Text of I&B Minister Shri Manish Tewari’s speech at IISS, Singapore 12-01

“Reviving the India Story- Policy Priorities for a Congress Government.” 

Text of I&B Minister Shri Manish Tewari’s speech at IISS, Singapore 

The Minister for Information & Broadcasting Shri Manish Tewari today delivered Fullerton Lecture at IISS, Singapore. Text of the speech is as follows:


Honourable Dr. Tim Huxley, Executive Director, IISS, Asia, Distinguished guests, Ladies and Gentlemen,

Thank you for inviting me to speak to this august gathering. In a short period of time the Fullerton Lecture Series have established themselves as a signature event. The galaxy of eminences who have spoken hear bears eloquent testimony to the pre-eminent position of the IISS as one of the foremost thought platforms of the world.
         

Let me begin from the beginning. What after all is the India story? What are the contours and parameters within which we are trying to locate the India story? What time frames are we talking about? Since its liberation in 1947, India has been an unfolding tale of a million mutinies that have been imploding on its mosaic on a daily basis. 

Zillions of ambitions and aspirations that bubble up every day in the hearts and minds of more than a billion people who are the permanent cast in this story. It thus becomes imperative to locate and anchor this milieu in its broader historical context. Even a narrower focus on India's growth trajectory in the last one decade would be incomplete and perhaps misleading if we do not take into account the factors that have moulded and shaped the policies India has adopted as also defined and determined the path it has trodden.

The idea of India has baffled many thoughtful gentlemen in the past too. Prime Minister Winston Churchill could not imagine that India was a single Westphalian entity any more than the equator was.

Since Independence, the warp and the woof of  the India story has been consistently woven by the Congress around a pluralistic society aspiring for equity in the policy frameworks of governance. The India story has been, by and large, consistent with this vision and understanding of India since the Congress has been heading the government for almost the better part of time over the past sixty six years except  perhaps intermittently for little over a  decade when other political formations were at the helm of the ship of  state.

As we engage in this conversation a round of provincial elections are playing themselves out concurrently and  national elections are  scheduled for the April- May of 2014. However to discern the policy priorities for a Congress government in its next term it is imperative too first delineate the core contours that define India today. 

 and then  rewind to 2004 and evaluate the past nine plus years of UPA's rule as that is both the trampoline and the spring board for future policy initiatives.

(i)  The first  contour of course is demographics. India is a young country with increasing  capacities both among its employable and the employed population. When this dividend starts declining among some of the hyper powers of today say by 2033 India would just about be peaking and plateuing on this score.

 (ii) The second is the increasing efficiency of its working paradigms. A twenty one year old  who started his career in 1991, now has 21 years of experience in a neo-liberal economic order. They are now more than acquainted with modern technology, foreign companies, and above all a market driven domestic dynamic.
(iii) The third is better companies. Indian companies are increasingly becoming both capable and competitive. 

 The trepidation that our corporate institutions are archaic monolith's that would collapse in the face of global competition has been replaced by a sanguineness manifested by Indian corporations in a plethora of sectors. They have not only become conglomerates but are rapidly acquiring companies in the emerged economies also.

(iv)  The fourth is an increasingly robust financial order. India invests  35 per cent of its GDP every year. Steps are being initiated to reinforce the financial system by emulating best practices that the global financial system have on offer. The objective being to convert good investment to GDP ratio into a higher rate of GDP growth. 

(v) The fifth is enhanced  economic integration.  India is now engaging with the world in a humongous manner. Gross flows on the current account are now 63.3 per cent of GDP and gross flows on the financial account are now 55.3 per cent of GDP. This fructifies into cross border gross flows of 118.6 per cent of GDP. This makes India one of the more permissive economies in the world. Engagement with the world brings in its wake a flow of ideas that invigorates the intellectual landscape also.  

(vi)    The sixth is liberalism, democracy and a bottoms up Public Discourse. A Liberal democracy that anchors both the rule of law and an institutionalised judicial system  Democracy ensures that issues which resonate with an overwhelming bulk of the people engage the collective energies of the policy community and liberalism ensures that there is space for the last man in the last row to live his dream without fear of discrimination or bias while the new media provides an opportunity to over 100 million Indians and growing the ability to articulate their views without let or hindrance.


Now let's turn to evaluating the performance of the UPA over the past nine plus years. They are broadly five parameters on which any democratic dispensation can be benchmarked. They are as follows;


a)    Political Stability- Since entering an era of coalition politics in 1991 India saw a fair amount of fluidity from 1996 -2004 an era that saw non-congress governments and coalition’s at the centre.  However if one was to juxtapose those eight years with the nine plus years of UPA rule from the May of 2004 till now you would discern that Political Instability as a thought, construct or a concept has almost but disappeared from the terra -firma of the Indian public discourse. This is the bedrock that has facilitated a silent revolution of empowerment that has engulfed India over the past decade.  The specifics of which I would elaborate later in my presentation.


b)   Social Cohesion- The idea of India has been underpinned by the core values that constitute the philosophical construct of natural rights and humanism. They are the fundamental freedoms of thought, expression, religious beliefs, democratic choice and a variety of others that fall within the remit of this overarching construct. The India that the UPA inherited in 2004 was scarred by a state sponsored pogrom perpetrated against the largest minority in the west Indian state of Gujarat. Coming on the heels of the religious polarisation perpetuated in the late 1980’s and early 1990’s using Indian mythology as an anchor it put a severe strain on the pluralistic ethos of India.  

