Sunday, June 30, 2013

Digital Technology and Human Mindset

The other day when I was traveling from a leading city to another leading city, separated by four hours of flight time on a leading airliner of an advanced country, I had the occasion to go through the in-flight magazine. The magazine opened to a statement by the Chairman as to how the airlines has been harnessing digital technology in a variety ways to make travel options easier, more productive and more comfortable for the traveler. As the full plane braced for a takeoff after an intriguing hour of delay, the captain informed the passengers that due to bad weather the plane has been provided a different route which happened to be a longer route, and the plane did not have sufficient fuel to cover the longer distance. Hence, the plane had to re-taxi to refuel itself, and could finally take off after a total of over two hours of delay. Ironically, however, the flight covered the s called longer route in the normal flight time. This delay of more than two hours for the stated cause of fuel insufficiency was a surprising experience given the strides reportedly made by the airliner through digital technology which should have made prediction and coordination seamless and easy.

The same flight had an in-flight advertisement of a leading car maker as to how its state-of-the-art cars are designed. The video showed extensive use of computer aided designs, graphics, computations and simulations on computers. However, it also showed how craftsmen make and carve sophisticated models of its cars by their hands, feeling and chiseling intricate shapes. It showed how experts touched and felt the exteriors and interiors, for both form and texture, and compared materials personally on looks and feel. It was as if the traditional craftsmanship and the innate human sensory perceptions were essential compliments to modern computerized design. This combination of human touch and elegance with computer power and perfection as shown in the video was truly remarkable in an industry where design and manufacture are widely assumed to have been digitized. In a flight which seemed to have been no better for all its technology, the automobile video was a good reminder that technology and human faculties are complementary.

Digital limits and opportunities

The two examples reviewed above demonstrate certain subtle aspects of digital power (and powerlessness) and human ingenuity (and confusion). The airliner operates in a country which can accurately predict weather days in advance and which can calculate flight paths of spacecrafts to planets millions of miles away. The airliner thus has access to all the predictive, computing and coordinating power of digital technology. Yet, all of these were of no avail in predicting and managing a mild dislocation caused by not-so-bad weather. The basic and genuine need of the pilot to ensure flight safety could not be met by matching digital flexibility and application of human mind, even of a very simple and normal variety that is available in such an advanced country. Not only that, as the plane landed with all its long delay, the crew completely disclaimed any responsibility towards connecting passengers and said that ground staff would take care of them; but alas no such staff was present on the ground! The disconnect between service and technology was palpable.

On the other hand, the craftsmanship in making the wooden models of cars and the manipulative skills of the designer's hand in shaping computer images tells how human dexterity would continue to be one of the most enduring and most wanted human capability notwithstanding the boundless progress in digital progress. The design approach for elegant cars also illustrates that as long as a product is designed for use by a human being, human touch in design would be an essential concomitant. Societies which think that expert craftsmanship is a relic of the past would find themselves dealing with products that miss out the human-friendly approach. Enlightened societies that continue to respect tradition alongside modernity would see service and technology as inseparable. Firms that appreciate the nuances of craftsmanship bring out best-in-class products like Apple. Technology is not an end in itself but is an enabler for customer delight. Although in the same industry of transportation both the sectors seem to view technology-service paradigm differently.

Sublime in sophisticated

As technology develops sophistication is bound to increase. The objective of technological sophistication is better need fulfillment. That said, there tend to be complexities and subtleties of sophistication. Complex technologies require expertise to design and handle. The designers must understand the needs of lay persons who use complex technologies while users must understand the full potential of such technologies. An insulin pump, for example, must be designed with all the advanced heuristics that are required to manage the complexities of multi-factorial diabetes disease but must also have the child in mind for simple and error-proof operation. A teenager or an adult who invests in a sophisticated smart phone must, on the other hand, take the embedded technology as given but expand his or her knowledge of its hardware and operating system to push the utilization of the phone to its design limits. There is, therefore,an important step of converting technological functionality into user experience.

The way the educational ecosystem must evolve to cater to the technological challenge is clear; it must provide fundamental knowledge as always because it equips a person to serve a variety of functions and industries. However, it must also track the evolution of day to day transformations that technology provides as only then will the human mind have the ability to harness the full potential of its own developments. In other words, the new generations of humans, regardless of the domain, cannot be technology naïve. The taxi driver of tomorrow, even in the emerging economies, cannot be ignorant of technologies. He or she must be capable of being a part of radio calling and distributed dispatch network, and have the ability to adapt to a wide range of electronic payment systems. The customers too must be able to move on from conventional debit or credit cards to mobile wallets, for example. Digital devices are the answer to the call of the future but require more than just technology to deliver the full promise.

