Saturday, May 28, 2011

People Orientated Leadership: The Spark of Spontaneity and the Touch of Totality

Amongst the various leadership models, the people (or relations) oriented leadership model and the task (or results) oriented leadership are the foundational ones. For long, these two models were seen to represent two distant or opposing poles of leadership style. The people oriented style of leadership is totally focused on people, with the leader constantly organizing, supporting and developing the people in his or her team. The people oriented leadership style facilitates a participative leadership style, and results in good teamwork and creative collaboration. On the other hand, a task-oriented leader focuses only on getting the job done, and can be quite autocratic. He or she will actively define the work and the roles required, put structures in place, plan, organize and monitor relentlessly, and often ruthlessly. However, as task-oriented leaders spare little thought for the well-being of their teams, this approach can suffer many of the flaws of autocratic leadership, with difficulties in motivating and retaining staff.

Regardless of the conceptual elegance in presenting two opposing schools of thought the two styles are not exclusive to each other. Highly, and solely, people oriented leadership style may provide significant feel-good ambience in the short term but typically fails to produce sustainable results in a competitive business world. A highly, and solely, task oriented leadership may achieve competitive results in the short term but typically fails to retain people in a business environment hungry for talent. The reasons are self-evident. An organization is essentially established to deliver results for the shareholders, a process which it must accomplish through motivated team members who are inspired to stay and grow with the organization and its business. In practice, most successful leaders use both task-oriented and people-oriented styles of leadership. For successful leaders, while the ability to positively engage people, and motivate and inspire them would be visible externally, the underlying theme would also be one of setting targets, defining a strategy, and monitoring execution. Aspiring leaders many times miss wood for the trees and focus on the charismatic and participative sheen of people orientation to the detriment of the need to develop people in true sense of the term and defining tough agendas for effective performance.

People orientation: natural or cultivated?

There is a considerable body of knowledge in organizational behavior, from the early Hawthorne experiments to the later day Abraham Maslow need hierarchy and Douglas McGregor’s Theory X and Theory Y, and the subsequent variations thereof to guide our understanding of the essential motivational triggers for people in an organization. Similarly, there is a considerable body of knowledge in transactional efficiency, from the early Frederick Taylor’s time and motion study to the later day PERT and CPM developed by the US Navy and Du Pont respectively and newer elemental project management techniques developed by Eliyahu Goldratt and others to guide our understanding of how to achieve competitive efficiencies. Both the streams of thought look at people in organizations from two entirely different perspectives; the challenge being that both the approaches are equally required. The essential difference, however, is that while the tools and techniques for task efficiency can be learnt and mastered though education and practice, the behavioral approaches for people motivation can at best be appreciated but not internalized merely through such learning and development programs.

The reasons behind the higher challenge in people orientation are simple. Firstly, each person in an organization is unique, and his or her personality type and motivational triggers vary significantly. These differences become evident in both individual and group interactions. Secondly, what motivates the team member is not necessarily one that motivates the team leader. The stress the team leader has in developing a comprehensive people orientation repertoire and the conflict he has in adapting his personal beliefs with the individual people nuances are real but not always evident.  Many leaders who cultivate people orientation as a managerial tool or leadership duty fail to be real people’s leaders. On the other hand, leaders who exercise a few basic people instincts rather than a complex inventory of people cultivation approaches often end up being more universally adored. Successful people leaders would aver that people orientation is neither about sophisticated word-smithy nor about charismatic rabblerousing; it is essentially all about the appealing to one’s brain, touching one’s heart and inspiring one’s guts.

The natural spark of spontaneity

Cultivated people orientation by which a leader or a manager practices a text book approach to people orientation is not only time consuming but generates more facades than are necessary in an organizational context. Group dynamics teaches us that successful team building is possible only when the facades which people put on are minimized, if not eliminated. Customer-centric behavior is a great approach that makes a leader a natural listener and positive responder, building trust and transparency with both external and internal stakeholders. If there is one approach that needs to be prescribed by organizations to enhance people orientation customer-centric behavior tops a rather limited list of prescriptive items. Customer-centricity is a great way to drive organizational growth and bringing about internal and external people alignment, simultaneously honing a few essential people instincts.   

While there would exist myriad factors that could affect people interactions and influence outcomes in a social context, the relevant factors are rather limited in an organizational context. An organization exists to serve its markets and customers. The team members of an organization exist to serve each other as internal customers to fulfill the overall organizational goal. A flair to understand the market place and the customer needs, an ability to empathize, and an inclination to listen and a willingness to serve are the four essential parameters of people orientation that dictate the team’s and organizational success in a business context. A leader who displays these characteristics as a natural and spontaneous part of his personality emerges not only as a truly successful people’s leader but also as an equally successful business leader. In contrast, any amount of time spent in interacting or indoctrinating people without the context of business or operation solutions could be ineffectual and in many cases counterproductive.

Neither carrot-and-stick nor iron-glove-in-velvet-fist

Leaders who enforce a totally task oriented approach believe that fear (and risk of non-performance) is the key to orderly and productive human behavior. There is some truth in the basic assumption of task management that without fear as a basic instinct other primordial basic instincts such as greed would take over human behavior and disrupt orderly organizational conduct. That said, most task oriented leaders have started realizing that making their team members shrivel in fear is counterproductive, and a degree of people orientation is necessary. Similarly most people oriented managers have realized that the responsibility of task execution is an integral part of people oriented leadership. Such dual style managers believe that a degree of unpredictability as to which style they adopt would help them lead their teams more effectively.

The classic approach in the dual style model has been the age old concept of reward and punishment, or the more recent behavioral experimentation of incentive to perform and disincentive for non-performance, which correspond to the carrot and stick adage. Yet another variant is to cloak the tough task management approach in a soft veil of people-centric approach, euphemistically termed iron fist in a velvet glove. Neither approach provides the needed balance; the former is purely economic and is a post-performance influencer rather than a pre-activity performance enabler while the later is unpredictable and often leads to cultural shock and instability in the teams. Studies have shown that the best mode of dual style leadership is one of predictability, whatever the relative proportion of task orientation and people orientation in a leader’s style. Predictability of a leader’s orientation leads to better alignment and compliance amongst the team members.

Open teams, articulate leaders  

People oriented leaders tend to dwell on the impact of problems on people more than the contribution of people to the problems. They tend to ignore the fact that problems almost always are a resultant of people actions or inactions. Leaders need to certainly protect people from a fear complex that punishments follow problems as such a mindset is sure to curb all creativity. However, when people are ill-equipped or ill-tuned to avoid or correct problems, leaders are expected to be open about it. Pussyfooting problems in such a scenario with the goodness of people orientation causes more difficulties to the teams than solves any of their problems. Being excessively evocative is an infirmity of people oriented leadership as much as being excessively questioning is in the case of task oriented leadership.

The primary purpose of leadership is to provide vision, strategy and resources for execution with a close touch on performance outcomes and with a core competence in problem resolution. People, in today’s competitive world, more than ever understand the importance of performance. The cooperation extended by the Jaguar-Land Rover unions to Tata Motors, post acquisition reflects the recognition that problem solving is more important to people than filibustering. Cascading the analogy to micro-organizational levels, today’s workforce is as interested in finding productive ways of performing as having a respectful work ecosystem. Leaders who can only offer palliative comfort and cannot resolve competitive conflict cannot inspire confidence in the work teams and cannot therefore enable their organizations achieve greater performance.  An enlightened workforce of today’s world is willing to be hauled up for non-performance as long as the leadership is able to guide them to reach solutions. 