One of the foremost tasks of the UPA government was to reassure its citizen’s and especially the minorities that there life, limb and liberty would receive the fullest protection of the Indian state while persevering to bring the criminals who implemented this pogrom to justice. For the true test of a democracy is not how you treat your majority but rather how you treat your minorities. 

Over the past years the UPA government has been successful in mitigating fear, maintaining peace and mainstreaming the minorities. This has resulted in the dissipation of the perception of a nation at war with itself. Again this has provided a fillip to economic activity as both the people and the state have been able to concentrate their attention upon bread and butter issues.

c)    Internal Security& it’s external linkages-India still faces serious challenges to its internal security both in the North West from cross border state sponsored terrorist activity as well as in the North East where ethnic insurgencies receive external patronage. Coupled with this is the problem of left wing extremism in central India where the bulk of our natural resources are concentrated. The UPA government through a combination of hard power and soft power initiatives as well as capacity augmentation measures has been able to keep the security situation stable despite grave provocations. The worst of course being the Mumbai outrage of 2008 ironically whose fifth anniversary was yesterday. 

Unfortunately the accused who perpetrated this assault continue to enjoy the generous hospitality of our neighbour. With triple transitions coming up in Afghanistan next year the security situation in South  and West Asia requires responsible engagement by all stakeholders. Similarly in the eastern theatre and the broader Indian Ocean region the string of pearls and other such exotically disruptive paradigms would only serve to make the global commons more volatile rather than secure the global flows of goods and resources.


d)   Economic Development- In the past nine plus years the UPA government has built up perhaps the most ambitious and holistic rights based social security infrastructure. The Right to information, guaranteed 100 days of employment to the rural poor, free and compulsory education to each child below 14 years of age, the most comprehensive school lunch programme that feeds 120 million children daily, food security for over 800 million people, forest rights to the indigenous people and the overhaul of antiquated land acquisition laws the list of initiatives is breath taking in the trinity of its scale conception and implementation.  All this was actioned without sacrificing growth. 

The UPA government has delivered an average rate of 8.1 % GDP growth over the past nine plus years. The mantra of equity with growth has been captioned and the talk has beenwalked.This was achieved despite the Arbitrage, Derivatives and leverages- the ADL cocktail of 2008 that mauled the neo-liberal economic order down to its very fundamentals.  After four stellar years from 2004 to the September of 2008 growth did slow down in 2008-09, but India quickly rebounded  from the slower growth of 6.7 per cent in that year to record rates of growth of 8.6 per cent in 2009-10 and 9.3 per cent in 2010-11 respectively.


 Unfortunately there was a yet another upheaval in the global economy in 2011 on account of the sovereign debt crisis in Europe and that resulted in the subsequent slide in the global economic paradigms. Concurrently India also had to confront domestic constraints on investment and consumption. As a corollary growth declined to 6.2 per cent in 2011–12 and  5.0 per cent in 2012-13. 

The current account deficit widened to USD 88 billion or 4.8 per cent of GDP in 2012-13 though indications suggest that we would close the fiscal with a CAD of 3.8%. A sharp down turn in manufacturing growth and a quantitative decrease in the services sector further decelerated growth in the first quarter of 2013-14 to 4.4 %.  India’s economic indices during this period are not an exception but unfortunately the current norm. Most developing economies have  been hit by the  phenomenon labelled as the 'Great Descent'. 


The silver lining however is the manifestation of the green shoots of recovery  in the badly-affected Euro zone  economies.  Anticipation of an upward swing in the economic trajectory of the US, coupled with the back benching of quantitative easing, has generated hope  of a gradual global revival.  The Indian economy has also showed early indications of recovery with an increase in exports in the second economic quarter;  reversal of  negative growth in  the manufacturing sector, rise in freight traffic, a generous monsoon and a sharp increase in the sown area which should fructify into enhanced farm output. 

Numerous reform measures over the past one year should start fructifying from the second half of the current fiscal translating into the expectation that the Indian economy will grow at over 5.0 per cent and perhaps closer to 5.5 per cent in 2013-14. Juxtaposed against global economic context even a growth rate of 5.0 per cent should qualify for more than an E for effort. Our foremost policy priority therefore, would be to return the growth trajectory to the commanding heights of the previous decade by expediting pending financial legislation as well as other policy initiatives which would ensure the top tracking of this process.


e)  Foreign Policy- In the past nine plus years one of the significant successes of the UPA has been  strategic positioning of  India’s interests in the evolving churn of global developments. India has successfully engaged with  US, Russia, China, EU, Japan, ASEAN, other global powers, multilateral institutions and its own region managing contradictions without being overawed by the responsibility that the movement to multi polarity portends. 

Notwithstanding the Asian rebalance, the continued emergence of China as the lonely power or the tumultuous events in the Middle east the moral imperatives that form the bedrock of our foreign policy have not been diluted but tempered with the pragmatism of the times we live in.

 In the past nine plus years the task of national reconstruction has been almost frantic to say the least.  Let me enumerate the steps taken to improve the Indian financial architecture in this year itself. A commission of theoreticians and practitioners has drafted a new Indian Financial Code a legislation drafted to replace 50 existing laws governing finance with a single concurrent financial statute. 

