Structure before Strategy: A Counterintuitive Business Conundrum?

Ever since Alfred Chandler wrote his seminal work "Strategy and Structure: Chapters in the. History of the Industrial Enterprise" in 1962, it has been well established that structure follows strategy in organization development. Chandler examined the organization of E I du Pont de Nemours and Company, Standard Oil of New Jersey, General Motors and Sears, Roebuck and Co and found that managerial organization developed in response to the corporation's business strategy. Even in subsequent times, the logic behind the Chandler hypothesis has been as compelling as the evidence has, in fact been. Without a knowledge of what an organization would need to do achieve its goals (for example, whether to expand or consolidate, diversify or specialize, and so on) it would be counterproductive to establish an organizational structure. Every company that has successfully created new product lines or business units provides the proof for the validity of the hypothesis. Yet, in today's competitive world, which places a premium on speed and technology in business creation, there is perhaps a need to reexamine the hypothesis that strategy must necessarily precede structure in all cases.

Fundamental to such reexamination must be some definitional clarity. Many strategists and managements assume an aspiration to be a strategy. For example, becoming the largest wind power producer in the country could be an aspiration but can never be equated with a strategy. A strategy is one that analyses various environmental opportunities and risks as well as the company's strengths and weaknesses, identifies the goals for growth or consolidation, and develops a set of plans to achieve the goals. A strategy can be high level for a general appreciation but must be extremely detailed to achieve flawless execution. Similarly structure, though well understood, cannot be seen as an end in itself. Structure is not merely an organizational instrument to implement the strategy; it is actually a platform to attract and assemble the talent that can implement a strategy. A structure can, therefore, be defined as a core organizational nucleus to kick-start an activity or a detailed organizational hierarchy to run a huge operation.

The strategy matrix

Despite the great business complexity that has overwhelmed us, the essence of business remains simple at its core, in terms of a 2X2 matrix on product and market dimensions. Product, for this purpose, includes service as well. The strategy matrix is expressed in terms of existing products and existing markets (EPEM), existing products and new markets (EPNM), new products and existing markets (NPEM), and new products and new markets (NPNM). The role of the strategist is to identify the right strategy matrix for his organization and develop the right strategies for each chosen quadrant. The challenges of developing customized strategies vary across the four quadrants. The EPEM strategy may require a significant operational focus while the EPNM may require additional market knowledge, the NPEM new product knowledge and NPNM totally new knowledge on products and markets. Although such a strategy formulation activity is the responsibility of the strategy department, it would appear that consummate development of strategies for all quadrants other than EPEM would need exceptional knowledge beyond what is normally resident in a corporation.

For example, let us take the case of a manufacturer of thermal power equipment wanting to diversify geographically into new countries and also diversify into new products such as nuclear power plants. The knowledge basket required for detailing the strategies cannot be expected to be ordinarily available in the company. Even within an industry there is no assurance that product diversification can be accurately crafted by an existing skill set. It is not certain, as another example, that the strategist or other experts in a manufacturer of tablets in the pharmaceutical industry would have all the subject matter knowhow to detail a strategy to diversify into a totally new delivery technology such as inhalers. Most organizations tend to bridge the gap by resorting to consultancy arrangements to provide the pathway. Apart from the high costs associated with reputed consultants, organizations have discovered that an organic talent pool with prior expertise and experience is still necessary to refine and detail the strategy that is defined by the external consultants.

Structure before strategy

The strategy matrix leads us to the need for reviewing the “strategy precedes structure” hypothesis. If a corporation is clear about its goals as well as its strategy, the strategy may be deemed to have been laid out with internal expertise. If a corporation is unclear about the goals, let alone the strategy, there would be a need to resort to external help, usually in the form of of a high caliber consulting organization to conduct significant cross-industry analysis to identify the opportunity space. On the other hand, if the corporation is clear about the goals but unclear about the strategy and the underlying technology, there would be a need to bring on board subject matter experts who can quickly validate the goals and convert them into actionable strategies. Such corporations would need to create structures that can serve as base platforms to attract subject matter experts.

Creation of a structure ahead of the detailed strategy has significant merits in select situations of corporate growth or business reinvention. In emerging markets such as India particularly, growth opportunities abound in every sector. New products and services with a strong underlay of new technologies offer great scope for goal directed business. Many times, whenever the sectors are opened up there tends to be a significant level of competition with preemptive moves by different players. Speed of decision making and execution, and appropriateness of entry are vital for achieving success in such cases. The successful foray by large corporate groups into newly opened up areas like telecommunications, insurance, banking, retail, automobiles, oil & gas, and infrastructure in India, post-economic liberalization, has been reflective of opportunity-driven and goal-directed business entry. Typically, the groups have been able to realize their business aspirations by setting up early appropriate core structures.

Defining the structure

Many times, managers and leaders desist from taking any structural initiatives until a strategy is clearly in place with due approvals. Often, this could be of false comfort if the strategy is developed and approved with inadequate knowledge of subject matter. Creation of a structure to avoid such eventualities is aided if organizations view structure in a twin lens of minimalism and essential need. In NPNM segment, the structure could just be a one man cell or a small expert team to start with, brought in from the relevant sectors to provide a nucleus of ideas. However, soon the structure would morph into a new business or operational unit. In both EPNM and NPEM segments, the structure could be more elaborate and more hybrid, comprising external experts and internal specialists to combine the known and unknown. In these segments the structures tend to be larger from the beginning as the goals are in terms of leveraging existing products or markets to achieve new adjacencies, with a lower level of risk relatively.

