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

In recent business times of India, no event has triggered so much surprise and debate as the return of NR Narayana Murthy from retirement as the Executive Chairman of Infosys, the Indian information technology iconic bellwether struggling to remain on a growth path (please also see: http://cbrao2008.blogspot.in/2013/06/the-return-of-narayana-murthy-fast.html). There have been positive and negative angles to the news of Murthy’s comeback. On the positive side, many have held that there is nothing wrong, and everything to support, in such a towering personality returning to bring back to health the company he founded and grew with his co-promoters. On the negative side, many also have held the return to be a reflection of the inadequacy of the past leadership development, and hence a prognosis of future insufficiency of leadership development.  After the initial swell of the welcome notes, analysts believe that only future events can judge if the return would be a positive or a negative for the long term future of Infosys and the overall gamut of business leadership development in India, including strengths and weaknesses of a possible dynastic succession.

For the larger body of students of technology and management as well as other professions, aspiring entrants to corporations and budding leaders, the return of Narayana Murthy must signify an entirely different aspect of corporate life and career development. It is not uncommon for scores of employees at all levels of an organization to leave, and for some of them to return to their alma mater. The twist here is that such returns are often seen as the return of the prodigal rather than the return of the savior as is the case with the return of towering leaders such as Murthy. Given that every unit of work in a corporation has its importance, the return of the employees at whatever level should qualify to be deemed as the return of the savior. That, however, hardly is the case except in certain truly high level leadership positions. As youngsters watch the unwinding of the Murthy2.0 story in Infosys3.0 saga, apart from the lessons to learn, a key self-learning objective must be how the young aspirants would be seen as saviors rather than prodigals, should such exit and return episodes occur to them.

Demand-supply perspectives

As with every aspect of human endeavor, factors of demand and supply determine the relative importance of any material or non-material resource. At a gross level, from a human resource perspective, in a company or in an industry there would only be few leaders of a comparable caliber while there could be hundreds of executives and managers at lower levels with comparable caliber. At a gross level, from a business growth perspective, there could be only a few corporations that are willing to introspect and take radical measures to revert to their growth path as Infosys has boldly done. At a gross level, therefore, the demand-supply gap determines whether the return of any individual professional is deemed to be the return of a prodigal or a savior. The phenomenon of surplus-scarcity can, however, be addressed efficiently by individuals and corporations equally by deploying the concept of substitutability appropriately.

The relationship between the organization and its human resources is a paradoxical one. Organizations benefit if the available skill sets are both standardized and unique. Standardized skills enable the companies lower the bargaining power of candidates and reduce the attrition pressure of employees.  At the same time, unique skills enable the companies enhance their competitive advantage in an industry and enhance the ability to reward and retain their employees. For employees, unique skills need not only continuous self-development but also an organizational ecosystem that facilitates development and deployment of unique skills. If an organization’s human resource base comprises only generic and standardized skill sets, it is unlikely that such an organization would become highly competitive. On the other hand, if an organization seeks only highly unique skills, conventional organizational systems would fail to cope with the need for heightened reward systems. The paradox needs resolution.

Prodigal minds and savior skills

Aspirations need to be matched by achievements. What we see in some organizations is a constant unrest in young operators, officers and executives to grow in their careers at a fast clip. Many times such young employees imagine a superior work opportunity and career package in other companies. When employees move far too quickly out of an organization in pursuit of short term career boost, such decisions, more often than not, result in later day distress. The foundations of such fast moving careers, instead of being reinforced by industry or skill distinction, tend to be brittle with disconnected skills and inadequate depth and breadth. At times, the best way to address the gaps is to retrace the steps and return to the base organization as a prodigal. In some cases, organizations also make mistakes in judging employees and release them too soon. Both organizations and employees need to be prodigal in such occasions. While this may cause some emotional distress, correcting the missteps, and more importantly rebuilding the stronger skill base, provides longer term solidity to the employee careers and organizational strength. Eventually, employees and organizations may benefit from the phenomenon of prodigal minds.

Renunciation must take place only after actualization. Leaders too face their share of needlessly fast moves, albeit into sunset. Leaders play a crucial role in not only growing their corporations but also preparing them for sustainability. Actualization for a leader is not complete until he or she is able to execute a business model and build a leadership team that can take the execution forward, until the firm is under a need, or in preparedness, for a new business model with an appropriate leadership model. When Narayana Murthy moved out of Infosys, it was probably actualization that was incomplete and renunciation that came on too soon. In retrospect, it would appear to be more of governance redistribution rather than undertaking the right change at the right time (please also see: http://cbrao2008.blogspot.in/2011/05/infosys-board-rejig-crowded-at-top.html ).  Saviors possess leadership skills that have built and grown companies with achievements that are industry acclaimed. Saviors typically have stature and charisma that can rebuild confidence in internal and external stakeholders, and turn situations around for stalled corporations.