Poka-yoking technology

Measurement is the insurance against misapplication of technology. As devices become more powerful and versatile, a whole new set of connectivity options and measurement systems become important to keep the devices and systems efficiently and appropriately functional. Typically, the new generation of devices and systems must have two processors and operating systems; one to deliver functionality and the other to ensure quality. The performance of the first needs to be assured by the quality measurement unit. This becomes extremely important as medical technology leapfrogs to offer newer bionic devices for human rehabilitation. Measurement can be by ordinal or cardinal measures. What is important is the application of measurement for assuring integrity of design in actual delivery. Japanese have perfected the art of poka-yoking technology. There is another dimension of technology, however; that relates to unintended misapplication or deliberate misuse,and is much harder to tackle.

As technology progresses and network integrates, the risks of unexpected randomness, loss of privacy and the insecurity of hacking also increase. The random and dangerous pitfalls of algorithmic trading constitute an example. Similarly, as social networking, e-commerce and online payments increase, the risks of unintended data usage and loss also increase. While more technology filters and more fixes can be deployed, ultimately it is the discretion and caution of the human mind that can prevent inappropriate use of technology. The human mind must continue to be trained to function independent of technology so that the ability of an individual to evaluate both intuitively and experientially varied technological outcomes is not hampered.

Mindset, not technology set

When I set out to write the blog post, I did not envisage a return to the case of the advanced airline of the advanced nation with which I started this post. This time, I was returning to my base city on a flight, and had the opportunity of listening to all of its representative employees and the Chairman emphasizing in their pre-takeoff video how committed they are to ensuring absolute customer delight. Upon landing, after a long wait of one hour at the baggage claim, upon enquiry, I was informed that my missing suitcase would be arriving by another later flight. The  airlines, in spite of knowing this through its self-acclaimed digital baggage tracking system, never bothered to inform hapless passengers like me, on a proactive basis, of the delayed baggage arrival. Nor did the airline tender even the simplest of apology, or any other comforting assurance of whether the baggage for sure would arrive at an appointed time. While the airliner would deliver the baggage to home eventually, the disconnect between digital tracking and physical expression has been disappointing to say the least.

Clearly, even the best of technology can only be as good as the level of human commitment to deploy and leverage it. It is the human mindset that will determine not only the limits of digital technology but also the multiple ways in which it can be harnessed for customer delight. While deploying technologies in all possible ways firms must focus on shaping of employee mindsets in three different ways. Firstly, there must be an abiding focus on deriving the full benefits of technology. Secondly, there must be the needed flexibility and ingenuity to deal with situations when adverse environment disrupts planned outcomes of technology. Thirdly, the entire organizational ecosystem and employee performance must be driven by a passion for customer delight. It is worth repeating that the best of technology can only be as good as the human mindset that deploys or receives it.

Posted by Dr CB Rao on June 30, 2013

Wednesday, June 19, 2013

A Framework of Generic Competitive Talent Strategies: An Extension of Porter’s Generic Competitive Strategies

In my last week’s blog post titled “Five Competitive Forces in Organizational Talent Arena: Porter’s Competitive Strategy Framework Extended”, Strategy Musings, June 16, 2013, I proposed that Porter’s theory of five competitive forces can be applied remarkably well at functional level too, and not merely at a firm or an industry level.  This hypothesis was formulated with specific illustration of talent management as a domain of application ( Towards the end of the discussion, I also stated that an understanding of the five competitive forces in the talent arena would need to be followed up with generic competitive talent strategies. This blog post develops a framework of generic talent strategies which can help firms to cope with the five competitive talent forces, namely, bargaining power of candidates, bargaining power of service providers, threat of competitors, threat of new knowledge and competitive rivalry in talent pool.

Generic competitive strategies are those strategies that are broadly available to firms when they face industry level competitive forces. While each firm is unique, strategies themselves tend to be generic as firms, by and large, tend to fulfill similar customer goals and have access to industry level and environment level strategic information with no particular firm level superiority. As a result, while all firms may choose one of the available generic strategies, the competitive advantage for a firm arises from how effectively it executes with reference to the generic competitive strategy chosen by it. By definition, each generic strategy would have a set of enablers, which again may not be unique, but would provide significant challenge and opportunity for individual firms to vary the emphasis and execution. For example, the generic competitive strategy of cost leadership may be derived by any or all of enablers such as product standardization, high scale, lean manufacture and integration.
Triggers for generic competitive strategies 
Any generic strategy must provide competitive advantage to the firm. Cost leadership, for example, enables a firm to be the lowest cost producer of functional products, other factors like quality being the same as industry standard, thus insulating the firm against future adversities. Differentiation, on the other hand, enables a firm to offer a diversified, feature-rich product or service range, with a premium user experience. Niche, on the other hand, enables a firm to be known for something unique to the firm. On a similar analogy, any generic talent strategy must deliver competitive advantage on the talent front. Unlike firm level competitive strategies which use factor resources including people to address markets, firm level talent strategies must address market factors to deliver people resources. An understanding of the five competitive forces of talent is, therefore, vital to construct generic talent strategies.
The triggers for that process are two questions: how can employees generate value for their firms, and how can firms generate value for their employees. In an ideal situation both these concerns are self-aligned and self-supporting. In reality, however, there tends to be misalignment between these two value objectives due to the varying influences of the five competitive forces. This blog post proposes value leadership, career differentiation and competency niche as three appropriate generic competitive talent strategies. As with generic competitive strategies, talent strategies must bear some nexus with business models pursued by firms. Generic talent strategies cannot be replicas of generic competitive strategies, however. Just because a firm pursues a cost leadership strategy it cannot pursue cost leadership in talent acquisition too; in fact, such a mimic could produce disastrous results! Similarly, for a firm it being a most differentiated employer need not necessarily translate to a generic strategy of differentiation at the firm level. Niche would be even more inappropriate to mimic.
Value leadership
Value leadership is a generic talent strategy that rewards the employees for the value they generate for the company. Value can be interpreted and quantified in various ways depending on the nature of the business and sophistication of the measurement system. It could be as simple as a rating through an annual performance appraisal system or as complex as a multidimensional analysis covering individual performance, peer evaluation, team performance, business unit performance and corporate performance. Value leadership strategy is direct and creates a nexus between an individual's perceived value to the organization and the business performance. Given the emphasis on keeping the individual happy and contended, value leadership strategy is a vital component of companies getting perceived as the best employers to work with.

