Tuesday, December 29, 2009

Incredible India, From 2010 to 2020: The Vision of a Welfare State


As India bids good bye to the first decade of the twenty first century it does so with a new confidence and commitment, looking forward to an even more eventful second decade. During the decade that went by Indian software engineers helped the world handle the Y2K bug seamlessly and smoothly, India surprised the world by becoming a space power on its own, Indian corporations acquired some of the most expensive global marquees, from steel to automobiles, and India as a country caught the fancy of global investors as the emerging economic powerhouse. For those whose lives are intimately woven with India, however, only a few small steps have been taken, and giant strides remain to be taken.

There are several potholes in India’s journey towards sustainable progress. Individual prosperity needs to be channeled for public good. Economic growth needs to be combined with social equity. Urban might need to be balanced with rural delight. Industrial development needs to be powered by innovative spark. India’s global dominance in pharmaceuticals needs to be reflected in healthcare for all in the country. Universal education needs to be sharpened with leading edge competencies. Public services have to be truly utilitarian fulfilling the needs of the teeming millions. Corporations need to hold economic wealth as trustees for the society. The list of the heights yet to be conquered in India’s quest for progress is endless.

It is easy to be despondent that the images of Incredible India are as yet not so credible. India has, however, demonstrated in patches that it can be world class when it plans with diligence and executes with commitment. India has the world’s largest number of US FDA approved pharmaceutical plants. With the largest count of drug master files and abbreviated new drug applications, India has become global generic pharmaceuticals powerhouse. India has become the home to the world’s cheapest 4-seater small car that was indigenously designed and manufactured. Indian information technology firms have continued to dominate the global software industry. The question, however, remains as to why progress in India has to be so tardy and patchy.

Mahatma Gandhi, the Father of the Nation envisaged that India would be a country where the downtrodden would be genuinely cared for. Successive governments since the independence have sought to alleviate poverty by focusing on economic growth, building dams and establishing industries. As a result, India achieved a measure of self-reliance although introverted socialistic dogmas substantially sub-optimized growth. Having achieved a notable level of industrialization the time has now come to shape India as a truly Welfare State. This article advocates a bold paradigm that targets social security, connectivity, energy assurance and innovative agro-industrial development as a strategy to build India into an ideal Welfare State.

Billion homes

Security of shelter, food, education and healthcare are the four pillars of social infrastructure, on which a true welfare state can emerge. Several of India’s problems, both from civility and sanitation purposes, can be traced to widespread homelessness across the country, which is an occurrence without any urban-rural divide. The Governments, Central and State, must target building of a billion homes by 2020 to be able to provide the security of shelter to the billion population which could increase by around 25% by 2020. While a proportion of the billion homes, say around 20%, could be left to a totally private initiative to meet the needs of the middle and upper income groups, around 50% could be in a mix of public-private partnership to build affordable, homes on ‘pay to own’ concept while another 30% would need to be entirely in public ownership to meet the needs of the downtrodden who cannot pay to own any home. The public participation could be in terms of the land that the governments would lease or transfer to the home building corporations and eventually to the owners.

A massive home construction initiative such as the ‘billion homes’ program would not only protect the massive population from the ravages of nature but also provide an influential pan-Indian trigger for employment generation. In a creative manner, the homeless and the jobless themselves can be involved in the construction activity providing them with a steady income even as they participate in the building of their homes with passion and commitment. The entire industrial sector, from cement and steel to design and construction majors would benefit enormously from this initiative, given the widespread upstream and downstream linkages of such residential construction activity. In fact, the ‘billion homes’ initiative would need to be conceptualized in terms of several thousands of environmentally harmonious townships all across India, in and around the established urban and rural habitats, with requisite rail and road connectivity.

Food security

India being a largely agrarian nation, setbacks to food production due to monsoon failures and floods on one hand and lack of incomes to secure daily food on the other hand are the two major handicaps of the economy. Certain State Governments have attempted to mitigate the adverse impact by cheap rice schemes, supported by public distribution system. Leakages in the public distribution system as well as inadequate quantities and quality of supplies to the system, together with the accompanied budgetary subsidy impact have curtailed the positive impact of these measures.

The answer to the financial constraint lies probably in taxing those segments of the food processing industry that cater to affluent sections (eg., fast foods, functional foods, aerated drinks, spirits and beverages) and recycle the money to beef up the public food procurement and distribution systems. Expansion of the subsidized rice or wheat scheme and supplementation with another essential nutrient such as lentil or egg would need to be taken up as a national food security program with adequate budgetary provision.

Universal education

Universal education needs to be a fundamental right as well as a basic obligation for the entire population. Eradication of child labor, with the provision of durable shelter and food security, should hopefully curb the practice of keeping poor children occupied in hard labor denying them the vital time for, and access to, education. Significant increases in the availability and quality of public school system, covering nursery, primary, secondary and vocational schools are urgently called for to support the objective of universal education.

Non-governmental organizations (NGOs) and socially responsible organizations can support this initiative through supply of qualified and committed teachers, which alone can enhance the real utility of the schooling system. Apart from budgetary support, encouraging private or public sector corporations to adopt and fund public schools for better quality of education as part of their corporate social responsibility also would go a long way in supporting universal education. Simultaneously, all higher education institutions should be mandated to reserve at least ten percent of their intake for economically handicapped but meritorious students. Food security offers direct benefit for education. The mid-day meal scheme pioneered by the Government of  Tamil Nadu for school going children, for example, led to a sharp increase in enrolment in schools. Reinforcement of such programs with more hygienic and nutritious food can help the objective of universal education even more significantly.

Healthcare for all

Reference has been made in one of the author’s earliest posts to a pioneering initiative undertaken by the Government of Andhra Pradesh to provide access to healthcare to the needy. The program called ‘Arogya Sri’ provides free treatment to the needy not only in government hospitals but also in corporate hospitals. This coupled with an emergency ambulance service which covers the nook and corner of the State has had a positive impact on the health security of the general population. Though initially it was feared that such schemes would impose an unmanageable subsidy element it has been established that the State’s financial system, though by no means healthy, has adequate resilience to absorb the impact of this noble endeavor.

The Western model of health insurance which is based on ‘pay and benefit as per affordability’ is not appropriate for the large number of ‘low income’ and ‘no income’ group of population in India. Direct intervention by the governments, NGOs and private sector in terms of providing quality hospital facilities and nursing services is a more relevant model for India. Given the fact that the direct healthcare system can be managed if the subsidy element is absorbed by a wider range of public-private partnerships, it is appropriate to extend the ‘Arogya Sri’ scheme nationally across all the states with relevant reinforcement.

Multi-modal connectivity

An efficient multi-modal transportation infrastructure comprising rail, road, air and waterways is a vital superstructure which can nurture a welfare state with productive work-life balance. These four transportation sectors are completely national and intrinsically geographic in any country. Absence of capital goods, consumer goods or food products can be made up through imports or barter mechanisms. Transportation infrastructure, however, has to be developed only within a country. India needs to take great strides for upgrading its transportation structure. While transportation systems call for massive outlays, various advanced nations would be willing to support futuristic transportation systems as evidenced by the India-Japan cooperation on industrial freight corridors that has been recently cemented. A multi-modal transport plan needs to be firmed up and global collaboration arrangements established on an urgent basis by the Indian Government.

Introduction of high speed bullet trains connecting all the State capitals would be a fundamental pre-requisite for enhancing the efficiency and productivity in the Indian transportation system. An entirely new rail network needs to be built across the length and breadth of the country to support the introduction of the bullet trains. Similarly, governments have to move away from archaic concepts of flyovers and take up construction of elevated highways for providing total solutions to intra-city transportation. The golden quadrilateral highways program needs to be expanded into a golden multi-lateral highways program connecting all Tier 1 and Tier 2 cities. The need for modern air transport may be less obvious as it is seen to cater to higher income segments, with an adverse impact on overall fuel consumption. However, air transport has also demonstrated how it can dramatically alter the mobility equation of a country, both in respect of personal and cargo movement. Waterways, in contrast, have been largely ignored in the country despite their being an environmentally clean and fuel-efficient option. Cleaning up of inland waterways and development of new coastal shipping pathways will be helpful to introduce an additional element of productivity in the overall transport system.

POGA for energy assurance

If the wheels of society, industry and economy are to move uninterrupted, and with increasing speed, to fulfill higher economic aspirations, the engines of the growth have to be adequately powered. Power, Oil, Gas and Alternative energy (POGA) sectors are the four vital sectors that require major attention to ensure energy security for a nation that is hungry for growth. Fortunately, unlike other infrastructural sectors, most advanced nations are equally interested in achieving energy security and are willing to provide their technologies and resources to exploit and commercialize sources of energy in countries such as India. India also must treat energy security as a global business that needs to be secured through access to, and control of, energy sources across the globe. Indian Government would need to draw up a strategic global energy plan that meets India’s long term energy requirements.

Over the last few years, despite liberalization the POGA sectors have not received the sustained policy thrust that these complex sectors deserve. Polices for super-mega power projects as well micro-mino power projects need to be put in place along with policies for efficient energy distribution and viable energy pricing. Oil and Gas sectors need to be strengthened by providing the ability for state run ONGC and GAIL corporations to aggressively explore and exploit global energy sources. Integration by oil refining companies into energy exploitation and generation on the models of western oil companies will also need to be considered. Importantly, new corporations have to be established to invent and / or assimilate technologies for exploitation of alternative energy sources such as solar, wind, thermal and bio-energy modes. Grants and subsidies as well as long term tax breaks for private and public sector corporations operating in the alternative energy field also need to be considered. The POGA sector, in terms of generation, distribution and usage of energy will play a critical role in reducing the carbon footprint of the country.

