Tarun Khanna is the Jorge Paulo Lemann Professor at the Harvard Business School (HBS), where he has sought for two decades to study the drivers of entrepreneurship in emerging markets as a means of economic and social development. At HBS since 1993, after obtaining degrees from Princeton and Harvard, he has taught courses on strategy, corporate governance and international business to MBA and Ph.D. students and senior executives. For many years, he has served as the Faculty Chair for HBS activities in India and South Asia. He was named the first director of the university-wide The Lakshmi Mittal and Family South Asia Institute at Harvard in the fall of 2010.
Outside HBS, he serves on numerous for-profit and not-for-profit boards in the US and India, including AES, a Washington DC headquartered global power company, and India-based Bharat Financial Inclusion Limited (BFIL), one of the world’s largest firms dedicated to financial inclusion for the poor. He is a co-founder of several entrepreneurial ventures in the developing world, spanning India, China, Southeast Asia and the Middle East. Recently, he co-founded Axilor, a vibrant incubator in Bangalore. In 2015, he was appointed a Trustee of Boston’s Museum of Fine Arts. He has recently published the book - Trust: Creating the foundations for Entrepreneurship in Developing Countries. In our conversation we spoke about how we can learn from some of the thinking in Strategy to inform how we think about our careers. We then get into discussing the book and explore what he means when he says the entrepreneurs in developing economies should create the conditions to create. We talk about what that means in terms of Leadership and how one could go about measuring Trust that is being built in the system.
This conversation is likely to be relevant to Entrepreneurs, Investors, CEOs and Advisors in the Start-up ecosystem in India and other developing economies.
Published in Dec 2018.
Tarun talks about developments in the field of Strategy and maps that to how individuals should think about their careers. He acknowledges the influence of Prof. Ben Jones (of Northwestern University) in shaping his thinking here. He talks about the fact that the world of knowledge is growing exponentially and we will know less and less (as a percentage) of what is to be known. He discusses how people should think about specialization and collaboration in this context and shares his perspective on the mind-set with which we should march into the future that can feel overwhelming.
Tarun discusses how he has crafted his self-assigned space of thinking about issues around creativity and entrepreneurship in Developing countries. He talks about being known as the “clearing house” for something. He also talks about the tension between access to intellectual capital at Harvard and being located closer to the action that he is passionate about. He later goes on to discuss the allocating mechanism he uses to fill his time when he visits the various markets.
Tarun makes the case for why it is critical for entrepreneurs in developing economies to build trust in their local economies. He contrasts the differences between a start up in Boston and its counterpart in Bangalore, Bogota or Beijing. Given the relative differences in maturity of institutions that provide support and the depth of talent in some of the associated areas, entrepreneurs starting up in emerging economies might have to deal with a lot of friction and Tarun makes the case for building trust for it to act as a lubricant in those circumstances.
Tarun talks in detail about the mind-set with which entrepreneurs need to think about creating the conditions to create. He talks about the example of Charles Shao and how he battled the decline in trust in the milk industry in China. He discusses how Charles gave away IP (which seemed counter-intuitive in the short run) to widen the profit pools of the industry as a whole and thereby improve the outcomes of his business.
Tarun talks about variations in how companies and entrepreneurs think about returning capital to the shareholders and talks about the examples of BFIL (earlier SKS Microfinance) and Banco Compartamos to illustrate how you could have very different approaches but still end up building a successful enterprise over the long run.
Tarun talks about how entrepreneurs (keen on having impact at scale) in developing economies should think slightly differently from their counterparts in more developed ecosystems like Silicon Valley. He urges them to include trust-building as part of the objective function in addition to the business metrics they are going after in building out their enterprise.
Tarun talks about the realities of building and measuring trust. He shares some of his thoughts on how entrepreneurs could take his central idea of creating the conditions to create and bring it to life when they work with multiple stakeholders. He urges the entrepreneurs to pick one stakeholder group and build trust with them as a starting point before looking to build trust with the entire system which can seem like a daunting task.