In terms of the five competitive talent forces, the value leadership strategy addresses the bargaining power of candidates the best and establishes a benchmark to assess the bargaining power of substitute service providers. It responds to the threat of competitors but does not adequately address the threat of new knowledge. At a broader level, the value leadership strategy ensures that the competitive forces are anchored around tangible and visible metrics of compensation. In the overall, value leadership enhances the intensity of competition in the talent pool. The biggest criticism of the value leadership strategy is that it focuses far too much on the past track record of the individuals, their current performance and the short run performance of the businesses they are directly involved with. Long term value building for the organizations and employees is somewhat lost sight of.
Career differentiation

In contrast to value leadership which focuses on the metrics of credentials, performance and compensation, career differentiation addresses talent issues in a career prism. An organization subscribing to career differentiation strategy takes a holistic and long term view of career development of individuals as opposed to short run talent-results match. In India, Tata Group, Hindustan Unilever, ITC, L&T and a few other firms have a track record of building careers, right from the induction stage of talented youngsters. Rotating people through a number of challenging assignments in different functions, businesses and sites, such companies provide long term careers as opposed to day-to-day jobs to aspirants. It is interesting that the governments, especially the Indian Administrative Service (IAS) followed career diversification as a competitive talent strategy.

Career differentiation addresses the five competitive talent forces in a manner different from leadership. While not ignoring the importance of compensation, career differentiation focuses on other motivators such as professional empowerment, responsibility with accountability, diversified experience and leadership opportunity to inspire individuals. Career differentiation helps in a virtuous iterative cycle of fulfillment and actualization, building strong roots and loyalty between the individuals and the corporation. Over time, such companies get known as differentiated employers where careers are made rather than jobs executed. Needless to say, career differentiation works best when the corporation has a sustainable growth agenda. Career differentiation works the best when employees and the organizational ecosystem consider long term sustainable growth as being more important than short term spikes in performance.
Niche competency
Niche competency as a generic talent strategy works best when firms are highly specialized in terms of business domain. Firms specializing in drug discovery, design and development, and contract manufacture as well as research oriented higher education institutions and such other highly focused activities rely on pools of experts who can deliver on the needed goals. A standalone design studio, for example, will be quite distinctive compared to a research department located in a larger integrated company. Generic talent strategy of niche competency looks for a rare fusion of innovation with a highly homogenized talent. A design house, for example, would have doctorates in science and engineering as reflective of homogenization but each is expected to be highly innovative, breaking new ground each time.
Generic competitive talent strategy addresses the five competitive forces in a unique way. First of all, the way the entire organization is designed with highly standardized yet creative talent reduces the tendency of individual bargaining power. It also addresses the other forces such as the bargaining power of service providers (as no vendor can be better than in-house talent in such niche companies) and the threat of new knowledge (as the environment of innovation fosters continuous learning and knowledge development). It also enables a moderate level of competitive intensity within the talent pool as such organizations are managed in a collegial manner. Niche competency as a strategy, however, is susceptible to poaching by competitors who may tend to replicate the model by transplanting the talent en bloc. Niche competency requires deep attachment of the individuals to their work and results just as all great scientists were wedded to their discoveries.
Talent, the core paradigm
The talent paradigm is the most critical challenge for an organization’s progress. No wonder, therefore, that the five competitive forces of talent rank almost on par with the competitive forces that influence the evolution of firms and industries. As with generic competitive strategies, generic talent strategies offer help in coping with the talent forces. Each of the three generic talent strategies, value leadership, career differentiation and niche competition has a role depending on the firm’s strategy. Each of these strategies requires proactive and front-ended investments in talent management which will be well worth the while for organizations.
Posted by Dr CB Rao on June 19, 2013         

