Sunday, December 29, 2013

Technology as an Intersection of Public Policy and Private Initiative: A case Study of Japan, the World’s Perpetual Technology Clock

Japan, the world’s technologically most advanced nation, has been buffeted by low growth and deflation for over two decades. During this period, the country has seen three-fold appreciation of its currency (Yen vis-à-vis US Dollar), rendering its products extremely pricey in overseas markets. The country has seen a huge real estate bubble that destroyed consumer and corporate wealth. The nation has aged significantly, potentially reducing domestic savings and consumption, and increasing welfare expenditure. The manufacturing industry faced onslaughts from the more nimble Korean industry and was burdened with excess capacity. Some of the high cost, big ticket overseas acquisitions affected the overall health of certain major conglomerates. The political system has faced continuous upheavals and the legislative processes have faced fractured verdicts during the period with a consequent impact on development economics.

Despite the above adverse trends, Japan retained its preeminent position as a global industrial leader, even two decades later. Japanese products, notably automobiles and electronics, continue to dominate global markets and customer mindshare, notwithstanding Yen appreciation. Japan continued to create new architectural marvels, albeit on a muted scale, despite the real estate slump. The industry continued to develop state-of-the-art products, several of them helpful to the aged population. The overseas expansion managed to weather the acquisition turmoil and deliver value. The political system remained durable enough to welcome a recharged Prime Minister Shinzo Abe and his strategy of Abenomics. At the core of this resilience lies technology, without doubt. This is evident as one considers the unfolding of new technologies in Japan for the future decades. Also at the core has been a public policy that was supportive of industry and technology.
Unstoppable in technology       
Prior to 1964 Tokyo Olympics, Japan started operating the Shinkansen bullet train between Tokyo and Osaka, completing the travel distance of 500 kms between the two cities in just 4 hours; since then Shinkansen reduced the travel time to two and a half hours. As Tokyo prepares to host the 2020 Olympics, Japan is preparing to showcase the world’s fastest train SCMaglev (superconducting magnetic levitation) super-bullet train, a hover train that will run at more than 500 kph and drastically cut the travel time between Tokyo and Osaka to just 67 minutes. Japan has been famous for its robotic technologies from the 1930s (Robot Lilliput was the first toy mechanical robot developed in 1932 in Japan). Since then, companies like Fanuc and Kawasaki, and a few others brought robotics to industrial manufacturing. Companies such as Sony and Honda brought humanoids to mimic human movements for day to day life. In 2013, Kirobo was developed as a humanoid robot that can accompany space astronauts. The expectation is that by 2020, robots that care for elders would be commercially available.
Self-driving cars are the new challenge and opportunity for the Japanese automobile industry which has mastered the energy-efficient hybrid car technology for mass production. Toyota and Nissan have pledged to develop self-driving cars for mass production by 2020. Applying technology in a delicate manner to human life is not strange to Japan. No wonder then that a Japanese rice maker has developed a rice polishing machine that removes the hard-to-digest bran but retains the delicate nutrition-rich subaleurone layer which is just 1/100 of a millimeter thick. While the Western firms dominate the global pharmaceutical industry, it is probably less known that some of the most potent and differentiated antibiotic drugs as well as cardiac, diabetic and gastro care were innovated in Japan. The same drive is evident in the research to use adult stem cells do the job of embryonic stem cells as induced pluripotent stem cells (iPSCs) to develop regenerative medicine that is free of controversies of embryonic stem cells and is more universally available. The amazing list of future technologies that are under development in Japan, certainly not limited to the above, is indicative of the unending quest of that nation for technological supremacy.
MITIoric Japan
What makes Japan tick with technological vision, investment commitment and execution commitment despite decades of economic deflation and political uncertainty? Forward looking government policies were often considered the facilitators of the Japanese miracle. In the post-war Japan, the famed Japanese Ministry of International Trade & Industry (rechristened as Ministry of Economy, Trade and Industry in 2001) was the facilitator of Japan’s unique industrial and export competitiveness. Decades of non-growth and industrial losses may have led to diminution of MITI’s relevance. The other answer also lies in the homogeneity of the Japanese society on one hand and the national acceptance of technology as the primary tool to improve quality of life on the other. Without the twin features of aligned public policy and private initiative, it would, for example, be impossible for a nation of the small scale of Japan to invest as much as USD 90 billion on SCMaglev super bullet trains with a 10 year investment horizon and an even longer and uncertain payback horizon. The social resolve to convert a challenge into an opportunity (for example, development of robots to take care of ageing population) also stems from a belief that technology can support rather than erode old world values.
The other feature is that Japan has always shown the wisdom and boldness to experiment with new technologies and open up new markets for new products first at home. This progressive approach has enabled Japan to master the new technologies prior to launching them with due customization abroad. The same quest makes for Japan’s high-tech toilets with a wide range of sensors and wash & dry mechanisms. At present, somewhat of a Japanese oddity, these can open new vistas in healthcare and sanitation, in a manner typically reflective of Japan – address and resolve problems at source. In several cases, the presence of several strong competitors for the domestic market also forced the Japanese manufacturers to master the art of technological parity with cost competitiveness. The differences in technological competitiveness and cost efficiency between the largest firm and the smallest firm are but marginal in Japan as contrasted with other nations where such differences across the industrial spectrum tend to be huge, and influenced by scale economics and resource accessibility. This means that a technology, once discovered or applied, becomes a national comparative advantage in Japan.
Abenomics, the three arrows
There is, of course, no denying that positive governmental policies help technological innovation and industrial growth. The miracle with Japan is that despite the fractured electoral verdicts, confused government policies and stagnant growth, technology continued to prosper. Japan has now a new hope in the new Abenomics which  refers to the new set of economic policy framework set in motion by Prime Minister Shinzo Abe upon assumption of office in December 2012. This comprises in his words “three arrows” of massive monitory easing, expansionary fiscal policy and long-term growth strategy. While the first and second arrows aim to transform Japan’s actual growth path, the third operates on the economy’s potential growth path, which assumes the optimal use of all available resources and technologies. With stock markets soaring by 40%, Yen depreciating by 20%, unemployment falling to 4%, real GDP growth increasing to 4% and job to applicant ratio nearing 1, the first arrow has decisively worked. The second arrow of sharp increase in fiscal expenditure for newer high-technology infrastructure projects takes longer to work but the projects of solar power and high speed transportation are signals that the second arrow would also work. The third arrow which aims to boost Japan’s potential growth through structural change in industry and business through techno-economic factors will become far more important.
Abe has set out the vision behind his long-term growth plan. “Japan is a country that challenges, that is open, and that innovates,” he says. The third aspect of his policy includes increased private investment, technological innovation, improved trade links, and reformed corporate-tax policy. The third component of Abenomics would depend on the pull factor from the infrastructure investments, acceleration of the intrinsic technological movement, industrial and technological collaboration between competing firms, and the investible resources that the private sector is enabled to develop. Apart from the new technologies discussed earlier, other frontier technologies such as metamaterial technologies, carbon capture technologies, magnetoresistive random access memory (MRAM), ultra-compact microwave communication systems, smart appliances, personal mobility vehicles, thorium and hydrogen technologies for nuclear power, 3D printer technologies, and several other new wave technologies are indicative of the potential that could lie ahead. Abenomocs faces the toughest challenge in ensuring that the technology led long term growth strategy is successful.
India has a lot to learn from the progress of many advanced nations, not the least from Japan. As a late entrant to the world’s superpower game, India (now, expected to be the largest economic power in the world by 2028) has the benefit of absorbing the good points of several advanced nations. Japan has instructive lessons of positioning technology at the intersection of public policy and private initiative. Whether it is the efforts of MITI  and METI up to the recent times or the Abenomics in the contemporary times, public policy and private initiatives shared  technology, both as an outcome as a catalyst. Japan has been able to focus its top engineering and scientific talent on leading edge technology in Japan while outsourcing manufacturing around the world, utilizing scientific and technological resources abroad. China, Taiwan, Malaysia, Thailand and Indonesia have been great beneficiaries of Japan’s optimized global technology model. India, with scientific and technological capabilities, far greater than those of the nations in citation, except China, ought to have been in the vanguard of this optimization model.
Manmahonomics of the 2000’s was effective as a macroeconomic fiscal policy in India but recent events have demonstrated how lack of technological competitiveness and cost efficiencies can affect industrial growth, erode export competitiveness, reduce domestic capital formation, increase external debt dependence, trigger price inflation and affect overall economic growth. An alternative strategy should be to align private initiatives and public policy to position India as the leading absorber of global technologies and deliverer of products for the globe. Creation of a manufacturing base in India for the world is seen in some industrial sectors but needs a major scripting of strategy. Every new electronic device and most components of industrial equipment of the world whether from Japan or USA are manufactured in China from Day 1, in each case. India needs public policy and private initiatives that make such concurrent technology transfer to and product manufacturing in India possible. This requires encouragement of massive infrastructural investments (far beyond EoUs and SEZs), for example, creation of industrial cities with transportation and social infrastructure across the country and provision of clear policy regime for wholly owned and partially owned subsidiaries of technology giants. The policies should distinguish between companies which transfer aged products and companies which transfer the latest generation products, policies obviously favoring the latter. The criteria for evaluation should include not only investment inflows but the quantity and quality of technology inflows. The day when India can claim for itself the words Abe spoke of Japan as a country that challenges itself, that is open, and that innovates, the future of India shall remain successful and sustainable.
Posted by Dr CB Rao on December 29, 2013



