Management

Navigating Corruption: A Case Study from India

In the face of corruption in India, wise business leaders must decide what is negotiable — and what isn’t.

November 22, 2022

Is it possible to be virtuous in a sea of corruption? Indian entrepreneur Rajah Koppala of Avis Vascular Centers is trying to do just that. Hear how he and his team are strategically and realistically fighting against the tide of corruption. And, gain insights from Saumitra Jha, an associate professor of political economy at Stanford Graduate School of Business, on what it takes to understand and navigate challenging ecosystems.

Rajah Koppala trained and practiced medicine in the United States before returning to India in 2013 to create a chain of vascular surgical centers which he calls “mini hospitals within hospitals.” As chairman and managing director of Avis Vascular Centers, he had to learn a lot about operating, quite literally, in a very different ecosystem. In the healthcare industry, much of the corruption is rooted in immense amounts of regulation and red tape. For every license that’s required, 23 in Koppala’s case, there’s an interaction with a public official, and therefore an opportunity for corruption. Koppala has decided that some things are negotiable and others aren’t. In this moral gray area, he has had to acknowledge what’s realistic for his business and has developed a set of consistent, intentional criteria to help him decide when he’ll pay and when he won’t.

“You just have to understand corruption is not going to go away. This goes all the way up to the very top. Everybody has their own self-interest. And to a degree, when the legal system is a little weak, when the wages of a lot of these officers is very low to start with, headwinds make this happen,” Koppala explains.

Saumitra Jha advises that there are certainly risks to giving bribes, even small ones, because once people become aware, he says, “They can ask for more and keep holding you up.” He advocates for strong, consistent leadership, making sure your employees are on board with “doing the right thing,” and finding partners in your industry to face obstacles together.

“Oftentimes in economics, companies might be competing with each other in an industry, but at the political level, they have a lot in common. And so thinking about how to do things at an industry level can often be much more beneficial,” Jha explains.

Rajah Koppala has also learned that relationships with public officials really matter. He encourages his team to have a cup of coffee and talk to the officials so they understand the gravity of the law that’s being broken, while still treating them with dignity. “Relationships equal money,” he says. “When you want to pay less, maintain a relationship.”

Listen to Koppala’s first-hand experiences navigating corruption in India and Jha’s strategies for surviving and thriving in these challenging and turbulent waters.

Grit & Growth is a podcast produced by Stanford Seed, an institute at Stanford Graduate School of Business which partners with entrepreneurs in emerging markets to build thriving enterprises that transform lives.

Hear these entrepreneurs’ stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.

Full Transcript

Rajah Koppala: You can’t stand here and say, “Look, I followed, let us say, the drug control law or whatever.” And I can’t stand here and say that I will not be a signatory to this. It’s not possible for an Indian businessman at my scale, for sure.

Darius Teter: Corruption isn’t black and white, but when the environment is fluid, where do you draw the line?

Rajah Koppala: I can give this in writing, and you can survey the cases of SMEs who are less than 10 million, everybody would have to get through this.

Darius Teter: Welcome to the second season of Grit & Growth from Stanford Seed, the show where Africa and South Asia’s intrepid entrepreneurs share their trials and triumphs with insights from Stanford faculty and global experts on how to tackle challenges and grow your business.

As we were interviewing for our last episode, we were inspired by a question from one of our guests: Is it possible to be an island of virtue in a sea of corruption? After talking so much about corruption, we thought it might be nice to take a little break and go visit this island of virtue to see for ourselves. After all this podcasting, frankly, I could use a vacation. I could sit on the beach, enjoy the sun, play in the sand, maybe even get a pina colada. But it turns out that even this island has its problems. And it’s hard to relax when there’s something out there, lurking under the water.

You see, in our previous episode, we discussed corruption on a systemic level, how it works, and how you can fight it. But the truth is, many business owners don’t get to engage with systems. They have to deal with corruption operationally. They’re actually swimming in it, and down there things are complicated. So today we’re exploring that question: Can you be an island of virtue in a sea of corruption? And we’re doing it in India with a case study of a business that has been navigating this issue for many years.

