Goals as Triggers: An Outcome-Process Matrix

Goals are an essential part of life for individuals as well as organizations. Goal setting is an important mechanism for development. In individuals it reflects leadership to take charge of one’s life and live optimally. In organizations it reflects a leadership capability to drive the organization on development path. Goals that are easy to achieve and will, anyway, happen in the natural course are not goals truly in a developmental sense. Goals which require planning, generation and deployment of resources, and which involve complex managerial processes are usual goals in an organizational sense. Goals by themselves are meaningless without they becoming outcomes, and outcomes are impossible without dedicated efforts. Aspirational adrenalin and situational stress are two important components of the journey towards converting goals into outcomes.

Goalsetting by itself is an emotional trigger. For some, setting mild easily achievable goals acts as a relief while setting lofty and tough-to-achieve goals could be stressful. For others, the reverse can be true. Outcomes, apart from the developmental satisfaction of achieving, involve emotional outcomes too. There are many components that vest in goals the stress dimension or lack of it. Time is the most impactful component. There is no linear correlation, positive or inverse, between factors supporting goal achievement and actual achievement of goals. It is not necessarily true that few is better for goals and more is better for resources for smooth goal achievement. It is this complexity that makes the theory of goals a challenging one. This blog post proposes a simple outcome-process matrix to understand the goal theory.

Goal-resource conundrum

Many advise that fewer goals make for better accomplishment. In matter of practice, there is nothing like being able to live with fewer goals. Even a singular goal has a cascade of goals. A singular goal like “I should join medicine” has several goals like “getting top ranks in certain qualifying subjects”, “getting top marks in the qualifying entrance examination”, “arranging resources for the costly medical study” and “preparing with the family for separation into hostel life” etc. In respect of organizational goals, there is never anything like singular goal. Something as singular as “we want to achieve the highest market share at X percent” has to be viewed really as a cascade of goals even at business level, let alone at each functional level. The goals would cascade into revenue, cost and profit goals at the business level, and each of these will further cascade into functional goals. Each organizational goal has a hierarchy of goals. And, some of the goals could conflict each other too!

Resources are also complex to decipher. The law of proportionality does not work beyond a point. When a company has a design, manufacturing or quality issue just throwing more people into the ring to solve the issues would not help. In certain situations, quality rather than quantity would be more important. In certain other cases, just giving more time (time being a very important resource) would help. Resources are, more often than not, are shared. In most cases, the impact of doing or not undertaking an activity or not providing a resource allocation would have its impact much later. Relating goals and resources uniquely, in a defined time frame, therefore is a problem in itself. Budgeting is a process to regulate resource allocation but it is a set of numbers. Achievement of goals, and the process thereto, is an emotional ownership journey. The outcomes and process interact in a way that ownership comes with a tinge of emotions.

Outcome classification

Outcomes are basically of two types; those that are potentially feasible and those that are seemingly unworkable. For example, in a market duopoly where both the players have equal share, it would be potentially feasible for one of the players to aim at a 75 percent market share. However, aiming at 95 percent market share would certainly seem to be unworkable. On the other hand, in the same duopoly, if the shares are 10 and 90 percent, it would be potentially feasible for the 10 percent player to become a 20 percent player or a 90 percent player to further become a 95 percent player. It would certainly seem to be unworkable for the 10 percent player to become a 90 percent player, however. In a way, the feasibility or otherwise of outcomes is contextual, depending on organizational, technological, market and environmental conditions. More importantly, it is a function of passage of time impacting these dynamics.

It would have been impossible to conceive of a smart phone which can be assembled and disassembled to suit different functionalities in user’s hands. The first step towards that has been made with LG G5 modular phone which enables upgrade of certain functionalities with addition of certain modules.  Google Ara with its Lego like phone construction which seemed infeasible prior to LG G5 suddenly becomes feasible now. Travel en masse to other planets and setting up human colonies would seem infeasible even today but could become feasible in a few decades. Visionary leaders set goals which are not easily visible to people reasonably versed in current state-of-the-art. Feasibility or otherwise depends on the processes adopted to work towards such goals. 

Process classification

The processes for achievement of goals are of two basic types; those that are carried out as they are instructed to be performed and those that are performed with experimentation. For example, most processes followed in most organizations by most individuals are all instructed processes. The advantages of process instructions are evident; they lead to repeatability and consistency with predictable results. They allow quality checks to be performed at key stages. Instructional processes promote learning, and lead to productivity. Well instructed people tend to be compliant and focused. Certain goals benefit immensely by instructed processes; in general, goals in industries with high safety risks or quality variations are better off by following instructional processes.  In goal setting, however, certain processes have to be extrapolated or creatively constructed; yet in instructional processes these are also codified.

Experimental processes are those processes which are generally first time processes. In certain aspects of business, experimental processes become inevitable. Most R&D goals can be achieved only with experimental processes. Market positioning of new products requires experimentation with consumer preferences. Even in a manufacturing setup, certain experimental processes would have to be gone through before standards can be established. Experimentation of even standardised processes occurs in empowered organizations which seek continuous improvements.  Experimental processes which are successful bring pride and ownership to the developers. Tolerance to mistakes is an essential requirement for successful evolution of experimental processes. When goals are lofty, resources thrifty and timelines tricky, experimental processes are the better option. Typically, not all individuals may be well suited to experimental processes.

