Monthly Archives: October 2009

A World of Possibilities

ET, November, 2008

I could be bound in a nutshell & count myself a king of infinite space.

– Shakespeare, Hamlet

Where else could we get learnings on Globalisation, or should I say Universalisation, than the example of the Universe itself. Starting from The Big Bang & expanding to its current state ….. & still expanding !! The origin was a very high concentration of mass & energy hugely compacted into a small space, probably smaller than an SME. Was it this energy of God, The Leader, that was The Driving Force, Passion & Desire which drove Him to create history ? While it got Him to create The Big Bang & to lead the Universe to where it is, He used Good Orderly Discipline (Operating Principles) to guide the progress over time & space.

Lessons then, are many. The starting point of the journey has to be a Deep Passion, A Strong Desire to take on the challenge of expansion or, depending on the scale, Globalisation; only the variables & complexity increase. No matter what the current size of the organisation, a huge accumulation of energy is a must to be able to start on the path. It is essential that a Leader has the Drive & the Vision which leads & guides the organisation towards the future. We have examples like Ranbaxy, Dr,Reddy’s to name a few, though not SME’s now, but demonstrating the impact of such energy. In the absence of this, the initial energy can burn out. The initial energy has to last & last to ensure that the organisation has enough fuel at all times ….. The Entrepreneurial Drive.

While the Good Lord was probably ‘born’ with all Leadership skills, these can be surely developed in lesser mortals like us, to be able to leave the same kind of blazing trail. There are enough lessons from the expanding universe & the field of business too to learn from.

While the Universe continues to expand, it remains one unified whole. This ‘oneness’ ensures that there is a ‘commonality’ of character in all its components. The purpose, mission, values of an organisation also need to have a shared acceptance. The same energy flowing through all the divisions and subsidiaries. The Leader has to ensure that all elements of the organisation are bonded together by a common energy, the gravitational pull which keeps the Universe as One. We don’t have a ‘breakaway’ component of the Universe deciding to go its own way, creating its own ‘New World’. The common nature of things, the characteristics & the gravitational attraction ensure that different parts operate in a huge cosmic show. . Leaders in this show, need to demonstrate Inner Strength & Maturity & hence Transcend themselves. Tatas have demonstrated this again and again over their long history. In the recent past, companies like Microsoft, Google have given ample illustration of how organisations can leap into globalisation successfully and over relatively short periods. Scale does not matter then. In the absence of this bonding and shared purpose & values, the different parts of an organisation will never be able to work as one organisation. The implications of this are many. The case for a shared, all pervasive energy in the organisation is so strong, that even at the cosmic level, scientists once believed in the presence of an all pervasive ether to carry electromagnetic radiation.

Another interesting lesson is, that the way the Universe is expanding, even though at tremendous speed, it actually moves out stage by stage. We have yet to learn of a part of the Universe jumping out ahead, beyond the edge of the Universe, into ‘darker spaces’ leaving the rest of the Universe behind to catch up. Really speaking, the principles of adjacency, related expansion, laying a foundation & then moving on further are relevant when globalising. At each stage, knowledge of the market & having a global mindset are key. The Leader has to do a risk-return assessment while taking these calls. Lakshmi Mittal’s expansion, while balancing & weighing these factors, is a classical example. Moving to adjacent domains, whether in terms of geographies or choosing which products to move with or with how much adaptation, all should be governed by the principles of adjacency, related & synergistic expansion. These principles come into play while making decisions on market entry through acquisitions, alliances or the greenfield route. It definitely is more effective & efficient. Resources are always limited & a good judgement, in economic terms, is to allocate limited resources among unlimited demands. The Strategic Choices are then based on a risk-return estimation. Needless to say, the principle of adjacency allows an efficient, effective, productive & low cost option. The more distant the next phase, the more energy & resources it will take. A question that needs to be answered is how much gain & at how much cost ? The net has to be positive. The Universe, with all its so called Unlimited Resources, still decides to expand out in adjacent, next outer domain !!