The touch of totality

People oriented leaders need to solve problems for their team members. This capability would come up from being in touch with the technology, commerce and in essence the totality of the work system. The simplistic view of leadership that it would suffice to be a generalist at the top is not true. All things being equal, organizations which have leaders with continued knowledge of the technical and commercial matters have proved themselves to be superior performers. By applying themselves to solving problems on the shop floor or in the market place, leaders demonstrate their willingness and ability to apply their shoulder to the wheel. Such a problem-solving ability of the leaders truly makes them people-friendly.  The famous Japanese concept of Gemba Kaizen mandates that problems be solved not in offices but in the workplace where they occur. The continuous improvements in Japan occur based on workplace interactions of the supervisors and workmen.

People oriented leaders, it may be hypothesized, have a greater responsibility that extends beyond providing general engagement to employees. Birthdays, anniversaries, dinners, high teas and other celebrations do have their place in employee engagement. Beyond these there is a more fundamental need for leaders to make better professionals of their team members. They need to be able to coach, mentor, train, and in some cases substitute for their team members. This alone is the core competence of people oriented leaders. Genuine people oriented leaders ensure that they retain their touch with everything they grew with from the beginning of careers even as they add new knowledge and experiences constantly. For example, leaders who time and again build new facilities and businesses tend to be in touch with the totality and positioned to be undeniably people-friendly.

Equidistance and maxi-potency

One of the hallmarks of effective people oriented leadership is that it is bereft of biases and is committed to equity and transparency. Leaders many a time fail to grow out of their attachment to their basic functional domains. They also fail to enlarge their core decision making teams to include new members as the operations and businesses grow. A people oriented leader can ill afford to be associated with only certain functions or be identified with only certain persons. The organization judges the leader on certain hard dimensions; for example, how equitable and how equidistant he or she is in all the dealings. The principle of equidistance requires that a leader must spend a proportionate time on each of the businesses, functions or regions, be equitably appreciative or critical of each of them and that the leader be accessible to all employees who would like to reach out to him, and be equally responsive to them.

The benefit of equidistance is that it enables the people oriented leadership to achieve maximum potency. Positive engagement across the organization will be supplemented by the teams feeling creative and empowered under the belief that the leaders have no favorites to play and no skeletons to hide. An organization that is bound together by trust and transparency among its team members would be best equipped to address its external stakeholders especially its customers with the needed product range and service levels. The examples set by industry leaders such as J R D Tata of the yesteryears and the contemporary Ratan Tata in terms of equidistance with all businesses and leaders of the large conglomerate group validate the hypothesis of people oriented relationship. Clearly, there is a correlation between genuine people oriented leadership that is marked by spontaneity and totality and organizational motivation and corporate growth that is spurred by creativity and empowerment.

Posted by Dr CB Rao on May 28, 2011     

Sunday, May 22, 2011

The Making of a CEO: The Stage Sets the Stature

The other day a noted leader remarked in the media that as more professionals become chief executive officers at a young age the risk of their committing mistakes also would increase. The implication obviously is that experience teaches a professional many things that would come in handy not only in the journey of becoming a chief executive officer (CEO) but also in becoming successful in the role. Given that a CEO is expected to be a person of many attributes, from high intellect to down-to-earth common sense, from informed ego to spontaneous humility and from transparent empathy to visible aggression one would tend to agree with the proposition that appropriate experience would shape the profile of a successful CEO. The academic setting in a university and the job setting in a firm are two major determinants of the character evolution of any leader. The field of leadership development which has spawned many theories and models is dominated by mythical folklore as much as practical truism.

