Sustainable Success through Competencies: From Mere Assembly to Strategic Alchemy

Apple’s recently launched new phones, iPhone 6 and iPhone 6Plus, have received highly favorable reviews. Apple’s foray into the field of larger smart phones and phablets through these two phones, long after Samsung pioneered this segment (followed by a host of other companies), has been much appreciated. There has been no evidence that Apple has suffered any of the launch and sales blues that a late follow-on competitor in a crowded market space typically suffers. Rather, the market reception makes it appear as though the fragmented field has been only waiting for Apple to come and conquer. The new phones do not necessarily offer, in individual departments, features that are superior to those offered by other noted competitors. Yet, the verdict seems to be that the phones would be winners as a total package.

The new iPhones, accompanied also by iWatch (where too competition has been ahead of Apple in time), indicate a case of sustainable success; success that is not necessarily dependent on any single traditional sustainability factor such as first mover advantage, competitive specifications, lower price, brand loyalty. Apple’s success is often linked to its core competencies, from design elegance to supply efficiency. It is also linked to its leadership and people; the personal imprint of the late founder-CEO Steve Jobs and the current CEO Tim Cook on one hand and the expertise of functional leaders and their teams on the other. The theory on the whole is that Apple’s success is one of core competencies. This blog post examines if the phenomenon at hand lends itself to a simple competency explanation, or indicates the need for a more robust explanation.   

Competence set

If products and services are the bridge between organizations and markets, competencies are the driving force for products and services to be successful. The triad of customer, product (or service) and the organization is an ecosystem by itself where the boundaries and functionalities of the three elements seem to be physically defined but practically are overlapped. The collection of competencies that exist in that ecosystem defines the entry barriers and mobility barriers relating to the ecosystem. For a firm to dominate such an ecosystem, the set of competencies must be relevant and honed. There are usually limits to which an existing ecosystem can be expanded to integrate new products and services. There are also limits to which existing competencies can be honed and kept relevant. The theory of core competence needs to be revised as the theory of competence based delivery.

Structured competence set is very specific to the strategic direction. Apple has earned envy for the elegance of its product design, capabilities of its hardware and software, and for the unique formatting of its retail stores. Yet, Apple has been on a hiring spree over the last two years, bringing in some top-notch talent from related and unrelated fields. Tim Cook, the current CEO, himself has an addition for supply chain efficiency under Jobs. Angela Ahrendts, CEO of Burberry brings retail and marketing experience of a different kind to Apple. Paul Deneve, CEO of Yves Saint Laurent brings the experience of fashion and luxury goods. So does, celebrity designer, Mark Newson In terms of multi-product internal and external design elegance. Yet, it is not only a new found passion for fashion that dominates Apple’s competency diversification. Kevin Lynch, the CTO of Adobe and Ari Partinen, Nokia’s PureView technology camera guru have been inducted to add technology power to Apple.

Translation loss

It is one thing to bring together a set of competencies with an eye on the future, and even realize them as specific product or service attributes but it is entirely another thing to realize sustainable profits from such products and services. Sony, the electronics giant, was determined to assert itself in the smart phones business. It brought in ownership alignment by buying out Ericsson’s stake in the joint venture. Thereafter, Sony has evolved an exciting new design philosophy with its Z series smart phones and T series phablets. It has its famed camera technology with some of its highest mega pixel count. It brought in its Bravia and Triliminus display technologies. It also brought the industry pioneering dust and water-proof construction to its smart phones. It increased the renewal frequency of flagship models to twice a year compared to the annual frequency of Apple, Samsung and LG. It priced its products cheaper than competition while not pulling any stops in advertising. Like Samsung, it became a full range product provider, each with superior features.   

All this has been to no avail. At a time when Apple continues its smart phone dominance even with limited products and late stage diversification Sony has admitted to huge losses in its well updated and widely diversified smart phone business. Clearly, the whole of Sony’s formidable competencies has been lower than the sum of its parts. High competencies can create outstanding products and services but they may encounter either fusion inertia or translation loss as the firm aspires for commercial success. This is by no means confined to electronics. IT majors that set up consultancy verticals with highly competent business professionals have found it difficult to drive into such new businesses. FMCG companies which diversified into water purification products failed to compete with the established water purification giants such as Kent and Aquaguard despite the formidable brand power and retail network reach that the FMCG companies have. More than an assembly of competencies, alchemy of competencies could be a sustainability driver.