A brand new Companies Act is now in place. Commodity futures are now dealt by the Ministry of Finance.   A new law has been promulgated establishing the Defined Contributory Pension mechanism under a statutory regulator.  


The obvious question that then begs an answer is what must be the policy priorities of a Congress /UPA govt in 2014, if people do give us that opportunity.  Simply put it should translate into consolidating the progress of the previous decade to build a  state that is able to deliver to the expectations of an empowered, ignited, transformed, connected but a  very restless young India.


The first and foremost task is to ensure that India transcends from a low Middle income to a Middle Income country. This would require liberalising our economy further to attract FDI/ FII inflows. This in turn means ensuring that an environment is recreated where it is easy to do business and ensuring that profit is not made to sound like a dirty word in our public discourse. 

This is the only way to ensure that the ten million plus young people- the flower of our democratic dividend are gainfully employed. Coupled with this is of course  a special emphasis  too quickly put in place the remaining building blocks of the financial edifice namely the Direct Taxes Code, Goods & Services Tax legislation Banking and Insurance enactments  DTAA's TIEU's  to name but a few.


The second is to build the Capacity of the state to be able to effectively address, surmount and yet nurture the opportunities that emerging frontiers have on offer. A State that can deliver public goods and services efficaciously. The third is a concerted attempt  to completely  overhaul India's colonial administrative system so that vertical and horizontal avenues of talent intake are created at every level of government. Perform or perish must be the new administrative mantra of India. 

The fourth is the rewriting of  a panoply of century old laws with an expiry date to synchronise them with contemporary realities that adequately empower the instrumentalities of the state to implement these covenants by putting in place mechanisms that put a premium on both performance and accountability.  The fifth is to create capacity in the judicial system at all levels to ensure that delivery of justice is efficacious and swift. 

The sixth is   to make it unambiguously clear to our public institutions that policy choices and their execution are the eminent domain of democratically elected governments. The seventh is to work for the reform of global institutions to reflect  current global realities and not the post world war II power balance. The eighth is to augment institutional wherewithal to protect our national interests both on land and the high seas from state and non state actors. 

The ninth is to work with likeminded nations prevent and pre-empt militarization of outer space. The tenth of course is to redouble our efforts at global disarmament. in this context we welcome the accord with regard to Iran's Nuclear programme. The last but not the least is to fix our politics and regenerate a spirit of multi-partisanship on critical policy issues so that our legislative institutions remain relevant to underwrite this transformation.

 As we look to the next two decades India requires space for consolidation to action the above elucidated menu of priorities. That means tranquillity on our borders, stability at home and an enlightened and secular leadership that can engage at home and with the world in a spirit of partnership and not demagoguery.  

India’s path of inclusive growth rests on the principles of social justice and equity, peace and harmony, pluralistic understanding of the social reality and celebration of diversity.  This ladies and gentlemen in brief is a snapshot of the real India story.

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One in 4 poll candidates hasn't disclosed PAN 11-29

One in 4 poll candidates hasn't disclosed PAN

With total assets of around Rs 56 crore, Dhanvantri Chandela, fielded by the Congress from the Rajouri Garden constituency, is easily one of the richest among candidates for the Delhi Assembly election. But she neither has a permanent account number (PAN) nor has she reported details of her income-tax returns to the Election Commission of India (ECI).

Chandela is not alone. Keeping her company on the long list of candidates who have not disclosed their PAN or I-T details are the Bahujan Samajwadi Party’s (BSP’s) Munni Seth-Rajendra Sharma, seeking election from Madhya Pradesh’ Dewas Assembly constituency (total assets to the tune of Rs 12.67 crore), and Bharatiya Janata Party’s (BJP’s) Bikaner candidate Sahi Ram Bishnoi (assets of Rs 1.72 crore), among others. If their nomination papers are anything to go by, these people have no PAN and do not file their income-tax returns.

In Chhattisgarh, Delhi, Madhya Pradesh, Mizoram and Rajasthan — the five states where elections have either taken place or are to take place this year — one in every four candidates has not disclosed details of PAN, while every second has not given income-tax return details. According to Association of Democratic Reforms (ADR) data for various states, compiled by Business Standard, of the 3,337 candidates fielded, the affidavits of 914 (28 per cent) have no mention of PAN and those of 1,502 (45 per cent) do not give income-tax return details.

The income of some of these candidates may not fall in the taxable bracket, but that cannot be true for all — at least 99 of those deciding not to give out I-T details have total declared assets of more than Rs 1 crore.

In candidates’ nomination papers, there are two separate columns for giving out details of PAN and income-tax returns.

But, in a majority of cases where these details have not been given out, the candidates have chosen to write ‘Nil’. A senior ECI officer says submitting wrong information cannot be a ground for a candidate’s disqualification but he surely can be prosecuted.

According to S Y Quraishi, former chief election commissioner of India, it is the responsibility of the returning officer to ensure no column in a candidate’s affidavit is left blank. But, he says, the officer cannot always verify the veracity of a piece of information given. “If a candidate gives false information in his affidavit, anyone can file a case against him and challenge his candidature.”

Among the five states, Mizoram seems to lead the pack, with 78 per cent of its candidates not disclosing their PAN details. Nearly 37 per cent of the 142 contesting in the state (52 candidates) have declared assets of over Rs 1 crore.