At each stage of expansion, The Leader has to be conscious of Adapting the organisation & its constituents to be ready to embrace the next phase, leading to a one whole again. There will be differences still, like different particles vibrating at different frequencies. With the global scale of operations, different particles, the subsidiaries may not vibrate at exactly the same frequency due to local situations. However, it is important to match & adjust frequencies to allow resonance to occur. Reading the pulse of the market & recalibrating are needed at all times. Skills at managing local teams across a global canvas are to be developed. Local leaders may have to be developed at various locations. While the subsidiaries should vibrate in total resonance within themselves, to have a high level of operational efficiency with least wastage of energy & resources, there has to be an all pervasive wave engulfing all the subsidiaries, which has a uniform frequency. This is where the wave particle duality comes into play. If there is no wave engulfing all subsidiaries with a common frequency, they will move away like separate entities, the corporation becoming an agglomeration of particles doing their own dance, the only reason for staying together being like that of a portfolio of Mutual Funds, being managed for balancing financial returns. The organisational fabric withers away. The common purpose gets lost. This wave engulfing all subsidiaries with the same frequency is open, candid & continuous communication, leading to alignment of goals, cultivation of trust & clarity of team objectives while maximising benefits of requisite grouping of differentiated knowledge, competence & skills. Group meetings, regular communication, collaborative efforts play an important role. Organisations get leaders from across the world to meet in offsite resorts, sometimes by rotation across subsidiaries to build this common bond. Familiarity builds, understanding & empathy increases. In the absence of such a unification, a higher level of entropy in the system can lead to chaos at the micro level, with the macro organisation losing its appearance and character. No wonder one finds companies like Infosys, TCS, GE having a certain character, wherever they operate across the world. This wave engulfing the entire organisation helps to preserve the organisational DNA. At a subatomic level, the nucleus has a mass lesser than the sum of the particles that are bound together. This mass is converted into the energy that bonds the subatomic particles together & this is the energy that is unleashed in the explosion of a nuclear device. Not only internally, an energy exchange with the ecosystem external to the organisation brings in the many benefits of networking.

To make it all happen The Leader has to ensure Empowerment, Accountability & Execution Excellence. There have to be certain immutable, unquestionable principles & norms of operation of the organisation in place. Systems & processes have to be designed accordingly. These ensure that there is disciplined approach & thinking across the organisation, while different parts operate smoothly, with the required autonomy & in line with organisational objectives. Measures and Rewards should be designed to encourage desired behaviour of collaboration & knowledge sharing. Light has the same speed for all freely moving observers. The laws of nature appear the same for all freely moving observers. Only relative motion, which implies adjustments & adaptation due to local variances remain important.

While the Universe is many many years old, light from our distant past is still reaching us. We need to tune into the right frequency to catch the microwave radiation just reaching us from those days. The spectrum of that radiation shows the characterstics of our heritage. So also, after the SME has treaded on the path of globalisation, values, DNA, culture, character & purpose should be passed on through folklore, anecdotes & documented learnings, to keep that energy of initial The Big Bang alive leading to Infectious Enthusiasm over the space-time continuum!!

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What is One plus One really equal to ??

4Ps Business and Marketing Sept., 2009

 

As a child, I used to be a pretty good student of mathematics. I guess grilling on sums and tables, which is the norm of Indian school curriculum, contributed tremendously to it. Practice sessions, mental maths as they also used to be called, expected one to rattle off answers to a barrage of questions like 2X2= ?, with lightning speed. 4 !! Yes !! You would be ridiculed in class if your answer happened to 3 or 5 …..

And then, after I finished my engineering education, where the ‘exactness’ of these practice sessions really helped, during my management education I was to exposed to something ‘illogical’. A ‘Holistic’ approach could actually make ‘Whole greater than the Sum of Parts’ according to Gestalt, I was told. Now what was this new mathematics ?? We were to unlearn some of the ‘exactness’ of mathematics and were told that when systems operate synergistically, a ‘resonance’ effect actually can lead to such a phenomena. Business, I realised, is not mathematics. It is philosophy, an approach, a mindset.