Prodigals as saviors

It is not that prodigals need to be at the bottom of the organizational pyramid and saviors at the top of the pyramid. Youngsters need to have the skills and the stamina that can make unique contributions in the domains in which they operate in their organizations, however small such domains may be. A product designer, a market researcher, a process engineer, a project executive, a quality officer and a salesperson all have their respective opportunities to be distinctive and become much sought after executives in their domains. The early development of savior skills in a youngster is a good augury for organizational competitiveness. Youngsters need to complement their subject specialization with practical expertise and a breadth of outlook. An automobile component designer, for example, would need to be conscious of the challenges of material technologies on one hand and the complexities of manufacturing on the other. The more end-to-end connected a specialized youngster’s thinking is, and the more broad-spectral his or her aptitude is, the more he or she would be able to add value to his or her functional competencies.  Such talent at the bottom of the pyramid is often hard to find, and that is the reason it is so valuable to build a cadre of saviors at the bottom of the pyramid.

This requires that organizations should focus on all-round skill integration in youngsters. The need for ready to use talent is so high in organizations that fewer organizations are willing to commit the lead time and effort to train youngsters in all the departments of an organization prior to their getting absorbed in their core functions. Early departmental rotation provides a broad perspective of a corporation’s value chain without compromising the core competence. If entrepreneurs such as Murthy emerge as saviors it is not necessarily only because of any superior skills and attributes but also because of their intimate association with the total value chain of the organizations as they establish and build their organizations. Professional organizations which compartmentalize functions as organizational silos in the name of specialization need to consciously adapt policies of all round development of skills in their youngsters. The greater the commitment to graduate and post-graduate rotational training and development programs for youngsters the corporation has, the greater will be the development of savior skills in the organization.

From prodigal to savior

Too much of functional specialization with too much of an emphasis on assigned task delivery but without an understanding of the total value chain contribution on the part of youngsters gives them a needlessly elevated view of their contribution.  Organizations-in-silos which are aware of the gap between the due requirements of organizational competitiveness and undue expectations arising from tiny contributions in narrow niches struggle to explain and retain talent consummately. Organizations that are unbounded in thinking and creative in execution tend to be conscious of the need to leverage young talent as much as possible to develop deep knowledge, broad perspectives and futuristic vision in them. Such organizations do not fight shy of nurturing and rewarding saviors from the early years of their careers. Youngsters who join organizations must understand the responsibilities and nuances of developing savior skills from the early years, and keep reinforcing the savior skills as they move up the managerial and leadership hierarchy. Such leveraged talent provides sustainable competitive advantage to corporations.

Posted by Dr CB Rao on June 9, 2013    

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

On May 7, 2011, I published a blog post on the board level moves at Infosys, “Infosys Board Rejig: Crowded at the Top?”, in my blog Strategy Musings, http://cbrao2008.blogspot.in/2011/05/infosys-board-rejig-crowded-at-top.html).  The blog post analyzed the challenges founder-leader teams face when all the leaders are competent and when the broader leadership team needs the challenges and opportunities of running their corporations. The blog post traced the dilemma faced by founder-leaders when they are one too many in a corporation. The post also made three important points. The first was that corporations need to recognize the importance of holistic leaders. The second was that leadership is not only skills and competencies but also about charisma and instincts. The third was that when corporations are headed by iconic leaders, such corporations struggle to subject themselves to objective benchmarking with respect to competition.

The loss of competitive edge and industry leadership faced by Infosys after the board level rejig that was announced on April 30, 2011 together with the more competitive business landscape has apparently prompted the Infosys board and its key stakeholders to raise, on June 1, 2013, the retirement age for executive positions to 75 years of age and recall the Chairman Emeritus N R Narayana Murthy to the board to operate as Executive Chairman. The other existing leaders,  Kris Gopalakrishnan becomes the Vice Chairman (from being a co-chairman) while SD Shibulal would continue to be the MD and CEO. While Narayana Murthy has stated that it was too early to comment on how he would re-strategize, his plan to establish an executive office, headed by his son Rohan Murty, a well-qualified professional in his own right points to his leadership style being different this time around.

Global leadership comebacks

The global corporate world has witnessed several comeback sagas. The most recent one has been the callback of the 66 year old A G Lafley, former chairman as the chairman and CEO by Procter & Gamble (P&G). Other notable comebacks have been Myron Ullman at JC Penney, Steve Jobs at Apple,  Henry Schacht at Lucent,  Jamie Houghton at Corning,  Ted Waitt at Gateway,  Richard Schulze at Best Buy, Charles Schwab at Schwab, William Stavropoulos at Dow,  Howard Schultz at Starbucks, Michael Dell at Dell and Paul Allaire at Xerox. Such callbacks have often been prompted by the need to shore up struggling businesses or take them to newer trajectories. However, not all such comebacks have proved to be successful.  The most spectacular comeback story was that of Steve Jobs at Apple as is widely known. Another success story has been that of Howard Schultz at Starbucks. Others had successes and difficulties in their second innings, in varying degrees though.

