Monday, January 31, 2011

Organizations as Knowledge Societies: Co-transformation with Employees

It is amazing to see how employees and organizations are often overtaken by issues of rewards and recognitions while considerations of performance and knowledge remain muted. Employees are singularly focused on individual performance while organizations at best are able to expand individual performance considerations to departmental and company levels. Clearly, there is a need for a deeper understanding of the triggers for this manner of organizational behavior and management, and arising from that definition of a transformational paradigm to actualize employees and organizations.

Recognition versus worthiness

In organizations, each time recognitions and rewards are bestowed upon some employees and some teams such actions, how well-intentioned and well-calibrated they are, cause perceptions of inequity in others. The perceptions of distraught when such actions are not well-thought out can only be imagined. Even post-recruitment new employees often get into a spin with multiple comparisons. Unfortunately, organizations are not sensitive to the implications of reward-recognition syndrome and measures to correct them. As a result, it is not uncommon to come across in any type of organization employees or managers who carry a chip on their shoulders. Equally common is to see employees who feel or assume that they are fine but it is their peers, subordinates or superiors are the ones who carry a chip on their shoulders.

As a metaphor, the phrase ‘chip on the shoulder’ describes people who nurse a grievance which requires either disputation or redress. Often, a self-righteous feeling of oppression or inferiority causes such employees to display a state of perceived inequity or oppression at the slightest provocation. Many times, superiors and peers too fail to recognize the existence of such feelings caused by valid circumstances or events. If these individual issues are not addressed appropriately in a timely manner the cumulative impact could be in terms of distorted culture and lowered morale caused by frequent friction among employee groups, and also between employees, their peers and superiors, and could erode the level of motivation in an organization.

Employee ’chippiness’ arises from several factors of organization design and talent management. Firstly, misalignment of organization structure and strategy on one hand and improper fit of the person and job result in performance warps that are not directly attributable to employees or their team members. Secondly, inadequate appraisal of an employee's performance and potential against internal goals and external benchmarks results in perceptions of either low self-worth or false superiority. Thirdly, inequitable deployment of performance management systems, in terms of reward or punishment, results in individual and organizational turbulence. Fourthly, unwillingness or diffidence of managers and leaders to counsel their team members in a transparent manner as to where they stand often results in unrealistic and assumptive self-evaluation in employees.

Left unattended ‘chippiness’ accumulates over time in an organization in an insidious manner, expanding from an individual centered perception to a shared cultural feature. Its negative behavioral impact ranges from passive participation to aggressive defiance in organizational activities by the affected employees. The former sub-optimizes organizational performance while the latter de-stabilizes organizational harmony. While employee reward syndrome is not a serious threat to organizational performance, the causative factors such as structure-strategy or person-job misalignment and managerial-leadership diffidence are more fundamental issues which are likely to erode organizational effectiveness. To that extent, unabated and unresolved reward-recognition issues constitute an early warning sign of latent impediments to organizational performance.

From an organizational behavior perspective, employee concern on rewards and recognitions is reflective of an internal debate in an employee's mind, whether grounded on right reasons or wrong perceptions, on his or her talent-performance equation. Despite the negative associations it has, the chip an employee carries on his or her shoulder is indicative of the human need for an employee to reassure the status he or she has in the organization. Ignorance of the syndrome by the employees and managers leads to an unhealthy preoccupation with virtual performance and potential rather than healthy equilibrium with validated performance and potential. Clearly, as companies seek to achieve tangible performance in a competitive manner the need to keep employees fully aligned and motivated cannot be overemphasized.

As organizational experts are aware, an employee is essentially trained to operate conceptually and analytically in the functionalities of planning and executing as well as identifying and resolving organizational problems. The typical employee is thus a ‘mind’ employee. As a physical metaphor, chip on the shoulder may reflect a weight the employee copes with while discharging his work, but in reality the chip resides in the mind of the employee. The feeling one has of chip on the shoulder is somewhat reflective of the mind's ability to discriminate and process information. There is, therefore, merit in transforming the employees from a preoccupation with the negative recognition syndrome that employees usually fall prey to into a positive worthiness culture that needs to be assiduously cultivated in the employees and the broader organization. However, the journey from ‘recognition chip on shoulder’ to ‘worthiness chip in the mind’ would be a complex and challenging journey.

Defining employee and organizational mind-space

Conceptually we can define two layers of mind-space that exist in a company. The first layer, which is the macro or cover layer, is the mind-space that the organization in the overall has. The second layer is the micro or the foundation layer that exists at the individual employee level. The occupancy of these two mind-space layers in terms of key issues provides a background for transformation from a recognition mindset into worthiness mindset. Typically, the organization’s mind-space is occupied by three sets of issues. The first set of issues relates to physical and financial goals for the markets. The second set comprises enabling goals such as quality, safety, environment, productivity and innovation. The third set relates to the competitive dynamics, flexibility, opportunities, challenges or constraints imposed by the industry and regulatory environment on which the company has little control. As it navigates through the three sets of issues, the organization cannot recognize itself or reward itself except through performance. The organization also cannot morph itself to move from low recognition/reward areas into high recognition/reward areas. In contrast, the employee mind-set is occupied not only by professional goals that cascade down from the organization goals but also by personal goals that are influenced by the family and society of which the employee is a part.

Secondly, institutions are expected to deliver returns to shareholders. The controlling groups of companies, whether investors or lenders legitimately expect both growth and profitability, and in any case profitability as recognition mechanisms. That said, companies can secure profitability even in competitive, fragmented markets. Industry structure rarely goes beyond a four-hierarchy structure (end product, aggregate, component, raw material), and each tier has relatively flat distribution of firms with potentiality of varying scale but reasonable profitability profiles. In other words, firms can actualize investors with profits and market capitalization, independent of scale through deployment of appropriate strategies such as innovation and excellence. On the other hand, individual employees of organizations have little option of recognition except through growth in the hierarchy. The way organizations are designed there remains only lesser and lesser room as one seeks to grow higher and higher. The more high performers an organization enables, strangely the greater the competitiveness for growth that it bears. While organizations can fight it out with competitors legitimately, employees perforce have to compete internally with their own colleagues to seek growth. To date, no organization design has succeeded in enabling equal growth opportunities for all its performers on the platforms of collaboration or competition. Chippiness is thus a mild form of inter-employee comparison and competition that naturally occurs even in the most collaborative organizations.

Thirdly, forced ranking and relative titration are inescapable concomitants of any human endeavor which is based on evaluation criteria. This has no relationship with the level of intelligence, aspiration or aptitude of the entrants to the bottom of the organizational pyramid. Even if an organization recruits all Ivy League graduates to its frontline employee ranks, such employees would find the room for growth insufficient or find themselves rank ordered to suit the slots available. The only way more competencies can be rewarded is by transforming the classic pyramid organization structure into a square organization structure, which is impractical. As the recent experience with Wipro, a leading information technology company in India, showed even at the ostensibly enlightened level of top management the concept of dual CEOs would not work. A study of over 6000 firms in the USA by Mercer showed that just around one percent had co-CEOs or co-chairmen. The picture is the same even at domain level; dual leadership is hardly ever practiced. Given these three factors, solutions for employee harmony have to look beyond organizational titles and examine deeper than superficial competencies.

Organizations as knowledge societies

If organizations are designed, developed and managed as knowledge societies as much as delivery entities, probably the unhealthy comparisons that exist in an organization would dim. Organizations have to be primarily execution focused, pushing the spotlight, in its wake, on individual and team performance. This, in turn, leads to parity in performance versus equity in rewards debate. However, when organizations are also simultaneously shaped as intellect driven knowledge societies not only performance would be even higher but also comparisons would be justified in terms of intellectual perspectives. Shaping a knowledge society would be contingent on the following ten principles.

1. Avoiding strategy-structure mismatch

Structure inevitably follows strategy, as well established by Alfred Chandler and other follow-on experts in their research. Yet, organizational or corporate structure tends to be rigid while corporate strategy is required to be, and can be, relatively more flexible. Unless, constant attention is paid to alignment, and realignment of strategy and structure, organizations would present to their employees a format of suboptimal strategic execution. In such a situation it would be difficult to differentiate between structure related handicaps and employee related deficiencies that affect performance.

The structure-strategy mismatch can be addressed by integrating various disciplines, and more particularly, the human resources function in strategy development, both at strategic and operational levels so that structural solutions are well-aligned. Secondly, HR professionals need to focus on reinventing the organization structure from time to time based on changes in corporate dynamics and competitive trends. It is important to remember that strategy can be executed only through motivated people actions.

2. Matching the position and the person

Strategy and structure, even when aligned need matching talent to achieve perfect execution. Identifying positions in an organization as a byproduct of strategy-structure match, defining the job requirements, and recruiting the right talent would be essential enablers for desired execution of strategy. In the absence of an appropriate person-position alignment, the responsibility for sub-optimal performance devolves more on the leadership than on the person, himself or herself. Many times organizations deal with person-position definitions in a piecemeal departmental fashion not realizing the advantages that could accrue by a holistic definition of organizational needs and standards.

