Like many others I have written for years about the inability of governments to run businesses. This is because of the procedural mindsets, lack of top management commitment because of short tenures, and absence of customer orientation. As a regulator, I have commented on the difficulty of regulating public enterprises because of their ability to get their owners (governments) to prevent obedience to regulatory orders, and reduce the regulator’s authority.
The lack of customer orientation makes government ownership incompatible with management of consumer goods and service businesses like airlines, hotels, soaps and detergents, food processing or information technology. Government managers invariably make them inefficient and uncompetitive.
The Mysore Soap factory could have been a market leader, and very profitable. Its stodgy marketing and packaging, lack of innovation in product diversification and design, and disdain for researching consumer needs and meeting them, have made it a minor player in this fast growing market.
Modern Bread was started at Jawaharlal Nehru’s instance to wean Indians from rice to wheat in the 1950’s. Ultimately it had to be sold to Hindustan Lever.
In the 1950’s government started a magnificent hotel in Delhi, the Asoka. It was red sandstone, spacious and stately, with excellent restaurants and good service. It took only a few years before the hotel smelt musty, attendants blatantly asked for baksheesh, the rooms were dirty, infested with rats and cockroaches. When Zubin Mehta brought the New York Philharmonic Orchestra to Delhi, all refused to stay in the hotel after seeing a few rats in the corridors. The Delhi Janpath was the low priced, centrally located government hotel. It is now decrepit, a foul place to stay. Similar were conditions in the Metropole in Mysore under Karnataka government ownership or even now, Meghalaya government owned Pinewood in Shillong. The customer does not come first in government hotels.
Among the earliest I T companies in India were the Electronics Corporation of India and the Computer Maintenance Corporation. The former withers under government ownership when later entrants like HCL, Wipro, etc, have thrived. CMC has become a star in the TCS portfolio after it was sold to them.
Air India and Indian Airlines became government companies when private airline companies were nationalised in the days of “socialism”; really controlled by the bureaucracy and politicians. All the state owned airlines have lost money, are grossly overstaffed, with little training, slovenly and sullen. The planes are badly maintained in engineering and comfort. The interiors, pillows and blankets are dirty, and toilets stink on long hauls. Invariably there is neither water nor paper. Cabin crew does not clean the plane when airborne. The food is unimaginative, poorly presented, lukewarm, and sloppily served. Air India under JRD Tata was a tiny airline with a world class reputation. Crew were carefully selected, repeatedly trained and supervised effectively. Not any longer. Indian Airlines became No 4 in eight years. Air India has few non-Indian passengers. Frequent Indian fliers detest it. It survives on the Gulf monopoly, Haj pilgrims and Indian families desiring an Indian ambience.
New private airlines like Jet and Kingfisher kept high standards from the outset and sustain them. They spend time and effort imagining the customer experience from ticketing to checking-in, terminals, in the sky and arrival. The experience is consistently good irrespective of the route. All employees, ticketing and check-in staff, porters, cabin and flight crew, in person or otherwise, provide a uniformly warm experience to the customer. Management is customer oriented and determined to make each customer experience memorable. Owners and managers have thought through the information systems, customer research, training, monitoring and supervision.
For government owned businesses, satisfying customers is not their core purpose. The companies provide high profile jobs for which bureaucrats have neither training nor inclination. A successful private businessman like the present Union Civil Aviation Minister could have brought in professionalised management and leadership. But like his predecessors, he has succumbed to bureaucrats who will run it even after the two airlines are merged and billions spent on buying new planes. New aircraft equipment cannot make a good airline as the best equipment and buildings cannot make a good company. Leadership and mindsets through frequent training at all levels of employees make the difference.
The new airline that Praful Patel is creating will suffer the fate of its predecessors. New aircraft will deteriorate, with poor maintenance, air crew will remain sloppy and sullen and ground handling of passengers and baggage will never reach the levels of private airlines. The new airline will be a larger white elephant on the government budget. Even the “reformer” Prime Minister and Finance Minister persist in throwing good money after bad by this merger, without transforming leadership, management and employees.