Outcome-process matrix   

  

As mentioned earlier, outcomes and processes constitute a matrix. Depending on whether the outcomes are potentially feasible or seemingly unworkable and whether processes are instructional or experimental, four grids get formed which influence the emotional stress or satisfaction that gets generated. The four grids are: (i) feasible outcome-instructional process, (ii) feasible outcome-experimental process, (iii) unworkable outcome-instructional process, and (iv) unworkable outcome-experimental process. Each of the combinations leads to different levels of stress and satisfaction levels. A stress-free situation occurs when outcome is considered feasible and people just follow instructions. In this situation, the stress of failure is on the lower scale. When the outcome is considered feasible but people need to experiment their way to the expected outcomes, there would be a positive stress and joy of discovery through experimentation.

When the combination is that of unworkable outcome and instructional process, there would be dissatisfaction of failed goal but there will be lack of guilt that the failure has occurred in spite of following instructions. The grid of unworkable outcome and experimental process is all the more stressful and dissatisfying due to outcome failure and guilt of failed process discovery.  This does not mean that the feasible outcome-instructional process grid is the best solution, and others lead to stress and dissatisfaction in varying degrees. In fact, the driver for industry leading growth is to be seen in terms of making the impossible possible and exploring the unexplored processes through experimentation.    

Impossible to possible

There are two simple steps to pursue the impossible to possible even when the route to achieve is completely unknown. The first step is to put in place a base case wherein an aspirational but feasible target that can be achieved in a well-planned manner is set out. The next step is to stretch the feasible to seemingly unworkable level and leave it to the team to explore their way to achievement. This enables the team to bring out their best to achieve the impossible with their ownership of processes, with the full knowledge and confidence that a backup is feasible and permissible. This approach is particularly relevant in space exploration, drug discovery, deep sea exploration, polar expeditions, and the like, where the impossible and unexplored can be pursued with the fall-back in play (space ship can be brought back after testing out the trajectory, exploration targets can be moved after the unknowns are discovered, molecules can be re-purposed after initial failures etc.,).   

Positive marginal stress and emotional ownership are critical factors that differentiate industry-leading teams from industry-average teams. Seemingly unworkable goals and hitherto unexplored pathways are well in order if the leadership understands how to inspire the team members on the discovery path. Ideally, if individuals are also hardwired to be unguided achievers of the impossible from their early educational and career days, the possibility of seeking and accomplishing the impossible becomes real in an organizational setting. Leaders in organizations, teachers in schools and colleges and parents in families have a responsibility of standing by the goal seekers in this process. The dividing line between positive stress and negative burnout on one hand and exhilaration of achieving the impossible and the disappointment of slipping from the peak on the other hand are too powerful to be left unattended.

Posted by Dr CB Rao on May 25, 2016    

The Hare as a Tortoise: A Leadership Sine Qua Non, Not an Oxymoron

Nature, in its broadest sweep, and Life, in its microcosmic splendor, are two of the most powerful and amazing creations of God. The human race has distinguished itself in this creative canvas as the one driven by its ability to think, analyze and execute, in summary developing itself and the society continuously. Long before management and leadership became domains of learning, human beings intrinsically and intuitively became self-driven in the game of positive evolution, going beyond (probably not completely though) the Darwinian thesis of the Survival of the Fittest. Arts, Science and Technology have been the first domains of organized knowledge building while Management and Leadership have been more recent additions, all of them making the human race a differentiated species. The domain of Arts remains as the eternal aesthetic aspect of knowledge while science and technology are the two unstoppable drivers of socio-economic development. Management and leadership, in contrast, have emerged as stylistic rather than substantial domains.    

It is typical that science and technology are experimentally learnt, and management and leadership are experientially learnt. Life and nature have been the greatest models of learning and development as well as challenge and opportunity for science and technology. Whether it is the airplane that mimicked the bird or the robot that mimics the human being and whether it is synthetic life or artificial intelligence, products of science and technology are invariably developed by emulating life. In contrast, management and leadership seem to learn or unlearn little from the nature and biological forms of life, save some references to the cheetahs for competitive spirit, and ostriches for needing to be open. Interestingly, the ancient Indian wisdom has Panchatatra that teaches several lessons of management and leadership through tales of the animal kingdom. This blog post considers one of the most interesting parables of all times, the hare and tortoise story (of ‘slow and steady winning the race’) to develop some contemporaneous management and leadership insights.

Fast, smart or wise?

In the increasingly competitive world, speed and “time to…” are considered the critical facets of competitive advantage. Successful industrialists who build new generation brands, firms and conglomerates in short frames of time, encourage the thesis that time is the most important resource, even compared to costs; the thesis implies that cost overruns could be recovered but time overruns would never be. Fast growth usually focuses on only one dimension of growth, for example revenues, market share or profit. Unidirectional fast growth does more harm than good in the long run. Fast growth often entails saturated deployment of resources which could be questionable in the long run. Smart growth attempts more balanced growth, for example revenues with profitability or market share with profit share. Smart growth, in contrasts, often entails judicious deployment of resources, including integration of differentiated and niche strategies within mass generic strategies. Smart growth impresses with intellectual prowess and commercial cleverness.

