Organizations grow as well as decline due to leadership. Leadership has many roles to play in an organization, many of them overlapping with the traditional roles of management. Two roles are however distinctive for leadership as opposed to management. The first relates to defining the strategic direction of the organization. The second relates to ensuring leadership continuity. All the other leadership tasks from planning to execution and from coordinating to monitoring can be performed by high caliber managers. Strategic direction and leadership continuity, however, are the two tasks that only a genuine leader can perform. In fact, a leader is differentiated from a manager by the effectiveness on these two parameters.
Setting strategic direction requires an intuitive conceptual ability, a trained analytical competence and a native entrepreneurial spirit. Strategic direction emerges from the annals of knowledge, teachings of experience and the visions of alternate futures. It is a core competence that scans comprehensively for visible and invisible opportunities but focuses precisely to crystallize the most appropriate product-market direction. Ensuring leadership continuity requires an ability to develop and manage a team of capable leaders, each member of which could potentially replace the leader at short notice or be capable of taking up leadership responsibility elsewhere. Developing and yet managing equally competent leaders is a core competence that sets apart leaders’ leaders from others.
Strategic leadership involves making a decisive change in the direction of the company. Some of the changes could be growth and profit boosting while some could be more of consolidating the present for supporting a better future. Mergers and acquisitions within the same domain could ensure a leadership position but need not necessarily imply strategic leadership. Real strategic leadership achieves a significant transformation in the business composition of a firm. Strategic leadership is greater than handling the strategy of a function; it is all about leading onto something transformative, which in the ordinary course of things would not have occurred despite the best of functional leadership. Strategic leadership in that sense belongs only to the chief executive officer (CEO), who must be the leaders’ leader to ensure that the sum of all the good parts of the organization results in an overall greatness.
Contrarian challenges
There are ten components which can be identified with each letter of leadership as a word, making it a meaningful acronym of ten critical attributes. These ten components are Logic, Emotion, Analysis, Direction, Engagement, Results, Swiftness, Harmony, Integrity and Precision. Viewed whichever way, these ten attributes emphasize how difficult the job of a leader is. For example, both logic and emotion, which tend to be contrarian, are equally important for a leader to succeed. The ability to deploy logic and emotion completely separately or in combination in different mixes under relevant circumstances cannot be a cultivated process; it needs to be a spontaneous hallmark of a natural leader. Swiftness and precision are again two attributes which could play against each other. Decision making requires swiftness which could at times come with a compromise to the quality and precision parameters of a process and its outcome. The same way, focusing on only precision could slow down a leader.
Engagement and direction are two very important process parameters which are applied together but also require drawing of a necessary line between them. Engagement requires patience, empathy and a relatively mass contact. The more engaged a leader is with his team, the more likely he or she could be successful in motivating the team. At the same time, engagement could suffer from the perils of multiple influences and vested advocacy. The leader would need to ensure that the team is directed to perform certain tasks, though the team feels different, mainly to ensure the desired outcomes. Very often, the leader is able to see a strategic picture that the team would not be able to see despite engagement; therefore direction becomes important after due engagement with the team. At the same time excessive use of direction under the umbrella of engagement would not go well either.
Many times, result-orientation is considered to be the dominant characteristic of leadership. This is not necessarily true. A leader with the right attributes of leadership carries out the right processes and succeeds in achieving the right results. In planning and executing for results, analysis and the science of analytics plays a major role. Too much emphasis is placed on the conceptualization and visualization as a striking differentiator of leadership with management. It is, however, the analytical ability that distinguishes a top class leader from others. There are also certain attributes of leadership which are mutually reinforcing with each of the other components. Integrity is one such attribute that reinforces corporate and functional conduct, including result orientation. Integrity leads to alignment of thought, expression and actions, across individuals, teams and the organization. Harmony is yet another characteristic that strengthens internal and external collaboration for the organization.
Practical leadership
Leadership is all about weighing in options and decision making. The ten attributes play a major role in determining how the leadership converts challenges into opportunities and opportunities into businesses. Let us take the case of an airliner facing deep operational and financial turbulence. We may simulate how the airliner’s leadership could role-play the acronym of leadership to achieve positive outcomes. The first task of the leader is to let logic and analytics prevail over emotion in planning for recovery. The leadership should be able to see beyond current turbulence and establish a case for industry and business revival, given the cyclicality of the airline industry. Once the case is established, the second task of the leadership is engagement, with the distraught employees, the circumspect passengers, and the worried external agencies, bankers and regulators. The process of engagement is helped by the level of integrity and harmony, with the right touch of emotion, that are displayed in the process of dealing with all the stakeholders.
These processes cannot be interminable; nor can they be viewed as processes of negotiation with the stakeholders as to who would blink first; whether it would be disheartened employees on voluntary attrition or panicky bankers and regulators with bailout packages and policy frameworks. Swiftness of a turnaround plan, rather than emotional stewardship, builds credibility and secures broad-based support to bail the airliner out of the turbulence. Precision in articulating the recovery pathway and metrics helps in reinforcing the credibility. Results orientation helps the leadership measure its own success, and articulate to build credibility amongst the stakeholders. Practical leadership would endeavor to turn around the airliner by its own efforts as expeditiously as possible without letting it sink on elusive hopes of public bailout.
At another extreme would be an entrepreneurial leader who has rolled out an enterprise on the basis of a minimum business program acceptable to the angel and financial investors as well as co-promoters. The entrepreneurial leader builds the logic of growth by the swiftness with which he achieves performance that exceeds its plans. A noted entrepreneurial pharmaceutical firm achieved in two years what it promised as its minimum program of five years, thus building a huge bank of faith in all its stakeholders. Direction and results constitute the hallmarks of a high growth entrepreneurial firm which help the leader engage with his stakeholders. Integrity is a major component of entrepreneurial success while harmony with emerging public policy and underserved social needs helps the firm constantly identify new opportunities.
More often than not, many firms also happen to be well established corporations with large organizational structures, comprising functional units or business units. The concept of leaders’ leader is well challenged in such organizations. For most such organizations, the emphasis would be on hard-wiring the leadership behaviors and processes with structures and templates. Logic, analysis, direction, results, integrity and precision are the dominant themes. Leaders need to add emotion, engagement, swiftness and harmony to the behavior models of the large corporations to ensure holistic leadership. Technology needs to be deployed in areas such as company-wide engagement while entrepreneurial leadership needs to be integrated at functional and business leadership levels. Harmony with environment could be a dominant integration need as is evidenced by the delays faced by large corporations in establishing new green field projects in steel, power and other such sectors.
Acronym for all seasons
Practical leadership is not only contextually appropriate but also conceptually relevant in any leadership situation. Organizations, large or small and public or private need leaders who can bring out the capabilities of the team to the fullest extent through a combination of attributes. Different types of organizations typically facilitate or require certain types of leadership. Practical leadership requires that the leaders achieve a transformation of leadership models to promote growth or fight decline as the case may be. Logic, Emotion, Analysis, Direction, Engagement, Results, Swiftness, Harmony, Integrity and Precision are the ten essential components of leadership that remind every leader of his or her attributes for success and fulfillment.
Posted by Dr CB Rao on April 29, 2012
Sunday, April 29, 2012
Sunday, April 8, 2012
From Business Matrix to Technology Matrix: The re-crafting of the BCG Model
The BCG Growth-Share matrix is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970s. It is based on the premise that a corporation's business units can be classified into four categories (shown as four quadrants of a business grid) based on combinations of market growth and market share relative to the largest competitor. Market growth serves as a proxy for competitive advantage and relative market share serves as a proxy for competitive advantage. These two variables of market performance are considered in the BCG model to be the critical determinants of profitability of a company.
The BCG matrix has lost much of its sheen over the years mainly because of three reasons. Firstly, business performance is influenced by a greater number of strategic factors than just market variables. Secondly, the four types of businesses are not independent of each other; some could be actually supporting the other while some could be in the kind of position they are in due to the others. Thirdly, the matrix is applicable more for broad and large markets rather than to small and niche markets. The concepts, unfortunately however, still get to be utilized extensively in academic and business settings mainly to determine the investment philosophy of a firm towards business units in each of the four segments. This is a worrisome factor.
Investment logic and fallacy
The BCG investment logic is that based on the future business and profit potential, businesses or products must be divested, analyzed, invested or milked, each of this being a mutually exclusive option, in the proponents’ view.
Businesses which have low market share and low growth rate tend to be marginal businesses which could consume disproportionately higher management time and organizational human resources. These businesses called Dogs must be divested, according to the BCG theory. Some consider these as cash traps which have little potential as a result of which the company would be better off without them than with them.
Question marks are products or businesses that grow rapidly, and as a result consume large amounts of cash. However, because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually, a cash cow when the market growth slows. If it does not become a market leader it will become a dog when market growth declines. Question marks need to be analyzed carefully to determine if they are worth the investment required to grow market share.
Stars are products or businesses that generate large sums of cash because of their strong relative market share that too in a fast growing industry, but also consume large amounts of cash because of their high growth rate. So the cash being spent and brought in approximately nets out, unless managed well. If a star can maintain its large market share it will become a cash cow when the market growth rate declines. On the other hand, if stars cannot maintain their market dominance with reasonable investment logic, they could become dogs.
As market leaders in a mature market, cash cows are businesses or products that exhibit a return on assets that is greater than the market growth rate – so they generate more cash than they consume. These units should be ‘milked’ extracting the profits and investing as little as possible. They provide the cash required to turn question marks into market leaders. A corporation that has more cash cows in its portfolio tends to soar high on market capitalization. The concept of milking without investments does not appear to be progressive management thought, however.
Distorted logic
The BCG Matrix has always been deficient due to its preoccupation with visible variables of market performance, ignoring the underlying drivers of either firm competencies or market requirements. In fact, the way the investment logic is built up there is a clear absence of customer or market centricity and a dominant preoccupation with the firm’s business or growth. More importantly, the corporate responsibility to serve the markets with appropriate products and businesses is made subservient to return on investment as the only criterion. Fundamentally, products and businesses are built on investments in R&D and manufacturing assets which have a useful life. The corporate leadership has a responsibility to ensure that the assets run their useful life, and if the product life cycle outlives the asset life cycle, the assets are either modernized or substituted.
The BCG Matrix also ignores the logic that product technology has the capability to make the quadrants relive their utility or lose their utility much earlier than the asset life. Automobiles, for example, are a classic group of products which can be produced to newer capabilities on apparently dated machinery. Smart phones, on the other hand, can be rendered obsolete in a year due to changes in operating systems rather than the declines in the manufacturing assets. Technology well harnessed can help channel additional investments to enhance the returns on the total investments, past and the new ones together. The computer chip is a striking example of technology beefing that can rewrite the rules of the BCG Matrix.
The essential logic of the BCG Matrix is that all products and businesses outlive their utility, and firms must therefore be opportunistic in utilization of the assets. While the Matrix explicitly considers market based variables, it does not exhort firms to first understand the key drivers of the markets prior to matching the available or future assets to the market needs. The Matrix does not take into consideration either the consumer or the competition. While it may be argued that the BCG Matrix is not intended to address the issues of competitive strategy, an important management tool cannot be allowed to be grossly deficient, leading to errors in how corporate leaders use it while trying to serve their stakeholders, including customers and investors.
Quadrants astray
The BCG Matrix is essentially a 2X2 matrix. The author of this post has been a votary of the simple, but exceptional, usefulness of a 2X2 segmentation in the strategic classification of issues, products, assets or markets (please refer to the author’s earlier post, “The 2 Dimensional Matrix: A Universal Analytical Tool” in Strategy Musings, July 3, 2011). The 2X2 product-market matrix is a fine example of connecting existing products and new products with existing markets and new markets to define four unique strategies of market penetration, product expansion, market expansion and product-market diversification. However, the product-market matrix is just a lens to clarify strategic approaches to product-market options; and no less or no more. On the other hand, the BCG Matrix is erroneously used to drive the investment strategies of a firm that could actually injure the firm and its markets.
The concept of cash cows, for example, is deleterious to the long term health of a corporation. The approach that market leading products and businesses in mature industries must be milked to earn high returns with the least investments is deficient in that it could compromise key parameters of safety, quality and productivity, if indiscriminately deployed. The temptation to earn super-profits on the basis of lean investments needs to be resisted, and instead cash cows must merit reasonable reinvestments to ensure that the products and businesses, which are favored by mature markets, meet the high standards.
Stars are considered cash guzzlers as well as cash generators. The BCG Matrix suggests good management as the requirement to ensure the net cash surplus of stars. Management could, however, just be one factor. Luxury products in any space, for example, require significant investments. The ability of the stars to be net cash generators often is a function of economic strength of the nations as much as the managerial strength of the firms. JLR, for example, became sick as part of global meltdown but became a star in the hands of Tata Motors not merely because of the Indian management (or component supplies) but also due to the global economic recovery.
Question Marks need to be analyzed, according to the BCG proponents. Question marks actually require risk taking ability on the part of the managements as the products and businesses represent bets on the future. Focus needs to be on securing the right blend of technology and management to ensure that the question marks fulfill their potential. Manufacture of fire resistant glass could be a question mark given the high costs but with appropriate technology and scale it could be the most preferred glass option at least for commercial and industrial spaces.
Dogs is an uncharitable sobriquet given to a quadrant of products and businesses which the BCG Matrix recommends to be divested. Dogs, if at all, are the most faithful, loving and adorable creatures. It is rather paradoxical to suggest that businesses that served well once upon a time should be divested once they become frail. The inability of the leadership to read market signals and technological trends should not lead to divestitures. More appropriately, resetting of business priorities or the possibility of generating greater value for a business or a product line in someone else’s hands should be the real driver. The success of IBM’s computer business under Lenovo after the acquisition is an example of win-win divestiture.
Technology matrix
Management of the product-market portfolio is one of the greatest challenges of corporate leadership. As companies become multi-product and multi-business, the challenges of portfolio management become more complex. The strategic issue for the leadership is not as simple as finding an easy solution through simplistic analytical tools such as the BCG Matrix, which has several limitations in itself. The challenge for the leadership is to have a portfolio of projects with not only with the right growth and earning parameters but also with the needed customer centricity and technological profiles. For those who visit the established automobile plants of Japan and Korea it is a surprise how the relatively older plants produce the most gleaming automobiles. The answer lies in the prudent investments that are made in product and process technologies to keep the standards high. Once the leadership starts viewing its portfolio of products and services or businesses from a true market serving perspective rather than from the firm performance perspective, the BCG Matrix loses its glamour as well as the relevance.
The more appropriate dimensions to assess the portfolio of products and businesses of a company are the product technologies and process technologies. A technology matrix drawn on product and process technologies provides sharper insights into the management of the future. A quadrant with dated product and dated process technologies has no justification to stay in economic life; divestiture is not an option. Companies which have quadrants of products and businesses with dated product and contemporary process technologies, but with contemporary product and dated process technologies would be able to grow these question marks into viable options by making relevant investments in product and process technologies respectively. Companies which secure a quadrant of businesses and products that have contemporary product and contemporary process technologies are destined to win in the current competitive world. Responsible and proactive leaderships will need to consider Technology Matrix rather than Business Matrix as the tool to achieve sustainable growth with profits.