Rajah Koppala: Hi, I’m Rajah Koppala, the chairman and managing director of Avis Vascular Centers. We are a chain of vascular surgical centers. We’re more than a clinic; we sublease areas of our hospital to run a mini hospital in that hospital. We call them a store-in-store, for lack of a better word. But we have now 18 centers spanned across India, mostly in South India, but pan-India right now.

Darius Teter: Rajah studied and practiced medicine in the U.S. before returning to India in 2013, and the Indian business ecosystem took some time to get used to. There are some organizations that track corruption around the world, and one of them produces something called the Corruption Perception Index, and that’s where they interview thousands of people, including business people, and ask them, “What do you perceive is the level of corruption in India?” And they have a scale from zero to a hundred where zero means utterly corrupt, just nothing happens without corruption, and 100 means everything operates under perfect legal conditions. I’m just curious: Where do you think India lies? What do you think India’s score is?

Rajah Koppala: I would probably put it around 25, maybe. I have seen worse. When I came back from the U.S., I was shell-shocked. I was like, “This is ridiculous.” And then I’ve since moved on. I would probably rate it somewhere between 25 to 30, at this point, yeah.

Darius Teter: Yeah, that’s true. It’s all relative, right? Well, the actual score for 2021 is 40, so not quite in the middle. And then if you rank all the countries that they survey, they survey 180 countries, India’s right in the middle there, too. They rank 85 out of 180 countries on the Corruption Perception Index. To put Rajah’s story in perspective, we turned to someone who thinks very seriously about these issues.

Saumitra Jha: On that, if I may, I want to share a joke a Pakistani friend of mine told me.

Darius Teter: That’s the voice of Saumitra Jha.

Saumitra Jha: Being from India and having a friend from Pakistan, we always used to make fun of each other. So one day to pull his leg, I said, “Well, you know, Shiraz, Pakistan is the second most corrupt country in the world according to Transparency International.” He said, “Oh, actually we’re the most corrupt, but we bribed them.”

Darius Teter: I love that.

Aside from comedy, Saum has another job.

Saumitra Jha: I’m Saumitra Jha. I’m an associate professor of political economy at the Graduate School of Business at Stanford University, as well as a senior fellow at the Freeman Spogli Institute for International Affairs.

Darius Teter: What is the importance of political economy at a business school?

Saumitra Jha: I think it’s very important. I might be a bit biased, but I think it’s being aware that a lot of the things that we think of as purely driven by markets are actually driven, to a large extent, by politics, as well. Think about food prices: that’s driven by the U.S. Farm Bill and EU agricultural policy or price supports in many developing countries. Or think about labor: that’s driven mostly, to a large extent, by immigration laws and restrictions of mobility. At some level, all markets are connected with politics. I think it helps us become better at strategy and helps us become better at trying to achieve the objectives of our organization, which I think is to change organizations and change the world.

Darius Teter: What Saum says is true all over the world, but it looks different depending on where you are and what you do. When Rajah came back to India, he had to learn how to operate in a completely different ecosystem. You came from the U.S.; you’re a bit naive, as you said. You weren’t really clear on how to navigate the system. You made some mistakes. What are the big lessons that you’ve learned over the years in managing this type of risk?

Rajah Koppala: Well, number one is that you cannot be an island of integrity and virtue in a sea of corruption and mediocrity. You can’t stand here and say, “Look, I followed, let us say, the drug control law or whatever, whatever.” And I can’t stand here and say that I will not be a signatory to this.. It’s not possible for an Indian businessman at my scale, for sure. I can give this in writing and you can survey the case of SMEs who are less than 10 million. Everybody would have to get through this.