Wise growth, on the other hand, focuses on sustainability while leveraging smartness. Leaders who believe in wise growth consider the race for competitiveness as a marathon rather than as a sprint. Wise leaders are sensitive to the environment and society as much as to their teams and themselves. They have a balanced view of all things that are relevant and appropriate; science and technology with management and leadership, the past with the future, entity performance with social good. They are able to integrate values and ethics seamlessly with commercial considerations and appreciate the subtle as opposed to gross; for example, differentiate between equity and equality. Typically, wise growth involves moving to, rather than jumping to conclusions. This is dependent on introspection and reflection as a trait as much as conceptualization and analysis.

The proverbial hare and tortoise story has relevance in these three shades of growth. Managers and leaders who drive growth, often reckless, are like hares who push themselves, and their firms, into unacceptable positions. Managers and leaders who constantly look for niche and expertise are like tortoises that are dependent on bumbling hares or others’ harebrained ideas; their success tends to be based on relativity of smartness. Managers and leaders who ensure sustainability in their firms, in every dimension of their performance, are like hares which act as tortoises, combining speed with sensitivity and fastness with smartness; they tend to be wise leaders. Hares and tortoises have certain characteristics that make them what they are; a corporate hare and tortoise analogy requires a combination of the characteristics of hares and tortoises.             

Hares and tortoises

Hares are adorable little animals of the animal world. Hares are similar to their cousins the rabbits, but carry several important differences. While rabbits dig burrows, hares do not, living instead on the open ground. This is reflected in their stronger build, as running from predators is their only way to safety. They can approach speeds of over 70 kmph for short bursts, significantly faster than most other animals. Hares have strong hind legs which support such bursts of high speed. Another characteristic feature is the largeness of the hare's ears which help the hare hear or sense a predator coming from a mile away. This enables the hares, which are vulnerable, to survive the dangerous competitiveness of the animal world by darting away. Hares with their irrepressible impatience and instinctive speed are quintessential representatives of certain entrepreneurial, managerial and leadership behaviors.

The tortoises, in contrast, are the antithesis of the anticipated managerial behavior. They are rugged, slow and somewhat uncouth. They are, however, blessed with the hardest protective shell and have the ability to hide their vulnerable limbs within its protective shell when danger is sensed. Some biologists hypothesize that slow lives lead to long lives as exemplified by tortoises. Turtles and tortoises are considered harbingers of good luck. The hare and tortoise story imbues certain wisdom to the tortoise of making steady but slow progress to the winning post in contrast to the hare which sprinted off to a great start only to doze off with a false sense of invincibility vis-à-vis the slow tortoise. In today’s world of hyper-competition, hyper-fast harebrained strategizing and execution may act counter to right timing and right scoping while tortoise-like super-slow approach may be equally unhelpful.

Hare as tortoise

For the corporate world, the story of hare and tortoise can only be a simile and not a model. A firm, to be a wise firm (and a manager or a leader to be a wise one) needs to be able to combine the virtues of hare and tortoise and eschew their weaknesses.  Like a hare, a firm needs to be fast and nimble but cannot afford to be harebrained and complacent. Like a tortoise, a firm needs to be slow and steady but cannot afford to be shell-shocked and cocooned in the face of competition. A hare can modify its emotional behavior to that of a tortoise but a tortoise would find it difficult to be physically capable as a hare. A combination that has the physical prowess and agility of a hare (with none of its randomness) and the emotional steadiness of a tortoise (with little of its laziness) could be a wise combination.  

Wisdom in a corporate sense is difficult but not impossible to define and practice. The famous philosopher Aristotle called wisdom the master virtue. He defined it as ‘figuring out the right way to do the right thing in a particular circumstance, with a particular person at a particular time’. The Bhagavad Gita, India’s Hindu religious theological treatise, says that wise leaders understand how to balance the extremes and act from a state of equanimity. The Gita also imbues wisdom to tortoise saying ‘just as a tortoise draws in its limbs, the wise can draw their senses in at will’. Wisdom requires a firm and a leader to be smart on five dimensions in which its organization is anchored. These are people, function, region, product and business. A wise leader is people-smart, function-smart, region-smart, product-smart and business-smart. These five dimensions of smartness cannot be delegated to other leaders; instead they must be an integral part of wise leadership.

‘Hartoise’, a professional sine qua non    

It may be an oxymoron to say that hare and tortoise can coexist as one being. However, from a professional viewpoint, the good points of both the animals need to be assimilated and the unhelpful points eschewed as part of wise leadership. As a hare, a leader or a firm needs to be fast, nimble and quick on the uptake. At the same time, unlike a hare, they can ill afford to be harebrained and random. As a tortoise, a leader or a firm needs to be shock-proof and competition-proof. At the same time, unlike a tortoise, they can ill afford to be withdrawn and meditative when action is required.  Like hare and tortoise, the leader and the firm need to be alert to predatory competition but unlike a hare they should not be running away from competition; rather like a tortoise, they should be having a protective shell against competition. The protective shell is typically made up of perfection in products and processes as much as in people and culture.

Planning in a slow and steady fashion like a tortoise, and executing on a predetermined path like a hare could be a wise characteristic of a 'hartoise'. Reflection on every situation, inflexion at every challenge and acceleration at every opportunity helps leaders and firms to be fast, smart and wise in the totality. The foundation for wise leadership is contextual sensitivity. It appreciates that fastness and smartness have their utility but also have their limits too. Understanding, reflecting and leveraging on the challenges and opportunities that people, functions, regions, products and businesses offer and responding appropriately either as a hare with speed and focus, or as a tortoise with poise and smartness would be a touchstone of wise leadership. Fast and smart or slow and steady as required would be the right ‘hare as tortoise’ analogy for leaders and firms targeting sustainable success.