Posted by Dr CB Rao on April 8, 2012
The BCG matrix has lost much of its sheen over the years mainly because of three reasons. Firstly, business performance is influenced by a greater number of strategic factors than just market variables. Secondly, the four types of businesses are not independent of each other; some could be actually supporting the other while some could be in the kind of position they are in due to the others. Thirdly, the matrix is applicable more for broad and large markets rather than to small and niche markets. The concepts, unfortunately however, still get to be utilized extensively in academic and business settings mainly to determine the investment philosophy of a firm towards business units in each of the four segments. This is a worrisome factor.
Investment logic and fallacy
The BCG investment logic is that based on the future business and profit potential, businesses or products must be divested, analyzed, invested or milked, each of this being a mutually exclusive option, in the proponents’ view.
Businesses which have low market share and low growth rate tend to be marginal businesses which could consume disproportionately higher management time and organizational human resources. These businesses called Dogs must be divested, according to the BCG theory. Some consider these as cash traps which have little potential as a result of which the company would be better off without them than with them.
Question marks are products or businesses that grow rapidly, and as a result consume large amounts of cash. However, because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually, a cash cow when the market growth slows. If it does not become a market leader it will become a dog when market growth declines. Question marks need to be analyzed carefully to determine if they are worth the investment required to grow market share.
Stars are products or businesses that generate large sums of cash because of their strong relative market share that too in a fast growing industry, but also consume large amounts of cash because of their high growth rate. So the cash being spent and brought in approximately nets out, unless managed well. If a star can maintain its large market share it will become a cash cow when the market growth rate declines. On the other hand, if stars cannot maintain their market dominance with reasonable investment logic, they could become dogs.
As market leaders in a mature market, cash cows are businesses or products that exhibit a return on assets that is greater than the market growth rate – so they generate more cash than they consume. These units should be ‘milked’ extracting the profits and investing as little as possible. They provide the cash required to turn question marks into market leaders. A corporation that has more cash cows in its portfolio tends to soar high on market capitalization. The concept of milking without investments does not appear to be progressive management thought, however.
Distorted logic
The BCG Matrix has always been deficient due to its preoccupation with visible variables of market performance, ignoring the underlying drivers of either firm competencies or market requirements. In fact, the way the investment logic is built up there is a clear absence of customer or market centricity and a dominant preoccupation with the firm’s business or growth. More importantly, the corporate responsibility to serve the markets with appropriate products and businesses is made subservient to return on investment as the only criterion. Fundamentally, products and businesses are built on investments in R&D and manufacturing assets which have a useful life. The corporate leadership has a responsibility to ensure that the assets run their useful life, and if the product life cycle outlives the asset life cycle, the assets are either modernized or substituted.
The BCG Matrix also ignores the logic that product technology has the capability to make the quadrants relive their utility or lose their utility much earlier than the asset life. Automobiles, for example, are a classic group of products which can be produced to newer capabilities on apparently dated machinery. Smart phones, on the other hand, can be rendered obsolete in a year due to changes in operating systems rather than the declines in the manufacturing assets. Technology well harnessed can help channel additional investments to enhance the returns on the total investments, past and the new ones together. The computer chip is a striking example of technology beefing that can rewrite the rules of the BCG Matrix.
The essential logic of the BCG Matrix is that all products and businesses outlive their utility, and firms must therefore be opportunistic in utilization of the assets. While the Matrix explicitly considers market based variables, it does not exhort firms to first understand the key drivers of the markets prior to matching the available or future assets to the market needs. The Matrix does not take into consideration either the consumer or the competition. While it may be argued that the BCG Matrix is not intended to address the issues of competitive strategy, an important management tool cannot be allowed to be grossly deficient, leading to errors in how corporate leaders use it while trying to serve their stakeholders, including customers and investors.
Quadrants astray
The BCG Matrix is essentially a 2X2 matrix. The author of this post has been a votary of the simple, but exceptional, usefulness of a 2X2 segmentation in the strategic classification of issues, products, assets or markets (please refer to the author’s earlier post, “The 2 Dimensional Matrix: A Universal Analytical Tool” in Strategy Musings, July 3, 2011). The 2X2 product-market matrix is a fine example of connecting existing products and new products with existing markets and new markets to define four unique strategies of market penetration, product expansion, market expansion and product-market diversification. However, the product-market matrix is just a lens to clarify strategic approaches to product-market options; and no less or no more. On the other hand, the BCG Matrix is erroneously used to drive the investment strategies of a firm that could actually injure the firm and its markets.
The concept of cash cows, for example, is deleterious to the long term health of a corporation. The approach that market leading products and businesses in mature industries must be milked to earn high returns with the least investments is deficient in that it could compromise key parameters of safety, quality and productivity, if indiscriminately deployed. The temptation to earn super-profits on the basis of lean investments needs to be resisted, and instead cash cows must merit reasonable reinvestments to ensure that the products and businesses, which are favored by mature markets, meet the high standards.
Stars are considered cash guzzlers as well as cash generators. The BCG Matrix suggests good management as the requirement to ensure the net cash surplus of stars. Management could, however, just be one factor. Luxury products in any space, for example, require significant investments. The ability of the stars to be net cash generators often is a function of economic strength of the nations as much as the managerial strength of the firms. JLR, for example, became sick as part of global meltdown but became a star in the hands of Tata Motors not merely because of the Indian management (or component supplies) but also due to the global economic recovery.
Question Marks need to be analyzed, according to the BCG proponents. Question marks actually require risk taking ability on the part of the managements as the products and businesses represent bets on the future. Focus needs to be on securing the right blend of technology and management to ensure that the question marks fulfill their potential. Manufacture of fire resistant glass could be a question mark given the high costs but with appropriate technology and scale it could be the most preferred glass option at least for commercial and industrial spaces.
Dogs is an uncharitable sobriquet given to a quadrant of products and businesses which the BCG Matrix recommends to be divested. Dogs, if at all, are the most faithful, loving and adorable creatures. It is rather paradoxical to suggest that businesses that served well once upon a time should be divested once they become frail. The inability of the leadership to read market signals and technological trends should not lead to divestitures. More appropriately, resetting of business priorities or the possibility of generating greater value for a business or a product line in someone else’s hands should be the real driver. The success of IBM’s computer business under Lenovo after the acquisition is an example of win-win divestiture.
Technology matrix
Management of the product-market portfolio is one of the greatest challenges of corporate leadership. As companies become multi-product and multi-business, the challenges of portfolio management become more complex. The strategic issue for the leadership is not as simple as finding an easy solution through simplistic analytical tools such as the BCG Matrix, which has several limitations in itself. The challenge for the leadership is to have a portfolio of projects with not only with the right growth and earning parameters but also with the needed customer centricity and technological profiles. For those who visit the established automobile plants of Japan and Korea it is a surprise how the relatively older plants produce the most gleaming automobiles. The answer lies in the prudent investments that are made in product and process technologies to keep the standards high. Once the leadership starts viewing its portfolio of products and services or businesses from a true market serving perspective rather than from the firm performance perspective, the BCG Matrix loses its glamour as well as the relevance.
The more appropriate dimensions to assess the portfolio of products and businesses of a company are the product technologies and process technologies. A technology matrix drawn on product and process technologies provides sharper insights into the management of the future. A quadrant with dated product and dated process technologies has no justification to stay in economic life; divestiture is not an option. Companies which have quadrants of products and businesses with dated product and contemporary process technologies, but with contemporary product and dated process technologies would be able to grow these question marks into viable options by making relevant investments in product and process technologies respectively. Companies which secure a quadrant of businesses and products that have contemporary product and contemporary process technologies are destined to win in the current competitive world. Responsible and proactive leaderships will need to consider Technology Matrix rather than Business Matrix as the tool to achieve sustainable growth with profits.
Posted by Dr CB Rao on April 8, 2012
Sunday, April 1, 2012
Leading India to Growth with Equity through GLAM: The Generic Leadership Accountability Model
India needs leadership, in all its facets to become economic superpower. In this, industrial and business leadership has a major role to play, in terms of driving economic activity through industrial and business ventures and in the process generating employment. The word “leadership” is rather freely used in contemporary times, and is conferred even on professionals who are at best managers of status quo. Even more worrying, leadership is seen as synonymous only with driving growth of the enterprise, without a view on a larger purpose. An article in The Smart Manager attributed to Jason Jennings talks of six guiding principles, the first of which is that smart leaders are committed to double-digit revenue and profit growth! The other five principles relate to delegation, risk taking, strategy articulation, grassroots ownership and stewardship. None of these is beyond common sense, and none is nationally contextual. Leaders surely are those who can manage a total enterprise or those who can manage businesses, sites or functions with a total enterprise perspective.
Driving growth is a key facet of leadership but mere firm level growth need not necessarily contribute to national development. In the context of India's socio-economic profile marked by lack of access to minimal services to an overwhelming proportion of population, an industrial and business model that is predicated upon only growth would be inadequate. Rather, industrial and business leaders must focus on growth with equity. Driving growth with equity requires leaders who are leaders in the true sense of the term. Leadership is also working successfully under multiple constraints and fulfilling multiple objectives simultaneously. The cornerstone of leadership for India, Inc is therefore growth for the country and equity for all the stake holders, most importantly the common man. This blog post proposes a Generic Leadership Accountability Model (GLAM) for driving India's equitable growth through ten relevant native leadership principles of accountability.
Principle # 1: Priority Pyramid
The principle of priority pyramid encourages leaders to focus on what different strata of the Indian society requires and not just what the most elite or the most affluent needs, although the latter could provide a quick route to entry, growth or profits. The example of Indian Hotels, owned by the Tata Group, is a good case. From being a luxury hotelier the chain has moved to become a multi-segment accommodation provider with different brands, and properties, catering to luxury, business, family and budget categories. Both the Tata Group and Mahindra Group which are into high end commercial and residential spaces are looking at affordable housing too. Luxury and economy can never be mutually exclusive in India where over sixty percent of the population has no access to basic amenities and services. Between a Maruti-Suzuki or Tata Motors which cater to every segment of car users and Audi or BMW which are focused on the few affluent, the former are more relevant automobile enterprises for India surely. CK Prahalad's Bottom of the Pyramid theory is exceptionally applicable to Indian development and enterprise growth. Leadership for a contemporary India is thus all about having a degree of social accountability to the national needs.
Principle # 2: Rural Integration
An interesting data set emerged that the demand for the Indian consumer goods and white goods demand is being increasingly driven by rural consumption. The rate of growth for rural demand has outstripped that of the urban demand. Encouraging as the trend is we need to be cognizant that nearly seventy percent of India's population is still rural and thirty percent of India's GDP needs to be generated out of agriculture. The proportionality of rural-urban demand can change only when India moves into the rural areas with a complete package of mixed use economic infrastructure comprising modern agricultural inputs and services, rural bazars, agricultural and food processing industries, supply chain and distribution centres, schools, colleges and hospitals, BPO units and call centre complexes. In other words, relevant customized urban clones need to be created to bring urban development to the door steps of rural households. This would not only reduce cost of urbanization and urban production but also place wealth directly in the hands of rural population without the costs of intermediation.
Principle # 3: National Research
Notwithstanding the progress on several fronts, India still trails the advanced world in original research, product innovation and generation of patented intellectual property. Quite apart from the resource and talent bottlenecks, mindless pursuit of product specifications of the Western world has led to skewed and infertile research efforts. Research on product and process technologies relevant for India would have reversed the trend of dependence on the Western models of innovation. The Economist has recently carried an article on how products developed in India based on frugal engineering are disrupting the traditional high specification and high cost models of the West. While the more sophisticated equipment may continued to be developed in the West and Japan and Korea, there is no reason why more products for the bottom and middle of the pyramid cannot be invented, developed and patented out of India. We need to develop national specifications eschewing the imported specifications. The Bureau of Indian Standards (BIS) should focus on defining the kind of products and product specifications that India needs as a research mandate, and the government should strengthen the higher research institutions and the patent offices to give a leg-up to truly national research. Leadership needs to be accountable to a nationally relevant product and process development strategy as GE India with the India-smart diagnostic devices and Tata Motors with Nano car have done.
Principle # 4: Manufacturing Core
India cannot be the super economy of the world without a superlative manufacturing core. The recent travails of the India's capital goods industry in a background of more competitive imports from European and Chinese manufacturers is a clear alarm that India's manufacturing needs to reinvent itself. In a globalizing world, customs tariffs and indigenization schedules have ceased to be triggers and protectors of local production. The enigma of Indian manufacture is proving to be somewhat counter-intuitive after decades of manufacturing infrastructure development. From furniture to toys and tableware to toys imports are dominant while the whole spectrum of high end automobiles, white goods and electronics goods is import-dependent. Statistics of increasing manufacturing output in India hide the fact that most high technology production is based on imported precision manufacturing equipment and incorporate high technology components. Leadership has to eschew the expedient route of ready imports And encourage local capabilities. World-class industrial design would be one priority area that could help commonplace manufacturing goods regain their competitiveness. Progress in microelectronics and tool and die manufacture would help the Indian manufacture get toeholds in the technology intensive manufacturing sector.
Principle # 5: Clean Environment
The Indian census 2011 has brought out the dramatic fact that over fifty percent of India's population has no access to basic sanitation services. The Indian civic and industrial society generates millions of tonnes of waste of all types which is neither segregated and treated well at source nor recycled and reused safely. Non-renewable and slow-renewable resources are consumed indiscriminately. Waste management and resource protection offer a huge potential for corporate entry and growth. Leaders who have recognized the potential are few and far between. Ramky group has shown that waste management makes both civic and economic sense. Leaders of major corporate groups need to demonstrate their social commitment and environmental sensitivity by establishing companies which treat, recycle or otherwise dispose of waste and effluents on one hand and also which limit indiscriminate use of non-renewable resources. In several cases, resort to superior process technologies and materials can eliminate waste. High capacity coolants high eutectic cutting tools can reduce the waste of coolants and coolant water. Solvent-free manufacture of bulk drugs and other fine chemicals reduces effluent load dramatically. Leadership has to take the technological and business route in ensuring a clean and holistic environment. Planting of trees, though essential and positive, hardly compensates for lack of fundamentals of clean living and clean production.
Principle # 6: Cultural Sensitivity
It is important that Indian leaders are sensitive to the Indian culture. The Indian culture is not a religious culture although Hinduism as the largest religion of India, with its several universal teachings, has a profound impact. The Indian culture, also absorbed the good points from the several nations which occupied India for over three centuries. India became independent on August 15, 1947 due essentially to a grassroots nationalistic and patriotic peoples movement led by the Apostle of Nonviolence and Father of the Nation, Mahatma Gandhi. As a result, the Indian culture tends to be nationalistic and patriotic, reflecting unity in diversity. The Indian culture respects the woman as the builder of the family and therefore the society but has also been open to encourage the women to take up professional work. Leaders have to be cognizant of the several hues of the Indian culture. When leaders seek mute compliance to their diktats what they actually get is simmering dissent. When leaders run their airlines with air hostesses dressed up the western way they make both the visitors and Indian hosts uncomfortable. Indian leaders of MNCs have a responsibility to explain the nuances of the Indian culture to their global colleagues and also vice versa, and develop models of positive cultural fusion. Good culture leads to good business too.