Sunday, June 16, 2013

Five Competitive Forces in Organizational Talent Arena: Porter’s Competitive Strategy Framework Extended

Michael Porter had in 1980 formulated a landmark framework for generic competitive strategies. Central to Porter’s theory of competitive strategy is the framework of five competitive forces. These five forces are the bargaining power of suppliers, the bargaining power of customers, the threat of new entrants, the threat of substitute products and the competitive rivalry within the industry. These represent five important external competitive forces that influence competitive intensity in an industry. Each of the competitive forces typically has several components to it. A good understanding of the five competitive forces enables a firm to respond with appropriate generic competitive strategies. The ability of the firm to leverage or address the competitive forces leads to firm-level competitive strategies in terms of cost leadership, differentiation or niche, as postulated by Porter.

My blog, “Strategy Musings” featured several posts by me that address certain weaknesses of Porter’s framework or tweak the framework to be in step with the contemporary environment. Some of these are: “Beyond Porter’s Darwinism: The Sixth Competitive Force”,, Generic Competitive Strategy and Specific Competitive Advantage: Viable Paradigm or Visible Paradox?”, and “From Competition to Collaboration: Porter’s Five Forces Theory Revisited”, Though several other aspects of Porter’s generic competitive strategy have also been addressed by the author, the above cited posts have a direct treatment of the five forces framework. The blog posts point to the solidity and the adaptability of the five forces framework to a changing environment.
From macro to micro
Porter’s strategy is essentially aimed at a macro level understanding of the firm and its environment. However, the framework can be applied at functional and micro levels as well. At each functional level (be it manufacturing, research, supply chain or human resources, for example), there could be relevant competitive forces that can be captured in terms of the Porter framework. One of the important applications could be addressing the industry’s war for talent. In emerging markets such as India which are aiming at faster economic and industrial development, talent is a scarce factor that is hotly competed. Three macro factors dictate the talent competition. Firstly, the pace of foreign direct investments in India would only go up with global firms increasingly looking to Indian operations to provide products and services for their global needs. Secondly, there would be a renewed interest to capture the burgeoning Indian market as India promises to become the most populous country of the world, overtaking China by 2028. Thirdly, Indian companies would globalize more aggressively to achieve market access and geographic diversity.
At a micro level, the talent wars would place a premium on readily deployable talent as more companies vie for the Indian pie and more Indian companies vie for the global pie. With business models being limited and competition relatively unlimited, the availability of ready-to-use skills would be a key factor. As companies realize the challenge, there would be a greater emphasis on operational excellence and product or service level innovation to achieve differentiation. The micro level strategies of the firms are bound to accentuate the pressures on talent. With universities churning out candidates with only generic skills, availability of candidates with customized, industry specific skills becomes a key requirement for firms seeking competitive advantage. Corporate human resources leaders need to understand the five competitive forces that govern the talent scenario and influence firm level competency to attract talent. The five forces of talent are:  bargaining power of candidates, bargaining power of service providers, threat of competitors, threat of new knowledge, and competitive rivalry in talent pool. These are considered below.
Bargaining power of candidates
While at a gross level there are more candidates than available jobs, when it comes to skills that are required for effective job performance highly competent candidates do wield considerable bargaining power. In India particularly, a combination of technical and commercial knowledge, operating and strategic skills, and communication and collaboration skills is hard to get in candidates, particularly as one considers middle and tiers of management. It is not surprising, therefore, that the limited talent pool of this particular combination of candidates exercises considerable bargaining power. HR leaders are required to balance the premium that is required to be paid for such talented candidates with the value that such candidates would be able to bring about in the particular organizational settings. In certain cases, this requires a broader review of organizational culture; organizations that are home to multi-faceted talent tend to have an equally potent value proposition for such multifaceted candidates. Recruiters need to focus as much on creating a star organization as on recruiting star performers. Neither should they baulk away from the costs of building high performance organizations and recruiting high performing talent.    
Bargaining power of service providers