Given that not all global comebacks have been equally successful, and some have been even downright disastrous, it goes without saying that comeback by itself is not an implicit guarantee of success. A research on leadership comebacks quoted and commented upon in the May 24, 2013 online issue of Forbes suggests that allowing gilded chief executives an encore performance had been no guarantee of success. It often required the recalled leaders to execute radically new and unsentimental strategies even if some of them were crafted by them. It also mentions that paradoxically three-quarters of the recalled chief executives had actually handpicked their successor leaders, suggesting that handling them in the new innings could be a challenge, besides implying concerns on the durability of handpicked succession plans. The case of Infosys suggests that organizational challenges in the company could be no different, given that the successor team had been handpicked by Narayana Murthy himself. Setting the strategic direction and ensuring capable succession would continue to be the exiting leader’s most important contribution. Even when it is done well, there could be unexpected eventualities as demonstrated by several of the above cases.

Challenging times, dramatic measures

The saga of leadership comebacks is not so well experienced in India. Part of the reason is that Indian enterprises generally tend to retain their leaders as long as possible; the cases in point being Ratan Tata of Tata Group or Y C Deveshwar of ITC Group.  Infosys has been an exception where the founder leaders themselves accelerated leadership successions. The return of the 67 year old Narayana Murthy to Infosys is likely to be the most high profile and path-breaking one in India Inc, potentially rewriting the script in terms of leadership tenure, succession planning and comeback options in challenging and difficult times. That the times have been challenging in the last seven years when Murthy has been taking a declining interest and, in fact, no interest over the last two years when he moved out of even non-executive chairmanship are well documented. In the times of Nandan Nilekani, who succeeded Narayana Murthy as the MD and CEO (2003-07), Infosys clocked compounded annual growth rates (CAGRs) of  42.3, 44.5 and 54 percent in revenues, profits and share price respectively in that block of years. Those were some of the best times in Infosys’s history.

Times, however, have started to change for the worse as Kris Gopalakrishnan took charge between 2007-11 as reflected by the declining CAGRs of 18.3, 15.2 and 10.3 in each of those factors. During the current CEO S D Shibulal’s term (2011-13) not only the market conditions turned tougher but the competitors notably upgraded their competitive game; as a result the CAGRs continued to maintain their downward journey with 10.7 and 7.3 and finally a negative 7.1 percent in respect of revenues, profit and share price in 2011-13. During the same period, the leader Tata Consultancy Services (TCS) continued to post stronger results while other competitors, notably Cognizant and HCL Technologies, began to overtake Infosys in performance. As a result, while Infosys continued to retain an iconic aura, the earnings bellwether status began to slip. During the period, the company also saw the exits of several high profile executives and leaders from the company. Apparently, the Infosys board led by non-executive chairman K V Kamath (who himself was brought in to wring in a change in Infosys in 2013) felt that the return of Narayana Murthy would be the one dramatic measure that would reverse the declining fortunes (Kamath, one of the great leaders of the Indian industry, would continue as the lead independent director).

Challenges; internal or external?

In 2011, at the time of his retirement from Infosys, Narayana Murthy stated that the team that he left behind at Infosys was a dream team in whose safe hands the company would grow further. At that time, Infosys initiated a major strategic transformation, called Infosys 3.0. The strategy aimed to move Infosys higher up the value chain of information technology into newer areas like consulting, products and platforms while targeting greater value addition in the traditional areas of application development and management. One view has been that Infosys embarked on a right strategy at a wrong time; the company needed to protect its base business through low costs, competitive pricing and quality execution prior to embarking on newer vistas of development. The other view is that the new leadership upset the organization all across the levels as it sought to become more efficient through readjustment of roles, responsibilities and grades; increased attrition pointed to more than ordinary churn.  

Declining performance of corporations is often due to a variety of causes, both internal and external. Leadership and competencies are unique and internal to a company. Customer mindsets and competitors are discontinuities and external to a company. The intersections that are available to the company and competitors are technologies, strategies and people. The skill of the company lies in deploying technologies, strategies and people to maximize its competitive advantage in the marketplace vis-à-vis its competitors. Leadership and competencies that are unique to the organization can drive the competitive advantage through the above equation. The decision to recall Narayana Murthy is grounded in a strong faith in his charismatic leadership which is characterized by a visionary approach and a global stature that would augur well for positive, business development. It remains to be seen whether this time around he would develop his leadership bench to be able to weather any sort of competitive pressures.

Rohan, the new ‘roshan’?

If there has been one surprise in the recall paradigm, it is the induction by Narayana Murthy of his son Rohan Murty as his executive assistant in a chairman’s office that will be newly created to connect Narayana Murthy with the broader company. There is no doubt that the 30 year old Rohan is a highly educated and well accredited young professional, with roots in Indian values  and his father’s value system, and competencies in state-of-the-art information technology. Narayana Murthy has assured, in addition, that Rohan would have no leadership role in Infosys, and more such young professionals would be inducted into the chairman’s office. There are two ways this surprise induction can be looked at. The first is that as a software company, Infosys can no longer ignore the massive changes that are occurring in the hardware segment in terms of ultrabooks, tablets, smartphones, phablets, convertibles and wearable computers, as also the integration of the new generations of hardware and new applications software. Rohan and his team of young officers would hopefully go beyond the mechanics of data collection and analysis of a conventional chairman’s office and drive innovation as well as connectivity with Gen-Next devices and users.