Sunday, December 22, 2013

Indian Bollywood Blockbuster Movie Magic: Ten Management and Leadership Lessons

The last four months have seen the successful launch of four Hindi multi-starrer blockbuster movies from Bollywood, each featuring different pairs of actors, and each with a significantly different theme. These, as the avid Indian movie audience would acknowledge, are Chennai Express, Krrish3, Ram-Leela and Dhoom 3. Chennai Express has Shahrukh Khan in the lead, Krrish 3 Hrithik Roshan, Ram-Leela Ranveer Singh and the latest Dhoom 3 Aamir Khan and Abhishek Bachhan. Deepika Padukone is the heroine in two of the blockbusters while Priyanka Chopra and Katrina Kaif are the heroines in two others. All the lead actors of the four blockbusters are top stars of Bollywood. The four films are lavishly mounted with high production values and deployment of graphics and special effects rarely seen on the Indian screen. All of these movies conform to the proven Bollywood formula of music, dance and heroics. And, all of these have proved to be international successes and national blockbusters.

Thematically, each film has amazingly different takes. Two of the movies belong to family drama genre and two to action genre. Chennai Express is a typical Indian lighthearted movie of fun and frolic, with a heady concoction of next door South Indian ambience and theatrical heroics. Krrish 3 is a scientific fantasy on the lines of Superman and Spiderman, with good triumphing over evil, but in a delectably Indian fashion. Ram-Leela is an intoxicating fusion of Shakespearean tale and Indian family rivalries, in a riot of color and beauty.  Dhoom 3, just released, is a tantalizing international escapade of a lovable soft heroic villain, as the lead of an antagonist pair. Two of the movies, as the suffixes indicate, are sequels. All the movies gained from superstar power and added power to stars as well. Each took several months to take, certain dance and chase sequences required days of practice and Crores of Rupees of spend. Uniformly, all the movies benefitted from snappy taking, notwithstanding the typical Indian proneness to lengthy introductions, inescapable song and dance sequences and the inevitable 150 minutes plus of movie length.
High style, some substance
Somewhat cynically, it may be observed that the history of successive blockbusters of either Hollywood or Bollywood demonstrates the power of high technology overwhelming the weakness of low rationality. Whether it is Harry Potter, Avatar or Batman, Spiderman and Superman movies, the intent is clearly to transport the audience to newer thematic universes through a slew of special effects covering up slender storylines. The four Bollywood movies probably have uneven storylines, but have immensely benefitted from deployment of high cinematic technology. The important factor in all the four movies has been that none of the movies was un-Indian, in fact all of them, and certainly three of them, emphasize the indigenous and ethnic elements pretty strongly. This trend is also borne out in other blockbuster hits in other Indian languages, be it Telugu or Tamil. The plausible lesson is that an Indian blockbuster needs to disown nothing of its theatrical tradition but needs to layer it with dollops of technology.
The concept of ‘transportation’ of audience has significant differences between Hollywood and Bollywood. Having experienced to advanced living, the Western audience needed to be transported to sci-fi worlds of outer universe, repeatedly. Probably, the only successful Hollywood franchise that stayed on in physical locations for audience transportation was the highly successful James Bond series.  For Hollywood, it is the virtual virtuosity of science and technology creating new universes. For Bollywood, however, it is more of transportation to more exotic physical locations of India and the advanced countries, including for the latest Dhoom 3 shot extensively in Chicago. Interestingly, Indian movies, more particularly the Telugu ones, have a historical tradition of transporting audience to mythological and folklore realms.  Be that as it may, the essence of successful movie making is transportation of audience to a world that is fantastic and fantasizing, not reachable except in the confines of the movie theatre. That said, the Bollywood blockbuster saga has many lessons for management and leadership, ten key ones being discussed below. 
1.      Integrated imagination is foundation
The greatest feature of moviemaking is imagination. Every department involved in moviemaking, be it story writing, screenplay writing, music creation, cinematography, choreography, art and set making or editing has the common characteristic of imagination, besides each department’s core competence. While moviemaking in general may have such departmental imagination, blockbuster movies are notable for the way individual departmental imaginations are aligned and integrated. The higher the level of integrated imagination the greater would be the blockbuster status. In contrast, business enterprises tend to be conformist and devolve the responsibility of imagination only on planning departments, and a few leaders. Even the few existent imaginative initiatives are not perfectly integrated. Ability to imagine departmentally and functionally, with alignment and integration, is a key aspect of successful organizations.
2.      Direction is execution
Business management theorizes and practices that the chief executive of an organization assisted by a team of functional leaders manages an entity and delivers success. In a typical business or industrial organization, the chief executive leads and directs but rarely executes by himself or herself. In contrast, the director of a movie dons multiple hats.  A great director not only imagines the entire movie but also drives and integrates imaginations of different departments. He not only plans and resources, but also actually executes his directorial responsibilities on a daily basis, covering all actors, and all departments of moviemaking, until the final product of a fully edited movie is censored and released. The chief executive of a movie thus overturns the conventional wisdom that leaders need to lead while executives need to execute. While establishing and running an enterprise is quite distinct from movie making, the lesson from movie making of the leader taking complete ownership and being associated with execution should not be lost sight of. Business leaders may derive greater success by emulating the concept to execution ownership of movie directors. 
3.      Sensory experience drives success
Each of the four Bollywood blockbusters mentioned earlier, or for that matter any blockbuster movie of any ethnicity or language, demonstrates that heightened sensory experience transports the audience to a world of acceptance and appreciation. While products and services of enterprises are not two-hour capsules like movies and are longer lasting, such a feature underscores even more the need for a higher sensory experience for users to be attracted and attached to a product or service.  This principle is relevant for leadership and managerial initiatives too. The success of the blockbuster movies indicates that the incorporation of varied emotions is an essential component of success in Indian ethnicity. The success of several market-facing multinational corporations in India, from Unilever to P&G, is based on their sales and marketing strategies that are ethnically emotive. Internal organizational processes that make and sell products as well as products and services that cater to users equally require ethnic sensitivity, albeit in different shades and emphases. 
4.      Creativity adds spark to success
Over the last 100 years of the Indian cinema, several thousands of movies in various Indian languages have been produced on the basic Indian formula of family dynamics and dance and song mechanics. The freshness the Indian movie technicians have been bringing to the celluloid screen with newer lyrics and tunes as well as energetic choreographic movements (notwithstanding the value erosion in some cases), integrating in the process modern technologies and global trends is truly amazing. Indian moviemaking demonstrates that even an age-old formula can be rendered fresh with a dash of creativity. Managers and leaders, who are often faced, with highly repetitive processes and are often expected to deliver the beaten messages, must take a leaf out of the Indian movie makers to add a dash of creativity to make the processes, procedures and deliveries fresh and appealing. Charismatic leaders and managers differentiate themselves from the pedestrian ones on the basis of creativity.       