Myths and facts
While there are several mythical propositions on leadership development a few are striking. The first myth is that a leader is borne but not made. This myth is so widespread that even self-made leaders who come up the hard way to apex positions often take the position that leadership has to come naturally to a person. While the hypothesis has a grain of truth in that a certain basic personality disposition, especially one oriented towards achievement, is indispensable for a leader, it is also true that most other leadership attributes can be developed through experience. The second myth is that top-rung institutions, especially the IITs and IIMs, alone can provide a sure passport to a leadership mantle. While such premier institutions no doubt make one a better professional, eventual transition to leadership is a function of more complex variables that are encountered over time. The third myth is that technical skills are less important as one moves up towards leadership positions. Nothing can be farther from truth in an era where technology and its deployment are the fundamental differentiators of competitive companies.
Equally striking are certain facts of leadership development which are often obfuscated in mythical folklore of leadership. The first fact is that a CEO needs to be simultaneously competent in multiple domains and be able to engage with multiple stakeholders. Very often, however, media and analysts get taken in by one or two dominant characteristics of successful leaders and equate them with the essence of successful leadership in a generic format. The second fact is that leaders do slip up at times either in strategy or execution; however, leaders who are successful in the overall tend to be astute enough to pull back in time from mistakes. Many times, however, undue premium is placed on the infallibility of a CEO which tends to get questioned only after the CEO moves out. A classic case in point is the conservative accounting policies adopted by the new chairman of India’s largest bank, soon after the retirement of the highly acclaimed and successful predecessor who drove exceptional growth for the bank. The third fact is that the most successful CEO is one who has the ability to manage a leadership bench of near equals and potential successors than a bench of distant runners to leadership positions. Here again, the folklore is that leaders cannot develop under titans.
Phases and paces
The conventional thinking is that a CEO goes through a career journey like any other professional but with the caveat that the innate leadership qualities give the extra decisive edge to the professional to become a CEO. The various phases of the career journey are seen to be the graduate and post graduate academic phases in which theoretical domain knowledge is gained, and the operating level, managerial level and functional leadership experiential phases in a firm in which commercial deployment of theoretical knowledge is achieved. The pace at which a professional coasts through these phases is mandated by regulations in the academic phase but is entirely opportunistic and unpredictable in the experiential phase. The pace in the experiential phase is often seen to be influenced not only by exceptional performance but also by opportunity, godfathering and even a bit of luck. As one moves through these phases, management of stakeholders, both internal and external, is seen to become more important than anything else.   
This sequential model of leadership development has inadequacies which have not been adequately brought out in the reviews of leadership. In any case, the conventional model has little depth in the making of the new generation CEOs. A more appropriate way of viewing leadership development is through a longitudinal stratification of the entire career growth of a professional, spanning both the academic and experiential phases of say four decades into a learning mode and an application mode, with considerable connectivity between the two modes. This model overturns the conventional wisdom that academics is only about knowledge and experience is only about application. On the contrary, it is in the first mature academic setting that a graduate student experiences the competitive elements of performance, the group dynamics of human interactions and the commercialization mechanics of knowledge acquisition. The first transformational seed of leadership development is thus laid in the academic phase itself. If the premier institutes such as the IITs and IIMs are pursued for providing a fast track to apex positions, one reason lies in the competitive dynamics of entry into and study in such institutions.
Similarly, in today’s fast changing technological world, knowledge acquired decades ago in the class room would be of little help for achieving and sustaining successfully a CEO position.  Each decade in the five decades that had gone by has seen the emergence and embodiment of new domains of knowledge. Biotechnology and molecular biology are by now passé in medicine. Biological engineering, nanotechnology, and regenerative medicine are the new futuristic domains. Electronics is the core of communications and computing no doubt but media communications, artificial intelligence, and robotics are influencing the emergence of new lifestyles and industries. Massive changes in material technologies are underway, with the use of precious metals and rare minerals in new engineering applications, like gold and silver in electronics and communication gadgets, rare earths in automobile applications and polymers in pharmaceutical applications. By being up-to-date in such new technologies the CEOs in leading companies such as Apple, Samsung, Sony and Toyota are ensuring that their companies remain ahead of competition. The new age CEO needs to reprioritize his or her attention from stakeholder management to absorption of new customer-centric technologies as long as he or she intends to be a successful CEO.
Shaping and honing
Learning and application on an ever increasing and ever innovative canvas, from the inception to finale of a leadership career, is well established from the above discussion. The question still remains as to how true blood CEOs are shaped and honed over time. A study of successful Indian CEOs suggests three essential components and one highly desirable embellishment of the process. Firstly, a positive mindset for continuous learning and improvement makes a success of the dual mode knowledge model discussed above. Secondly, an intensive stint in one or more fundamental domains of a firm establishes perspectives that drive business success. Thirdly, leadership character is toughened and reinforced when potential leaders have the early opportunities to closely work with true blood CEOs. And the embellishment without doubt is the ability to work in a global business environment. These four components are synergistic and provide exceptional value for the leader.
A positive mindset for continuous learning and improvement is crucial for a CEO to keep his firm ahead of a competitive knowledge curve. The learning needs to be on multiple dimensions, covering both hard skills and soft skills, ranging from science, engineering and technology to human, organizational and social behavior. Here it is important to distinguish the one-time asset of an acquired knowledge with a more enduring ability to continuously grasp new knowledge. It is not mandatory that the CEO of an engineering firm needs to be an engineer or that the CEO of a finance firm needs to be an accountant. Instances abound of leaders from non-technical areas successfully leading technology firms, and vice versa. At the core of this phenomenon is the leader’s ability to grasp new domains and internalize the core features of the domains that are besides his or her academic expertise. My blog post on Five Great Leaders (January 2011) exemplifies how such cross-functional grasping and learning power made great leaders truly outstanding CEOs.   
Notwithstanding the proliferation of departmental specializations over years, four core domains continue to be the fundamental crucibles for leadership development. These are product development (or R&D), manufacturing, marketing and projects. The sooner in one’s career one works in one or more of these domains the more robust would one be as a leader. Product development is the engine of growth for a business, and a stint therein provides the leader with invaluable perspectives on generating value for the customers. A well designed product creates its own market in a sustainable fashion. Manufacturing is the delivery machine of a firm; the toughest managerial challenges occur, and the best of management models have emerged, in this domain. A leader who has worked on the shop floor carries with him for his life what productivity, competitiveness, planning and coordination mean under a comprehensive canopy of man management.
A firm exists for its customers, satisfying the existing ones and adding new ones. A leader who has intensive field exposure will be imbibed with perspectives on driving growth through proactive need identification and fulfillment. All business and industry depends on a ubiquitous black box called factory that converts inputs into outputs. Design and execution of facilities helps potential leaders understand how flexibility and specialization can be combined to deliver conversion efficiencies. Not all leaders would have the opportunity or time to work in all the four areas, but by exercising options to work in these domains professionals of varied academic disciplines can imbue themselves with exceptional value building and leadership qualities. The success of Hindustan Unilever in India in ensuring a strong leadership bench is related to its well established policies of placing all promising professionals in these areas early in the careers.
The ultimate opportunity for a professional with leadership potential is to work with an established leader. Such a stint challenges and reinforces the evolution of one’s own developing managerial and leadership concepts, and makes them even better. The stint also provides an opportunity to get a bird’s eye view of how operations and businesses are conducted in a total value chain perspective. Recognizing this important need, many large firms in India have established a practice of inducting promising professionals, early on in their career, as executive assistants to senior leaders, including the CEO.  Such companies have experimented with two routes; one is of inducting the professionals first as executive assistants and then moving them to the chosen core domain and the other is of positioning the professionals first in the chosen core domain and then moving them as executive assistants. Whichever route is taken, potential leaders, with a flair for learning, have been found to immensely benefit from the above three elements of leadership development.
The fourth dimension of operating in a global environment has gained much acceptance in recent years with the growing importance of global competitiveness and international growth. While international marketing is the logical choice to develop global leadership potential, international business development, strategic alliances and mergers & acquisitions have also emerged as the perfect domains for prospective leaders to cut their teeth in the challenging world of global business. Recognizing the importance, certain top rung academic institutions are integrating internship in select countries as part of the overall curriculum. As more overseas companies set foot in India, even domestically oriented businesses would need to build a pool of global leaders to manage collaborative as well as competitive relationships.  
Entrepreneurial and family leaders
The above described four pronged strategy of leadership development is a proven model which has produced several iconic CEOs in India. The model obviously works the best in professional organizations, in both private sector and public sector, where large numbers of talented professionals exist and systematic practices of talent management are deployed. In entrepreneurial organizations, however, very often neither the time nor the opportunity for such structured leadership development exists. Yet, entrepreneurial companies have thrown up some of the most successful CEOs ever. The reasons are not far to seek. By their very nature, entrepreneurial organizations are innovative, competitive and customer-centric with a clear need to seek a market niche. All the four elements discussed in the model above, therefore, occur in entrepreneurial organizations with greater intensity and connectivity.
In particular, entrepreneurs have an added responsibility. Unlike in large organizations where leaders are selected and anointed based on the models discussed, entrepreneurs start their journey with a presumptive assertion of their CEO leadership positions. This puts a tremendous responsibility on the entrepreneurs to live up to the self-appointed status. More often than not, all successful entrepreneurial companies owe their success to the entrepreneur-CEOs fulfilling their leadership mission. The initial success should not, however, make the successful entrepreneur-CEOs ignore or forego the benefits of the more elaborate four pronged CEO journey. Entrepreneur-CEOs who have worked on continuous learning, focused on core domains, created a seasoned board of directors and aimed high in international markets have continued to strengthen themselves and their organizations. Amongst these factors, establishment of a highly competent board of directors comprising industry veterans has helped many an entrepreneur overcome the disadvantage of not having worked with great leaders as in a normal professional CEO journey.
The situation in respect of family enterprises is different but has its unique nuances too. Most family organizations which are large, public limited companies have taken the route of passing the family scions through the four component model, albeit with the preordained motive of moving them to the CEO positions. This obviously puts an added responsibility on the scions to prove themselves on their own merits. Companies and conglomerate groups such as Dr Reddy’s and the Murugappa group have been able to demonstrate that the four elements are a winning proposition for family scions as well in their transformation as CEOs. The dilemma for the family leaders often is in terms of broad-basing, instead of strangulating, leadership opportunities for the professionals. Wise families have discovered that moving the family scions quickly through CEO route to board positions had enabled the simultaneous fulfillment of family and professional CEO development harmoniously.
Stage sets the stature
The leadership practice as discussed in this post clearly points out that leadership stature is achieved and enhanced by the choice of an appropriate stage for leadership play. Leaders, more particularly the chief executive officers, are neither borne nor anointed; they are actually developed through a combination of measures and practices. Potential leaders who understood the competitive dynamics of university education in a positive foundational frame, and also saw the firm as a university for continuous learning in its own right, who understood and toiled in the domains where real tangible value is created for the firm and who demonstrated panache and flair for working with other great leaders, all in an ambience of global competitiveness have proved themselves to be highly successful CEOs. In an environment in which technology increasingly determines the breakthrough ways in which customer needs are identified and delivered through innovatively designed and competitively manufactured products, the new generation CEOs would need to embrace the concept that the firm is the perfect stage for creating and enhancing their own leadership value.
Posted by Dr CB Rao on May 22, 2011.  