Digital workshop for the world

Over the last few years, the global view that India would only be the world’s back office while China would ideally be the world’s workshop has been changing in India’s favor. Global companies have started to recognize that India could be a high quality-low cost manufacturing base for several consumer and industrial products. India has certainly made such a mark in automobile and component sector and is, in fact, ahead of China in these domains. However, in respect of electronics-driven product categories, India lags behind China in a significant manner.

Digitalization and electronics have been the core of most new product development. Multinational corporations who possess such technologies are unwilling to establish such development and manufacturing bases in India unless majority or total ownership of such enterprises is assured in their hands. India’s restrictive policies on joint ventures and foreign investments in high technology areas and the propensity of Indian partners to hold on the majority voting rights and / or management control have limited the flow of foreign investments and induction of advanced technologies into the electronics sector in the country. Taking a cue from China, Indian industry and government would need to create helpful conditions for overseas corporations developing India as their preferred manufacturing destination, even for the most advanced electronics goods.

‘Re-farming’ the nation

While reforms has been the most popular buzzword of the Indian economy for the last two decades (1990-2009), the new decade of 2010-2019 requires a new buzzword that strengthens India’s agrarian roots to provide total food sufficiency and even achieve exportable surplus to meet the needs of the less privileged nations. This requires construction of new dams, inter-connection of rivers, desert and dry farming technologies and massive afforestation to counter the dwindling green belt in the country. Even as the economy and industry would directly benefit from economic reforms, the economy, industry and the society as the whole would benefit from a massive drive to ‘re-farm’ the nation.

‘Re-farming’ of the nation requires a cultural shift away from endless and chaotic urbanization to a more modern and balanced rural thrust which preserves the natural fundamentals of a rural economy while integrating the amenities of an urban economy. Several other initiatives discussed earlier such as social security, infrastructure stability, energy assurance and transport connectivity would go a long way in reversing the flow of men and materials from rural to urban economies. It is not uncommon to witness in Japan, environmentally clean factories situated in close vicinity of lush farm fields signifying a harmonious blend of the agrarian and industrial sectors. There is no reason why industrial development in India should be at the cost of agricultural development. Rather than convert huge tracts of land expansively into sparsely used industrial or service zones, ways and means must be found to promote co-existence of agricultural, industrial and service economies.

Reaching global scale

A few industrial houses as well as a few first generation enterprises have understood and executed with perspicacity plans to achieve global scale and scope. Global scale with comprehensive scope enables companies access the best technologies, resources and customer bases, internationally. That said, a vast majority of industrial and business enterprises which have potential to reach global scale are content to remain fragmented and sub-optimal in scale for fear of loss of identity. The typically Indian emotional bonds of growing and staying together have inhibited companies from seeking synergies from mergers and acquisitions, nationally or internationally.

A new mindset that subordinates professional aspirations to corporate potentialities and derives individual prosperity from national wealth could lead to a sea change in the traditionally ambivalent approach of the Indian businessmen towards individual business identity versus global business standing. Banking industry, automobile industry, pharmaceutical industry, software industry and FMCG industry are some of the industrial sectors which would benefit from selective India-centric or cross-border amalgamations based on product and market complementarily as well as synergy of capabilities. Industry associations as well as individual corporate honchos and entrepreneurs are well-placed to initiate this process. The Central Government, by setting up a ministry similar to Japan’s famous Ministry of International Trade and Industry (MITI), now Ministry of Economy, Trade and Industry (METI) can help such orderly industrial progression with strategic oversight and guidance (and not necessarily, control!).

Innovating a generic mindset

India had centuries ago, through its brilliant scholars, made phenomenal discoveries and contributions in the fields of astrology, astronomy, healthcare, architecture, civil engineering, administration and financial management. Over the last few centuries, however, India has become a follower rather than a leader in several domains, being content with replicating products, duplicating technologies and recycling business models, either from the West or the East. In doing so, however, India did find a new niche in reverse engineering, technological adaptation, follow-on product development, generic manufacture and cost-competitive global integration. In order to become a leading and vibrant nation, India, however needs to combine its acknowledged “generic follower” skills with innovative pioneer capabilities.

Any generic-follower model has inherent limitations of operating in the tail end of a product life cycle where the price-cost equations leave uncomfortably thin profit margins. Time and again, even in an industry such as the software industry where Indian talent is globally recognized, break-through product concepts continue to emanate from the West. Industrial sectors which have high intellectual potential in terms of the human resource base should make specific and sustained efforts to incubate new products by investing in special development laboratories. Several of the sectors listed earlier as well as additional ones including automobile, pharmaceutical, information technology, watch, gems and jewels, food processing, automotive components, and design, development and engineering services, have the potential to add a significant innovation edge to their broader generic portfolio and emerge as unassailable global players of multiple facets.

Epilogue: Incredible India, from 2010 to 2020

The journey from 2010 to 2020 can be exciting and fascinating for India if the vision, strategies and execution are aligned to build a truly Welfare State with robust social and industrial infrastructure and high productivity. With the vision and strategy outlined in this article, India can be a self-assured nation where complete social security is ensured through universal housing, food, education and healthcare; an upwardly mobile nation in which multi-modal transportation enhances connectivity; a powerful nation which has the energy sufficiency to turn wheels of progress faster: an advanced nation which houses a futuristic digital workshop for the world, a bountiful nation which ‘re-farms’ itself industrially and a creative nation which adds an innovative edge to all the generic competitiveness that it possesses. This ambitious blue print does require massive financing. As with micro-enterprise formation, a worthy and genuine concept, even at a daunting national scale as outlined herein, will not be found wanting for national and international funding support. The India Welfare Plan, 2010-2020 outlined in this article has the potential to transform India into a truly global power bringing cheer and pride to all the Indians as never before.

Goodbye 2009, and Welcome 2010!

Posted by Dr CB Rao on December 29, 2009

Sunday, December 27, 2009

Corporation as a Totalitarian State: Reasons and Remedies

Over the centuries of industrial and economic development, the corporation has grown as the most powerful and pervasive form of human organization for achieving economic goals. There has, however, been significant debate over the last few decades as to whether the typical corporation is run with the most optimal objectives and outcomes, which are appropriate in a broader economic and social context. The debate has become shriller with the emergence of individual corporate malfeasance such as Enron and Satyam or collective corporate misdemeanor as that found in recent collapse in the Wall Street. Concepts of exchange regulations, corporate governance, corporate social responsibility, board independence or CEO accountability have provided certain ameliorative measures but have not altered the way the typical corporation is fundamentally run.

Whether the overall context of the country is democratic or autocratic, the corporation itself has surprising global commonality in its primary characteristics, across countries and cultures. In essence, provocative though the statement may appear, the corporation continues to be set up and managed as a totalitarian entity. As one is aware, a totalitarian state is one where a government subordinates the individual to the state and strictly controls all aspects of life by coercive means. In the initial years of the corporation when Theory X management was the dominant practice, a typical corporation was completely exploitative. Emergence of Theory Y management and understanding of organizational behavior, no doubt, brought in individual motivation as a key anchor of modern management. Yet, it cannot be disputed that the corporation continues to be run as a totalitarian entity where the employee has to be subordinate to the Corporation.

Corporate totalitarianism would not be an issue but for the paradoxical convergence in the mindsets of employees and the leadership to be run in a totalitarian manner. The leadership of a corporation is charged with the task of wealth maximization. More specifically, it has to maximize the corporation’s revenues, profits and market capitalization at all times. So long as a corporation is in a legally approved domain it has to do, and will do, all it can to maximize its financial parameters. A corporation in the tobacco or spirits industry, for example, seeks to maximize the consumption of the tobacco products or liquor products despite the harm such goals may cause to the society and environment. In an analogous manner, employees are increasingly tuned to concepts of variable pay and stock options which link their compensation structure and career growth to business maximization. The individual in today’s material world is completely subordinate because of either individual volition or leadership compulsion to a paradigm of corporate totalitarianism.

Defining (and defying) corporate totalitarianism

Definition of corporate totalitarianism is a complex subject. In a democratic state the ruling political party and its government secure a mandate, however imperfect the democratic processes are. They, therefore claim some transparency and legitimacy in translating a mandate into action, recognizing that a gross travesty could vote them out of power the next time. In an autocratic state, where a single monolithic party dominates the governance, as in the case of China, the government can claim the backing of a well articulated party ideology in seeking to govern in a totalitarian way. In a corporation, however, despite the existence of shareholder mechanisms it is the corporate leadership that determines how a corporation should be run. As long as a corporation remains in legal and regulatory confines, and in addition delivers reasonable investor returns, the manner in which a corporation is run never begets a question. As a result, what a corporation should have, and would have, achieved with better corporate democracy or ideology, as the case may be, is never understood.

Difficult though it is to define, corporate totalitarianism lends itself to certain markers. A corporation which remains rooted in businesses that are socially less desirable or in markets that are prone to questionable practices is often blinkered from exploring better but more challenging options due to lack of free thought and open ideology in the corporation. A corporation where leadership positions are filled through nepotism or crony capitalism is able to do so due to the abject surrender of employee merit to leadership muscle. A corporation which always maximizes short run profits to the detriment of long term value does so because it is more expedient to run a generic business than create an innovative business. In all such cases, and more, lack of enduring values that optimally bind the corporation and the society is a key cause.