In order to achieve optimal person-position match, the international competitive trends which continuously raise the bar of performance need to be continuously studied. Simultaneously, the need to equip the employees with new skills and knowledge and extend their horizons of operation is also paramount. This requires that the organization is committed to continuously upgrade its knowledge levels and practices to state-of-the-art standards to remain competitive.

3. Balancing hard work with smart approaches

Several studies have pointed to the decline of number of working hours in advanced nations as a causative factor for declining productivity. On the other hand, developing countries and emerging markets, in their hunger for growth, tend to work hard to meet the growing opportunities. That said, hard work needs to be balanced with creative, efficient and effective methods of work to be able to achieve desired competitiveness. Japan and Korea have established themselves as role models of hard work combining with innovation to develop world-class products. China and India in certain sectors, have emerged as role models of hard work providing handsome dividends when carried out in a creative way (for example, the global delivery model of the Indian IT sector). Organizations need to recognize differently employees who combine their hard work with smart application.

4. Combining efficiency and effectiveness

Students are educated and employees are trained to be efficient. Efficiency is usually measurable in terms of speed of delivery. Efficiency as exemplified by speed is, however, only one facet of overall performance. Effectiveness of delivery in terms of various other essential measures of performance is equally important. Machine shop managers who achieve higher throughput by operating machine tools at the highest levels of speed and feed would perhaps be causing more reworks and higher cutting tool consumption than managers who operate the machines at optimal speeds and feeds.

Developing measures for organizational effectiveness is a challenging task. In normal organizations where often activity is mistaken for achievement, it is quite a task to acknowledge that even achievement is not equivalent to effectiveness. Clear definition of goals as well as pathways to achieve goals at one level and enshrining business aspirations in ethical principles at another level are helpful. These let employees discriminate between efficiency and effectiveness, and therefore achieve a balanced pursuit.

5. Rewarding knowledge-based performance

One of the important gifts of industrial engineering to industrial management has been work simplification and work definition. This has enabled employees become more productive than ever before. In addition, standard operating procedures ensure that jobs are carried out as per well thought-out procedures to achieve required parameters. A concomitant of this efficiency movement has been a more dominant stress on “know how” rather than “know why”. The subordination of the inquisitive self has probably led also to a lower premium on acquiring knowledge other than what is strictly required by the job on hand.

While organizations do try to overcome this self-imposed constraint by seeking contributions in related areas and emphasizing continuous learning, the impact would not be same as building knowledge societies of organizations. A complete understanding of the value chain, for example, is important for every employee regardless of whether he or she works only one part of the value chain. End-to-end thinking with focused execution is the key for knowledge-based delivery. Japanese organizations have long perfected, beneath the veneer of conformist organizations, an unending know-why approach. The seeds of such approach start really with all entry level employees being put through a total company, operations and technology induction to expand the knowledge base – a model worth emulating.

6. Facilitating continuous learning

One of the striking features of modern day knowledge management is the pace of information obsolescence. New technologies are not only enhancing product and process knowledge but are also mandating new ways of doing business, on a more global scale than even before. A pre-occupation with internal best practices and a diffidence to evaluate external best practices often accentuates the knowledge gap. In many organizations it is often left to individuals’ aptitude and grit to upgrade their capabilities through formal education processes.

An employee’s career typically spans over three decades; development of knowledge over such a long span or on a rolling decade basis is likely to grow exponentially. An awareness of the huge frontiers of knowledge one needs to cross will bring to an employee the needed humility to view his or her performance in the right perspective. The diffidence of a manager or a leader to counsel or mentor his employee is also directly related to the knowledge-edge that such managers and leaders develop through their own upgrade initiatives.

7. Supporting execution with resources

Employees would need an appropriate balance of responsibility, empowerment and accountability. While position-person match defines responsibility and strategy-structure match defines goals and accountability, empowerment is both intrinsic and extrinsic to an employee. As discussed earlier, development of a knowledge base and continuous updating would enable a more effective executive. Extrinsic to the employee’s performance, however, is the resource deployment provided for the employee to execute on his plans. In the absence of appropriate resources, it would be easy for the average employee to obfuscate any shortcomings of his role in terms of resource shortfalls, which may or may not be germane to specific cases.

A rigorous yet flexible corporate planning and budgeting process is essential to focus on business goals, portfolio plans, delivery programs and the enabling financial and non-financial resources. Successful organizations have created independent planning and budgeting departments which are linked to strategic and operational units of the organization respectively, but are also intertwined with each other in terms of plan and budget development and review processes.

8. Fusing collaboration and competitiveness

Zones of comfort are helpful for teams to reach their higher potential. Mutual trust and dependence enhance shared commitment to corporate goals. Not unnaturally therefore much of the organizational behavior theory and practice has focused on the benefits of collaboration, not only within teams, but across functions and between firms even. While this is valid and relevant, zones of comfort could also lead to certain levels of complacence, and in some cases even mediocrity, as the bars raise higher in the industry, as a whole. Successful organizations have discovered the benefit of injecting mild and open competition as a strategy to enhance overall competitiveness.

Competition would be counter-productive when it is individualized; however it can be catalytic when it is related to corporate goals and achievements. Organization structures and team formations on one hand and portfolio division and geographic spreads on the other could be markers of competition. An ideal organization is one that integrates collaborative nuances with competitive dimensions. For example, an R&D division can learn from the best practices of another division, say manufacturing, and incorporate the best practices of productivity to enhance product development throughput. Vice versa, manufacturing division can observe how innovation and empowerment take place at employee level in a research organization and achieve significant innovations in shop-floor. Collaborating internally, the corporation can become stronger externally. At the same time, internal deficiencies can be made up by external collaborations; the competition induced by such moves makes internal divisions more adept.

9. External benchmarking

Benchmarking is the most effective manner of staying competitive. While most organizations incorporate internal benchmarking within their companies, very few resort to external benchmarking of attributes, skills or performance as a routine process input. A few organizations believe that a certain level of attrition and accretion helps in maintaining a cultural momentum to achieve weeding out of stale internal practices and integration of leading edge external approaches. On the other hand, a systemic and process-driven effort at external benchmarking will combine the advantages of organizational stability with potentialities of continuous reinvention.

As with research, a focus on competing in the industrial space with best practices helps achieve the goal. Encouragement to publish papers and monographs in peer-reviewed journals, enabling speaking assignments in prestigious conferences, participation in technology conferences and empanelment in practice upgrade initiatives at industry level would help employees appreciate the progress made in the external environment and accordingly assess the gaps.

10. Promoting self-actualization

To date, Abraham Maslow’s five step hierarchy of human or employee needs remains true and unshaken for its wisdom and relevance for individual and organizational development. Rewards and recognition may be passé but self-actualization would never be. It would continue to remain the most challenging goal and most satisfying achievement for employees and organizations. Self-actualization, unlike common perception, is not an end in itself; it is a process. As an employee or organization achieves self-actualization, the process of re-discovery commences yet again, leading to higher levels of knowledge acquisition and enhance actualization.

Organizations that practice self-actualization are competency-based and competitiveness oriented. They emphasize acquiring knowledge for the future as much as deploying available knowledge for the present. A complete organizational value chain that aligns strategy and structure, matches jobs and talent, enhances knowledge levels and performance outcomes through a combination of measures would be an assured pathway for self-actualization. Self-actualization can be organizationally driven with the company as an entity aspiring to become the best that it can.

Co-transformation of employees and organizations

Neither employees nor organizations can by themselves transform themselves into knowledge entities. Only through concerted and coordinated approaches, organizations and employees can co-transform themselves from a sub-optimal rewards culture to a virtuous self-actualization culture. Organizations as knowledge societies can be truly transformational to national economic development.

Posted by Dr CB Rao on January 31, 2011

Sunday, January 23, 2011

Five Great Indian Leaders: One Singular Leadership Ethic

In my long professional career of over thirty six years (from 1974 to date), I was fortunate to work with five great corporate leaders of India whose skills, attributes and personalities define sublime leadership in all its facets. A study of their leadership styles brings out that the Indian leadership model is clearly more of substance than of style. If India is now acknowledged to be in the vanguard of global industrialization, and if the world has stood up today to recognize that there exists a uniquely Indian way of management, such acknowledgement and recognition is in no small measure due to the leadership strengths that exist in India. The five leaders who are discussed in this blog post are archetypes of the vast community of the Indian leadership that is uniquely Indian, yet globally competitive.