At the other end of activity spectrum, if Rohan and his executive office stay at the level of data compilation and data analysis, the recall experiment of Narayana Murthy could create an informal power hierarchy which is more operations-focused and performance-oriented rather than innovation and transformation driven. At an extreme, such a traditional approach could make the established leadership somewhat redundant as the formal structure would also have similar operational performance objectives. Unless managed well, Narayana Murthy’s comeback could be a boomerang on the orderly management which Infosys is known for. The balance of advantage to Narayana Murthy as the new executive chairman, therefore, lies in utilizing Rohan and his young team as the new ‘roshan’ (shine and light being the literal meanings of the Indian word) that shines the light for a new pathway of technological and operational innovation for Infosys.

Without doubt, the Narayana Murthy experiment has to succeed exceedingly well for the sake of not only Infosys but also the Indian information technology sector in general. And, succeed must this experiment as Infosys has no comeback leader left in the open other than Nandan Nilakani, now well ensconced as the successful head of Government of India’s strategic Aadhaar UID Project!

Posted by Dr CB Rao on June 2, 2013

 

 

Customized Product Design (CPD): The Next Wave of Competitive Advantage?

Exponential technological development has contributed, in recent years, to a massive increase in product lines and products. Companies typically run hundreds, if not thousands, of store keeping units (SKUs). The more global a company is the greater the proliferation of SKUs. SKUs typically define product variations to meet country and customer specific homologation needs. It is, therefore, tempting to hypothesize that there is a huge wave of customization that is sweeping the industrial scenario. Unfortunately, SKU proliferation ends up adding to complexity with variations rather than meeting multiple customer needs with real customization.  Product variations do not necessarily mean customer customization.  The nature of variations, oftentimes, tends to be as per design templates rather than customer needs.  Product variations, as are commonly found irrespective of product or country, tend to fall broadly under three main categories: category driven, performance driven, and price driven. There are, however, two influencers that are esteem driven and policy driven.  

Category-driven is exemplified by broad and dominant product configuration; for example, smart phone versus non-smart (or, dumb?) phone and sedan versus utility vehicle. Performance-driven is exemplified by hardware and software differences which together set performance differential between products. Price-driven appears rather easy to understand in terms of different price points at which a product can be positioned but is actually more complex; specifications-driven costs and brand-driven premiums impact price. Esteem-driven is reflective of product-market niches that are created by companies. Policy-driven is the outcome of the influence of regulatory policy on product design. The preference for 660 cc mini cars in Japan or sub-four meter cars in India which qualify for lower excise duty reflect that category. Despite five such categories and multiple SKUs, rarely do products get designed around customers.

Customer choice; a mirage? 

The interests of the customer and corporation are conceptually aligned but practically tend to be misaligned. When one sees the hundreds of apparel in retail stores, it is easy to appreciate that the apparel are designed with certain standard sizes and ruling fashions in mind. In fact, factory production, ipso facto, tends to promote standardization and reduce customization in any field. Reverting to the example of apparel, decades ago when there used to be no readymade apparel, tailoring represented the only and complete form of dress development, which was truly customized to the individual.  In the earlier paradigm, the consumer had the choice of selecting a cloth and getting it tailored to his or her measurements and stylistic requirements. In the current paradigm, mass production of multiple designs does not necessarily translate itself into real customer choice. Probably, the right phraseology for the current scenario is product choice rather than customer choice.

Mass production in factories, of course, vests several other advantages of quality in design, manufacture and delivery, use of superior material and methods, reliability and adoption of global trends. Henry Ford’s assembly line manufacture of a standardized car in a single color in the 1910s represented that extreme of industrialization while General Motors’ competing strategy of differentiation was an alternative approach. In contemporary times, Apple represents the early Ford of smart phones with not more than a couple of products in each product line while Samsung with its scores of smart phones represents an amplified version of General Motors in smart phones. Customer choice, however, is not a matter of numbers either; there need not necessarily be proportionality between SKUs and customer choice. A simple question clarifies: Is Galaxy S4 equally ergonomically optimal to hold and operate for all ages and for all types of palms? The answer, unfortunately, is a ‘no’, which implies that a person of a small palm has to either bear the burden of an oversized state-of-the-art phone or a right-sized smaller screen phone of lower specifications.

Customer choice defined

True customer choice occurs when a customer is able to secure a product that meets his or her expectations on all specification and at all price points. This is an awakening that is occurring slowly, but surely, even in some of the most strident category manufacturers. Luxury vehicle manufacturers such as Mercedes Benz and Audi are now moving down the categories to B class and A class cars as well as towards compact SUVs to provide their customary luxury specifications across all categories and price points. Becoming a full length manufacturer is commonly seen as the solution to providing customer choice. Probably, this is a beginning and still not a full resolution of the trend. The concept of full line manufacture as it exists today is one of positioning products at different price points, which almost invariably translates having a range of products from low-spec to high-spec.  True customer choice, however, enables the design of a product around the customer needs, with a very open and flexible mix and match approach.