Progressive and intelligent corporations mitigate the temptations of totalitarian behavior by enabling free intellectual thought in their organizations, which in turn helps them move into better product-market segments, subscribe to corporate meritocracy and embrace science and technology in a big way. The case of ITC Ltd in India is a case in point in respect of product-market segments. Once completely confined to the socially inimical domain of cigarette manufacture ITC, the corporation became a socially responsive conglomerate by diversifying into paper, stationery, hotels, hospitality, food processing, agri-business and information technology as well as e-choupals (rural electronic marketplaces). The case of Hindustan Unilever is a case in point in respect of corporate meritocracy. Though traditionally in simple product lines like soaps and oils, HUL became a pioneer in nurturing highly competent organizational talent that introduced several innovative concepts of business growth and inclusive marketing in India, offering in the process its leadership talent to the parent Unilever’s global operations. The case of Tata Motors is a compelling case study of an Indian corporation becoming a global leader by acquiring leading edge scientific and technological capabilities in design and manufacture of automobiles.

Corporate leadership that is intellectually driven as much as it is financially driven has a better chance of resisting totalitarianism and instead promoting inclusive, yet competitive business growth. Such corporations institutionalize the anti-totalitarian DNA in the organization by recruiting the brightest talent through open recruitment practices from educational campuses, establishing intensive on-the-job and off-the-job training programs, providing challenging professional environment and undertaking objective assessment of performance for differentiation. This, however, is easier said than done because of the way corporations are organized to concentrate power in its leadership and the manner in which the university system turns out talent of varying levels. There is a four-way grid that combines two dimensions of leadership with two dimensions of talent pool.

4Q leadership-talent grid

Essentially there exist two types of leadership, autocratic and participative, and two types of talent systems, meritocracy and mediocracy. These are, of course, representative of two extremes in each case, identified for conceptually illustrative purposes. There could be shades of grey in each case as well as multiple combinations. Autocratic leadership implies top-down administration of vision, strategy and execution, together with controlled employee management. Participative leadership, on the other hand, represents a consultative evolution of vision, strategy and execution, together with facilitative employee management. Meritocracy implies presence of, and reward for, high levels of skills across the organization. Mediocracy represents middling, average skill levels across the organization, and are rewarded uniformly regardless of performance.

These four combinations may be viewed simplistically as autocratic mediocracy, autocratic meritocracy, participative mediocracy and participative meritocracy. Autocratic mediocracy represents the face of a completely totalitarian corporation where the leadership’s writ is total and unquestioned not because of its strength but because of the inability of the organization to engage in constructive intellectual debate. Autocratic meritocracy represents a paradigm where the ability of the organization to chalk out and execute creative strategies is often stymied by the insistence of the leadership to conduct the affairs in its own way, thus eliminating grassroots ownership and participation. Participative mediocracy reflects an enlightened leadership relying on a pliant organization to develop consensual approaches that fail to be competitive in the marketplace. Participative meritocracy is the only optimal combination that brings out the synergy of progressive leadership and competent talent pool.

Leadership teams and organizations need to realize the importance of participative meritocracy as a means to eliminate totalitarian trends from the corporation and promote healthy internal debate in the corporation. Participative meritocracy helps in the development of economically sustainable and socially responsive corporate ethos and establishment of a process and systems driven organizational eco- system. Comprehensive and thorough planning, focused and speedy execution, and differentiated and rewarded performance are the hallmarks of participative meritocracy. Each corporation can then develop its unique identity which unequivocally reflects the value system that it subscribes to, with customized reference to the business domain it operates in.

Totality of purpose, the true anti-totalitarian marker

Willy-nilly, corporations and leadership teams become prisoners of their own history and legacy. In today’s fast changing world product lifecycles and even business lifecycles are becoming shorter than ever. A company committed to the paper and publishing business, for example, cannot support all of its growth plans only through the conventional paper medium, given the pervasive impact of the digital age. A manufacturing industry can no longer conduct its operations oblivious to its carbon footprint and in ignorance of clean technologies. The inability of organizations and leadership teams to recognize such trends of inflection makes them all the more defensive, getting increasingly rooted in a past which has no connect with a dramatically different future. Such corporations attempt to survive by totalitarianism only to wither by that.

Corporations and leadership teams, on the other hand, must keep an open mind on the totality of purpose of their existence and identify the right motive force for growth. This requires the leadership teams to challenge the very domains that provide today’s revenues. One may hypothesize that had the global automobile industry been more proactive in bringing out clean motive power it would have made a more proactive and positive contribution to the phenomenon of climate change. Novo Nordisk derives all of its billions of dollars of turnover from injectable insulin products. It requires a great openness of mind on the part of its leadership team to develop an insulin pill, as it is presently doing, which if successful could not only change the face of anti-diabetes treatment but also threaten its own established investments in the injectables domain.

Lack of intellect, competence and free thought in organizations promotes corporate totalitarianism to the detriment of a corporation’s broader economic and social purpose. Progressive leadership teams must assiduously seek the totality of the corporation’s purpose by upgrading their own competencies from time to time and nurturing a climate of open intellectual thought in their organizations. Those corporations and leadership teams which provide the due importance to free and creative thought, and eliminate undue emphasis on executive compliance and conformity would be providing the right incentives foe knowledge driven transformation. This approach would help the corporations to lead change, and leverage change for achieving a totality of sustainable purpose, with reference to the economy and society.

Posted by Dr CB Rao on December 27, 2009

Sunday, November 29, 2009

Competence-Loyalty Dichotomy: Separating Grain from Chaff

Individual survival and group living have been the two fundamental, though apparently bipolar, aspects of human living from the start of civilization. As administrative, industrial and political organizations evolved over time, teams have emerged as the basic platform of organized living. The evolution of the modern form of corporation gave a new meaning and role to teams and team leadership. From the frontline teams at work for departments to the apex leadership teams at the helm driving corporate futures, management of teams offers its own challenges and opportunities.

Leaders provide hope and aspiration for their teams and in return gain their trust and support. This relationship is not always reciprocal; in some cases leaders trust the teams more than the teams trust them while in other cases the teams trust their leaders more than the leaders trust them. Traditionally leaders across generations relied on the formal organization to achieve consensual action and leaned on the informal organization to push through specific agendas. The balance between the formal and informal organizations is levered by the leaders through their loyalists, with the attendant pros and cons. This apparently perplexing sub-optimization of the team organization needs a behavioral evaluation.

Complexity needs competence

Management of modern day organizations, whether business, administrative or political, has become a more challenging and complex task than ever, with a heavy responsibility devolving on the leaders. In today's competitive environment, the leaders are required to build cohesive, high performance leadership teams with high competency metrics to be able to discharge their onerous responsibilities. In a well- balanced leadership team all missions, domains and members should display equal competence and evoke equal confidence.

Yet, it is not unusual for leaders to be selective in the way they repose their confidence across missions, domains and members. Some members gain more confidence than others through well demonstrated loyalty. Some members gain more appreciation than others through well demonstrated performance. Loyalty is often accompanied by total compliance to the leader while competence is accompanied by a certain degree of independence. A leader as much as a team member needs to differentiate between loyalty and competence in an organizational context.

Confidants and loyalists

Both loyalty and competence have merits if they are aligned to enhancing the performance of the entity. A competent loyalist in a leadership team is someone who not only appreciates the leader’s ideas and personality but also improvises on it for better corporate performance. A competent loyalist becomes the leader’s confidant. The competent confidant wins praise from the leader and the team not merely because of his loyalty and commitment but also because of his performance and perspectives. A confidant becomes a trouble shooter, and even a successor to the leader. From Henry Kissinger of the US Government to Steve Ballmer of Microsoft Corporation, organizational history has case studies of team members who fused competence and loyalty to emerge as dominant forces of teams. A loyalist who is only marginally competent or is even incompetent, on the other hand, drags down organizational performance. Ordinary loyalists observe, act and speak as proxies for their leaders skewing the organizational balance in the process.

In the complex modern day organizations, confidants who are trouble shooters are welcome in the teams; they even signify a typically Darwinian way of leadership selection. On the other hand, team members who seek a loyalty driven role should be less than welcome; they throttle independence and objectivity, often bringing bias into managerial processes. A competent confidant has the right perspectives for the future. An ordinary loyalist however largely remains in the past.

Competent confidants boost an organization’s drive into the future while ordinary loyalists impede its ability to move with, let alone ahead of, times. A loyalist, always waiting for the leader’s cue, adopts a cautious approach that inhibits independent and proactive thinking on the part of others. A confidant who is absolutely confident of his capability as well as loyalty is, on other hand, willing to even openly differ with the leader as long as it would such challenge helps the company’s future.

Despite these factors, leaders probably tend to have more run-of-the-mill loyalists than out-of-the-box confidants in their teams. When a loyalist gets preferred for loyalty rather than competence to manage crucial missions, the very choice signifies a sub-optimal performance benchmark that weighs down the overall organizational performance. Yet, the loyalist’s compliance instincts and the leader’s dominance compulsions make for an puzzling combination. The key to the puzzle, however, lies in the leadership realpolitik that pervades organizations.

Leadership 'realpolitik'

Complex leadership and management challenges are involved in setting up and growing business corporations or administrative entities. These challenges include, among others, crafting of a vision, drafting of a strategy, creation of an organizational structure, raising of resources, establishment of facilities, assembly of inputs, opening up of partnerships and above all, high quality product delivery for the marketplace, all of which require a high level of business appreciation and functional excellence. These activities also need to be continuously fine-tuned to counter and even stay ahead of the inevitable competition. Undoubtedly therefore, superior leadership and management skills are called for on the part of not only the business leaders but also his or her leadership team.

That said, there is a dimension of realpolitik beyond the textbook definition of leadership and management that governs corporate or administrative leadership. Realpolitik has its origins in politics or diplomacy which dictates formulation of policies and actions based primarily on practical considerations, rather than ideological notions. The term realpolitik, however, also pejoratively implies politics that are power-centric, and not necessarily principle-centric and which are often Machiavellian. Managing organizations requires not only leadership skills but realpolitik attributes to be able to remain at the helm, satisfying multiple internal and external stakeholder pulls and pressures. Leaders being also careerists as anyone else need loyalists to be in control of the corporate ship cruising in the choppy business waters.