The Indian leadership style is highly competency centric, relentlessly growth focused, steadfastly employee oriented, significantly export oriented, and uncompromisingly hard working. Indian leaders, whether they have their roots in enterprises belonging to the government owned public sector or family and people owned private sector, and whether they have entrepreneurial moorings or professional background reflect the above mentioned five leadership essentials. Each of these five facets, especially the facets of competencies and growth orientation have also variations that are contextual to the individual leadership backgrounds and the distinctive personalities. The clear common thread, however, is one of aggressive promise and authentic delivery, despite the challenges posed by a continuously dynamic macroeconomic and regulatory environment of a developing resource-scarce economy.

Given the high nationalistic orientation and professional pride that the Indian leaders possess, and the great opportunity for India to leapfrog into the innovation space while continuing to be the back office and workshop for the future, the Indian leadership passion never ebbs. The discussion of the five leadership examples brings out clearly that the Indian leadership model never takes it easy. As a matter of fact, each of the leaders discussed in this blog post even today actively contributes to the Indian leadership firmament, never resting on the laurels. It is fascinating to see how the Indian leadership recharges its batteries through work, and only more work, setting an inspirational model to the executives and managers across the organizations. In the earlier dogmatic socialistic era of the 1950s to 1980s as well as the recent pragmatic liberalization period of the 1990s and 2000s, the Indian leadership model has evolved in a consistently positive manner.

Though it is daunting to capture the multifarious leadership tenets of these five great leaders, and is even more difficult to describe adequately the several nuances of my association with them in a blog post I would, nevertheless, attempt in the chronological order of my getting in touch with them. The evocative titles that I have given to each of the models perhaps bring out just one facet each of the multiple leadership capabilities that the five great leaders possess.

Nationalistic rationalism

When the Government of India decided in the mid-1970s to bring into India a two-wheeler scooter for the common man in competition with the well-entrenched Vespa and Lambreatta models of dated designs, and that too through the transplantation of Innocenti production plant from Italy to India, it turned to Mr S Soundararajan (“SS”) who was heading the State owned Garden Reach Shipbuilders & Engineers Limited. SS, a protégé of the then Defense Minister VK Krishna Menon, a mercurial leader in his own right, had by then built a formidable reputation for turning around the shipbuilding firm which proved to be a waterloo for many a chief executive. SS, as the chairman & managing director of the new two-wheeler company, christened Scooters India Limited, brought a rare nationalism to the venture. His faith in Indian engineers was amazing; he refused to engage any Italian engineer in connection with the transplantation and indigenization efforts, and instead relied upon the Indian engineers to manage technology transfer, knowledge assimilation, plant commissioning and commercial launch. He had also a unique faith in the young graduate engineers of India, and extended bold invitations to them to set up a string of scooter retail centers and a clutch of component manufacturing ancillary units in India to support the new two-wheeler operations. At a time when import of components ruled roost in the Indian industrial scene and indigenization was considered a multi-year Himalayan task, SS motivated and managed the launch of the first product, the 150 cc Vijai scooter of the latest Innocenti vintage, in a completely indigenized state. While “India Can” is a fashionable axiom today it is to the credit of SS that he revolutionized Indian industrial thinking for true self-reliance decades ago. SS emerged in that context as an icon of nationalistic industrial pride in India.

The disaggregated components of SS’s leadership model make a fascinating account. A socialistic work ethic marked by equality combined with a capitalistic drive for efficiency characterized his unique leadership model. His egalitarian work ethic was characterized by a flat organization in Scooters India long before the concept became popular. He was completely socialistic, rubbing shoulders with the common citizens, whether on official or personal travel. It was all, however, not merely emotional or inspirational leadership with SS. A razor sharp intellect and an overwhelming passion for knowledge characterized his leadership model. Though a finance professional (SS was an Indian Audit and Accounts Service, IAAS, professional), he had an outstanding grasp of engineering matters, and personally solved many engineering and manufacturing problems. A photographic memory, an amazing sense of recall, strong analytical skills, a ruthless task focus, an unforgiving attitude towards slippages, a punishing approach towards slipshod work and a dare-devil approach to industrial risk-taking made SS a much respected as well as feared leader. He was a strategic visionary to the core too. Quite apart from the strategic marketing and vendor development approaches, his model of centralized production of aggregates and components of the scooter and decentralized assembly of the finished product in various States through independent licensee operations reflected his strategic thinking.

I was the Special Assistant to S Soundararajan between 1974 and 1976, following my stints in State Bank of India, and Tata Motors (then, Telco). My two years with him gave a lifetime of valuable experience to me, from shop floor studies to strategic licensee affairs; and from employee motivation to enterprise management. The principle of end-to-end thinking in the solution of operational and strategic problems, which became my forte in subsequent years, was inspired by his unique thinking approach. He challenged me to raise the bar of performance continuously, placed me resolutely in the zone of perfection, taught me the art of standing up to stalwarts, instilled in me the work ethic of selfless service and developed the rare attribute of thinking and acting strategically and tactically simultaneously. Whether regular shop floor production planning and inventory control or one-time savings in oil and energy consumption through optimized paint shop operations, SS provided the free play for demonstrating my engineering and analytical skills. That he saw a future leader in me as early as in the mid-1970s, despite my soft spoken and self effacing personality, is a great tribute to his ability to identify talent and challenge it to achieve greater heights. Clearly, S Soundararajan is an Indian leader par excellence who inspired others with unparalleled competency, irrepressible passion, and unquestionable ethics.

Focused specialization

When British Leyland plc decided in the late 1970s to steer the management and operations of its Indian subsidiary, Ashok Leyland Limited (established initially in 1948 as Ashok Motors to make Austin cars) into Indian hands, the parent corporation eventually focused on Mr RJ Shahaney, the then chairman & managing director, Jessop & Co a state-owned leading engineering firm for the onerous task. It was a decision well validated by the thrust of development and growth that RJS brought to the affairs of Ashok Leyland. RJ Shahaney, popularly called ”RJS” or “Ram Shahaney”, has been the long time chairman & managing director, and is currently the chairman emeritus of Ashok Leyland. He has also been chairman or director of many other Hinduja Group companies. RJS has been a strong believer in technological modernization and plant infrastructure development as the key drivers of corporate growth. Under his stewardship, AL grew manifold in scale and scope into a multi-site truck & bus behemoth in India, consistently optimizing fuel efficiency and load carrying capability of its products, and assimilating both Japanese and European concepts of manufacture. In fact, achievement of a singularity of purpose and delivery from a plurality of ownership, regulatory and environmental conditions characterizes RJS’s unique leadership strength. RJS was especially adept at deploying technology as a strategic driver of competitive advantage. He had an uncanny capability of harmonizing the best-in-class technologies of each aggregate of a commercial vehicle to develop a hybrid vehicle that was easily the best-in-class for India. A truck or bus engineered from a synthesized fusion of Japanese Hino diesel engine, German ZF synchromesh transmission, American Rockwell axles and British Leyland cabs is a tribute to his technological wizardry. Simultaneously, he also drove personally the concepts of indigenous vehicle design and manufacture to execution.

Undoubtedly, RJS ranks among the best in terms of leadership capabilities in the Indian industry. His crystal-clear thinking, laser-sharp focus, 360 vision, photographic memory, conceptual and analytical mastery and networking finesse are unmatched. He was extremely task focused and did not pardon delays and unjustifiable failures. Though he was an engineer by profession, his grasp of, and grip over business, financial and legal matters was exceptional. RJS was clearly a leaders’ leader. Several industry stalwarts worked under him at AL to enrich the management team at AL. RJS was also a champion of internal talent development. The clarity with which he identified R Seshasayee in the 1980s as the future leader of AL, enabled the space that could match Sesh’s extraordinary capabilities, and the steadfastness with which he supported Sesh as his successor were indeed remarkable.

RJS was a person not only of great professional eminence but also outstanding personal ethics. Despite the several environmental changes and market vicissitudes that AL faced from time to time, he held on to his professional beliefs and personal values and saw to it that no genuine platform or idea was ever mothballed. RJS’s passion for technology and scale is legendary. Technological modernization and infrastructure expansion at AL that were relentlessly pursued by him from the 1980s positioned AL as an undisputed leader in the Indian truck and bus industry. Long before the Japanese automobile industry took root in India, the innovative manner in which RJS led the absorption of the Japanese methodologies and techniques in AL’s engine assembly and manufacturing lines was exceptional. From multi-axle vehicles, tractor trailers and defense vehicles to Hino diesel engines, synchromesh gearboxes and ergonomic cabs, RJS was a pioneer of technological modernization at AL. After British Leyland sold its majority stake in Ashok Leyland to a joint venture of Hinduja Group and Iveco, RJS worked with the Hinduja family to drive the Group’s diversification moves, which he did as effortlessly as he steered the wheels of AL in the home turf of automobiles.