About 43 per cent of Chhattisgarh’s 983 candidates, 16 per cent of Rajasthan’s 733 and 15 per cent of Delhi’s 796 have not mentioned their PAN. The proportion of candidates with assets of more than Rs 1 crore in these states stands at 22 per cent, 47 per cent and 33 per cent, respectively.

So far as those who have not filed their I-T return details are concerned, their share in the total number of candidates stands at 67 per cent in Chhattisgarh, 40 per cent in Madhya Pradesh, and 39 per cent in Delhi.

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Can You Overdo People Skills? 11-29

Can You Overdo People Skills?

In our work with leaders on overplayed strengths, people sometimes object to the idea that every strength can be taken too far. For instance, an academic journal editor once held up publication of a research article stating flatly that “it is impossible for a leader to be too supportive, caring, and loyal.”

Did that journal editor have a point? Recent interest in one of the greatest American presidents offers a fascinating example. Let there be no doubt that Abraham Lincoln was an extraordinary leader who galvanized a bitterly divided country and navigated it through phenomenal discord. In fact, Lincoln is one of our personal favorite leaders. 

But his acclaimed biographer, Doris Kearns Goodwin  , author of A Team of Rivals   (which Steven Spielberg drew from in his recent film  ), turned up some counterintuitive insights in her penetrating research. Taking into account aspects of Lincoln often neglected in the cultural lore, she considers the possibility that his leadership could have been even more effective had he not been quite so caring.

In a 2009 HBR interview   Goodwin was fast to point out Lincoln’s tremendous gift of people skills. She described his exceptional emotional intelligence, willingness to hear out opposing views, keen eye for talent, capacity for forgiveness, and ability to share credit for success but take blame for mistakes. 

This constellation of admirable attributes earned him loyalty. It was key to recruiting and managing the big talents, and big egos, that made up his cabinet who — despite many being from opposing political parties and former rivals in seeking the presidency — “ended up believing that he was as near a perfect man as anyone they’d ever met,” according to Goodwin.

However, Goodwin also concluded that “Lincoln’s greatest flaw came out of his strength, which was generally liking people and not wanting to hurt them.” This seemed to color his judgment, and delay corrective action by giving people too many chances to turn things around. Nowhere is this more evident than in the disastrous example of how Lincoln managed George McClellan  , his general in the early stages of the Civil War.

McClellan had his own issues with overused strengths. His confidence and pride could verge into arrogance. Born to the upper class, McClellan was condescending and insubordinate   toward his folksy commander-in-chief. He referred to Lincoln as “a well-meaning baboon” and declared him an “idiot.”   McClellan’s tactical judgment soon proved to be questionable too. 

Though a systematic and thorough planner who exercised careful judgment, McClellan was also a perfectionist who suffered from analysis-paralysis   and struggled to take decisive action. His excessively cautious approach is considered by military historians   to be why the Union failed to quash the smaller Confederate forces early on in the Peninsula Campaign of 1862  , the failure to seize theConfederate capital of Richmond  , and the bloody draw against much smaller forces at Antietam  .

Some believe that McClellan should have been removed well before Antietam. In part, Lincoln may have been reluctant to make such a bold staffing move because he was new to warfare and military strategy. Goodwin, however, concluded, “In the end it was his inability to hurt people that made Lincoln keep McClellan on far too long.” 

By dragging his feet on this decision, the Confederacy managed to hold on despite long odds and the Union lost strategic ground and thousands of soldiers, including over 12,000 casualties at Antietam  . Six weeks later, Lincoln finally removed McClellan from command.

Lincoln was not alone in struggling with tough people calls. In a recent HBR blog post, we documented how today over half of executives are too soft on accountability. This shortfall is particularly common among those with strong people skills, who are bedeviled by two hazards when it comes to tackling performance issues.

The first hazard is that caring leaders tend not to be direct, especially when there’s a conflict. They might avoid talking with the other person altogether; or soft-pedal the message to the point where the person walks out of the room blissfully unaware of the seriousness of the problem. The hazard is augmented when leaders rationalize, usually by telling themselves, “I don’t want to make anyone upset.” They’d like to believe they are being protective of the other person, when in fact they’re protecting themselves.

Leaders with strong people skills should also be aware of a second hazard: that they, like Lincoln with McClellan, will be much too slow to act. Well-liked leaders, if they are honest with themselves, shy away from tough action because they fear it will hurt their reputation. Another way that such leaders hang themselves up is by pointing to the subpar performer’s good points. But if you wait until that person has no redeeming value, you’ll wait forever.

 Finally, once these leaders do achieve clarity that the person needs to go, they let concerns about implementation delay action unnecessarily. “It will be hard to find a replacement” or “It’s a bad idea to make a change now because there’s been so much instability lately.” In attempting to rein in tendencies that impede your ability to deal with tough personnel issues, self-delusion is your biggest threat.

How do you prevent your valuable people skills from turning into a liability? For one, wake up to the fact that that very aptitude puts you at risk of misapplying it. Realize too that the more heavily you rely on those skills and the more deeply you believe in them, the graver the risk. 

Second, wake up to the value of the antithesis of a strong people orientation — tough-mindedness about people. Finally, be able to imagine that the height of people skill is to combine these seeming polar opposites — to take needed tough actions in a constructive, respectful way.