Posted by Dr CB Rao on January 5, 2014       

Charismatic Leadership: Energizing for Empowerment

Forbes has this week tweeted that charisma still matters in business no matter what the level of the leader’s intelligence, wisdom or constitution is. As we know, charisma is the powerful personal quality that some people have to attract and impress other people. With this hypothesis of Forbes, corporate and business leaders are drawn to the league of charisma which hitherto has been a sole preserve of successful movie actors and differentiated politicians. There is, of course, truth in the hypothesis. Not all successful leaders are charismatic but some successful leaders are, in addition, charismatic too.  There would be general consensus that leaders of India, Inc such as Ratan Tata and NR Narayana Murthy are not only effective leaders from a standard leadership criteria template but are, in addition, charismatic leaders as well. 

Charisma could occasionally be a family legacy but in most cases that does not, by itself, make for sustainable charisma. Mahatma Gandhi was a charismatic leader but his children did not become charismatic leaders. Indira Gandhi, as the daughter of charismatic Jawaharlal Nehru, commenced her political innings with some inherited charisma but quickly built her own unique charisma. Differentiated performance is a key aspect of developing charisma to the potential heights.  Charisma in one field can lead to success and additional charisma in other fields too. NT Rama Rao and MG Ramachandran were charismatic movie hero-actors of Telugu and Tamil cinema respectively, and leveraged their movie charisma to become the elected chief ministers of their respective states. This has not always been true either. Amitabh Bachchan, the charismatic Hindi movie hero, failed to make a success of his organization for a business venture.

Defining charisma

Charisma is not a skill that can be acquired or honed. It is an intrinsic aspect of one’s personality that is part genetic and part gets developed over the years.  Most persons as they become successful become respected and applauded but not necessarily charismatic. The global IT industry has had several successful CEOs but very few have been successful as Steve Jobs. Clearly, charisma is a special quality of select leaders that draws people to them. They are mesmerized by not only their performance but also their ability to connect themselves with the general population, be it that of an organization or the society itself. Charismatic leaders connect with the people on physical (performance) as well as emotional (oneness) plane. Mahatma Gandhi became the charismatic focal leader for the yearning of the Indian people for independence.  Indira Gandhi’s Garibi Hatao (Banish Poverty) slogan became a major performance credo that connected her to the poorer sections of the society.

What leads to charismatic leadership has not been researched conclusively. It is, however, clear that transactional leaders cannot be charismatic leaders. Transformational leaders, though not necessarily all, tend to become charismatic leaders. Charismatic leaders tend to be natural products of a context in which their capabilities and values resonate with the larger organization, developing a strong emotional and psychological bond between the leaders and their followers. Trust and credibility are the key pillars that reinforce charisma. Charismatic leaders are open to self-sacrifice, self-evaluation, self-correction and even self-atonement. They choose typically unique ways to go through these processes as undoubtedly Mahatma Gandhi did. As a result, charisma is not related to position or power. Charisma endures even if leaders do not seek power or even if they exit positions of power.

Organizational implications

Charismatic leadership is not essential to organizational success but charismatic leaders do make iconic firms. Infosys as the Indian IT bellwether under Narayana Murthy, Tata Group as India’s global conglomerate under Ratan Tata, Panasonic as the electronics pioneer under Matsushita, Microsoft as the software giant under Bill Gates, Bose as the pure audio synthesizer under Amar Bose, Apple as the iconic innovator under Steve Jobs and scores of such companies illustrate that fact. The alchemy between performance competencies and charismatic dimensions of a leader are contextual. Jamshedji Tata, the predecessor to Ratan Tata was a paternalistic leader who was also a charismatic leader in a regimented, socialistic phase of the Indian economy. Ratan Tata who succeeded him was less charismatic in comparison to JRD but had a distinct performance and growth orientation in a rapidly liberalizing Indian economy. Both had contributed enormously to the growth of the Tata group in a contextually appropriate fashion. Each built on charismatic aura over the years.

In the public domain, the negative aspects of unbridled charisma that were put to negative uses constitute certain dark chapters of history, with such leaders causing unprecedented human misery through world wars and other forms of strife. In a corporate context, charismatic leadership has its own pitfalls, especially in monopolistic, entrepreneurial or family companies. The sway held by charismatic leaders over their followers and internal as well as external stakeholders leads to stifling of debate and concentration of power. Charisma at times leads to perceptions of infallibility on the part of such leaders and their followers. Companies led negatively by charismatic leaders with all the attention on themselves eventually become vulnerable to more nimble and competitive firms led by leaders with more consensual decision-making. Truly charismatic leaders who keep a watch over themselves for continuous self-improvement can, however, build truly iconic firms.

Discovering charisma

While truly charismatic leaders could be few and far between, it pays for every competent individual to discover the charismatic components one is blessed with, and work on them. At a genetic level, these could be the physical personality and the mental intellect. However, as competencies develop, people tend to acquire certain unique attributes and competencies that could make them more charismatic than others. These could be differentiated value system, mesmerizing communication skill, focused execution ability, multi-faceted conceptual capability and so on. Leaders must utilize these unique attributes to connect with others and help their teams succeed in shared goals. As a leader’s canvas expands in line with his or her upward movement in the organization, the charisma also grows with the leader. Charisma does not mean or require rabble-rousing or awe-inspiring speeches, delivered with the full force and power of the leader; rather it involves listening to the multitudes with empathy and feeling the pulse of the organization and society for the leader to be able to respond with focus and empathy.