Dell, the computer maker was long seen to be a leader in customers designing their computers by selecting the configuration of choice. Even the Dell model is not representative of true customer choice. Changing the processor, adding RAM capacity or battery power, or providing operating system (OS) options and accessory choices are more in the nature of upgrades rather than product redefinition.  True product definition would occur if a customer can, in the case of Dell for example, mix and match the specifications of Inspiron, Latitude and XPS models as well as those of laptop, ultra-book and tablet. Similar is the case with automobile manufacturers who try to customize marginally based on power train options or interior trim. The day when a hatchback can be grown proportionally into a compact utility vehicle at customer’s choice is probably still decades away even globally. Service industries, which are not manufacturing oriented and therefore should be better placed for flexibility, find it difficult to offer multiple services in flexible formats.

Customized product design

The challenge in achieving true customer choice lies in combining the benefits of mass factory production with the rigor of fulfilling individual customer choice. Reverting to the example of readymade apparel, there could be two ways by which the manufacturer can achieve customized service. All this would require is a measurement system in each retail shop. By taking the measurements and communicating them to the central factory along with the requisite cloth and style codes through the company information technology system, the retail shop can provide the custom-stitched, yet factory made, apparel to the customer rather than try to force-fit or re-tailor the available options at the retail store. This first way leads to the second way of building up a database of thousands of people measurements and developing a more customized size and style classification that could combine the advantages of factory design and production with the benefits of custom tailoring for the customer. Needless to say, over a few months the database would exponentially expand and provide a competitive advantage to the apparel manufacturer relative to the others.

The concept can be extended virtually to any sector with appropriate modifications. Given the openness and the lead time of 6 months in designing and manufacturing a smart phone, the smart phone makers can encourage customers to pre-book their phone requirements by taking a picture of the buyer’s hand (palm lines and finger prints can be covered to avoid risk to personal details) and an inventory of his choices in terms of screen size, screen type, pixel resolution, on-board memory, micro-card memory, processor speed, operating system, camera pixels, flash type, battery power and build type to quote, just a few parameters. This customer data base can facilitate the design of a truly ergonomic and operationally customized smart phone. Like with apparel, as the company builds up a database of millions of customer profiles, smart phones can be smartly, rather than presumptively, designed for the widest possible focused fulfillment. This approach can be leveraged for any product or service with appropriate data capture and analysis systems to move towards mass customization.

Mindsets and competencies

What is proposed in this blog post is a radically different way of conducting product design. The proposed paradigm makes the customers the product designers by enabling them convert their individual experiences, thoughts and desires into millions of specifications which can be sifted through using high speed processing technologies to develop histograms customer choices. The paradigm requires a major shift in the mindsets of corporations. They must resolve to understand and fulfill customer requirements first hand by asking intelligent questions, providing meaningful options and redeeming the customer hopes with products that are better customized.  Customers also must change for the paradigm to be successful. They must be discerning, responsive and responsible. They must be demanding but also patient. To enable the initiative achieve widespread awareness and expand to achieve self-sustaining capability, corporations could do well to form customer clubs which can become the nuclei of customer creativity and design enablement.

Corporations need also competencies to be able to successfully pilot the customized product design initiative and institutionalize the customer integration. Companies need to identify and establish the essential infrastructure that is required to connect the customer to the corporation. As with the apparel company, it could be the ubiquitous tailor for taking measurements of customers in the apparel retail store, supplemented by style manuals or style portals. As with the smart phone company, it could be palm scanning and product design kiosks in the phone retail stores. At the central level would be a very strong information technology backbone that connects all the primary data collection hubs with a powerful central server system, a high speed algorithmic processing system and a multi-faceted analytical capability. Organizational design must provide for structures and processes that enable continuous interactions between the market and product design divisions of the company. Talent that is technology savvy and customer friendly as well as analytical would be essential.

Customized product design (CPD) as proposed in this blog post could be the next wave of competitive advantage for corporations if backed by appropriate mindsets and infrastructures.

Posted by Dr CB Rao on May 26, 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

‘Post Bank of India’: The Next Economic Revolution!

Generations of Indians, more particularly the home birds such as the housewives and senior citizens and expectant students and job seekers, have experienced the Indian post office system as an integral part of their lives. The bright red post box found at every street corner, the humble neighborhood post office, and the energetic post person with his or her cycle have been ubiquitous symbols of tireless public service. The colorful stamps periodically brought out  by the Indian philately system has contributed to remarkable integration across the country. The money order system which was almost the only way to transfer money a few decades ago had an interesting aside; the white message card at the bottom to be torn off and given to the recipient along with the money meant more than the money itself to the recipient. Listening to the shout of the postman announcing “post” or the anticipation of opening the house mail box had been the daily triggers of joyousness, and in some unfortunate cases, occasional pathos too for all individuals. The telegrams were the instant messengers of all news, good and sad.

The post office system was especially empathetic to the indigent rural and poor citizens. It pioneered the savings habit amongst them with very low minimum balance requirements. The advent of superior telecommunications and the surge of national banking as well as emergence of other mailing alternatives have, no doubt, challenged the dominance of the Indian postal system. That said, the Government owned post office system is not to be written off yet. In fact, its core competence of delivering the mail at the door step in every nook and corner with a personal connectivity by the postman with the people and homes he serves is not matched by any other competing service provider. The Indian postal system can reinvent itself and continue the glorious tradition of inimitable and personalized public service by becoming the Post Bank of India, as this blog post argues.      