Principle # 7: Quality Revolution
If there is one ultimate and sustainable determinant of competitive advantage, it is quality. Positions of cost and differentiation may provide initial as well as growth advantage but quality determines who would remain in the competitive game. The Indian leadership has not played its due part in making quality a national asset rather than a firm-specific asset. Several companies, surprising amongst all of them, Toyota, the gold standard in quality, have realized that quality requires the continuous attention of the entire organization for sustainability. Quality also covers the total value chain, from design on the drawing board to the delivery to the customer, including also vendors and suppliers making it necessary for all the internal and external stake holders be aware of the quality needs. Leaders in India would need to ensure that quality gets the highest priority. Quality encompasses all behavior and leads to compliance with various other critical parameters such as safety and productivity.
Principle # 8: Women leadership
Leaders of modern India must make special efforts to bring women into the leadership rungs. The author’s previous blog post on gender diversity dealt with this issue at great length (“Gender Diversity in India: Number Game or Talent Paradigm?”, Strategy Musings, March 18, 2012). If corporations are willing to just invest two years of career support in talented women professionals, the goal would be entirely realized. Other strategies could be to enable reeducation and lateral entry to capable women managers who had to take a break for family reasons. There is a larger national purpose in having home makers as business makers. Would a woman leader at the helm of a sugary carbonated fizz drink company lead a diversification into health foods with greater understanding, empathy and passion? Would a woman dean at the hem of an educational institution make special efforts to steel the women students to the rigors of professional life better? The answer, probably, is yes to both the questions.
Principle # 9: Infrastructure Reinforcement
Not all leaders are expected to be in infrastructure companies. Those who are must obviously aim at executing the long gestation infrastructure projects with utmost speed. Leaders in infrastructure companies in India must possess exceptional skills to structure projects with environmental sensitivity, cut through land acquisition difficulties, choose appropriate technologies, tie up mega finances, interact with myriad government, non-government and private agencies and have longevity greater than the long gestation times of infrastructure projects to make sustainable impact. Does L&T with continuity of leadership of its CEO better than BHEL which sees quick periodic changes of its CEOs? The answer probably is yes. It is, however, possible for leaders who are not in infrastructure companies also to influence the development of infrastructure; in fact they have all the stake in good infrastructure. The role played by a bold and vocal leadership of Electronics City companies for building of road infrastructure in Bangalore is a case in point. Leadership that participates in industry associations such as CII can view things in broader perspective and advocate infrastructure. Bold leaders would make India infrastructure savvy.
Principle #10: Safety Net
India, like many other oriental countries, is not opportunistic. India Inc does not consider employees as a variable factor. During the global liquidity crisis of 2008 and 2009, amongst all the countries India has been the only country that avoided job cuts. Indian employment carries its own safety net. However, there are vast sections of population employed in the unorganized sector for whom minimum wages are abysmal. There are also employees, both in organized and organized sectors, who do not have adequate medical insurance. The travails of senior citizens who are no longer in employment for healthcare are particularly severe in India. Leaders need to plan the compensation policies not necessarily on current market forces but more in terms of greater retirement security. Safety net can be created when operations and businesses have long term sustainability. Given the talent crunch, employee loyalty can be nurtured in creative India-specific ways, for example, through healthcare options. Similarly, corporatization of unorganized sector could help improve living conditions for the indigent labor.
India-specific leadership
As the above discussion shows, leadership in India can be, and needs to be, on a plane larger than growth and profits. Corporate and business initiatives need to be contextually relevant to Indian environment to usher in growth with equity. There needs to be a unique Indian leadership model built on the classic global leadership principle but with accountability to the Indian needs. The Generic Leadership Accountability Model (GLAM) discussed for India could have wide applicability for emerging nations, and even for the advanced nations with faltering economies.
Posted by Dr CB Rao on April 1, 2012
Driving growth is a key facet of leadership but mere firm level growth need not necessarily contribute to national development. In the context of India's socio-economic profile marked by lack of access to minimal services to an overwhelming proportion of population, an industrial and business model that is predicated upon only growth would be inadequate. Rather, industrial and business leaders must focus on growth with equity. Driving growth with equity requires leaders who are leaders in the true sense of the term. Leadership is also working successfully under multiple constraints and fulfilling multiple objectives simultaneously. The cornerstone of leadership for India, Inc is therefore growth for the country and equity for all the stake holders, most importantly the common man. This blog post proposes a Generic Leadership Accountability Model (GLAM) for driving India's equitable growth through ten relevant native leadership principles of accountability.
Principle # 1: Priority Pyramid
The principle of priority pyramid encourages leaders to focus on what different strata of the Indian society requires and not just what the most elite or the most affluent needs, although the latter could provide a quick route to entry, growth or profits. The example of Indian Hotels, owned by the Tata Group, is a good case. From being a luxury hotelier the chain has moved to become a multi-segment accommodation provider with different brands, and properties, catering to luxury, business, family and budget categories. Both the Tata Group and Mahindra Group which are into high end commercial and residential spaces are looking at affordable housing too. Luxury and economy can never be mutually exclusive in India where over sixty percent of the population has no access to basic amenities and services. Between a Maruti-Suzuki or Tata Motors which cater to every segment of car users and Audi or BMW which are focused on the few affluent, the former are more relevant automobile enterprises for India surely. CK Prahalad's Bottom of the Pyramid theory is exceptionally applicable to Indian development and enterprise growth. Leadership for a contemporary India is thus all about having a degree of social accountability to the national needs.
Principle # 2: Rural Integration
An interesting data set emerged that the demand for the Indian consumer goods and white goods demand is being increasingly driven by rural consumption. The rate of growth for rural demand has outstripped that of the urban demand. Encouraging as the trend is we need to be cognizant that nearly seventy percent of India's population is still rural and thirty percent of India's GDP needs to be generated out of agriculture. The proportionality of rural-urban demand can change only when India moves into the rural areas with a complete package of mixed use economic infrastructure comprising modern agricultural inputs and services, rural bazars, agricultural and food processing industries, supply chain and distribution centres, schools, colleges and hospitals, BPO units and call centre complexes. In other words, relevant customized urban clones need to be created to bring urban development to the door steps of rural households. This would not only reduce cost of urbanization and urban production but also place wealth directly in the hands of rural population without the costs of intermediation.
Principle # 3: National Research
Notwithstanding the progress on several fronts, India still trails the advanced world in original research, product innovation and generation of patented intellectual property. Quite apart from the resource and talent bottlenecks, mindless pursuit of product specifications of the Western world has led to skewed and infertile research efforts. Research on product and process technologies relevant for India would have reversed the trend of dependence on the Western models of innovation. The Economist has recently carried an article on how products developed in India based on frugal engineering are disrupting the traditional high specification and high cost models of the West. While the more sophisticated equipment may continued to be developed in the West and Japan and Korea, there is no reason why more products for the bottom and middle of the pyramid cannot be invented, developed and patented out of India. We need to develop national specifications eschewing the imported specifications. The Bureau of Indian Standards (BIS) should focus on defining the kind of products and product specifications that India needs as a research mandate, and the government should strengthen the higher research institutions and the patent offices to give a leg-up to truly national research. Leadership needs to be accountable to a nationally relevant product and process development strategy as GE India with the India-smart diagnostic devices and Tata Motors with Nano car have done.
Principle # 4: Manufacturing Core
India cannot be the super economy of the world without a superlative manufacturing core. The recent travails of the India's capital goods industry in a background of more competitive imports from European and Chinese manufacturers is a clear alarm that India's manufacturing needs to reinvent itself. In a globalizing world, customs tariffs and indigenization schedules have ceased to be triggers and protectors of local production. The enigma of Indian manufacture is proving to be somewhat counter-intuitive after decades of manufacturing infrastructure development. From furniture to toys and tableware to toys imports are dominant while the whole spectrum of high end automobiles, white goods and electronics goods is import-dependent. Statistics of increasing manufacturing output in India hide the fact that most high technology production is based on imported precision manufacturing equipment and incorporate high technology components. Leadership has to eschew the expedient route of ready imports And encourage local capabilities. World-class industrial design would be one priority area that could help commonplace manufacturing goods regain their competitiveness. Progress in microelectronics and tool and die manufacture would help the Indian manufacture get toeholds in the technology intensive manufacturing sector.
Principle # 5: Clean Environment
The Indian census 2011 has brought out the dramatic fact that over fifty percent of India's population has no access to basic sanitation services. The Indian civic and industrial society generates millions of tonnes of waste of all types which is neither segregated and treated well at source nor recycled and reused safely. Non-renewable and slow-renewable resources are consumed indiscriminately. Waste management and resource protection offer a huge potential for corporate entry and growth. Leaders who have recognized the potential are few and far between. Ramky group has shown that waste management makes both civic and economic sense. Leaders of major corporate groups need to demonstrate their social commitment and environmental sensitivity by establishing companies which treat, recycle or otherwise dispose of waste and effluents on one hand and also which limit indiscriminate use of non-renewable resources. In several cases, resort to superior process technologies and materials can eliminate waste. High capacity coolants high eutectic cutting tools can reduce the waste of coolants and coolant water. Solvent-free manufacture of bulk drugs and other fine chemicals reduces effluent load dramatically. Leadership has to take the technological and business route in ensuring a clean and holistic environment. Planting of trees, though essential and positive, hardly compensates for lack of fundamentals of clean living and clean production.
Principle # 6: Cultural Sensitivity
It is important that Indian leaders are sensitive to the Indian culture. The Indian culture is not a religious culture although Hinduism as the largest religion of India, with its several universal teachings, has a profound impact. The Indian culture, also absorbed the good points from the several nations which occupied India for over three centuries. India became independent on August 15, 1947 due essentially to a grassroots nationalistic and patriotic peoples movement led by the Apostle of Nonviolence and Father of the Nation, Mahatma Gandhi. As a result, the Indian culture tends to be nationalistic and patriotic, reflecting unity in diversity. The Indian culture respects the woman as the builder of the family and therefore the society but has also been open to encourage the women to take up professional work. Leaders have to be cognizant of the several hues of the Indian culture. When leaders seek mute compliance to their diktats what they actually get is simmering dissent. When leaders run their airlines with air hostesses dressed up the western way they make both the visitors and Indian hosts uncomfortable. Indian leaders of MNCs have a responsibility to explain the nuances of the Indian culture to their global colleagues and also vice versa, and develop models of positive cultural fusion. Good culture leads to good business too.
Principle # 7: Quality Revolution
If there is one ultimate and sustainable determinant of competitive advantage, it is quality. Positions of cost and differentiation may provide initial as well as growth advantage but quality determines who would remain in the competitive game. The Indian leadership has not played its due part in making quality a national asset rather than a firm-specific asset. Several companies, surprising amongst all of them, Toyota, the gold standard in quality, have realized that quality requires the continuous attention of the entire organization for sustainability. Quality also covers the total value chain, from design on the drawing board to the delivery to the customer, including also vendors and suppliers making it necessary for all the internal and external stake holders be aware of the quality needs. Leaders in India would need to ensure that quality gets the highest priority. Quality encompasses all behavior and leads to compliance with various other critical parameters such as safety and productivity.
Principle # 8: Women leadership
Leaders of modern India must make special efforts to bring women into the leadership rungs. The author’s previous blog post on gender diversity dealt with this issue at great length (“Gender Diversity in India: Number Game or Talent Paradigm?”, Strategy Musings, March 18, 2012). If corporations are willing to just invest two years of career support in talented women professionals, the goal would be entirely realized. Other strategies could be to enable reeducation and lateral entry to capable women managers who had to take a break for family reasons. There is a larger national purpose in having home makers as business makers. Would a woman leader at the helm of a sugary carbonated fizz drink company lead a diversification into health foods with greater understanding, empathy and passion? Would a woman dean at the hem of an educational institution make special efforts to steel the women students to the rigors of professional life better? The answer, probably, is yes to both the questions.
Principle # 9: Infrastructure Reinforcement
Not all leaders are expected to be in infrastructure companies. Those who are must obviously aim at executing the long gestation infrastructure projects with utmost speed. Leaders in infrastructure companies in India must possess exceptional skills to structure projects with environmental sensitivity, cut through land acquisition difficulties, choose appropriate technologies, tie up mega finances, interact with myriad government, non-government and private agencies and have longevity greater than the long gestation times of infrastructure projects to make sustainable impact. Does L&T with continuity of leadership of its CEO better than BHEL which sees quick periodic changes of its CEOs? The answer probably is yes. It is, however, possible for leaders who are not in infrastructure companies also to influence the development of infrastructure; in fact they have all the stake in good infrastructure. The role played by a bold and vocal leadership of Electronics City companies for building of road infrastructure in Bangalore is a case in point. Leadership that participates in industry associations such as CII can view things in broader perspective and advocate infrastructure. Bold leaders would make India infrastructure savvy.
Principle #10: Safety Net
India, like many other oriental countries, is not opportunistic. India Inc does not consider employees as a variable factor. During the global liquidity crisis of 2008 and 2009, amongst all the countries India has been the only country that avoided job cuts. Indian employment carries its own safety net. However, there are vast sections of population employed in the unorganized sector for whom minimum wages are abysmal. There are also employees, both in organized and organized sectors, who do not have adequate medical insurance. The travails of senior citizens who are no longer in employment for healthcare are particularly severe in India. Leaders need to plan the compensation policies not necessarily on current market forces but more in terms of greater retirement security. Safety net can be created when operations and businesses have long term sustainability. Given the talent crunch, employee loyalty can be nurtured in creative India-specific ways, for example, through healthcare options. Similarly, corporatization of unorganized sector could help improve living conditions for the indigent labor.
India-specific leadership
As the above discussion shows, leadership in India can be, and needs to be, on a plane larger than growth and profits. Corporate and business initiatives need to be contextually relevant to Indian environment to usher in growth with equity. There needs to be a unique Indian leadership model built on the classic global leadership principle but with accountability to the Indian needs. The Generic Leadership Accountability Model (GLAM) discussed for India could have wide applicability for emerging nations, and even for the advanced nations with faltering economies.
Posted by Dr CB Rao on April 1, 2012
Friday, March 30, 2012
Management by Projects: A Paradigm Shift in Performance Appraisals
The other day Adobe Systems, the global software company known for its digital documentation technologies announced that it would be scrapping the annual performance appraisal process and would instead opt for regular feedback to its employees. The plan is to have managers regular feedback to their teams to ensure a quicker and continuous self-actualization, rather than wait for the year-end. The company now says it would provide feed-forward instead of feedback. Not a borrowed practice, the roots can be traced to management guru Marshall Goldsmith's theory on how instant and real-time feedback can boost performance. “Course correction is also faster and more immediate this way," says the Company. Considering that annual performance appraisals have been a direct result of management by results or managing for results, the quest for alternative is both natural and surprising.
Companies have always been challenged by the complexities and sensitivities of conducting performance appraisal in manners that are not only comprehensive and performance supportive but also equitable and developmental. Towards this objective, firms tend to constantly innovate and tweak their appraisal systems. Some companies emphasize a 360-degree appraisal where employees are assessed by peers, bosses and subordinates. Some others now place greater emphasis on employee behavior rather than on targets. Most others emphasize adding additional dimensions such as managerial aptitude and leadership skill inventories as appraisal platforms in addition to goal oriented rating systems. All these have only added to paperwork or portal work (where appraisals are digitized) without making any fundamental difference to the timeliness and effectiveness of appraisals. Management by, and for, results continues to be somewhat elusive for firms.