Fundamentally, people are attracted to leaders by promises and eventually leaders are judged by their people for their performance.  The balance between promise, performance and charisma tends to be contextual. Charismatic leadership works to different levels of effectiveness in different settings. Leaders on the shop floor and in the marketplace preferably need a charismatic personality to convey their messages with the required degree of impact and homogeneity. It is perhaps less relevant, even less appropriate, to rely on charisma when leading a competent peer group or intellectually driven subject matter experts. There are certain research findings that suggest that a group of extroverted subjects are, rather surprisingly, led better by an introverted leader, and vice versa. Such research also suggests that whether the groups are homogenous or heterogeneous, and whether they are extroverted or introverted, charisma works. This probably explains why entrepreneurial firms on rapid scale-up mode, troubled firms facing turnaround situations and conglomerates with several thousands of employees are drawn to charismatic leadership, especially.

Responsibility of charisma 

There is no doubt that a charismatic leader can be electrifying and energizing for the organization. Whether he or she would, in fact, be empowering or enslaving is the determinant of success of organizations under charismatic leaders. As with most leadership factors which act as strengths as well as weaknesses, charisma also acts both ways. Charismatic leaders need to constantly evaluate whether their charisma inspires others to greater creativity and productivity or just keeps them spellbound, looking for constant guidance and direction. An organization’s interests are better served when the hope and energy unleashed by a charismatic leader are channeled systemically and systematically by a companion leader towards creativity and productivity.  Political leaders have, for example, discovered the need painfully through experience. The spell cast on the electorate by the charismatic political leader needs to be converted into votes by a well-oiled election machine.

The charismatic leader has yet another responsibility; he or she needs to be equally charismatic when leading large gatherings, managing small teams or interacting individually. The elements of charisma may vary across the three settings but the core characteristic of leading based on the leader’s unique differentiators, listening with empathy and responding with assurance would remain the same. One can only think of Mahatma Gandhi again for his unflinching and unwavering charisma across widely varying situations, whether one of inspiring the great Indian masses  or debating within the Indian National Congress leadership team or negotiating with adversaries such as Winston Churchill or Jinnah. Charisma that is built on competencies and values, and reinforced by empathy and responsiveness tends to be invigorating and empowering. The journey of charismatic leaders is a continuous one of self-evaluation and self-actualization for the broader benefit of organizations and societies they represent and lead.

Posted by Dr CB Rao on July 14, 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 (http://cbrao2008.blogspot.in/2013/06/five-competitive-forces-in.html). 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         

Institutional Actualization: The “5 A” Process of Virtuosity

If actualization is defined as becoming what one is capable of becoming, who would not want to reach a point of actualization? The desire to actualize one requires a process of virtuosity. Nothing comes easy in life, more so actualization. In a previous blog post, “Self-actualization by One’s Self for Oneself: An Enlightened Process for the Elusive Goal” published on April 21, 2013 in Strategy Musings (http://cbrao2008.blogpost.com), I proposed a model of ten-component self-actualization that had strong performance and philosophical undertones, and traced several phases and steps that need to be gone through during one’s lifespan.  The blog post postulated and demonstrated that the ten components, namely, self-awareness, self-appraisal, self-confidence, self-control, self-development, self-discipline, self-expression, self-improvement, self-motivation, and self-respect, together, constitute an enlightened process to achieve the typically elusive goal of self-actualization.

The above mentioned approach to actualization was proposed as a holistic solution to handling life’s challenges and opportunities for a human being in a social or organizational context. One question we face is whether the model of actualization for institutions would be any different from that of individuals. The answer probably is in two parts. One, to the extent that institutions are led and managed by individuals, individual actualization should lead to institutional actualization. Second, institutions are also like citizens and need to fulfill certain responsibilities and also seek fulfillment. That said, institutions have a life of their own and individuals may not be able to influence a particular course of actualization, without institutions themselves taking up actualization as a process. This blog post proposes a simple model that would capture the process of virtuosity by which institutions can achieve actualization.

Institutional actualization

Actualization of human beings and of institutions makes the world a better place to live in. There is no single benchmark of what actualization means. In fact, it is established that actualization varies vastly for individuals even within the same trade. For a particular actor or musician, for example, actualization could mean winning of an Oscar. For others in the same artistic domains, actualization could mean mass popularity amongst the audience. For a particular corporate executive, actualization could mean being a generation ahead in growth and creation of personal wealth. For another, it could mean training a vast pool of leaders and creation of institutional wealth. Whatever be the gross difference or subtle nuance, actualization is a key driver of social and economic progress.

For institutions too, actualization could be different even within an industry. For certain organizations scale is important and for others scope is important. Some are inspired by market share and some by profit share. Some aspire for growth while others are content being model corporate citizens. Whatever be the actualization benchmark, it is clear that when actualization ceases, progress plateaus. There was a time when the government-owned public sector corporations were a showpiece of India’s engineering progress. This arose as the bureaucrats and executives found actualization alike in laying the first foundations of national technological development. However, as monopoly power stalled and licensing raj stymied competition, complacence set in and actualization faltered.