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Why HR Needs to Stop Passing Over the Long-Term Unemployed 11-29

Why HR Needs to Stop Passing Over the Long-Term Unemployed

One of the very bad things about the Great Recession is that those who were not doing well already got hurt the worst, and that also seems to be the case for the economic recovery. Hiring has picked up, but not for the long-term unemployed, those out of work for more than more than 26 weeks. We’ll get a new look at the data when July jobs numbers are released Friday.

The revelation last year   that many job requirements for open positions mandated that candidates already be employed seemed a bit like a joke, but the evidence that employers screened out unemployed applicants was so widespread that the Equal Employment Opportunities Commission began investigating it.

A couple of interesting studies examined the extent of discrimination against the unemployed. These studies are unusual in that they involved real efforts to find real jobs. One   created 3,000 pretend candidates and sent their resumes to a random sample of job openings. They varied one item among otherwise identical applications: whether the individual was currently unemployed and, if so, how long they had been unemployed.

Only about 4.5% got callbacks, which suggests that the typical unemployed applicant has to apply to a little more than 20 jobs to just get a positive response from an employer indicating that they are still being considered for the job.

Surprisingly, the call-back rate was slightly higher for those who had just been laid off than for those who currently had a job. What happens after you are unemployed for more than a month? At that point, the probability of getting any positive response from employers falls sharply and declines further with each month, hitting a plateau after about eight months. A person with an otherwise identical set of skills and experiences is about half as likely to get a positive response from employers after eight months of unemployment as compared to a person just being laid off.

The other study (PDF)   is similar, with an important twist. They compared applicants on two dimensions: How long they were unemployed and whether they had relevant job experience. This study also found a sharp drop-off in employer interest for candidates with around six months of unemployment, but it also found that recently unemployed candidates with no relevant experience for the position were more likely to get employer interest than were those with relevant experience who were unemployed for six months or more.

What’s going on here? At least at present — and perhaps because of the depth of the recession — there doesn’t seem to be much stigma associated with being unemployed per se. But there is a really big reluctance to hire those who have been unemployed for a while. It’s so big that it trumps the concern about having the relevant skills, which news reports constantly suggest is the big challenge employers face.

Here’s the point: Hiring managers are only human. They don’t have much support in doing their jobs. If you think hiring decisions are based on careful evidence about what attributes make the best hires, think again. Few employers have the time or resources to do any studies of what predicts a good hire, let alone looking at the specific evidence concerning prior unemployment. There is no evidence that I have seen anywhere suggesting that the long-term unemployed make worse candidates.

Hiring managers are going with their gut feel or what they think are “sensible” ideas about what makes a good candidate when the resist hiring the long-term unemployed. We know that going with your gut in hiring decisions means going with all kinds of unstated and in many cases unconscious prejudices. That’s what kept women and minorities out of many jobs and now keeps older workers out of them as well. How about these sensible ideas? “If they were good, someone else would have hired them” — not when other employers think like you do and when there are so few jobs to go around. “Their skills are rusty” — one doesn’t forget how to do a job in six months, and all new hires require some time to learn how your operation works.

What we do know about job candidates who are long-term unemployed, which is related to job success, is that they are persistent. Millions of other unemployed facing this job market gave up looking and dropped out of the labor force. We also know that they will likely be very grateful to have a job, and gratitude is associated with many aspects of good job performance. They are also likely to be cheaper and easier to hire because you don’t have to woo them away from their current employer.

The way to get hiring of the long-term unemployed started is to recognize that there is no objective case in this economy for not considering a candidate who has been out of work for a while. Therefore, excluding them out of hand is a form of prejudice. The people at the top of organizations need to point out that excluding such candidates is likely costing us money because we are ignoring potential good hires, just as it costs us money to exclude women, minorities, older individuals, and anyone else who has the potential to do the job.

It’s the right thing to do in terms of our social impact, it’s the right thing to do to make our organization inclusive and looking like our society, and it’s also the financially sensible thing to do.

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South India’s Street side Coffee Culture 11-27

South India’s Street side Coffee Culture

( There is a possibility that some tamil words may have been 

misspelt as the author is not from India)

David Hagerman

India is most often associated with tea, but java culture runs deep in the country’s southern states. Click to see slideshow.

Early one morning last week I queued outside Sri Gopi Iyengar Coffee and Tiffin Center, a coffee bar just outside the monumental Meenakshi Sundareswarar Temple in Madurai, Tamil Nadu. My long wait under a scorching sun was rewarded with a small glass of fragrant, caramel-hued brew topped with a fluff of white foam. Though a moderate coffee drinker at home, I was already on my fourth dose of the day. It would be far from my last, for in this South Indian state, coffee is as delicious as it is ubiquitous.

India is most often associated with tea, but java culture runs deep in the country’s southern states. Coffee was introduced to what is now Tamil Nadu’s neighboring state of Karnataka in the 17th century by an Indian Muslim saint named Baba Budan, who smuggled seven beans from Yemen while on pilgrimage to Mecca. Cultivation flourished under the British, and India now produces some 300,000 tons of coffee per year. Tamil Nadu is the country’s third largest grower after Karnataka and Kerala.