Baby and the bath water
The mainstay of the traditional annual performance cycles has been the specific linkage with goals, though assessment of developmental needs and an understanding of the managerial and leadership potential became integral part of the process. Standardization of appraisal templates, harmonization of rating scales and simultaneous assessment of employees across the company serve to ensure relative equity at least as a conceptual goal. The failure of the annual appraisal systems can be related more to the inability of the managers to provide objective and honest feedback and provide tangible mentoring and support for overcoming gaps and developing the employees. This is further compounded by the linkages of ratings with salary increases and promotions. A play-safe bias gets introduced in the appraisal processes at one end with managers becoming paternalistic as an extreme. At the other end, the role played by the appraisals in determining the career development makes employees to be excessively submissive towards the supervisors.
While companies have been cognizant of the deficiencies of the annual performance appraisal systems, hardly any company has gone as far as Adobe in terms of scrapping totally the annual appraisal systems. Companies have been trying to address issues of “halo” and “bias” as well as seeking to avoid the temptations of excessive generosity and criticality through appropriate counseling for objectivity on one hand, and prescription of normal distribution in ratings on the other. In practice, these guidelines do little more than sober down excessive variations, reaching rarely to the core of objectively yet empathetically appraising performance and potential in all the complex facets. As a result, annual performance appraisals continue to have their critiques. It is, however, doubtful if continuous feedback, as a substitute for an annual review, would lend itself to personalized flexibility and standardized efficiency of annual appraisals and provide the anticipated motivation for self-actualization. Firms with larger staff are likely to struggle to get superior options relative to the established and well-oiled annual appraisal systems. And, without a simultaneous and relative assessment of employee performance, company-wide, working out salary increments and career promotions could be quite difficult.
Annual results and specific projects
The root cause for the unhappiness with the annual performance appraisals lies in the assumption that all the results achieved by an individual can be assessed after each period of twelve months. Reducing the review period to six months or even a quarter does not take away the basic deficiency. Neither does focusing on inter-personal relationships and delivery through 360 degree feedback and assessment centers compensate for the deficiency. Taking focus away from metrics and bringing it onto behaviors also does not resolve the problem. This is because neither day-to-day processes and behaviors nor annual performance snapshots truly reflect what individuals, teams and organizations need to deliver against performance goals. Moreover, abolition of annual reviews and substitution by ongoing feedback requires maturity on the part of the team members. The organization also needs to overcome the diffidence and weariness caused by frequent feedback, and stay alert with the needed checks and balances.
The challenge with either sporadic or frequent feedback system is that with targets being hard to quantify on a high frequency, appraisals tend to focus only on behaviors and other qualitative aspects. Supervisors and team members could lack the maturity to handle work without targets. The problem is bound to be more acute with remote working virtual teams. Considering that feedback processes involve considerable allocation of time, daily or even weekly feedback is likely to divert significant amount of productive time to appraisals which could be emotionally consuming for their lack of novelty. While substituting the annual reviews with frequent, say weekly, reviews will help prevent 'the top of the mind recall' and “recency” biases the benefit is too small relative to other difficulties. It also appears that there are very few ways to retool the managers and employees to achieve frequent feedback capabilities.
Management by results vs projects
The performance appraisal systems typically assess performance in terms of results (vis-a-vis goals), work (vis-a-vis time) and competencies (vis-a-vis requisites) in three different buckets, each as a snapshot at the end of a year. If, in addition, peer and other stake holder inputs are required though they demand additional tools such as 360 degree feedback. A paradigm to integrate all the three appraisal components and other stake holder feedbacks can be made possible by a conceptual shift from Management by Results to Management by Projects. Management by Projects or MBP is a logical evolution of a performance management process which started with the once famous Management by Objectives (MBO) and got stuck in Management by Results (MBR).
All work, professional or even personal, is nothing but a series of projects, each with specific start point, end point, work flow, resource commitment, result delivery and stake holder acceptance. These projects could be short term in nature, beginning and ending within an appraisal cycle or long term ones starting prior to and/or ending later than a current appraisal cycle. Regardless of the overall timeframes, projects will have milestones which invariably fall within an annual appraisal period. Compared to the individual components of an appraisal process, projects are more amenable to a holistic appraisal at the end of each milestone as well as at the conclusion of the project.
The case of car design
It would be best to illustrate how MBP can positively influence a performance appraisal system by a case example. For simplicity let us assume that a car body is to be redesigned by a team of engineers in a period that falls within an appraisal cycle. Typically, the redesign will involve body design, head lamp design, tail lamp design, dimensional redesign, compatibility check of the new body profile with the other new or existing components, manufacturing feasibility, marketing acceptance and so on. While each work stream would have functional specialty and several engineers for each team, the entire design group has to work together with several other non-design functions, teams and team members to deliver successfully.
The project of redesigning a car typically tends to be in terms of a series of steps, some sequential and some parallel. For example, these could be understanding of on-road performance of the current model, understanding of new material, component and process technologies, creation of new design specifications, development of manufacturing process parameters, sourcing specifications, development of new designs, development of samples, integration of components and body, laboratory testing of new materials, components and body, on-road testing of new body, limited market acceptance testing, finalization of design and manufacturing , and sign-off by the project and management teams. Several of the above will also be iterative.
Stage gates as assessment centers
The essence of project management lies in the judicious identification of milestones, and stage gates which need to be successfully crossed to proceed to the next stage. Typically, these involve the presence of all members of the larger team and sign-off on each successful milestone. In the case of the car example, for example, the design teams in charge of current product analysis and new material and component trends would make presentations on their findings and seek the group's approval to proceed to the next stage of developing design specifications. How well the two teams perform in their studies and how the peer teams perceive their performance would be well reflected in the presentation.
The senior leadership team and the human resource team that participate in such stage gate presentations would have a wonderful 360 degree view of the performance of the presenting teams, and the members, that no further performance appraisals or assessment centre or peer review methodologies are required. Even more significantly, the leadership teams can participate in the stage gate processes through questions and suggestions, making the whole system inclusive and virtuous. The challenge, if at all, lies in capturing the essence of performance through appropriate templates by leaders who are well tuned for the selection process.
While stage gates are important, the ability of the team to successfully complete the project to the stipulated specifications and time lines within the approved budgets would be the ultimate reflection of the success of the project, and with it of the team members. These conclusive events serve as events that foster team bonding and development based on demonstrated success. Even when the success falls below the expected level such stage gates as well as concluding events would help members to learn appropriate lessons and prepare themselves for handling future projects better. Ideally the stage gates should receive fifty percent of weight and the project conclusion receiving the remaining fifty percent in the performance appraisal of the MBP process.
Organizational requirements
The MBP approach to performance appraisal is unique in that it is universally applicable to all types of industries and all sizes of firms. Projects, defined in a manner broader than setting up physical brick and mortar, projects are the core of work flows in any setting. Each goal of any organization needs to be accomplished through a project or a set of synchronized projects. By focusing on projects as living or real time platforms of goal delivery and performance appraisals absolute harmony can be achieved between organizational goals, team results and individual performance. For the business leaders, functional leaders and human resource partners to effectively participate in MBP, an open organizational architecture which discourages silos is required. To leverage it as a performance appraisal tool, the leaders and more particularly the human resource experts would require an ability to appreciate and analyze work flows in terms of projects, and only projects. The appraisers would need to be learners in the MBP system, and not mere judges as in the traditional appraisal systems.
MBP also requires an organizational culture which is collaboration and communication oriented and which has the true professionalism to discuss project performance transparently despite the knowledge that it would constitute a part of performance appraisal system. The advantages of MBP based performance appraisal system are many. Fundamentally, it institutionalizes a goal driven project management culture in the organization with emphasis on cross-functional team work. Secondly, it makes performance appraisal meaningfully calibrated with logical milestones and process parameters. Thirdly, it transforms performance appraisal into a real time virtuous process which knits together the basic performers, supporting and associated team members as well as peers and leaders. Fourthly, MBP helps leadership development across all levels and makes performance appraisal, leadership development and achievement of individual, team and corporate goals truly harmonized. Given the multifarious benefits, it is time for companies to adopt Management by Projects as a required paradigm shift in performance appraisals.
Posted by Dr CB Rao on March 30, 2012
Companies have always been challenged by the complexities and sensitivities of conducting performance appraisal in manners that are not only comprehensive and performance supportive but also equitable and developmental. Towards this objective, firms tend to constantly innovate and tweak their appraisal systems. Some companies emphasize a 360-degree appraisal where employees are assessed by peers, bosses and subordinates. Some others now place greater emphasis on employee behavior rather than on targets. Most others emphasize adding additional dimensions such as managerial aptitude and leadership skill inventories as appraisal platforms in addition to goal oriented rating systems. All these have only added to paperwork or portal work (where appraisals are digitized) without making any fundamental difference to the timeliness and effectiveness of appraisals. Management by, and for, results continues to be somewhat elusive for firms.
Baby and the bath water
The mainstay of the traditional annual performance cycles has been the specific linkage with goals, though assessment of developmental needs and an understanding of the managerial and leadership potential became integral part of the process. Standardization of appraisal templates, harmonization of rating scales and simultaneous assessment of employees across the company serve to ensure relative equity at least as a conceptual goal. The failure of the annual appraisal systems can be related more to the inability of the managers to provide objective and honest feedback and provide tangible mentoring and support for overcoming gaps and developing the employees. This is further compounded by the linkages of ratings with salary increases and promotions. A play-safe bias gets introduced in the appraisal processes at one end with managers becoming paternalistic as an extreme. At the other end, the role played by the appraisals in determining the career development makes employees to be excessively submissive towards the supervisors.
While companies have been cognizant of the deficiencies of the annual performance appraisal systems, hardly any company has gone as far as Adobe in terms of scrapping totally the annual appraisal systems. Companies have been trying to address issues of “halo” and “bias” as well as seeking to avoid the temptations of excessive generosity and criticality through appropriate counseling for objectivity on one hand, and prescription of normal distribution in ratings on the other. In practice, these guidelines do little more than sober down excessive variations, reaching rarely to the core of objectively yet empathetically appraising performance and potential in all the complex facets. As a result, annual performance appraisals continue to have their critiques. It is, however, doubtful if continuous feedback, as a substitute for an annual review, would lend itself to personalized flexibility and standardized efficiency of annual appraisals and provide the anticipated motivation for self-actualization. Firms with larger staff are likely to struggle to get superior options relative to the established and well-oiled annual appraisal systems. And, without a simultaneous and relative assessment of employee performance, company-wide, working out salary increments and career promotions could be quite difficult.
Annual results and specific projects
The root cause for the unhappiness with the annual performance appraisals lies in the assumption that all the results achieved by an individual can be assessed after each period of twelve months. Reducing the review period to six months or even a quarter does not take away the basic deficiency. Neither does focusing on inter-personal relationships and delivery through 360 degree feedback and assessment centers compensate for the deficiency. Taking focus away from metrics and bringing it onto behaviors also does not resolve the problem. This is because neither day-to-day processes and behaviors nor annual performance snapshots truly reflect what individuals, teams and organizations need to deliver against performance goals. Moreover, abolition of annual reviews and substitution by ongoing feedback requires maturity on the part of the team members. The organization also needs to overcome the diffidence and weariness caused by frequent feedback, and stay alert with the needed checks and balances.
The challenge with either sporadic or frequent feedback system is that with targets being hard to quantify on a high frequency, appraisals tend to focus only on behaviors and other qualitative aspects. Supervisors and team members could lack the maturity to handle work without targets. The problem is bound to be more acute with remote working virtual teams. Considering that feedback processes involve considerable allocation of time, daily or even weekly feedback is likely to divert significant amount of productive time to appraisals which could be emotionally consuming for their lack of novelty. While substituting the annual reviews with frequent, say weekly, reviews will help prevent 'the top of the mind recall' and “recency” biases the benefit is too small relative to other difficulties. It also appears that there are very few ways to retool the managers and employees to achieve frequent feedback capabilities.
Management by results vs projects
The performance appraisal systems typically assess performance in terms of results (vis-a-vis goals), work (vis-a-vis time) and competencies (vis-a-vis requisites) in three different buckets, each as a snapshot at the end of a year. If, in addition, peer and other stake holder inputs are required though they demand additional tools such as 360 degree feedback. A paradigm to integrate all the three appraisal components and other stake holder feedbacks can be made possible by a conceptual shift from Management by Results to Management by Projects. Management by Projects or MBP is a logical evolution of a performance management process which started with the once famous Management by Objectives (MBO) and got stuck in Management by Results (MBR).
All work, professional or even personal, is nothing but a series of projects, each with specific start point, end point, work flow, resource commitment, result delivery and stake holder acceptance. These projects could be short term in nature, beginning and ending within an appraisal cycle or long term ones starting prior to and/or ending later than a current appraisal cycle. Regardless of the overall timeframes, projects will have milestones which invariably fall within an annual appraisal period. Compared to the individual components of an appraisal process, projects are more amenable to a holistic appraisal at the end of each milestone as well as at the conclusion of the project.
The case of car design
It would be best to illustrate how MBP can positively influence a performance appraisal system by a case example. For simplicity let us assume that a car body is to be redesigned by a team of engineers in a period that falls within an appraisal cycle. Typically, the redesign will involve body design, head lamp design, tail lamp design, dimensional redesign, compatibility check of the new body profile with the other new or existing components, manufacturing feasibility, marketing acceptance and so on. While each work stream would have functional specialty and several engineers for each team, the entire design group has to work together with several other non-design functions, teams and team members to deliver successfully.
The project of redesigning a car typically tends to be in terms of a series of steps, some sequential and some parallel. For example, these could be understanding of on-road performance of the current model, understanding of new material, component and process technologies, creation of new design specifications, development of manufacturing process parameters, sourcing specifications, development of new designs, development of samples, integration of components and body, laboratory testing of new materials, components and body, on-road testing of new body, limited market acceptance testing, finalization of design and manufacturing , and sign-off by the project and management teams. Several of the above will also be iterative.
Stage gates as assessment centers
The essence of project management lies in the judicious identification of milestones, and stage gates which need to be successfully crossed to proceed to the next stage. Typically, these involve the presence of all members of the larger team and sign-off on each successful milestone. In the case of the car example, for example, the design teams in charge of current product analysis and new material and component trends would make presentations on their findings and seek the group's approval to proceed to the next stage of developing design specifications. How well the two teams perform in their studies and how the peer teams perceive their performance would be well reflected in the presentation.
The senior leadership team and the human resource team that participate in such stage gate presentations would have a wonderful 360 degree view of the performance of the presenting teams, and the members, that no further performance appraisals or assessment centre or peer review methodologies are required. Even more significantly, the leadership teams can participate in the stage gate processes through questions and suggestions, making the whole system inclusive and virtuous. The challenge, if at all, lies in capturing the essence of performance through appropriate templates by leaders who are well tuned for the selection process.
While stage gates are important, the ability of the team to successfully complete the project to the stipulated specifications and time lines within the approved budgets would be the ultimate reflection of the success of the project, and with it of the team members. These conclusive events serve as events that foster team bonding and development based on demonstrated success. Even when the success falls below the expected level such stage gates as well as concluding events would help members to learn appropriate lessons and prepare themselves for handling future projects better. Ideally the stage gates should receive fifty percent of weight and the project conclusion receiving the remaining fifty percent in the performance appraisal of the MBP process.