Defining the right structure is contextual. In a NPNM goal, for example, a structure that gives due weight to both the product and market aspects would be necessary. The minimalist structure could, therefore, be as simple as comprising two experts while a larger structure may be mandated when the new product and new market canvas are large. In EPNM and NPEM segments, structures could be more elaborate, given the potential for early execution. Whichever be the segment, in the proposed paradigm structure and people (or organization and talent)e seen to be the same. This approach is found to be especially useful in educational institutions where new streams of education are woven around expert academicians rather than predefined structures. This leads us, as a follow-up, to the role of leaders as institutional knowledge structures.

Leaders as institutional structures

Leaders as much as they lead organizations also represent institutional structures of knowledge. Corporate groups following the NPNM opportunity in India have leveraged proven leaders as institutional knowledge structures. Such corporate groups have consistently leveraged retired senior bureaucrats or chiefs of public sector undertakings as the knowledge drivers for new businesses, especially in sectors such as oil, energy, and infrastructure segments, which were traditionally preserves of the State in India. In other market-facing segments, however, private sector leaders have uniquely filled the role. Reliance retail format was, for example, set by a private sector retail leader. Videocon benefited from structural leadership of a highly successful leader from the South Korean LG Electronics.

At another level, when corporations make major organizational policy shifts through appointment of top level business leaders, especially the chief executive officers, they are seeking to establish institutional knowledge structures as an instrument to drive a new wave of strategy and execution in the corporations. Extending the concept further, utilization of available organizational structures through breakthrough talent enables the paradigm of structure leading the strategy. As a corollary, when long established structures are dismantled or when longstanding leaders move out it would be tantamount to corporations losing institutional knowledge structures. Leadership thus represents an amalgam of structure, strategy and talent.

Synthesis of strategy and structure

Notwithstanding the several examples cited herein, structure in general would follow strategy, in most cases even in the current times. However, structure in this established paradigm refers to an elaborate organizational and hierarchy based structure aimed at the implementation of a detailed execution strategy. The counterintuitive paradigm of structure preceding the strategy presented here refers to specific cases of new business development, especially those that are opportunistic, and are pressured by considerations of speed and technology. In such cases, it would be impossible, and even incorrect to distinguish between strategy and structure or to sequence them in any order.

The 2X2 strategy matrix comprising product and market dimensions as described in this blog post presents a context for structure to precede strategy in certain strategic contexts. Structure in such cases is essentially an organizational platform to induct requisite knowledge, expertise and talent to carry out strategy formulation and execution in new domains that are beyond the grasp of current organizational framework. Structure in several such cases could be singular (as in the case of CEO appointments), minimalist or extensive (depending on the newness and sweep of the product-market combinations). In all cases, however, structure preceding strategy provides an opportunity to pursue new businesses where time and technology are of the essence.

Posted by Dr CB Rao on June 25, 2011

Bonsai Managers and Banyan Leaders : Need for a New Paradigm for India Inc

R Gopalakrishnan in his book "The Case Study of The Bonsai Manager" propounded the concept that a manager who is not working at the upper end of his own potential can be termed as a bonsai manager. He goes on to analyze various anecdotes, fables and comparisons from the nature and wild life to draw analogies of managerial responses, focusing on concepts of knowledge, intuition and wisdom. The focus of his book is essentially on the variables that a manager can play on to either be content with being a bonsai manager or grow into a fully functional and fully contributory manager. Gopal's thesis implies that a manager is by himself his own cause and effect in the event he gets stymied as a bonsai manager. The thesis of his insightful work is that by shaping one’s managerial instincts intelligently and contextually, often drawing lessons from nature, one can unleash the power of intuition in oneself and thus reach the fullest potential. Gopal’s book is a must-read for its native simplicity and contemporary wisdom.

Gopal's highly innovative and intuitive conceptualization does not consider a companion concept of banyan leaders in organizations. A banyan leader, as the name suggests, is one who dominates the organizational scene not developing powerful successor-leaders or even managers and general managers, just as a banyan tree would, in a natural habitat, not allow growth of alternate plant or tree life. A banyan leader, in his individual capacity, thinks, expresses and acts as the collective wisdom of the organization rarely allowing flowering of any independent thought. It is a moot point if a preponderance of bonsai managers causes the perpetuation of banyan leaders or the domineering personality of a banyan leader stymies the development of free managerial thought, expression and action causing an organization-wide bonsai manager phenomenon. Reverting to the wild life scene, the contrast is remarkable; elder animals encourage the younger ones to be independent and adventurous at the very first opportunity. There is perhaps a whole different survival and growth paradigm in the organizational eco systems that set differential rules of personality development, compared to wild animal life or controlled civic life.

Three levels

Organizations typically have three levels of professional personality development. The first and basic level is the executive level where a professional largely functions as an individual, following the guidance of his or her superiors. The second higher level is the managerial level which sees the professional maturing into a manager with the responsibility of planning, organizing, strategizing, directing, reviewing and controlling the performance of team members. Typically, managers lead departments. The third highest level is that of a leader who has the responsibility for the vision, strategy and execution as well as the overall performance of a business unit or the organization as a whole. Typically, an executive has an individualized compliance responsibility while a manager has a group-oriented optimization responsibility and a leader has a company-wide transformational responsibility. As one progresses in the managerial and leadership hierarchy, the challenge of managing the external environment also increases significantly. The escalating hierarchy of responsibilities makes it imperative for professionals to be not only distinctive but also instinctive and statesman-like.