Infrastructure and services

Even more than the Indian Railways, India Post (previously the Indian Posts and Telegraphs Department),  which falls under the Ministry of Communication and Information Technology amazes any resident or observer of India, for its reach and service. With a network of nearly 155,000 post offices, nearly 90 percent of which serve the rural population (rural population being 70 percent of India’s 1.3 billion population), with an area coverage of one post office for every 22 square kilometers and population coverage of one post office for every 9000 people, India Post has a formidable presence all across the vast country (of 3.287 million square metres). With the telecommunications and Internet revolution, India Post has also kept pace with the introduction of electronic versions of its physical services to an extent. Over time, India Post moved into savings bank operations as well as other financial services.  Today, it has 233 million post office savings account holders and a formidable deposit base of Rs 5.5 billion.

Whatever India Post has done to keep pace with the changing times has been commendable but not transformative, relative to its infrastructure, organization and reach. Time has now come for India Post to plan a paradigm shift in its vision, strategy and structure in terms of its products and services. In every sense, India Post has the ability to touch the lives of every Indian, and also connect every Indian nationally and internationally. With growing population and globalization, and the need for increased connectivity, India Post can leverage its core competence of mailing platform to consolidate itself into a communication hub and ultimately transform itself into a multifaceted economic hub. In this process, India Post can render a host of communication and economic services, with innovative products, that can ensure inclusivity for the vast rural and semi-urban population as well as the indigent sections of the society. This requires a reinforcement of existing services and diversification into new ones. Global communication and national banking would be two of India Post’s principal hubs which it can interleave with a wide range of social, essential and educational services too.

Global communication hub

India Post has in it the historical capability to continue to be the dominant mail agency of India for decades to come. At the same time, India Post has to recognize that it has lost substantial ground to private national and international courier services. India Post has, in the past, underestimated five critical competency levers that are required in a changing millennium. Firstly, it underestimated the growing need for safety and surety in mail and parcel services. Secondly, it underestimated the importance of a collection organization to supplement its delivery organization. Thirdly, it underestimated the need for dedicated transport infrastructure to ensure speed and flexibility in delivery. Fourthly, it underestimated the extent of information technology upgradation that is required to not only trace and track physical mails but also to convert physical mails into more cost-effective and time-effective electronic mails. For example, it never occurred to India Post that like Gmail and Yahoo it could also offer “Indiapost.com” mail service, for example. Fifthly, it never engaged itself with the changing trends of social communication with its own platforms.

All is not lost, however. Each of the above shortfalls can be taken care of with appropriate infrastructural, technological and organizational initiatives. In fact, it can convert the disadvantages into advantages by being ahead of the competitive curve. It can, for example, implement Good Transportation Practices for not only safety and surety for all universal mailing applications but also to enter into newer mailing services customized for multiple industries. It can restructure and refocus its delivery organization to double up as a collection organization as well. With superior transportation support for door to door travel and multiple shifts for personnel India Post can achieve enhanced customer contact. India Post also needs to modernize and diversify its transport fleet and also outsource mail and parcel transportation to achieve overnight delivery. Information technology can be leveraged to develop and offer India’s own multi-language dedicated email service. And, finally from developing applications suitable for the three operating systems of computer, tablet and mobile devices, India Post needs to develop its own operating systems and networking platforms for Indian needs.

Not too many years ago, people wanting to send greetings in India used to rely on the several telegraphic messages of India Post to communicate the wishes. Today, everyone relies on 123Greetings or a similar Internet portal, most of which are structured and executed by Indian software engineers! India Post can resurrect its historical role as a communication hub by providing communication connectivity for all requirements of the Indian population, which is both resident and non-resident in India. India Post can also tie up with appropriate multi-product gifting agents globally to participate actively in the global social networking. With each day of the year being observed as a special day internationally, special messaging and gifting could become a recurrent source of additional business for India Post.

This leads us to the hypothesis that India Post can no longer see itself as an India-centric communication entity. The more India Post globalizes by establishing physical infrastructure in other countries, executing international mail sharing arrangements and setting up global mail delivery objectives, the more effective will India Post will be as a global communication hub. As India Post moves from a business model of being a predominantly physical mail deliverer in India to a business model of globally present Indian communication hub, the organization has a lot to strengthen itself and fulfill its national mission in an international setting.     

National banking hub  

One of the simpler thoughts has been that India Post should diversify itself into banking operations. Given that post office savings schemes have been popular, banking is a logical extension. India’s Finance Minister P Chidambaram has proposed modernization of the country's postal network to make the post offices become part of the core banking solution and offer real time banking services. He has desired that the ubiquitous post office should morph into a neighborhood bank, proving a major boon for villages. The Reserve Bank of India (RBI) has recently formulated certain guidelines, including making all entities with a credible track record eligible for a banking licence. India Post has a strong rural presence and is already into the small savings scheme. It has, by itself, around 155,000 local post offices and around 24,000 district offices against a total of 90,000 bank branches (all banks included).  The new guidelines for setting up private banks issued by the RBI, among other things, makes it mandatory for new banks to open at least 25 per cent of branches in unbanked rural centers. India Post will handsomely win on this score.

