A colleague was bragging to me today about his company’s 3% growth. "We’re doing great" he said "given this lousy economy." Great? 3%? I looked at him and said "Great is Genpact" (see chart here.) Genpact announced quarterly results yesterday (read press release here). First quarter revenues of $234million were up 33% versus first quarter 2007. Net income of almost $20million was up almost 10X (1,000%) versus last year. Operating margin was up to 15% versus 12.2% last year. Now, that’s growth!
"Genpact?" he asked. I reminded him it was the GE company started in 1997 to do back-office operations. "Oh yeah, that’s the Indian company. That’s not a fair comparison." "You’re right I said, let’s look at what they faced developing their growth:
- The company has no sales in its local country – it is 100% export dependent
- Over 80% of sales are in the "lousy economy" U.S.A.
- The company is located in a country with terrible infrastructure problems – there is no potable water, power outages are common, bad roadways inhibit worker commuting, terrible public transit hurts commuting, the country produces no oil – so it has limits on auto usage – and almost no worker can afford a car
- Most employees cannot obtain visas to visit the country where most sales occur
- The country has one of the greatest poverty rates in the world, and struggles with education, health care and all other poverty-based problems
- It is based in a country with almost no foreign exchange, so it cannot import hardly any components, nor import managers from rich, developed countries
- The government is regulation-happy with controls and limits on practically everything
- Costs are going up faster than revenues – because the U.S. dollar keeps going down in value dropping revenues while the costs of people paid in Indian rupees keeps going up!
It really isn’t a fair comparison. Compared to my friend, he has all the advantages, and Genpact is beleagured with phenomenal problems. For most American’s facing that list of challenges (plus more) they would give up before even starting. Yet, my friend felt 3% growth was "great" – meanwhile Genpact blew the doors off almost every U.S. company last quarter – and certainly its competitors like IBM, CSC, EDS and Accenture.
When we Lock-in, we start making excuses for why we don’t grow. We blame our historical marketplace, or our historical customers, or our historical suppliers, or our historical investments – we blame all our old decisions and then say it’s OK if performance – well – sucks. To grow, to exceed expectations, requires first getting the right mindset. Instead of looking for reasons to explain bad performance the managerial mindset must be "what do I have to do to exceed expectations? What would someone looking to the future do to grow fast and make higher returns?" We have to get out of Defending & Extending our past, and being satisfied with whatever results that D&E behavior produces and instead focus on the future and be willing to do the things necessary to GROW.
Kudos to the leadership at Genpact. Quarter after quarter the company keeps growing and making better returns. If readers don’t know why they are successful, best to study them. It’s not a simple story of "they are in India". Hopefully readers realize that being in India does not create "no-way-to-lose bliss." Business as an Indian company competing offshore is cutthroat and must overcome a multitude of challenges. It’s the skill of Genpact’s management to overcome challenges while staying focused on high-growth opportunities that sets Genpact apart from competitors. The markets where Genpact competes are open to everyone – Genpact is just better at seeing the opportunities earlier, keeping themselves Disrupted to try new things and maintaining White Space to develop new solutions that allows them to keep exceeding expectations.
So the next time you want to talk about your growth – better check results at Genpact before you start bragging. And if you really want to grow, better start setting your own bar much higher and managing for the future. Succeeding is about getting out of the D&E Mindset and following The Phoenix Principle – not being in the right location.