The three intellectual components that Gopal mentioned in his book become relevant in the above progression. An executive needs to be knowledgeable. A manager needs to add intuition to the knowledge he has had as an executive. A leader has to add wisdom to the knowledge and intuition he has had as a manager. While it is not incorrect, and on the contrary it would be fortuitous, to have executives who are not only knowledgeable but also intuitive and wise, unfortunately the highly compliance oriented work systems at the operating level make such executives feel strange and unwanted. Companies such as Google, on the other hand, owe their meteoric rise to the freedom and empowerment they provided to the youngsters to dream and develop new paradigms of growth in technology and business. The same companies also are evidence to their growth slowing down with bureaucracy overpowering creativity and empowerment at the bottom of the organizational pyramid. On a similar analogy, companies such as Hindustan Unilever which create appropriate eco systems for their managers to combine intuition with knowledge enable their managers handle growth opportunities early on, thus building up the leadership stock in the company. The same companies found their growth stalled when their eco systems turned less challenging for their managers.  

The race of the banyan

The growth of the banyan tree has few parallels in wild forestry. The great banyan derives its growth force from its genetic evolution. The way it grows symmetrically and expansively drawing strength from its branches, the branches becoming roots and becoming supporting pillars of the main trunk and the vast expanse of overarching branches is a fascinating study. A banyan leader in an organizational setting displays a remarkable similarity. Like the banyan tree, the banyan leader possesses indefatigable growth energy. His vision and aspiration dominates the entire organizational eco system. Like in the case of the banyan tree’ main trunk, the banyan leader’s core competence would, however, be inadequate to support an organizationally overarching leadership personality. The banyan leader verily then depends on a set of followers who adulate, propagate and mimic the leadership style of the great banyan leader, and like the banyan’s root-branches become inseparable component of a monolithic, all-pervasive leadership system (not merely style) in the company.

The banyan leader is a great source of strength for small and medium scale organizations, struggling to cope with the scale and power of larger corporations. The banyan leader is also essential in entrepreneurial and start-up organizations which require conviction and passion as much as competencies and capabilities to carry the day. Typically, the banyan leader has a tremendous level of energy and commitment, which together with functional expertise makes him virtually the sole leader in his organizations. It is important for the banyan leaders to recognize that there come an appropriate time in the organizations when they themselves should operate slightly below their potential so that a new crop of leaders can grow under them. Banyan leaders who refuse to recognize this need for slow-down typically end up competing with their own teams to establish their continued superiority and sole relevance. Gopal in his book outlines a simple three step process for leaders to develop leaders out of their younger generation. The three step process is in fact a reflection of how the animal kingdom grooms its offspring to stay on and succeed in the fiercely hostile natural habitats.

Protect-nurture-pace

The first task of a leader is to protect the younger generation from the harsh organizational environment and make them aware of the manner in which they can be successful in the organizations. Induction and alignment programs provide a valuable methodology to achieve this. The real value will, however, accrue only when the leaders are able to devote their personal attention to spend quality time with the new recruits. Their presence in the induction programs provides confidence to the new recruits that the leadership has faith in them.  The second task of a leader is to nurture the young talent.  Here again, on the job training programs and standard operating procedures as well as written down vision, values and code of business conduct play a valuable part in nurturing the young talent. However, this phase also requires participation by the leaders to coach and motivate the young generation. Wise leaders often devise ingenious ways to cut through the hierarchy and reach out to youngsters through company-wide communication programs and professional development programs. The third task of a leader is to pace the young managers through complex challenges to assume leadership responsibilities. Performance appraisal and management systems do provide a valuable methodology to achieve such progression but are not wholly adequate. Projects which are in the direct line of sight of the top leadership are the only viable means to bring out the best in the young managers. These could be productivity improvement, operational excellence, business development and organizational transformation projects, for example.

Tracking the young officers from the time of their joining an organization is a practice that progressive organizations institutionalize. Talent map, competency atlas and skill pool are tools which can capture the talent in an organization at a particular cross-section of the time and provide the platform to manage the talent in a proactive manner. As organizations grow larger and global it becomes difficult for top leadership of a company to physically or virtually stay in touch with the younger generation spread across the businesses and regions. A useful thumb rule adopted by alert leaders is that behind the extraordinary performance of any established functional or business leader there would be one or several young managers who could be contributing silently. Understanding the silent performers of an organizational hierarchy is often a challenging task as the corporate rule book often asks that career rewards are an adequate return and recognition of the performance of the younger generation. The rule book ignores the tangible and intangible benefits of identifying future leadership talent early and put them through the three step process of protecting, nurturing and pacing. It is not the case, however, that professional transformation is the exclusive responsibility of the leaders only; on the other hand, the young professionals themselves have a great responsibility to be seen and heard in an organizational system.

Absorb-upgrade-transform

Akin to the three step process of protect-nurture-pace recommended for leaders to groom young talent, corresponding three step process of absorb, upgrade and transform for the young professionals. The first task of any young entrant to an organization is to process and absorb as much information as possible on his job and his company. The young officer must be prepared to spend time with related functions to understand the wider organizational value chain, and be willing to spend midnight oil to perform projects which may not fall wholly in his domain. The second task of a young officer is to augment the competency set. It does not suffice any longer to be just a specialist and aspire to become a successful leader. At the same time it is also counterproductive to be a generalist and hope to become a top leader. Today’s precision dynamics of business requires leaders to have multiple core competencies. By seeking job rotation and dipping deep into other functional domains youngsters can achieve success in competency augmentation. The third task of a young manager is to transform himself into a leader. Organizations usually set the bar for leadership transformation high. Organizations may deploy a wide range of metrics from proven performance record to psychological evaluation score to determine the transformational readiness of a young manager. Apart from coasting through such gates the young manager should have an objective idea about his own transformational fitness.

