha ayush must be both biological and operating with a deep purpose.

The writer’s latest book, JAMSETJI Tata—Powerful Learnings for Corporate Success, has been coauthored with Harish Bhat. rgopal@themindworks.me