Alchemy versus assembly

In the physical world of management, assembly of competences is just an assembly of functions, with divergences reduced and alignments enhanced by cross-functional collaboration. To achieve sustainable success with industry pioneering or industry dominating features, organizations require alchemy of competencies. Alchemy, in a medieval sense, related to a form of chemistry pursued in the middle ages which tried to discover methods to change ordinary metals into gold. In a more modern sense, however, alchemy reflects a mysterious power that can change things or provide exceptional longevity. Addition of new people competencies certainly helps firms develop new products and services. Without hiring of Sumatran and Pawan, with their experiences of international automotive development, Tata Motors and Mahindra & Mahindra would not have been able to diversify into passenger cars and utility vehicles as they had been able to. That said, such successes have not been sustainable and repetitive leading to a question as to whether more than assembly of competencies is involved in sustainable success.

The concept of alchemy becomes relevant in the perspective. One hears of teams that tick; like the Indian cricket teams that won laurels in the World Cups, from 1983 onwards. One also hears of dream teams that deliver beyond expectations; many Hollywood blockbusters are shaped by dream teams. Such teams are shaped by alchemy. Alchemy in an organizational sense is neither mysterious or mystique; it represents complete emotional and professional bonding between members that ensures an ecosystem of creative ideas, open conversations, considered discussions and aligned executions. Teams empowered by alchemy continuously examine how the existing competencies are reinforced by the new competencies and vice versa. Alchemy is about everyone, and not the just new ones. It is not about one’s capability alone but everyone’s mutually fortified. As the examples of induction of new capabilities and the development of dream teams demonstrate, alchemy needs more than just those two elements.

Principles of alchemy

The challenge, therefore, is retaining alchemy in organizations as an all time phenomenon, irrespective of who comes and leaves. This blog post suggests a few principles of organizational alchemy. The first is organizational refresh. Staid organizations can produce only average solutions. By addition of new talent or upgrading of existing talent, organizations must refresh themselves constantly. The second is continuous collaboration. Typically organizations focus on collaboration based on projects. The more complex and more cross-functional or cross-border a project the more is the exhortation for collaboration. In organizational alchemy, collaboration has to be perpetual. It is neither issue based nor project based; it is a way of life. The fourth is technological flair. Alchemist organizations have the ability to create technological solutions to human problems; generating a satisfaction of pushing the horizon. Everyone in the organization understands technology even though only the defined ones may practice it.

The fourth principle is to look beyond the ordinary. The miraculous power to transform gets harnessed only when extraordinary goals are set. Alchemist organizations believe in growth as a way of life.  The final principle, that also enables the prior principles, is organizational chemistry. Personal chemistry works usually bilaterally or at best in limited teams. Organizational chemistry wherein every member of the organization is emotionally and professionally bonded is the essential element of alchemy. As Apple embarks on a new journey transforming Apple as a life companion with a slew of new products such as watches, wearable computers and health devices to supplement its smart phones, tablets, laptops and desktops, and as it inducts new talent from related and unrelated fields, the watch will be on if Apple would be the one company that moves from assembly of competencies to alchemy of competencies. Apple would be an interesting iWatch for students of management and leadership in times to come.

Posted by Dr CB Rao on September 21, 2014        

Analyzing and Developing Competitive Moves: A New Market and Practice-centric Framework

An industry is composed of multiple players who together define the structural dynamics of the industry. Whichever way the industry is defined, narrowly or broadly, it is not untypical to have at least two competitors. Monopoly is almost non-existent in the current times while duopoly could exist in certain sunrise or technology intensive industries. In most cases, however, oligopoly typifies the industry structure in contemporary era. As the students and practitioners of management are aware, an oligopoly falls in between a monopoly, where there is only one firm in an industry, and the perfectly competitive industry, where there are several firms. The entry and growth are the most challenging in a monopolistic industry structure where competitive moves are often dictated and overwhelmed by the monopolist firm. In the perfectly competitive industry, entry is relatively easy and the competitive moves of the firms are affected more by market conditions than by each other’s moves. Growth, however, is tough in a perfectly competitive industry. In contrast, in an oligopoly which falls in between a monopoly and a perfectly competitive industry, firms tend to have several options in their pursuit of entry and growth.