Loyalist – joker in the pack?

The ordinary loyalist is very much like a joker in a pack of cards (no pun intended). Those who know card games understand that the joker card plays an extremely beneficial (and occasionally harmful) role in a card game. A joker card can substitute for any card of any rank, symbol or color and hence affords tremendous flexibility in forming winning sequences and sets. The holder of a joker card surprises the rest by forcing a quicker win than is usually anticipated. While in a game of cards serving of joker cards is a matter of chance, in an organizational setting the evolution of loyalist in a team is a matter of historical inheritance as much as it is a designer act.

A study of corporations that have seen dramatic failures, from Enron to Lehman, points out that unbridled power of the corporate leaders has been a root cause of corporate collapse. Such failure comes with circumvention of processes through motivated management of leadership teams. A chief financial officer or a chief business officer in some cases and a chief technical officer or a chief marketing officer in other cases have enabled the typically dominant corporate leaders embark on wildly adventurous paths. Castle-in-the-air concepts of virtual energy trading and bubble-beyond-reality of sub-prime lending are reflective of how confidants of corporate leaders could hijack organizations and distort economies. The leader’s loyalist provides a total malleability to the leadership fiber to the detriment of organizational solidity.

Loyalty tips the balance

Typically a leadership team varies in size depending on whether the company is functionally organized or divisionally managed and whether it is regional or global in its presence. The multiplicity of views in large teams can at times be highly vexatious and energy-consuming for corporate leaders. The leader can exercise positional power only to a limited extent to achieve convergence. Realpolitik comes in handy to develop paradigms based on quick conclusions rather than lengthy deliberations, even if the later were to be beneficial in the long term.

Heads of corporate functions are particularly helpful for the corporate leaders in drawing business realignments. That is because they have the capability to shape future plans, allocate resources, recruit manpower and control certain shared services. The strengths of individual business operations can be skillfully undermined by the realpolitik of shared services with a façade of corporate optimization. Loyalists can be divisive too. The loyalist can launch frontal attacks on inconvenient members at the behest of his leader, fracturing the leadership team into multiple fractions. The leader finds it easy to implement his plans with a divided house despite a fractured mandate. In all of the scenarios discussed above, the leaders stay on but the businesses stagnate.

Loyalty to the leader or passion for the company

The excessive emphasis on a singular leader as the driver of corporate growth is in enigmatic contrast with the elaborate mechanisms put in place for board oversight and corporate governance. The increasingly enormous influence the leader has come to wield on corporate affairs has led to the spawning of the loyalty culture to the detriment of commitment to the company. Genuine leaders must overcome the temptation to seek loyalty for him from his team members and instead encourage his team members to develop passion for the company. Visionary leaders recognize that it is the institutions that are perpetual and leadership achievements constitute but mere chapters in unending histories of enterprises.

The competence-loyalty dichotomy disappears when it is realized by the leader and the team members that the leadership interests are best served only when the corporate interests are best served. Team members who have ample loyalty for the leader but little passion for the business are a liability while members who are independent of the leader but passionate about the company are an asset. Passion for business emanates from an innate desire to achieve self-actualization while loyalty for leader comes from a comforting instinct to promote mutual aggrandizement. Once the hypothesis that institutions are larger than even the individuals who establish or grow them is accepted the competence-loyalty debate gets settled irrevocably in favor of the former.

Competencies make conglomerates

Companies with a progressive and confident leader and a large number of competent confidants have quickly evolved as successful conglomerates and eventually became leading industrial houses. High performance teams are an asset to the company even though individual business leaders appear to challenge corporate hegemony. Capable business leaders aggressively perform but also openly demand space for performance. They are conscious of their domain and business expertise and view their performance as a vehicle to position them as the future leaders. In a conglomerate or a diversified business, business leaders compete, rather than collaborate, to establish their credentials. Left uncontrolled, the leadership battles can be self-consuming.

In such organizations, conflicting aspirations compete for scarce resources, different businesses shape up at different points of value curve and burning desires lead to organizational bushfires. The corporate leadership teams in such organizations are bound to be in constant turbulence. In a conglomerate corporation, the confidant typically emerges from the businesses preferred by the corporate leader or select corporate functions close to the corporate leader. The deft leader in such situations chooses a performance driver and an opinion maker from the leadership team to harmonize the multiple directions of a conglomerate. Many conglomerates have failed to utilize their diversified positioning and cash resources objectively due to the failure to nurture competent confidants across the spectrum. There is no reason why only Tata Motors, Tata Consultancy Services and Tata Steel should be the flagship companies of the Tata Group when with the right harmony between the group leader and business confidants, the Group would have been a leader in various other segments like power and chemicals.

Confidence with competence

Indian business families have discovered to their advantage that the concept of having loyalists is detrimental to the professionalization and growth of family businesses. Gone are the days when trusted family lieutenants bereft of academic qualifications or business experience dominated the boards or management teams simply because of significant native wisdom and unflinching loyalty towards the family. The fast forward growth of Indian family businesses can be traced to the downplaying of the loyalist culture.

When family businesses have gone through this positive metamorphosis, it is paradoxical that professional organizations, should succumb to the loyalist culture. A dependence on loyalty as a proxy to leadership is corrosive in that it weakens the resolve of the leadership team to debate issues objectively and professionally. The loyalist culture is also debilitative as it enhances non-formal authority and misaligns formal and informal organizational structures. The leaders who find the loyalty culture to be expedient initially often find their own leadership authority weakened eventually.

A virtuous leadership team is one which is open, transparent and collaborative in discussing vision, goals and strategies, in making resource allocations and in measuring and rewarding performance. While individual businesses, domains and members of a leadership team need to be competitive, the dynamics should be balanced by self-regulation. Similarly while teams need to be integrated and aligned with the leadership, the mechanics should be supported by adequate autonomy provided by the leader.

A corporate leader and his team have tremendous strategic responsibilities towards the company and all its stakeholders. A corporate leader who expresses open confidence in the team, sans the loyalists would reinforce the corporate performance through collaborative competition. Individual members can support this process by acquiring cross-functional and cross-business skills which could help them contribute equally in strategic deliberations. A completely integrated and aligned leadership team with high competency metrics will be truly inspirational for a company or an industrial house, and its stakeholders.

Posted by Dr CB Rao on November 29, 2009

Sunday, November 1, 2009

The Fine Art of Business Collaborations: From Hidden Agendas to Shared Missions

It is a dream for any company in an industry to be so integrated and so diversified that it is able to exercise complete control over its value chain and provide the complete spectrum of its products to all its customers, globally. Such a perfect monopoly, however, is neither economically feasible nor socially desirable. It is no wonder that corporations around the world, within industries and across industries, are recognizing the need to collaborate and maximize value for themselves and all their stakeholders. That said, there is still far lower emphasis in corporations on collaborations, compared to competition as a means of value maximization. This deficiency is even more palpable in India. This arises from an inadequate appreciation of the power of collaboration and an insufficient availability of talent to manage collaborations as they ought to be.

Collaborations: value drivers

In today’s world technology is becoming both specialized and expansive at such a fast pace that it is unproductive for any firm to attempt to do everything by itself. By collaborating with segmental players, companies can focus their energies on developing new products on a continuous basis. This collaborative model has indeed been demonstrated most effectively in the automotive and electronics industries, although there is considerable ground to be covered in these industries as well. On the other hand, most other industries including such intellectually driven industries such as pharmaceuticals are paranoid about self-reliance and circumspect, if not suspicious, about collaborations.

As a result, while the automotive and electronics industries continuously offer new products and services at an amazing pace offering better choice for the consumer, introverted industries such as pharmaceuticals are facing new product drought which could threaten the very existence of such industries in future. The concepts of integration and differentiation which are fundamentally investment- intensive and hence cost-accretive can be made market-friendly and value building initiatives if collaborative strategic relationships between specialist companies can be fostered.

Technologies: collaboration drivers

A strong collaborative position emerges from core competencies in science and technology. Manufacturers of computers, mobile phones and cameras, for example, are immensely benefitted by the core competencies of chip makers such as Intel and AMD in developing high performance processors for a variety of applications. Automobile manufacturers are significantly benefitted by the core competencies of their component makers in upgrading component and overall system performance. As a result, firms within and across industries that are engaged in collaborative product development and manufacture are able to continuously expand the boundaries of performance.

In this collaborative model, maximization of corporate performance emerges as a logical corollary of maximization of customer satisfaction with better product choice. The collaborative model focuses on creating product attributes that are not limited by current input functionalities and instead focuses on motivating the participants of the collaborative model to invent new functionalities. In contrast, firms and industries which seek performance maximization through monopoly control over the value chain tend to face economic extinction in the long term.

Markets: value determinants

Very often, strategists and CEOs make the mistake of judging value propensity of their firms only by way of internal value chain optimization and by deployment of internal performance metrics. The questions that they often ask themselves relate to the internal efficiencies in each of the primary functions of product development, manufacturing and marketing, and the several ancillary functions that support them. Very rarely, they focus on how well those functions are collaborating to determine a benchmark value for their firm, let alone explore if the value chain can be optimized for maximal value by bringing other players from within the industry as well as from outside the industry into the collaborative loop.

Companies which have listened to the signals from diverse markets to fulfill their differentiated needs, and collaborated for new technologies and new inputs to create new products that fulfill such needs have clearly outperformed others. Tata Motors outperformed its peers in India consistently as it has excelled in developing products that meet segmented customer needs. The roadblocks to a more universal implementation of this collaborative principle of business reconstruction stem largely from introverted corporate and professional mindsets that are unwilling to invest in business innovation and instead seek to maximize short run performance.

