Published on: 8th October, 2019
Simon Sinek’s latest book ‘The Infinite Game’ should be celebrated as a breath of fresh air in the futile discourse around the rightful purpose of capitalism. In that context, one of India’s greatest sons – the late Verghese Kurien, the man who made Amul a powerhouse – deserves to be lauded as the greatest player of the ‘Infinite Game’. We can learn from Sinek & Kurien about how ‘just cause’ lie at the heart of great enterprises.
“…he was the man who revolutionised milk production in India, transforming the country from a milk-deficient place to the world’s largest producer (with 17% of the global total), and along the way drawing millions of rural farmers out of poverty…Few others had his tenacity, his drive, his sheer bloody-mindedness, to get government ministers and foot-dragging babus to yield to his ideas. No village panchayat, no landowner, no grasping corporatist, stood for long in his way. One minister of agriculture tried to remove him from the National Dairy Development Board, of which he was founder-chairman for 33 years; instead, the minister lost his own job. The saying in Delhi was, “Don’t touch Kurien.” Once engaged in a knuckle-banging argument, he never gave in; and he never gave in, of course, because he was right.” – The Economist’s obituary on Verghese Kurien, 22 September 2012 (source: https://www.economist.com/obituary/2012/09/22/verghese-kurien)
The Greatest Exponent of the Infinite Game….
Nine years ago Simon Sinek shot to fame with his incredibly popular Ted Talk. His books Start With Whyand Leaders Eat Last have been an inspiration for those looking to build businesses with purpose. In his latest book, The Infinite Game, he extends those principles for those who want to build businesses that outlast them. In an interview with Greg Thomas of Workday (see https://blogs.workday.com/simon-sinek-to-succeed-in–business-you-must-understand-the-game/ Sinek cites the example of the Vietnamese war which the Americans lost despite winning all the battles. Sinek says ‘It’s not so much that America lost the war, it’s that America was fighting to win and the North Vietnamese were fighting for their lives. America didn’t lose, they ran out of the will or the resources to stay in the game and dropped out of it.’ For anyone seeking to build a lasting business, it is important to distinguish the battles from the war and thus play Sinek’s infinite game.
In fact, quoting further from Sinek’s interview with Workday illustrates this point more clearly:
…Lived & worked in Anand, Gujarat
Sinek’s new book isn’t available in India as yet but reading the Workday blog reminded us of Amul and the man who engineered this remarkable enterprise’s rise to glory – Verghese Kurien.
Born into an affluent Syrian Anglican family in Kerala in 1921, Kurien excelled in academics & sport first in Loyola College in Chennai, then in the College of Engineering (Guindy) and, finally, in Michigan State University (where he was sent on an elite scholarship sponsored by the Government of India). Upon his return to India, in 1949 the Government sent him to work at a run-down creamery in Anand in what was then part of Bombay state and is now Gujarat.
Kurien hated his Government job in Anand and when he quit a few months later, Tribhuvandas Patel, a prominent political leader of local farmers, persuaded Kurien to stay and help run the Kaira District Cooperative Milk Producers’ Union Limited which came to be known popularly as Amul dairy). 25 years later this co-operative was merged into other co-operatives to create the now legendary Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF).
Arguably, the most striking example of sustained co-operation on an epic scale in India, GCMMF generated revenues in FY19 of Rs 330 billion (nearly US$5 billion). That is 3x as much as its closest competitor Nestle India’s revenues and that is only 20% shy of Hindustan Unilever’s revenues. On this measure, GCMMF is India’s second largest FMCG company.
Not only is GCMMF big, it grows much faster than its rivals. Over the past decade, GCMMF has grown revenues at 17% CAGR compared to Nestle’s 10% and HUL’s 9%. Over the last five years, the growth gap between GCMMF and its two largest rivals is even bigger! In key FMCG product categories such as butter, cheese and packaged milk, Amul has been the longstanding market leader in the face of sustained efforts by MNCs to break its dominance. GCMMF is also India’s biggest exporter of dairy products.
Growth aside, the scale on which GCMMF operates is astonishing. GCMMF’s daily procurement of milk is 23 million litres from over 18,700 village milk co-operative societies (which include 3.6 million milk producer members). The way GCMMF aggregates the milk produced by over 3 million families into the village co-operative dairy and then further aggregates that into the district co-operative which in turn feeds into the mother dairy has been studied by numerous management experts.
So how does GCMMF give a fair deal to its farmers, its management team, its 10,000 dealers, its one million retailers and its hundreds of millions of customers? At the core of this pioneering co-operative’s success appear to be four factors:
In Sinek’s world it does not matter whether an enterprise is for-profit or not-for-profit, private sector or public sector. What matters more is over what horizon the enterprise thinks, plans and acts. If these enterprises don’t think, plan and act over very long time frames, it is ‘game over’ for them regardless of how good their staff are, how strong their competitive advantages are, how strong their balance sheet is. Furthermore, to sustain any purposeful endeavour over long periods of time, the enterprise needs to be centred around a ‘just cause’ [whether it is for-profit or otherwise is a secondary distinction because customers are not bothered about the enterprise’s profits].
In India, we find a very small number of listed enterprises have the mindset to play the infinite game. Not only are most promoters short termist, they have no cause to pursue (the two issues are obviously linked). As a result they flit from one opportunity to other whilst constant being buffeted by free market forces and being preyed upon by bankers, brokers and corporate financiers.
To quote from my 2016 bestseller ‘The Unusual Billionaires’: “Most Indian companies tend to focus on short-term results and hence that makes them frequently do things that deviate away from their articulated strategy…these deviations take them away from the path they have to travel to achieve their long term goals…the willingness to resist the temptation of short-term ‘off strategy’ profits for long-term sustainable gain is not there in most leading companies,’ writes Rama Bijapurkar, a leading market strategy consultant…The typical promoter profiled in [“The Unusual Billionaires’] is patient and persevering, even bordering of the boring. He ignores short-term thrills based on flavour-of-the-month ideas. He consciously rejects aggressive forays into unrelated businesses…Such behaviour requires tremendous patience and a willingness to ignore the stock market’s proclamations regarding prevailing fads and fashions.”
Asian Paints, Berger Paints, Marico and HDFC Bank are amongst the companies covered in detail in “The Unusual Billionaires.” All four companies are a part of our Consistent Compounders Portfolio. You can see here how our portfolio is doing:
Verghese Kurien was ousted from his leadership role in GCMMF in 2006 by politically vested interests. (If you are interested in what transpired.The great man passed away six years later. Verghese Kurien’s legacy will outlast the vested interests who found it fit to stab this modern day Caesar in his Rome.
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Saurabh Mukherjea is the author of “The Unusual Billionaires” and “Coffee Can Investing: the Low Risk Route to Stupendous Wealth”.
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