Certain skills lend themselves for outsourcing. Service providers in technical and management fields often emerge as short term and medium term alternatives to regular talent that seeks in-house employment. This alternative becomes particularly relevant for one-time burst activities and for specialized skill sets. Certain advanced geographies and certain global corporate houses tend to rely on service providers as a matter of course even as such service providers tend to be available in abundance thereon. In emerging markets and domestic companies the reliance on service providers is much less even as such service providers tend to be relatively scarce. From an organization’s viewpoint, however, it is a choice between two types of power rather than reduction of overall external power on the organization system per se. Progressive organizations may seek to strike a prudent balance between premium in-house talent (that could be both a perpetual cost and institutionalized value) and specialized external vendor support (which could offer specialized support at high cost but with a discretionary tenure). The resort to service providers as an alternative to in-house talent must be a carefully thought out strategy.      
Threat of competitors
The talent paradigm adopted by competitors has a bearing on the competitive forces exerted in the talent scenario. At the very basic level the more companies seek a particular level of talent the more demanding and choosy the premium candidates become. At a more involved level, however, as companies innovate or begin to follow innovators they become competitors to incumbents and monopolists. Firms which are forced to defend their positions and firms seeking to dethrone them equally become hunting grounds for talent. In addition, during certain phases of industry evolution certain discrete skills tend to be sought after by all companies fiercely. For example, leaders with expertise in global selling and customer development became the highly sought after skills of Indian IT majors in the 1990s. For the Indian pharmaceutical industry in hot pursuit of Hatch-Waxman generic exclusivity opportunities, intellectual property expertise became highly sought after. As competitors follow successful business and operational models of industry leaders, the threat of competitors in terms of poaching talent or proactively attracting talent enhances the competitive intensity.    
Threat of new knowledge
Managements are aware how technologies make laboratory and manufacturing assets obsolete. As new measuring technologies emerge metrology equipment pass through successive generations of obsolescence. As new machining technologies emerge machine tools become lighter and more flexible. Less realized, however, is the impact of new knowledge on the talent scenario. In the 1980s and 1990s, a new generation of computer savvy executives overtook more conventionally trained established manpower. In the 2000s and 2010s, a new generation of Internet savvy and highly networked executives is tending to dominate global executive scenario, overtaking standalone executives. Scientific and technology domains are, often, reinvented by new innovations. Firms which lay store on the talent trained years ago would find themselves obsolete as new knowledge shapes new business models. Construction firms which rely on conventional excavating, piling and stuttering practices may find themselves overtaken by firms which deploy mechanized excavation, ready-mix concreting and mechanized stuttering, for example.    
Competitive rivalry in talent pool
Quite apart from the above four factors, firms and industries are affected by the competitive rivalry in the talent pool. By logic, firms and industries that are in an aggressive growth mode tend to experience competitive rivalry within the talent pool. If corporations are unable to clearly explain the individual talent - employee career - corporate growth paradigm with visible nexus between individual performance, career development and business results, individuals tend to jostle for visibility, enhancing rivalry. Firms and industries that have enjoyed rapid growth but are slated to slow down also are subject to competitive rivalry as talent seeks new avenues to satisfy its growth passion. Departure of successful key executives from firms encountering growth-plateau to companies desperate for reinvention leads to higher competitive rivalry in the industry in the overall as leaders seek to build their growth teams. Firms need to understand that their own internal career policies and external hiring policies could elevate the competitive rivalry in an industry and even create a talent bubble wherein competitive intensity for talent zooms far ahead of competency growth of the talent, leading to an unsustainable demand-supply balance.
Generic talent strategies
Porter suggested cost leadership, differentiation and niche as three generic strategies that are available to firms to cope with the five competitive forces that an industry faces. To manage the five competitive forces of the talent paradigm discussed herein, the author suggests three relevant generic talent strategies that firms can adopt. These are compensation leadership, career differentiation and niche. Each of these will have unique ways of talent management that offer alternative approaches for coping with the five competitive forces in the talent arena and optimizing organizational and business performance. A framework of such generic talent strategies would be the subject of a later day sequel to this blog post.
Posted by Dr CB Rao on June 16, 2013