5.      Age or culture no bar
Moviemaking is a universal art with no barriers of age, language, region or religion. This is one enterprise, in which the youngest technician can make the best of movies on a shoestring budget, and budding actors, musicians and lyricists can turn stars overnight. It is also an industry which can see the most seasoned and aged directors mount pictures of contemporary standards. Indian Bollywood, in particular, has been home for multi-religious prosperity. For the predominantly Hindu movie audience, the three superstars are Aamir Khan, Salman Khan and Shahrukh Khan. Corporations need to look beyond the demographic profiles and focus on talent and performance as the primer drivers of acceptance, independent of preconceived perceptions on backgrounds or regions and religions. Corporations also must be willing to provide integrated project opportunities for youngsters to deliver and for seniors to reinvent themselves.
6.      Exceptional people, exceptional success
A review of the blockbuster movies reveals that they are made by teams of exceptional people in all departments, including the director himself or herself. While a few exceptional technicians tend to take other average talent in stride to make good movies, blockbuster movies that are differentiated in all respects tend to have exceptional professionals leading all the departments. This has an important lesson for those corporations which seem to treat performance appraisals as distribution of annual increments. The concept of normal distribution of ratings and increments is, in most cases, is justifiably reflective of the talent and profiles that calibrate themselves in a natural manner. However, like blockbuster movies, trendsetting organizations encourage and institutionalize top-ranking talent across the organization. This approach reflects a penchant and passion to accept nothing less than exceptional talent and hold back nothing in rewarding such talent exceptionally (even if it covers the total organization) for exceptional performance.
7.      Job clarity delivers clear results
The art of moviemaking, often considered unregulated and self-taught, is quite scientific, and reflects the highest principles of organizational design and organizational behavior that are not seen commonly even in evolved business organizations. Moviemakers provide the greatest respect to departmental structuring. Each department, be it production, art, photography, music, lyrics, dialogues, dress, lighting, logistics or editing, has its core competence and core delivery clearly defined. Each department knows how it can add value to the other departments and the overall movie but is resolutely focused on its core delivery. Unlike the complex organizational structures where accountability is often confused with collaboration, and functional delivery is obfuscated with value chain management, moviemaking has clear departmentation. Blockbuster movies get recognized for superior departmental delivery as much as other movies are noted for any slippages that could have led to less than optimal performance. For corporations as much as for celluloid, job clarity produces clear results.
8.      Nativity is not naivety
Despite the sweep of modernity in the Indian society and the overwhelming influence of Hollywood on the movie scene, the Indian movies continue to retain their nativity. In fact, reflection of native values and practices is an integral element of successful Indian movies. This is not surprising as the centuries old hoary traditions of India have not only withstood the ravages of multiple foreign invasions and occupations but have consolidated themselves, globalizing with integration of modern trends. Some corporations tend to think that they must bring in change for change sake, often viewed in terms of Western practice and wisdom. On the other hand, more successful organizations respect and cater to nativity, leveraging nativity for acceptance of modern requirements. As the resurgence of practices of Yoga and Ayurveda across the World demonstrates, nativity is not naivety but is representative of authenticity.   
9.      Global quality, Indian costs
The newer Bollywood blockbuster movies represent a step-function jump in quality, almost to the best global standards, and have called for significantly higher production budgets hitherto unseen in India. Even so, the production budgets of the four movies cited were around USD 12 million each for the family drama genre and around USD 20 million each for action genre with special effects (even including shooting in overseas locations). This contrasts extremely favorably with the very high production costs that were upwards of USD 280 million for the likes of Titanic, Spiderman 3 and Pirates of the Caribbean. Clearly, Indian movie magic can extend to achieving global quality with local costs. Of late, there have been doubts whether India would consolidate its advantage as global manufacturing hub. The Bollywood movie magic demonstrates that India still enables a unique paradigm of global quality with local costs. The Indian movie industry and the Governments must seize the opportunity by setting up the likes of Universal and Disney studios in India.  
10.  One for all, all for one
The most interesting aspect of blockbuster moviemaking is the interest the director takes in all the departments for functional perfection and the interest all the departments take in matching up to the director’s vision. From listening to and improving upon the storyline through music sittings to determining shooting angles and playacting for the actors in each day’s shooting, to quote a few, the director participates in every function, and collaborates with each departmental head. The situation that obtains in business or other enterprises is starkly different. From the Chief Executive down to the Functional Heads, the practice is to let the others perform to their goals, with the heads and chiefs limiting themselves to reviews, assessments and management of performance and consequence of their reporting executives.  The assessed individuals also strangely disregard any partaking of functional interests by their superiors, criticizing it as micromanagement. Managers and leaders should emulate the way a blockbuster movie director and his team members work on a ‘one for all, all for one’ principle to realize the director’s vision of a blockbuster movie in the making.
Movie magic, leadership logic
Movies are often seen as nothing more than 150 minutes of entertainment. Indian movies, anchored in their templates of emotions, songs and dances, are seen as even more escapist entertainment. Worse still, most professionals and leaders have a marked disdain for moviemaking as a poor cousin of any organized enterprise. However, behind these 150 minutes of celluloid experience lie important lessons of management and leadership which can be imbued in the day to day as well as strategic business and corporate management practices. There is, in fact, no project like making of an intended blockbuster movie, translating a directorial concept into a magnum opus, working in the process with hundreds of talented leaders and individuals on a daily basis. There is no power like the power of a blockbuster movie in riveting the attention and collecting the adulation of the society. Successful moviemaking is dexterous management of total uncertainty and creation of a creative extravanganza from the simplest of ideas, based on talent, imagination, creativity, passion, dedication and team work.
The history of Indian film making has several chapters scripted by movie moguls and actor stalwarts through their cinematic contributions. In several cases, from the popular Raj Kapoor to the legendary NT Rama Rao, hugely successful moviemakers demonstrated synergistic core competencies in a number of domains such as acting, screenplay, scripting and direction, to name a few. People who are familiar with the Telugu film industry aver the kind of deep research and strict discipline that NTR brought to his inimitable mythological roles. Aamir Khan reportedly practiced for over 45 days to get his tap dance in Dhoom 3 to perfection.  Successful movie stalwarts never stopped learning; they continued to learn and demonstrate personal leadership in multiple domains, spurring imagination and creativity, and seamlessly merging with every element of the movie making system from light boys to musical geniuses. The ten principles of successful movie making identified in this blog post have relevance and applicability in the broader realms of management and leadership for all enterprises and for all organizational endeavors.
Posted by Dr CB Rao on December 22, 2013   