Actualization, beyond strategy

Institutions rely on structures and processes to govern growth. Strategic planning or long term planning is one such systemic discipline adopted by corporations. Starting with vision, the process develops a strategy, guides execution and measures progress as an iterative process. The strategic process, unfortunately, is both an enabler and an inhibitor to institutional actualization. The SWOT analysis of long term planning, for example, is akin to the processes of self-awareness and self-appraisal, and lays the foundation for development of a corporation. However, once a strategy is developed metrics take over. Achievement is measured against hard metrics rather than soft aspiration. The even more qualitative goal of actualization never gets assessed. Strategy, while being an important enabler of actualization, also cannot be allowed to dampen the quest for actualization.  

The issue with strategy is that past performance or current competition almost always serves as a benchmark for vision and strategic goals. Strategy is rarely determined in a corporation by a true understanding of its actualization potential. That hardly does justice. Actualization is pushed to limits when a person or institution charters into a completely unchartered territory or imagines a completely invisible. Actualization for a corporation is a lifetime experience rather than the result of a five year strategic planning process. A review of the multinationals, such as Lever, Glaxo, SKF, GE who entered India more than 100 years ago and have tasted a level of growth in, and integration with, India, that would not be visible to the trained mind even at the time of entry, demonstrates how actualization of a lifetime actualization differs from a limited perspective strategic goal setting. Most pioneering inventions and most path-breaking businesses, national or multi-national, and in India or abroad, owe their success to higher levels of actualization inspired by an unknown but imagined future.

A 100 year horizon

Institutional actualization, as a process, has a horizon of several decades. While institutions exist in perpetuity, and therefore have no specified life as individuals, probably 100 years, in rests of 20 years, as with individuals is a good way of establishing actualization horizon even for institutions. Continuing that concept, a corporation can be postulated to grow up in the first twenty years, become established in the second twenty years, season itself in the third twenty years, emerge as a bellwether in the fourth twenty years and become an icon in the fifth twenty years. Today’s corporate analysts and business historians judge corporate evolution far too early. As a result, young startups are praised as bellwethers and icons even in the first decade of their growth. Like individuals, institutions are also prone to the adverse consequences of headiness caused by premature recognition, which may impact their ability to secure lifetime achievements.  

This is not to suggest that corporations do not or cannot become innovators or pioneers in the first twenty years of their life, or even within the first few years of inception. Certainly, they do and can as demonstrated by many young achiever-companies. Success of entrepreneurial efforts or competitiveness of business models, however, does not ipso facto imply sustained institutionalization of a corporation or its actualization of a lifetime. A whole series of Internet product or service companies have made their mark in their first years in the recent post but it would remain to be seen whether they would keep up a sustained momentum and achieve actualization. A process that helps institutions target actualization as a lifetime objective would be well-merited. This blog post proposes a five component process, comprising Aspiration, Ambition, Analytics, Achievement and Actualization (called the 5 A Process) that would be particularly relevant for institutions. 

The "5 A" process

Aspiration, which implies a strong desire to achieve something, is largely seen as an individual trigger. At an organizational level it gets translated into getting into a business or growing a business based on targets of revenue and/or profitability. The real aspiration for a corporation, however, must be in terms of making available to customers or society something which has not been available thus far and thereafter remaining a leader in that pioneering business for a lifetime. Whether it is Lever, Glaxo, Philips, SKF, Tata or GE who entered India over 100 years ago with consumer products, healthcare products, electronics, bearings, steel or infrastructure equipment the rule of making something available for the first time, and remaining a leader for decades in that business reflects an aspiration that lays the foundation for lifetime institutional actualization.

Ambition is aspiration reinforced with the determination to achieve and succeed. The difference between ambition and aspiration is same as the difference between determination and desire. Corporations need to be fired with an ambition to succeed. Pioneer-entrants mentioned above and a host of other private sector and public sector firms in India made their entries, braved near hostile circumstances, brought in novel products, opened up unreachable regions and all the while successively introduced new technologies, products and business models. Determination helped these corporations become institutions. Even ITC, which depended only on the socially regressive tobacco and cigarette business demonstrated pluck and determination to re-charter its course into multiple socially acceptable businesses to survive and grow.

Aspiration and ambition need to be channeled through a robust framework of analytics for corporations to achieve their aspirations. Analytics is the science of analyzing data to develop trends and providing guideposts to future. That said, decades ago there was no analytics as a domain, yet the pioneers did successfully what they did over hundred years ago. The reason lies in the fact that there is no better analytical tool than the human brain. All of GE’s inventiveness is no match to the invention of GE’s great founder Thomas Edison and his analytical ability that foresaw the need for a corporation based on technology in the 1800’s. So has been the analytics of Henning Holck-Larsen and Soren Kristian Toubro, the two Danish engineers who foresaw India’s future and established Larsen & Toubro (L&T) in 1938 in India. Human analytics still remains the best bet for providing a framework for channeling aspiration and ambition.

Measuring achievement is apparently the easiest of the five step actualization process which moves as per set aspirations. If achievement is to be measured against revenue/profit metrics, it is indeed an easy task. If, on the other hand, it is to be measured in terms of sustainability of the aspiration, it is indeed a hard task. However, there are ways to measure the sustainability of the transformation. The robustness and scalability of technology deployed in a corporation is the first measure of achievement. The breadth and depth of market reach of a corporation is the second measure of achievement. A corporation which consistently maintains its high score on these two dimensions would be on a sustainable path of actualization. Toyota and Sony are examples of such sustainable achievement; they are helped to overcome financial setbacks on the strength of sustainability of their technological depth and market reach.   