In my long professional career of over 36 years, my association with RJS has probably been the longest and the most profound. My first interaction with him was when I floated a note in 1982 on what I thought was an adventurous volume and geographic expansion that AL undertook in the 1980s under his stewardship. That was the time RJS was held in extreme awe by the AL organization that was conservatively molded by the previous Indo-British Management. It was a great tribute to his objectivity and equanimity that he not only took the critically evaluative tone of my note in his stride but also identified me to be his undeclared protégé and deputy in several of his strategic business initiatives and technological upgrades that he led at AL. My relationship with RJS was one of implicit mentor-mentee. He influenced talent development both by precept and practice and was a great role model. It was a pleasure and challenge to watch him dissect and analyze issues as well as numbers, and come up with brilliant solutions, whether in day to day internal corporate management or in external strategic negotiations. The support he gave for my Ph.D. program in industrial management at the Indian Institute of Technology Madras will always be cherished by me. Given the vast canvas of technological and business initiatives that RJS led at AL, it was a pleasure and privilege for me to be a part of all such developments with him.

World-class erudition

When Mr RJ Shahaney was like a huge banyan tree dominating the leadership landscape in Ashok Leyland, it was inconceivable that there would be an opportunity for another colossus to grow with the company to a leadership position. Mr R Seshasayee (“RS” or “Sesh” as popularly called) joined the company in the late 1970s as its internal audit manager from Hindustan Lever, almost at the same time as RJS joined the company as its first Indian managing director, and rose rapidly in the company to become the second Indian managing director in 1997. It required an extraordinary skill-set on the part of RS to grow under the never receding umbrella of RJS, with a vibrantly different personality and sparklingly differentiated skill-set. RS was the first consummate business leader from the conservative Southern India to make his mark felt as a pan-Indian leader. He conducted the affairs of India’s apex industrial association, Confederation of Indian Industry (CII) as effortlessly as he managed the affairs of the automobile giant. His unparalleled erudition that matches the best of Harvard, Wharton and Stanford as well as IIT and IIM alumni brings a rare universality and global sheen to his leadership stature. RS, despite his financial academic and professional background, instilled in himself a fine grasp of all things technical. His first internal audit study in AL which focused on engineering optimization and cost compression of carburizing in the huge heat treatment furnaces of AL was an incontrovertible proof of his engineering grasp, financial analysis and creative approach. There was no looking back for him thereafter. Interestingly, Sesh’s interests and passion extended beyond corporate matters. He is a connoisseur of arts and music, and a fine vocalist himself.

When RJS made way for RS as the managing director in AL it was a latent question in everyone’s mind as to how any other leadership model could be effective, let alone be different at AL. RS proved that a true leader is one who creates his own shoes rather than one who tries to fit into another leader’s shoes. Without in any manner diluting the technological ethos institutionalized by RJS, RS added newer technological nuances, redefined competitive economics of design and manufacture, and triggered the development of a global product range. An outstanding and passionate speaker, out-of-the-box and lateral thinker, incisive and intricate analyst and no less important an empathetic and enabling people’s leader, RS brought a global recognition to the Indian industry. He has been responsible, leading from the forefront, for building a youthful organization at AL, bringing in winds of change and unleashing energies of creativity. Yet, the organization needs more of his strategic services, as exemplified his being elevated as the executive vice chairman of the company, to lead the strategic drive as a top-ranking global automobile company, in line with the vision of the new chairman of Ashok Leyland, Mr Dheeraj Hinduja.

I did not have the formal opportunity to work directly with RS as part of his organization all through my two-decade career in AL, except for my last year but my association and rapport with RS were perhaps more intense and synergistic than what any of his direct reports would have had. Whenever he embarked on any major conceptual exercise or business initiative, he would invariably invite me to thought-partner him, and provide supplemental thoughts as well as counterpoints to his views. The several theme sessions we had as part of the corporate planning exercises were particularly exhilarating from an intellectual point of view. His openness to seek an alternative point of view prior to solidifying his approach has been a strong point of his participatory style of leadership. His ability to channel the finance function as a business enabler at one level and as a prudential gatekeeper at another level was instructive to me as I went through the integrated corporate planning exercises with him. RS was both an inspiration and challenge for me; inspiration because he demonstrated how communication is a key leadership skill and challenge because to be an effective corporate planner after him required the best of one’s strategic skills.

Passionate entrepreneurialism

Nations derive sustainable competitive advantage through the entrepreneurial passion of their professionals. Mr K Raghavendra Rao, founder-CEO, and currently the chairman & managing director of Orchid Chemicals & Pharmaceuticals Ltd (“Orchid”), epitomizes this essential entrepreneurial passion of India. K Raghavendra Rao (“KRR” or “Raghavendra” as is popularly called) set out to establish in 1992, almost simultaneous with India’s liberalization drive, Orchid as his entrepreneurial venture and grow it into a world-class, globally recognized integrated pharmaceutical enterprise. KRR, currently the chairman and managing director of Orchid, is unlike any other Indian entrepreneur. A true first generation entrepreneur hailing from a modest, conservative but disciplined middle class background he attained the stature of industrial leader by sharp intellect and sheer passion. Orchid represented a more challenging entrepreneurial journey than any other contemporary or prior era entrepreneurial venture. Unlike other ventures, Orchid did not have the benefits of inflection of technology, wave of outsourcing, size of domestic market, lack of entry barriers, and/or founder’s core technologies which drove the inception and growth of many an entrepreneurial enterprise in India or abroad. On the other hand, the Orchid model of excelling in the established and highly crowded Indian pharmaceutical space militated against the easy way. Though focusing on active pharmaceutical ingredients (APIs) and finished dosage forms (formulations) he built a business around indigenous process technology, global niche, scale and scope, and operational efficiency in the chosen product space. Starting with an initial focus on APIs for less regulated markets, KRR rapidly expanded the scale and scope of Orchid, progressively integrating into regulated generics markets and diversifying into innovative drug discovery. Building a US$ 3 million start-up into a US$ 500 million asset and 4000 strong employee enterprise, with a much envied status of becoming the 15th largest company in just 15 years from inception in an industry of several hundred Indian and MNC subsidiary companies, KRR demonstrated what Indian entrepreneurial gumption and passion could achieve.

KRR has many attributes that a great leader needs to have, from conceptual and analytical skills to strategic and operational capabilities and from a flair for communication and motivation to a penchant for control and coordination. More than anything else, however, his ability to connect with his stakeholders, from employees to investors, and from technology vendors to marketing partners in an endearing manner is remarkable. KRR passionately believed in establishing world-class facilities that generate employment and wealth for India. His commitment to environmental friendliness, as exemplified by his multi-million dollar investments to make Orchid facilities zero-discharge, place him in an entirely different class of altruistic entrepreneurs. In KRR, the oriental old world simplicity combines with contemporary new age dexterity to make him a charming, charismatic and dynamic leader, with a universal appeal. He is perhaps the most number-savvy leader in our midst, with a computer like numerical memorization and processing capability. And true to the already established thread of leadership in this blog post, despite being a finance and business management professional KRR has an amazing grasp over chemistry and pharmaceutics as well as engineering domains.

It was my privilege and pleasure to thought- and execution- partner KRR, whom I knew from my early Leyland days (from 1982 to be exact), on his entrepreneurial journey. After setting up pharmaceutical, steel, hotel and garment facilities and businesses in the rather industrially undeveloped areas of the Middle East, KRR set foot in India in April 1992 to set up his entrepreneurial venture with a modest seed capital of US$ 125,000. My leadership journey with KRR, built on the strong foundations of professional respect and personal rapport that we shared from the Leyland days, started first as an independent director from Orchid’s inception in 1992 to 1998 and later as its whole-time deputy managing director from 1998 to 2010. My association proves the point that a great leader has the uncanny ability to give the requisite space to peers and colleagues who can deliver value for his enterprise. He gave me the most challenging opportunity of conceptualizing and incubating all the diversification initiatives of Orchid from domestic formulations to global generics and from biotechnology to drug discovery. His unflinching faith in my strategic and negotiating capabilities helped me to structure several industry-leading strategic collaborations and alliances for Orchid. KRR’s ability to empower people to establish and grow initiatives, and provide value propositions for talented leaders eventually became Orchid’s core competence of attracting some of the best talent in the pharmaceutical industry to its fold. As part of this, KRR laid enormous faith in the competence of the Indian scientists, technologists and leaders to build a world-class infrastructure and global enterprise by themselves without any consultants. Such was the return commitment from his team that even in the most trying times of takeover threats, global economic meltdown and company-specific financial stringency, not a single senior team member left for greener pastures. My role, facilitated by KRR, in the strategic and structural transformation of Orchid remains undoubtedly the high point of my long career.