Careers certainly cannot always be realized in exactly the same manner as they are planned for (by the organizations) or aspired for (by the individuals). It is, however, important for young aspirants to choose their peak aspiration early and assiduously work towards scaling the peak. In this journey, it would also be useful to choose a role model of top leadership to understand the key success factors. While leadership styles and models are easily categorized, no leader works or delivers exactly the same way as another leader. Apart from the fact that leadership is contextual, it is also intrinsically personality driven. There are over fifty personality attributes that have a crucial bearing on the contextual leadership model. It is therefore important for youngsters to develop their own leadership styles even as they get mentored, coached and inspired by great leaders. Today’s leaders of Indian blue chip companies have all functioned and grown under stalwart leaders; yet each successor has been able to set his or her own stamp of leadership as he or she became the leader. Essentially, the transformation has to come from within, to reach one’s full potential.

Neither bonsai nor banyan

The organizational landscape would be poorer if it is marked only by bonsai managers or banyan leaders. As India, Inc takes on increased domestic competition and gets prepared to play a larger direct role in other emerging markets and developed markets, managerial and leadership capabilities need to be of a very high order. Young aspirants and established leaders need to collaborate to fulfill a new global managerial and leadership vision for India that reflects a healthy growth of talent, an ample measure of empowerment and a viable metric of delivery.

Posted by Dr CB Rao on June 19, 2011       

India as a Super-Economy: Need for Agro Revolution?

The last few months have been somewhat of concern to well-wishers of the Indian economy. The estimates of GDP growth rate are being revised down wards to 8 percent. Manufacturing output has been erratic, and has in fact halved in April 2011 to 6.5 percent. Agricultural produce has been affected by unseasonal rains in various regions, affecting net agricultural output which otherwise could have recorded a greater high. Oil subsidy continues to be high despite periodic hikes in petrol and diesel prices. Foreign direct investment has shown deceleration. Continued inflation has forced the Reserve Bank of India (RBI) to mop up excess liquidity and raise interest rates. State Bank of India (SBI), India’s biggest bank suffered a steep fall of 99 percent in profitability due to unusual provisions. Most importantly, the automobile industry, especially the truck and bus sector, which is the established bell-weather of the Indian economy, whether of growth or recession, has shown distinct signs of serious slowdown.

On the governance front, controversies seemed to have numbed the governments from undertaking fresh policy reforms or liberalization measures. Infrastructure, widely expected to benefit from policy reforms, has not seen the dramatic policy push that was expected. In particular, power, roads, railways, airports, transportation, housing, irrigation, healthcare, education, and several other infrastructure sectors continue to be in need of greater policy thrust. Major public undertakings are consequently awaiting a leg-up in orders for infrastructure equipment. In the established industrial sector, design and manufacturing competitiveness is affected by a lack of innovative research and development as well as process upgrades. Export oriented units and special economic zones do not seem to have retained the favor of the policy makers. The stock markets have been trading 15 to 20 percent lower than the previous highs. The European debt contagion and the US public debt constraint continue to cast shadows over global recovery. The questions that should trouble the policy makers in India are whether the Indian economy is sufficiently insulated, has encountered a temporary speed-breaker or has entered a slow deceleration phase. 

Growth fundamentals

Fortunately, whichever way one analyzes the Indian economy, the growth story is intact in its fundamentals. There are no major emerging economies that offer the kind of investment landscape that India offers; the land space, the people resources, the factor advantages and the market potential. There is tremendous potential for a virtuous cycle of investments in all sectors of the economy, agriculture, manufacturing and mining and services, investment in each sector impacting the other sectors synergistically. There is every reason for global multinationals to invest in India not merely for cost arbitrage but also for value arbitrage.  The changing demographics in favor of the youth provide more working hands and higher purchasing power, with an opportunity to absorb several new product lines.

Liberalization, however, has also resulted in concentration of development in cities and in consumption sectors for the relatively well placed. The growth in city malls, multiplexes, posh offices, high end automobiles (largely imported), luxury residential apartments, galloping land prices are symptomatic of an economy growing to cater to the wealthy few. Although the theorists of top-down growth may argue that the cascade would soon reach the uncovered sectors, the progress seems to be agonizingly slow. Seventy percent of India’s population still lives in its 660,000 villages without proper connectivity. The produce of the rural economy seems to be at the mercy of nature and exploited for more sophisticated urban living, if at all. Modernization of agriculture and dovetailing of food processing industry with agriculture as in the United States, Israel or Japan seems to be woefully inadequate in India. In an economy faced with high inflation in food prices, millions below the poverty line not having access to adequate food and a growing consumerist society demanding multiple food choices, agriculture, rather than industry or retail, must rank in priority to lay solid foundations for sustainable economic growth. 

Growth equation

It is hypothesized that if the Indian agriculture grows at 8 percent per annum, industry and services grow at 12 percent per annum each and gross investment perks up to 40 percent of GDP, the Indian economy would coast to a comfortable and sustainable double digit growth trajectory. However, agriculture has been the Achilles’ heel of the economy, with average growth rates hovering around 2 percent per annum in some years. A completely rain dependent agricultural sector with small farm holdings, indigent farmers and lacking productivity techniques has little leeway to post higher growth rates. The alternative hypothesis that if India attracts greater industrial and infrastructural investments it would lead to a trickle-down effect on the rural economy has not been borne out. In fact, it has led to the opposite in terms of migrant labor leaving chronically poor rural areas to seek a living in urban, infrastructural and industrial construction. Research has established that while this trend may have provided short term alleviation from rural penury it has also impoverished the rural economy in terms of capable farm hands and has also resulted in disturbed social conditions both in rural and urban areas.

