At the outset I congratulate AIMA on its outstanding contribution to the field of professional management in the country. That in the process, its annual surplus exceeds that of major industry bodies, excluding CII, is very laudable. Professionalism has come to mean one of two things in our country. Competence and values on the one hand and a mercenary “everyone has a price” philosophy on the other. We must labor hard for the ascendance of the former, i.e. competence and values, and set a personal example to negate the corrosive latter. Competence without moral and human values is trash.

In earlier sessions of this convention, issues like the importance of a global mindset, of innovation and of entrepreneurial managers have been discussed. I will not belabor these issues. Instead, I will try to flesh out some macro issues that I believe every manager, old or new, has to get to grips with in this world.

If any one had told us even two years ago that the US financial system would undergo a huge crisis, it is unlikely we would have paid heed to him. Some of the biggest names in the system, from Bear Sterns to Lehman Brothers, to Freddie Mac and Fannie Mae to AIG to Merrill Lynch, to Washington Mutual and now Wachovia, have gone through gut wrenching change, with some of these names likely to fade into oblivion. Even the two remaining & the largest Investment Banks, viz. Morgan Stanley and Goldman Sachs, had to bow to the inevitable and have had to become Commercial Banks under the supervisory control of the Fed.

If anyone had said that FDI from India would almost equal FDI into India would we have given that credence? This and much more is happening. Welcome to the brave new world, which is both flat and round.

Now almost any business, anywhere in the world, is affected by competitors, by events anywhere in the world. One can call this globalization. This throws up both opportunities and threats, not just one of them. I find it disconcerting when people pretend that only one of these exists. The drum beaters of the left only see the threats, the buglers of the right only see opportunities. We, as businessmen, unlike some politicians, have to be credible.

Big business, which is what many of those assembled here today, represent, is even more influenced by significant geo-political and geo-economic developments.

In the last two decades, global growth has been good, despite hiccups like the 1997 Asian Crisis, in an environment of low inflation and easy availability of low cost capital. Whosoever has made efforts to grasp the opportunities has benefited, be it China , SE Asia, India or Latin America . It has been a period of great hope and great improvement in the lives of billions of people. Of course, it could have been better, more equitable etc. , but it has laid to rest the ghost of government led growth and raised the sphinx of private sector led growth.

In 2008 however we are seeing the end of this era of high growth and low inflation, at least for a while. Growth is likely to be sustained, especially in developing countries, but under less benign conditions. We would have to work harder and more intelligently for it. Oil & perhaps commodity prices could continue to rise, protectionism in developed countries could increase, climate change will become much more of a real issue and ,above all, there could be much greater volatility in all of these. We have to also deal with the impact of terrorism and Sovereign Wealth funds.

The second major development is that geo-political centres of power are being realigned. Till 1990 we had a bi-polar world. With the disintegration of the Soviet Union, we had two decades of a virtually unipolar world dominated by the US . Now, with a resurgent China , Russia and India and an economically weakened and inward looking US, and an indecisive Europe, we will be in a multi-polar or no polar world, of shifting alliances between these powers, and countries like Saudi Arabia , Iran and Brazil . The rise of oil prices and Europe's dependence on Russia for gas supply, has introduced a new dimension in the global power game.

I have long maintained that this flux provides significant political and economic opportunities for India and that a policy of equidistance with EU, Russia and China , and a slight tilt towards the US , is in our interests.

The last two decades have also made it amply clear that the issue is not market or state ; this has turned out to be a false choice. The answer is market and state. I like to say, I am a free market socialist. Sounds like a contradiction. But virtually every country is veering around to this view, including the US .

In our country we still have too much of the state and not enough of the market. So, we need to move in the direction of greater role for the markets. Currently, we are over regulated and under governed. Ultimately we should be better governed, well regulated with essentially free markets.

Which brings me to the issue of the state of governance in our country, which does deeply affect business operations & interests.

The current situation is unsatisfactory. Coalition governments are here to stay at the centre and growing even in the states. The nexus between politics and criminals can continue to be ignored only at our peril. The quality of the political system & leadership, barring some notable exceptions, leaves much to be desired.

What is important for business is that it put its weight behind the right political forces and seek to influence them in a transparent manner. Either we can try and cut deals with the political system for our selfish ends and harm the economy and polity, or we can try to improve the system for all businesses. Business has by and large not covered itself with glory and our credibility with the public is low. The resistance to land acquisition for industrial development is a pointer to this perception.

Recently, I came across a book written a century ago by Gurudev Tagore called “Greater India”. It makes the important point that our civilization survived all the turmoil over centuries because in our society, the community provided for itself and did not depend on the government. Our dharamshalas, schools, water bodies were built and maintained by the society. Gurudev called for the reinvigoration of this Swadeshi, swavalambi Samaj concept. These essays predate Gandhiji's freedom struggle, but almost predict the program that Gandhiji brought to fruition.

The biggest contribution business makes in society is by running its business well. This is our core purpose and core contribution.

But as organizations grow large and influence the economic environment as much as they are influenced by it, we need to engage with the environment. This engagement can be said to be at three levels.

The first level is to be trusted as a company by society. To have legitimacy. We do not fully realize the importance of this. It is when things start to go wrong that the importance of public perceptions becomes evident. The quality of talent that we can attract & retain is also partially linked to such perceptions and realities. This is earned by the quality of our products and services, our corporate governance practices and by our CSR activities.

The second level has to do with influencing rule and policy making. This is very important in the long run. Rules and policies are not God given. It is in the interests of businesses to see that they are sensible. These can be from Octroi to labour legislation to the WTO negotiations. Businesses need to engage with policy making at all levels.

The third level is philanthropy.

I take this opportunity to exhort all of us to allocate 1% of our net profit to support social provision of services. This will include CSR activities and philanthropy. I am confident it would make a greater impact than the 30% of our profits that we pay to the government! At CII's national session in January this year, a CII initiative on health showed that it was able to reduce diseases by over half in selected villages merely by spending around Rs 20 lakhs in a drainage system for the village. Ideally, our associations like CII and AIMA should organize such efforts and identify good ideas and NGOs through whom this money can be canalised.

It is within this broad sweep that we must chart the course of our companies. I would in conclusion stress two points which I consider important.

First, we need to review our strategies. Do they adequately reflect the opportunities and threats faced by us? And the answer in many cases would be “not enough”. We still have miles to go before we improve our offerings and our geographical reach. We are at the dawn of a new era. Ten years ago, Indian MNCs was just a wild thought. Now, it looks doable but we still have mountains to climb. This is a challenge every competent manager cherishes.

Second, let us take a close and frank look at our organizational culture. Is it conducive for attracting and retaining talent, ethical behavior, honest feedback from all, disagreement with the boss? Does it reward the straight and punish the crooked?

Being able to disagree with the boss is to my mind a key requirement for sustained results. Some attribute the outcome of the IInd world war to the freedom to disagree within the British forces and the absolute obedience within the Germans.

It is when both these, strategy and organization culture, are robust that we can place big bets even on relatively weak market signals. The success of Microsoft, Google, Airtel can be attributed to the ability to do this. If we look at our own company's successes and failures we would realize the centrality of this feature. When the demand for a product is obvious, competition intensifies and margins weaken. It is when it is not obvious that we have the latitude to dig in to a market and realize the first mover advantage.

Quality of management is the key resource any organization has and therefore the core attribute which should be cultivated in it. I believe that it comes from the organisation's values and performance orientation. If these are in place, the rest can be put together. As leaders in organizations, all present here today have a make or break role to play in this process in their organizations.

The world is ours for the making. Ours for the taking. Let us make it and take it.

Thank you.

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