India Post is already into various financial services, including small saving schemes, postal insurance, foreign exchange services, money remittance services etc as alluded to earlier. That said, India Post needs to do more than what it has been doing to become a full-fledged bank, competing with the likes of SBI or ICICI Bank. This requires India Post to implement very robust banking systems and Internet based high capacity servers and information technology backbones. India Post also needs to induct top flight banking and information technology professionals into its organization. Government also needs to support India Post with the integration of the post office banks with the direct cash transfer schemes and preferential interest rates for rural based savings and lending schemes. India Post has to evaluate the desirability of spinning off its financial services arm into a full-fledged bank to provide the requisite autonomy and competitiveness to the banking operations while providing access to the available infrastructure.

Compared to the Indian banking services which are still oriented towards the urban and semi-urban clientele in India, the Indian post office system is very well poised to facilitate and promote financial and economic inclusivity to the rural population in India. This, however, can be reinforced and supplemented with providing a range of community and economic services to the population. Each post office can offer an Internet centre which can act as an e-choupal popularized by ITC as an information and commercial exchange platform in the agricultural and aquaculture domains for the rural population and farmers. If ITC could set up 20,000 e-choupals as a private sector initiative and touch the lives of 15 million farmers in 100,000 villages, one may imagine what India Post with its 155,000 post office network all across India can achieve in financial and economic inclusivity, covering the billion rural citizens. In fact, taking advantage of complementary nature of communication and banking, of local production and national/global markets, post office network could even emerge as the new educator of information technology for the vast indigent population of India.

Structure to support strategy

The concept of India Post morphing into Post Bank of India synergizing global communication with national banking is a great strategic value proposition. For the strategy to succeed, structure must support strategy. While continued ownership by, and policy support from, the Central Government is essential, it would be necessary to move India Post from a departmental structure to corporate structure, with requisite empowerment and accountability.  As Alfred Chandler proposed in his landmark book published in 1962, structure must follow strategy. A new strategic direction for India Post to elevate its communication and financial services to an entirely new (and high) trajectory will require several structural inputs such as definition of strategic business units, creation of new organizational structures, induction of new technologies and talents, re-training of current talent base, incorporation of market competitive strategies and processes, and payment of market competitive salaries with services and tariffs that are aligned to benchmarks of social integration and economic inclusion. With an integrated strategy and structure, India Post which is famous for its evocative and colorful stamps, among others, is bound to put an indelible and pervasive stamp of integration and inclusivity on the Indian social and economic canvas.

Posted by Dr CB Rao on May 12, 2013     

Time and Motion Study in Modern Era: From Stopwatch to “Humatronics”

In the 1960s and 1970s, time and motion study was a rage. It was pioneered in the West by Frederick Taylor in the late 1800s and early 1900s. The International Labor Organization (ILO) which caters to the welfare and wellbeing of labor has published its landmark manual on time and motion study. The objective of time and motion study on which the early foundations of industrial engineering were built was initially seen to be productivity of labor. Over time, it was expanded to include productivity of machines and that of man-machine systems. The change of nomenclature of time and motion study to work study and addition of workmen friendly tools like ergonomics and system efficiency techniques like statistical work sampling could do little to enhance the image of the time and motion study. Yet, time and motion study was relied upon more to determine piece rates and based on that wage and incentive rates in union-management negotiations.

Periods of protracted negotiations caused by the piece rate disputes used to add to industrial strife. The industrial engineer who entered the shop floor with his stop watch became as unpopular as the discipline he represented. However, with a change in the approach of unions and managements in favor of enterprise level goals rather than piece rate goals in the post-liberalization phase, the need to time every activity and person became less relevant. With the advent of Japanese production management systems which took shop floor productivity and man-machine optimization to new levels through integrated design of factory systems, classic time and motion study has virtually gone into oblivion. The question that arises is whether the concepts of work study and personal productivity are any less relevant today. As an analysis below would show, productivity from an individual to enterprise level continues to be a matter of critical importance.

Digital productivity

Today’s shop floor environment is characterized by digitally controlled equipment which perfectly record quality and productivity of output. The logistics environment is characterized by a number of coding and tracking devices, including global positioning services to record the speed and timeliness of movement and delivery. The office environment is characterized by a host of productivity devices, from desk top computers to smart phones to enable executives and managers to multitask. At a gross level, the electronic brain and eye are taking over several of the production, logistics and managerial functions from the human being. One would, therefore, believe that the newer digital ecosystem provides the right replacement technology for personal productivity, relieving the stop watch and work study from such vintage responsibilities.

Digitization, however, represents part-solution and part-problem. The solution, clearly, is one of accurate recording, retrievable archiving and analytical potential. The problem, less clearly, is one of digitization being a programmed and rigid protocol as opposed to human review and intervention which can be contextual and expansive to cater to unforeseen eventualities. The problem is also one of system designers prescribing excessive data collection and analysis which could eventually confuse analysis. Even more dangerously, any error in automation could lead to highly damaging results. The occasional cataclysmal results that occur due to the deployment of computerized algorithmic trading on the bourses are proof of such risks. At a personal level, the multiplicity of devices and options as well as of 24X7 working while seemingly aiding productivity could be actually enhancing stress and reducing productivity levels. 