“No true blue South Indian would ever do without his or her filter coffee early morning ,” says Chennai food writer Sadita Radhakrishna. The author of a forthcoming book on Tamil Nadu cuisine, Ms. Radhakrishna remembers that when she was growing up in Bangalore, “every single day, coffee seeds were roasted and ground on an old coffee grinder with a handle” and brewed in a traditional lidded drip filter made of brass.

David Hagerman

The perfect cup in Karaikudi, Tamil Nadu. Click to see slideshow.

Tamil Nadu residents still sup at home, but coffee is also served in messes, restaurants and chain cafes with catchy monikers like Hot Chips. But the majority of the state’s java is served and drunk at coffee bars, a term that describes a range of street establishments from standalone shacks just wide enough to accommodate a vendor and carts parked under a corrugated roof to huts carved out of the ground floor of permanent structures. 

At a coffee bar, your hot drink (many serve tea as well) is ordered, prepared, served and paid for at a window fronted by a small counter. It’s at the counter that you drink while standing on the pavement, perhaps as you nibble a piping-hot crispy daal fritter or a tea biscuit plucked from a metal-topped glass canister. Takeaway is always an option, provided you bring your own receptacle.

In southern India, the brew method of choice is slow drip in a brass filter, which can hold a cup of water or be sized for a crowd at up to 10 liters, and is kept gleaming via regular applications of tamarind paste. Some java jockeys use the sock method, pouring hot water or milk through fine grounds in a piece of muslin suspended from a metal ring. Beans are Arabica, robusta or a mix of the two, always blended with chicory.

 Sugar is a given (ask for konjam jeeni for a less sweet brew), and so is India’s wickedly rich full-cream milk, kept hot on a burner near the counter. To prepare an order the vendor places sugar in a wide-lipped metal tumbler, adds a shot of coffee and a ladle of milk, and then simultaneously blends, cools and froths the liquid by pouring it back and forth between two tumblers, often from great heights (thus its nickname “meter coffee”). Utter the words konjam kuda and he’ll add a flourish of black coffee to the surface of the drink.

David Hagerman

Black coffee is added at the end to finish the glass. Click to see slideshow.

Depending on the type of bean used, southern Indian coffee can be smoky, winey or even a bit cinnamony, and the chicory adds a hint of nuttiness. In over a week of steady sampling around Tamil Nadu, I drank my best (and strongest) glass at Gopi Iyengar, though I’d rate all of the others nothing less than wonderful.  Served in small doses for as little as 8 Indian rupees (about $0.13) a glass, southern India’s coffee-bar coffee goes down like ice cream — leaving room, pocket change and a hankering for just one more.

Coffee bar at Sri Gopi Iyengar Coffee and Tiffin Center, 37/35 West Chitrai Street, Madurai, Tamil Nadu. 

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A Message for Entrepreneurs: ‘Don’t Hesitate to Start’ 11-27

A Message for Entrepreneurs: ‘Don’t Hesitate to Start’

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Roni Einav is one of Israel’s most successful software entrepreneurs. In 1983, he founded Fourth Dimension Software, later renamed New Dimension Software. He served as its CEO and chairman until the firm was sold in 1999 to Texas-based BMC Software for $675 million. Currently, he heads Einav High Tech Assets, which invests in high-tech start-ups. Einav is also co-author with Miriam Yahil-Wax of the memoir, Nordau to NASDAQ — The Evolution of an Israeli High-Tech Start-Up, which describes his entrepreneurial journey.

Einav believes that entrepreneurs need to balance their instincts and education, and to not be afraid of making mistakes. In a conversation with Knowledge@Wharton, he says: “I tell people that if they are looking for the perfect idea, for the perfect gap in technology, they will never get there.”

An edited transcript of the conversation follows.

Knowledge@Wharton: Your book is titled Nordau to NASDAQ. What does the title mean?

Roni Einav: The title has a few [different] meanings. One of them is that I was living for many years in a place in Tel Aviv called Nordau Boulevard and my destination was a global target like Wall Street or NASDAQ. There is also a socialistic flavor because [World Zionist Organization co-founder Max] Nordau was next to [Theodor] Herzl in the Zionist part of the movement. The movement was pretty socialistic. And then we came to the climax of capitalism. Also Miriam, my co-author, thought that it should be a little mysterious.

Knowledge@Wharton: You studied at Technion, which is one of Israel’s most prestigious technical universities. And then you spent some time with the Israeli defense forces. How did these experiences shape you as an entrepreneur?

Einav: I think I was lucky to be educated in Technion, which has got a few Nobel Prizes. After being educated as an engineer, I served my country in the Army. But I wasn’t an officer in the military operations; I was in operations research, in the systems analysis of ammunition and our military systems. From age 22, I got the chance to operate in the big [league]. You fight for [your] opinions with the senior officers. And even though they are 40-45 years old and enjoy a great deal of prestige for what they’ve done in the Army, you come out with your own thinking. You are not afraid to fight for your opinions, to be stubborn … to think of what is the best for Israel and for the Israeli Army.

I think it’s a kind of a complementary education. After four or five years, you are more experienced in the practical side of the academia and not just in the academia itself.

Knowledge@Wharton: From there, how did you enter the world of business?

Einav: I never worked for anybody. I started in the computer business, but at that time it was more professional services. Our clients were the ministry of defense, the Army, some of the big Israeli ventures. There are not too many big organizations in Israel — just five or 10. After a while I realized that if you want to play globally you need to have some [intellectual] property, a software product or something that can be sold in other parts of the world.

