Indian business schools need to teach commercial diplomacy
Narain D. Batra
Business and economic schools
emphasize quantitative analysis and sophisticated computer modeling. But real
life in the street cannot be enclosed in a Bell Curve. Events cannot be always predicted
within varying margins of error.
Modern tools of business and economics cannot capture outliers, for example, the rare and extreme event such as the current Indian financial crisis, the fall of the rupee, which has roiled India for some time. While one cannot prevent a tsunami from hitting a country, it’s certainly possible to imagine such an extreme event occurring and build enough reserve resources to reorganize and restructure.
Nor do business and economic schools teach how to resurrect and rebuild the most invaluable human asset: trust and confidence. How do you restore people’s faith in a system that has failed them? How do you bring the foreign investor back to India?
Advocacy, negotiation, and campaigning should be central to every economic and business management program in India.
Consider this: In 2008 when the CEOs of Detroit Big Three automakers went to Congress for a $25 billion bailout to avoid bankruptcy, members after members asked them why they should trust them for doing the right thing for taxpayers and consumers. Show us your business plans before we give you the money, they said, after reproaching them for their extravagances.
The best argument the CEOs could muster was that bankruptcy would put millions of people out of job, which was not only unpersuasive but also a dangerous half-truth. The foreign automakers, Honda, Toyota, Hyundai, BMW and Mercedes who run non-union auto plants in the South were after all doing not that bad in the bad times. No one wanted Detroit to disappear as a most important auto-manufacturing hub that energizes every walk of American life and directly and indirectly impacts the lives of 2.5 million people.
But Detroit has been an example of failure in persuasion. It failed to persuade the American consumer that its cars are better than those made by Germans, Japanese and South Koreans. The fall of the rupee, similarly, is failure in persuasion that India can manufacture high quality goods for exports. India must compete or perish.
Business schools claim that they create future leaders; but they don’t teach the fine art of how to become influential in a democratic society. They train technocrats who feel more comfortable with their smartphones rather than sitting across a hostile group of people or skeptical global investors and turn them into friends
Doing business is about persuasion; therefore, what business schools need to do is to develop programs that prepare business students for developing and exercising soft power. For want of a better term, some people call it lobbying, though I believe that “advocacy” is a better word. Richard Hall and Alan Deardorff of the University of Michigan wrote in the American Political Science Review that “Professional lobbyists are among the most experienced, knowledgeable, and strategic actors one can find in the everyday practice of politics.”
But lobbyists are sometime reviled as unethical because most people think lobbying as greasing, wining and dining—an unfortunate negative attitude about a socially useful activity.
Lobbying is a multimillion-dollar global service industry.
China, Israel, and many Arab countries, for example, have hired some of the best lobbyists to look after their interests in the United States. Chinese lobbyists want to ensure that Americans do not turn protectionists. American lobbyist-diplomats prowl and troll throughout world wherever decision-making power is concentrated. They know how to negotiate with the powers that be and use the news media and other resources to protect their national interest. Lobbying substitutes the power of the gun with the power of the tongue.
One of the most arduous tasks for anyone is to understand the labyrinthine activities of the US Congress; how it works and wields power through its committees, subcommittees and public hearings; how issues emerge in the public consciousness and how they are transformed into bills that become laws. It is important for us to understand and appreciate the role of lobbyists in the halls of power and how they facilitate legislative processes both at Capitol Hill and state capitals.
Apart from being extremely knowledgeable and strategic thinkers, lobbyists put to use an indispensable tool of persuasion, which is negotiation. While it is said that most things in life are negotiable, the art of negotiation does not come easy whether one is dealing with friends or foes.
Besides teaching negotiation skills, business schools should teach students how to work with the news media and use social networking for generating social and political capital. The learning focus could vary from how to attract foreign direct investment (FDI) to persuading Iran, for example, to sell its oil to India in rupees. Iran’s detainment of Indian oil tanker MT Desh Shanti was a failure in corporate diplomacy. It must not happen again. But now comes another test: whether Walmart, the global retailer with $466 billion gross revenue last year, will open its front-end retail door in India; or exit altogether.