Sunday, June 9, 2013

From Prodigal to Savior: The Evolution of a Trainee as a Leader

In recent business times of India, no event has triggered so much surprise and debate as the return of NR Narayana Murthy from retirement as the Executive Chairman of Infosys, the Indian information technology iconic bellwether struggling to remain on a growth path (please also see: There have been positive and negative angles to the news of Murthy’s comeback. On the positive side, many have held that there is nothing wrong, and everything to support, in such a towering personality returning to bring back to health the company he founded and grew with his co-promoters. On the negative side, many also have held the return to be a reflection of the inadequacy of the past leadership development, and hence a prognosis of future insufficiency of leadership development.  After the initial swell of the welcome notes, analysts believe that only future events can judge if the return would be a positive or a negative for the long term future of Infosys and the overall gamut of business leadership development in India, including strengths and weaknesses of a possible dynastic succession.

For the larger body of students of technology and management as well as other professions, aspiring entrants to corporations and budding leaders, the return of Narayana Murthy must signify an entirely different aspect of corporate life and career development. It is not uncommon for scores of employees at all levels of an organization to leave, and for some of them to return to their alma mater. The twist here is that such returns are often seen as the return of the prodigal rather than the return of the savior as is the case with the return of towering leaders such as Murthy. Given that every unit of work in a corporation has its importance, the return of the employees at whatever level should qualify to be deemed as the return of the savior. That, however, hardly is the case except in certain truly high level leadership positions. As youngsters watch the unwinding of the Murthy2.0 story in Infosys3.0 saga, apart from the lessons to learn, a key self-learning objective must be how the young aspirants would be seen as saviors rather than prodigals, should such exit and return episodes occur to them.
Demand-supply perspectives
As with every aspect of human endeavor, factors of demand and supply determine the relative importance of any material or non-material resource. At a gross level, from a human resource perspective, in a company or in an industry there would only be few leaders of a comparable caliber while there could be hundreds of executives and managers at lower levels with comparable caliber. At a gross level, from a business growth perspective, there could be only a few corporations that are willing to introspect and take radical measures to revert to their growth path as Infosys has boldly done. At a gross level, therefore, the demand-supply gap determines whether the return of any individual professional is deemed to be the return of a prodigal or a savior. The phenomenon of surplus-scarcity can, however, be addressed efficiently by individuals and corporations equally by deploying the concept of substitutability appropriately.
The relationship between the organization and its human resources is a paradoxical one. Organizations benefit if the available skill sets are both standardized and unique. Standardized skills enable the companies lower the bargaining power of candidates and reduce the attrition pressure of employees.  At the same time, unique skills enable the companies enhance their competitive advantage in an industry and enhance the ability to reward and retain their employees. For employees, unique skills need not only continuous self-development but also an organizational ecosystem that facilitates development and deployment of unique skills. If an organization’s human resource base comprises only generic and standardized skill sets, it is unlikely that such an organization would become highly competitive. On the other hand, if an organization seeks only highly unique skills, conventional organizational systems would fail to cope with the need for heightened reward systems. The paradox needs resolution.
Prodigal minds and savior skills
Aspirations need to be matched by achievements. What we see in some organizations is a constant unrest in young operators, officers and executives to grow in their careers at a fast clip. Many times such young employees imagine a superior work opportunity and career package in other companies. When employees move far too quickly out of an organization in pursuit of short term career boost, such decisions, more often than not, result in later day distress. The foundations of such fast moving careers, instead of being reinforced by industry or skill distinction, tend to be brittle with disconnected skills and inadequate depth and breadth. At times, the best way to address the gaps is to retrace the steps and return to the base organization as a prodigal. In some cases, organizations also make mistakes in judging employees and release them too soon. Both organizations and employees need to be prodigal in such occasions. While this may cause some emotional distress, correcting the missteps, and more importantly rebuilding the stronger skill base, provides longer term solidity to the employee careers and organizational strength. Eventually, employees and organizations may benefit from the phenomenon of prodigal minds.
Renunciation must take place only after actualization. Leaders too face their share of needlessly fast moves, albeit into sunset. Leaders play a crucial role in not only growing their corporations but also preparing them for sustainability. Actualization for a leader is not complete until he or she is able to execute a business model and build a leadership team that can take the execution forward, until the firm is under a need, or in preparedness, for a new business model with an appropriate leadership model. When Narayana Murthy moved out of Infosys, it was probably actualization that was incomplete and renunciation that came on too soon. In retrospect, it would appear to be more of governance redistribution rather than undertaking the right change at the right time (please also see: ).  Saviors possess leadership skills that have built and grown companies with achievements that are industry acclaimed. Saviors typically have stature and charisma that can rebuild confidence in internal and external stakeholders, and turn situations around for stalled corporations.
Prodigals as saviors
It is not that prodigals need to be at the bottom of the organizational pyramid and saviors at the top of the pyramid. Youngsters need to have the skills and the stamina that can make unique contributions in the domains in which they operate in their organizations, however small such domains may be. A product designer, a market researcher, a process engineer, a project executive, a quality officer and a salesperson all have their respective opportunities to be distinctive and become much sought after executives in their domains. The early development of savior skills in a youngster is a good augury for organizational competitiveness. Youngsters need to complement their subject specialization with practical expertise and a breadth of outlook. An automobile component designer, for example, would need to be conscious of the challenges of material technologies on one hand and the complexities of manufacturing on the other. The more end-to-end connected a specialized youngster’s thinking is, and the more broad-spectral his or her aptitude is, the more he or she would be able to add value to his or her functional competencies.  Such talent at the bottom of the pyramid is often hard to find, and that is the reason it is so valuable to build a cadre of saviors at the bottom of the pyramid.
This requires that organizations should focus on all-round skill integration in youngsters. The need for ready to use talent is so high in organizations that fewer organizations are willing to commit the lead time and effort to train youngsters in all the departments of an organization prior to their getting absorbed in their core functions. Early departmental rotation provides a broad perspective of a corporation’s value chain without compromising the core competence. If entrepreneurs such as Murthy emerge as saviors it is not necessarily only because of any superior skills and attributes but also because of their intimate association with the total value chain of the organizations as they establish and build their organizations. Professional organizations which compartmentalize functions as organizational silos in the name of specialization need to consciously adapt policies of all round development of skills in their youngsters. The greater the commitment to graduate and post-graduate rotational training and development programs for youngsters the corporation has, the greater will be the development of savior skills in the organization.
From prodigal to savior
Too much of functional specialization with too much of an emphasis on assigned task delivery but without an understanding of the total value chain contribution on the part of youngsters gives them a needlessly elevated view of their contribution.  Organizations-in-silos which are aware of the gap between the due requirements of organizational competitiveness and undue expectations arising from tiny contributions in narrow niches struggle to explain and retain talent consummately. Organizations that are unbounded in thinking and creative in execution tend to be conscious of the need to leverage young talent as much as possible to develop deep knowledge, broad perspectives and futuristic vision in them. Such organizations do not fight shy of nurturing and rewarding saviors from the early years of their careers. Youngsters who join organizations must understand the responsibilities and nuances of developing savior skills from the early years, and keep reinforcing the savior skills as they move up the managerial and leadership hierarchy. Such leveraged talent provides sustainable competitive advantage to corporations.
Posted by Dr CB Rao on June 9, 2013    