Extroverted mindsets: value visionaries

Corporate and CEO mindsets need to look beyond the current business models and delivery platforms on a continuous basis to extract the maximum value from the happenings around the world. Except in monopoly and patent protected domains, the competitive sustainability of a product is limited to one or two years and that of its manufacturing platform to four to six years. Strategists and CEOs, rather than periodically reinvent the value chain, fall into the trap of trying to extend product and manufacturing life spans until the last dollars are squeezed out of them. In the process, they make their companies highly vulnerable to more extroverted and more proactive competition.

A computer maker who is concerned about the current stocks and who holds back from either the development or the launch of a full range of upgraded models simultaneous with the launch of the latest operating system (Windows 7, for example) makes itself vulnerable to a competitor who has been more proactively collaborative with the developer of the new operating system. Steel plants which recognized the strategic importance of mines, petroleum companies which recognized the source vitality of oil fields and foundries which recognized the criticality of die, pattern and gating system making as a core competence present examples of companies looking beyond straightjacket business models to explore sustainable models of collaboration across industries and geographies. Value visionaries are those CEOs and strategists who constantly search for newer and more collaborative ways of doing business.

Talent: primer for collaboration

A corporation’s ability to look beyond the zones of comfort stems from the availability of talent that can identify new market needs, explore new delivery platforms and create new business models. The global delivery model pioneered by the Indian IT firms to meet the IT needs of global customers is a classic example of breaking the mould. The efforts by GE to develop new low-cost diagnostic devices for the emerging markets and taking them back to their developed markets is a more recent example of reverse globalization. Typically, talent pools from different functions, different industries and different geographies are harnessed together to make such game changing events possible.

For talent driven business optimization to happen, CEOs and strategists must have an appreciation of the constantly changing drivers of value in a business model. These could relate to a fundamental redefinition of customer needs which a firm seeks to meet, the configurations of products that best fulfill the changing needs, the material inputs, manufacturing processes and conversion technologies, facility standards, quality levels and delivery mechanisms. Companies must nurture talent that looks beyond current comforts and constraints to seek new ways of doing things. Strategists and CEOs in particular need to understand the essentiality of cross-corporate and cross-industry collaboration, and need to be suitably talented by themselves to lead by example.

Negotiation: foundation of a collaboration

Any collaborative relationship requires negotiation to make it happen. Negotiation is the complex and often tiresome process of two companies attempting to develop common ground to meet future strategic objectives. Hidden agendas destroy negotiations and collaborations while shared missions strengthen them. A good negotiation posture can only emerge from strategic clarity on the drivers of industry evolution and the determinants of firm’s competitiveness, with and without the proposed collaborative framework with the potential partners. A fruitful negotiation can occur only when the partner for negotiation is chosen based on detailed desk research and on-site due diligence. A smooth negotiation process can only happen with deployment of negotiators who understand the essential ingredients of viable business and the subtle nuances of a win-win collaboration.

The above three essential steps of negotiation are sequential in nature. Any attempt to invert or mix up the sequence or priorities would invariably result in a botched up negotiation. Negotiation of a business collaboration can neither be top-down nor bottoms-up. It is one process that is typically driven by a mid-tier organization that establishes a cooperative framework based on business fundamentals. For the negotiation to succeed in terms of a sustainable collaboration, the top leadership should be irrevocably committed to the three essentials of negotiation identified above and the operating level should have adequate strategic appreciation.

Hidden agendas: value destroyers

The purpose of any collaboration is to create synergy for enhanced performance of the partners. The process of negotiation seeks to create a charter for achieving such synergy. The biggest roadblock for any negotiation is the opaqueness which each partner faces in its attempt to understand the other partner’s motives. The fundamental prerequisite for any successful collaboration is therefore mutual trust. Trust is required because collaboration involves exchange of information, based on confidentiality agreements, on market plans, product plans, technologies and costs and a host of confidential data. Hold-back of information on these fronts leads to sub-optimal and at times counterproductive collaboration.

The typical negotiator, either as a company or as a professional representing the company, has therefore the challenging task of establishing trust as the fundamental lever for a successful collaboration. Trust emanates from strategic clarity, leadership commitment and negotiator skill. Trust emanates from each party having faith in its own competencies and a belief that the collaboration would not short-change on its strengths. Collaborations that are unevenly poised on mutual strengths or weaknesses and mutual risks or rewards are more likely to fail. Even if a collaborative framework is cobbled together initially it will eventually flounder on mutual non-performance.

Strategic clarity: shared missions

Any collaboration must fit into the long term strategy of the company. Collaborations must be leveraged to supplement technologies, markets or people. They should play a clear role in the integration and diversification value chains of the company. This means that a company seeking a collaboration must have a strategic roadmap with a role clearly assigned to each strategic partner. The company should be able to visualize a performance scenario with and without the collaboration and be prepared to share with the partner. It is heartening that progressive companies develop strategic clusters of related companies with whom they are able to share their long term technology perspectives and agree on shared missions.

Strategic clarity on collaboration roadmaps and enabling shared missions is generally missing in the Indian scenario. The more knowledge driven and the more competitive a company considers itself the more introverted and the more closed the company behaves. The Indian pharmaceutical industry which has an aggressive global agenda and weak local resources is a telling illustration of how resources can be diffused in highly duplicative activities that run counter to the structural requirements of a global aspiration model. The industry is all set to replicate its chaotic and fragmented Indian market model in the global markets, eroding its own value in the bargain. A Japanese MITI kind of initiative is called for to infuse appropriate strategic and collaborative thinking among the firms in various industries in India.

Structured diligence: mutual alignment

Correct selection of the partner is an essential element of the negotiation process. Opportunistic selection of partners often leads to conflicts in negotiation processes as well as in collaboration management. There are four important phases of a diligence exercise for successful negotiation and collaboration. The first is a broad business level meeting to determine compatibility of business models, organizational culture and functional capabilities. The second is a technical evaluation of the required products and services, or their surrogates. The third is a detailed evaluation of the quality and compliance capabilities. The fourth is an evaluation of the opportunity of collaboration and the competitiveness of the firms to generate value from the collaboration model.

There are several examples in the global business scenario which demonstrate the critical importance of diligence. Roche-Genentech and Daiichi-Ranbaxy represent two distinct polarities in the pre-collaboration diligence spectrum and post-collaboration value build or value erosion as the case may be. Jet-Sahara merger in the airlines industry, Tata-Corus acquisition in the steel industry, Kingfisher-Shaw Wallace spat in the liquor industry, and HM-Isuzu collaboration in the automobile industry are but a few examples of how the level of due diligence could influence outcomes.

The negotiator: catalyst or inhibitor?

The personality of the negotiator plays a key role influencing the speed with which a negotiation can proceed and the strength which a collaboration can take shape. The demands on a negotiator are plenty. The negotiator needs to be highly competent with a complete understanding of the industry and the firm. He needs to be exceptionally communicative with an ability to listen as much as talk. And above all, he needs to be a collaborator with an outstanding ability to reinforce mutual strengths and overcome mutual weaknesses. He needs to be committed not only to the company he represents, understandably for business expansion, but also to the very process of collaboration, to inspire confidence and trust in the other party.

The negotiator when he is competent, communicative and collaborative as discussed above can be a true catalyst for the negotiation process. If he lacks any or all of the three critical factors could well be a major roadblock for the partnership. Rail track type of parallel negotiations, neither converging nor diverging or circular type of negotiations, with neither a beginning nor an end, are familiar examples of a faulty negotiating personality. An understanding of multiple cultural requirements is an additional requirement for a global negotiator. Negotiation requires openness with appropriate transparency as much as softness with adequate firmness to develop a mutually respected win-win position.

Model pitfalls: rat traps and pies in the sky

There are two clever, if not cunning, negotiation models that are employed by negotiators in negotiating with apparently weaker partners, trying to seek one-sided success; not surprisingly neither will be a sustainable success in the long term. The first is the rat trap negotiation model. In this model, the weaker partner, often requiring urgent cash consideration, is enticed into a ‘rat trap’ of excusive and perpetual collaboration which completely limits future flexibility and cash flows for the weaker partner. The characteristic feature of the rat trap model is that given the dire need for cash, just as a rat in need of food enters a rat trap, the needy partner enters a one way street of permanent collaboration. Technology sellouts without royalties, contract manufacturing sans profit shares, perpetual royalty-free licenses, circular first rights of refusals, corporate selloffs without tagalong rights, low private equity valuations in times of downturn, and technology imports without access to improvements are some examples of typical rat trap negotiations.

The second model is the pie in the sky model. This model appeals to partners who have a comfortable present but are driven by ambitions of a highly prosperous future. Aggressive and adventurous partners who are unaware of future industry evolution, and pitfalls thereof, fall for this model. Typically, in this model one partner offers for the other a highly attractive future cash flow stream in return for a nominal upfront payment. Collaborations which swap current businesses for apparently more attractive future collaborations, payment models which are not linked to success milestones, exotic valuations based on bloated business plans, royalties linked to declining businesses, payments linked to uncertain product developments and approvals, and non-competes without current business alternatives fall under the pie in the sky negotiation model. Needless to say, neither the rat trap negotiation model nor the pie in the sky negotiation model would lay the basis for a strategic collaboration; some of these could end up in tortuous litigation as well.