Michael Porter in his work on Competitive Strategy (1980) prescribes a framework for developing and countering competitive moves. According to Porter the firm in an oligopoly often faces a dilemma. It can pursue the interests (for example, profitability) of the industry as a whole (or of some subgroup of firms), and thereby not incite competitive reaction, or it can behave in its own narrow self-interest at the risk of touching off retaliation and escalating industry competition to a battle. A firm needs to resolve the dilemma by choosing a balance between industry level cooperation (to avoid profit eroding warfare) and firm level competition (to avoid giving up potential revenues and profits). Arguing that in an oligopoly, the firms are mutually dependent in respect of competitive moves, Porter outlines a series of competitive moves that firms could typically follow. These are broadly classified by him as being cooperative or nonthreatening moves, threatening moves, and defensive moves. Porter also hypothesizes that the nature of competitive moves is influenced by the industry instability on one hand (influencing the likelihood of competitive warfare) and the commitment of the industry members to the industry (influencing the likelihood, speed, and vigor of competitive moves). Amongst the three types of competitive moves, Porter lists several competitive options under threatening moves. While Porter’s framework of competitive moves is quite useful in developing competitive strategy, this blog post suggests an entirely different and potentially more useful framework for analyzing and developing competitive moves.

Listing limitations

Porter’s approach of listing competitive moves under different heads is centered on the firm rather than the competition. It also has the underlying theme of generic approach (which is a common theme throughout his Competitive Strategy Work) rather than an approach customized to the nature of competitors. For example, it talks of moves being offensive or defensive based on a judgment of whether the firm is able to make its moves on a preemptive basis or on a responsive basis. The framework proposed by Porter is limited to functional strategies such as Timex conceptualizing a different channel strategy than its Swiss competition could. While doing so, Porter rather simplifies the competitive paradigm by suggesting that retaliatory competitive moves could be lagging by the lead time that is required to implement them. He suggests, for example, that responding to a long lead competitive move such as a new automobile model or a new blast furnace would intrinsically carry a lag time in retaliatory response. This approach is deficient in the sense that even without having perfectly competitive industry conditions, the contemporary industrial scenario is marked by perfect information. In today’s world, therefore, retaliatory responses to any competitive moves of the firm could take place with as small a lag time as a couple of months, which in fact could even be overcome with better execution by the competitors. Porter’s theory also implies somewhat erroneously for the current situation that a firm’s competitive move would have similar advantage over each of the competitors and that each of the competitors makes a similar assumption.

In addition, Porter’s framework is limited by the fact that the today’s firms are well anchored in concepts of continuous product improvement or yearly model changes. No firm, therefore, waits for the other firm to make a move. All firms in an oligopolistic industry structure would be capable of undertaking competitive actions in more or less a simultaneous manner. For example, automobile makers not only undertake annual model renewals but also introduce multi-level product families (say, sub-compacts, compacts, sedans, and SUVs). Computers, mobile devices and tablets have new product introductions on almost a quarterly basis. The differentiators for firms in the contemporary oligopolistic structure would therefore be more in terms of levels of innovation in product development, effectiveness in marketing, excellence in manufacturing, and efficiency in marketplace delivery. Certain core competencies of the firms, rather than generic functional strategies, distinguish the more competitive firms from the less competitive ones. This hypothesis leads us to the development of an analytical framework that does not start with the categorization and listing of competitive moves in a functionally generic methodology as suggested by Porter; rather it crystallizes a new theme of this blog post that the players in the industry must first be classified on the basis of their positioning in terms of their core competencies and the contingent business results. Understanding the competitors in a broad typology would be an essential foundational step in analyzing and defining competitive moves in the new framework.