Sunday, June 2, 2013

The Return of Narayana Murthy: Fast Forward Again for Infosys?

On May 7, 2011, I published a blog post on the board level moves at Infosys, “Infosys Board Rejig: Crowded at the Top?”, in my blog Strategy Musings,  The blog post analyzed the challenges founder-leader teams face when all the leaders are competent and when the broader leadership team needs the challenges and opportunities of running their corporations. The blog post traced the dilemma faced by founder-leaders when they are one too many in a corporation. The post also made three important points. The first was that corporations need to recognize the importance of holistic leaders. The second was that leadership is not only skills and competencies but also about charisma and instincts. The third was that when corporations are headed by iconic leaders, such corporations struggle to subject themselves to objective benchmarking with respect to competition.
The loss of competitive edge and industry leadership faced by Infosys after the board level rejig that was announced on April 30, 2011 together with the more competitive business landscape has apparently prompted the Infosys board and its key stakeholders to raise, on June 1, 2013, the retirement age for executive positions to 75 years of age and recall the Chairman Emeritus N R Narayana Murthy to the board to operate as Executive Chairman. The other existing leaders,  Kris Gopalakrishnan becomes the Vice Chairman (from being a co-chairman) while SD Shibulal would continue to be the MD and CEO. While Narayana Murthy has stated that it was too early to comment on how he would re-strategize, his plan to establish an executive office, headed by his son Rohan Murty, a well-qualified professional in his own right points to his leadership style being different this time around.
Global leadership comebacks
The global corporate world has witnessed several comeback sagas. The most recent one has been the callback of the 66 year old A G Lafley, former chairman as the chairman and CEO by Procter & Gamble (P&G). Other notable comebacks have been Myron Ullman at JC Penney, Steve Jobs at Apple,  Henry Schacht at Lucent,  Jamie Houghton at Corning,  Ted Waitt at Gateway,  Richard Schulze at Best Buy, Charles Schwab at Schwab, William Stavropoulos at Dow,  Howard Schultz at Starbucks, Michael Dell at Dell and Paul Allaire at Xerox. Such callbacks have often been prompted by the need to shore up struggling businesses or take them to newer trajectories. However, not all such comebacks have proved to be successful.  The most spectacular comeback story was that of Steve Jobs at Apple as is widely known. Another success story has been that of Howard Schultz at Starbucks. Others had successes and difficulties in their second innings, in varying degrees though.
Given that not all global comebacks have been equally successful, and some have been even downright disastrous, it goes without saying that comeback by itself is not an implicit guarantee of success. A research on leadership comebacks quoted and commented upon in the May 24, 2013 online issue of Forbes suggests that allowing gilded chief executives an encore performance had been no guarantee of success. It often required the recalled leaders to execute radically new and unsentimental strategies even if some of them were crafted by them. It also mentions that paradoxically three-quarters of the recalled chief executives had actually handpicked their successor leaders, suggesting that handling them in the new innings could be a challenge, besides implying concerns on the durability of handpicked succession plans. The case of Infosys suggests that organizational challenges in the company could be no different, given that the successor team had been handpicked by Narayana Murthy himself. Setting the strategic direction and ensuring capable succession would continue to be the exiting leader’s most important contribution. Even when it is done well, there could be unexpected eventualities as demonstrated by several of the above cases.
Challenging times, dramatic measures
The saga of leadership comebacks is not so well experienced in India. Part of the reason is that Indian enterprises generally tend to retain their leaders as long as possible; the cases in point being Ratan Tata of Tata Group or Y C Deveshwar of ITC Group.  Infosys has been an exception where the founder leaders themselves accelerated leadership successions. The return of the 67 year old Narayana Murthy to Infosys is likely to be the most high profile and path-breaking one in India Inc, potentially rewriting the script in terms of leadership tenure, succession planning and comeback options in challenging and difficult times. That the times have been challenging in the last seven years when Murthy has been taking a declining interest and, in fact, no interest over the last two years when he moved out of even non-executive chairmanship are well documented. In the times of Nandan Nilekani, who succeeded Narayana Murthy as the MD and CEO (2003-07), Infosys clocked compounded annual growth rates (CAGRs) of  42.3, 44.5 and 54 percent in revenues, profits and share price respectively in that block of years. Those were some of the best times in Infosys’s history.