Sunday, December 15, 2013

Scientific Temper and Technological Perfection: The Driver of National Competitive Advantage

Organizations contribute to a nation’s wealth and national competitive advantage. India has recognized the importance of science and technology and created the department of science and technology. It is, however, a moot point if the fervor of science and technology truly pervades India, Inc; for, if it were, India would have been far less import dependent on products of high technology and far more export competitive in terms of India-made high technology products. Part of the reason is due to early digression of talent, focus and investments from the demanding aspects of science and technology to the glimmering aspects of management and administration. This blog post postulates that establishment scientific temper and technological perfection should be pursued as national core competencies to derive national competitive advantage.

Complex qualities
With decades of unrelenting publication of management thought, it is expected that members of an organization must possess all humanly possible qualities, referred to often as competencies, capabilities, skills, abilities, traits and attitudes. These are often classified into hard skills and soft skills, as well as into operating skills and strategic skills. The prescribed human qualities are several, to quote a few professional knowledge, conceptual skills, analytical skills, and interpersonal skills. As higher levels of organization are considered, other additional qualities are prescribed which include, for example, foresight, vision, integrity, ethics, intuition and charisma. A study, in fact, listed over 100 human qualities that a leader, and potential leaders, must possess. As a result of this trend (or fad), programs to develop these myriad qualities have burgeoned into a learning and development industry by itself!
A parallel phenomenon relates to professional specialization or functional specialization. This has, in fact, become the very organizational core of socio-economic and business-industrial infrastructure. The number of professions is no longer limited to a few; it has vastly expanded beyond the traditional research, procurement, manufacturing, quality, and selling domains to spawn additional domains, for example operations, logistics, legal, secretarial, marketing, information technology. In addition, the professionalization has got merged with product lines to include automobile engineers, oncologists, pharmacists, chemists and the like. The matrix of growing professions and product lines has led to an exponential proliferation of qualities which each of these specialist and generic professions must possess. Rather than myriad qualities, scientific temper and technological perfection are all that are required for national competitive advantage.
 Simple differentiators
For sustainable success and perpetual growth, organizations need to have high quality human resources. At one level, the more scientists and engineers an organization has the more likely would be its competitive advantage. This does not mean that organizations should have only scientists and engineers (or technologists) or that other professionals such as managers and accountants are not important. In fact, even more important than the numbers, is the organization-wide presence of certain mesmeric and differentiated qualities that science and technology stand for. These are scientific passion and technological perfection. These help organizations discover, design and deliver not merely products and services but new ways of doing any of the organizational or business processes. As much as the caliber and number of scientists, engineers and technologists in any organization, the extent of scientific fervor and technological perfection across the organization is the key differentiator.
Science and technology (or, engineering) are closely related and often have interdependent and overlapping functions. Science enables fundamental discoveries while engineering designs the equipment and products, and makes manufacturing and delivery possible. Science requires sophisticated engineering and technological infrastructure to deliver. Higgs Boson particle (God Particle) could be discovered only because of equipment made with unprecedented engineering and technological sophistication such as the Large Hadron Collidor of 27 kilometer length. Stem cell discoveries would not be of any avail without cryogenics and cryogenic equipment. By the same taken, without discoveries in materials science nanotechnology developments would not be feasible. Science and technology are so closely interrelated that it would be unnecessary to delineate the functions. What can be delineated, however, are the basic qualities of the two disciplines.
Scientific temper 
Pandit Jawaharlal Nehru, the first Prime Minister of independent India was the first to articulate the concept of scientific temper. In his landmark book The Discovery of India he advocated reliance on observed facts and not on pre-conceived notions, the search for truth and new knowledge, and a refusal to accept anything without testing and trial as some of the important characteristics of scientific temper. He proposed that scientific temper was required not merely for the application of science but for life itself and the solution of many of its problems. The concept of scientific temper is critically required for organizations which most oftentimes get caught up in whirlpools of pre-conceived notions, convenient propositions and ad-hoc reactions. Scientific temper needs to be an individual and organizational way of thinking and acting that uses a scientific method, of observing physical reality and drawing conclusions or hypothesizing the abstract possibilities and validating potential outcomes.
Scientific temper is an attitude to life that integrates logic, discussion, debate and analysis to arrive at the best possible conclusions. Inherent to scientific temper is the ability to think and communicate. Organizations, schools and colleges or businesses and governments, should promote positive thoughtfulness and constructive expressiveness to institutionalize scientific temper. The economic benefits of scientific temper are many; but for Nehru’s scientific temper the Indian Institutes of Technology and national research laboratories would not have been set up, several heavy industries established and multiple dams constructed within a few years of Indian independence. Leaders with scientific temper would similarly institutionalize science and technology in their organizations. More than that, they will facilitate processes of scientific enquiry all through the organization leading to logical decision making, structured execution and objective monitoring of results.
Technological perfection
Compared to scientific temper, technological perfection is a moving concept; moving, of course, to higher levels of perfection every period of time. Perfection is defined as having everything that is necessary, and without faults or weaknesses; in one sense, the highest level of quality attainable at any point of time. The limits of perfection are set by the limits of technology available at any point of time, and given that scientific temper causes humans to push technology ever to newer limits, the limits of perfection also set to move continuously upwards. Whether it is the power to weight ratios and fuel efficiency and emission levels of automobiles or it is the imaging capabilities of scanners and surgical precision of radio-knifes and lasix lasers, technological perfection continuously pushes up the accomplishments of devices and equipment as well as man-machine systems.
Like scientific temper, technological perfection is an attitude to life that integrates aesthetics with performance, durability with reliability, and economy with efficiency. Technology tends more often to be continuously incremental and periodically breakthrough. Cost and affordability constitute the twin ballasts that stabilizes technological randomness. Scientific temper that triggers technological quest also governs the irrelevant technological perfection. The economic benefits of technological perfection are many. Without achieving better fits and tolerances as well as better finishes and efficiencies, Japanese automobiles would not have been world leaders. Higher levels of technology bring higher levels of service but also higher levels of profligate consumerism and adverse consumption. Scientific temper enables individuals and organizations to draw an appropriate balance between cost and consumption
There is a school of thought that clinical application of scientific temper and unrestrained quest for technological advancement affect, if not erode, human values. The school of thought argues that not everything in the world is rational or logical, and there needs to be a level of piety and spirituality related to religious beliefs and a level of emotion and empathy related to social equality and equity. In emerging economies, in particular, science and technology must be deployed to uplift the vast sections of the society. This requires a two-fold deployment of science and technology. At one level, the best of science and technology must be mastered to make India a globally competitive industrial power. At another level, science and technology must be optimized to serve the vast indigent sections of the society through universal access to better social infrastructure and public services; roads, schools and colleges, hospitals, public transport, power, housing, for example. The former would bring in economic power while the latter would usher in social equity for India. 
Posted by Dr CB Rao on December 15, 2013      