You just have to understand this is not going to go away there. This goes all the way up to the very top. Everybody has their own self-interest. And to a degree, when the legal system is a little weak, when the wages of a lot of these offices is very low to start with, there are a lot of factors, headwinds that make this happen. It’s not you alone. It’s not some guys giving money because they want to give money. There’s a background to that. So try to understand, be more empathetic to the problem, and then it will probably be easier for you.

Darius Teter: I want to make sure in this conversation we don’t excuse all other countries and just pick on India, because I think Americans can be a little bit naive about the gazillion ways in which contracting and insurance industries and other things —

Rajah Koppala: Very, very slippery. Even medical practice in the U.S. can be very slippery.

Darius Teter: One of the things … you mentioned that before you went to India and set up your business, you were a physician in the United States. And so how many years did you work in the U.S. as a doctor?

Rajah Koppala: Seven years.

Darius Teter: Seven years. I’d love to hear whether you identified or observed similar types of challenges in the U.S. medical system.

Rajah Koppala: Oh, yeah. I’m never a man to mince my words. It can get pretty close. It can be almost incestuous at times, as well. We had the other extreme back when I was training, where such expensive meals, which a resident can’t even think about, were sponsored by these companies. I remember, I think the bill for each person was 300 bucks a person or something.

Darius Teter: Wait, we’re talking about a drug company hosting doctors for some kind of a so-called conference, right?

Rajah Koppala: Conferences. We’d have cruises. That was a funny part. The cruise would be a four-day cruise for you and your wife. All day they would talk about the drug at various ways; but you’d be in the swimming pool, you’d be drinking, eating, whatever. I keep saying this: they have a law and they have ethics and the ethics bracket is always bigger than the legal bracket, almost all the time. They are happy to compromise here and they’ll stick … be around the law. So they don’t actually break the law, but they’ll be somewhere around breaking the law in the ethics aspect. And that’s where I get a little worried.

Darius Teter: When I was younger and I was working overseas and advising governments, I was such a prima donna, because I had in my mind this idea that the United States had figured all these things out and was best practice. And I’m kind of embarrassed to admit it, but I would be lecturing senior government officials in other countries about their problems. And I was so naive because what the difference in the U.S. is, is that so much of what we call corruption in other countries, we’ve actually legalized it. The whole process of dark money donations for political influence, it’s legal; but it is millions and millions and millions of dollars being spent to influence the laws, but also the regulations that support those laws.

And in most contexts, you would say, “My God, that is so corrupt.” But it’s legal. It’s not ethical, but it’s legal. I think we could do a whole episode about what it takes to get a restaurant license in New York City and actually the story would not be different. It would look exactly the same. Corruption also looks different across industries. For Rajah, it involves red tape, lots and lots of red tape. You’re in the medical field, and presumably this is a field that requires lots of licenses and approvals, and there’s probably quite a lot of heavy regulation in your sector. Do you require a lot of services from public officials in running this chain of hospitals and store-within-a-store treatment facilities?

Rajah Koppala: There is enormous amount of regulation. We need to report to 23 licensing bodies. There are 23 guys who have to give us permission to run a hospital. And sometimes it’s good. Obviously, it’s health care. You’d like regulation and that’s probably the reason why it’s there. But sometimes it’s almost duplication, the same thing going back and forth. Out of the 23 guys, two guys in parallel take care of my fire problem. My fire complaint is done by two different people, for some strange reason. So we have the Department of Fire and then we have the Department of Municipal Affairs that also wants to look into fire, for some reason. So you can get this permission, but that guy will not give permission, and so on. Sometimes it’s almost redundant and ridiculous, but this is how things, especially medical, are regulated the world over. But it’s just extraordinarily special in India. There’s just so many of those permissions.

Darius Teter: Regulations are important to consumer protection, especially in fields like medicine. But each license creates an interaction with a public official and thus an opportunity for corruption. But Rajah found a novel way to decrease these touchpoints.

Rajah Koppala: Well, the store-within-the-store facilities, that’s the other reason why we moved to that model, is that a lot of the onus of licensing is on the store owners — the primary hospitals into which we set up the hospital.

