Start-up to SHE enterprise

Over more than 100 years, we have experienced the social-economy benefits brought by the early 20th-century founders of sustained, humane, and enlightened enterprises. India needs more of them now

On July 1, T N Ninan, in the piece “Reality check for start-ups”, pointed out while start-ups had an important role in nation-building, there was a concurrent need for them to be more mature with respect to governance and profitability. I feel trying to grow a baby to be six feet tall in five years is fruitless corporate genetic re-engineering. Founders need to be creative, but also disciplined and reflective. Combining such opposite traits is tough, but essential. This was the context for my co-author R Narayanan and me to write a book in 2020 titled Wisdom for Startups from Grownups.

Building enterprises requires the entrepreneur to be patient, plan-oriented, and performing, preferably with a low profile. There are examples of Indian entrepreneurship destroyed by early publicity and seeking riches — by developing political assets, premature initial public offerings, bending rules, and disregard for corporate governance.

Business Standard reported on HDFC Bank, the $180 billion merged entity, whose value now counts among the top three on the Indian stock exchanges. HDFC Bank is already among the most valuable banks in the world, behind only JP Morgan, Bank of America, and ICBC. If it grows as fast as expected, it may well be the most valuable bank in the world in about a decade.

Indian manufacturing had made its presence felt globally through acquisitions like Corus, JLR, Novelis, and General Chemicals; Indian software companies had made a global impact in services through Tata Consultancy, Infosys, and Wipro. HDFC Bank may be the first Indian bank to be globally noteworthy for value and values.

Long-lasting companies have a founding philosophy (like the Gangotri of a river), icons and narratives (like the contours of widening proportion during flow), and, finally, distinctive rituals (as the delta flows into the seas). It is educative to trace the growth of HDFC.

Founder Hasmukhbhai Parekh had a philosophy as early as 1951. His lifelong dream was to enable the common man to own a decent house he could call home while actively working, and not wait for accumulated savings close to the age of retirement. If my reader was born before the mid-60s, he or she would know what a pipedream this was in India those days. However, the company could be registered only 26 years later in 1977, when he was 66!

While Hasmukhbhai will be remembered as the founder, Deepak Parekh will be remembered as the shaper of leaders like Keki Mistry, Renu Sood, Aditya Puri, and Paresh Sukthankar; and creating an enduring conglomerate meeting diverse financial needs of people and an ethical and non-controversial corporation. The team built an institution of values, not valuations, a sustainable, humane, and enlightened (SHE) enterprise. The milestones of HDFC have been captured in the Legacy Centre at Ramon House, well worth a visit by leaders and students of enterprise. A memorable quote of Hasmukhbhai reads: “I seem to enjoy sitting at the feet of Saraswati more than worshipping Laxmi, though it is Laxmi I have served all my life.”

I developed insights into the making of HDFC when I co-authored a book with Lata Dhir in 2021: How Deepak Parekh Grew HDFC Group Exponentially. The book recounts what it took a start-up of the 1970s to be dizzyingly valued in later years. Hasmukhbhai had no capital for bootstrapping the venture, neither were there angels or venture capitalists. Since ICICI was an early investor, today’s HDFC Bank is a “grandson” of ICICI! Hasmukhbhai set about building his “temple”. Luckily, he had not been tutored on unicorns and such other illusions. There were no quick fixes. He had to build trust and enduring values as the foundations of the temple.

Hasmukhbhai did not directly aim to create an empire. He worked obliquely by doing what was right, leaving the best effort to deliver the result — karma in action. This is the principle of obliquity. The share of the middle class (Rs 5-30 lakh a year) was minuscule in the 1960s. This class has grown to 30 per cent of Indian households in 2021, and is expected to reach 60 per cent by 2047.

SHE enterprises are hugely valuable to a social economy, much like top scientists are to the knowledge economy. A top scientist is exceptionally valuable for advancing the frontiers of human knowledge. What about enterprise?

Modern-day stories have been written about Tata Consultancy Services, Infosys, and Wipro, for example, recognising their enormous contributions to society, shareholders, public ethics, and corporate governance. They have their flaws, of course, but they are marginally flawed members of a large community, who are perceived by society to be quite flawed.

Over more than 100 years, India has experienced the social-economy benefits of early 20th-century founders of SHE enterprises like Jamsetji Tata, Jamnalal Bajaj, and Pirojsha Godrej. India needs more of them now to build the country we dream of. It creates too few SHE companies though its entrepreneurial entropy is frenetic.

The writer is an author and a business commentator. www.themindworks.me; rgopal@themindworks.me