Competitor typology

All the players in an industry can be categorized in terms of two critical dimensions. The first one is their ability to influence the market while the second one is the ability to compete with the other firms. On the dimension of market influence, firms in an industry tend to be one of the following: market creators, market maintainers or market destroyers. Market creators have their core competency in product innovation and create an entirely new market through their products. Apple is an outstanding example of market creator in the communication and computing devices industries.  Market maintainers are competent enough to be successful product followers keeping the market live and expansive through their product followership.  Most firms in an oligopolistic structure belong to this class. Samsung is perhaps a good example of a firm in this class, both in communication and computing industries. Market destroyers are companies which are faced with declining competencies and are unable to influence positive market development. Market destroyers through their dated or dysfunctional products cause customers to develop a negative image of the industry. Firms which are flooding the tablet computer market with cheap devices of low functionality constitute a striking example of market destroyers. Not every industry would have firms belonging to all the categories all through the years. One instance of a market creating firm may be followed by several annual instances of market maintaining firms and a few instances of market destroying firms.

On the dimension of competitive advantage, firms typically fall into one of the following three dimensions: share builders, share maintainers and share losers. Share builders are those firms which have their core competencies in marketing effectiveness, manufacturing excellence and delivery efficiency. Building on their product development capabilities, whether of innovation or followership, such firms achieve share building capabilities. Market builders are natural share builders as the market monopolistically develops around their innovative products. However, it is quite possible that market builders could fail to utilize the natural share building advantage if the core competencies in any or all of the domains of marketing, manufacturing and delivery are sub-optimal.  Market maintainers, on the other hand, assiduously seek to create competitive advantage as share builders to compensate for the lower level of product innovation. Share maintainers are those firms which are in an equilibrium state in the oligopolistic structure. Many share maintainers possess a balanced portfolio of mid-range competencies that are capable of maintaining a reasonable market share in an oligopolistic market. Share losers are typically uncompetitive firms, lacking in any level of differentiation in product development, marketing, manufacturing, and product delivery.

The firm in a nine grid matrix

Typically, therefore, all firms in an oligopolistic industry can be categorized in various grids of the nine grid matrix.   The most competitive firm is the one which is both a market builder and a share builder while the least competitive firm is the one which is both a market destroyer and a share loser. While only a few pioneering firms fall in the most competitive grid, and a few in the least competitive grid, most firms fall in any of the remaining seven grids. The essence of competitive moves of firms would be to move to grids that reflect a higher degree of competitive advantage. It would not be possible for firms to achieve such mobility without first analyzing where and how firms are positioned in various grids and then developing appropriate competitive moves. Once this grid is conceptualized and effectuated in the live industrial setting, Porter’s competitive strategy framework can be effectively applied. Competitive moves can be designed around core competencies that are required to qualify for the superior grids. Similarly, each grid would have its own entry barriers and mobility barriers, raising resource bars and adding challenge to the execution of competitive moves. The concepts of industry level instability and firm level commitment articulated by Porter can also be appropriately fitted on to the nine grid matrix.

The nine grid matrix tends to correlate with revenue-profit as well as market size-market share markers rather well. The most competitive grid corresponds to high revenue-high profit markers as much as high manufacturing scale-high market share markers while the converse is true for the least competitive grid. Once the fact of the nine grid matrix is recognized it is easy to appreciate that simple defensive or offensive functional strategies would be inadequate. Tata Motors, for example, is an Indian automobile firm that belongs to the category of market builder-share builder. From 1985 onwards, Tata Motors has been adding new products and new markets in the truck and bus market qualifying for a near permanent presence in the most competitive grid. Its principal competitor, Ashok Leyland has been a market maintainer and also a share maintainer, but occasionally transiting into the share builder class through superior manufacturing and market financing strategies. Volvo, on the other hand, has been an innovator in bus segment through its high performance, low floor buses but has just been a share maintainer despite having product innovation. New entrants into the heavy commercial vehicle industry such as Eicher, Navistar and Force Motors have been market losers as well as share losers due to an inability to develop the required core competencies. Competitive moves of firms in the superior grids tend to be a combination of offensive and defensive strategies while the firms in less competitive grids would need to follow a string of offensive strategies from model development to operational excellence and from channel building to brand building to transit to the superior grids.