Organizational requirements
The MBP approach to performance appraisal is unique in that it is universally applicable to all types of industries and all sizes of firms. Projects, defined in a manner broader than setting up physical brick and mortar, projects are the core of work flows in any setting. Each goal of any organization needs to be accomplished through a project or a set of synchronized projects. By focusing on projects as living or real time platforms of goal delivery and performance appraisals absolute harmony can be achieved between organizational goals, team results and individual performance. For the business leaders, functional leaders and human resource partners to effectively participate in MBP, an open organizational architecture which discourages silos is required. To leverage it as a performance appraisal tool, the leaders and more particularly the human resource experts would require an ability to appreciate and analyze work flows in terms of projects, and only projects. The appraisers would need to be learners in the MBP system, and not mere judges as in the traditional appraisal systems.
MBP also requires an organizational culture which is collaboration and communication oriented and which has the true professionalism to discuss project performance transparently despite the knowledge that it would constitute a part of performance appraisal system. The advantages of MBP based performance appraisal system are many. Fundamentally, it institutionalizes a goal driven project management culture in the organization with emphasis on cross-functional team work. Secondly, it makes performance appraisal meaningfully calibrated with logical milestones and process parameters. Thirdly, it transforms performance appraisal into a real time virtuous process which knits together the basic performers, supporting and associated team members as well as peers and leaders. Fourthly, MBP helps leadership development across all levels and makes performance appraisal, leadership development and achievement of individual, team and corporate goals truly harmonized. Given the multifarious benefits, it is time for companies to adopt Management by Projects as a required paradigm shift in performance appraisals.
Posted by Dr CB Rao on March 30, 2012
Sunday, March 18, 2012
Gender Diversity in India: Number Game or Talent Paradigm?
On March 8, 2012 India, like the rest of the world, celebrated the International Women’s Day. The day as usual was marked by several events and media outpours. Celebration of one assigned day for women, however, does not solve the challenge of ensuring gender equality in our social life and enabling gender diversity in all aspects of political, economic and business life. India, like in many other aspects, presents a paradox in its approach to women. At one level, the social firmament is male dominated, requiring women to be domestically oriented and followers of male members in building families. At another level, however, women are respected and accepted for their leadership in education, employment and governance. The role of women in differentiating the Indian society is also well acknowledged. When qualitatively optics tend to be confusing, and even somewhat misleading, metrics help clarify the true situation.
Indian women in nation building
India ranked 98 in women’s participation in parliament, based on a worldwide survey. While India’s Vijaya Lakshmi Pandit was the first female President of the United General Assembly and Indira Gandhi was the first woman Prime Minister of India, the overall representation in India’s parliament has been low. Lok Sabha, the Indian parliament of democratically elected representatives, has 59 woman members, constituting just 10.8 percent of the total membership while Rajya Sabha, the higher house, has only 25 members, representing 10.3 percent. These numbers compare adversely with the global average of 19.1 percent for representation of women in parliaments. Interestingly, small (and some of them affluent countries) seem to have significantly high levels of women representation in parliaments as these statistics show: Cuba, 43.2 percent, Iceland, 42.9 percent, Netherlands, 40.7 percent, Finland, 40.0 percent, and Norway, 39.6 percent. Even more interestingly, the Arab States have more than doubled the membership of women from 4.3 percent in 1995 to 11.7 percent in 2010. Against these trends, India has yet to ratify the Women’s Reservation Bill that sets apart 33 percent of parliament seats for women.
It is, however, creditable that Indian women politicians have been able to withstand the challenges of India’s democracy and rigors of electioneering and able to secure parliamentary and ministerial positions. It is also appreciable that Indian women have been able to secure significant leadership positions in the Indian administrative and economic services. However, it is surprising that the representation of women in the Indian corporate sector has been significantly low. According to Catalyst India Benchmarking report for 2010, only 17 percent of Indian companies offered target leadership development programs for women. Another study by Women in Leadership (WILL) Forum shows that Indian companies have much lower women representation in senior positions compared with multinational firms. According to the Community Business Survey conducted by Cranfield University, School of Management Studies (“Standard Chartered Bank: Women on Corporate Boards in India 2010”), out of the 1112 directorships on the BSE-100 companies, only 59 are held by women. This represents just 5.3 percent of the total directorships. This percentage compares poorly with other countries: Canada at 15 percent, US at 14.5 percent, and UK at 12.2 percent, Hong Kong at 8.9 percent and Australia at 8.3 percent. Of the 323 executive directorships only 8 are held by women, representing just 2.5 percent. If these statistics are titrated for the women directors who happen to be members of the promoter families, the representation of women professionals on corporate boards and as executive directors would be abysmal. It is gratifying that two of the largest private sector banks have women as the CEOs. While proving the feasibility and potential of women in organizational leadership roles, such rare instances prove an exception rather than a rule.
The climb on a corporate ladder, leading to the apex of the organization, whether it is the C-suite or the Board is steep, tough and all-consuming. Given the conservative attitudes in India to women employment and empowerment as well as the family-shared preferences for bringing up children and taking care of the elders, the low statistics are not surprising. It is actually of some comfort that an advanced country such as UK had also similar low figures in the late nineties. Even in a highly empowered country such as the US that has been practicing gender diversity for decades, the proportion of women dwindles in terms of the climb to the top. According to statistics in the Website Women on Business (www.womenonbusiness.com) while women make up 50.6 percent of “management, professional and related occupations” they comprise only 14.8 percent of Fortune 500 board seats and a mere 2.8 percent of Fortune 500 CEOs and 2.2 percent of Fortune 1000 CEOs. Despite the low overall numbers, the record of India for women in certain sectors such as information technology, banking, medicine and financial services is certainly quite impressive. A large IT organization has, for example, women taking 50 percent of the positions at the entry level. The difficulty is that the percentage drops to 20 percent for the middle level and to low single digits at the top levels.
Attitudes and policies
This drop-off in women representation in corporate climb seems to be related as much to individual attitudes as to the corporate policies. Within India itself, multinational corporations have a better representation than Indian corporations. While large Indian companies had 5 to 6 percent women in senior positions, some multinationals have 15 to 20 percent women at the same level in 2010, the WILL study shows. During the same period while a select Indian bank had around 20 percent women participation in its total workforce, in comparison a select multinational bank in India had around 40 percent women representation in its total staff strength. The WLL study also shows that 84 percent of Indian subsidiaries of multinationals have adopted women's advancement strategy, compared with only 37 percent of India-headquartered companies. Clearly, directed and emphatic corporate policies can help double the representation of women in the Indian corporate sector notwithstanding all the individual and familial limitations. If, in addition, specific initiatives are taken to offer more distinctive and differentiated policy support, the impact could be positive and exemplary.
Fundamentally, policies towards women executives should have a long term perspective. Given that child bearing is the most challenging obstacle in the path of women’s taking up of jobs or staying on in employment, policies must focus on mitigating the impact of this particular tender period. The customary paid maternity leave periods of say 4 months for the women employees would need to be supplemented by additional paid paternity leave periods for the spouses and partially paid leave periods taking the combined child protective period to a year. In a career span of 35 to 40 years, investment of two years of leave on two children would emerge to be a worthwhile one for the individuals as well as corporations. By combining such extended (beyond the 6 month) periods with work-at-home options as well as online informal educational options the employees could even supplement their competencies and reinvent themselves as well. This coupled with policies on flexible working hours and safe on-station and off-station travel policies can help the women employees compete with men employees and push their envelope of performance. That said, major attitudinal changes in male members in terms of family development are also essential to ensure an equitable balance.
Empowering families
The role of the husband and the family, especially the elders, in supporting long term career development for women is critical, especially given the joint family system and lack of public or private geriatric care systems in India. The onus of child development and geriatric care almost entirely falls on female members of a family in India. By sharing these responsibilities of grooming and teaching children, and of supporting and tending the elderly, husbands can take a vast load off the women members and enable them perform with continuity and confidence in the job environment. Many of the women directors covered in the Standard Chartered Bank study felt that the role of the family in determining the career success of women in India is critical – in terms of providing support at a very practical level and also in terms of acknowledgement and recognition by family members of the role of the women outside of the home. Having the support of the older women in the family (particularly the mother-in-law and the mother) as well as the husband and children was seen as extremely important. If female members who have reached board positions have such limitations to cope with, the challenges facing the normal working women can be even more daunting. The family, as a whole, needs to be completely aligned and harmonious, with equitable allocation of responsibilities amongst all the members, for a woman to be self-actualize herself to the fullest extent in the career.
It is often hypothesized in the Indian context that considerations of supplemental income and lifestyle motivate female members to take up employment, and their families to support the. This, however, is a simplistic view. The real unexpressed motivation, however, is in terms of intellectual and economic independence. The typical Indian girl child is today much better educated than ever. It would be tragic if only one half of the talent base of a family is leveraged for economic development of the nation. An economically independent and professionally networked female employee is often able to bring to her family more enriched perspectives, and also develop her children in a more competitive manner. Professional engagement also helps the women to keep in touch with contemporary developments and even upgrade their competencies with additional qualifications. Families that support full employment could be contributing to national development to a greater degree than is apparent.
Public-private support
The governments as well as public-private partnerships have a great role to play in supporting gender diversity. The role of government sponsored communication in managing family welfare has been substantial in India. Apart from health related communication, the government communications can focus on the positive aspects of employing women in terms of supporting meritocracy and not as a matter of gesture. The themes could include how patience and attention to detail as well as the multitasking capabilities which are an integral part of a woman’s psyche could bring about certain special competencies to jobs that require such capabilities. Other themes could include how women could be good in seeking and giving advice, and also being high on integrity and principles. The female directors surveyed by the Cranfield University stated that their constant teaching of the good and the bad to the children helped them to take right approaches as part of the decision making processes. Overall, the thematic emphasis could be on the participation of women correcting the skew of a male-dominated decision making system and bringing the all-round family welfare at the centre and core of social and economic development.
Infrastructure support can be another great way by which public-private partnerships could support gender diversity. Most prominent would be to set up baby and child day care centers wherever clusters of industries and businesses are situated. This would have a salutary impact in motivating women to reach out to the geographic areas where their skills are needed most. The transport systems should be made female commuter friendly by providing more ladies-exclusive rail coaches and buses. Private cab services must also institutionalize female cab services with alarm systems and GPS fortified taxies. Rather than follow the model of limiting nighttime travel for women protection, night patrolling should be made more pronounced with more women patrol crews and more self-help groups active across all residential and work communities. The rapidly increasing fitness centers must incorporate self-protection as a part of the stay-safe, stay-fit curriculum for the female members. While offering all financial incentives for girls to complete their collegiate and professional education without interruption, the school and college curriculums must focus on the nation-building role of women, and bring out case studies of how women can transform families and societies.
Self-employment as paradigm shift
With India's talent crunch and with women representing a huge untapped talent resource, it is important to leverage the vast valuable pool of talent that the women represent. Surprisingly, nearly 70 percent of women graduates of even elite institutions such as the Indian Institutes of Management (IIMs) do not reportedly pursue a higher career. Many women, however intelligent and qualified they are, tend to subsume their ambitions and dreams in the interest of family and society. All the guidelines discussed above could enhance the participation of women at work and enable greater initiatives in career building but it is still doubtful if the fundamentally rigid organizational and family structures which are built around fixed concepts of time can fully utilize the talent of women. A paradigm shift in favor of self-employment could potentially help educated and creative women set up and run enterprises that are better aligned with their time systems. A large number of service businesses and online ecosystems are ideal platforms to combine their home and work environments and still weave businesses around their core competencies.
As Indian economy develops further, research and development and service industries would gain prominence. Higher levels of affluence may boost service businesses such as fashion design, advertising, hospitality and media, to quote a few. Genuine and sustainable competitive advantage would accrue by women focusing on businesses of lasting value creation, not merely those driven by conspicuous consumption. All domains which provide knowledge services and deal in intellectual property creation should be domains of choice for the contemporary Indian woman. Starting a business is probably the best way of starting at the top for women and stay on there.
Leveraging talent
Gender diversity is more than providing more jobs to women or having more women in organizations. Diversity centered on talented women leads to diversity of culture, thinking processes and differentiated business approaches. It not only opens up a larger talent pool but also leads to enrichment of thought and experience. However, for gender diversity to succeed in a sustainable manner it must be based initially on certain special efforts including training and mentoring of the women employees but eventually on deployment of equally and equitably high standards in education, recruitment and performance management. A few organizations in India have demonstrated as to what it takes to get women on the top of a structure of meritocracy; there is no reason why more organizations cannot be adept in advancing gender diversity. Quite apart from professional employment, entrepreneurship would be an area for women to self-actualize themselves by developing micro and small enterprises around their core competencies. In the long run, it could be the preferred route for women to demonstrate their leadership capabilities.
Posted by Dr CB Rao on March 18, 2012
Indian women in nation building
India ranked 98 in women’s participation in parliament, based on a worldwide survey. While India’s Vijaya Lakshmi Pandit was the first female President of the United General Assembly and Indira Gandhi was the first woman Prime Minister of India, the overall representation in India’s parliament has been low. Lok Sabha, the Indian parliament of democratically elected representatives, has 59 woman members, constituting just 10.8 percent of the total membership while Rajya Sabha, the higher house, has only 25 members, representing 10.3 percent. These numbers compare adversely with the global average of 19.1 percent for representation of women in parliaments. Interestingly, small (and some of them affluent countries) seem to have significantly high levels of women representation in parliaments as these statistics show: Cuba, 43.2 percent, Iceland, 42.9 percent, Netherlands, 40.7 percent, Finland, 40.0 percent, and Norway, 39.6 percent. Even more interestingly, the Arab States have more than doubled the membership of women from 4.3 percent in 1995 to 11.7 percent in 2010. Against these trends, India has yet to ratify the Women’s Reservation Bill that sets apart 33 percent of parliament seats for women.
It is, however, creditable that Indian women politicians have been able to withstand the challenges of India’s democracy and rigors of electioneering and able to secure parliamentary and ministerial positions. It is also appreciable that Indian women have been able to secure significant leadership positions in the Indian administrative and economic services. However, it is surprising that the representation of women in the Indian corporate sector has been significantly low. According to Catalyst India Benchmarking report for 2010, only 17 percent of Indian companies offered target leadership development programs for women. Another study by Women in Leadership (WILL) Forum shows that Indian companies have much lower women representation in senior positions compared with multinational firms. According to the Community Business Survey conducted by Cranfield University, School of Management Studies (“Standard Chartered Bank: Women on Corporate Boards in India 2010”), out of the 1112 directorships on the BSE-100 companies, only 59 are held by women. This represents just 5.3 percent of the total directorships. This percentage compares poorly with other countries: Canada at 15 percent, US at 14.5 percent, and UK at 12.2 percent, Hong Kong at 8.9 percent and Australia at 8.3 percent. Of the 323 executive directorships only 8 are held by women, representing just 2.5 percent. If these statistics are titrated for the women directors who happen to be members of the promoter families, the representation of women professionals on corporate boards and as executive directors would be abysmal. It is gratifying that two of the largest private sector banks have women as the CEOs. While proving the feasibility and potential of women in organizational leadership roles, such rare instances prove an exception rather than a rule.