Technological virtuosity

Virtuosity, which reflects an almost inimitable and perfect skill that a true expert possesses, is not everyone’s forte. Virtuous masters are often seen more as domain specialists rather than business leaders. Mr RS Prasad, presently co-founder, and managing director of Suven Nishtaa Pharmaceuticals Private Limited is a virtuoso of pharmaceutical science and technology, turned into a passionate business leader. RS Prasad, popularly called “RSP”, is widely credited as the creator of some of the finest pharmaceutical research and manufacturing complexes in various corporations in India. He is also considered the pivotal force behind the generics successes of select Indian pharmaceutical firms, from the mid-1990s till date. An unmatched understanding of pharmaceutical science and technology coupled with a natural ability to develop new science and technology based on his own creative logic molded RSP into a unique techno-business leader. A fiery disposition towards exactitude and a friendly orientation to develop talent made RSP a rare genius who developed hundreds of pharmaceutical leaders in India, several of them now doing great stints in several overseas corporations. His talent development strategy is a simple three component strategy which is highly effective; he seeks accountability from his team members to deliver results, imparts deep knowledge, in terms of both know-how and know-why, and builds a community of professionals who share the vision of virtuosity. His vision is one of “doing right things and doing things rights” which alone, according to him, brings in sustainable results in the long term.

RSP proves a counter-theory that grassroots technical specialists can excel equally as high level strategic thinkers. He also establishes a framework that right-minded professionals would work, and choose to work again, with even the most exacting and often authoritarian taskmasters like him. The reason is that with RSP only objectivity and logic drive his fury. His team members appreciate that his passion to transfer knowledge to them, albeit through diligent working charters, ultimately empowers them. RSP characterizes a development model which abhors mediocrity at the peer and superior levels but accepts knowledge handicaps at lower levels with a view to make better professionals of his team members. Uncompromising integrity at both personal and professional levels, unflinching commitment to Indian science and technology, and unceasing quest for new knowledge and practice make RSP a true role model for the pharmaceutical industry. RSP, with his contributions to building of US FDA approved world-class pharmaceutical facilities, development of several products with Paragraph IV, first-to-file status for the US market, and shaping of a talent-driven quality oriented organization, is widely credited as the technological and scientific power behind the pioneering generics thrust of Dr Reddy’s Laboratories, which catapulted the company into the global league.

Supported by KRR’s passion to get the best of technologists into Orchid, I was instrumental in inducting RSP into Orchid as the head of regulated generics business initially. As Orchid under KRR set out to grow into the complex business of setting up world-class aseptic formulations facilities for regulated markets, RSP emerged verily as the man of the moment. It was a pleasure to watch him conceptualize any objective in terms of a total resource plan, laying out sequential and parallel activity plans and schedules, integrating quality and regulatory compliance in each of the activities. We shared a belief that my business creativity and his technological virtuosity could create unbeatable value for the corporation. In my long conversations with RSP I could challenge him, and also get challenged, in the process expanding our horizons of knowledge. This process gave me a unique opportunity to understand his capabilities, conceptualize his leadership model and also make suggestions for his becoming an even more effective leader. Dogged as he was in his beliefs, committed as he was to his credos and immersed as he was in his pursuit of excellence people considered it a challenge to prompt him to look at a different point of view. On the other hand, it was to his credit that he accepted some of the most strident feedback from me or possibly anyone else, as long as it was logical. If a model of perfect planning and execution, marked by the highest standards of quality and self-reliance, ever needed to be defined, RSP exemplified it.

Indian leadership and global marksmanship

The account of the five leaders points out certain attributes that are common amongst the great leaders of India. Firstly, it is the competency basket that calibrates a leader’s stature in India. While a leader may or may not be accepted for his or her authority, the leader will certainly be respected for his or her intellect in India. The competencies that are reflected in India’s sterling leaders include not only higher order intellectual abilities such as the depth and breadth of knowledge, impeccable memory, and sharp thinking but also unique success factors such as visualization beyond the obvious, conceptualization of complex issues and incisive analysis of data and information. Secondly, certain unique factors emerge as defining aspects of the leadership personality, embellishing the commonly shared competency basket in a manner unique to each leader. These could be could be nationalistic fervor, networking finesse, collaborative mindset, export propensity, perfectionist quest, expansive erudition, influential communication, entrepreneurial spirit and technological excellence. Thirdly, all successful leaders are also inspiring role models who demonstrate their grasp over their related as well as unrelated domains and also impart knowledge to others by precept and practice. Fourthly, they are aggressive taskmasters who seek accountability and clarify responsibility, in the process punishing inefficiency and rewarding performance. Fifthly, all of them have an unflinching faith in the ability of Indian scientists, technologists and managers to deliver, and within that faith, a distinct reliance on the young and the intelligent to rise to overcome all challenges. Most importantly, great leaders also happen to be leaders’ leaders and/or people’s leaders who succeed in building great leadership teams and organizations that deliver sustainable performance.

To consider the flip side, if such sterling leadership attributes existed in the Indian industry from the 1970s and all through the decades of liberalization the question remains as to why such leadership could not make a more profound impact on the companies that it led, and on the broader industrial scenario. The answer to this lies in the fact that for most leaders their strengths act their weaknesses too. The delivery models of the five leaders offer interesting support to the intriguing but true theory of strengths sub-optimizing themselves as weaknesses. The five delivery models of the five leaders may be summarized as: “Intuit - Improvise - Indigenize” of SS, “Plan - Prioritize - Push” of RJS, “Organize - Orient - Optimize” of RS, “Dream - Diversify - Dominate” of KRR and “Resource - Recharge - Regulate” of RSP. In each case, an excess of a dominant streak of leadership served to erode the potential full impact of the respective leadership models. High dependence on intuitiveness, daring resort to improvisation and dogmatic commitment to indigenization resulted in several of the pioneering initiatives of SS going awry. RJS believed in meticulous and cautious planning, sticking to core product competencies and top-down push for enhanced delivery which sub-optimized his great potentialities. Despite well-intentioned efforts and notable successes in re-organizing and re-orienting the corporation around new themes (for example, cost savings and innovation), RS’s eventual propensity to satisfy conflicting interests possibly led to some level of compromise in execution. KRR dreamt like no other entrepreneur or professional CEO could, and expanded as well as diversified his canvas with great aplomb and panache but his overpowering desire to dominate led to overreaching on strategic and execution fronts. RSP clearly knew how to resource even the most complex project right, excelled in continuously recharging his team but probably could not generate self-sufficient leadership because of excessive regulation and minimal empowerment. These are, however, not insurmountable handicaps; little moderation or aggression on some of the components would unleash full potential of the leadership models.

As brought out by this blog post, India has had, and continues to have, deep leadership talent, of which the five leaders discussed herein are some of the finest examples. The Indian leaders, despite the handicaps of dated technology, scarcity of resources, paucity of trained manpower, and excesses of regulation, excelled in overcoming the challenges and bringing growth and competitiveness to the Indian industry. As India Inc braces itself for a new global competition it is easy to see how the leadership competencies and the leadership models defined by these five great Indian leaders would be very much contextual to India’s step function growth. The apparent plurality of these leadership models reflects, in fact, the singular and quintessential Indian leadership model of intellect-driven work ethic, which is smart and intense. These leaders point to the enormous leadership talent that resides in India. If the leaders such as these great personae are able to find common forums to work together, say as members of boards of directors, the powerful thrust for India’s competitiveness would be unimaginable. These five great leaders who represent diverse generations of leaders demonstrate that Indian leadership has continuously reinvented, reinforced as well as mellowed over time.

I sincerely hope and pray that all of the wisdom, foresight and passion of these great leaders, and several others of their illustrious ilk, will continue to be available to India Inc and its constituent professionals for years and decades to come.

Posted by Dr CB Rao on January 23, 2011.

Saturday, January 15, 2011

Black Boxes and White Spaces: Leveraging Creativity for Growth

Everyone agrees that employee creativity is essential for growth of corporations, or for that matter any organization be it in public sector or private sector. It is indeed a matter of significant research as to how start-ups are fired by creative energy while large corporations struggle to retain creative energy. Even highly creative firms such as Microsoft and Google which are founded solely on creativity are perhaps facing the burden of largeness affecting their basic DNA of creativity. It is not unusual, therefore for large organizations, for example Procter & Gamble and 3M, to devise ways and means to retain their creative energy despite the size. The models adopted by such firms are usually structure, process or initiative driven, and despite their relative success do not represent a universal model of organizational creativity.

Some of the approaches of creative firms focus on pursuit of open innovation (embracing ideas from outside the organization), percolation of strategic thinking down the organization (enabling strategy deployment at unit or department level) and relying on technology to drive innovation (letting products create markets). These approaches, however, occur in phases with creativity going through cyclical downturns, often influenced by strategic shifts and lapses. Nothing else, for example, explains how a leader in televisions in the 1980s like Sony (with its famous Trinitron picture tubes) should completely lose ground to Samsung and the likes which revolutionized the television industry in the 2000s with flat panel displays. Only those organizations which institutionalize creativity at employee level may hope to remain competitive at all times.