Sunday, December 8, 2013

Strategy – Tactics Conundrum: A Philosophy of Neuroscience?

The world of strategy is replete with prescriptions for long term planning and strategic management. Over the years business management and leadership became more rooted around growth and profitability at a broad business or corporate level. Management literature also moved in tandem, focusing on the need to craft and execute strategies that deliver long term value to the stakeholders. As a result, there is hardly any focus today on the day to day managerial requirements. In fact, the concept of tactical or short term optimization of value does not seem to exist at all. This is somewhat surprising given that some of the thought leaders in strategic management owe their foundations to microeconomics.

The swing to strategic management has its support in the fact that many of the actions of a business fructify in the long term. Investments, whether on products or facilities, have to be made with a view on the long term. They also take time to fructify and deliver value. That said, every strategic resource has a very strong embedded tactical component in it, even several. For example, when equipment is purchased to upgrade technology, its daily output is the key embedded parameter. In other words, no strategic asset can be divorced from its tactical impact. A key issue for firms is the identification of the tactical delivery that is expected of any strategic action on one hand, and the tactical actions that are required to be taken to achieve strategic delivery. 


Amongst the various resources that constitute or drive an operation or activity, people are the unique resource that can operate at both strategic and technical levels. From an oriental perspective which is based on lifetime employment, people may even outlast equipment and products, thus qualifying as the most strategic resource a firm can have. Even from a western perspective, people even if changing careers are seen to be the strategic assets of a firm. That said, the daily performance of the individuals in an organization determine the course of a firm on its strategic path.  

People in any organization need to have both tactical and strategic perspectives.‎ People are the ones who can make tactics align with strategy on a daily basis, and vice versa as required. For people in a firm to be strategically effective, they need to be tactically effective too. A dichotomy has developed between tactical and strategic aspects of people development and functioning over the years; for example that the leaders need to be more strategic and far less tactical and front line executives need to be more tactical and far less strategic. Such dichotomy sub-optimizes the most critical tactical and strategic resource of the firm, namely the people.

Driven by brain  

It needs no saying that how an individual behaves and acts is driven by his brain. Brain, therefore, holds the key to how people as workers, managers and leaders work in organizations and societies. Memory, communication, coordination, thinking, concentration are five critical brain functions. These functions affect how body and mind work. The five regions of the brain namely cerebrum, cerebellum, brain stem, pituitary gland and hypothalamus together dictate a very broad spectrum of abilities and competencies of a person. The large part of the brain, cerebrum, has six lobes which determine the basic abilities: frontal that determines thought, parietal that enables sensory, occipital that realizes visual, temporal that feels smell and sound, limbic that relates emotion and memory and insular that conveys pain. Cerebellum, the smaller part of the brain, however, influences a more complex set of competencies, which makes cerebellum a target of more intensive research.

In the past, cerebellum was thought to be linked solely to motor functions. Recent research, however, has focused on cerebellum as a learner and adapter of fine movement through learning and performance cycles. Cerebellum adds to the flexibility, plasticity and perfection of the mind and the body. The brain stem is the posterior part of the brain and provides the main motor and sensory nervous control and coordination to a person. The pituitary gland is at the base of the brain and is responsible for the release of a wide range of hormones in a person enabling the biological profile of a person, including certain hormones responsible to manage stress in a person, and stressful situations by a person. The hypothalamus, closely related to and influencing the pituitary gland, is another organ at the base of the brain influencing and coordinating many hormonal and behavioral cicardian rhythms, complex patterns of neuroendocrine mechanisms, complex homeostatic mechanisms, and important behaviors.  

The complex and powerful set of these five parts of the brain are bound together by billions of neurons and trillions of synapses for communicating with themselves and with the rest of the body through its central nervous system. The very simple rendering of the brain neuroscience as above demonstrates how complex, in terms of both brain genetics and brain development, the human brain is and how even more complex would it be to influence working, managerial and leadership behaviors and competencies to reach artificially targeted behaviors and competencies. This brings us the classic debate of whether leaders are borne or made. The neuroscience offers a platform to be blessed with, or acquire, the required competencies, traits and behaviors but it is the philosophy of introspection, which is essentially one becoming aware of oneself, that could offer tangible help in exploring, stretching and reaching the inner capabilities.

Varying needs 

Every organized activity, be it social or organizational, requires three types of responsibilities. The first is working responsibility, the second is managerial responsibility and the third leadership responsibility. In each of the responsibilities, there are certain basic profiles and certain additional nuances to achieve optimal efficiency and effectiveness. At the working level, three types of skills are required: grasping skills, compliance skills and improvement skills. These three skills make the workplace safe and productive with compliance to quality. These simply get honed and enhanced as a worker acquires seniority. At the managerial level, there would be a different type of skill progression. At the beginning management levels, the need is essentially of technical skills. At the middle management level, additional analytical and relational skills are required. At the senior management level, conceptual skills are required even more. The conceptual skills include judgment, foresight, creativity, planning and problem solving.  