The climb on a corporate ladder, leading to the apex of the organization, whether it is the C-suite or the Board is steep, tough and all-consuming. Given the conservative attitudes in India to women employment and empowerment as well as the family-shared preferences for bringing up children and taking care of the elders, the low statistics are not surprising. It is actually of some comfort that an advanced country such as UK had also similar low figures in the late nineties. Even in a highly empowered country such as the US that has been practicing gender diversity for decades, the proportion of women dwindles in terms of the climb to the top. According to statistics in the Website Women on Business (www.womenonbusiness.com) while women make up 50.6 percent of “management, professional and related occupations” they comprise only 14.8 percent of Fortune 500 board seats and a mere 2.8 percent of Fortune 500 CEOs and 2.2 percent of Fortune 1000 CEOs. Despite the low overall numbers, the record of India for women in certain sectors such as information technology, banking, medicine and financial services is certainly quite impressive. A large IT organization has, for example, women taking 50 percent of the positions at the entry level. The difficulty is that the percentage drops to 20 percent for the middle level and to low single digits at the top levels.
Attitudes and policies
This drop-off in women representation in corporate climb seems to be related as much to individual attitudes as to the corporate policies. Within India itself, multinational corporations have a better representation than Indian corporations. While large Indian companies had 5 to 6 percent women in senior positions, some multinationals have 15 to 20 percent women at the same level in 2010, the WILL study shows. During the same period while a select Indian bank had around 20 percent women participation in its total workforce, in comparison a select multinational bank in India had around 40 percent women representation in its total staff strength. The WLL study also shows that 84 percent of Indian subsidiaries of multinationals have adopted women's advancement strategy, compared with only 37 percent of India-headquartered companies. Clearly, directed and emphatic corporate policies can help double the representation of women in the Indian corporate sector notwithstanding all the individual and familial limitations. If, in addition, specific initiatives are taken to offer more distinctive and differentiated policy support, the impact could be positive and exemplary.
Fundamentally, policies towards women executives should have a long term perspective. Given that child bearing is the most challenging obstacle in the path of women’s taking up of jobs or staying on in employment, policies must focus on mitigating the impact of this particular tender period. The customary paid maternity leave periods of say 4 months for the women employees would need to be supplemented by additional paid paternity leave periods for the spouses and partially paid leave periods taking the combined child protective period to a year. In a career span of 35 to 40 years, investment of two years of leave on two children would emerge to be a worthwhile one for the individuals as well as corporations. By combining such extended (beyond the 6 month) periods with work-at-home options as well as online informal educational options the employees could even supplement their competencies and reinvent themselves as well. This coupled with policies on flexible working hours and safe on-station and off-station travel policies can help the women employees compete with men employees and push their envelope of performance. That said, major attitudinal changes in male members in terms of family development are also essential to ensure an equitable balance.
Empowering families
The role of the husband and the family, especially the elders, in supporting long term career development for women is critical, especially given the joint family system and lack of public or private geriatric care systems in India. The onus of child development and geriatric care almost entirely falls on female members of a family in India. By sharing these responsibilities of grooming and teaching children, and of supporting and tending the elderly, husbands can take a vast load off the women members and enable them perform with continuity and confidence in the job environment. Many of the women directors covered in the Standard Chartered Bank study felt that the role of the family in determining the career success of women in India is critical – in terms of providing support at a very practical level and also in terms of acknowledgement and recognition by family members of the role of the women outside of the home. Having the support of the older women in the family (particularly the mother-in-law and the mother) as well as the husband and children was seen as extremely important. If female members who have reached board positions have such limitations to cope with, the challenges facing the normal working women can be even more daunting. The family, as a whole, needs to be completely aligned and harmonious, with equitable allocation of responsibilities amongst all the members, for a woman to be self-actualize herself to the fullest extent in the career.
It is often hypothesized in the Indian context that considerations of supplemental income and lifestyle motivate female members to take up employment, and their families to support the. This, however, is a simplistic view. The real unexpressed motivation, however, is in terms of intellectual and economic independence. The typical Indian girl child is today much better educated than ever. It would be tragic if only one half of the talent base of a family is leveraged for economic development of the nation. An economically independent and professionally networked female employee is often able to bring to her family more enriched perspectives, and also develop her children in a more competitive manner. Professional engagement also helps the women to keep in touch with contemporary developments and even upgrade their competencies with additional qualifications. Families that support full employment could be contributing to national development to a greater degree than is apparent.
Public-private support
The governments as well as public-private partnerships have a great role to play in supporting gender diversity. The role of government sponsored communication in managing family welfare has been substantial in India. Apart from health related communication, the government communications can focus on the positive aspects of employing women in terms of supporting meritocracy and not as a matter of gesture. The themes could include how patience and attention to detail as well as the multitasking capabilities which are an integral part of a woman’s psyche could bring about certain special competencies to jobs that require such capabilities. Other themes could include how women could be good in seeking and giving advice, and also being high on integrity and principles. The female directors surveyed by the Cranfield University stated that their constant teaching of the good and the bad to the children helped them to take right approaches as part of the decision making processes. Overall, the thematic emphasis could be on the participation of women correcting the skew of a male-dominated decision making system and bringing the all-round family welfare at the centre and core of social and economic development.
Infrastructure support can be another great way by which public-private partnerships could support gender diversity. Most prominent would be to set up baby and child day care centers wherever clusters of industries and businesses are situated. This would have a salutary impact in motivating women to reach out to the geographic areas where their skills are needed most. The transport systems should be made female commuter friendly by providing more ladies-exclusive rail coaches and buses. Private cab services must also institutionalize female cab services with alarm systems and GPS fortified taxies. Rather than follow the model of limiting nighttime travel for women protection, night patrolling should be made more pronounced with more women patrol crews and more self-help groups active across all residential and work communities. The rapidly increasing fitness centers must incorporate self-protection as a part of the stay-safe, stay-fit curriculum for the female members. While offering all financial incentives for girls to complete their collegiate and professional education without interruption, the school and college curriculums must focus on the nation-building role of women, and bring out case studies of how women can transform families and societies.
Self-employment as paradigm shift
With India's talent crunch and with women representing a huge untapped talent resource, it is important to leverage the vast valuable pool of talent that the women represent. Surprisingly, nearly 70 percent of women graduates of even elite institutions such as the Indian Institutes of Management (IIMs) do not reportedly pursue a higher career. Many women, however intelligent and qualified they are, tend to subsume their ambitions and dreams in the interest of family and society. All the guidelines discussed above could enhance the participation of women at work and enable greater initiatives in career building but it is still doubtful if the fundamentally rigid organizational and family structures which are built around fixed concepts of time can fully utilize the talent of women. A paradigm shift in favor of self-employment could potentially help educated and creative women set up and run enterprises that are better aligned with their time systems. A large number of service businesses and online ecosystems are ideal platforms to combine their home and work environments and still weave businesses around their core competencies.
As Indian economy develops further, research and development and service industries would gain prominence. Higher levels of affluence may boost service businesses such as fashion design, advertising, hospitality and media, to quote a few. Genuine and sustainable competitive advantage would accrue by women focusing on businesses of lasting value creation, not merely those driven by conspicuous consumption. All domains which provide knowledge services and deal in intellectual property creation should be domains of choice for the contemporary Indian woman. Starting a business is probably the best way of starting at the top for women and stay on there.
Leveraging talent
Gender diversity is more than providing more jobs to women or having more women in organizations. Diversity centered on talented women leads to diversity of culture, thinking processes and differentiated business approaches. It not only opens up a larger talent pool but also leads to enrichment of thought and experience. However, for gender diversity to succeed in a sustainable manner it must be based initially on certain special efforts including training and mentoring of the women employees but eventually on deployment of equally and equitably high standards in education, recruitment and performance management. A few organizations in India have demonstrated as to what it takes to get women on the top of a structure of meritocracy; there is no reason why more organizations cannot be adept in advancing gender diversity. Quite apart from professional employment, entrepreneurship would be an area for women to self-actualize themselves by developing micro and small enterprises around their core competencies. In the long run, it could be the preferred route for women to demonstrate their leadership capabilities.
Posted by Dr CB Rao on March 18, 2012
Sunday, March 11, 2012
From IIMs to IILs: From Masters in Management to Leaders in Leadership?
The Indian Institutes of Management (IIMs) have been the most successful of the Indian efforts to clone and absorb, and even excel over, the Western educational thought. The IIMs are a group of public, autonomous institutes of management education in India. The institute at Calcutta was established first, on November 13, 1961, and was named Indian Institute of Management Calcutta or IIM Calcutta. It was set up in collaboration with the MIT Sloan School of Management, the government of West Bengal, the Ford Foundation and the Indian industry. The institute at Ahmedabad was established in the following month and was named Indian Institute of Management Ahmedabad. Like MIT Sloan in the case of IIM Calcutta, Harvard Business School played an important role in the initial stages of IIM Ahmedabad. The success of these two premier institutes prompted setting up of more Indian Institutes of Management (IIMs) from the 1970s. Today, India has thirteen IIMs. The success of the IIMs triggered the mushrooming of standalone management schools and establishment of management divisions within general and technical educational institutions.
The IIMs offer a wide variety of management courses. They were established with the objectives of providing high quality management education and to assist industry through research and consulting services, and have more than fulfilled the vision and objectives. IIMs are considered to be among the most prestigious and elite business schools in India. Like the Indian Institutes of Technology (IITs) which attract the best school leaving talent through nation-wide Joint Entrance Examination (JEE), the IIMs attract the best graduate talent through their Common Admission Test (CAT). The IIMs primarily offer postgraduate, doctoral and executive education programs. The two-year Post Graduate Program in Management (PGP), offering the Post Graduate Diploma in Management (PGDM), is the flagship program across all IIMs. Some IIMs also offer a one-year Post Graduate Program for experienced executives. Some IIMs offer the Fellow Program in Management (FPM), a doctoral program. The Post Graduate Diploma and Fellowship are considered to be equivalent to MBA and Ph.D., respectively. Many IIMs also offer short-term executive education courses and part-time programs.
Expectations and realities
According to IIM Ahmedabad (IIMA), students admitted to the Post-graduate Program in the past have had scholastic achievements in different disciplines such as arts, commerce, science and professional streams such as medicine, engineering and agriculture. Some of the qualities which characterize past students include high levels of initiative and energy, capacity for hard work, strong task orientation, willingness to learn, and a temperament suitable for teamwork. The PGP classes have had a mix of fresh graduates and persons with work experience. Among the recent PGP students, a significant proportion has had full-time paid work experience of more than six months after their graduation. The influx of experienced graduates into the IIM stream reflects the gap between the expectations developed in fresh students by the IIM education and the experienced maturity levels that most brick and mortar organizations need. The IIMs typically prepare the students to leapfrog over the first executive steps to become managers straightaway. The fundamentals of products, processes and the marketplace are therefore not mastered to the requisite extent by the management graduates. Many times, the intelligence and grasp of the management graduates enables them to overcome the lack of frontline experience. Even so, the gaps between the demands posed by the role intricacy and peer group imbalance in organizations on one hand, and the aspirations fueled by the strategy oriented management education and the initial jumpstart of the career, on the other hand remain high.
Despite this realization and the influx of experienced personnel into IIM studentship, even if the majority is with experience of six years or lower, the challenges of expectation-reality gap and aspiration-delivery gap have not dimmed. The practical circumstances force that, out of the thousands of IIM alumni that join the ranks of industry and business each year, only a few become the most successful entrepreneurs or most effective leaders, managing total enterprises meeting all the benchmarks of true success and effectiveness. In a career, spanning four decades leading to enterprise leadership, so much emphasis is put on just two years of management education at the base of the career, which is subject further to the rollercoaster of organizational dynamics. One way of looking at the elite management education system of India is that the IIMs teach leadership to the unprepared far too early, actually make them managers quite early and let them lose the leadership potential eventually. Given that India’s quest for global economic position requires leadership in multiple domains, clearly time is opportune to define the limits to management education and also explore the next frontier of leadership education.
Early genesis and emerging logic
Despite the adverse image India’s post-independence socialistic polity has, many of the more progressive institutional initiatives of India owe their origin and inspiration to administrative analysis and political wisdom. The Indian Institutes of Technology (IITs) were established by the Government of India, under the leadership of Jawaharlal Nehru, the first Prime Minister of India who believed in scientific and technological self-reliance. The IITs were set up as a group of autonomous engineering and technology-oriented institutes of higher education, declared as “institutions of national importance”. They were created progressively from 1951 to develop a talent base of scientists and engineers, to support the economic and social development of India. Today, India boasts of sixteen IITs. The establishment of the IIMs was also envisioned and initiated by the Indian Government, based on the recommendation of the Planning Commission. India grew rapidly in the 1950s, and in the late 1950s the Commission started facing difficulties in finding suitable managers for the large number of public sector enterprises that were being established in India as a part of its industrial policy. To solve this problem, the Planning Commission in 1959 invited Professor George Robbins of the University of California to help in setting up an All India Institute of Management Studies. Based on his recommendations, the Indian government decided to set up two elite management institutes, Indian Institutes of Management. Calcutta and Ahmedabad.
India today has a civil service cadre of over 20,000, manning the huge all-India governmental and administrative apparatus. These belong primarily to the all-India services and the central services. The all-India services consist of the Indian Administrative Service (IAS), Indian Police Service (IPS) and Indian Forest Service (IFoS). The personnel of these services are allotted state cadres and primarily work with the State Governments. They also serve on deputation to the Central Government. The Indian Administrative Service, with its federal nature, forms the backbone of the delivery of basic services and poverty alleviation programs. The seven central services comprise Indian Audit & Accounts Service (IA&AS), Indian Foreign Service (IFS), Indian Revenue Service (Income Tax), Indian Revenue Service (Customs & Central Excise), Indian Railway Personnel Service (IRPS), Indian Railway Traffic Service (IRTS) and Indian Postal Service (IPoS). The cadre of all these ten services is perhaps insufficient to cater to the needs of the huge 1.3 billion population and their development needs in India.
India has over 3000 central and state ministries and over 650 administrative districts, each of which requires several individual service heads, over 300 major central government owned public sector undertakings (PSUs) and over 5000 state government owned PSUs, and over 100,000 joint stock, public limited and private limited companies, each of which requires multiple corporate officers and enterprise leaders. The leadership pool is supplied by scientists, engineers, professionals, some of them with formal management qualifications; all of them acquired at the starting phase of their careers. Most of the leadership capabilities and competencies are acquired by these officers as they progress through their three to four decade careers. Given that the environmental context, in terms of political, social, demographic, economic, business, and technological trends, changes significantly every five years it is a moot point if the currently available educational structures, including the management capstone education offered and acquired typically in, and by, one’s mid-twenties would be adequate in one’s later half of the career between forty five and sixty five years of age when the leadership impact is expected to be the maximum. There is, typically, a mid-career inflexion point in one’s leadership journey which is completely unattended to in the current educational system.
Breaking the journey
The mid-career point, say the period between forty and forty five years of age (corresponding to fifteen to twenty years of experience) is the inflexion point when typically a mature manager begins to morph into a potential leader. By then, a successful manager would have reached a level of functional mastery and cross-functional capability demonstrated by successful headship of a function, division or a region. What lies ahead is the opportunity to head a business with profit and loss responsibility and later the total corporation. In some cases, the emerging leader would be required to even start up an entirely new business or open up a new region for the corporation. The leadership skills for this transformational journey would be significantly different in terms of developing a business or enterprise vision, formulating a transformation strategy and executing it through a leadership that walks the vision and strategy. The mature manager’s skills of orderly resource management, compliance to established systems and procedures and programmed people management would be necessary but would fall short of the leadership needs. Non-recognition of this inflexion requirement causes managers to continue to act as managers even when they are catapulted to leadership positions.