Darius Teter: With the 23 licenses you needed to get, that regulatory forest or jungle pushed you to change your model from having a stand-alone hospital to having sort of a hospital within a hospital, because then the burden lies with the hospital that’s hosting you. Can you translate that into a reduced number of licenses that you have to worry about?

Rajah Koppala: Oh, big time. I operate across five states. Each state, again … when we say corruption, it’s very important to have a very nuanced view. It’s not corruption-corruption, as in a bad word always. But there’s an ecosystem that’s built around it. And I’d have to deal with five ecosystems. There’s no way with my bandwidth I would be able to do it. So we said, “Look, in return, if you lose about 5 to 8 percent of the revenue top line in handling those guys or whatever it takes to set up the licenses and all that, so be it.” This is a conscious plunge we took. But we see examples all the time where less regulation is easier to start, easier to run, easier to make more profits, more shareholder value, more jobs, better promotions, everything. But at my level, with my scale, I can’t cut it down. There’s no way. We just have to play the system and just do all the hacks that will make you follow all the laws. At the same time, make sure your life’s a little smoother.

Darius Teter: But even well-intentioned regulations can have unintended consequences.

Rajah Koppala: This whole thing, there’s a huge ecosystem, like I keep saying. There’s a guy who does PNDT licensing. I do vascular work for the legs. I do ultrasound for the legs and that’s how I diagnose varicose veins, for example. Now, in India — I know it’s done for a good reason, because we have a lot of female infanticides. People would kill female babies in this country. So they went overboard in the other extreme and said, “Any usage of medical ultrasound waves requires a special permission.” And if you don’t have the permission, you could be arrested, you lose your license. It’s a criminal offense not to have it. And that’s called PNDT. So I could be doing an echocardiography, I still require a PNDT. I could be doing ultrasound of the legs, I required PNDT. I could do ultrasound of the brain in a baby, I need a PNDT.

The law is so ridiculous. While it was set up for sex determination in moms, the law is applied pan-across because they have no way of distinguishing a guy who uses it for heart, versus for legs, versus babies. They have no way of implementing the law to that degree. It’s so ridiculous that … now I have 18 centers. In 18 places, I require this certificate. And this one the host hospital will not give me. I have to acquire it on my own. And everywhere it’s a one- to six-month process. So while I can open up a center in 10 days, I have a six-month downtime. I’d apply for everything six months in advance. And why? Because this committee of PNDT meets once in three months. And if, God forbid, they met yesterday, they won’t meet for another 89 days again.

Darius Teter: They want to make sure people are not using medical imaging devices to determine the sex of a fetus and thereby make decisions for infanticide. And so now they’re saying anybody who has any type of imaging device needs a certification. You can’t get it for six months, which means your business literally cannot function. This is an example of a law with good intentions that’s applied to everyone at a huge cost of doing business. That’s one example. This could literally shut you down for months. When you’re navigating all that red tape, it’s almost impossible not to trip up. If the system is rigged to make ethical business impossible, why even try?

Saumitra Jha: I would say that it’s good to be aware that there are a lot of risks associated with giving bribes and engaging in corrupt activities, particularly when you get too connected through these types of illicit transactions with certain people, because you are no longer going to be able to act independently. And people are aware of these things and they can then ask for more and they can keep holding you up until —

Darius Teter: Yeah. You’re hostage now.

Saumitra Jha: Yeah.

Darius Teter: They own you. But by the same token, Saum and Rajah agree you have to face reality.

Rajah Koppala: Coming off a higher horse doesn’t work. I was initially guilty of that. I said, “You know what? I’ve gone there. I’ve seen that. If this doesn’t work, I go back to the U.S.,” and so on. I sort of had this very black or white approach. And in that, I assumed that whatever I was seeing in U.S. was perfect and what I was seeing was not good. Maybe that doesn’t work. It’s a fair amount of gray in both sides. I think there, also, there’s a lot of stuff, and here, also, there’s a lot of stuff. I think a more measured approach works.