In order for agriculture to post robust rates of growth, economic development must squarely target the rural economy. Decades ago, the rural economy used to be a self-sufficient, regenerative economy based on farm animals, farm holdings and sharing of farm and agricultural produce. That model has become twisted over the last few decades with growth of urban agglomerations sucking out the rural produce as well as pulling out the rural labor, without commensurate reinvestment in the rural economy. The ‘Amul’ Gujarat Cooperative Milk Marketing Federation has been striking example, in the post-independent India, of how fruits of development could be collaboratively created and shared within the rural economy, leveraging the urban demand. National Dairy Development Board has been another example. Various state governments, thereafter, started their own dairy units. However, all of these are based on collectivizing the farm products for urban marketing. There is a need to broad-base agricultural economy beyond milk and milk products. Such a broad spectrum agricultural strategy needs to have six essential components.

Agro irrigation

The fundamental requirement for a sustainable agricultural revolution is the creation of huge water reservoirs. India has water resources which are much higher than those possessed by several countries; however, retention and utilization of water resources has been woefully inadequate. After the Bhakra Nangal, Hirakud and Nagarjuna Sagar dams of the 1950s and 1960s India has not been home to major agricultural dams. In contrast, the giant Three Gorjes dam in China demonstrates the continuing efforts by China to deploy new technologies to harness river water resources even more sweepingly than ever. India has at least ten major river systems and twenty medium river systems that lend themselves to a new wave of agricultural reservoir construction. Unfortunately, inter-state disputes have stalled progress on this very vital need. Successive river water tribunals have taken several years to resolve any of the inter-state disputes, with little beneficial impact.

Clearly, there is a need for a different approach to build new agro reservoirs on an expeditious basis. Two options could be considered. The first is to place 50 percent of all river water resources as national resources with equal distribution to all the riparian states, regardless of the upstream or downstream nature of individual states, and the balance 50 percent being available as state resources to be shared between upper and lower riparian states in a titrated ratio. The second approach is to establish a common agricultural grid of all the riparian states with equal sharing of all river dam construction costs, equal sharing of all river water resources and pooling of all agricultural produce with equalized prices. Each agricultural grid should have an inter-state agricultural authority to administer and adjudicate on the river water and riparian issues. Short of connecting all the rivers of India into one grid which could take several decades of negotiation and several subsequent decades of civil construction, the above two approaches would yield more immediate results.

Agro technology

Technology in the agricultural sector has been largely limited to the production side in terms of fertilizers and pesticides on one hand and tractors and farm implements on the other. Even here, as the controversies over the long term impact of fertilizers and pesticides, and more recently on the poisonous impact of Endosulfan shows, a much greater level of science and technology must be applied to make artificial soil enrichment and crop protection friendly towards soils, crops and humans. Even on tractors and farm implements, there is a need to design and manufacture products that are more ideally suited to small farm holdings and the varied soil conditions that are encountered in India. On a different but related plane, each mandal or panchayat must have a soil science and technology centre which tests and analyzes the soil conditions, pre-tilling and post-harvesting to recommend the right crops to be grown, the right seeds to be chosen, and the right fertilizers to be applied. These centers should ideally be run by the governments, offering services free of charge to the farmers. The investments would be more than recovered by enhanced farm productivity.

The role of agricultural technology exists acutely in the product side. There is a need to upgrade the harvesting, drying and milling technologies of food grains so that  rice and pulses are protected from the vagaries of nature and also  are classified scientifically in terms of calorific value and nutrition content. Science and technology, for example, can devise milling technologies that can provide rice with varying levels of polish, to suit different palates and different nutritional needs. Similarly, pulses and oil seeds can be put through technological filters for developing finished products catering to balanced and customized nutrition. As the recent contamination of bean sprouts and cucumbers in Europe shows, modern quality control and biological testing methods are required to ensure that agricultural produce meets the stringent requirements of human consumption. With the application of science and technology, the nutritional and medicinal properties of day to day agricultural products can be well characterized and applied as a first line approach to boosting human immunity. Agro technology can veritably lead to agro-driven human health revolution.

Agro logistics

Apart from product and process domains, the Indian agriculture needs a major improvement in logistics. The entire agricultural supply chain, from procurement of seeds to delivery of finished agricultural produce, is subject to many vagaries of weather, vicissitudes of input availability and prices, unpredictability of transportation, inadequacy of storage facilities, and above all an acute dependence on the governments for minimum support prices and seed distribution policies, and on banks and financial institutions for loans. Production of seasonal and value adding fruits is constrained by lack of cold chain transportation and cold chain storage facilities. In addition, lack of timely advice and access to communication facilities clouds farm level decision making. The governments have been making efforts to address these by strengthening the food corporation of India and the public distribution system on one hand, and establishing Kissan Call Centres on the other. However, these infrastructure facilities need to be modernized and expanded to meet an 8 percent growth target in agriculture. Priority must be on modern space management, pest and rodent proof containment and electronic tagging and retrieval systems.

Given the success of cooperatives in the dairy industry and private corporations in oil, spice and condiment industries, as well as the unique success of ITC in its eChoupal initiative it could be appropriate to forge public-private partnerships and joint ventures in agro logistics. While the governments could bring in land as their share of capital, private corporations could bring in technology and management. Such participation could be particularly valuable in cold chain technologies, including storage and distribution. Alternatively or as a supplemental initiative, a new corporation could be floated for cold chain logistics (on the lines of Container Corporation of India). It would appear that much of the attention of the governments has hitherto been on crop production and financing. It is time therefore that agro logistics comes in for attention in the plans of agriculture ministries, and within the ambit of the Central Government’s five year plans and annual union budget as well as the state budgets.

Agro business    

A significant value addition could accrue to the agriculture sector by bringing in agro business as an integral part of agriculture.  Apart from encouraging farmers to stay with farming through modernization and incentives, it would be appropriate to encourage the younger generation of the farmer community to take up agro business ventures. These ventures should ideally focus on food processing and development of packaged foods. Big corporations in the food processing industry and major retail chains can do their bit by outsourcing their requirements on such farm extension ventures. Given the urban preferences for convenience packaging and the retail interests in unitizing supplies, such ventures could extend from supply of packaged food grains, pulses and spices to cut vegetables.