It was quite obvious all over. Practical observations confirmed the validity of such a phenomena. Management Gurus & literature continued to reinforce the effects of synergistic operations. Related expansion and diversification made sense. Unrelated diversification would naturally tend to be less efficient as there would be consumption of effort, resources, time (energy ??) towards keeping the unrelated parts of an enterprise together ….. different particles (?) to be held together by the application of external energy. Unless each particle or business in this case, of its own volition, gives up some of its own energy and contributes to The Bonding Energy !! But this ‘contributory’ Bonding Energy or Force never really happens without the so called ‘Common Thread, Knitting, Synergy or Interest, that can lead to A Clear Differential Advantage’ and gain for all units. If The Kinetic Energy of each unit is higher than The Bonding Energy, they would tend to move apart releasing this energy into the environment, somewhat like in a nuclear ‘fission’ reaction. However, if The contributory Bonding Energy is higher, due to a ‘common interest or desire to stay’ together, you get a unified organisation where ‘Whole is greater than the Sum of Parts’ !!

Primarily, organisations exist only for two reaons 1) To create Value for The Customers & 2) To create Return on Investment for the Owners ….. and in that order. In social organisations also these remain valid, but maybe expressed as 1) ) To create Value for the Beneficiaries & 2) To create a ‘Surplus’ through efficiencies.

The world is one continuum of energy, represented by different frequencies manifesting as particles. The higher the frequency of a ‘wave particle’, higher is its mass as manifested in the ‘particle’. Business units also replicate such energy continuums and particle duality in a similar way. When they resonate with the same frequency they are one particle of existence. Different frequencies will have them vibrating as separate particles, obviously connected by a weak energy flow, which exits in the cosmos in any case, between diverse entities as well. What then is the purpose of ‘applying autocratic force’ to have them together ?? Doesn’t everyone love to be a free body !!?? Well the only two reasons to be together are 1) We build greater Value for The Customer together and/or 2) We operate in a manner that our operations gain from each other. Under these conditions, particles (business units) contribute the very essential Bonding Energy and ‘Whole is greater than  the Sum of Parts’, as that is the only reason that makes sense for these particles to stay in ‘dance’ together !! In the absence of these conditions the system will become less efficient as there would obviously be an energy loss rather than a gain, by forcing togetherness.

That brings me to another version of this 1+1 mystery. Over the last few years, just before the recession hit, ‘valuation’ was in vogue !! Every new start up or even existing organisations started talking ‘valuation’. Rather than Creating Value for The Customer, Valuation became the buzzword. A simple mind like mine got quite confused frankly. How do valuations shoot up like this ? I felt quite miserable at not being able to comprehend all this. And then, one day, it hit me like a thunderbolt ….. I really DID NOT understand this new game. This was, when someone mentioned ‘Sum of parts is greater than the Whole’. Now what does this mean ??  All this while I was living happily having understood the ‘Whole is greater than the Sum of Parts’ logic (which also had taken me quite a while to grasp) …..

What is this ? At this stage in life, do I have to learn my maths again ? Sure that was not a very great and encouraging thought. Do I live in ignorance for the balance of my life ? It was a very depressing feeling. And then, after a long phase of close to depression, I saw the picture …..

‘The Bonding Energy’ should be contributed willingly by constituent particles only, towards efficiently aggregating together in the collective sefishness of “1) We build greater Value for The Customer together and/or 2) We operate in a manner that our operations gain from each other 1) To create Value for The Customers & 2) To create Return on Investment for the Owners …..  in that order”. That is the key towards ‘Whole is greater than the Sum of Parts’ !! In cases where ‘Sum of Parts is greater than the Whole’, it is not that ‘Whole’ is less. It is just that the full impact of ‘Whole’ was never realised and nurtured to ‘flower and blossom’. Eureka !!

No wonder when businesses get reduced to being seen as distinct particles, with no ‘Bonding Energy’, when they have no reason for being together in the first place, ‘Sum of parts will be higher than the Whole’. It is this irony, driven by ‘Valuation’ rather than ‘Value Creation’, compounded by greed and short term results that lead to businesses being managed as MF portfolios rather than with an approach of ‘organisation building’ and ‘Value Creation for The Customer’. Value for the Owner is a natural outcome.