Instability and commitment

Industry structure sets the basic parameters within which competitive moves are made by the firms in an industry. Industry instability arises from evolution of technologies, processes and resources as much as from entry of new players or exit of existing players. Industry instability is a relative term in the sense that a monopolistic structure faces mild instability as it transits to a duopolistic structure and a duopolistic structure faces significant instability as it transits to an oligopolistic structure. As an oligopolistic structure transforms into a perfectly competitive structure, however, the level of instability could reduce. Oligopoly offers an opportunity for competitive firms to dominate the industry, by way of a 20-80 rule (20 percent of firms dominating 80 percent of value), through appropriate competitive moves. The commitment of the firms to the industry, which is often demonstrated by investments in technology, infrastructure, capacity and talent, has a major role to play in determining the relative industry instability and relative firm stability. The lack of commitment of firms to the industry, on the other hand, leads to more number of share losers and eventual exits, actually stabilizing the industry in the process.

The Indian domestic airlines industry offers a great example of the framework of competitive moves and the concepts of industry instability and firm commitment that are discussed in this blog post. Until the 1990s the domestic airlines industry was the monopoly of only the State-owned Indian Airlines. However, with the economic liberalization, several private airliners were allowed to enter the aviation sector converting the industry into an oligopoly. For some years, it looked as though an industry shakeout would lead to a duopoly between the Indian Airlines and Jet Airways but eventually an oligopolistic structure emerged with different airlines becoming positioned differently (for example, Deccan Airways as a market maker through pioneering of low cost air travel, Jet Airways as a share builder with investments in capacity, technology and talent, Kingfisher and a few other airliners trying to be share maintainers while also being market maintainers on the plank of enhanced service. Despite the airlines industry being highly investment and lead time intensive, it is interesting to note that similar competitive moves (capacity expansion, aircraft modernization, trained crew, travel safety, price competitiveness, domestic reach extension, international routes, and electronic services) are being made by all the competitors to move to superior competitive grids.

Core competencies and competitive moves

Unlike the proposition made by Porter, competitive moves are not a set of functional actions or calibrated strategies that achieve superior position for firms. Competitive moves have to be necessarily based on a sub-structuring of the industry on the dimensions of innovation and excellence, and then specifically woven around the core competencies required to move from inferior competitive grids to the superior grids or to defend their presence in the superior competitive grids.

Posted by Dr CB Rao on August 28, 2011     

Five Great Indian Leaders: One Singular Leadership Ethic

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

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

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

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

Nationalistic rationalism

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

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

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

Focused specialization

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

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

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

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

World-class erudition

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

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

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

Passionate entrepreneurialism

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

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

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

Technological virtuosity

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

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

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

Indian leadership and global marksmanship

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

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

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

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

Posted by Dr CB Rao on January 23, 2011.

CK Prahalad (August 8, 1941 – April 17, 2010): Timeless in Strategy, Tireless in Creativity

In the sudden demise of Dr CK Prahalad in San Diego, USA, the world of strategy has lost one of the most perceptive, innovative and influential strategic thinkers of all times. Strategy would not have been what it is today but for the innumerable path-breaking conceptual and analytical constructs that Professor Prahalad developed and propagated over the years. With indefatigable energy and passion he taught, wrote, consulted and mentored, on a global platform for over 44 years, leaving behind his unique and distinguished stamp on management thought and practice.

CK Prahalad (CK or CKP as he is popularly called) represented the very best of Indian intellect that found a global home. Born into a large family of Sanskrit Brahmin scholars in the South Indian city of Coimbatore in August 1941, Coimbatore Krishnarao Prahalad obtained his B Sc degree in Physics from Loyola College, University of Madras in 1960. After graduation, he worked in Union Carbide as industrial engineer and later in India Pistons as training manager. Setting sights on management education, he earned his PG diploma in Business Administration from the prestigious Indian Institute of Management, Ahmedabad, as a student of the first batch in 1966. His stint at Union Carbide and the move into the management studies were perhaps the critical inflexion points of his life.