A total transformation of the agricultural sector would, however, be possible if agricultural entrepreneurship, what may be euphemistically called “agropreneurship”, takes root in the Indian social psyche and economic environment. Entrepreneurship in business, and even in agro business, is seen as an urban phenomenon. Ministry of Agriculture, together with banks and financial institutions, should promote intensively say, for a period of 10 years agricultural entrepreneurship through competitive schemes, advisories and grants/low cost loans. Entry of big corporations in agriculture based business including retailing of agricultural products, must be mandated on encouraging agropreneurship to cover at least 5 percent of the turnover in the first five years and 10 percent of the turnover in the next five years. With these measures agropreneurship would become a self-sustaining movement in a period of ten years. 

Agro studies

As with any other sector, a dedicated educational and research base committed to development of agriculture backed by high quality infrastructure would support modernization of agriculture. Starting of agricultural colleges in the 1950s provided the first seeds of such movement. Unfortunately, compared to other streams such as commerce or pharmacy, specialized agricultural education has virtually languished in the country. With agriculture contributing to over 50 percent of employment and nearly 20 percent of the GDP in the Indian economy, and with the application of organized science, technology and management offering great potential it is time that agriculture should have its own specialized institutions. In contrast to this dire need, it is ironic that products of a few agricultural MBA programs are being lapped by industry and business.

Part of the solution could lie in creating a world class agricultural curriculum with a good blend of foundation courses (such as crop sciences, soil sciences, seed sciences, irrigation sciences and so on) and providing a superstructure of vertical specializations (such as agricultural forecasting, farm supply chain management, food processing technologies, agricultural biotechnology, crop genetics and so on). Simultaneously, fundamental and applied research in various aspects of agriculture would need to be specially funded and results of such research patented. It is difficult to envisage that agro studies would grow in scale and stature without such explicit support from the governments, private corporations and reputed universities. Perhaps, the Indian Institute of Management Ahmedabad which has pioneered management courses in agricultural management could be asked to propose a more holistic and forceful thrust for agricultural education.   

Agro governance

Despite the criticism that is often levied against the Indian model of governance, there is no doubt that but for certain concerted policies, initiatives and actions by the specially constituted ministries of agriculture and rural development, agriculture in India could have been in worse shape. The pioneering vision and commitment of Late C Subramaniam who championed the cause of agriculture as the minister for food and agriculture in the Indian Central Government in the 1960s and 1970s and the path-breaking work undertaken by eminent agricultural scientists such as Dr MS Swaminathan in ushering in the Green Revolution are striking examples. It needs to be debated if a sector as vast as agriculture can make do with only one ministry and a few institutions. For example, in the beginning of the blog post, it has already been mentioned that the state governments need appropriate intra-state and inter-state governance mechanisms to achieve an optimal utilization of India’s water resources.

Each of the initiatives mentioned here, namely agro irrigation, agro technology, agro logistics, agro business and agro studies need separate ministries both at central and state levels. In the event separate ministries cannot be constituted, the agriculture ministry itself should be elevated to the level of a super ministry with each of the departments as above also accorded the status of super departments. A new agricultural transformation vision which steps up the growth rate in agriculture and allied sectors to 8 percent, together with a renewed emphasis on, and enhanced allocations for, agriculture in the five year and annual plans would be feasible with a stronger ministerial and bureaucratic structure as suggested.

Indian farmers, resilient fighters

Despite the vagaries of weather, dependence on monsoon, vicissitudes of policies, poverty of farming community, the Indian farmers have been an ever-optimistic, gutsy society of growers. In fact, in 2010-11, thanks to their efforts, India has achieved a record production of food grains (236 million tonnes), pulses (17 million tonnes) and cotton (339 lakh bales). The agricultural and allied sectors have recorded an increase of 6.6 percent in performance for the year. Surely, the governments did their bit by increasing the minimum support prices, enhancing seed availability, providing advisory services, increasing loans and reducing interest rates to benefit farmers. With an aggressive growth vision and transformational agenda as outlined herein, the Indian agriculture could potentially scale up to an annual growth rate of 8 percent, assuring double digit growth rate for the economy. India’s quest for super economic power status would verily get its support from a resurgent farm economy.

Posted by Dr CB Rao on June 12, 2011   

  

   

 

      

   

From Young Executive to Chief Executive: Pathways for Sustainable Growth

Each generation tends to be more knowledgeable and more aggressive than the previous one. The current generation of job aspirants is no different. If at all, Internet, social networking and media have brought globalization and growth on to the forefront. These forces are the strongest in the generation that sees industry and business as the most relevant canvas to lay out one’s career aspirations. This generation, which knocks at industry gates and corporate portals also realizes that there is no longer a classic and proven educational or experience paradigm that propels one to the top crust. The bottom of the pyramid that seeks to grow to the top is larger than ever, even as the competition to excel in the process is fiercer than ever.

When an interviewer quizzes on the career goals of a young aspirant it is now passé for the candidate to say that he or she would endeavor to perform the best in his or her job and leave the rest to his or her management. It is no longer blasé to answer that he or she would like to be in the interviewer’s chair or become a chief executive in a couple of decades or so.  An aggressiveness or ambition to set the highest goal and then set out a work path seems to be the order of the day. It could be difficult to second-guess whether the nonchalance is borne out of confidence or casualness but it is easy to predict that if the aspirations are not backed up by achievements the aspirants as well as the organizations would be in churn. The pathways to growth must therefore be well understood in terms of both opportunities and impediments.