That is one flaw that the famous BCG matrix can lead to. Businesses are seen as delinked, independent entities in this approach, without looking at the ‘synergistic’ or ‘complimentary’ roles they may actually be playing in the ‘dance’. This race for ‘Valuation’ rather than ‘Value Creation for Customer’ in some cases gets particularly pronounced in the ‘portfolio’ treatment and approach followed by some PEs. However, it is an area of caution only. Airtel and Max are cases where PE support, without losing track of Customer Value Creation led to extremely positive results. Quick valuations and selling off of parts of organisations like cattle or treating multiple organisations as merely elements of a portfolio, can be obstacles in organisation building or in creating value for the customer or even for the owners ….. examples of this also are many. This can be dangerous at any stage in an organisation’s development, but sometimes quick valuations expected in early growth stage can ring a premature death knell for your business ….. delivering a ‘still born’.

I realised that  :

  • 1+1=2 is maths; can also be used by business accountants
  • ‘Whole is greater than the Sum of Parts’ is sound business approach, philosophy, mindset
  • ‘Sum of Parts is greater than the Whole’ is Value Destruction in the search for Valuation

 

QED

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India Tomorrow : Each of Us Contributes to Strategic Leadership

The Indian Optician, Feb., 2009

A lot would have happened across the world, since I wrote in the last issue. Significant, life changing, world changing events ….. 26/11 in Mumbai & subsequent events, Slumdog Millionaire, A New ‘Audacity of Hope’ rising in the United States of America ….. How will Obama ‘Change The World ?’ !! There seems to be chaos & confusion. “Where are we headed ?”, we ask each other & ourselves.

That takes me to what I wrote in the last issue, “Strategic Leadership in Business” ….. it requires efforts to clear confusion & to get clarity in business, to determine ‘Current’ & ‘Desired’ states, to make choices to allocate resources in the most effective manner to deliver Value to our customers, to get The Right People to Execute Well & then to monitor, measure & reward them.

When we work for any organisation, in some way or the other, big or small in scope, we think & evolve business frameworks for our areas of operation. We do it for our products, functions or departments and at senior levels, for the entire company or for our own businesses. In most cases, we draw from & build on disciplined strategic frameworks and concepts by people like Porter, Ansoff, Drucker, BCG, Kotler, Jack Welch, Louis Gerstner, Howard Schulz, CK Prahlad, Jim Collins & many others who have shared a whole world of experience with us. We involve in rigorous analysis as Product Managers, Functional Heads, CEOs, Businessmen & Entrepreneurs varying the scope & breadth of our coverage, depending on our level & role.

This structured, disciplined approach in our work enables us to look at details, while keeping in place the context of mapping the ‘Whole’. Rarely, however, do we adopt this approach or reflect with the same rigour, structure & discipline, when it comes to levels above & below the company i.e. for the Individual Microcosm or the National Macrocosm. It could, I feel, help at both the levels ….. The Individual & The National, if, in an integrated manner we apply the same approach as we use in our professional work setup in our companies. As an example, let’s attempt to go through one route of thinking we could build on, to look at India as an organisation, to be run professionally ….. as Jim Collins would say, with Disciplined People, Disciplined Thought & Disciplined Action. As for any organisation, the starting point remains our Desire, Mission, Vision, Strategy, Values ….. Let’s try ….. !!

Desire : To see a Developed, Prosperous & Healthy India.

Mission : To create Total/Balanced Wealth i.e. Spiritual, Physical & Material Wealth for India. Striving for only Material Wealth, as reflected in economic & financial indicators alone, maybe necessary but not sufficient. Similarly, just taking pride in the Spiritual & Cultural background of India may not be enough. Physical Wealth i.e. Infrastructure, Health etc. & Material Wealth are also important & therefore the need for Balanced Wealth Creation ….. A balance of Yin & Yang.