Collaborating to win

Strategic collaborations are equitably negotiated to bring mutual competencies into constructive play. They represent a balance of rigidity and flexibility. For example, mutual exclusivity is balanced by performance triggers for non-exclusivity. They balance risk with reward appropriately. For example, both partners need to bring in balanced resource commitments to the collaboration to be able to reap the rewards proportionately. Strategic collaborations require milestones and deliverables that are mutually agreed a priori to measure performance and undertake course corrections. And they require a governance structure, with equal senior level representation and voting rights as well as arbitration procedures to move with the times.

Strategic collaborations essentially require a three dimensional fit: strategic, cultural and operational. Well structured collaborations transform the value chains of companies, helping them to address new products and markets with optimized resources. They enhance technological depth and enhance market reach. They consolidate industry structure while preserving firm level competitiveness. The society benefits with technologically updated products with cost economics. The firms, industry and economy benefit with efficient deployment of scarce resources for consistent growth of national product. A truly collaborative mindset, with no hidden agendas and with shared missions, represents a unique managerial alchemy that can usher in multiple benefits to all the stakeholders.

Posted by Dr CB Rao on November 1, 2009

Wednesday, October 21, 2009

The Japanese Business Mindset: Enigmatic but Efficient and Effective

The prolonged recession of over a decade cast a deep shadow on the Japanese economy.  The emergence of nimble corporations from countries such as Korea and Taiwan has posed new threats to Japan.  Yet, Japan continues to lead the world in industrial innovation and business leadership.  Despite the four-fold adverse movement in Yen-Dollar parity over three decades, Japan continues to retain a global market share for its products.  Despite not following the Western management concepts, Japan continues to be effective in global competition.  Japan amazingly defies the aging characteristics of a mature economy and continues to be youthful and vigorous in terms of technological and business leadership.

Japan’s unprecedented industrial success is often traced to the culture, homogeneity, discipline and hard working nature of the Japanese society. The inscrutability of the typical Japanese businessmen and the invisibility of the Japanese industrial system are often cited as barriers to competitors trying to replicate the Japanese success. 

The Japanese enigma, however, cannot be explained by a simple cultural or behavior paradigm.  The Japanese performance model is a national phenomenon that transcends industrial or business classification. It has its roots in a thoughtfully seeded and carefully nurtured mindset that seeks perfection and practicality in all the activities.  This paper distills the over three decade experience of the author with reputed Japanese corporations and distinguished Japanese professionals to analyse the Japanese mind-set in terms of five essentials of (i) design mindset, (ii) manufacturing mindset, (iii) marketing mindset, (iv) collaboration mindset and (v) individual mindset.  All of these reflect a simple but exacting, and uniquely Japanese, philosophy of fusing quality with elegance in whatever is done under the brand of Japan.

(i)  Design mindset

Product design is the key driver for the success of any industrial operation.  The Japanese design philosophy can be viewed in terms of five key facets which reinforce each other mutually and result in a product that is differentiated for performance, quality, reliability, usability and elegance, providing a total product life cycle experience for the users.  These five aspects are reviewed below. 

Incremental innovation-pioneering inventiveness

Japan has been a leader in Kaizen that embodies the concept of continuous improvement.  The Japanese believe that a product platform has to be basically robust but intrinsically adaptable for continuous enhancement.  The Japanese design philosophy emphasizes incremental improvements as a cost-effective yet value building route to enhance product life cycle.  The Japanese also believe that quality can be enhanced and costs reduced simultaneously.  Typically, a product design is characterized by several basic performance characteristics which when individually leveraged provide successive phrases of product enhancement.

Alongside incremental innovation, Japan has been a pioneer in breakthrough design concepts which help create whole new markets.   From the time Japan pioneered the design of robots to replace manual operations (for example, robots for welding) to the more recent development of the world’s first commercially viable humanoid robot(for example, Honda’s Asimo robot) or Toyota’s hybrid car (Prius), the country has demonstrated an uncanny capability to leapfrog ahead of the technology development curve.  If the rest of the world is focused on integrating cameras with cellular phones, Japan would be ahead integrating camcorders with cellular phones.  If the world is focusing on moving from LCD technology to LED technology, Japan is focusing on moving imaging from 2D to 3D. Except for one or two slips (for example, flat panel technology a few years ago), the Japanese industry has been a step ahead of the rest of the countries in terms of breakthrough inventions that could be commercialized.

The ability to simultaneously follow the twin strategies of incremental innovation and pioneering inventions helps the Japanese companies expand and diversify the market segments on one hand and create totally new markets on the other.  It also helps the Japanese industry to straddle multiple price points and value points with effective product-market segmentation.

Lighter in weight but higher in strength

The success of the Japanese design philosophy is rooted in its reversal of historic engineering principles.  Even as the Western designers tried to equate higher weight with higher strength, Japanese designers consciously strove to explore light weight designs as a means of saving materials and costs while enhancing performance.  A study of various automobile designs of the world would reveal that for comparable specifications and performance, the Japanese products are at least 10% to 20% lighter.  The feature of lower tare weight directly translates into the benefits of lower manufacturing costs, higher operational productivity and better life cycle economics.

Clearly, use of newer material and component technologies and a perceptive understanding of the likely usage conditions drives the low weight-high strength philosophy.  Customization of designs to different countries and user conditions also helps the Japanese designers optimize their product characteristics with relevant design parameters. The cost impact of product weight is well appreciated by the Japanese companies.  When hit by recession, all Japanese automobile makers targeted to take off a certain percentage in the weight of the automobiles to enable meaningful cost savings.  That such weight and cost savings could be achieved with concomitant increases in strength is a reflection of the Japanese design ingenuity.

Smaller in size but greater in functionality

The Japanese design philosophy emphasizes miniaturization far more extensively than is attempted anywhere else.  Miniaturization is both an art and science.  The constraints of space that govern life in Japan could have, over generations, established a mindset which aims at space optimization.  Yet, transfer of such space-efficient approach into an organized industrial design mindset requires fusion of engineering and art.

The Japanese highway system is the most visible icon of the Japanese designers’ skill in optimizing space.  All the elevated highways are of single centre pillar design and enable free and full flow of traffic both on the ground and elevated tracks.  Industrial products with multi-functionality convergence represent a contemporary and amazing wave of new product innovations that combine smaller form factor with more ubiquitous functional performance.

Co-design with suppliers

The Japanese design philosophy is a comprehensive, end-to-end system that integrates material and component design with the end-product design.  Typically, each new product creation or new product upgrade commences with the end-product designers unveiling the total design concept to the suppliers and vendors and encouraging them to come up with their suggestions.  This collaborative process creates new products with seamless integration of multiple technologies.

In several cases, new product developments are led by the suppliers and vendors.  Globally, we have a few examples like chip manufacturers (such as Intel) constantly driving up the processing capability of devices.  This capability, however, is so diversified and deep rooted in Japan that usually every supplier or vendor has the capability to take its material or component technologies to newer levels and thus initiate fundamental changes in the end-product itself.

Product elegance for user delight

Japanese society is known for its harmony with nature.  A green, flowery ambience permeates the general landscape.  The innate sense of aesthetics prompts Japanese designers to combine product elegance with user friendliness.  Whether it is a simple product such as an instant tea sachet or a complex product such as a camera, the ability to reach higher levels of product elegance and user delight is a characteristically Japanese feature.

The Japanese design philosophy combining aesthetics with ease is an affirmation that in contemporary design style has, in fact, technological substance (see the author’s blog “Style is Substance: Management of Product Design and Manufacture” in cbrao2008.blogspot.com).  For example, a sachet which tears off in the right manner with the right effort requires a wrapper of special quality and crimping with exacting tolerance.  The approach of using technology for elegance extends to a range of products that cover industrial and domestic applications.

(ii)  Manufacturing Mindset

While innovative product design is the driver of the unique Japanese mindset, manufacturing creativity is a core facet of the Japanese industrial ingenuity.  Japan’s unique manufacturing mindset is revealed in several distinctive approaches as below.

Simplification with standardization

Manufacturing philosophy in Japan emphasizes modular manufacture with simple, standard equipment.  Japan has been a pioneer in development of flexible manufacturing systems and transfer presses.  Japan has also been a leader in quick die change systems.  Complete balancing of a production line from start to finish with careful definition of tact time is an essential feature of work flow design in Japan covering the main assembly lines, as well as the supportive sub-assembly and machining lines.  The concept of quick die and tool change is based on perfect matching of multiple sets of tools and dies to basic equipment beds.  Together such concepts ensure that a vast shop floor operates in perfect synchronization.

Unitized manufacture is yet another hallmark of the Japanese manufacturing system.  Amazing flexibility is achieved by understanding the essential core of any seemingly complex manufacturing operation and then designing operations (whether machining, casting, forming or assembling) around the core unitized operations.  For example, in the manufacture of an automobile engine, capability to handle the machining of one cylinder bore is all that is required to develop a flexible, unitized machining system that can handle a wide variety of automobile engines, from single bore to multiple bore configurations. Uniquely Japanese innovations in tool and die design and the mounting arrangements can make it possible for standard machines to undertake non-standard, variable operations, Competencies in manufacturing tools and dies of different designs is yet another capability that adds flexibility to the manufacturing system.  The quality of a manufactured product is  related to the accuracy and the detail that is ingrained in a typical tool or die.

Digitized upgrade

It is one of the enigmas of the Japanese manufacturing mindset that some of the most gleaming and tight-tolerance products are produced out of even old and seemingly obsolete machinery.  While modern Japanese plants have mirror finishes and complete automation, aged plants are also well utilized to produce contemporaneously acceptable products.

Digitization of the older equipment is extensively used by the Japanese to enhance process integrity and achieve tight manufacturing tolerances that are comparable to the ones that can be achieved by newer machinery.  Mechatronics and robotics represent the powerful face of digitization in Japan.  Even transportation and storage are highly automated using digital technologies.  Japan being the home to the electronics industry it is not surprising that digital upgrade is extensively used in the Japanese manufacturing system.