Knowledge@Wharton: One of your first notable forays in business was in Iran, which was under the reign of the Shah at the time. Could you tell us about that experience?

Einav: At that time, the relations between Israel and Iran were very close. Israel and Iran and Turkey were the power against the Arab world. The Shah wanted to have a powerful Iran, a good education system and so on. He came to us as architects and engineers to help him build the civilian part of the Navy — the Iranian Navy. We built new cities in Bandar Abbas, Bandar Bushehr and Kharg Island.

Today, Bandar Bushehr, for example, is known for the nuclear plant. Sometimes Iranian boats travel from Bandar Abbas to Lebanon with missiles. But at that time, we were engineers and the thinking was that people from Israel can do a professional job relatively fast. The places I have mentioned are very remote and have an extremely bad climate …. So, it was interesting. After working with the Shah, we also worked with the Pahlavi Foundation in Tehran. And we felt very good.

Knowledge@Wharton: The other episode from the early years I found interesting was that following Israel’s peace agreement with Egypt in 1979, the Sinai Peninsula evacuation contributed to the growth of your company, which you named “Einav Systems.” How did that happen and what was the impact on the company’s growth?

Einav: That was my first big contract. We had a team of 10 or 12 people. The Army at the time understood that in order to ensure that a project of so many billions was effectively implemented, they must use civilian resources. I was lucky to work for them and maybe they were lucky to hire me because the job was intelligent, fascinating, but at the same time it required a lot of effort and a lot of talent. As a result of my success in the job, I got additional contracts, which were more related to software for big civilian projects.

Knowledge@Wharton: How was Fourth Dimension Software formed and how did it grow out of Einav Systems?

EIt was owned 50% by somebody who worked for Einav Systems and 50% by partners related to Einav Systems. This was a very typical way, a socialist way, of setting up a new business with no external funding. After a couple of initial failures, we got an opportunity from the Israel Air Force. They had software that they used for scheduling the routine daily life of the Israeli Air Force. But while the software was important, there was no documentation, nobody built it as a package. There was a [lot] of improvisation. The Army and we came to an agreement that we would take the software and develop it into something that could last for many years. The benefit for the Army was that they would get it for free for many years and the advantage for us was that we got an opportunity to do something very big.

Knowledge@Wharton: How did you overcome the initial challenges in developing database software?

Einav: As we started with the scheduling package, we were naïve enough to think that we could make a better database as well. If you are young and ambitious, you are not afraid to fight IBM or Computer Associates and smaller organizations. Maybe I can say … that in being too educated maybe you’re becoming too disciplined and too organized. It’s good to be organized but it’s also good to dream a little and be a little naïve …. You need to balance your instincts and your education.

Knowledge@Wharton: Intuition and imagination play as big a role in entrepreneurship as discipline and hard work.

Einav: I think so. We never dreamt that Fourth Dimension Software would have so many products, that it would be so profitable. So, the range of your dream is one year, maybe two years. And the dream is a dynamic one. After one year, you have a different dream.

 You spend a lot of time in your book talking about the importance of human capital. One way of achieving your dreams is to attract and develop the best people. Could you explain how you did that in your company?

Einav: At that time, it was relatively easy because in Israel there were not so many [success] stories like Fourth Dimension Software. All the stories about Israel and the few thousand start-ups are the result of my story and stories like that. At that time, if you wanted to sell software abroad, you just had five or 10 or 15 possibilities. Once we started to succeed — you have to be successful in order to attract human capital — we had the right friends in the Army. Among the new immigrants, we found the right people to work for us.

Knowledge@Wharton: What was Control M?

Einav: Control M was our first enterprise software product. Across the world, there are maybe 15,000 or 20,000 organizations like banks, airlines, insurance companies and military organizations that have [multiple] activities. Let’s take, for example, a bank. A bank has mortgages and foreign currency and you can get cash from ATM machines. But at least once every day or maybe once every hour, depending on its size, the bank wants to streamline all its activities. We built a software robot that could do this. Later, we developed complementary technology.

Knowledge@Wharton: How did the company enter and expand in the U.S. and then in Europe? And what lessons did you learn from those experiences?

Einav: At that time we were dreamers but not crazy. We understood that we didn’t have money to build our sales force. So, Boole & Babbage Europe (B&BE) sold us in Western Europe. In America, we got another distributor. This distributor, operating from California, worked for us for five years but there were problems. In 1991, we entered into an agreement to hire most of his people who were related to our technology in their offices in six different locations. We were rich enough to make this move. It was a critical move because a year-and-a-half later we had our IPO in NASDAQ. Before that we needed to prove that we were a strong force. And as a global player, you need to be on your own in the U.S.

Knowledge@Wharton: What are the factors that led to the company going public? What obstacles did you encounter and how did you deal with them?

Einav: We were successful before going public. And we gained experience during our journey. While we did not know what it meant to be public, we felt that all our competitors were on NASDAQ and, if you want to be a global player, you need to follow the game. At that time, the value of the company was $120 million. Two percent of the company was owned by EDS. We felt that [an IPO] was the right move. After one year, the value of the company doubled. It was around $250 million. After one more year, it was $35 million. So, there were also troubles and once you are public, everyone knows when you are in trouble.