Target Audience/Size : A billion + Indians (Customers !!).

Customer Deliverable : An environment which is conducive to the development of full Creative Potential for every Indian, which, when made All Inclusive & Collectively Exhaustive, creates A Whole, a Lot Lot more than the sum of parts.

Situation Analysis : A billion + people; 50% below 20 years; Infrastructure, Literacy, Health Care need improvement; Rich & Diverse Cultural & Spiritual Heritage. If the Potential of a Culturally Rich, Young, Billion plus people can be unleashed & sustained by keeping them Healthy, there can be Magic !!

Strategy : To develop Human Resources by providing education & employable skills, enhance efficiency by providing the required facilities/tools & make them sustainable by keeping them Healthy. The rich cultural & spiritual heritage to be built into education early in life, so that along with the Right Skills, they develop an Inner Strength & Maturity that they can draw on, throughout life. These are assets which should not be left to be dabbled in, late in life. If built in the early years, the young can become a lot more Effective, Transcending themselves & not ‘Wasting their Youth’.

Vision : To see India as The Number One Country in Total Wealth Creation. We can have The Best Product in The World i.e. Our People

What adds Value to Customers (Indians) ? : Education, Healthcare, Right Facilities/Tools

What to Measure ? : ‘GDP/Capita’ ….. the measurable, purely economic component (not exhaustive & sufficient, but surely, still necessary) that drives the whole machine, the measurable outcome that fuels growth & success; each unit i.e. each person will then become the driver & beneficiary from the process; Inclusive Growth reaching out to the Last Indian, in the Last Lane, in the Last Village ….. !!

Right People : To develop people with 1) Right Skills 2) Great Execution 3) Passion for India

Values : Integrity & Ethics, Freedom of Thought & Expression, Continuous Learning throughout Life, Respect for Everyone, Humility, Cultural Sensitivity, Celebration of Life.

Brand : India

Brand Positioning : Professionalism with A Heart. Young, Skilled, Warm, Confident, Rich Cultural & Spiritual Heritage, Inner Strength ….. Good Orderly Discipline resides here !!

The above illustration is definitely not the final word in The Journey that India is on. However, as in an organisation, continuous education, training/retraining & Brand Communication (with Strategic Organisational Needs in focus) play a crucial role, so also in this case. This is NOT about forcefully imposing a way, but by nurturing an inclusive & harmonious interplay of ‘Purusha (Soul)’ & ‘Prakriti (Nature)’ ….. The Indian Way !!

Having a 360 degree, all encompassing approach could allow collective development of the Individual & the ‘Organisation’. If each individual is going to be the basic unit of measurement of organisational & national development, applying this framework in a disciplined & structured manner to develop individuals, can lead to multiple building blocks working separately, creating a movement which reinforces the bigger cause.

Coming closer home to our areas of work, the same applies to development of people within our businesses & organisations. Very often we ignore the development of our staff & people. We think that they will leave us after getting developed or trained, little realising that underdeveloped employees will suppress our own growth. Not only that, our customers see them as suboptimal service providers & go elsewhere. People development remains The Key in all areas of life. Infact, it is ECHO principle at work ….. Employees’ & therefore Customers’ Health reflects on Owners’ Well Being !! Also, employees are more loyal, passionate & effective once they see efforts for their own development too ….. And why would you then not pay these developed people well, if they are good performers & if the fear is that they will leave for better salaries (which is also not always true). As GDP/Capita can be a good indicator for India, so also Revenue per Employee can be used in our businesses. Develop employees to lead to Higher Revenues & The Cycle continues ….. each effort contributing to The Bigger India Dream/Vision : To see India as The Number One Country in Total Wealth Creation with The Best Product in The World i.e. Our People
!!

The New India will be created by each one of us contributing in our own way, in our own businesses, in our own companies ….. In the words of Abdul Kalam : ‘Creativity comes from Beautiful Minds’ ….. !! The Outcomes one gets are a result of what one plans & prepares for. Ultimately, as someone said, ‘Luck is The Residue of Design’ …..

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