Predictive variability

Japanese understand that controlling the variability is the key to manufacturing perfection.  Control of variability is achieved in two ways.  The first is by total transparency and connectivity of information across the entire manufacturing value chain.  Japanese resort to visual communication of process flows, material flows, product machining and assembly characteristics to ensure that all participants in the manufacturing system are harmonized with a clear understanding of the requirements.

The second way of achieving predictive variability is through a resort to real time, continuous statistical process control (SPC) systems and periodic process capability studies, supported by a systematic maintenance approach.  The SPC charts not only enable strict control of quality but also provide early warning signs of any creeping process variability, enabling proactive corrective actions.  Japanese have indeed been pioneers in the use of statistics in the fields of quality control and quality assurance.

Just-in-time inventory system

The famed Kanban, Just-in-time (JIT) inventory system of the Japanese needs no introduction.  JIT is integrated from the very foundations of building a manufacturing system by eliminating spaces for inventory.  The geographical limitation of space in the country which acts as a constraint and the collaborative expansion of supply chain that includes component and material suppliers are harmoniously used by the Japanese to eliminate idle inventories.  The Japanese are clear that inventories lead to inefficiency in the manufacturing system.  If a breakdown or slippage occurs in any part of the manufacturing line, the line as a whole is stopped instead of allowing stage-wise inventories to be built up.

Adoption of pull-type manufacturing planning helps the Japanese plan production to match demand.  The pull-type system enables synchronizing of the material system and manufacturing system to the sales system through a fine-tuned logistics system.  Just-in-time inventory system synergizes with the pull-type manufacturing system as the whole system operates in a perspective of demand certainty.  The Japanese philosophy of pursuing profitability rather than chasing market share also harmonizes with the pull-type manufacturing and Just-in-time inventory systems.  Together, the continuous flow and the pull-type planning ensure that the Japanese manufacturing system operates with the lowest inventories and highest efficiencies.

5Ss, 3Ms and PY/RC approaches

The Japanese manufacturing philosophy is rooted in designing efficiency and effectiveness into the workplace.  Lean manufacturing is a way of life in Japan.  It is exemplified by the 5S and 3M concepts.  The system of 5S helps in efficient workplace organization for high productivity.  Seiri (sorting), Seiton (set in order), Seiso (cleanliness), Seiketsu (standardization) and Shitsuke (sustaining) go far beyond housekeeping to ensure workplace efficiency and safety.

The 3M concept is focused on eliminating waste in the manufacturing place.  Toyota Motor Corporation, as part of its famous Toyota Production System, defined three broad types of waste:  Muda (non-value adding work), Muri (unreasonable work) and Mura (fluctuating work). By eliminating these three broad categories of waste, the Japanese manufacturing system benefits from enhanced productivity.  These concepts are strengthened by the poka-yoke principles of fool-proofing facility design.  In the unlikely event of errors occurring, the Japanese adopt root cause analysis (with fishbone diagrams, why charts and FMEA analysis) to identify the fundamental causes of errors rather than stop at correcting the symptoms.  This process is also carried out straight at the source of the problem (Genchi Genbutsu) rather than in offices.

(iii)  Marketing mindset

Japanese marketing mindset is quite differentiated from that of other countries.  While the Japanese companies utilize the essential elements of sales and marketing as any other company, be it in terms of market research, customer segmentation, brand promotion, point of sale service and after-sales service, the Japanese marketing mindset is notable for five differentiated characteristics.

Quality as price builder

Japanese corporations aim at what they perceive as an optimal mix of market share and profitability.  The marketing mindset emphasizes the Japanese brand of functionality and quality as an enabler for seeking price premium.  Whether due to the intrinsic cost premium of superior design and superior build, the external impact of adverse Yen-exchange rate (Yen 90 to a dollar in 2009, compared to Yen 360 to a dollar in 1974!) or the deliberate premium sought for the Japanese brand, Japanese corporations price themselves at least 10 to 20% higher than comparable Korean or Taiwanese brands.  The Japanese believe that pursuit of excessive market share has an adverse profitability impact.

The fundamental premise of Japanese marketing is that higher quality provides better product feel and longer usage besides ensuring lower after sales costs.  In addition, the strong association of Japanese brand image with robust quality helps to position the users in the society as a class appreciative of a superior brand.  Whether Japanese would have achieved market dominance in each and every product segment had they pursued a strategy of price parity (if not price competitiveness) vis-à-vis their competitors is a debatable point.  As an overall system, however, long term stability and profitability of the system are perhaps better balanced with the Japanese conservative price and market policies.

Brand segmentation for market segmentation

Products with multiple functionalities are the new driving force of market segmentation.  The Japanese industrial system focuses on creativity of product design as a driver of market segmentation. In respect of a cellular phone, for example, combinations of mega pixels, optical zoom, picture capture capability, connectivity options, multi-media flexibility, battery life, display screen size are creatively combined to develop multiple product-market segments leveraging contemporaneous technologies. Gaming console companies have created new brand statements based on innovative functionalities of real time activities.

Japanese, in addition, have perfected the art of using brand segmentation as a tool for market segmentation.  Sony Ericsson’s Walkman and Cybershot branding of music and camera oriented mobile phones, respectively, is an example.  Similarly, development of concepts such as an urban off-road utility vehicle  or small family small car has been uniquely Japanese. Creation of unique brands such as Lexus and Infinity s has helped the Japanese automobile giants Toyota and Nissan make green-field positioning statements against established luxury marquees such as Mercedes and BMW.

Packaging as differentiator

Japanese retail stores have a knack of using packaging for providing customers with enhanced shopping experience.  From the smallest piece of purchase to the priciest piece of acquisition, packaging gets an integral and elegant treatment from the Japanese retail stores.  As a result product functionality, whether the product is a perishable item or long term usage item, gets preserved till the time of commissioning, and is further protected in subsequent phases of transportation.

Japanese provide an emphasis on packaging that is equal to that laid on design and manufacture.  Packaging itself has three layers; the first being the primary packaging that occurs with product delivery at the manufacturer’s end.  This ensures a perfect fit of the product and all its accessories in a creative packaging unit.  The second is the secondary package that distributes the product to different parts of the globe without any untoward mishandling or breakage.  The third, and most important, is the way the product is unpacked and repacked at retail end while providing factory-fresh delivery to the customer.  In the Japanese system, the packaging value chain is total, robust, elegant and user- friendly.  Packaging design is a fundamental part of product design in Japanese hands.

Global customization

The global success of the Japanese brands is due to a marketing mindset that is adaptive to different user requirements and usage conditions in different parts of the globe.  The phenomenal success of the Japanese automobiles across the globe is linked to the companies’ ability to identify the core characteristics of consumer demand in each country.  In the case of an automobile, for example, these are fuel efficiency, ground clearance and turning circle as far as India is concerned.  Automobile design for USA, on the other hand, emphasizes power, robustness and interior trim.  Design for Europe is focused on styling, external trim and internal trim.

Japanese companies believe that products have to be developed, manufactured and positioned in the host country markets in alignment with core country characteristics.  As a result, portability of brands across the regions is relatively limited, compared to that on offer by the Korean, US or European competitors.  Japanese cellular phone markers for example, have developed designs with user feel essentially aimed at the Japanese users as a result of which some great phone designs are yet to move beyond the Japanese shores.  This certainly is a disappointing result of the Japanese marketing conservatism.

That said, global production has been taken up aggressively by the Japanese companies in select fields to integrate their design, manufacturing and marketing philosophies with local needs.  The ability of Japan to withstand the volatility of global current markets and economic conditions is related to development of multiple manufacturing bases across the world.  Japan has thus been proactive in letting technology and operations lead the way on the marketing path.

‘Hared’ tortoise

Japanese marketing mindset is highly deliberative and rarely opportunistic.  With increased competition from other developed nations, especially the Asian Tigers such as Korea, Taiwan and China, the Japanese marketing philosophy of hastening slowly has perhaps inhibited the Japanese companies from achieving a market penetration that is proportionate to their technological superiority.  For example, though the Japanese have been first off the block in terms of light emitting diode technologies, it is the Koreans that have introduced the first products into the markets.  The hesitation of the Japanese to translate the technologies pioneered in the laboratories and shop floors as first mover products into the market place is surprising on the face of it.

The Japanese marketing philosophy may remind one of hare and tortoise.  The Japanese corporations deliberately play the tortoise in the marketplace despite developing superior or comparable technologies ahead of competitors.  Presumably they use the time to read the customer needs in a more thorough manner and also let the faster, first mover competitors open up the markets for the superior but costlier Japanese products.  It is instructive that despite the history of continuous follow-on introductions, the Japanese remain market leaders in terms of customer appreciation and brand recall.  Their brand resilience and technological virtuosity perhaps would make the Japanese proverbial tortoise in the global marketing race.

(iv)  Collaborative mindset

In today’s globalised conditions, collaborations and alliances are the essential components of globalization.  Japanese companies are a major focal point of the wave of alliances and collaborations.  This is only natural, given the needs of other countries for the Japanese technological resources on one hand and the Japanese need for global markets and cost-effective material and component supplies on the other.  Yet, the Japanese mindset on collaborations and alliances is quite unique and hesitant.  The collaborative mindset of the Japanese is expressed in five key different ways.

Cautious consideration

The typical Japanese approach to collaboration is marked by cautious consideration.  Unlike the Western counterparts, the Japanese are neither hurried nor opportunistic in trying to sew up collaborations despite the existence of market or partner opportunities.  Perhaps a perception of being adequate as a nation in revenues and profits leads to a rather smug Japanese view towards collaborations.  More importantly, the Japanese commitment to the long term and the preference to make only the winning moves influences the typical Japanese corporation to consider a host of factors prior to even deciding to start the process.