Knowledge@Wharton: Following the IPO, Fourth Dimension experienced extraordinary growth. In less than three years the company grew six fold. What drove this growth and what challenges did that create?

Einav: We learned how to be public for the good and bad parts. It was good at the beginning, maybe too good. We thought that it’s a multiplication game — that if we double the workforce, we would double the revenue. It didn’t work. We needed to rebuild the company from scratch. But, luckily, we had the money to fail for a year. With no money in the bank, it may have been impossible to rebuild the company.

Knowledge@Wharton: What led to that sharp fall in business? Also, I believe there was the filing of a class action law suit. How did you deal with that challenge?

Einav: It happened all together. We were not ready for the fact that our revenue was not growing as we had planned. The [problem] was that our expenditure was extremely high. So, I told my colleagues, “Listen, if we have 20% or 25 % better sales and only 25% less expenditure, everything will be right again.” And that is more or less what happened. The technology was good all along and there were no severe problems with customers because in a way any customer that you gain is strapped to your technology. It’s not easy to leave the technology. Also, I think that the technology and the company are stronger than business cycles.

Knowledge@Wharton: The conflict that followed also led to the firing of the CEO from the U.S., your partner with whom you had started Fourth Dimension. After that point, how did you rebuild the operations?

Einav: The problem with my partner was that he thought that we could continue with the same concept. I took it more seriously. Once he was out and we hired another CEO — I was the CEO in the interim period — [things fell in place] because we continued to develop new products. It was relatively easy for us to convince clients who had bought from New Dimension to buy additional products because it was the same look and feel, the same concepts, the same support. So, it wasn’t as difficult once we agreed about the new business plan that was a little bit more conservative.

Knowledge@Wharton: Today you lead Einav High Tech Assets, which invests in high-tech start-ups. What kind of companies and technologies are you investing in?

Einav: Most of them are in software.

Knowledge@Wharton: Any examples?

Einav: We have a company by the name of VeNotion Technologies — VNT. It maps applications, business applications, software packages, hardware, etc. In a bank or any legal organization, after a while, they don’t know which [application] is down and why. When they try to correct or change something in one business application, they can harm a different business application. This is one example; we know how to map business applications. Another thing we do with software is build a kind of simulator… we can navigate to see the city or the road. The idea is to assemble or to combine whatever is in Philadelphia and if an architect or a transportation engineer is planning a new project with say, Bentley, we know how to put a design in place and you can drive the car and see whether there are safety problems.

Or, if you want to oppose a new initiative in the city, at least you will understand what you are opposing, because many times people oppose new initiatives without really knowing if it will disturb them or not. So, we know to combine. These are two typical things I do today.

Something that I do which is a little bit strange is that we found out that in Israel and in California, I’m sure in Pennsylvania too, 25% or 30% of the children don’t eat the yolk of the egg. [We are trying to] mix the yolk and the white part of the egg in the shell without touching the shell. So you can have a hard-boiled egg, which is almost white. The child can eat it without noticing that he is eating the yolk. I’m trying to make a business case out of it, either by selling such eggs in the supermarket or by selling home appliances that can do the magic.

Knowledge@Wharton: During your career what is the biggest leadership challenge you faced? How did you deal with it and what did you learn from it?

Einav: I can’t say what is the biggest because once you experience failure you still need to convince everybody that you will survive. So, it’s the way you behave, sometimes convincing people that the future is rosy. But you also need to take concrete steps. You need strong contacts. For example, when we signed the new contract in 1997 with Boole & Babbage (B&B), I had to go to my board and convince my friends that the probability that B&B would be purchased earlier than us was higher. I said to them, “I don’t know for sure but I feel that this is the way to sign the new distribution agreement. My instinct is that they will be purchased before us.”

Knowledge@Wharton: Based on your experience, what are the challenges of working with a business partner? How should you choose a partner so that the partnership is productive and does not become a source of stress and conflict?

Einav: I can’t be naïve and say that it’s easy. Even if you find the right talent, the right partners, I can assure you that some of them will be different in four years, some of them will be different in five or six or seven or eight years. There is no way to ensure that people will be in love or in good business relations for the next 20 years. I don’t have a formula for that. You have to believe that you have selected the right wife, the right partners, and that it will work. It’s not easy, not in family life and not in business. But you have to work it out.

Knowledge@Wharton: What are the main lessons from your entrepreneurial journey that could benefit other entrepreneurs? What advice would you give them?

Einav: The best thing I can tell people is that if they are looking for the perfect idea, for the perfect gap in technology, and are afraid to make mistakes, then they will never get there. In certain moments, you have to decide to jump into the water. And if you find that you have made a mistake, then make the correction very fast. Don’t hesitate to make corrections. At the same time, don’t hesitate to start. Don’t think too much. Jump and do.

Knowledge@Wharton: One last question: How do you define success?

Einav: This is also something which is dynamic. When I was a child or even a youngster, if somebody became a millionaire, let’s say made $1 million or $2 million, it was definitely a huge success. I don’t think that somebody would like to define success as the success I have experienced because it may be too much. It’s the kind of dream you can’t dream about. In Israel, if you make less than $5 million, people say, “It’s OK. So-so.” You need to make more than $5 million or $10 [million] in order to be regarded as a successful entrepreneur. But the truth is that maybe to live a good life the old definition of $1 million or $2 million or $3 million is good enough.

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