The answer to this lies in the managers and the companies as well as the civil servants and the governments retooling the mature managerial talent base and transforming it into an emerging leadership talent pool at the above identified mid-career point. The transformation requires the reinforcement of the managerial skills in the new-generation and next-generation contexts and the absorption of what it takes to be a leader in the changing environmental context. For example, the contemporary marketing head must understand the importance of social networking and how it could further change in future and the transformative products and services that are needed to leverage the social networking. Amazon leadership, for example, transformed the industry through electronic book, Kindle and online digital book libraries, leveraging the Internet and telecommunication technologies, and built for itself an industry dominating position. Online music technologies and cloud platforms demonstrate the need for leadership to transform lives through transformed corporations. This transformation requires the mature managers to shed the past partially and take on leadership development fully.
Indian Institutes of Leadership (IILs)
Just as the IITs and IIMs provided a fundamental and lasting breakthrough for India in the scientific, engineering and management education from the 1950s and 1960s, a new network of Indian Institutes of Leadership (IILs) would mark a pioneering transformation in the buildup of leadership development in India. The IILs, like the IITs and IIMs, should be deemed institutes of national importance, and set up as autonomous institutions under the Act of Indian Parliament. The admission to the IILs should be open only to the practicing civil servants or corporate managers in the age group of forty to forty five years, with a corresponding experience of fifteen to twenty years. The admission should be open to mature managers who qualify through a Common Admission Test Customized for Leadership. The admission should also be open to those managers who are sponsored as well as those who reigned from their managerial services, with appropriate years of experience as stipulated. The Government, the industry and the industry associations have a role in supporting the establishment and ramp-up of IILs. It also requires that IIMs confine themselves only to their current educational formats and not open up new leadership course streams for highly experienced candidates. However, IITs and IIMs should be encouraged to establish either on their own or in partnership with the government and the industry discrete IILs.
The curriculum of IILs should obviously be innovative and challenging and also state-of-the-art in terms of adaptation to the dynamic external environment. It should focus on transforming functional managers into business leaders without losing the core technical and professional strengths. Capabilities and competencies to start and grow startups, green field expansions and diversifications, achieve globalization and leverage pioneering technologies should be the unique deliverables of the programs. The curriculum should promote networking between industrial leaders and civil servants as well as between entrepreneurial leaders and professional leaders. The sponsoring corporations should treat the study period of twelve to eighteen months as paid sabbatical period, and seek no direct relationship between the study stream and the company domain; on the other hand, the companies should see the IIL programs as multifaceted leadership development initiatives. The faculty competencies should also be commensurate with the lofty and challenging goals of the IILs; the best of business leaders from India and abroad should constitute the core faculty with fulltime involvement. The IILs would be as transformative in India’s leadership drive as the IITs and IIMs had so far been, and would continue to be in India’s educational drive.
Posted by Dr CB Rao on March 11, 2012
The IIMs offer a wide variety of management courses. They were established with the objectives of providing high quality management education and to assist industry through research and consulting services, and have more than fulfilled the vision and objectives. IIMs are considered to be among the most prestigious and elite business schools in India. Like the Indian Institutes of Technology (IITs) which attract the best school leaving talent through nation-wide Joint Entrance Examination (JEE), the IIMs attract the best graduate talent through their Common Admission Test (CAT). The IIMs primarily offer postgraduate, doctoral and executive education programs. The two-year Post Graduate Program in Management (PGP), offering the Post Graduate Diploma in Management (PGDM), is the flagship program across all IIMs. Some IIMs also offer a one-year Post Graduate Program for experienced executives. Some IIMs offer the Fellow Program in Management (FPM), a doctoral program. The Post Graduate Diploma and Fellowship are considered to be equivalent to MBA and Ph.D., respectively. Many IIMs also offer short-term executive education courses and part-time programs.
Expectations and realities
According to IIM Ahmedabad (IIMA), students admitted to the Post-graduate Program in the past have had scholastic achievements in different disciplines such as arts, commerce, science and professional streams such as medicine, engineering and agriculture. Some of the qualities which characterize past students include high levels of initiative and energy, capacity for hard work, strong task orientation, willingness to learn, and a temperament suitable for teamwork. The PGP classes have had a mix of fresh graduates and persons with work experience. Among the recent PGP students, a significant proportion has had full-time paid work experience of more than six months after their graduation. The influx of experienced graduates into the IIM stream reflects the gap between the expectations developed in fresh students by the IIM education and the experienced maturity levels that most brick and mortar organizations need. The IIMs typically prepare the students to leapfrog over the first executive steps to become managers straightaway. The fundamentals of products, processes and the marketplace are therefore not mastered to the requisite extent by the management graduates. Many times, the intelligence and grasp of the management graduates enables them to overcome the lack of frontline experience. Even so, the gaps between the demands posed by the role intricacy and peer group imbalance in organizations on one hand, and the aspirations fueled by the strategy oriented management education and the initial jumpstart of the career, on the other hand remain high.
Despite this realization and the influx of experienced personnel into IIM studentship, even if the majority is with experience of six years or lower, the challenges of expectation-reality gap and aspiration-delivery gap have not dimmed. The practical circumstances force that, out of the thousands of IIM alumni that join the ranks of industry and business each year, only a few become the most successful entrepreneurs or most effective leaders, managing total enterprises meeting all the benchmarks of true success and effectiveness. In a career, spanning four decades leading to enterprise leadership, so much emphasis is put on just two years of management education at the base of the career, which is subject further to the rollercoaster of organizational dynamics. One way of looking at the elite management education system of India is that the IIMs teach leadership to the unprepared far too early, actually make them managers quite early and let them lose the leadership potential eventually. Given that India’s quest for global economic position requires leadership in multiple domains, clearly time is opportune to define the limits to management education and also explore the next frontier of leadership education.
Early genesis and emerging logic
Despite the adverse image India’s post-independence socialistic polity has, many of the more progressive institutional initiatives of India owe their origin and inspiration to administrative analysis and political wisdom. The Indian Institutes of Technology (IITs) were established by the Government of India, under the leadership of Jawaharlal Nehru, the first Prime Minister of India who believed in scientific and technological self-reliance. The IITs were set up as a group of autonomous engineering and technology-oriented institutes of higher education, declared as “institutions of national importance”. They were created progressively from 1951 to develop a talent base of scientists and engineers, to support the economic and social development of India. Today, India boasts of sixteen IITs. The establishment of the IIMs was also envisioned and initiated by the Indian Government, based on the recommendation of the Planning Commission. India grew rapidly in the 1950s, and in the late 1950s the Commission started facing difficulties in finding suitable managers for the large number of public sector enterprises that were being established in India as a part of its industrial policy. To solve this problem, the Planning Commission in 1959 invited Professor George Robbins of the University of California to help in setting up an All India Institute of Management Studies. Based on his recommendations, the Indian government decided to set up two elite management institutes, Indian Institutes of Management. Calcutta and Ahmedabad.
India today has a civil service cadre of over 20,000, manning the huge all-India governmental and administrative apparatus. These belong primarily to the all-India services and the central services. The all-India services consist of the Indian Administrative Service (IAS), Indian Police Service (IPS) and Indian Forest Service (IFoS). The personnel of these services are allotted state cadres and primarily work with the State Governments. They also serve on deputation to the Central Government. The Indian Administrative Service, with its federal nature, forms the backbone of the delivery of basic services and poverty alleviation programs. The seven central services comprise Indian Audit & Accounts Service (IA&AS), Indian Foreign Service (IFS), Indian Revenue Service (Income Tax), Indian Revenue Service (Customs & Central Excise), Indian Railway Personnel Service (IRPS), Indian Railway Traffic Service (IRTS) and Indian Postal Service (IPoS). The cadre of all these ten services is perhaps insufficient to cater to the needs of the huge 1.3 billion population and their development needs in India.
India has over 3000 central and state ministries and over 650 administrative districts, each of which requires several individual service heads, over 300 major central government owned public sector undertakings (PSUs) and over 5000 state government owned PSUs, and over 100,000 joint stock, public limited and private limited companies, each of which requires multiple corporate officers and enterprise leaders. The leadership pool is supplied by scientists, engineers, professionals, some of them with formal management qualifications; all of them acquired at the starting phase of their careers. Most of the leadership capabilities and competencies are acquired by these officers as they progress through their three to four decade careers. Given that the environmental context, in terms of political, social, demographic, economic, business, and technological trends, changes significantly every five years it is a moot point if the currently available educational structures, including the management capstone education offered and acquired typically in, and by, one’s mid-twenties would be adequate in one’s later half of the career between forty five and sixty five years of age when the leadership impact is expected to be the maximum. There is, typically, a mid-career inflexion point in one’s leadership journey which is completely unattended to in the current educational system.
Breaking the journey
The mid-career point, say the period between forty and forty five years of age (corresponding to fifteen to twenty years of experience) is the inflexion point when typically a mature manager begins to morph into a potential leader. By then, a successful manager would have reached a level of functional mastery and cross-functional capability demonstrated by successful headship of a function, division or a region. What lies ahead is the opportunity to head a business with profit and loss responsibility and later the total corporation. In some cases, the emerging leader would be required to even start up an entirely new business or open up a new region for the corporation. The leadership skills for this transformational journey would be significantly different in terms of developing a business or enterprise vision, formulating a transformation strategy and executing it through a leadership that walks the vision and strategy. The mature manager’s skills of orderly resource management, compliance to established systems and procedures and programmed people management would be necessary but would fall short of the leadership needs. Non-recognition of this inflexion requirement causes managers to continue to act as managers even when they are catapulted to leadership positions.
The answer to this lies in the managers and the companies as well as the civil servants and the governments retooling the mature managerial talent base and transforming it into an emerging leadership talent pool at the above identified mid-career point. The transformation requires the reinforcement of the managerial skills in the new-generation and next-generation contexts and the absorption of what it takes to be a leader in the changing environmental context. For example, the contemporary marketing head must understand the importance of social networking and how it could further change in future and the transformative products and services that are needed to leverage the social networking. Amazon leadership, for example, transformed the industry through electronic book, Kindle and online digital book libraries, leveraging the Internet and telecommunication technologies, and built for itself an industry dominating position. Online music technologies and cloud platforms demonstrate the need for leadership to transform lives through transformed corporations. This transformation requires the mature managers to shed the past partially and take on leadership development fully.
Indian Institutes of Leadership (IILs)
Just as the IITs and IIMs provided a fundamental and lasting breakthrough for India in the scientific, engineering and management education from the 1950s and 1960s, a new network of Indian Institutes of Leadership (IILs) would mark a pioneering transformation in the buildup of leadership development in India. The IILs, like the IITs and IIMs, should be deemed institutes of national importance, and set up as autonomous institutions under the Act of Indian Parliament. The admission to the IILs should be open only to the practicing civil servants or corporate managers in the age group of forty to forty five years, with a corresponding experience of fifteen to twenty years. The admission should be open to mature managers who qualify through a Common Admission Test Customized for Leadership. The admission should also be open to those managers who are sponsored as well as those who reigned from their managerial services, with appropriate years of experience as stipulated. The Government, the industry and the industry associations have a role in supporting the establishment and ramp-up of IILs. It also requires that IIMs confine themselves only to their current educational formats and not open up new leadership course streams for highly experienced candidates. However, IITs and IIMs should be encouraged to establish either on their own or in partnership with the government and the industry discrete IILs.
The curriculum of IILs should obviously be innovative and challenging and also state-of-the-art in terms of adaptation to the dynamic external environment. It should focus on transforming functional managers into business leaders without losing the core technical and professional strengths. Capabilities and competencies to start and grow startups, green field expansions and diversifications, achieve globalization and leverage pioneering technologies should be the unique deliverables of the programs. The curriculum should promote networking between industrial leaders and civil servants as well as between entrepreneurial leaders and professional leaders. The sponsoring corporations should treat the study period of twelve to eighteen months as paid sabbatical period, and seek no direct relationship between the study stream and the company domain; on the other hand, the companies should see the IIL programs as multifaceted leadership development initiatives. The faculty competencies should also be commensurate with the lofty and challenging goals of the IILs; the best of business leaders from India and abroad should constitute the core faculty with fulltime involvement. The IILs would be as transformative in India’s leadership drive as the IITs and IIMs had so far been, and would continue to be in India’s educational drive.
Posted by Dr CB Rao on March 11, 2012
Sunday, March 4, 2012
Total Quality, Cost and Time Management (TQCTM): A Relevant Competitive Paradigm for India, Inc
The issue of industrial or manufacturing competitiveness has been engaging the attention of the Government of India (GoI) for the last several years. The GoI had taken some salutary measures in the past, through its enactments and the requirements of its agencies such as Securities and Exchanges Board of India (SEBI) to enhance the disclosure of information by certain categories of corporations for review by their stakeholders. While aspects like Management Discussion & Analysis have trailed the trends in other advanced countries, certain disclosure requirements on R&D expenditure, technology imports, technology assimilation, development of indigenous technologies, energy efficiency, payables to small and micro enterprises, installed capacities and production, imports and exports have been uniquely Indian, and have helped shine the light on certain important operational parameters of companies. The mandatory requirement of independent cost audit for certain category of firms has been another uniquely Indian requirement of corporate introspection and disclosure, mandated by the GoI, although it has never reached the status of statutory audit of accounts.
The new enactments on the Cost Audit Report Rules (CARR) and Companies (Auditor’s Report) Order (CARO) by the GoI represent an attempt to sharpen the cost audit principles and also expand their applicability. Simultaneously, they seek to reduce the hitherto prevalent resistance of the companies to external cost audits on the grounds of confidentiality of cost data. They also ensure greater teeth through a performance appraisal report that focuses on key operational metrics such as capacity utilization, productivity improvement and so on. Currently, The National Task Force on CARR and CARO of The Institute of Cost Accountants of India (ICAI) is engaged in a nation-wide discussion with industry associations, captains of industry and professional experts. Hopefully, the final outcomes would have the acceptance of all the stakeholders. While such Government and ICAI sponsored cost audits have their utility in terms of focusing attention and ensuring compliance, the real benefits of cost audits would accrue to the company only when the companies understand the concept of cost in its totality and put in place systems of rigorous and meaningful cost management. This blog post proposes a new paradigm of total quality and cost management against a time perspective for India, Inc.
Cost, quality and competitiveness
Cost management is the most important instrument in the quest for globalization by India, Inc. Cost, however, should never be seen independent of Quality. In all ways, cost and quality are significantly interrelated. There are several myths surrounding the cost-quality equation. The most prominent one is that cost and quality are inversely correlated. In other words, it is assumed that higher quality leads to higher cost and somewhat conversely lower cost implies lower quality. While higher levels of quality do require higher levels of product specification, material strength, manufacturing integrity and service delivery, the relationship is neither linear nor proportionate. A higher quality product or service actually creates and expands demand, enables higher scale of production and distribution, improves overhead absorption and ultimately results in superior cost position. Quality integrated cost management is the essential tool for competitiveness.