Multiple learning needs

There is a considerable concern that the roadblock to India’s quest for the first world status if at all would be the talent or skills shortage. It is feared that the expectations with which industries and businesses are being set up in India are unlikely to be met in full as the requisite talent is either in short supply or pricey. There is yet another concern that even the premium educational institutions of India are not as world-class as they ought to be. There seems to be, however, excessive externalization in these matters. Even if the hypotheses were to be correct, neither India Inc nor the aspiring talent pool can wait for years for a restructured education system to emerge. The available systemic outputs, which are in fact not inadequate, need to be honed and harnessed to make the best fit of talent and opportunities.

Education, anywhere in the world, does not provide one with readily deployable knowledge. The domains are so varied that no standardized syllabus can meet thousands of work variations. Yet, what education provides is a set of knowledge elements and analytical tools that can be further developed or customized to meet a variety of job needs. It is entirely in the realm of possibility for organizations to leverage the basics to build futures. Similarly, prior experience often teaches many domain fundamentals and process skills which may not be exactly applicable in a new job situation but lay the building blocks. The first job as well as the new job on one hand, and the college fresher as well as the lateral mover all present opportunities which the constituents of the organizational processes in India are ignoring. Rather than blame the educational systems or work environments, employees and employers need to focus on multiple learning needs as manifold opportunities to grow would emerge in the Indian economy.

Grasp beyond curriculum

A young executive who aspires to be a chief executive cannot predict for sure if his or her first company would be the home for him as a chief executive too, or if his core domain would be the perfect launch pad for the career journey. Students in India, or probably even abroad, choose courses based as much on aptitude as by a host of external factors such as demand-supply factors, parental advice, affordability considerations and vagaries of government policies. While the choice of curriculum may also decide the choice of the first company there is no set rule that the pathway to career progress is domain based. There is no such division as technical or non-technical in one’s progression to the top. The ability to grasp new knowledge beyond the curriculum together with the ability to apply all knowledge to new applications is the first prerequisite for being on the pathway to a chief executive position. This is because unlike any other job, the chief executive job requires continuous learning and adaptability to new situations.

It is well established that chief executives demonstrate a remarkable capability to go beyond the core curriculum to gain knowledge of new domains. This needs to be a deliberate process objective of an aspiring executive from the very beginning of the career. Executives who remain devoted to their functions, not bothering or attempting to learn other functional contours, would be cloistered and find it difficult to become multi-function leaders. Organizations when they recruit young executives must focus on their ability for flexible and continuous learning rather than go by only the knowledge-function fit. In many ways, it is necessary for an executive to start a new learning journey once he joins an organization, developing new aptitudes and acquiring new knowledge sets. This does not require that a finance executive should become a physicist or that an engineer should become an accountant to grow in career. The concept of grasp beyond curriculum, however, requires that the executive must understand the drivers of other functions in terms of overall operational and business impact, and the connectivity to his or her core curriculum.

Customer centricity

The essence of growth for corporations as much as for chief executive aspirants is customer centricity. This is both an aptitude and a skill. Product or service-driven organizations are, in fact, customer centric organizations. Their chief executives convert their personal passion for serving the customers with new products and services into a drive for the creation of innovative products and services. It is interesting how passion for customer centricity could be built up from the very beginning of one’s career. The contemporary organizational value chain comprises not only the three core functions of product development, manufacturing and marketing but also a host of other functional specializations and sub-specializations that make the core functions delivery optimally. These supportive functions are, for example, quality, regulatory affairs, production planning, corporate planning, business development, information technology, finance, human resources, and so on. In addition, umbrella functions such as environment, safety and health, ethics, compliance and risk management, corporate social responsibility determine the values of an organization.

The key to appreciation of customer centricity by a young executive lies in an awareness of how each function, regardless of whether it has a direct interface with the customer or not, has a significant contribution to make for organizations to achieve customer delight. It is easy for young executives to understand how the core functions serve the customers in terms of developing, manufacturing and selling products. They do not easily understand how they would be serving the customers when their jobs are in other specialized and supportive functions. This is where organizations need to develop the value chain perspective in the young executives. Young executives need to appreciate that quality is a value differentiator, regulatory affairs is a specifications optimizer, production planning is a timely deliverer, corporate planning is a priority balancer, business development is a customer seeker, information technology is a business connector, finance is a resource manager, and human resources is a talent provider. Each of the functional specializations delivers specific value to customers by optimizing the core functions. The young executives need to appreciate that customer centricity can be achieved by serving the internal functional customers as well.

The ability of a young executive in a function, core or supportive, to connect with internal functions is the foundational component of his or her ability to achieve a mastery of the organizational value chain. It is easier said than done as under the concept of focus and specialization, departments tend to operate as silos in organizations. In such vertically run organizations departmental managers tend to discourage cross-functional collaboration at the mildest, and promote turf wars and inter-departmental politics at the severest. Young executives who acquire and develop value chain perspectives larger than departmental priorities naturally run a better chance of becoming chief executive. Organizations, and its leaders and managers, have a major responsibility in enabling such a developmental eco system. This is also a self-validating and self-fulfilling hypothesis as young executives with such broader perspectives would be the ones to accept and benefit from job rotation programs, thus enriching their careers even further.

Many young executives and chief executives ignore the relevance of, and challenges inherent in, ingraining internal customer orientation as an organizational mindset. Value chain eco system needs a broader business understanding and a deeper multi-functional appreciation. Corporations would therefore need to provide comprehensive value chain indoctrination to new entrants to establish comprehensive multi-functional appreciation and collaborative cultural moorings in young executives. Departmental managers must eschew the temptation of placing the young entrants in narrow jobs before they understand how they can effectively develop as total organizational personalities, and not merely as cogs in organizational wheel. To enable this, even organizational design may need to be reinvented. Quite apart from the silo design and operation of departmental units, organizational performance appraisal and reward systems tend to encourage individual performance. Instead, well designed and well operated matrix organization structures and group incentive schemes linked to collaborative effort are required to support broader perspectives. More fundamental would be the young executives’ passion for knowledge acquisition and an organizational culture that promotes a spirit of enquiry.