The requirements in terms of leadership are significantly different. There are general leaders and there are also transformational leaders. General leaders, while leading, improve the process, inspire a shared vision, enable others, model the path and balance logic, emotion and aggression. Transformational leaders, while leading, challenge status quo (not merely improve the process), charismatically drive towards a focused vision (not merely inspire a shared vision), make change possible (not merely enable change), consistently model leaders and leadership (not merely modeling the path) and uniquely synergize logic, emotion and aggression. Everyone has the capability and entitlement to evolving from an ordinary worker to transformational leader. The core to that journey lies in one’s own brain as the several factors described above represent behaviors, competencies and traits made possible by the way one’s brain functions. The enabler to modify the brain function to suit the needs comes in the form of philosophy of brain neuroscience.  

Brain plasticity, mind flexibility 

Brain is a physical organ that makes a human being what he or she is. Mind is the abstract or intangible consciousness of a human being that is primed by the brain. Mind and brain are related to each other like software and hardware are related in a device. Persons are usually ignorant of the unexplored power and potential of brain and, in addition, are commonly protective of the known thought profiles of the mind. While the largely neglected philosophical foundations of our heritage have enough guidance to achieve flexibility of mind, advances in neuroscience are enabling new knowledge on stretching of brain to enhance the critical functions discussed earlier. Neuroplasticity or brain plasticity is a broad medical term that refers to the ability or tendency of the neural networks, synaptic and non-synaptic, to change based on learning, aging as well as any damage. The concept has relevance in understanding if the brain functions can be better understood by an individual for him or her to better respond to his or her aspirations.   

Philosophy enables one to understand the flow of thoughts in one’s mind. Mind is essentially composed of intellect and consciousness. While brain provides intellect, consciousness is a self-fulfilling aspect of the mind. The more conscious one is one’s competencies, traits and behaviors, and one’s desires and aspirations, the more conscious one would be of one’s ability-aspiration match. Mind flexibility refers to the ability of the mind to adjust thinking or actions to suit changing goals or environmental inputs. Flexible thinking requires attention, inhibition, working memory and goal focus. Interestingly, these overlap with some of the critical functions of the brain. While brain and mind are developed in a specific manner, encouraging one to be trained to be tactical workers or strategic leaders, there is no strict boundary that limits one to only tactics or strategy. A combination of brain plasticity and cognitive flexibility will prepare every individual to be equally good at tactics as well as strategy. Such fluency and flexibility is essential for organizations to realize the full potential of its human resources.

Posted by Dr CB Rao on December 8, 2013              

Sunday, December 1, 2013

From India to Indonesia: A Path Relevant for Nano?

Ratan Tata, the legendary leader of India’s Tata Group has said in an interview the other day (The Times of India, November 29, 2013) that it was a mistake to have described and positioned the innovative Tata Nano small car as the world’s cheapest car. He even went to the extent of stating that the Nano should be launched in a new country like Indonesia in a new Avatar and brought back to India with a new image. Ratan Tata, the Chairman Emeritus of the Tata Group also stated that the car was developed as a safe alternative for the Indian small family of husband and wife and their children who travel unsafely on a two-wheeler and implied that Nano car failed to take its place due to the stigma of a cheap car. He also felt that it could be launched as a changed product in Europe where it has a lot of interest. For all those who believed in Tata Nano as a hallmark of Indian innovation, Ratan’s admission on Nano must have come as a rude shock. 