Prahalad, armed with the MBA from IIMA, proceeded to Harvard Business School, USA where he earned his Doctor of Business Administration in 1975. He returned to India to teach at his Alma Mater, IIMA during 1976-77. He thereafter joined University of Michigan, USA and made his mark as a foremost management teacher in the United States. He served as the Distinguished University Professor of Corporate Strategy at the Stephen M Ross School of Business in the University of Michigan. Dr Prahalad was the recipient of several honors and awards globally. Honorary doctorate degrees from global universities and high-ranking civilian awards from the Government of India such as Padma Bhushan were part of the recognitions.

Though a bit dated, one of the best accounts of CK Prahalad’s passions expressed as his reflections can be found in the paper “C.K. Prahalad’s Passions: Reflections on His Scholorly Journey as a Researcher, Teacher and Management Guru” co-authored by Lynn Perry Wooten and Anne Parmigiani from University of Michigan and Nandini Lahiri from Indian School of Business (Journal of Management Inquiry, Vol. 14, No. 2, June 2005, pp 168-175).

This blog post presents Dr Prahalad’s genius from diverse perspectives based on the author’s understanding of his works and the author’s attendance in Dr Prahalad’s speaking forums.

Sweeping in canvas

Throughout his long distinguished career Professor Prahalad helped reshape strategy and set new directions for business. He had an unparalleled genius for developing seemingly abstract yet elegantly simple constructs, marked by lateral and out-of-the-box thinking. His teachings helped future managers and leaders acquire leading-edge conceptual, analytical and strategic skills. His articles and books, which went on to become bestsellers, shaped innumerable professionals, across domains and countries, to think differently. His consultancy assignments helped companies plan and grow existing and new businesses or turnaround the ailing ones. His speeches and presentations in several global forums helped strategy acquire a distinctiverecognition as a critical domain. More importantly, his mentoring of corporate boards, chief executive officers, entrepreneurs, bureaucrats and ministers helped India, Inc recognize its global potential.

If there is one factor that characterized all of CK’s contributions it is the unique trail-blazing nature. While several management gurus are content to spin extension and analogue theories around their first fundamental premise, CK constantly and consistently propounded new trail-blazing concepts and theories. As a result, CK made a more complete and holistic contribution to business management than any other exponent, save perhaps the legendary Peter Drucker. Each of Dr Prahalad’s bestselling books and award-winning articles exemplifies a thought process that is refreshingly different and genuinely creative.

Prahalad’s books institutionalized new ways of strategic thinking through elaborate paradigms, well-illustrated with real time case studies. His notable works include “Competing for the Future”, co-authored with Gary Hamel (1984), “Multinational Mission: Balancing Local Demands and Global Vision” (1987), ”The Future of Competition: Co-Creating Unique Value with Customers”, co-authored with Venkat Ramaswamy (2004), “The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits” (2004), and “The New Age of Innovation: Driving Co-Created Value through Global Networks” (2008), co-authored with MS Krishnan. Each of the books created a new strategy paradigm completely different from the previous ones and laid new trails of strategic thinking.

Prahalad’s award-winning articles almost inevitably churned management thought and laid new pivots of strategic thinking. Prahalad’s “The Dominant Logic: A New Linkage between Diversity and Performance” (1986), co-authored with Richard Bettis,” Strategic Intent” (1989) and ”The Core Competence of Corporation” (1990), both co-authored with Gary Hamel,” The Role of Core Competencies in the Corporation” (1993), “A Strategy for Growth: The Role of Core Competence in the Corporation” (1993),” Weak Signals Vs. Strong Paradigms” (1995), “The End of Corporate Imperialism” (1998), “Serving the World’ Poor, Profitably” (2002), co-authored with Allan Hammond, “The New Frontier of Experience Innovation” (2003), and “Twenty Hubs and No HQ” (2008), co-authored with Hrishikesh Bhattacharyya, have each led to entirely new waves of thinking in corporate strategy.