Creativity is the ability of an individual to visualize imaginatively, think innovatively, and act effectively to achieve an end-result with value-adding differentiation. Creativity also signifies an ability to overcome known and unknown challenges with the least possible expenditure of additional resources. Creativity is significantly different from pursuit of excellence. When limits to excellence begin to operate, only creativity and innovation can take companies to different trajectories. In a competitive and uncertain world, companies which are creative would most certainly have advantage over companies which are not. Nevertheless, creativity figures low in corporate agenda as a work or organizational ethic that needs to be institutionalized. For most organizations, only the visible working of an employee mind to follow the prescribed practices is relevant and the employee brain is akin to a black box (“one can never fathom what happens inside a human brain, nor is it necessary”)! For most organizations, their environmental view rarely strays beyond an explored business canvas into unexplored white spaces (“one has to have deep pockets to lose money on white spaces”)! By failing to dip into the thought processes that go through the black boxes, companies miss on the opportunities of white space growth that lies ahead of them.

Creativity-conformity conundrum

Organizations are often faced with a creativity-conformity conundrum which needs to be optimally resolved to ensure both differentiation and focus simultaneously. Organizations are nothing but aggregations of heterogeneous people who are brought together to achieve a common purpose, complying with certain organizational ethos and norms. Implicit in this is the need for organizations to be homogeneous in the way they think, talk and act. Conformity to the organizational processes and systems as well as corporate goals and strategies is essential for organizations to achieve oneness despite individual plurality. On the other hand, creativity is a trait that requires freedom of thinking and action. Creativity is enabled in organizations when individuals are enabled freedom of thought, communication and execution. Creativity requires reinforcement through acceptance and execution of ideas, which in turn calls for expenditure of resources. In one sense, conformity enables organizational focus with frugality while creativity sparks corporate differentiation at the risk of profligacy.

Competitive dynamics are often difficult to navigate. They mandate focus and specialization, and also demand differentiation and diversification simultaneously. While large firms and conglomerates are probably better placed to cater to the apparently conflicting needs, small and medium firms find the demands of competitive dynamics extremely complex to resolve. This is where creativity as a corporate strategy and as an organizational ethic comes in handy. Contrary to popular perception, creativity does not ipso facto lead to profligacy. Some creative ideas may require resources to implement, some may lead to multiple foci but some may neither need additional resources nor create additional streams of work. Creativity could often find a better way to accomplish the set strategies, more productively and more effectively, and could many times lead to breakthrough strategies, to catapult companies into new trajectories. It is, therefore, important that organizations understand the conformity-creativity conundrum more perceptively and create an optimal balance, and synergy, between the two essential sources of competitive advantage.

In organizations, conformity needs systemic strength to be effective while creativity needs cultural enablement to flourish. Conformity supports better execution, which requires clearly defined projects, programs, systems and processes. In the absence of these systemic enablers, conformity becomes individualized to boss-subordinate relationships, often leading to multiple and often conflicting approaches across the organization. Creativity supports better planning, which requires ideation to develop alternatives and evaluate vision, strategy and performance vis-à-vis aspirations from time to time. In the absence of these strategic enablers, pursuit of creativity becomes a purposeless diffusion of organizational effort. Prudent and dynamic organizations resolve this conundrum by establishing core foundations of business discipline while cantilevering the core to enhance business efficiency and achieve business diversity. To be able to do that, however, organizations need to disparage their mindsets of the perception that creativity is all about strategy, and hence is the responsibility of the corporate elite, and is not a competence and motivator of the organizational mass whose main responsibility is to execute.

Manifestations of creativity

Creativity is not all about corporate vision or strategy. Creativity, on the other hand, is the core of on-ground continuous improvements as well as the launch pad of breakthrough developments. Creativity improves existing products as much as it creates new ones. Creativity creates new manufacturing processes as much as it enhances the capability of existing processes. Creativity enables market segmentation as much as it creates new user needs. Creativity extends to every function of an organization may never be limited to innovation in research. Creativity results in product superiority as much as it leads to cost competitiveness. Creativity seeds and grows new businesses as much as it protects and extends existing businesses. Creativity makes industries more resilient and self-reliant even as it connects and even amalgamates multiple industries into one. Creativity happens at the leadership level as much as at the front-line worker level. Creativity is pervasive and universal in its concept, execution and ownership.

In everyday’s life we encounter occurrences which demonstrate how creativity achieves all of the above. There was not so long ago a time when USB data cable and charger were distinct in a cellular phone. Today, simple standardization with USB at one end and micro-USB at the other end merged both the accessories into a single cable, reflecting how simple creativity could lead to cost savings through continuous improvement. On the other hand, when a slide-in, slide-out tablet computer is configured to morph into a net book computer, enabling dual use as a tablet and net book based on needs, it represents a complex improvement, capable of creating new market segment. However, if a palm held computer which reads electrical signals of the brain and conducts day to day affairs is developed it would represent a breakthrough innovation that redefines life and creates new markets. Successful and creative transplantation of technologies from one industry to another would result in product innovations that could be game changers. If the roof and side panels of cars are fitted with solar panels a new hybrid car revolution could take place, for example.

Vintage machine tools could achieve enhanced performance with superior jigs and fixtures as well as stronger tools and dies. Sequential machine tools could be amalgamated into machining centers and reconfigured into flexible manufacturing systems with creativity. When conventional metal cutting is replaced by laser cutting or when surgeon’s scalpel is replaced by laser beam, it is creativity of transplantation. Yet, successful transplantation is not a result of any one singular technology. Biological-engineering interfaces on one hand, and hardware-software integrations on the other reflect the need to have multiple functions and domains to collaborate to make creative improvements and breakthroughs feasible. The few examples given here give an impression that creativity and complexity go hand in hand. Harnessing of fundamental research and use of several technologies, some of them unrelated, indicates that creativity requires higher order abilities. On the other hand, creativity is multi-layered, the first layer of which is simple and spontaneous ideation.

Ideation, the engine of creativity

Creativity at the core is just ideation. From Newton to Archimedes, simple observations resulted in groundbreaking laws while from Bell to Edison fulfillment of day to day needs resulted in breakthrough products. In the bygone era of limited education and constrained industrialization, it was left to the passion and brilliance of individual scientists to be creative. In today’s context of broad-based education and unfettered industrialization, creativity could be everyone’s cup of tea. More particularly, if simple ideation is seen to be the engine of complex creativity, there is no reason why every employee in an organization, or for that every individual in the society, cannot participate in a revolution of ideation. Japanese companies have long realized this vital trend and made Kaizen or continuous improvement, through creative grassroots ideas, the fountainhead of performance enhancement. The same has been the case with the Japanese concept of quality circles. There is no need for any other proof that ideation is in everyone’s territory.

Ideation to work in organizations needs two triggers: challenge and motivation. Employees need to be challenged to find improvements to every day issues. The challenge is that no human endeavor, even with the best of technology, is perfect; there would always be room for improvement. Even as new products are conceived leading to improved need fulfillment, the quest for perfection only increases. Designers, manufacturers and marketers need to be constantly challenged to update their own creations. It is established that a product in today’s environment undergoes at least two upgrades every year and potentially evolves through at least ten generations before it is completely overshadowed by a new breakthrough product. Innovative firms have laboratories that seek ideation from every source, sales and service reports, competitor products, vendor experiences, shop floor feedback and employee opinions, and convert the prioritized ideas into product actions. Too few companies realize the power of having all employees thinking about process improvement all the time. At Toyota, each year, each employee generates on average at least ten ideas, aggregating in the process to several thousands, and even a million, of improvement ideas each year. Each of these ideas enhances efficiency and saves money. Over 99% of the ideas are reportedly implemented.

Ideation is sustained and reinforced by the motivational culture of a company. Contrary to perceptions, financial incentives are not the sole instruments of motivation; in fact, in many cases they could fail to motivate too. The reason is that ideation is a spontaneous response to an individual’s yearning for self-actualization. The greatest satisfaction an employee or a team derives from ideation is to see the ideas blossom into physical improvements. When I visited the Toyota plant in Nagoya, Japan, I found the factory operations to be an object lesson in continuous ideation. The coordination of the arrival and assembly of the 30,000 parts of an automobile, the minute-by-minute completion of assembly balanced to Takt Time, the visual signals that are everywhere, the error-proofing of manufacture and component and sub-assembly movement in a quietly efficient Toyota factory all take some time to sink in. The nuances of the Toyota Production System are so subtle and effective that only an underlying credo of spontaneous and continuous ideation can support such a hugely successful innovative machine. The large sign that is in both Japanese and English, announcing “Good Thinking, Good Products” in a Toyota plant brings out the motivational impact. Toyota values the creative energy of its employees by tying up the duties of supervision and management to the generation of improvement ideas by the workers. When one looks at Toyota’s record of financial performance over the last several decades, and the evidence of employees’ creative ideas to power this performance, there is clearly a lesson here for all businesses and all organizations.