Redefining productivity

In the digital era, productivity needs redefinition at personal, team and enterprise level redefinitions. The classic dilemma at individual level has been between professional (or work) life and personal (or family) life. In the digital era, the dilemma has been expanded to cover digital (or Internet) life. The fact that individuals are now increasingly programmed to work in a boundary-less and timeless manner with an ever larger universe of people indicates that the overall system productivity does need re-optimization. The fact that individuals are now increasingly networked independent of either personal or professional life indicates that both personal and professional productivity could be affected. The fact that the formal and informal teams are overtaken by virtual teams which do not share the same interactive characteristics of formal and informal teams is a cause for worry. At the enterprise level, lack of convergence between operational productivity and business competitiveness also needs to be tackled.

Samuel Johnson, the eminent English literary leader, said in the 18^th century that books of the hour need to be distinguished from the books of a lifetime. For achieving personal productivity, work for the day needs to be distinguished from the work for the lifetime; and so must information of the minute be distinguished from information of the lifetime. Equally, Internet interactions need to be distinguished in terms of socialization as a pastime from socialization for real personal and/or social good. Individuals must keep track of three important parameters of personal productivity: (a) in the personal, familial and social areas, the value-adding and non-value adding activities performed by the individual each day, (b) the efficiency and effectiveness with which the individual decides and executes each day, and (c) the ability to start and end each day with the conviction and humility of learning and contributing each day.

While individuals need internal motivation, teams need shared motivation to be productive. Virtual teams have been a result of globalization and global delivery models. Productivity of such teams is supported by plurality of ideas and systematization of planning but is eroded by constraints of time and space and diffusion of execution responsibility and accountability. Productivity of virtual teams is a subject by itself as virtual teams are governed by metrics rather than processes, and by communication rather than feel. The ability to be productive and focused is usually impaired by the Exponential and Inverse Laws of Virtual Teams. The Exponential Law states that each addition to a virtual team doubles the information overload. The Inverse Law states that the larger the team and higher the information, the lower will be the discussion.  Each virtual team requires a productivity mentor to enable productive behavior and results from virtual teams.

Enterprise productivity defies easy definition. The concept of business competitiveness as measured by market share, market capitalization or earnings per share embeds in it operational productivity as a foundation. Business competitiveness requires operational productivity but operational productivity by itself cannot guarantee business competitiveness. Operational productivity coupled with strategic productivity can provide business competitiveness. Strategic productivity is poorly appreciated even in the best of organizations. The inevitable gross and futuristic nature of strategy allows huge latitude in deployment of resources and definition of expectations. Enterprise leaders need to develop and execute relevant company level paradigms to ensure productivity in strategic planning and execution.

Humatronics

Electronics and digitization dominate our modern day lives; individuals are overwhelmed by access to data and information and networks and matrices of multiple cross-sections. Teams are rendered invisible by virtual configurations of multi-geographic teams and boundary-less work streams, with constraints of time and space. Enterprises are unable to combine operational productivity and strategic productivity into an integrated paradigm. The way to cope with this is to develop a digital paradigm of work study which combines human ingenuity and flexibility with electronic speed and accuracy. This paradigm, christened Humatronics, will be contrarian in terms of a focused and purposeful use of electronics and digitization instead of an unbridled and unlimited use of these platforms.

From the view of personal productivity, humatronics would, firstly, involve limiting the followers and followed of the social and internet media to the bare minimum and to the most profound so that the ratio of value creation to time deployed has the most favorable number. Secondly, it would involve time-bound sequential working rather than toggle-switching multi-tasking. Thirdly, it would require a daily balance of activity accounting and achievement accounting, capturing the Top 5 time-drawers and Top 5 achievement-rankers. The clarity and value which would accrue through this process on an individual’s productivity would be phenomenal.

In terms of team productivity, Humatronics would, firstly, involve creation of teams that are able to develop the right balance of “read-talk-see” faculties so that the team members are able to simulate each other’s presence and thought processes and minimize the time required for physical interface. Secondly, the meetings should be based on effective tele-presence systems that bring a real life feel to remote meetings. Thirdly, it would require localization of primary responsibility within the global system so that the benefits of local execution and global delivery are combined. The productivity that would accrue through the use of digital processes for global team effectiveness would be substantial.

Enterprise productivity can be enhanced through humatronics in a number of ways. Commonly, digitization of all activities which enables accuracy and archiving is considered as the primary contributor to productivity. Real productivity would, however, accrue from conversion of hazardous and time consuming manual jobs to robotic operations. Welding and stamping have been primary areas for robotics. Automated high level stacking and retrieval, automated guided vehicle transportation, driverless automobiles, pilotless aircraft, robot-assisted surgeries, robotic ultra-clean room operations, automated continuous process systems, and such other areas are prime targets for humatronics at the enterprise level.

Holistic and integrated design of robot-assisted digital man-machine systems on one hand and optimization of digital-assisted human brain power on the other are the new enablers for productivity.

Posted by Dr CB Rao on May 9, 2013