Unlike many management gurus who preferred to plough their own lonely paths, Professor Prahalad believed strongly in collaborating with other management thinkers, including his students who evolved into independent thinkers in their own right. The array of books and articles he co-authored with such experts, some of them listed above, is proof of his cross-institutional, cross-border collaborative research and writing, often taking years of dedicated work before a publication is made. Quite often, however, it fell on his shoulders to present and communicate thoughts to several learned forums across the globe. While there could be effective class room teachers and public orators, Dr Prahalad had a unique capability to connect with the audience, influence listeners of varied mindsets, and instill a sense of purpose in each listener.

Pioneering in theory and practice

Amongst the many conceptual contributions of Prahalad, ‘strategic intent”, “core competency” and “bottom of the pyramid” have been the truly game-changing ones. Though these were initially proposed by Dr Prahalad as case based theoretical constructs and caused intellectual upheavals in management thought when they were first presented, all of these have now become viable practices.

The construct of strategic intent comprised three attributes of direction, discovery and destiny. It required a company to think of a long term and differentiated competitive position that a firm must seek over a decade or so, which in turn would motivate the employees explore the new terrain with a sense of purpose. Prahalad advocated upward movement of new ideas from all across the organization to help the company chart out a competitive future stating that a company’s strategic orthodoxies would prove to be more dangerous than its well-financed rivals. The prime message was one of doing things differently to achieve desired differentiated outcomes.

The concept of core competencies made fundamental departure from the established concepts of strategic business units and outside-in models of competitive strategy by arguing that only the core competency of a firm could truly drive its strategy and business. Each firm could have its own core competency or a portfolio of core competencies but a true core competency would be one that remained difficult to replicate by the competitors. The theory advocated building of core competencies that support a strategic intent. It proposed a core competency mind-set that would unchain talent from the imprisonment of business units, identify projects and people who embody core competencies and a game plan to identify next-generation competencies.

The paradigm of “fortune at the bottom of the pyramid’, was India-centric theory with truly global implications. It argued that by developing low cost products and services that serve the poorest of the poor, corporations would actually earn profits with a social purpose. It hypothesized that by focusing on the demand at the bottom of the social pyramid companies would help eliminate poverty. The book supported the theory with several actual case studies from India. While it had its share of skeptical critics it is now well established that Prahalad’s BoP theory has become viable industrial practice. Tata’s USD 2,000 dollar Nano small car, Nokia’s and Samsung’s USD 20 mobile phones and Yunus’s Grameen Bank demonstrate how profits get generated by focusing on, rather than shirking away, from poverty.

Equally path-breaking have been Dr Prahalad’s other concepts; for example, that the consumer and the firm are intimately involved in jointly creating value that is unique to the individual consumer and sustainable to the firm (“The Future of Competition”) or that the emerging markets can be a source of innovation, which can be captured by accessing global resources and talent to create customized co-created experiences for consumers. The attempts of global automobile firms and innovator pharmaceutical firms to collaborate with Indian partners indicate that the time has arrived, as always, for Prahalad’s futuristic propositions.

Passion for India as a global force

CK Prahalad was perhaps the only Western management thinker who believed that India would be a global leader sooner than later. He appreciated and forecast global competitive dynamics as much as he understood and formulated dynamic corporate strategies. He held that leadership was all about the future, about hope and change.

In 1994 Dr Prahalad addressed a select group of CEOs of India, Inc in Windsor Club. He suggested to them that they must build multinational firms from India (Indian MNCs) rather than be paralyzed by the entry of multinationals into the Indian market. Very few of the assembled CEOs thought then that it could happen. Probably saddened by this reaction he started working with Indian corporations and individual CEOs to prompt a multinational mindset. Surely to Prahalad’s satisfaction, he saw in his lifetime the concept of Indian MNCs becoming reality. Today virtually all industrial sectors of India are significantly globalized while several top Indian corporations have made major global acquisitions.

In 2007-08, as the celebrations of India@60 wound down, he formulated a new vision for India@75, ie., India by 2022. He argued that India’s success in this endeavor would depend on economic strength, technological vitality and moral leadership. He set several exciting goals for India. He urged the governments to convert the huge population into a distinct advantage through quality education. He believed that India would account for 10 percent of global trade. He exhorted India, Inc to get 30 of its firms onto Fortune 100 list. He wanted India to have 10 Nobel Prize winners based on research conducted in India. He believed that India’s unique manufacturing and R&D paradigms could be developed to develop cost-effective breakthrough innovations.