Arithmetical potential of ideation

For committed and talented employees, work just grows on them, day over day. For those who spend a lifetime on job, ideas constantly flow through the mind rather subconsciously. Yet, managers and leaders fail to harness the potential due to three commonly held fallacies. Firstly, it is rarely understood that creative ideas come up spontaneously to only the uninhibited employees. Creative expression needs to be facilitated in those eco-systems that place a premium on conformity and compliance; and unfortunately organization design and practice, by and large, tend to be conformist. Organizations thus rarely recognize the enormous creative potential that lies within them. Secondly, it is commonly believed that creative ideation requires structured and systematic studies. Many managers and leaders who are steeped in scientific management cannot believe in the concept that ideas that are borne out of intuition, experience or even hypotheses can also be tenable and viable. Thirdly, those control the intellectual reigns in organizations believe that effective ideation can only be done only by personnel appropriately qualified and experienced, such as corporate planners, industrial engineers or operational and business leaders, and so on. If only the latent churn of ideas all across the organizational pyramid could be harnessed the power of mass ideation in organizations would be enormous.

Assuming a typical employee joins a firm at the age of 25 years and retires at the age of 60, working 250 days a year, 8 hours each day, he or she would have lived through 4,200,000 minutes of breathing and living through his or her firm. Given that a creative idea just needs a spontaneous spark, the typical employee would have millions of opportunities for ideation. Just a few of the opportunities could become tools of excellence or triggers of game-change. If only the organizational culture facilitates and encourages employees to be creative and expressive, and the organizational eco-system captures and distills such creative ideas, creative ideation would receive a significant institutionalization. In idea-centric organizations such idea generation and capture occurs from the very first contact between the employee and the company. When I joined Telco (now Tata Motors) 34 years ago as a Systems Analyst, almost the first question I faced in my induction program was whether I had any suggestions for the company! Senior leaders in Tata Motors consistently emphasized the power of ideas, motivating greenhorns as well as established managers to contribute with ideas. It is not surprising that the DNA of Tata Motors became one of sustained leadership in development and manufacture of automobiles.

Typically, there exist four phases in the life of an employee which give rise to different capabilities and opportunities for creativity. The first phase is the entry phase into the first job which provides the first opportunity to view the operations of the firm with a totally uncluttered perspective. To the extent that the employee is well equipped with academic tools he or she has the opportunity to enhance problem solving capabilities of the organization. Clearly, it is the organization that has to take the lead to harness the untested power of a new employee with an open, hear-him-out approach. The second is the development and growth phase of the employee, say the first ten years of his or her career, wherein the employee understands the depth of the job, appreciates the nuances and makes the work better. At the same time, this phase could be the most challenging, for the employees and their bosses, in terms of achieving the right conformity-creativity balance. The third phase could be the most opportunity filled phase of an employee, with he, or she, moving from an operating role to a managerial responsibility. It provides the twin opportunity of shaping strategy development as a manager heading a domain and mentoring his or her operating executive team members to tap their creativity. The fourth phase, say the last ten years of one’s career, would be the game changing phase where one, by virtue of being a cross-functional or business leader, would be vitally interested in unleashing and harnessing the power of organization-wide creative energy. Leaders of organizations could be the greatest advocates and beneficiaries of organizational creativity.

Black boxes and white spaces

Entity leaders need to appreciate that continuous and sustainable profitable growth is the essential facet of economic and social life. The judicious manner in which a business leader manages the forces of competition and sources of competitiveness determines the growth trajectory of the corporation. The business leaders have a unique responsibility in conceptualizing an integrated three-horizon platform of growth. The first horizon aims at excellence in the current business, the second horizon leverages the current business to exploit adjacent businesses, and the third horizon leads the corporation into uncharted but value-building futuristic areas of growth. Employee creativity plays a notable role in each of the horizons, from continuous improvement in horizon 1 to step-function creativity in horizon 2 to breakthrough creativity in horizon 3. To harness the employee creativity in this manner the leaders should understand and respect the employee black box as a treasure-trove of ideas, and seek out and also pursue the environmental white space as a landscape of growth.

Dr VS Ramachandran, an eminent neuroscientist in the University of California, San Diego, in his path-breaking book,” The Tell-Tale Brain” proposes strikingly that the human brain, with its 100 billion nerve cells and pathways, is capable of making more connections than there are particles in the universe. The human brain is capable of being much more than a set of compartments for specific functions or even a complex set of electro-mechanical neuron network firing away based on internal and external stimuli. Cognitive neuroscience enables us understand how a human brain could feel and appreciate its own deep consciousness. This sunrise science is an essential tool for employees and leaders of an organization to understand the power of the human brain which is otherwise sought to be severely limited by the way our organizations are designed for rigidity (often creating hard silos), the manner in which organizational processes are operated for conformity (which is often dictatorial), and the strategy by which development paths are rendered bumpy (laced as they are with ego-status polemical speed-breakers). The new science is anchored on the premise that each and every human brain that works in the organization is capable of visualizing unimaginably latent growth vistas, mastering immensely complex skills, and performing seemingly impossible feats of development. Organizations whose employees and leaders appreciate the human brain as a dynamic force of creativity and not as an obscure black box of conformity would stand to gain immensely.

The bar to achieve profitable growth is continuing to rise. It is passé today to seek excellence in the current business or attempt to gain business in contiguous spaces. Limits to efficiency in ongoing businesses are adversely set by the way day to day management is run in a complicated manner. At the same time, the entrepreneurial instincts which are the very vitals of industrialization are ebbed out by theories of strategic synergy and core competencies. Yet, whoever objectively surveys the deep history as well as the contemporary progress of industrialization understands that white space growth is the one that has the maximum potential of game changing growth. Very often, even large organizations with tremendous resources become wary of investing for white space growth, abjectly failing to do what a lone entrepreneur or a wise technocrat sets out to do in spite of resource crunch. Organizations should develop a healthy respect for the human brains in the organization (which are all waiting to express without their own conscious knowledge), and supplement it with a yearning for white spaces in the environment (which are all awaiting to be seeded with businesses that were never-before thought of). The way to action the new neuroscience of organizational behavior and the new paradigm of dynamic corporate strategy is to continuously drill for creative fuel in the organizational landscape and use the creative energy to build a pipeline of ideas that would drive growth. Just as humans, organizations must aim at, and experience, self-awareness to reach the full creative potential.

Posted by Dr CB Rao on January 15, 2011

Sunday, January 2, 2011

Urban India 2020: Models for Growth

With a land area of 3.2874 million square kilometers and a population of 1.2 billion, India has 2.4 percent of world land area but supports 18 percent of world population. By 2020, India is estimated to have a population of 1.33 billion, with an astonishing demographic dividend; average age of an Indian would just be 29, compared to 37 in China and 48 for Japan. With economy poised to grow at 9 percent per annum, gainful employment of the huge workforce is both the challenge and the opportunity for India. Seventy percent of the Indian population lives in India’s 638,000 villages while 30 percent of the population lives in 5100 urban habitats. With economic growth, urbanization is projected to expand further, requiring to support 40 percent of the population by 2020. Most industrial and economic investments would be made in and around the urban habitats as part of the unabated economic growth.

Urban challenge

If the central and state governments do not address the issue of strategic urban planning, the opportunity of economic growth could turn into a serious nightmare. Indian cities and towns are already bursting at the seams. The pressure on civic facilities has grown enormously within each city and town, with the governments and companies preferring to focus themselves on city centers and extensions which have established social infrastructure. This coupled with continuous migration of people from rural and semi-urban habitats to such established cities has enhanced the pressures on the limited road space and other social infrastructure beyond bearable levels. As each suburb becomes a beehive of industrial activity, cross-movement of people and materials tends to create unceasing traffic logjams. An Indian worker today spends additionally anywhere between 25 and 50 percent of his work time moving between home and office, adding yet another reason for low productivity and skewed work-life balance.

In the past license raj of the 1950s to 1980s, the governments directed industrial activity away from cities. Virtual barren lands were converted into thriving industrial townships, creating new cities. While a modern Indian who is used to seeing swanky factories coming up in city suburbs may baulk at the trend of the yesteryears there is no doubt that industrial dispersal brought economic benefits and de-pressured the urban systems. This phenomenon is by no means Indian-dogmatic or government-centric; India has its own Jamshedpur and Jamnagar in the private sector while Hyundai and Toyota helped build cities in Korea and Japan respectively around their sprawling industrial complexes. The Indian model was however weak in that the principal sponsors (public or private companies) could only do some part of social construction; their principal purpose had to remain that of building, equipping and operating factories. The industrial dispersal trend lost the steam with economic liberalization in the 1990s and beyond as the governments began to woo private and foreign investors with industrial estates developed nearer the cities. This has, in turn, created more tier 2 cities while converting cities into metros. However, this level of urbanization has resulted in severe stress on the dilapidated urban systems.