Ten essentials

While realization of the concepts of acquiring knowledge outside the core curriculum and native departments are as much dependent on organizational policies and culture as on the young entrants’ passion and perseverance, there are ten essential personality goals which young aspirants must keep in mind and assiduously fulfill to become well-rounded executives, justifying a consideration to grow in organizational hierarchy. These are: respecting higher order values and ethics, reflecting a persona of trust and transparency, understanding the product-market scope, learning the product and manufacturing intricacies, appreciating the importance of time, integrating a culture of continuous improvement, establishing a level of credibility, mastering the inter-personal subtleties, fostering the spirit of innovation and preserving the freedom of expression. These need to be taken up as personal developmental objectives by young aspirants on their own, even though the process may be greatly helped if they are provided with or able to secure mentors who can help in mastering the Ten Essentials.  

There is a simple dictum that if one does right things in life the right results will follow. It is important that a young executive should voluntarily follow a set of higher order ethics and values from the beginning of career. One would be advised to not only inculcate an organization’s published values and ethics but also search for and absorb what other ethical and value parameters are observed by other leading corporations. Many times, walking the talk which is a litmus test of leadership gets inculcated from the young age as one gains strength of character through ethical behavior.

In business dealings as in social relationships, trust and transparency are critical. A Young executive must learn to align his thought, talk and action in a trustworthy and transparent manner. Hidden agendas destroy trust and transparency in organizational relationships. An executive who is known for his transparency is invariably trusted with more responsibilities and partnerships. Trust and transparency arise from a conviction of doing the right things and a confidence of delivering performance against promises made.

While behaviors and values are important, alignment with organizational business goals is equally important. As business grows on products and markets, youngsters need to achieve a complete understanding of the products and markets, not merely by names but also by characteristics. Understanding product-market scope is not a responsibility only of sales and marketing personnel; rather it is a requirement for every professional employee. A young executive who fails to grasp the product-market scope early on in his career would never be aligned with the broader organizational value chain.

In an organization, if products constitute the engine of growth, the shop floor is the platform where manufacturing value is created. The early months of joining an organization is the right period for a young executive to learn the specifications of products and parameters of manufacturing processes. Early integration of a value engineering philosophy vests in the young executive an ability to participate in the value creation activities of the organization with greater authenticity, be in products or processes.

It is important to realize the importance of time both in personal and business contexts. Time management helps an executive not only to be productive in business but also establish an optimal work-life balance, customized to one’s needs. In business, go-to-market time or a project launch time are critical, with each participant in the value chain complying with timelines to ensure timely end-delivery. A young executive’s time management in business or industry would help him become a reasonable manager of time in his personal and social life as well.    

Integrating a culture of continuous improvement (kaizen) is an essential part of a young executive’s career journey. Raising the bar of competitiveness through higher performance on a continuous basis is the way of growth for organizations. A young executive’s opportunity and challenge in career lie in his ability to constantly improve. The promising young executive typically refuses to accept the status quo and tries to discover ways of doing things better. A spirit of continuous enquiry needs to be the essence of an aspirant’s career journey.  

A willingness to set stretch targets and a capability fulfill the promise through performance lends credibility to a young executive’s profile. While a policy of ‘under-promise and over-deliver’ is an accepted strategy, true credibility comes with setting challenging targets voluntarily and exceeding them consistently adds greater credibility to a young executive’s profile. This stems from an ability to conceptualize and analyze the task at hand, estimate elemental times and resource requirements and successfully execute. A successful chief executive would be one who has been, and is, a thorough project manager

A young executive needs all the guidance and support from his colleagues and superiors to learn and execute. Unfortunately, human dynamics often destabilize organizational relationships, more so when organization design and management processes encourage silos. A young executive needs to treat each colleague as a collaborator and demonstrate how he himself could be a good collaborator. Gaining acceptance of colleagues, treating each one as an internal customer, needs interpersonal skills which in turn require an understanding of human motivation, organizational behavior and more importantly an understanding of one’s own self.   

As one progresses in business or industrial life, competition for leadership tends to be fierce and generic. What differentiates one aspirant to chief executive position from the other would be the degree of innovation one brings to the job. A young executive who is innovative in his endeavors carves out a niche for himself in the organization. The stamp of innovation could be seen in product creativity, manufacturing efficiency, operational excellence or business effectiveness. Aspirants for career growth must focus on being innovative in whatever job one does, enhancing organizational competitiveness in the process.

Most important in a career journey is the ability of an executive to be independent in thinking and execution, within the boundaries and responsibilities set in an organizational system. Freedom of expression must be the cherished trait of an executive as he or she progresses in the organizational journey. The ability to be independent and expressive arises from a sense of rectitude and diligence. Imbibing and demonstrating such ethical behavior, one also acquires the stature to express the pros and cons fearlessly, and take the organization on a competitively and ethically correct path.

Bonsai managers and Banyan leaders

Given the pyramid organizational structures, not all young executives can become chief executives in their home organizations but most young executives can become operational and business leaders of substance and stature in native or other organizations through a combination of behavioral initiatives, knowledge endeavors and execution efforts. Executives and organizations must collaborate to create organizational eco systems that facilitate development of grassroots leadership than a crop of ‘bonsai managers’ and ‘banyan leaders’.

Posted by Dr CB Rao on June 6, 2011.