Times, however, have started to change for the worse as Kris Gopalakrishnan took charge between 2007-11 as reflected by the declining CAGRs of 18.3, 15.2 and 10.3 in each of those factors. During the current CEO S D Shibulal’s term (2011-13) not only the market conditions turned tougher but the competitors notably upgraded their competitive game; as a result the CAGRs continued to maintain their downward journey with 10.7 and 7.3 and finally a negative 7.1 percent in respect of revenues, profit and share price in 2011-13. During the same period, the leader Tata Consultancy Services (TCS) continued to post stronger results while other competitors, notably Cognizant and HCL Technologies, began to overtake Infosys in performance. As a result, while Infosys continued to retain an iconic aura, the earnings bellwether status began to slip. During the period, the company also saw the exits of several high profile executives and leaders from the company. Apparently, the Infosys board led by non-executive chairman K V Kamath (who himself was brought in to wring in a change in Infosys in 2013) felt that the return of Narayana Murthy would be the one dramatic measure that would reverse the declining fortunes (Kamath, one of the great leaders of the Indian industry, would continue as the lead independent director).
Challenges; internal or external?
In 2011, at the time of his retirement from Infosys, Narayana Murthy stated that the team that he left behind at Infosys was a dream team in whose safe hands the company would grow further. At that time, Infosys initiated a major strategic transformation, called Infosys 3.0. The strategy aimed to move Infosys higher up the value chain of information technology into newer areas like consulting, products and platforms while targeting greater value addition in the traditional areas of application development and management. One view has been that Infosys embarked on a right strategy at a wrong time; the company needed to protect its base business through low costs, competitive pricing and quality execution prior to embarking on newer vistas of development. The other view is that the new leadership upset the organization all across the levels as it sought to become more efficient through readjustment of roles, responsibilities and grades; increased attrition pointed to more than ordinary churn.  
Declining performance of corporations is often due to a variety of causes, both internal and external. Leadership and competencies are unique and internal to a company. Customer mindsets and competitors are discontinuities and external to a company. The intersections that are available to the company and competitors are technologies, strategies and people. The skill of the company lies in deploying technologies, strategies and people to maximize its competitive advantage in the marketplace vis-à-vis its competitors. Leadership and competencies that are unique to the organization can drive the competitive advantage through the above equation. The decision to recall Narayana Murthy is grounded in a strong faith in his charismatic leadership which is characterized by a visionary approach and a global stature that would augur well for positive, business development. It remains to be seen whether this time around he would develop his leadership bench to be able to weather any sort of competitive pressures.
Rohan, the new ‘roshan’?
If there has been one surprise in the recall paradigm, it is the induction by Narayana Murthy of his son Rohan Murty as his executive assistant in a chairman’s office that will be newly created to connect Narayana Murthy with the broader company. There is no doubt that the 30 year old Rohan is a highly educated and well accredited young professional, with roots in Indian values  and his father’s value system, and competencies in state-of-the-art information technology. Narayana Murthy has assured, in addition, that Rohan would have no leadership role in Infosys, and more such young professionals would be inducted into the chairman’s office. There are two ways this surprise induction can be looked at. The first is that as a software company, Infosys can no longer ignore the massive changes that are occurring in the hardware segment in terms of ultrabooks, tablets, smartphones, phablets, convertibles and wearable computers, as also the integration of the new generations of hardware and new applications software. Rohan and his team of young officers would hopefully go beyond the mechanics of data collection and analysis of a conventional chairman’s office and drive innovation as well as connectivity with Gen-Next devices and users.
At the other end of activity spectrum, if Rohan and his executive office stay at the level of data compilation and data analysis, the recall experiment of Narayana Murthy could create an informal power hierarchy which is more operations-focused and performance-oriented rather than innovation and transformation driven. At an extreme, such a traditional approach could make the established leadership somewhat redundant as the formal structure would also have similar operational performance objectives. Unless managed well, Narayana Murthy’s comeback could be a boomerang on the orderly management which Infosys is known for. The balance of advantage to Narayana Murthy as the new executive chairman, therefore, lies in utilizing Rohan and his young team as the new ‘roshan’ (shine and light being the literal meanings of the Indian word) that shines the light for a new pathway of technological and operational innovation for Infosys.
Without doubt, the Narayana Murthy experiment has to succeed exceedingly well for the sake of not only Infosys but also the Indian information technology sector in general. And, succeed must this experiment as Infosys has no comeback leader left in the open other than Nandan Nilakani, now well ensconced as the successful head of Government of India’s strategic Aadhaar UID Project!
Posted by Dr CB Rao on June 2, 2013