Saumitra Jha: It would be nice to say that the long-term benefits outweigh the short-term ones, and from trying to follow the law to the extent possible, but that might not always be the case, obviously. Sometimes things are just going to be difficult.

Darius Teter: In these moral gray areas, every decision is contextual. But what you lose with that approach is consistency. And in this kind of fluid environment, consistency can be powerful. Let’s go back to that island for a moment. There’s a saying in English, “to draw a line in the sand.” It means to set a limit, a boundary, that you won’t cross. Of course, the line itself won’t actually stop you from crossing. It’s not a barrier. There’s no penalty for stepping over it. But the more you cross that line, the less it means and the more it disappears back into the sand.

Saumitra Jha: I think this is why it’s good to be intentional about it. I think the worst situation is where you think you’re being ethical, but it is a death by a thousand cuts, where it’s like, “Okay, here’s the big story that I’m ethical, but then, all right, I’ll make this compromise and then I’ll make this compromise and I’ll do it in these dimensions.” Because one phrase that came up a lot in your discussion was this word “slippery.” That things begin to, once you make those compromises, it’s very easy to keep on making the next one and the next one. In fact, it gains momentum. I think that being aware that that’s the big tendency and saying, well, okay, in this situation maybe it’s life or death and you have to just do a certain thing because it’s better for humanity in the long run. But I think the key is to make it clear. Look, this was done for these reasons and we judged it based on a set of criteria that we think we still abide by, and it was above a certain threshold or it wasn’t.

Darius Teter: I like that. It rises to an existential threat.

Saumitra Jha: Yeah. I think as long as it’s clear what the criteria are, I think that’s the important thing. Because if there’s no line, then there’s going to be no check and no limit.

Darius Teter: Consistency also signals what type of business you’re running: one that’s willing to cut corners or one that tries to operate aboveboard. And that’s why Rajah always tries to pay his fines.

Rajah Koppala: Let’s say the differential is 10 X, and you follow the law, versus paying one X, and getting away by not following the law. Follow the law, and that just makes things easier. Everything is recorded in the system. We forgot to pay a thing called director’s tax. You pay 250 rupees every three months, which we forgot, God forbid. And so we had to pay 100,000 Indian rupees. And then the same guy calls me and says, “Can you pay 10,000 and I’ll just make this go away?” I said, “No, I’m paying 100,000 rupees.” Because I want this thing written up that I forgot and I paid, and therefore this case is closed. I don’t want the next officer who comes here to open this case again. I prefer that approach because you pay 10 X, doesn’t matter, but you made a mistake. You make sure you shut the mistake, you cross your T’s, dot your I’s, and that’s one rule.

Darius Teter: Okay, so this is a key point. The message to your team is: we follow the law. If we make a mistake and we get fined for it, we should pay the fine, but make sure it’s documented. Because you want to establish a pattern with regulatory authorities that you guys own your mistakes, you pay your fines, you’re not going to pay a bribe to get rid of the fine, you’re going to do better to avoid those mistakes in the future. You’re sending out a message to the regulatory group of people that are watching you, what kind of a business person you are.

Rajah Koppala: When you have the soft power of not paying everything nilly-willy, and if you make a mistake, you admit it and you pay the fines, then you’ll be taken seriously when you go with a real problem. That’s my view, at least.

Darius Teter: So how do you remain consistent in an environment where the rules are constantly changing? One way is to have simple criteria that you apply to every decision. Rajah, for instance, has outlined some things that he negotiates and some things that he doesn’t.

Rajah Koppala: In these 23 bodies that are supposed to inspect us, some are subjective, some are objective. Things like taxation, sales tax, income tax, it’s a pure numbers game. You check your numbers every time and then if your numbers aren’t in your favor, it’s a fairly straightforward thing. The whole taxation system, it’s a lot of legalese, but we should be able to handle it. Again, then I, as a law, almost have never paid anything. Then you have the other half, which is subjective. I don’t know. The Pharmacy Act for example, has about 400 points. I’m sure you’ll miss one or two, for sure. You need to let go of some things. For example, we work — we live in a street full of stores that have large holdings that show their wares. The government said it needs to be eight feet by 10 feet or something, some number.