Saturday, May 14, 2011

Icons and Iconoclasts: A Corporate Co-existentiality Conundrum

In the contemporary corporate leadership world, iconic leadership has emerged as a new buzzword describing leaders who have led their corporations to great glory. While path-breaking leadership is nothing new and had been around from the days of industrial revolution, heightened media and analyst attention has contributed to the emergence of a school of thought on iconic leaders within the vast field of leadership theory and practice. One of the features of iconic existentialism is the relative fixation to certain successful approaches, which may or may not agree with the dynamic movements that are expected of a modern day corporation. Also, concentration of adulation often brings a counter force, however mild it is, in terms of radically opposite schools of thought in the broader society, and in the specific case of corporate leadership - the organization. This blog post examines a new theoretical conundrum of icons and iconoclasts co-existing in a corporation.

Icons and iconoclasts defined

Icons are those who achieve a halo for something they have done in a consistently trail-blazing manner. As a result of sterling achievement, icons receive great admiration and followership, not only in their organizations but in the overall industry and society. Buoyed by the success, icons expect or get used to others following them in their principles and precepts. Iconoclasts, on the other hand, are those who attack or are dismissive of cherished beliefs and pathways. Iconoclasts are loathe to following a pathway of compliance. While icons and iconoclasts are often viewed in a religious perspective, and iconoclasts in particular have a negative religious connotation, the concepts have a context and relevance to the contemporary organizational dynamics too.

From the perspective of an organization, a leader at the helm of a very successful organization tends to receive iconic status. Simultaneously, the organization gets powered by his or her vision and internally collaborates to develop strategies and implementation pathways. An iconic leader is often successful because of path-breaking approaches that he advocates and the distinctive competitive advantage he secures for the firm. In an icon-led organization, the job of the team members is often seen to be limited to focused execution rather than experimentation with new modes of business.

In an icon-led organization, there also tends to be sub-terranian angst, on the part of some, at the inspired manner in which the organization as a whole abdicates the responsibilities of independence and creativity to display solidarity and compliance with the principles laid down by the leader. Wise organizations tend to put in place structures, systems and processes that could channel such angst into discussions and debates on alternative modes of business management. Very often, however, the spell under which the broader organization finds itself under an iconic leader renders such structures, systems and processes weak.

Paradox of iconoclastic icons

It is a paradoxical truism that most icons are themselves a product of iconoclastic attributes and achievements. Intelligent and aggressive professionals who rebel against conventional or materialistic way of conducting administrative or business affairs often end up propounding radical new ways of administration and business management respectively to achieve public good or investor returns. When P V Narasimha Rao as the Prime Minister of India and Dr Manmohan Singh as the Finance Minister of India ushered in economic liberalization in 1992 they were repudiating the deeply established socialist dogmas of Indian polity. In the process, they set a new direction for the Indian economy and became icons by themselves. When the Minister for Environment in the Indian central government, Jairam Ramesh made environmental clearance the new sentinel of social activism in the government in recent years he became iconoclastic in that he challenged unbridled exploitation of natural resources in the pursuit of growth. Of course, one has the incomparable example of Mahatma Gandhi who became iconic by his passionate espousal of non-violence as a means to secure the Indian independence.

The corporate sector also offers examples of the paradox of iconoclastic icons. Steve Jobs consistently fought against the monopolies of Windows operating system and Internet Explorer and created his own Mac series of computers and Safari browsers. His emphasis on superior graphics capability and sleek form factor were trend setters and served as the core competence of differentiation for a new series of iPod, iPhone and iPad convergence gadgets. That said, the iconic phenomenon needs individual leaders to institutionalize itself. Linux is a great example of an intellectual community of developers militating against the established Windows operating system but which has not achieved the iconic focus due to a lack of individual or corporate leadership. On the other hand, Android mobile phone software system that utilizes Linux open source code achieved iconic status at the hands of Google.

The real paradox of most iconoclastic icons is that their rise to fame is based on demolition of established paradigms and models that operate outside their own space. In other words, extreme efficiency in destabilizing competition with a radically different product and service offering is the established model of an iconoclastic icon. That said, there are some interesting examples of corporations making bold departures by their dogged advocacy of path-breaking approaches. For example, the path taken by Sony in its heydays of consumer electronics leadership in terms of an aggressive foray into movies and media content was primed by leaders who thought of content as being as important as hardware and software in the decades to come. Perhaps the same can be said of Microsoft venturing into gaming devices. A few years ago and into motion flow technologies more recently. Clearly, leaders in such corporations broke the established moulds.

However, it is rare that an icon or an icon-led organization allows iconoclastic approaches within the organization. When an organization tastes success based on the path shown by the icon it does not allow alternative avenues of thought. This is one reason why certain organizations and leaders encourage disruptive thinking and constant evaluation of points of inflection in environment and technology as a means to look for alternative pathways. The impact of such mild and controlled internal iconoclastic approaches will nowhere be near the aggressive unbridled external iconoclastic approaches. Sony leadership, for example, had to face lot of internal and external criticism for its gaming and media entry. The problem in this case was not the inappropriateness of the diversification but inadequate attention on, and the consequent loss of core competence in the core consumer electronics business. The lesson here is that iconoclastism just for its sake would be hardly helpful.

Compliance and innovation

The organization design at any point of time in history has emphasized compliance; there is no evidence that future evolution of organization design would be any different. Without compliance to certain pre-defined values, vision and strategy, any organization would find it difficult to be purposeful and focused. Organizations have also developed a counterbalance to compliance in terms of innovation. Organizations have emphasized continuous, incremental innovation as well as breakthrough, pathbreaking innovation to be able to fight the status quo mindset that high degree of compliance and conformity brings in. These approaches and tools are available to all companies. The issue remains one of finding a feasible and futuristic breakthrough approach that an iconoclastic approach could bring. The example of the camera industry is illuminating in this regard.

For long, the camera industry faced successive onslaughts of disruptive technologies only to fight back and take centre stage. First, it was the phasing out of the decades old film roll technology. Then came digital technology which enabled roll-free photography with internal or external chip. This got further revolutionized with computer becoming a bridge between the camera and the Internet. However, in parallel, in recent years moblile phones and tablets have taken the imaging battle to a different plane by direct and immediate uploading of photographic images shot through them to either dedicated photo banks or enabling transmission to other recipients through email. While mobile phone and tablet cameras are no match in imaging capability to standalone professional cameras, it is the ease of uploading of images taken through these gadgets that endears them to multiple generations of users, and challenges the camera industry once again.

Had the camera makers been iconoclastic of themselves, that is being opponents of framing themselves only as imaging specialists, this attack on them by the convergence gadgets would not have looked so lethal. The camera makers no doubt achieved great strides with embedded computers and processors in the new generation cameras that reach new heights in customized image capture. If only some of the attention had been placed on embedding related processors that connect the cameras to their own customer service portals, photo banks or the email systems on the Internet, the new generation cameras would have been an even more roaring success. This kind of transformational thinking has to come from within the organizations. Strangely, companies such as Samsung and Sony which have been in the leadership of camera enabled mobile phones did not do the reverse for their own professional camera systems. This paradox is indicative of the fact that when a mega corporation has large business silos it becomes a challenge to have an end-to-end iconoclastic approach.