By any yardstick, Nano was a technically brilliant package. It is a 4 door bubble design car, with a 2 cylinder rear mounted gasoline engine and a 4 speed gearbox, capable of comfortably seating 5 persons of a small family (couple and the kids). With a wheel base of 2.2 meters and an overall length of 3.1 meter and a width and height of 1.5 and 1.6 meters respectively, the car beat the Volkswagen Beetle small car in external compactness and internal spaciousness. With a power and torque output of 38 PS and 51 NM respectively, and a kerb weight of 600 Kg and a turning radius of only 4 meters, Nano is also an ideal city car. The no-frills car had a launch price of Rs 100,000 (then USD 2000), becoming the world’s cheapest car to be designed, manufactured and commercialized ever in the world. This level of techno-commercial brilliance is undoubtedly a matter of significant pride for India, a country that was until recently immeasurably dependent on imported dated technologies of overseas automotive majors for Indigenization.
Cheap price, the only factor?
Ratan Tata’s perception that the cheap price and the associated stigma have been the main causes of Nano’s failure is probably an oversimplification of the issue. It is probably as much oversimplification as assuming that the lowest price that cannot be achieved by any other car manufacturer would automatically set the market on fire for Nano. A 2008 forecast by a reputed agency, CRISIL, for example, estimated that Nano would singlehandedly expand the car market by as much as 65 percent, that is creating an annual additional demand in lakhs of Nano cars. In actual practice, the Nano car could only be sold in thousands. The car underwhelmed rather than overwhelmed the fast growing Indian car market. The current hypothesis by Ratan Tata that the low price acted as a deterrent overturns the entire theorem of strategy about market being weighed down by high entry deterrent prices. Clearly, there is more to Nano, or any other product, than mere price.
The corollary hypothesis that an unbelievably low price carries a stigma is also equally questionable. Nor is it sustainable that low price products would need to target only consumers of lower economic strata, in this case such strata not being the appropriate users of a Nano-type car. There exist several examples in both overseas and Indian environments that invalidate these two hypotheses of stigma. Akihabara, the electronics shopping city of Tokyo and Shinjuku, the up-market shopping district of Tokyo are dotted by luxury shops as well as discount shops, the latter patronized by even the more affluent clientele. If Nano were truly positioned effectively for the two-wheeler bound small families as intended by the design envelope, both as a conceptual and practical proposition, Nano would have been a symbol of prestige rather than a sign of stigma. Nano has certain broader leadership lessons to offer in this context to students and practitioners of management and strategy, five of which are discussed below.
Leadership is sum of parts
A brilliant and focused leader can pull off unparalleled accomplishments by his or her personal charisma, commitment and competence, moving broad teams with him or her. That is what Nano has been – without Ratan Tata’s leadership there could not have been a Nano car at all. However, for a product to become a phenomenon, it requires brilliance in strategy and excellence in execution in all functions that directly enable or indirectly support the design, manufacture and marketing of the product. Certain functional performances whether relating to the location decision of the plant or the marketing of the car were probably not on the dot as certain other functional performances relating to design, project engineering, supply chain and manufacture have been in respect of Nano. Business leadership at the apex level cannot substitute functional leadership; in other words, brilliant business leadership leads to sustainable results when all the functions display equal brilliance. While it may be fashionable to speak of leadership synergy, the more foundational imperative is the realization that leadership at the minimum is sum of the functions.
Success is much about timing 
Time and tide, it is said, wait for none. In a business setting, competition never stays still. Strategic timing is the essence of business success. When Tata Nano was conceptualized in the early 2000s, India was a hugely small car market with a dated Maruti 800 small car ruling the roads like a king. Had Nano been introduced by  2004 as originally envisaged, the car would have caught the peoples’ fancy. As the events moved, Maruti introduced a more modern small car, Alto, while Hyundai introduced i10, both of which influenced an important upward shift in consumer expectations. The prolonged political standoff on the Singur land in the State of West Bengal (where the Nano facility was to originally come up) and the consequent shift of all the facilities and equipment to a new site, Sanand, in the state of Gujarat which pushed the launch to 2009 did not also help matters. Breakthrough initiatives, which include market shaping product development and launch, often require a near perfect timing. As Tata Motors seeks to reengineer and reposition Nano, the timing would be as important as strategy.   
Style and substance are equally important
Products in the contemporary market space are preferred as much for experience as for functionality. A product-specific ecosystem helps in merging the twin requirements. In a previous blog post “Style is Substance: Management of Product Design and Manufacture”, Strategy Musings, August 8, 2009 (, the author of this post argued that styling determines not merely a look-feel but also leads to upgraded design and manufacture. To the extent that Nano was brought in as a no-frills car in an environment which was getting used to more up-market features, the consumers may have felt that style lacked substance in the Nano.  Some of the cost-cutting measures like lack of external access to rear trunk, lack of airbags, lack of power windows and lack of air-conditioning probably compromised the stylistic and substantive aspects. A Dell like approach that would have enabled the customers choose their preferred combinations of style and substance would have resulted in better customer engagement and superior management of customer expectations. Rather than keep the new Nano features under wraps, it would be helpful for Tata Motors to release them in advance and calibrate the design and manufacture to take care of customer responses.
Products and customers need ecosystems
Products shine in ecosystems that add demonstrative value to their hardware and software. The Apple stores showcase Apple phones while iTunes provides the applications boutique. Customers had plenty of accessories to choose from to add value to their iPhones and iPads in offices and homes.  In contrast, Nano despite being a prestigious product was put in as a poor sibling of the mighty trucks in the dealer network of Tata Motors. More distressingly, the target customers probably had parking spaces for their two-wheelers but no parking spaces for their new Nano cars! A complete lifecycle analysis would have provided the product and marketing architects of Nano with valuable inputs on the availability and non-availability of supportive ecosystems for the car. Again, as Nano gets reengineered and repositioned an appropriate ecosystem development becomes essential. Nissan, for example, has decided to have its own dealer channel for the Datsun Go small car in India.
No price points, only value points
Any discourse on price being excessive or attractive (that is, entry deterrent or entry supportive) would not be of relevance without considering the above four principles. To recapture, firstly, any product or service initiative must be a well-made holistic offering of all the functions of a corporation. Secondly, the product or service well timed to be ahead of competition and capture the imagination of the users. Thirdly, the style and substance of a product or a service must complement each other, in terms of specifications, performance, functionality and experience. Fourthly, there must be supportive and well tuned ecosystems that enable a home for the product or service, both at the company delivery end and at the customer usage end. The levels at which these four principles are established, in conjunction with the pricing levels, determine value points, constituting the essential fifth principle. As Nano embarks on a new journey, the discourse on price points would need to be rechanneled into an appreciation of the value points.
India, a qualifying path in itself
The author believes that there is no need to reposition Nano in Indonesia or a European country and then import the concept into India. No doubt, some of the important products of Japanese car majors have been first launched in Indonesia and brought to India subsequently. No such product, however, rode on the Indonesian success story as a qualifier for entry and ramp-up in India. There are opportunities and challenges in ‘direct to India’ as well as “ to India through Indonesia’ options, however. Indonesia (or, for that matter Malaysia) being a small homogenous country provides a steady feedback to perfect a product. India, which is heterogeneous in states and preferences, on the other hand challenges designers and manufacturers with varied demands and requirements.
Gritty designers and manufacturers believe that if they succeed in India they can succeed anywhere else in the world. There has been no better example of succeeding in India than the Tata group itself with its constituent firms, not in the least Tata Motors as its corporate crown jewel.  And, notwithstanding the faltered experience of Nano, there is no reason why Tata Motors should explore other emerging markets as a path to a win in India. The five principles of this blog post should be a solid foundation for Nano to conquer the world with India as its hub. All believers in Indian innovation would look forward to multi-functional excellence at Tata Motors, not in the least technical and marketing brilliance matching up to each other!
Posted by Dr CB Rao on December 1, 2013








Sunday, November 24, 2013

A New Approach to Competitive Advantage: The Strategically Balanced Corporation

Corporations are established and developed based on a combination of vision, strategy and execution. Amongst these three, strategy sets the pathway to accomplish the vision through execution. Strategy differentiates one firm from the other, not necessarily in terms of performance but more in terms how it seeks to achieve its vision. Firms are commonly viewed as specialized, diversified, integrated, local, global, and so on. Strategy, in its core elements, has not altered much over the years but the environmental information and internal awareness that sets the tone for strategy has not only become more complex but also volatile. The number of players has also significantly increased in any industry. The corporations are finding it increasingly difficult to develop unique strategies. Strategy, in this context, is not about which industry or business to operate in but is about how to achieve competitive advantage in any chosen business or industry.