And they came up and said, “Look, everybody who has a holding more than eight feet has to pay a fine.” Now, I could say, “Look, I’m a hospital, so this holding law may not apply to me. I’m trying to give people directions to my place. I run a 24/7 clinic and there’s no other clinic in this hospital.” I have enough reasons which I presented to the commissioner, who didn’t want to hear it. So I paid the fine. But if I had a legal system that would give a decision within a year, I would not pay a final bribe. I would definitely go and litigate that. But I know that if I took this to court, it’d take me at least five years before I got a decision, and the amount at stake was very small.

Darius Teter: So sometimes it makes more sense to pay an unfair fine than to litigate. There’s two things here I want to capture. You’ve said something really interesting. The first is, to be clear about which risks present the greatest threat to your business. In other words, what is the intensity of the issue? What is the potential downside? You’re looking at, if this goes bad, how painful will it be? And then there’s another factor which is, how probable is this risk? Intensity of impact, probability of actually happening. These are two critical factors. You may not have this written down, but dynamically you’re managing this against probability and pain.

Rajah Koppala: Correct.

Darius Teter: Of course, it’s hard to get consistency if you’re not the one making the decisions. Do all of these cases come to you? Or is this something where your team understands the marching orders, they understand the strategic framework, and they make these calls themselves?

Rajah Koppala: I insisted that they all come to me, because I feel in the last seven years the number of things I have to pay out have decreased. And this could, A, be because of better landscape, or B, because we’ve taken a value-based stand against it on most situations. And therefore, just like our vendors talk amongst themselves, so will these guys talk among themselves and say, “Look, if you go there with a trivial problem, they aren’t going to pay. They are going to push back.” And that’s something we’ve learned. We should develop that pushback attitude in the stakeholders.

Darius Teter: I think the other thing is, you don’t want your staff to make those decisions. I wouldn’t want my staff to be trying to figure out where the line is each time. I would want them to move that up to me or to someone I’ve designated to be the arbiter on that question. I don’t want staff to be out constantly agonizing over what is the right thing to do. I want them to always know what the right thing to do is. And if they’re really not sure, then ask somebody. Right?

Saumitra Jha: I think that’s right. And you want to consult the folks who understand what the implications are. I think there’s the ethical side of things which are … but there’s also, of course, the legal side of things. And so leaders have to deal with the ethics and then lawyers have to deal with the law. Within the confines of the law there’s going to be a question of what is the right thing to do.

Darius Teter: Saum says that organizational alignment may be hard, but it’s definitely worth the effort.

Saumitra Jha: On an issue like corruption, as well as of other ethical things that a company’s doing, it really helps to have the buy-in of the employees. Instead of saying, “Well, this is a top down, this is what we do,” which I think has its place, you want to get the message out and convince people, “Look, this is the best thing for all of us,” even though it’s going to mean that we spend more time doing things and it’s going to be hard. It will help you get the right employees, it’ll help you motivate the employees in moments where you’re not going to be able to observe what they’re doing. And I think that the extent to which you can get people on board with these approaches, as well, is often a challenging one, but I think one that’s worth investing a lot of time in, as well.

Darius Teter: All this corruption talk is stressful. So let’s get back to that island. Ah, that’s better. It’s empowering to think about what you can influence in these circumstances: your criteria, your consistency, and your employees. Of course, what’s most distressing are the things that are outside of your authority, especially the bureaucrats who enforce regulations. But while you can’t control how public officials treat you, you can control how you treat them. And that goes a long way.

Rajah Koppala: Relationship equals money. When you want to pay less to maintain a relationship, I’m afraid to say a lot of young business leaders, or even I when I came back, we come up from such a chair that we can sometimes disrespect this process. I’m not saying should you respect it or praise it, but you can’t hurt the guy’s ego. A small inspector comes. He writes the first information report of the so-called law that’s broken. These are the guys who will actually write the report and everything from that point is based on what he writes.