Innovators, mavericks, and iconoclasts

Given that a total break with an established system requires high level leadership talent which is able to differ strongly with the iconic leaders, organizations probably would need to think of alternative modes of disruptive thinking. Maverick thinkers emerge as an alternative to the scarcity of, and more importantly the churn caused by, iconoclastic thinkers. Maverick thinking reflects an unconventional, albeit unpredictable, way of problem solving which is based on lateral or out-of-the-box thinking. Maverick thinking has its limitations in that it often ends at ideation and several maveric ideas would need to be evaluated before a feasible set is selected. Unlike innovation, maverick approach tends to be based on neither logic nor science. It tends to be more intuitive and judgemental. Unlike iconoclastic leadership, it lacks the passion and commitment to drive a whole new way of doing business. To that extent, organizations may find maverick thinkers to be low on both risk and reward.

It is interesting to consider the relationship between innovation, maverick thinking and iconoclastic approach. Let us consider a hypothetical global automobile manufacturer committed to achieving the minimum possible levels fuel consumption not only in its automobiles but also in the transportation system. Innovation drives improvements in combustion systems, reduction in frictional losses and balancing of weights to ensure the least possible fuel consumption. An-out-of-the-box or maverick thinking may target manufacture of the entire automobile by the lightest possible materials such as aluminium coupled with incorporation of hybrid engines and solar panels on the roof. An iconoclastic approach may, however, look at eliminating weekend travel by creating virtual homes where by travellers can be transported virtually to the intended friends or relations' homes. Such an iconoclastic automobile manufacturer could create a totally new business of establishing large estates of virtual homes utilizing state-of-the-art computer, telecommunication, internet, audio and video technologies. Like weekend parks, they would be virtual habitats for distant families reducing weekend travel and fuel consumption on that score. Both maverick thinking and iconoclastic approach require innovation to make things happen. As can be seen from the example, the scale, scope, depth and cross-functionality of innovation enhances from an innovation for innovation play to innovation for maverick thinking play and finally to innovation in an iconoclastic approach.

Game changers

Clearly organizations need to reinvent themselves from time to time to counter the ill-effects of maturity of business and technology or take the growth to the next trajectory. While several initiatives of out-of-the-box and lateral thinking as well as disruptive thinking can throw up fresh and unconventional ideas they tend to be operational in nature. However, these initiatives appear well suited to a large spectrum of small, medium and large enterprises. On the other hand mega corporations could be a perfect canvas for more fundamental transformations with coexistence of icons and iconoclasts. Virtuous mega organizations have a way of pathbreaking leaders as well as iconoclasts becoming icons, who would at some point of time after their success encourage new waves of iconclastic approaches in parts or whole of their businesses. Co-existence of icons and iconoclasts, however, requires a strong leadership bench and a congenial iconic leader who looks beyond his principles and precepts to facilitate a transformation of proven iconoclasts into emergent icons.

Posted by Dr CB Rao on May 14, 2011

Saturday, May 7, 2011

Infosys Board Rejig: Crowded at the Top?

It is lonely at the top in the corporate world, it is often said. For the founders of Infosys, however, it has been a journey of togetherness ever since the company was founded in 1981. In an era which routinely saw first generation entrepreneurs fall apart, second generation siblings spar and multi generation business families struggle to remain together, it has indeed been remarkable that the core founders of Infosys, led by the iconic N R Narayana Murthy not only stayed together but also transformed Infosys into a USD 6 billion corporation and 100,000 plus people organization in a remarkably short period of time. Whoever has left the founders’s group, be it Ashok Arora at the time of IPO, N S Raghavan for his pursuit of entrepreneurial support initiatives or K Dinesh to make way for new board members, the separations have been for reasons acceptable to all the seven founders.

Despite the several blue chip companies that strode the Indian business scene, Infosys has always been an amazing corporate bell-weather. In many ways, Infosys, founded almost a decade before India’s economic liberalization not only brought India’s software prowess onto the global scene but also symbolized the emergence of a new entrepreneurial and leadership class that won global admiration. The team of Infosys founders led by N R Narayana Murthy consistently shone as a great example of founders’ promise to the corporation and investors getting redeemed beyond expectations. Over time, Narayana Murthy, in particular, came to represent an eclectic fusion of individual intellect, business ethics and corporate governance acquiring in the process the image of an irreplaceable leader. As a result, ever since Murthy announced his decision to retire from Infosys upon attaining the retirement age of 65 years, and preparatory to which event he became the chairman and chief mentor of the company in 1994, speculation has been rife over the future course of Infosys leadership.
A contour of changes; real and apparent

It is not surprising, therefore, that the board level leadership rejig at Infosys announced on April 30, 2011 attracted a tremendous amount of media attention. It is not that leadership changes are new to Infosys. In fact, ever since Murthy became the chairman and chief mentor of Infosys in 1994, the company saw a series of leadership transitions, all of them very orderly and within the founder group. First, it was Nandan Nilankani, who became the CEO and MD in March 2002 following the transition of Narayana Murthy to the executive chairman' role.  Subsequently Murthy became non-executive chairman and chief mentor in August 2006.  It was later the turn of Kris Gopalakrishnan to move into Nandan' shoes in April 2007 as Nandan moved into public service. And now in August 2011, it would be S D Shibbulal's turn to move into Kris' MD and CEO role even as Narayana Murthy moves out to become the Chairman Emeritus, KV Kamath non-executive chairman and Kris, the full time co-chairman. There is as yet no announcement of who will fill in Shibulal's COO role.