Modern tools of business and economics cannot capture outliers, for example, the rare and extreme event such as the current Indian financial crisis, the fall of the rupee, which has roiled India for some time. While one cannot prevent a tsunami from hitting a country, it’s certainly possible to imagine such an extreme event occurring and build enough reserve resources to reorganize and restructure.
Nor do business and economic schools teach how to resurrect and rebuild the most invaluable human asset: trust and confidence. How do you restore people’s faith in a system that has failed them? How do you bring the foreign investor back to India?
Advocacy, negotiation, and campaigning should be central to every economic and business management program in India.
Consider this: In 2008 when the CEOs of Detroit Big Three automakers went to Congress for a $25 billion bailout to avoid bankruptcy, members after members asked them why they should trust them for doing the right thing for taxpayers and consumers. Show us your business plans before we give you the money, they said, after reproaching them for their extravagances.
The best argument the CEOs could muster was that bankruptcy would put millions of people out of job, which was not only unpersuasive but also a dangerous half-truth. The foreign automakers, Honda, Toyota, Hyundai, BMW and Mercedes who run non-union auto plants in the South were after all doing not that bad in the bad times. No one wanted Detroit to disappear as a most important auto-manufacturing hub that energizes every walk of American life and directly and indirectly impacts the lives of 2.5 million people.
But Detroit has been an example of failure in persuasion. It failed to persuade the American consumer that its cars are better than those made by Germans, Japanese and South Koreans. The fall of the rupee, similarly, is failure in persuasion that India can manufacture high quality goods for exports. India must compete or perish.
Business schools claim that they create future leaders; but they don’t teach the fine art of how to become influential in a democratic society. They train technocrats who feel more comfortable with their smartphones rather than sitting across a hostile group of people or skeptical global investors and turn them into friends
Doing business is about persuasion; therefore, what business schools need to do is to develop programs that prepare business students for developing and exercising soft power. For want of a better term, some people call it lobbying, though I believe that “advocacy” is a better word. Richard Hall and Alan Deardorff of the University of Michigan wrote in the American Political Science Review that “Professional lobbyists are among the most experienced, knowledgeable, and strategic actors one can find in the everyday practice of politics.”
But lobbyists are sometime reviled as unethical because most people think lobbying as greasing, wining and dining—an unfortunate negative attitude about a socially useful activity.
Lobbying is a multimillion-dollar global service industry.
China, Israel, and many Arab countries, for example, have hired some of the best lobbyists to look after their interests in the United States. Chinese lobbyists want to ensure that Americans do not turn protectionists. American lobbyist-diplomats prowl and troll throughout world wherever decision-making power is concentrated. They know how to negotiate with the powers that be and use the news media and other resources to protect their national interest. Lobbying substitutes the power of the gun with the power of the tongue.
One of the most arduous tasks for anyone is to understand the labyrinthine activities of the US Congress; how it works and wields power through its committees, subcommittees and public hearings; how issues emerge in the public consciousness and how they are transformed into bills that become laws. It is important for us to understand and appreciate the role of lobbyists in the halls of power and how they facilitate legislative processes both at Capitol Hill and state capitals.
Apart from being extremely knowledgeable and strategic thinkers, lobbyists put to use an indispensable tool of persuasion, which is negotiation. While it is said that most things in life are negotiable, the art of negotiation does not come easy whether one is dealing with friends or foes.
Besides teaching negotiation skills, business schools should teach students how to work with the news media and use social networking for generating social and political capital. The learning focus could vary from how to attract foreign direct investment (FDI) to persuading Iran, for example, to sell its oil to India in rupees. Iran’s detainment of Indian oil tanker MT Desh Shanti was a failure in corporate diplomacy. It must not happen again. But now comes another test: whether Walmart, the global retailer with $466 billion gross revenue last year, will open its front-end retail door in India; or exit altogether.
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