For good measure, we do have a few strategic templates from management gurus; the principal ones being the theory of generic competitive strategy by Michael Porter and the theory of core competence by C K Prahalad. There are also several theories for firms and organizations to become effective and competitive, for example, the model of balanced scorecard by Robert Kaplan and David Norton, the theory of constraints by Eliyahu Goldratt and the theory of reengineering by Michael Hammer. All these theories, developed in the 1980s and 1990s, do not take into account the perfect spread of information and options that is now available for strategists and firms. Every leader, for example, is aware of the generic strategies of cost leadership and differentiation, and even the sub-strategies to achieve them. What strategy officers must now focus is on developing an elegant balance amongst multiple strategic options. This blog post proposes a paradigm of strategically balanced corporation.
Strategic balance
An optimal strategy is one that is open to environmental opportunities but also one that hedges against environmental uncertainties. It also plans execution based on available resources or resources that can be acquired to execute the strategy. This requires that the strategy must always balance rewards and risks on one hand and aspiration and attainability on the other. Seeking this balance is a delicate and complex process; with strategists requiring to be both conservative and aggressive as the situation demands. The concept of strategic balance is relevant for mono-product firms as well as for multi-product and multi-business firms. The concept is also not necessarily limited to only products or services but covers all the essential parts of a firm’s value chain such as products and services that are delivered, the manufacturing or delivery process used, the customer outreach methods, the human resources deployed, and so on.   
Research has focused on firms adopting certain extreme strategies. For example, it has been well researched if market share and profitability are correlated. It has also been researched if specialized and conglomerated businesses have unique sustainability characteristics. There is, however, practically negligible research on what constitutes a strategic balance and whether strategic balance leads to superior performance. In this context, this blog post creates a fundamental platform to understand and analyze strategic balance. We may define strategic balance as a firm-specific balance that exists by design amongst various key components of a firm’s value chain and between strategic options that exist in respect of each component of the value chain. Strategic balance must not be misconstrued as striking a middle ground; rather it should be seen as a quest for optimality of a firm. The concept of strategic balance is amplified below.
Value balance
There is a concept, in some schools, that it is not important for a firm to operate across all segments of the value chain. This school of thought argues that a firm could just develop and stick to a core competence and stick to it. An analogy could be that a firm could be a design house but could manufacture and market products with external alliances as successfully as a fully integrated firm. Such outsourcing hypothesis could be true to an extent but not to a sustainable extent. Corporate history has enough chapters of firms which mimicked a full value chain operation on certain basic internal strengths and a large extent of external support but withered away when the alliance partners denied support or failed to respond to growth opportunity because of lack of internal capabilities. As a matter of fundamental principle, a firm which does not ensure value chain balance with appropriate attention to key components such as R&D, manufacturing, supply chain, marketing, human resources and information technology would be suboptimal and sub-sustainable in a competitive world. By no means, this is an all-inclusive listing of value chain components.    
Portfolio balance
Every firm exists and grows based on products and services in a particular business, be it hospitals or healthcare business and automobiles or transportation business. The notion that portfolio concepts are valid for only diversified businesses is archaic. Even a business of coffee chains can apply and benefit from portfolio balance concepts. Once a business is defined, and however narrowly the business is defined, there would be creative ways to in-build a portfolio into the products or services. A portfolio approach is based on the strategic truism that a service or a product offers more than the product or service functionality to the customer. A restaurant may serve only food but it can provide umpteen choices in terms of culinary streams to its customers. Even Starbucks, known for its pioneering coffee line of business, has multiple beverages, hot and cold, besides several eats and food accessories as its portfolio. The strategic challenge lies in developing the right balance between specialization and diversification. Any business provides the opportunity of strategic portfolio balance;  a company manufacturing only heavy trucks can offer a wide portfolio from bare chassis to fully built custom application vehicles on one hand and from civilian to defence vehicles. Strategic portfolio balance ensures an optimal exploitation of environmental opportunity and appropriate hedging against volatility.
 Manufacturing balance
Manufacturing represents a part of value chain which converts a proven design into a saleable product or service. Manufacturing can vary between complete integration and complete outsourcing. The former is highly resource intensive with high fixed overheads that could be highly catastrophic in the event of a precipitous demand downturn. The latter is certainly resource-lean with low overheads but could be highly vulnerable in the event of a sharp and sudden demand uptick. Each industry offers a paradigm of optimal manufacturing balance. A highly evolved industry where each component or material has also evolved into its own industrial structure provides several solutions for manufacturing optimality. On the other hand, a newly developing industry has fewer degrees of freedom to offer. The former implies an established quality and cost base that could afford higher outsourcing. The latter could have doubtful engineering and quality fundamentals that could demand greater control over manufacture through integration. An automobile manufacturer outsourcing differing components based on differentiated internal capabilities is an example of the former. On the other hand, a coffee chain seeking control over coffee plantations, roasting technologies and coffee making is an example of the latter. Strategic manufacturing balance ensures optimal quality, cost and delivery capabilities for a firm.
Marketing balance
The best of design and manufacturing optimality could come to naught with strategic marketing imbalance. Marketing balance is not about regional marketing effort allocations or domestic-export balance. It is about striking the right balance between the product and the sales channel, between different marketing channels and between sales and service.  Some of the technical marvels, Tata Nano car to quote an example, have failed to fulfill the potential of design and manufacturing brilliance due to marketing sub-optimality. Had Tata Nano been marketed through an exclusive car dealer network, with appropriate emphasis between different marketing approaches and a special after-sales package, potentially Nano would have caught the imagination of the target market segments. By way of another example, the best of marketing cannot make up for strategic imbalances in either design or manufacturing. Godrej Interio comes across as a prime example of lack of strategic portfolio balance (dependence on all-steel design and manufacture, as is Godrej wont) adversely influencing the final low-business outcome, despite some great strategic market balance. These examples also illustrate how a strategic balance amongst the various components of a value chain is also extremely important for a firm to achieve sustainable successful performance. 
Talent balance

Firms are a complex cascading network of leaders, managers and executives on one hand, and another equally complex network of organization, teams and individuals. Adding further complexity is the network of businesses, functions and processes. Across all this complexity, two components stand out:  individuals and teams. Organizations are often unable to comprehend and convey whether it is the individual performance or the team performance that determines performance. Talent management thought keeps swinging between the typical Western practice of individual superstar performance and the equally typical Oriental practice of consensual team performance. This leads to somewhat strange positions taken by leadership experts wholly deprecating either ‘we’ or ‘I’ in performance management. The concept of strategic talent balance requires that individual performance be treated as important as team performance. For organizations to be successful, meritocracy based on individual performance (and individual recognition) and organizational harmony based on team performance (and team recognition) must co-exist. Without overwhelming each other, ‘I’ as well as ‘We’ are equally important for strategic talent balance.
Strategically balanced corporation
The aspects discussed above are illustrative and not comprehensive. The value chain of a firm varies significantly, multi-functionally, depending on the industry. It is important for a firm to understand and map out its value chain in its entirety and then select the components that are critical for performance. The next step would be option mapping for each function and establishing the optimum strategic balance in each case. Exercises of long range planning which seek certain goals and develops strategies to execute towards the goals would not be effective unless they are set in the perspective of strategic balance. Strategists (whether they are chief executive officers, chief functional officers or chief strategic officers) must also be balanced professionals without any biases as to what constitutes the appropriate strategies; for example, some tend to seek diversification and some seek specialization preferentially as a pre-experienced panacea for success. Such biases limit the openness and effectiveness in developing true strategic balances.
A strategically balanced corporation is able to move through the economic and business cycles successfully while exploiting opportunities with agility. The journey of a small-cap startup through the phase of mid-cap company to the goal of a blue-chip company is based on strategic balance adding strength and resilience to exploit opportunities and withstand uncertainties. A strategically balanced mid-cap or blue chip firm leads to the evolution of a conglomerate. While a conglomerate provides much flexibility to define varied businesses under its fold (for example, salt to software and chips to ships), it is essential that each business or firm under the conglomerate umbrella is a strategically balanced corporation. The seeding, screening and weeding of individual businesses adopted by big conglomerates, from time to time, is proof enough of the need for the individual firms to be strategically balanced and sustainably effective. If research were to be undertaken on the performance of strategically balanced corporations, the results would surely support superior performance by, and superior competitive advantage for, such firms.
Posted by Dr CB Rao on November 24, 2013