Also, the Japanese mindset is typically concerned about governmental and environmental factors that could promote or inhibit a free play. The Japanese appear reluctant to manage a restrictive bureaucratic regimen.  The flexibility and cost-competitiveness of the country as a sourcing base of the market rather than the scale of the market seem to dictate the Japanese decision to take up any market for evaluation.

Diligent evaluation

Even after the Japanese decide that a particular host country’s industrial and economic environment is aligned to their interests rarely does a Japanese corporation move into a market without extensive due diligence.  Whether the move is in the form of an investment in advanced countries such as US and Europe or a collaboration in emerging markets such as India or China, complete feasibility studies are an essential part of the exploratory process.  Typically,  the Japanese prefer to conduct their due diligence processes in alliance with local partners. Such studies, however, provide no assurance that the Japanese company would eventually tie up with the diligence partner.

The system of Japanese diligence is so rigid and unique that new facts discovered in the process of diligence hardly motivate the Japanese to make course corrections.  The Japanese tend to stick to sequential phases of diligence even if early diligence points out the need to advance certain entry steps or re-jig product and manufacturing plans.  The Japanese also are typically unwilling to share their inner perspectives with the partners, thus losing the benefit of their local insight.  While the Japanese lay solid and robust foundations for their business moves with their detailed diligence, very often they pass up major market opportunities due to the inbuilt rigidities in the diligence processes.

Planning for perfect execution

Inevitably, planning by the Japanese corporations tends to be extremely detailed aiming for perfect execution.  Several departments are simultaneously roped in with shared vision, strategy and programs of collaboration. Detailed program management plans are drawn up with all micro level issues fully considered, prior to commencement of physical activities.

The success of the several Japanese ventures in rather divergently aligned business environments of different countries (China to India, or Europe to USA) could be traced to the detail and rigor they bring to the execution plans.  The success of the Japanese automobile ventures in India is certainly attributable to such diligent planning for effective execution.

Collaboration with commitment

A typical Japanese corporation is reluctant to enter into expansive or open-sky collaborations, which could provide unlimited access to their technologies or which could demand major commitments on the part of the Japanese partners to the markets.  Collaborations usually are highly product specific and focused on a few deliverables.  This approach is prompted by a desire to understand the potential for partnership success in phases and also take up only a scope that could be successful. That said, expansion of collaboration is a challenge, but not insurmountable as demonstrated by several case studies of Japanese collaborations in India

Once a collaboration is taken up, the Japanese partner could be expected to provide the needed inputs to make a success of the collaboration.  In execution, commitment remains focused on the collaboration rather than the broader company issues.  Japanese companies stay committed to their collaborations and alliances even if they encounter unanticipated surprises, as evidenced by Daiichi Sankyo-Ranbaxy alliance.  The same characteristic may not be held true of Western collaborations.  The Western companies could be opportunistic in entry into as well as exit from collaborations.

Respect for partner

An industrial enterprise needs continuous induction of resources for long term play.  Even if a local partnership starts off with a majority or 50:50 equity share eventually the local partner would need to dilute its equity to bring in resources which only the cash-rich Japanese collaborator can bring in.  The Western approach seeks to assume 100% ownership and management control at the earliest and nominate its own management structure. Japanese partners on the other hand tend to be extremely respectful for the local partners, regardless of the shareholding level the local partners are reduced to.

The respect for global partner is exemplified by the Japanese in many ways.  India’s Maruti-Suzuki and Kirloskar-Toyota reflect the respectful manner in which the Japanese treat the local sentiments, from retaining the Indian names on the company marquee to continued representation of the partners in key decision making structures regardless of the equity percentage.

(v) Individual mindset

The Japanese society is as much plural as it is singular in its behavior. Anyone walking into a Japanese shopping district or shopping mall will find the sales persons extremely chirpy with pleasant greetings (“simasens” and “arigatos”) all the time. A keenness on the part of the sales people to connect with the customer will be palpable. On the other hand, a Japanese business professional tends to be cautious and careful, virtually reflecting an unwillingness to commit in any manner.

The professional approach of the individual Japanese businessman or corporate professional is marked as much by politeness and friendliness as by reticence and hesitation. As a group, however, the Japanese are amazingly focused, cohesive, analytical and achievement-oriented. The transformation from the individual to the group has a unique alchemy at work. Far from any mystical group catalyst, it is the Japanese individual’s unique underlying mindset that drives the visible group performance.

Superior role of the institution

The fundamental governing principle, either of the Japanese society or the Japanese corporation, is that every individual subordinates himself or herself to the institution he or she represents. Whatever be the inner individual preferences and predilections the individual expresses only those points of view that reflect the institutional position. The individual takes pride as a representative of the institution that has corporate achievements than as a person with personal or professional skills.

The amalgamation of the individual personality with the institutional personality starts from the time a professional joins a Japanese organization as a trainee. The training programs provide a complete exposure to the company’s business, products and processes, inculcating proficiency and generating pride in the individuals (for example, the famous Toyota Way program of Toyota Motor Corporation for its new joiners). This coupled with the system of mentoring the newcomers with identified mentors (sensei) helps the newcomers develop a total identification with the institution and its work groups.
Creativity of standardization

Nothing is more striking in the Japanese corporate system than the strong streak of standardization that pans across all industries and corporations, be they be small, medium or large enterprises. From the way data is captured and tabulated to the way data is analyzed and presented, there is only one unique way for the Japanese that is common across Japan. The Japanese have a time tested way of summarizing tremendous amounts of information in terms of simple bullets, graphs, schematics and tables with high visual impact. The standardization of information management across the nation in Japan is creative, and contrasts sharply with the diversity and plurality of information management which is often encountered even within an organization in other countries.

Even more amazing, however, is the very unique and creative manner in which the Japanese professionals are trained to capture, analyze and deliver solutions using a ubiquitous A3 sheet of paper. The A3 sheet has typically 6 sections comprising background, current conditions, goals and targets, analysis, proposals and the execution plan.  Sequentially, problems are comprehensively analyzed and solutions perceptively found using the A3 sheet.  Readers who are interested to learn more of this are referred to “Toyota’s Secret: The A3 Report” in MIT Sloan Management Review, Summer 2009, Volume 50, No. 4.

Management for technology

The typical Japanese, even as he grows in career, stays with technology rather than opt for general management as is practiced in the West. Management systems in Japan have a strong operational and technological orientation. There is far less importance accorded to perceptions and claims and far greater emphasis laid on facts and figures in the typical Japanese presentations. Individuals absorb and present only the corporate view of the organization. They are trained to understand and articulate operations as a system rather than as individual activities. Even at the CEO level the focus in a typical Japanese corporation is more on technology and less on management. There is thus an ambience of individualized as well as collective technological quest in all Japanese organizations. The overwhelming emphasis on technology and operations at the individual level to the detriment of managerial faculties has its own pluses and minuses perhaps.

Acceptance for job rotation is high at individual level in the Japanese corporations. It is not untypical for R&D engineers to move into marketing and operations. It is also not untypical for legal people to do stints in assembly lines. Cross-movement of engineering talent to commercial domains and commercial professionals to quasi-technical domains is commonplace. Shared understanding of corporate issues develops as job rotation helps individuals enrich their core competencies with feedback loops from the markets and peer functions, and eventually become multi-skilled.

Small groups for big decisions

The Japanese organizational system is unique for the importance accorded to the middle tier (comprising managers, senior managers and general managers) in information analysis and decision making. The nuclear decision making groups are typically small, organized vertically within domains and horizontally across domains, providing ample space and scope for individuals to express, debate and conclude on their viewpoints. These nuclear groups are, however, networked across the organization forming a rather large discussion forum. The compact yet widespread organizational grouping helps in building the consensus system of decision making for which Japanese organizations are famous for.

With Japanese, formal meetings in office settings are a great method to share information and exchange viewpoints. However, formal meetings in Japan rarely serve the objective of generating a decision, contrary to the expectations in the West or other oriental counties. The Japanese believe that each meeting provides additional information which needs to be evaluated internally before any final decisions are communicated. Meetings, visits and interactions therefore end in polite handshakes rather than in collaborative hugs. It often takes several meetings before the decisions are crystallized and relationships solidified.

Velvet hands in iron gloves

The typical Japanese professional often gives the impression of being a very polite but somewhat impersonal partner. In the process of developing a collaborative arrangement as well as implementing it the Japanese operate behind a corporate veil that limits the amount of information that is provided. In fact, for a nation that prides itself for its technological depth and perfection, the information that is made available for partnerships is rather limited in a formal sense.

That said, it is more common in the Japanese scenario for professionals to develop deep and abiding relationships with their counterparts in the partner companies. Once a relation develops, the typical Japanese professional brings out all his experience and expertise to make the collaboration work smoothly and deliver effective results. On this dimension of establishing a lifelong relationship and rapport, Japanese professionals reflect an oriental culture of working from the heart. 

The Japanese business mindset in totality

The Japanese business mindset which has helped the nation achieve technological and industrial dominance globally is complex and unique with multiple facets that reinforce the total value chain. On one hand, a unique alchemy of high-end design, manufacturing and marketing deliver world-class products and services through a global network while on the other hand carefully titrated corporate and individual approaches towards business and professional collaborations somewhat limit the market dominance the Japanese companies could have enjoyed. For proponents of technological and operational virtuosity there is indeed a lot that can be learnt from the Japanese mindset.  It is enigmatic but hugely efficient and effective!

Posted by Dr CB Rao on October 21, 2009