In a process of institutional actualization, why should actualization figure as a discrete process component instead of as the final outcome as would be in the case of individual actualization? The reason is fairly simple; corporations are expected to be perpetual in life while individuals are not. For individuals, actualization is nearly an end-of-the-active life experience, almost synonymous with nirvana. On the other hand, for corporations actualization is a reminder of how they can transform themselves into institutions and how they can contribute to societies in a perpetual manner. Each actualization cycle should ideally lead to the next one. In institutional actualization, the very fact of actualization should spur thinking on the next frontiers. This applies whether corporations see a 20 year horizon or a 100 year horizon for institutional actualization.

Leaders’ responsibility

Corporate leaders and their boards must, from time to time, take time off to assess their corporations on their actualization journey. Even if their corporations have met all the performance metrics and even if they are the preferred ones of the Street (and in some cases, in spite of their not being so), the leaders and boards would do well to introspect and review whether their corporations have become what they must become, and actualized themselves to the best extent. Institutional actualization tends to be a perfect blend of all the positive faculties of the individuals comprising an organization, in time spans appropriately visualized.  

Posted by Dr CB Rao on May 19, 2013

Practical, Successful Leadership: Elegant Tightrope walking

Leadership is one subject which has spawned awe inspiring experiential and non-experiential theories. From clichés like “leaders are born and not made” to truisms like “leadership is the ability to transform”, the folklore of leadership is sprinkled with multiple hypotheses of fiction and fact. Leaders are expected to be charismatic and visionary, attributes which are not possessed by all but a few. As I mentioned in one of my earlier blogs, there are over hundred adjectives and phrases that are considered as leadership attributes. Leaders, in organizational setting, are seen and heard but not experienced as often as the common professional would hope for.  As a result of the management literature that abounds on leadership and the distance that separates a leader from followers, there tends to be aura and mystique on what leaders and leadership represents.

In practical terms, however, leaders and leadership are less esoteric than they are made out to be. Leaders do not necessarily belong to an extra-terrestrial class with extra-sensory perceptions on future. Nor are they just competent professionals with added drive of aspiration, aggression and passion. Leadership is also not only about vision, strategy and execution in a transformational perspective.  Practical leadership is also the art and science of achieving sustainable growth with profitability, reconciling, resolving and managing contradictory drivers of performance. Practical leadership is contextual, in terms of external and internal environment as well as external and internal stakeholders. Practical leadership involves making wise, even if seemingly inconsistent as viewed by others, choices between pairs of drivers of performance.  A practical, successful leader does far more of elegant tightrope walking than dashing flying in the air. There exist five pairs of such challenging contradictions a successful leader manages which this blog post discusses. In the process though, a successful leader primarily holds a few parameters of leadership non-negotiable.

Non-negotiable parameters

The five non-negotiable parameters of successful practical leadership are truly foundational ones: safety, quality, productivity, ethics and compliance. There can never be a compromise on the safety of business, operations, people and environment.  Quality of products and processes is essential to serve the customers, markets, society and nations well. Productivity, whether in decision making or operational execution, is the sine qua non of competitive advantage. Ethics represent the super-ordinate values that govern the conduct of each and every member of the organization. Compliance reflects an unswerving commitment to follow all the laws and regulations of doing the business. Leadership, while endeavoring to manage contradictory performance drivers will need to be unflinching in respect of non-negotiable parameters.  Given this foundational hypothesis, practical leadership is all about leading a way out of contradictions. This blog post postulates five pairs of such apparent leadership contradictions, covering a vast canvas of strategic and tactical leadership.

Empowerment versus control

The biggest leadership challenge a successful leader tackles is making and sustaining his entity entrepreneurial yet systematic; empowered yet accountable. Entrepreneurial and empowered cultures go hand in hand and are known to generate products and services of transformational nature. Equally, lack of systemic controls and sense of accountability also leads such ventures to near-terminal experiences. A highly systematized and stage-gated organization, in contrast, delivers consistent results but not transformational outcomes. Fusing empowerment with accountability is best achieved by creating business unit organizations, identifying single point business leadership, integrating all line and staff functions in the business unit and holding leadership accountable for growth with profitability.

Not many organizations are successful in achieving the above essentially because they are faced with a paucity of real business leaders as opposed to functional leaders who are much more easily found. Over time, the functional leaders who are unable to transform into business leaders develop a vested interest in keeping the organization functionally driven, rather than multiple business, product or service driven. Creation of business unit organizations must be seen as an essential step to develop top leadership bench that knows how to run a business rather than a function. Boards and Chairmen/CEOs have a special responsibility to develop business leaders out of functional leaders.  Integration of empowerment and accountability would come naturally with such a business and leadership ecosystem.

Short term versus long term

A common fallacy is that leaders need to focus on the long term and the executives need to focus on the short term. While leaders certainly need to have the long term vision of how technologies and markets would shape up and how the organization could transform itself for the future, no leader can ignore the short term. Short term actions ensure revenues and profits that enable a company undertake futuristic initiatives. A leader’s dilemma is not whether he has to choose between the long term and the short term but to make them work together. The successful leader would need to approach this with two clear foci. Given that the long term is always fraught with uncertainty, his or her objective must be to minimize the margin for error and given that the short term is predictable, his or her objective must be to maximize the scope for success.