The latest leadership level changes at Infosys are remarkable for several reasons. The first and foremost reason is that there is indeed no change; all the core founders continue to be associated in one way or the other, and if at all with certain newly defined roles. The second reason is that for the first time a business icon has been brought into the leadership system from outside the founders’ team. The third is that the changes have sought to directly address the so called ‘founders versus professionals’ debate generated by analysts in the media, and momentarily heightened by the abrupt resignation of T V Mohandas Pai who, as the most successful non-founder leader, became director early but could not wait for the CEO position until the last of the core founders could fulfill that role. The fourth is that the changes could, in fact, be more fundamental in their objectives than apparent at first sight, and could portend a major gear shift in corporate strategy, including major acquisitions or a fundamental transformation in organization, including leadership transitions at all levels.
A balanced media view
Though there have been several hypotheses and analysis in the media and a measure of explanation by the principal leaders themselves, the view taken by The Economic Times seems to be the one which is quite balanced. Commenting on the changes, The Economic Times in its editorial dated May 2, 2011 titled "Changing Slowly: Infosys' new management structure is complex but can still work" stated, "Infosys has now three chairmen, one emeritus, one co-executive and one plain vanilla. This is overkill, at first glance, but still a workable arrangement on closer scrutiny, provided all the three at the top collectively mark out their areas of responsibility and curb wanderlust". The reference is to Narayana Murthy, Kris Gopalakrishnan and K V Kamath, respectively. Commenting on Shibulal's appointment, the editorial said "By appointing SD Shibulal as managing director and chief executive officer, Infosys has continued its tradition of honouring the founders, turn by turn. So far, this has not done the company any harm. This time around, too, it could work, particularly given that the board has also decided to induct three younger leaders by June.
The paper's comments on KV Kamath's appointment appear to seek some prophetic touch. It said "Apart from his other achievements at ICICI,  Kamath's outstanding contribution was effective succession planning. And this could be his lasting contribution at Infosys in the few years he has here before he also retires".  It may be noted that Infosys has extended the retirement age for non-founder directors to 70 years while keeping that of founder-directors unchanged at 65 years.  The paper felt "Narayana Murthy's stamp on Infosys is indelible and given his energy and capacity for statesman-like advocacy, it would be silly for the company not to continue to use him as brand ambassador for as long as possible. Murthy can be trusted to provide the room that his successors need in the company's active management." On Kris, the paper felt that Gopalakrishnan's elevation probably reflected the company's desire to reward an effective leader who saw revenues double over a turbulent four years and take the right strategic calls on stepping up consulting and moving into growth areas like telecom. The paper concluded that while some younger companies showed greater dynamism of late, the shake-up showed that Infosys had the will to evolve and stay at the top of the game.
An internal explanatory perspective
Eager as the media has been, the four key leaders, Murthy, Kamath, Kris and Shibulal have also been open about articulating their points of view on the rejig, individually and collectively. The corporate view is that Murthy is a visionary and a mentor par excellence, who will continue to inspire the corporation for a long, long time; Kamath is a great organization and leadership developer, with strong growth instincts and transformational capabilities; Kris is an innovative thinker with the ability to take the right bets on revenue drivers; and Shibulal is a focused execution person whose mission is to implement the new Infosys vision 3.3. This unique combination of leadership strengths, it is said, would deliver equally unique value to Infosys. All the four leaders are expected to continue the established values of ethical credibility, financial prudence and positive aggression. The corporate view also is that there are still some missing pieces of the leadership puzzle, like bringing a new generation of non-founder leaders to key positions which will be rolled out over the next few months.
From the individual statements of the four key players, however, no key new directions are discernible. Murthy states that having worked hard for 42 years, he would take life a little easier, and even take up a public role if something exciting comes by. Kamath states that he would do just what a non-executive chairman is expected to – good corporate governance, clear strategic articulation and light touch steering of a company that is well on its course. Kris sees himself taking direct interest in client relationships, and people development through Infosys Leadership Institute. Shibulal would like to be a client-centric, execution-focused leader, who would lead by example. No out of the box acquisitions for growth are proposed; only those that could fit in the strategic plan would be evaluated. When the dust settles, therefore, the question would be as to whether the leadership is sub-optimizing itself for continuity or consolidating itself for as yet unknown major transformation?
The Infosys board rejig raises pertinent issues of leadership and corporate development that extend far beyond Infosys. In fact, this blog post is not really on Infosys, nor is it intended to analyze the happenings at Infosys. Further attention on Infosys is perhaps not even necessary as the company is extremely fortunate to have a combination of exceptional leaders at the top. But not every company can do, or needs to do, what Infosys has done. The issues that arise from the Infosys saga that have relevance for several other companies are as follows.

Founders' dilemma

Firstly, the sooner the founders' dilemma is resolved, the better it would be for a founder-driven entrepreneurial company. The resolution need not necessarily be in terms of either founders staying in control or giving up control. As long as the right choice is made keeping merit as the benchmark, either decision would be good. That said, each route has its additional challenges. The route taken by Infosys of founder continuity could lead to sub-optimization when the founders are one too many, and each a capable individual, with the company in addition having a strong professional leadership bench. The question would be whether a company, even of 6 billion dollar scale, would need so many iconic leaders when much larger, multi-industry behemoths like Reliance are ably led by just one great leader.

Clearly, having many great leaders at the board level, many of them founders, is a great asset for any company. If the board, instead of adopting an approach of division of functional responsibilities, adopts an approach of entrusting an entire business vertical to one leader it could transform the company from merely being a scale driven business corporation to a scope driven multi-business conglomerate. In Infosys example, if this approach is taken, one can visualize at least four founders driving four types of IT businesses each (for example, services, products, consulting and BPO) and making Infosys an IT conglomerate. Another method could be for the founders who built a company to a multi-billion dollar level and in the process accumulated multi-million dollar personal wealth to rediscover entrepreneurial roots. If certain smart founders could establish and grow a company to 6 billion dollar scale with an investment of a few thousands of rupees, clearly with a proven track record and the security of personal wealth, each of the founders can be trusted to recreate equivalent or larger corporations.

Integrated leaders

in general, successful leaders tend to be holistic and integrated personalities. While, each leader may have something of an additional core competence, be it in terms of vision, strategy or execution and mentoring, coaching or transforming, a successful leader would be able to work on a set of multiple dimensions. It would be more appropriate for the leader at the apex level to stretch that integrated capability as long as one would wish, rather than divide, albeit consensually, the responsibility matrix with other equally competent leaders. One would believe that the Tata group and Hindustan Unilever are particularly adept at developing integrated leaders who could simultaneously transform and grow their companies.

That said, a deliberate de-emphasis of one's holistic capabilities would have its relevance and appropriateness when the established integrated leader desires to develop potential leaders in waiting. Such a developmental pathway was followed in an exemplary manner as the baton moved from Murthy to Nandan to Kris, and now to Shibulal. The challenge lies in pursuing such a pathway between founders and professionals (as founders seek to retire to grow the professionals) or between professionals and next generation members of founders (as founders seek to bring their family members into leadership positions). The time span to achieve such transition needs to be neither too short nor too long so that the full potential of all the leaders is brought into play at the earliest.

Management of instincts

Leadership of corporations is not only one of skills and competencies but also one of values and ethics. Leadership is also one of managing instincts in a positive and purposive manner. There are again two ways of approaching the management of instincts, given that business is as much of collaboration as of competition. Infosys, for example, has very distinctive methods of integrating ethics and values as part of decision making. For example, the loss of an acquisition candidate to another IT giant in recent times is attributed by the Infosys leadership to certain “un-Infosys’ style negotiation approaches of the target candidate. When the board composition represents a cultural homogeneity, decisions are likely to be careful, conservative and compliant, a real virtue for the tough times as Infosys demonstrated.

That said, homogeneity has its limitations when business environment is competitive yet full of opportunities. Debate and challenge at the apex level is often essential to crystallize new ways of doing business without compromising core values and basic ethics. The current Infosys model of positive aggression in a framework of homogeneity may not be competitive under all circumstances, both internal and external. Any divergence to homogeneity model needs to be well thought out. The turmoil caused by iRace human resources transformation in Infosys has apparently some relevance in this context. A debate on extracting more value vis-a-vis restructuring positions or compensation would have helped in a better management of instincts.

Trauma of benchmarking
The comfort and pride of being a leader often breeds a reluctance to benchmark oneself against competition. This gets ensconced in a false sense of invincibility as the corporation and leadership become darlings of the media, investors and analysts. At least two of the three software bell-weather corporations have taken to such smugness with the leaders extending the lead and the followers shortening the lead. The Infosys act shows that the corporation and leadership had enough sagacity and appropriate timeliness to pull back into an overdrive. The lesson exists for all corporations in leadership positions in an industry to be always alert and keep exploring methods that leverage intrinsic talent to explore new avenues of growth, in the process enabling the corporate leaders self-actualize themselves and build value for the corporation.  
Bench-marking requires not only skills of analysis but also openness of objectivity. Viewing industry boundaries from several angles and in multiple manners is essential to achieve meaningful benchmarking guidance. Ashok Leyland for long prided itself for being in a leadership position in the bus segment and having the second largest position in the truck segment little realizing the strides a more expansive Tata Motors has been taking in a wider range of light, medium and heavy commercial vehicles, multi utility vehicles, sports utility vehicles and passenger cars of all ranges. Again, both Ashok Leyland and Tata Motors missed the point that an entirely new luxury bus segment driven by Volvo was emerging leaving them as marginal players in the new segment. Too narrow an industry focus or single measures of benchmarking lead to needless complacence in leading companies due to a failure to appreciate the changing industry boundaries.  
Lonely amongst a crowd, at the top
Clearly, a corporation is blessed if it is able to groom organically robust leadership talent and also inorganically attract proven external talent. The greater the number of leaders with iconic or near iconic status in a corporation the greater is its potential to grow and reward all the stakeholders. As the Infosys model shows it is entirely possible for a corporation to achieve growth rates better than industry average on the strength of its leadership, and with a good game plan for division of responsibilities as per core or super-core competencies. On the other hand, there also lies a hypothesis, proven elsewhere, that the crowded leadership leverages all of its talent most effectively if it is deployed in a lean manner and utilized on an integrated canvas.
In any corporation, the greater is the leadership potential the greater should be the applicable functional and business canvas. The difference between a great corporation which has a dominant scale and a great conglomerate that has both dominant scale and expansive scope, despite both having the same bench of iconic leadership talent at the top is only one factor; the former knows how to collaboratively deploy its leadership talent even at the risk of sub-optimization to prudently consolidate itself while the later knows how to competitively deploy its leadership talent even at the risk of stretching itself adventurously into new horizons.
Posted by Dr CB Rao on May 7, 2011