Darius Teter: Right. This very, very junior person. So relationships matter.

Rajah Koppala: It matters a hell of a lot. I now tell my guys, have a cup of coffee, talk to them, see the gravity of the law that’s been broken. And if he insists, then we come up with some number. But make sure this guy’s ego is not hurt. Make sure it doesn’t become a pissing contest between us and them. And it can’t be that. It shouldn’t be that at the first level, for sure. Any junior officer comes, have a cup of coffee. These guys are very small guys, but they need the time under the sun. And his first report is what matters until the end of this case. So this is something that’s very important, this relationship-building with all the guys. In a funny way, they are your stakeholders, as well. I always say, “Look, you have vendors, you have customers, and you have the whole regulatory bodies.” You need to have a manager for that, as well.

Darius Teter: So the government bodies are in your value chain?

Rajah Koppala: Absolutely.

Saumitra Jha: I think that’s absolutely the case. And also, being aware of what their objectives are and helping them achieve those objectives. So many folks want to be better civil servants and they want to advance in their careers. And so giving them the … oftentimes, businesses have a lot of expertise to provide that can help them learn and become better at their jobs. That is an opportunity. I think creating those relationships early in a way where you’re helping people become better at their jobs and treating them not just as a means, I think it can be really valuable down the line.

Darius Teter: Rajah often looks for creative ways to align with public officials.

Rajah Koppala: And I’m a great believer in that soft power. When we had COVID, for example, we were doing free meal distribution. I’m a guy who doesn’t pay the officers, so to speak, on a daily, regular basis. I don’t send them Diwali gifts or whatever. But during COVID, I made officers come and distribute meals as if it was their program, not mine. I actually gave up the credit. Some other person’s benefiting; but also, I’m trying to show that I have this nice side to me, a philanthropic side to me, in which you can participate. We are all friends, we will all go out to the people and say that, “We are out there for you.” I’m a hospital, I’m there for you; you’re the police officer, you’re there for you. They were getting a thousand phone calls about hunger every day when the COVID lockdown happened.

My first million meals, at about 500,000, I made the officers give it. I said, “Look, it’s your show. I don’t even want my name out there. These are the bags of rice and food or whatever. You just go for it.” You have to devise ways in which you can actually engage proactively, appeal to their nice side, if they have one, and say that you are always on that side. And you’re this guy who always doesn’t break the law as a habit, who’s always looking at the welfare of the people around them. And why don’t you join us a little bit? And that would be a nice way of appealing to them, if you can wield some soft power, which is what I believe in.

Saumitra Jha: Allowing other people to take the credit was a good way of building a relationship. I think it’s good to share the credit, not just —

Darius Teter: Hand it off?

Saumitra Jha: Yeah, but I think that I understand why that was the case and I can see that would be very useful. I think the reason I say share the credit is because I think it’s useful to be embedded in the local communities. And that can also make you less susceptible to the holdup situations that you can have when you’re based on relationships with specific members of the police or the bureaucracy. And so having local support where people know that, “These guys, in times of need, they helped us,” it inspires trust that … they’re providing medical services, which require a lot of trust already, so maybe they do care about us as human beings rather than —

Darius Teter: I totally see that.

Saumitra Jha: Yeah.

Darius Teter: For industry-wide issues, it can even make sense to form bonds with your competitors.

Saumitra Jha: Oftentimes, in economics, companies might be competing with each other in an industry, but at the political level they have a lot in common. Thinking about how to do things at an industry level can often be much more beneficial on the political side, saying, “Look, we have this ridiculous queuing system. Is there a way of streamlining it? Can we facilitate that? Can we provide help to the government so it’s better at what it’s doing?” If it’s done at the industry level where people feel like, “Okay, this is a solution that makes everybody better off,” it makes consumers better off, it makes the industry better off, I think the governments often will be quite receptive to it. And particularly, the line ministries folks who want to show, “Look, I did this meaningful thing that helped improve efficiency in this sector.” But that’s best coming from a collective group of folks in the —

Darius Teter: Right. Industry association or something like that. Yeah. This can be an especially powerful strategy for taking on those well-intentioned regulations like the ultrasound law that Rajah mentioned earlier.