Leaders can achieve the above by concentrating on technological advantage for the long term and operational advantage for the short term. Success in the long term is derived by banking on the right technologies which create new markets with new products or services, and also deliver them effectively with efficient processes. Success in the short term is derived by ensuring high quality products consistently with as low operationally-efficient costs and as high market-acceptable prices as possible. This requires leaders to constantly bet on sunrise technologies and optimize mature technologies. Successful leaders will deploy sub-leaders who have the necessary depth in various aspects of science and technology as well as operations to integrate the short term and long term successfully without any conflict.       

Competing versus collaborating

Leaders by definition tend to have a strong competitive spirit. There are leaders who believe that in the businesses they operate in they must be the first or the second. Competitive spirit, if not moderated and titrated could drive leaders, especially those committed to keeping their businesses in top pecking order, to take actions that engulf their businesses and leaders in competitive actions which could destabilize the businesses and leaders. In growing or stalling companies, neither the success nor failure is singularly that of one leader but of the leadership team as a whole. A leadership team which competes for success is more likely to fail its organization while a leadership team which collaborates for success, or even in failures, is more likely to secure success for its organization.

Extending the theme to the external world, successful leaders must know the relative benefits and pitfalls of unmitigated external competition. As brought out in my earlier blog, collaboration can contemporaneously coexist with competition in the current industrial and business world. Successful leaders who understand the tightrope between collaboration and competition would be best positioned to take optimal decisions between integration and diversification, in-sourcing and out-sourcing, in-licensing and out-licensing, investment and divestment, and physical and Internet aspects of business.  The ability to optimize investments and maximize returns would depend upon the ability to walk the tightrope between collaboration and competition.  

Kaizen versus Kaikaku

The other very important leadership choice is between kaizen and kaikaku. The more famous Japanese word kaizen means continuous improvement. Kaikaku, a less known Japanese word means radical change. Both the conceptual words have their origins in the famous Toyota Production System but have applications in areas beyond production.  Leaders who come in to turn around adverse business situations or to drive supernormal growth or leaders who are steeped in aggressive leadership templates may be tempted to consider radical change in preference to continuous improvement. On the other hand, leaders who are at the helm of mature businesses and whose leadership templates are built around balanced scorecard of all aspects of business may be inclined to consider continuous improvement in preference to radical change.

The above kaizen-kaikaku choice is more of an opportunity than a challenge if the leader sees the short term as the arena for kaizen (or continuous improvement) and the long term as the canvas for kaikaku (or radical change). In fact, Toyota has demonstrated how it applies both kaizen and kaikaku to its leadership culture. If Toyota’s annual refreshes and periodical overhauls of its automobile models are a result of kaizen, its pioneering pursuit of automobiles with hybrid technologies, and diversification into robotics and intelligent homes is a reflection of kaikaku. Samsung is another group whose leadership culture demonstrates simultaneous application of both kaizen and kaikaku. Samsung applies both kaizen and kaikaku to foundational short term, reflecting a high degree of technological, operational and leadership strength while every kaikaku transformation is quickly followed up with several kaizen initiatives.

Speaking versus listening

Leaders are evangelists of what they ardently believe in. The famous Quality gurus Deming and Juran and the management gurus Drucker and Prahalad have been evangelists of what they believed in. Charismatic leaders are well positioned to be evangelists of change whether of kaizen and kaikaku mode. Without their passionate espousal of change organizations, whether they are moribund or vibrant, would find it difficult to be catalyzed into change. That said, continuous evangelism could be more mesmerizing than galvanizing for the rank and file. It often distances the leader from ground realities, and even makes the sub-leaders become mere followers rather than creative thinkers and doers on their own. It requires perfect focus and fit-as-glove dovetailing for only single minded evangelism to become an institutional strength.

In contrast, leadership which combines passionate advocacy with empathetic listening takes leadership to the next higher level. If Douglas McGregor’s Theory X is to be believed, and many virtuous corporations do, in fact, benefit from Theory X as a driver of positive corporate culture, grassroots leadership often lies innate in an organization at senior levels to express to, and develop with, charismatic and passionate leaders. Great organizations, therefore, resort to continuous leadership development in their own institutes to listen to and to coach future leaders. Great leaders not only coach and mentor employees, negotiate with vendors, and assure customers and investors but also are willing to listen to employees, customers, vendors, investors and various stakeholders so that their own passion and evangelism gets directed at real issues and succeeds in providing real, sustainable solutions.

When ends converge

As the foregoing illustrates, leadership is a synthesis of not only excellence but also a harmony of contrasts. Practical, successful leadership is built on solid foundations of five non-negotiable parameters of safety, quality, productivity, ethics and compliance, and achieving convergence between five important pairs of apparently contradictory but realistically synergistic options for leadership, these being empowerment and control, short term versus long term, competing versus collaborating, kaizen and kaikaku, and speaking versus listening. The result of this model of practical, sustainable leadership would surely be sustainable growth with profitability for the organization it leads. This elegant practical leadership model has the potential to generate sustainable wealth and value for the organizations, customers, markets, societies and nations.

Posted by Dr CB Rao on March 31, 2013.