Warren Buffet once said “What we learn from history is that people don’t learn from history.” After all, it is possible to build a future in business only by learning from the past and constantly adapting to the changing times. Evolution to change is what sustains life on earth and different species do it differently, even without human intelligence. So, it should not come as a surprise that we have extended the usage of our ‘sixth sense’ and cognitive skills, beyond biological survival to the survival and development of our businesses.
Business has been around for as long as civilization itself. For instance, the Sumerians had a strong business network as early as the late Neolithic Age and the first proper currency in Mesopotamia extends as far back as 3000 BC. The first ‘retail stores’ had sprouted in ancient Greece by 800 BC and markets were thriving with merchants selling their wares in the ‘Agora’ in the city centre. For some Indian context, the Varna System of the Vedic Age had an entire echelon dedicated to merchants and businessmen called Vaishyas who find mention in the Vedas and the Upanishads and even one of the greatest epics of Hinduism – the Mahabharata mentions Vaishya characters like Yuyutsu, half-brother of Duryodana, the leading antagonist of the epic and till date, caste plays a not so insignificant role in deciding profession. Some current examples include the founders of Flipkart, Myntra, Reliance, Adani Group, Birla Group and Jindal Group. Clearly, the Business Environment of today has its roots in history and thus is quite different from region to region.
It would be an eye-opener to understand the role of history in shaping the business environment across geography, by comparing India and the United States of America for the vast difference in their economies and business culture. The repeated references to Walmart and Big Bazaar (being the hypermarkets with the largest network across their respective countries) would be helpful to look at the general behavioural patterns and serve as a rudder in steering the course of this article.
Walmart, the brainchild of Sam Walton is a product of the Discount Merchandising Departmental Retail Business that evolved after World War II due to rising prices and the demand that built up for goods over the years of the war. The main strategy leveraged by Sam Walton was to embed these stores in the suburbs and rural areas that were being ignored by major retailers right from the beginning, i.e., the first Walmart store was opened in Arkansas in 1962, a very rural state till today. Walmart has grown dramatically since then. This can be attributed to the fact that Walmart understood what was being demanded at a particular age and time by the American populace. In the words of Sam Walton himself, “You can’t just keep doing what works one time, everything around you is changing. To succeed, stay out in front of change.” Unlike Walmart, which had to survive in an industry teeming with a lot of other stores like Target, K-mart etc. which were all mostly products of the afore-mentioned Discount Merchandising Departmental Retail Business, Big Bazaar actually brought organized retail marketing to its country, in fact it was the first retailer to conceptualize and create a fusion of the look, comfort and quality of modern retailing with the touch and feel of Indian bazaars in the year 2001. It was a tactical time for Future Group to propel its stores as the effects of the economic reforms of the previous decade on lifestyle were beginning to show and it would not be long before the foreign MNCs recognized India as a potential retail market and harnessed the opportunity.
This was an example of how history and not just the prevailing business conditions affect major decisions in an organization.
At this juncture, we might argue that history is always important while setting up a business but it might not have a notable role beyond that. But it is the very same history that comes to our aid when we try to explain why Big Bazaar could not achieve the global status that Walmart could. Firstly, the brand of a developed country helps to a great extent, and countries being developed or developing stem from history. But that is not all. Indian MNCs suffer from a negative halo because of an economy that is slowing down (even before the Covid-19 pandemic) and serious corruption scandals. Trust in Indian MNCs has been the least in European nations for the larger part of the decade compared to other emerging markets like China, Mexico or Indonesia with most Chinese brands like Lenovo and Air China faring better.
Is this an example of history repeating itself? European countries have had to decide between India and China for a long time when it came to trade. This has been evident right from the 18th century when European powers tried to gain a foothold of the then richest economies of the world, through trade. Though the dimensions of the two issues at hand are different, the essence of it is still the same. In the competitive global financial stage, it is possible only for a few select companies (read countries) to be benefitted and the others have to bear the brunt of a missed opportunity to internationalize. This is an important attribute in Big Bazaar’s failed attempts in global expansion. Having said that, the role of other factors like late entry into developed markets like Singapore and Dubai are also not to be undermined.
All this paints a picture of Walmart being the epitome of successful and sustainable retail business. But is it true? The innumerable public protests and lawsuits filed against the company point otherwise and this article would be incomplete without examining the Corporate Social Responsibility of the retail giant especially with the cry for sustainable entrepreneurship growing louder with each passing day. In this regard, Walmart has been far from successful by aggressively consuming land to increase its store footprint and lagging behind on using cleaner sources of energy. Another detrimental effect is that it has been driving out the small retailers and hurting the local communities in the long run. A problem of this magnitude has never occurred in India. Again, history at play! Mandis, Melas and roadside peddlers have been part of the Indian retail landscape since centuries by making essentials available in inaccessible areas. And even today, retail giants like Big Bazaar co-exist with such unorganized retailers while they have almost been wiped out in the USA. Another significant factor is that most of the peddlers belonged to refugee groups and had little social power unlike in India where they are ethnic Indians.
But is CSR something that originated recently? Is it even a western concept? The answer lies in the grandma tales that we all love, or at least in the Indian grandma’s. CSR is deeply embedded in our roots – it is very similar to the concept of daan- charity. Though the connection might not seem deep enough or even absurd at first, there is more to it than what meets the eye. Ancient Indian practices have always advocated for daan by the rich and those in power, especially kings. Charity to the poor in the form of cows, food (annadaan), land etc. were an indispensable part of yajnas like Ashwamedha, Rajasuya etc. which were essentially conducted to establish supremacy. This was perhaps a subtle and symbolic attempt to make the high and mighty understand that with such power comes social responsibility, i.e., upholding ‘Dharma’. CSR bears an uncanny semblance to this Indian concept. In fact, it took World War I (and the subsequent establishment of the ILO) for the West to appreciate peace and social justice against a backdrop of ruthless exploitation and violence. And even today, CSR is seen more as corporate image building and a PR activity than a social responsibility. Euphemistically, the West only re-discovered a concept that is inherently Indian.
It is a good time to ask ourselves now, do we often ignore how history shapes the present? Do we conveniently forget history at times, when a seemingly new concept unfolds? It is clear now that history can have consequences in business and society even after decades. To be able to understand today and be prepared for tomorrow, we need to look at yesterday. Let’s try to appreciate history and prove Buffet wrong!
LEXICON
CSR – Corporate Social Responsibility, The term refers to practices and policies undertaken by corporations that are intended to have a positive influence on the world. The key idea behind CSR is for corporations to pursue pro-social objectives.
ILO – International Labour Organization, A United Nations agency whose mandate is to advance social and economic justice through setting international labour standards. Founded in October 1919 under the League of Nations, it is the first and oldest specialised agency of the UN.
MNC – Multinational Corporation, An international corporation that derives at least a quarter of its revenues outside its home country.
PR – Public Relation, the practice of managing communication between an organization and its publics.
Madhumita Mohan
Writing Mentorship 2021
References
https://www.freepressjournal.in/cmcm/indian-vs-american-business-culture
https://www.bigcommerce.com/blog/retail/#the-history-and-evolution-of-retail-stores
https://economictimes.indiatimes.com/news/company/corporate-trends/why-indian-mncs-find-it-difficult-to-gain-developed-worlds-approval/articleshow/25516443.cms