A wake-up call for business leaders

All pollsters and commentators had egg on their faces on 11/9 when Donald Trump was declared the victor of the US presidential election. They had got it horribly wrong. Clearly they did not know what was going on in the minds of very large numbers of American citizens, enough to elect a very unusual person, who had never been elected to any post, even in a local government. Trump is a complete outsider to the political establishment and the world of political pundits and pollsters. Clearly the pundits had not seen the signs of deep anger amongst US citizens with the narrative of globalisation that has driven government policies and business strategies for the past 25 years, and citizens’ disgust with politics as usual.

The pundits and pollsters can be forgiven. All of us ignore evidence that goes against our deep convictions. In fact, we unconsciously create filters to reject the small signs that could alert us to changes in our social and physical environments. NASA’s Nimbus satellite did not notice the hole in Earth’s ozone layer. The satellites had been circulating the globe for years. But only when scientists on a ship in Antarctica proved, with other evidence, that there was a dangerous hole, NASA went back to its satellites’ records to see how they had missed the evidence for so long. They found that their systems had been designed to filter out, as statistical noise, from the masses of data, the many small signs that would not fit the scientists’ theories of what they expected to see.

Trump is a complete outsider to the political establishment and the world of political pundits and pollsters. Clearly the pundits had not seen the signs of deep anger amongst US citizens with the narrative of globalisation that has driven government policies and business strategies for the past 25 years, and citizens’ disgust with politics as usual.

We look for what we want to see. In 2004, the Indian business establishment, along with the government, saw India Shining. They saw their own glasses filling faster. Declaring that India was shining, the government confidently called for the people’s endorsement. However, the glasses of many millions in India were not filled enough. They realized that the government and its business supporters were out of touch with them. And so, in an election whose outcome shocked many, they threw out the shining ones.

The day after the election results were announced in India, I was to address the India summit at the Kellogg School in Chicago, to explain India to business people and experts from the USA, and invite them to invest in India and provide us with solutions to our problems. I was as shocked as everyone in the room with the election result. How could I pretend to explain India to them? So I began by asking how many amongst the two hundred people in the room had expected this result. Not one hand went up. I asked how many had met someone in the previous month who had said this could be the result. A few hands went up. I asked how many had read anything in journals that would have explained why we could expect such a result. Hardly any hands.

Clearly, I said, hardly anyone in the room, including even myself, knew what was going on in India. There must have been people who knew something we did not know, and who were seeing what we were not seeing. But, we were not meeting them, listening to them, or reading them. We had become isolated in a community of ‘People Like Us’. I therefore said that I would not pretend to explain India to the people in the room. Rather, I would now like to listen to people not like us to be able to understand the Indian reality.

The US election was not about which political party the people preferred. Trump and Sanders were outsiders to the parties. Yet both went very far in the elections, one finally getting elected as the next US President. Both tapped into anger with the business-political establishment, and anger with the effects of globalization of financial markets and free trade on the lives of people while the rich were enjoying and celebrating the benefits. Many say that governments (and economists and business people), have not done enough to sell the benefits of globalization and free trade to the people. They are urging the Establishment to make the case again and harder. I fear they will make people even angrier.

People know the statistics. That hundreds of millions of people have been lifted out of poverty in the last twenty-five years. They know that they can buy products they could not buy before, and at lower prices too. Such statistics do not tell the whole story of globalization. The rich have been getting very rich. Inequality has been increasing.  MNCs have been asking governments for lower taxes for giving countries the privilege of having them come to their countries. Some have been avoiding taxes altogether. And too many rich people have hidden their gains in tax havens. Moreover, it is not right to attribute poverty reduction entirely to globalization and free trade. Governments have invested public money in education and health, as China did even before it joined the global game.

People trust those who listen to them, rather than those who, from high velvet lined pulpits, preach to them. Governments and business leaders too must listen more to the people, not only to the pundits. Corporations want governments to get out of their way. Therefore, they want people to trust that the corporate way is better than the government way for them. With the backlash against globalization, it will no longer be easy for governments to make the case of big corporations to the people. Corporations must themselves win the trust of people. By giving 2% of profits as CSR businesses cannot buy the trust of people. They have to earn it by listening to the people, and to the troublesome NGOs who take up the causes of people. To win trust, they must change their business ways to improve the world for everyone, not only for investors in corporations.

(The writer is a former member of the Planning Commission, former Chairman of the Boston Consulting Group and author of Discordant Democrats: Five Steps to Consensus)