Saumitra Jha: Being in a position where you say, “Look, we can make this … we want to maintain the objective and the intent of this rule, but we want to narrow it in these ways that can also free up these other things.” I think that’s exactly where an industry association can be very helpful. Chances are there are going to be others that might have similar issues and then that’s an opportunity to work together to change the regulation or change the law.

Darius Teter: There’s another saying in English, “no man is an island.” You can’t do it all on your own. That’s especially true in these ecosystems. While it may feel like it’s you against the world, if you can get other people on your team, navigating corruption can be a lot less daunting.

Saumitra Jha: I think that at the end of the day, we can get quite cynical about bureaucracies. But I think a lot of these guys are just trying to make things better. And so if you approach them and say, “Look, this is not just my problem, it’s a problem that a lot of us face together. Let’s try and make this work because we want to improve the medical delivery for folks so they can walk in India.” I think that’s a really powerful message that people will resonate with. We all get bogged down in our day-to-day, but remember why you’re doing something, I think. And there are certain messages I think that people will find very appealing. I think there are opportunities there that we sometimes miss by tarring everyone with the same brush.

Darius Teter: All these strategies can help you survive the moral gray areas that come with corruption. They offer ways to mitigate risk and to turn obstacles into allies, but corruption can still be dangerous both to the business and to the people running it. Do you think Rajah’s taking a risk by telling his story as bluntly as he did? I’ve asked him this straight out. I said, “Are you okay with everything you said here being on a podcast?” He said, “Yeah, no problem.”

Saumitra Jha: Given that he is following the law, as he said, 99.99 percent of the time, and when he is not, he’s paying the fines, I don’t think there’s a legal risk. That’s often a question of perception because corruption does seem like it’s ubiquitous. But this is often a case where there’s bandwagon effects and there can often be the case that people think that there’s more corruption than there actually is, or that more people are willing to be corrupt than they actually are. And so there’s often what’s called a false consensus emerging around issues like these. It could be the case that we are actually on this bifurcation moment where even a few individuals acting in a visible way could really change the equilibrium.

Darius Teter: Corruption is contextual. What it looks like depends on where you are and what industry you’re in. And your response has to be contextual too. The first step is to understand the ecosystem and your company’s place in it. You’ve got to acknowledge reality and decide what is actually possible for your business. Being consistent and intentional can give you more control, so have criteria that will help you decide when you’ll pay and when you won’t. A line in the sand is useless if you keep crossing it. Find alignment within your organization and strive for it outside as well. Treat everybody with dignity, especially the junior people who are your primary touchpoints. Don’t assume everyone is a villain. These public officials are entrusted with enormous responsibility to actually make public policy work for people. Finding partners can strengthen your position and make your life easier. Relationships with your industry, your community, even the system itself, can provide solid ground.

Rajah Koppala: You cannot possibly hate the system and make this successful. You have to start falling in love with it somehow. It’s like a relationship you have to build.

Darius Teter: I’m grateful to Rajah Koppala and Saumitra Jha for sharing their stories. This has been Grit & Growth with the Stanford Graduate School of Business, and I’m your host, Darius Teter. If you liked this episode, leave us a review on your podcast app. It really helps us to share the stories of these incredible entrepreneurs with as many people as possible. To learn how Stanford Graduate School of Business is partnering with entrepreneurs in Africa and Asia, head over to the Stanford Seed website at seed.stanford.edu/podcast.

Grit & Growth is a podcast by Stanford Seed. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Andrew Ganem and sound design and mixing by Alex Bennett at Lower Street Media.

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