How the outside-in perspective of expat leaders can help companies
As companies transition to the next phase of growth, they require versatile leadership styles
In 2010, Carl-Peter Forster, president of General Motors (GM) Europe, was headhunted for the position of CEO, Tata Motors. With his proven track record at GM and BMW, it was a logical choice for Tata Motors, given their move into the luxury automobile segment through the Jaguar Land Rover (JLR) acquisition. By the time Forster left 18 months later, he had revitalized Tata Motors and put in place a turnaround plan that continues to pay dividends to this day. The impact he made led the company to retain him as a non-executive director.
There is an established history of companies turning to expat leaders for specific skills at a specific time. In fact, over the last two decades, the hiring of expats for leadership roles has increased, with approximately 20% of Indian companies having an expat leader on their management teams. This phenomenon is not exclusive to India. An expat leader, particularly in Asia, has often been the go-to solution when companies set out to transform a struggling business or enter new markets.
As companies transition to the next phase of growth, they require versatile leadership styles. Expat CEOs bring in an outside-in, rather than an inside-out perspective. Typically, this includes introducing and entrenching best practices and creating succession plans across an organization. Their rich and diverse experience are huge differentiators in gaining the competitive advantage. This was exemplified in the case of Carlos Ghosn at Nissan; his efforts in reversing the doom loop resulted in his appointment as CEO of the larger Renault-Nissan alliance.
Regardless of industry, an analysis of the trend of companies appointing an expat leader reveals the apparent rationale: niche expertise, relevant change management experience, and, perhaps most important, the courage and resilience to execute.
Typically, multinational companies look at executives from their overseas offices to lead new businesses in India. While there is an element of risk for a leader in crossing borders and cultures to captain the ship, the risk comes with significant potential reward.
Recently, when India needed to upgrade its manufacturing technology to international standards, the auto industry brought in global leaders to help with the transformation. Kenichi Ayukawa, a Suzuki veteran, took over the reins at Maruti Suzuki in 2013 amidst labour issues and declining market share. Today, Maruti has expanded its product portfolio, has a retail channel for premium products, and accounts for one in every two passenger vehicles sold in India.
The aviation industry also has a history of bringing in experienced hands from overseas. IndiGo recently announced that after a decade in charge, Aditya Ghosh was being succeeded by Gregory Taylor. As it embarks in a new direction, Taylor’s industry experience and knowledge will be pivotal to realizing their ambitions.
As real as challenges may be—cultural fitment, understanding each market’s way of doing business, local sentiments—they are best addressed when looked at as the precursor to opportunities in transforming the discomfort of uncertainty into a “win-all” proposition. The global leader’s maturity curve is expected to serve them well as the objective of their mission takes centre stage.
Along with drawing up goals and responsibilities, companies must work closely with the diversity of the local teams. How should success be co-created? Who can best deliver this integrated success? What would be the ideal tenure for the incumbent? When such rigour is applied, the right expat leaders emerge. Fortunately, in terms of orientation and empowerment, Indian organizations are increasingly open to bringing in external leaders and raising the bar on governance.
A few common attributes of successful expat CEOs emerge—a successful track record of performance in multiple markets, familiarity with the nuances of bridging cultures in new geographies, adeptness at navigating regulatory mazes and managing market dynamics and agility. The true triggers of success are the soft skills a new leader brings to the table. Add courage, resilience and optimism and the expat leader is well-positioned for success.The final measurement of success is effective succession planning.
As India moves into the next phase of its evolution as an economy, cost arbitrage, which brought the world to it, is being replaced by quality arbitrage. And, as the push to “Make in India” increases, the opportunity now is to take India to the world. For the expat leader with the right qualities, the country offers an increasingly compelling challenge and a unique opportunity for both personal and career growth.
Paul Dupuis, is managing director and CEO, Randstad India.