Softscaling: A New Growth Strategy for Volatile Environments

By Ritu Agarwal and Peter Weill

In an increasingly volatile world what were tried and true business maxims yesterday probably won’t work today. Just think Blockbuster and Borders. To understand how to thrive in volatile business environments we studied five top performing Indian companies – that were conceived and now thrive in chaos. What do the names Airtel, Hero Honda, HDFC, Tata Motors, and Max Healthcare have in common? At first glance, not much. Their businesses span the gamut from telecommunications to vehicles to healthcare services. Their products range in price from a less than one cent (per second cost of a mobile telephone call) to thousands of dollars. But look beneath the hood and the journey of these companies starts to reveal a common approach. Their managers have figured out how to delight customers in fast growing and competitive environments. We call the approach they use Softscaling – a powerful left and right brain combination of quantitative optimization and emotion linked together with data-informed empathy. The result is spectacular growth rates, industry leading profits and delighted customers.


Many will recognize these names as world-class industrial leaders from India. Yet what is less known about these companies is how they got to where they are today. In this article we describe the Softscaling strategy and how it enabled these companies to become global contenders. Growing in volatile environments requires more than optimized business processes, more than an emotional connection to the customer and more than great data pored over and processed with great empathy – it requires all three.

Softscaling – a powerful left and right brain combination of quantitative optimization and emotion linked together with data-informed empathy.

Softscaling for Exceptional Growth

Observers of India will tell you that the Indian economic environment in the last two decades has been volatile and chaotic. In 1991 the government of India introduced an aggressive set of reforms targeted at spurring international investment, deregulation, and increasing privatization of industry. The business landscape and environment changed overnight. A formerly closed economy was suddenly an attractive place to invest. Foreign capital flowed and foreign direct investment increased from US$107M to $4,101M over the ten years to 2001. All of a sudden the rules of business changed. The reforms created unprecedented business opportunities but also challenges. The infrastructure – roads, telephones, and power – was not ready for the increasing demand. The setting was dynamic, volatile, and unpredictable but, at the same time, offered tremendous opportunities for companies to start capitalizing on the growth.

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