An ability to successfully operate on low margins is the ultimate test of the cost-competitiveness of a firm. Many times, firms, especially those operating in innovation and niche space believe that cost is secondary and differentiation is primary. Some firms may even believe that pursuit of cost leadership and product differentiation are contrarian activities. There is, in fact, no conflict in the pursuit of these twin goals. Elimination and avoidance of all non-value adding and wasteful activities, and infusion and integration of value adding activities is a primary strategy of all corporations which have accomplished sustainable profitable growth for decades. A review of all corporations which have had decades of such growth over the last several decades in multiple industries and multiple regions, from Toyota in Japan to IBM in USA reflects the basic philosophy.
Controllable factors, all?
Many times, firms have a rather simplistic view of costs and competition. Many leaders are apt to exhort their employees that they should control what is under their control, namely costs, capacity and production, and not worry too much about the factors which in their view are not under their control, for example prices, demand and competition. Nothing can be farther than truth in this. In fact, all factors mentioned above, whether apparently controllable or not, squarely fall within the responsibility and control of the firms. The fact that market demand is at a low level oftentimes is an indicator of the unacceptable quality-cost position of a product or service. The fact that some other player has a lower priced, equivalent or superior quality product or service in the market is an indicator of the superior cost position such a player has been able to achieve relative to the incumbent. The phenomenon of competition in an industry indicates that the industry is attractive in terms of growth and profitability parameters. In essence, therefore, a firm cannot believe that its costs alone are a concern but not how a competitor prices its products.
The belief that a firm should continuously work on a best-in-class quality-cost position is the fundamental tenet that differentiates an industry leader from the rest. This is not to suggest that all firms in an industry must aspire for such an industry leading position. A firm’s strategy is a resultant not merely of a firm’s leadership aspirations but also of its technical and managerial capabilities, capital and other resource endowments, and the legacy issues relating to historical evolution. The point is that a firm should anchor its growth and sustainability strategies on a comprehensive strategy of quality integrated cost management. To be able to do that, firms must recognize that quality and cost are supported by individually unique set of cluster factors that determine the levels of quality and cost, and their interrelationship that a firm can enjoy.
Cost-quality cluster metrics
Cost is a powerful indicator of the ultimate competitiveness of a firm in an industry in which all the constituent firms are able to provide products or services of a comparable quality. The levers that a firm has in its possession to establish a position of superior cost are: productivity (or efficiency and effectiveness combined), scale, scope and speed. Encompassing all this is a zero-waste approach. Each of these factors is interrelated and their harmonious integration requires detailed planning, and correct execution with high forecast and delivery accuracy. Here, forecast accuracy is a broad concept covering not merely demand forecasting but also forecasting of all resource requirements including people, finance, materials, equipment, and various other inputs that are required for operations and delivery. Total cost management, therefore, requires application of the appropriate levers as identified herein across the entire value chain.
Quality is a powerful indicator of the ultimate competitiveness of a firm in an industry in which all the constituent firms are able to provide products and services of a comparable cost. The levers that a firm has in its possession to establish a position of superior quality are: innovation, product and service specifications, process specifications (covering both technical and non-technical processes), safety, skill levels of employees and compliance systems. Encompassing all this is a zero-defect approach. Each of these factors is interrelated and a superior position on quality can emerge only based on integration of all these parameters across the value chain, with a ‘first time right’ approach. Concurrent engineering is a methodology that has been successfully deployed by the automobile industry, especially the Japanese automobile industry, to ensure that quality is ensured in a seamless and unfailing manner across the total value chain. Here, compliance is an important concept in terms of establishing stringent benchmarks and the organization simultaneously conforming as well as innovating to meet such benchmarks. Total quality management, therefore, requires application of the appropriate quality levers as identified herein across the entire value chain.
Technology and management as integrators
The foregoing discussion may lead one to consider Total Cost Management (TCM) and Total Quality Management (TQM) to be two independent, though quite interrelated, streams of a firm. The point that each influences the other positively is well-taken but how such integration would need to be accomplished in practice is as yet unclear from the discussion afore. The key to such integration lies in technology; be it product technology, service technology, manufacturing technology, distribution technology or information technology. Product and process technologies present themselves in terms of the right form factor, appropriate levels of consumption of appropriate types of materials, the conversion efficiencies in terms of uptime, yields and so on. Service and distribution technologies present options for the firms and consumers to interconnect the supplies and requirements in a seamless function. Information technology helps the total value chain to be efficient and effective, and to eliminate waste and ensure compliance to specifications.
Equally important is the management of a firm, which comprises a host of factors from organizational culture to individual competencies. TCM and TQM aspirations cannot be fulfilled merely by deployment of technologies. Like every firm activity which is fundamentally behavior driven, cost and quality require a managerial mindset that utilizes technology and human resources in perfect harmony. The overall industrial context, including its strategic evolution, and the nature of competitive forces determine how management should deploy technology and human resources. What industries considered as a luxury in research and workshop settings a few decades ago, namely automation has become common place with the advances in mechatronics (electronics integrated mechanical engineering) and vastly changed expectations on what constitutes good ergonomics and wise economics. At the same time, the employee’s fundamental capabilities continue to determine how a national or global value chain comprising several functions, sites, teams and technologies can be seamlessly integrated.
Time as the ultimate arbiter
With several firms competing for similar strategic space, and all of them pursuing superior quality-cost options, it becomes necessary to identify one additional calibrator for superior positioning of the firms of the highest order. In this context, time which is the most precious, non-renewable and non-regenerative resource becomes critically important. Here again, myths surround the concepts of quality-cost execution in a time frame. It is not true, for example, that faster work could carry the risk of lower quality or that greater time allocation would ipso facto provide greater quality. Many times there are hidden or implicit activities that need to be performed, not performing which could have adverse quality and cost implications. Curing of concrete in a construction activity is one such example. There could also be limitations in the extent of parallel processing that can be carried out in a multi-tasked project. Components of a new design watch, for example, cannot be ordered unless the basic design parameters, both product and manufacturing, are frozen.
The laudable initiatives of the GoI in cost audit and the recent enactments on CARR and CARO themselves are reflective of the importance of the temporal dimension. These projects were initiated by the Ministry of Corporate Affairs, Government of India, in January 2008 with the constitution of an Expert Taskforce, which submitted a report in a timely manner by December 2008. However, the time taken to translate the recommendations into enactments and furthermore the far longer time that appears to be required by the Indian industry to go beyond the statutory audit requirements and establish in-house cost management efforts point to a need to integrate time as an essential third dimension in the quality-cost-time triad of competitiveness. The very special attribute of rendering the highest quality work at the lowest cost possible, and in the shortest time frame possible differentiates the firm that is solely and uniquely positioned in an optimized quality-cost paradigm. The Total Quality, Cost and Time Management (TQCTM) paradigm as a completely integrated and holistic strategic platform of competitiveness is highly relevant for an India, Inc that is seeking an ever expanding presence in the globalized economic and industrial world.
Posted by Dr CB Rao on March 4, 2012
The new enactments on the Cost Audit Report Rules (CARR) and Companies (Auditor’s Report) Order (CARO) by the GoI represent an attempt to sharpen the cost audit principles and also expand their applicability. Simultaneously, they seek to reduce the hitherto prevalent resistance of the companies to external cost audits on the grounds of confidentiality of cost data. They also ensure greater teeth through a performance appraisal report that focuses on key operational metrics such as capacity utilization, productivity improvement and so on. Currently, The National Task Force on CARR and CARO of The Institute of Cost Accountants of India (ICAI) is engaged in a nation-wide discussion with industry associations, captains of industry and professional experts. Hopefully, the final outcomes would have the acceptance of all the stakeholders. While such Government and ICAI sponsored cost audits have their utility in terms of focusing attention and ensuring compliance, the real benefits of cost audits would accrue to the company only when the companies understand the concept of cost in its totality and put in place systems of rigorous and meaningful cost management. This blog post proposes a new paradigm of total quality and cost management against a time perspective for India, Inc.
Cost, quality and competitiveness
Cost management is the most important instrument in the quest for globalization by India, Inc. Cost, however, should never be seen independent of Quality. In all ways, cost and quality are significantly interrelated. There are several myths surrounding the cost-quality equation. The most prominent one is that cost and quality are inversely correlated. In other words, it is assumed that higher quality leads to higher cost and somewhat conversely lower cost implies lower quality. While higher levels of quality do require higher levels of product specification, material strength, manufacturing integrity and service delivery, the relationship is neither linear nor proportionate. A higher quality product or service actually creates and expands demand, enables higher scale of production and distribution, improves overhead absorption and ultimately results in superior cost position. Quality integrated cost management is the essential tool for competitiveness.
An ability to successfully operate on low margins is the ultimate test of the cost-competitiveness of a firm. Many times, firms, especially those operating in innovation and niche space believe that cost is secondary and differentiation is primary. Some firms may even believe that pursuit of cost leadership and product differentiation are contrarian activities. There is, in fact, no conflict in the pursuit of these twin goals. Elimination and avoidance of all non-value adding and wasteful activities, and infusion and integration of value adding activities is a primary strategy of all corporations which have accomplished sustainable profitable growth for decades. A review of all corporations which have had decades of such growth over the last several decades in multiple industries and multiple regions, from Toyota in Japan to IBM in USA reflects the basic philosophy.
Controllable factors, all?
Many times, firms have a rather simplistic view of costs and competition. Many leaders are apt to exhort their employees that they should control what is under their control, namely costs, capacity and production, and not worry too much about the factors which in their view are not under their control, for example prices, demand and competition. Nothing can be farther than truth in this. In fact, all factors mentioned above, whether apparently controllable or not, squarely fall within the responsibility and control of the firms. The fact that market demand is at a low level oftentimes is an indicator of the unacceptable quality-cost position of a product or service. The fact that some other player has a lower priced, equivalent or superior quality product or service in the market is an indicator of the superior cost position such a player has been able to achieve relative to the incumbent. The phenomenon of competition in an industry indicates that the industry is attractive in terms of growth and profitability parameters. In essence, therefore, a firm cannot believe that its costs alone are a concern but not how a competitor prices its products.
The belief that a firm should continuously work on a best-in-class quality-cost position is the fundamental tenet that differentiates an industry leader from the rest. This is not to suggest that all firms in an industry must aspire for such an industry leading position. A firm’s strategy is a resultant not merely of a firm’s leadership aspirations but also of its technical and managerial capabilities, capital and other resource endowments, and the legacy issues relating to historical evolution. The point is that a firm should anchor its growth and sustainability strategies on a comprehensive strategy of quality integrated cost management. To be able to do that, firms must recognize that quality and cost are supported by individually unique set of cluster factors that determine the levels of quality and cost, and their interrelationship that a firm can enjoy.
Cost-quality cluster metrics
Cost is a powerful indicator of the ultimate competitiveness of a firm in an industry in which all the constituent firms are able to provide products or services of a comparable quality. The levers that a firm has in its possession to establish a position of superior cost are: productivity (or efficiency and effectiveness combined), scale, scope and speed. Encompassing all this is a zero-waste approach. Each of these factors is interrelated and their harmonious integration requires detailed planning, and correct execution with high forecast and delivery accuracy. Here, forecast accuracy is a broad concept covering not merely demand forecasting but also forecasting of all resource requirements including people, finance, materials, equipment, and various other inputs that are required for operations and delivery. Total cost management, therefore, requires application of the appropriate levers as identified herein across the entire value chain.
Quality is a powerful indicator of the ultimate competitiveness of a firm in an industry in which all the constituent firms are able to provide products and services of a comparable cost. The levers that a firm has in its possession to establish a position of superior quality are: innovation, product and service specifications, process specifications (covering both technical and non-technical processes), safety, skill levels of employees and compliance systems. Encompassing all this is a zero-defect approach. Each of these factors is interrelated and a superior position on quality can emerge only based on integration of all these parameters across the value chain, with a ‘first time right’ approach. Concurrent engineering is a methodology that has been successfully deployed by the automobile industry, especially the Japanese automobile industry, to ensure that quality is ensured in a seamless and unfailing manner across the total value chain. Here, compliance is an important concept in terms of establishing stringent benchmarks and the organization simultaneously conforming as well as innovating to meet such benchmarks. Total quality management, therefore, requires application of the appropriate quality levers as identified herein across the entire value chain.
Technology and management as integrators
The foregoing discussion may lead one to consider Total Cost Management (TCM) and Total Quality Management (TQM) to be two independent, though quite interrelated, streams of a firm. The point that each influences the other positively is well-taken but how such integration would need to be accomplished in practice is as yet unclear from the discussion afore. The key to such integration lies in technology; be it product technology, service technology, manufacturing technology, distribution technology or information technology. Product and process technologies present themselves in terms of the right form factor, appropriate levels of consumption of appropriate types of materials, the conversion efficiencies in terms of uptime, yields and so on. Service and distribution technologies present options for the firms and consumers to interconnect the supplies and requirements in a seamless function. Information technology helps the total value chain to be efficient and effective, and to eliminate waste and ensure compliance to specifications.
Equally important is the management of a firm, which comprises a host of factors from organizational culture to individual competencies. TCM and TQM aspirations cannot be fulfilled merely by deployment of technologies. Like every firm activity which is fundamentally behavior driven, cost and quality require a managerial mindset that utilizes technology and human resources in perfect harmony. The overall industrial context, including its strategic evolution, and the nature of competitive forces determine how management should deploy technology and human resources. What industries considered as a luxury in research and workshop settings a few decades ago, namely automation has become common place with the advances in mechatronics (electronics integrated mechanical engineering) and vastly changed expectations on what constitutes good ergonomics and wise economics. At the same time, the employee’s fundamental capabilities continue to determine how a national or global value chain comprising several functions, sites, teams and technologies can be seamlessly integrated.
Time as the ultimate arbiter
With several firms competing for similar strategic space, and all of them pursuing superior quality-cost options, it becomes necessary to identify one additional calibrator for superior positioning of the firms of the highest order. In this context, time which is the most precious, non-renewable and non-regenerative resource becomes critically important. Here again, myths surround the concepts of quality-cost execution in a time frame. It is not true, for example, that faster work could carry the risk of lower quality or that greater time allocation would ipso facto provide greater quality. Many times there are hidden or implicit activities that need to be performed, not performing which could have adverse quality and cost implications. Curing of concrete in a construction activity is one such example. There could also be limitations in the extent of parallel processing that can be carried out in a multi-tasked project. Components of a new design watch, for example, cannot be ordered unless the basic design parameters, both product and manufacturing, are frozen.
The laudable initiatives of the GoI in cost audit and the recent enactments on CARR and CARO themselves are reflective of the importance of the temporal dimension. These projects were initiated by the Ministry of Corporate Affairs, Government of India, in January 2008 with the constitution of an Expert Taskforce, which submitted a report in a timely manner by December 2008. However, the time taken to translate the recommendations into enactments and furthermore the far longer time that appears to be required by the Indian industry to go beyond the statutory audit requirements and establish in-house cost management efforts point to a need to integrate time as an essential third dimension in the quality-cost-time triad of competitiveness. The very special attribute of rendering the highest quality work at the lowest cost possible, and in the shortest time frame possible differentiates the firm that is solely and uniquely positioned in an optimized quality-cost paradigm. The Total Quality, Cost and Time Management (TQCTM) paradigm as a completely integrated and holistic strategic platform of competitiveness is highly relevant for an India, Inc that is seeking an ever expanding presence in the globalized economic and industrial world.
Posted by Dr CB Rao on March 4, 2012
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