Sunday, May 1, 2011

Friendship as the Foundation of a Firm: A Hypothesis of Enterprise Genesis and Growth

Some of the best firms in the industry have been set up by longstanding friends with complementary strengths and shared vision. Classic examples are Microsoft co-founded in 1975 by Paul Allen and Bill Gates, Google co-founded in 1998 by Larry Page and Sergey Brin and Facebook co-founded in 2004 by Mark Zuckerberg with Dustin Maskovitz, Eduardo Saverin and Chris Hughes. The founders in these and such other cases have been friends from college days or university days; in some cases with friendship starting from childhood. India has its own iconic models of friends coming together to establish great firms. Infosys, co-founded in 1981 by N R Narayana Murthy with Nandan Nilekani, Chris Gopalakrishnan, S D Shibulal, K Dinesh, Ashok Arora and N S Raghavan is one such great example. Orchid Chemicals & Pharmaceuticals founded in 1992 by K Raghavendra Rao with a team of close friends and Allsec Technologies co-founded in 1998 by Saravanan and Jagdish are two other examples where professional associates who were more of friends got together to launch new firms. In a different context, Larry Ellison, the CEO of Oracle hired his friend Mark Hurd as President and Director on the Board the moment Hurd exited from his CEO position at HP.

Clearly, in each case, quite apart from the technical and commercial brilliance of the founders, the friendship with which they have set up the enterprises has been a solid foundation for the firms’ establishment and growth. In recent weeks and months, however, there have been developments that throw up alternative insights into friendship as a foundation of corporate sustainability and growth. Paul Allen in his book, Idea Man, talks of how Microsoft has not been a completely exhilarating friendship journey for Paul despite the innovative ideas and concepts he thought he brought to the table, relative to a doubting Bill Gates. Infosys in India has recently been shaken by the departure of T V Mohandas Pai who rose to the ranks of top leadership despite not being a part of the original founder-friend group; the reason apparently is that founder-friends continued to hold sway over the chief executive positions by turns. It appears that friendship is yet to be studied either as a foundation of genesis and growth of a firm or as an important constituent of higher echelon organizational behavior.
Foundations of friendship
Most evidence points out that friendship is of utmost value in the establishment and growth of entrepreneurial enterprises. As the examples of Microsoft, Google and Facebook point out, friendship of likeminded students of brilliance provides the requisite reinforcement to test out technical and commercial ideas, create synergy from complementary skill-sets and make sacrifices in a spirit of sharing and caring.  Typically, likeminded friends share the same passion and concern and are driven by similar aspirations. Mark Zuckerberg’s vision was of an open world with free flow of information and complete freedom of social networking. Having computer scientist friends who shared the philosophy helped Mark convert his college level socializing concept at Harvard into a global mega corporation with the world’s largest socialization site. Page and Brin shared research experience as Ph D students at Stanford in search engine technologies, leading to the founding of Google with the objective of placing huge page-ranked quantities of information in the hands of users at the click of a mouse. Allen and Gates, the childhood friends, with their shared and complementary skills in microprocessors and software set up Microsoft to revolutionize personal computing with user friendly, path-breaking operating systems. 
As the anecdote goes, an affront suffered at the hands of an overseas client led Narayana Murthy and six other associate friends to launch Infosys to demonstrate to the world what India’s English speaking techno-analytical talent pool can deliver globally in terms of best-of-breed software solutions. K Raghavendra Rao, with his founding team, coincidentally sought to demonstrate to the world what Indian scientists and technologists can deliver in the highly patent protected field of pharmaceuticals. Allsec Technologies probably was one of the first entrepreneurial enterprises to lead the wave of business process outsourcing into India. As these and several other untold stories of such companies founded on friendship would reveal, simple selflessness, noble aspirations and resolute togetherness bonded the highly skilled founding teams to find winning solutions in each case. It is difficult to hypothesize whether, sans friendship as the key ingredient, any of the entrepreneurial recipes would have ended up with the same astonishing flavor of success each of the firms had in their respective arenas.
Fellowship is not friendship
The industrial world has also examples of professionals who with shared vision have taken charge of spinoffs of assets, divisions and businesses. For example, in the aftermath of scale-down or spinoff of drug discovery activities by global pharmaceutical multinational corporations, scientists working on discovery assets became stakeholders of such newly formed entities to take forward the incomplete vision. Several of them succeeded in further developing the assets and commercializing them. Basilea and Novoxel in Europe and Cerexa and Protez in USA are examples of significant scientific and professional affiliations cementing themselves in a friendly manner into new startup ventures. Several developments in the nascent biopharmaceutical field were also triggered by scientists with experience of fellowship in established companies or academic laboratories teaming up to explore new frontiers of science and commercialization. Similarly, when MNCs disposed off their non-core assets, professionals, who worked on such assets in their previous employment, embarked on a new entrepreneurial journey; they took charge of such new entities and successfully developed them.
Fellowship may lead to friendship but is not necessarily friendship. Fellowship influences sharing of vision with a common work ethic and business aspirations. Longstanding professional associations have succeeded in laying solid foundations of enterprises. Many enterprises founded on fellowship, however, seem to have none of the magic or mystique of friendship driven enterprises. Fellowship based associations even seem to dissolve themselves or morph themselves through sellouts once initial commercialization goals are fulfilled. Friendship founded enterprises, on the other hand, tend to have greater sense of purpose and possess a distinctive even if emotional permanence about them. Professional fellowship fortified with friendship or friendship reinforced with professional affiliation have proved to be much more effective in sustainable bonding and continued coexistence. Pai, for example, has had a great fellowship experience in Infosys but has perhaps not been able to stick together with patience as the founder-friends have been able to. It is not that friendships do not break apart or are not affected by personal vicissitudes or corporate volatility. The breakup that emerged out of Allan’s unfortunate affliction of cancer and the subsequent forging ahead of Bill Gates to build stakeholder value underlines the fact that business could cast a shadow on even the best of friendships. Perhaps, this is one reason why certain deeply drawn friendships try not to get entangled in what they perceive as materialistic business considerations; however, as I postulate herein, such diffidence is not well merited.
Value erosion with pseudo considerations 
Friendship is as much an enabler as a disabler. Competent professionals many times hesitate to join their friends in organizational endeavors on misplaced considerations that friendship sub-optimizes potential for growth. Similarly, needy leaders fail to induct their friends into positions of importance on the false perceptions that such moves could be seen to smack of nepotism. Both believe that friendship prevents questioning of each other for performance. Such erroneous perceptions prevent value that could otherwise have been built with great combinations of talents. Indeed, in colleges, institutions and universities many likeminded friendships emerge amongst the highly talented youngsters, and it is a pity that people prefer to remain as friends rather than launch enterprises with friendship as the foundation of enterprise. Friendship is also not one of equality; it is perfectly equitable for one of the friends who happens to be relatively better skilled or more charismatic to emerge as the first among equals or even as the clear leader.