Dr Prahalad advocated game changing accomplishments for India to move to the next higher trajectory. He said: “ Focus on the future, and not on the present or the trajectory of the past; Aspirations must exceed the resources; and Imagination is more important than analysis”. By focusing on inclusive growth that would emphasize the larger rural landscape as micro-producers and micro-consumers as much as the more visible urban landscape as major producers and consumers he felt that India with its 1 billion plus population could turn his India@75 vision into reality.

People power of strategy

Prahalad’s works are characterized by an unflinching faith in people as shapers of strategy and drivers of growth. Prahalad never looked at strategy as an impersonal corporate construct or as a mere structural enabler. CKP’s recent works have focused explicitly on consumers as the co-creators of value; however, even his earliest works integrated people as the essential component of strategy development.

In Prahalad’s framework people emerge as the primary constituency, either as generators of demand or creators of products, with his strategy linking both. For example, in Strategic Intent Prahalad dwelt with an active management process that would include: focusing the organization’s attention on the essence of winning, motivating people by communicating the value of the target, leaving room for individual and team contributions, sustaining enthusiasm by providing course corrections and using the intent consistently to guide resource allocations.

Needless to say, his work on core competencies is completely people focused. Here, however, he focused on the intellectual competencies of people. According to Prahalad, core competencies are the collective learning in the organization, signifying a unique ability to coordinate diverse skills and integrate multiple technologies. He argued, correctly so, that several individualized skills would not lead to the competitiveness of an organization, unless they were woven into a core competency that was distinctive to the organization. In his view, core competence would many levels of people and all functions, with top management looking at the company as an amalgam of skills and not as a collection of departments or products.

It is, however, in the “Fortune at the Bottom of the Pyramid” that an entirely new human dimension of CK Prahalad emerged. By all accounts, no management guru (or any corporate honcho) until then considered poverty-stricken sections of the society as one deserving of any mention in strategy formulation. In an era where consulting organizations and corporate strategists encouraged companies to focus on advanced markets to drive revenues, Prahalad in his landmark book advocated creation of fortune by focusing on poor people in emerging markets. The tag line “enabling dignity and choice through markets” is evocative. Post-publication of this book, creation and delivery of low cost but high quality products for customized applications became a board room topic, finally.

A loss, a void and a duty

Typically, Prahalad never stayed in a zone of comfort. If consulting assignments to top ranking global firms provided early challenges and opportunities, his passion to evengalize his strategic philosophies globally with a special focus on India made Dr Prahalad a truly jet-set global management guru. Very often, he is reported to have placed his external commitments ahead of his personal comfort and health. He founded and personally ran entrepreneurial ventures (Praja, Inc) which sought to harness the power of the technology and Internet. As with the philosophy he advocated for others, he set aspirations higher than resources and aimed to push the boundary farther, ever often.

The passing away of Dr CK Prahalad has snatched one of the most innovative and prolific management thinkers from the business world. Many academic institutions, industry associations, corporate boards and chief executives, directly served by his thoughts through association and indirectly influenced by his written and spoken thoughts, will be orphaned. More than anything else, the employee-on-the-frontline and the man-on-the-street would be impacted by the snapping of his creative thoughts that targeted common good, globally.

In Professor Prahalad’s demise, companies have lost a mentor who encouraged managements to engage the apparently ordinary people in their organizations and feel their extraordinary potential in strategy formulation and execution. Societies have lost a benefactor who could develop new business constructs which would harmonize the profit motives of a capitalistic corporation with the equity needs of a handicapped society.

Needless to say, India has lost a towering icon of great intellectual capability, acclaimed as the most influential management thinker of the world. Converting Dr Prahalad’s vision for India into a reality is the most relevant homage that India’ strategists can pay to his unique and distinguished memory.

Posted by Dr CB Rao on April 18, 2010