Urban decongestion and expansion of cities on one hand and creation of new satellite towns on the other have been the two principal strategies adopted by different state governments in India. Some governments followed a radical policy of broadening city roads of their metros by demolishing houses and shops on either side (with compensation to the owners) and also setting up new suburban hubs. Some metros focused on creation of new suburban hubs and office complexes. A few others followed a city extension strategy in three directions, with either IT or industry being the primer for such extension programs. Satellite cities were enabled as alternative locations but they themselves became as pressured as the primary cities. Various connectivity models were also followed; a bus-train system in one case and metro rail in a couple of other cases. Cities known for their natural beauty and salubrious weather became victims of aggressive development of offices and businesses in all directions. Even cities which saw flight of capital have seen businesses streaming back to operate in green as well as reclaimed land belts.

Whatever be the strategies adopted by various governments, Indian cities are continuing to grow faster than can be handled. Space has been, and would be the greatest limitation for economic growth, as Indian urban planning continues to develop in the legacy spatial planning model. It is not that every city has to be planned only like an American city with clearly demarcated areas, highways, flyovers and green spaces. Japan has a number of cities that support a smooth life in cramped spaces. This is achieved with a combination of social discipline (pedestrian walking plus non-use of automobiles) and a huge system of metro rail (underground, on-ground and elevated) systems. The task for India is in terms of infrastructural planning as well as attitudinal shaping to enable the society achieve substantially more with the needed incremental investments.

Determining factors

The choice for India as it plans the new age urbanization could be an amalgam of the American model as well as the Japanese model adapted to Indian user model. As India keeps its tryst with the destiny of becoming a superpower, the following factors would characterize the evolution. Firstly, there would be a burgeoning of factories, offices and businesses across the country, several of them in and around the 5000 plus urban habitats. Secondly, growth will be focused (i) in and around cities with redevelopment of legacy land and buildings and (ii) on adjacent and near to national highways. Thirdly, consumption centers (shopping malls and movie multiplexes), development centers (schools, colleges and universities), and living centers (houses and hospitals) would be as important as business or factory districts. Fourthly, connectivity (rail, road and air) would determine the productivity of operations and the quality of work-life balance. Fifthly, the opportunistic pace of new business development could be far higher than the planned pace of urbanization, unless new development perspectives are co-created by various stakeholders.

The combination of factors as above could be a heady cocktail for urban vertigo, driving the society from aspiration to exasperation unless strategic plans are developed covering each of the above five factors through centralized and coordinated planning. While avoiding a throw-back to the old licensing regime of directed industrial or enterprise location, the governments should come up with clear demarcation of land for different uses as stipulated above. This task of spatial guidance is a specialized function which needs to be undertaken through analytics by a standing institute rather than by government departments. At the same time companies proposing mega projects must examine how they could facilitate orderly planning of social infrastructure by discussing with the central planning institute, local civic authorities, and private real estate developers their requirements of civic infrastructure. Conceptually, every industrial planning initiative must have an accompanying social planning initiative, each of which must be formalized as specific projects in the hands of experts.

Conceptually, the urban development models would differ based on the key trigger for the urban expansion. The following two models are suggested.

Socio-industrial model

The classic model in India which gave birth to industrial cities such as Bhilai, Bokaro, and Rourkela (all based on government owned steel plants) as well as Jamshedpur and Jamnagar (based on private sector steel, vehicle and petrochemical plants) was based on industries acting as engines of development. Despite generation of huge wealth these cities have failed to reach the status of even tier 2 cities in social attractiveness index. The same may be said of the several suburban industrial hubs that came up, or are coming up, near established top cities in various states. Despite major industrial investments, some new industrial cities have not measured up to the desired levels of sustained factor inflows. At the same time, even though each State has at least ten to twenty urban habitats which could have supported a larger industrial growth given their factor endowments such towns remained tier 2 habitats.. Clearly, the trigger for synergistic socio-industrial growth is hard to identify.

An analysis of the industrial cities which rank high on industrial concentration but low on social acceptance and the civilian cities that continue to remain as the hot contenders for industrial growth despite stressed out urban infrastructure indicates that unless social, educational and quality of life infrastructure develops on par with industrialization, the overall urban development will remain skewed. A socio-industrial model by which governments pursue simultaneously development of all the four infrastructural bases would, on the other hand, have multiple benefits. Establishment of urban development boards with public-private partnership, co-opting of qualified investors in real estate and education in talks with industrial developers, grant of major social infrastructure projects simultaneously with sanction of major industrial projects would go a long way in rolling out a sustainable socio-industrial model.

The socio-industrial model by definition would need to focus on creating mini socio-industrial cities, perched between already developed hubs. Several corridors can be conceptualized in this manner, each extending to a length of 100 to 150 kilometers or so, and connecting about 200 to 250 non-city, larger urban habitats. By avoiding arable land belts as well as bio-diversity land belts, and creating special economic zones in dry and non-arable land belts, a golden mean of complementing agriculture with industrialization can be achieved. The socio-industrial model would require a large measure of inter-district and inter-state and political consensus to succeed. If enabled, the socio-industrial model could be a great optimizer for the federal economy on one hand a robust bridge between rural and urban habitats on the other.

Connectivity-productivity model

Experience in India and elsewhere suggests that connectivity is an essential element of industrial productivity. The Indian rail and road systems are saturated. The railway system has remained virtually static for decades while the national highway and golden quadrilateral road systems merely catch up with the current congestion. If the Indian railways create a new 10,000 kilometer cross-country rail network, connecting hitherto unconnected tier 2 and tier 3 cities there would be all-round triggers for industrial dispersal. This when integrated with dedicated freight corridors and bullet trains would usher in a sea change as to how industries and societies feel connected with each other. The connectivity model would be a great new way of stand-alone employment besides channeling industrial investment into the interiors to spur further employment.

Experience in China suggests that rural people migrating to urban factories provides distinct initial cost advantage which, however, ebbs over time. Proactive movement of factories into hinterland on the other hand could help sustain more durable crucibles of productivity. In India, certain industries such as food processing, personal product which utilize factor resources and also finds contiguous markets could benefit from such reverse migration of factories to people, as opposed to traditional migration of people to factories. This approach along with the connectivity approach could diversify the geographic base of industries substantially.

An essential facet of the connectivity-productivity model is mutual leveraging of industrial and infrastructural options. As a principle, every city or urban habitat having at least a select number of industrial parks and/or special economic zones (SEZs) in contiguous space must have a top class domestic airport and the ones with a large number of such industrial campuses should have an international airport even. From a reverse logic, cities and towns with airports and ports must be targeted to develop industrial clusters. For example, Krishnapatnam which would have a major sea port and a mega power plant operational soon must be developed to have more industrial parks, and an airport too. The essence of connectivity-productivity model is building of new spokes of development around upcoming infrastructural and connectivity projects.

The challenge in the connectivity-productivity model is one of developing the social infrastructure such as residences, schools, colleges, hospitals, entertainment complexes and so on. By preferential allocation of land for pioneering industrial and infrastructural developers, incentives can probably built into the development system. The already established capabilities in the more competed socio-industrial system can be leveraged for the benefit of the less endowed but less competed connectivity-productivity system. There can, however, be no understating of the requirement to enhance skill levels in this model. Companies and agencies would need to deploy special efforts for this purpose, both through in-house and collaborative efforts. If companies already established in the socio-industrial system move into the connectivity-productivity system, methods of training by deputation from one system to the other can be beneficial.

Role models and thought leaders

It is gratifying that India has many public sector and private sector role models that excelled in creating these systems in their own way. The top 21 public sector undertakings belonging to the Maharatna and Navaratna categories and the several top private sector conglomerates as well as some individual mega companies have excelled in creating assets, skills and wealth in barren tracts inIndia. Even as these and other groups venture into other countries to secure factor and cost advantages, focus must also be on the potential that still remains to be exploited within India itself to achieve more intense and more diversified social and industrial transformation.

The Government of India, especially the Planning Commission, can play a very important role in systematizing and accelerating urban development, comprising both renewal and expansion components. The Commission may, however, need to tweak the planning processes a bit. Firstly, given the interplay of industry, society and infrastructure the planning horizon would need to be extended to ten years, from the current five years. Secondly, the current emphasis on sector-wise and ministry-wise plans will need to be supplemented by strategic spatial planning. Thirdly, an institute of analytics to develop urban spatial planning models and their components needs to be established under central aegis. Fourthly, the Commission would need to establish supportive state planning processes as well as apolitical engagement processes amongst all stakeholders. Finally, central and state governments would need to engage bilaterally and multilaterally to optimize land use across the country for social and industrial benefit.

The private sector and public sector corporations have no less a role to play. Industry organizations such as CII, FICCI and ASSOCHAM as well as public sector bodies such as SCOPE would need to establish public-private boards which can develop perspectives of social industrialization. The industry bodies are well positioned to undertake or commission studies which develop socio-economic logic for various urban development options, drawing upon international comparisons where appropriate. These bodies can be the vital link between the entity plans, and public perspectives for understanding the industry’s passion for profitable growth, the government’s mandate for economic welfare and the society’s yearning for integrated development.

Posted by Dr CB Rao on January 2, 2011