Despite the virtues that go with friendship as a basis for business genesis and growth, some false positives sully the reputation of friendship. In a corporate or business setting personal loyalty to the leader friend is not a symbol of friendship; rather it is a reflection of pseudo-friendship that abdicates responsibility and advertises loyalty to the leader-friend rather than to his or her company. True friends work towards supporting their friend by better corporate performance than by keeping the friend emotionally or sentimentally happy. Pseudo-friendship typically occurs in models where a business leader hires his friends as his reporting functionaries controlling key domains and other functionaries are engaged in a race for sentimental dominance. The potential for pseudo-friendship is unfortunately multiplied when friends lose the values of friendship competing with the new professional associates or when colleagues who are bound by fellowship seek to position themselves as friends rather unnaturally. A conflict between fellowship and friendship with such false considerations would only damage the corporation.  
Sensitive friendship, aggressive business
Genuine friendship is a complex but a highly durable and reliable human emotion that defies expression. Friendship is recognizing each other’s needs and fulfilling them without expectations. True friendship does not seek recognition or reinforcement. Like a seed that is embedded in earth to grow in its own time, friendship lies embedded in one’s mind and heart to blossom into open and become expressive when the time comes. Once expressed, friendship is never expresses itself, for it seeks no assurance; in fact, friendship is often silently felt rather than openly expressed. Friendship is not always bilateral or reciprocal. It is indeed possible for an individual to develop deep friendship with the other even if the other appreciates or experiences only fellowship. Many times, friendship is a spontaneous resultant of human chemistry. Friendship tends to be so deeply imbedded that even after years of separation genuine friends reconnect as though they have been together all along. Given the above philosophical undertones, friendship is both sacrificial and sensitive. 
Business, on the other hand, is highly practical and often opportunistic. It is materialistic and never sentimental. Business can be, and needs to be, value driven and ethics driven but without acceptable financial results and investor returns business ceases to exist. While friendship is voluntary, spontaneous and multidimensional, business is deliberate, planned and focused. Business rests on accountability for success. In contrast, friendship seeks neither returns nor accountability. While friendship is at best an individual or small group experience, business requires ever-increasing organizational infrastructure to succeed. An inner circle of friendship tends to be a closed circle while a business organization needs to constantly integrate new individuals and talents into it. Individuals in friendship mode never compete; instances, in fact, are aplenty of genuine friends sharing their intellect and wealth with each other as required, without trying to retain such assets with themselves for individual advantage. In business people need to compete and contest with each other as much as they need to collaborate with each other. Prima facie, therefore, business seems to be hardly a place for friends to get together, but is in fact not true.
Superior business, friendship delivered
Despite the apparent contradictions between the emotional characteristics of friendship and objective requirements of business, friendship has an important place in business under certain circumstances. Firstly, there is no better foundation for setting up an entrepreneurial firm than a network of friends. The successful examples cited at the beginning of this post and many others not so prominent in public domain are proof enough of this. An entrepreneurial firm needs shared vision and values, unmitigated commitment and dedication and more importantly working, almost selflessly, for each other. On all these counts friendship endures as the strongest foundation for an entrepreneurial business that is subject to environmental volatility and vicissitudes. In cases where friends bring in complementary skills and strengths as Page and Brin of Google do, friendship remains the most potent driver even as such startups scale up as mega corporations. Even in the Indian context, Infosys has established that friendship of founders is not an impediment for business growth as long as the founder-friends are also highly talented in their own right.
It is not true that collaborative friendship does not support competitive business development. Given that true friendship is non-egoistic, no one in friendship circle feel it hurtful to question or be questioned. In addition, real leaders are expected to conform to McGregor’s Theory Y of self-motivated joyous performance than Theory X of externally driven paid performance. By collaboratively defining respective domains of activity and voluntarily setting aspirations of performance, professional friends can be as much performers as unconnected professionals could be. As an extension, even as business becomes challenging friends can assume responsibilities for new business units and add to business competitiveness without treading on each other’s toes. Neither is it true that friends cannot exist as subordinates. If friendship’s essential characteristic is selfless sacrifice from one or boundless caring from the other it is unclear as how one friend can be diffident about supporting the other. In fact, the considerations of reporting, authority and power are typically a product of independent professional moorings rather than dependent personal friendship. In contrast to fellowship which seeks security of acceptance, friendship enables the founders ideate openly and test out new concepts without any worries about non-acceptance. Friendship enables entrepreneurs and leaders stick together and venture boldly into unexplored areas and establish new paradigms of business. Simplicity of friendship enables them work offline on shared interests or burn midnight oil to come out with new improvisations. Superior business is truly delivered by simplicity of friendship.
Ripple effects of friendship
As people traverse in time through schools, colleges and universities and gain fellowship through organizations over several decades, relationships emerge that are tinged with genuine friendship. Such friends who have complementary skills and shared values are well suited to join together and start ventures that utilize their skills and fulfill their aspirations. A forward looking India set to become the third largest economy of the world offers innumerable opportunities for friendship-driven entrepreneurship. For example, software professionals who have expertise in different kinds of software languages and tools could join together to establish a boutique software firm. Engineers who have design and development as well as manufacturing experience could team up to establish niche engineering firms. Professionals in multiple industries and field could come together to create new products and services of convergence. Childhood friends who branched out into sunrise technologies abroad as they grew up could reconnect and return to their homeland to incubate high technology startups. Fellows of an organization who became genuine friends could move out to take parts of their organization’s value chain as low-cost high technology enterprises. The opportunities could be endless.
Friendship driven entrepreneurial activity certainly requires meritorious capabilities but does not necessarily require complementary skill-sets or professional alignment. It need not also require such friends working together in the same corporate format. For example, professionals who have done well in their careers can support their friends in different domains and fields to establish and grow their distinctive businesses. In such a paradigm, friends who have investible resources become business mentors and angel investors and let their friends become businessmen in their own domains, according to their own capabilities. On a different but an increasingly relevant plane, fellow professionals in business and organizations could reject the temptation of misplaced personal loyalty to leaders as part of commonplace organizational dynamics and instead exercise a transition to genuine friendship through which they can discover that additional magic and build sustainable value for the organizations.
India is widely recognized today for the great talent that graduates from its educational institutions and gains professional experience in the industry and business. Synergizing these skills through friendship, at any stage of life, would enable the great Indian talent discover its true potential with risks of novel enterprise insulated by the strengths of friendship. Friendship, spontaneous and ethereal in nature, would trigger challenging but enduring projects that they would all enjoy doing, which over time would grow these into meaningful and innovative enterprises that will leave behind something of value, an institutional stamp of friendship for the future, creating value for the society and the nation. The ripple effects of friendship driven entrepreneurism and organizational behavior would have a sustainable pan-economic surge impact for the New India. 
Posted by Dr CB Rao on May 1, 2011