The theory and practice of management have been enriched over the past several decades by several thought leaders. It is a matter of dismay, however, that the last two decades have suffered from a dearth of fresh management thinking. Michael Porter’s theory of competitive strategy of the early 1980s still remains as the last game changing paradigm in managerial thought and practice. This paper reviews the past contributions and future imperatives.
Some of the best contributions ever
Modern management began in the late 1800s and early 1900s as an offshoot of economics on one hand and as an adjunct to industrial and social revolutions on the other. Several experts have proposed tools, techniques, theories and practices that not only were a function of the times but also endured to grow and adapt with the times.
Frank Gilbreth, Henry Gantt, Frederick Taylor, Joseph Juran, Shigeo Shingo, Agner Erlang, Henri Fayol, Herbert Simon, Walter Shewhart, Chester Barnard, Walter Scott, Ronald Fisher, Oliver Sheldon, Elton Mayo, Genichi Taguchi, Mary Follett, Russell Ackoff, Edward Deming, Peter Drucker, Armand Feigenbaum, Philip Crosby, David Ogilvy, Theodore Levitt, Henry Markovitz, Chris Argyris, Alfred Chandler, Richard Waterman, Rensis Likert, Douglas McGregor, Henry Mintzberg, Merton Miller, Franco Modigliani, Lawrence Peter, Philip Kotler, C K Prahalad, Michael Porter, Kenichi Ohmae, Tom Peters. Eliyahu Goldratt, Stephen Covey, Masahi Imai, Michael Hammer, Gary Hamel, Robert Kaplan, Pankaj Ghemawat and Sumantra Ghoshal are some of the eminent scholars and practitioners of management who provided path-breaking concepts. These experts came from diverse domains covering psychology, sociology, accounting, engineering, finance and economics, to name a few. Some were / are doctorates and served as professors in reputed universities such as Harvard, MIT and Wharton while others carried with them the wisdom of expertise and experience. They also came from different geographies of the world. Contributions of some of these are discussed below with the proviso that those not reviewed herein do not necessarily represent any less leading edge thoughts than the ones discussed below.
Frederick Taylor (1856-1915) was perhaps the first ever thought leader of management who pioneered the concepts of efficiency movement and productivity improvement. Acknowledged as the father of scientific management, Taylor brought precision and rationale to managerial processes, and laid the foundations for a whole new management science called industrial engineering.
Henry Ford (1863-1947), the founder of the Ford Motor Company pioneered the concept of modern assembly line as a tool of mass production. His introduction of Model T automobile revolutionized the transportation industry with concepts of standardization, cost leadership and customer reach. Ford was perhaps the only business leader who relied on inventions and management to create huge wealth, without his company employing any major accounting or auditing practices.
Alfred Sloan (1875-1966), the famed chief of General Motors was perhaps the antithesis of Ford. He grew General Motors as a global leader in automobiles, pioneering the concepts of product and customer differentiation, planned obsolescence and accounting driven management. He was also instrumental in establishing the concepts of market segmentation and product branding.
Abraham Maslow (1908-1970), the creative psychologist brought a new humanistic face to psychology to understand and define the basic motivators of human living and performance. His framework of the “5 need hierarchy” remains to date the fundamental foundation of managerial theories of motivation. Maslow created the psychological basis for human resources management to come on its own in an organizational setting.
Douglas McGregor (1906-1964), the management professor ushered in a radical transformation in the practice of people management with his Theory X and Theory Y. That people do not seek to avoid work but rather are intrinsically self-motivated to perform and that people could be motivated to perform not by autocratic control but by actualization opportunity were the pioneering changes in managerial mindset proposed by him. McGregor provided a practical and sustainable execution framework for Maslow’s need hierarchy.
Peter Drucker (1909-2005), one of the most prolific management writers, explored how humans are organized across all sections of the society, whether business, government or not-for-profit. He could predict and guide dramatic changes in management of economies, industries and organizations. His emphasis on lifelong learning and coinage of the term “knowledge worker” reflect the superior role he accorded to knowledge as a driver of growth. His multitude of books and countless scholarly and popular papers are a lasting contribution to management.
Henry Mintzberg, born in 1939, has been famous for his critical review of established organizational dogmas and hyped-up managerial styles. His theory of organizational forms threw new light on how organizations can be configured for performance. He is one of the few exponents of a process driven managerial culture in organizations. He made an incisive attempt at separating style and substance, especially with reference to strategic planning.
Kenichi Ohmae, born in 1943, belongs to a rare breed of Japanese management experts who made an impact on the global management space. A pioneer of “3C’s Model”, Ohmae is an authority on strategic management practice, which has a measure of universality covering multiple industrial sectors. With his academic depth and practical insight he defined a new paradigm of knowledge driven management consultancy.
Rensis Likert (1903-1981), proposed four systems of management applicable in industrial settings and commended a participative style of management. Likert developed and validated several hypotheses of relationship between employee management and corporate performance, linking individual attributes such as loyalty, attitude, motivation, etc. to variables of organizational achievement such as productivity, cost and earnings. His Likert Scale and Linking Pin Model are enduring contributions to studies of organizational structure and supervision.
Taiichi Ohno (1912-1990), the perceptive engineer of Toyota is considered to be the developer of the world-famous Toyota Production System. Perhaps, no system of operations management had as profound influence on industrial management as Ohno’s TPS had. It represented not only Toyota’s competitive advantage in global automobile manufacture but quickly became Japan’s national comparative advantage, which even today is unmatched by any nation. Ohno’s principles of “Just In Time” extended outside manufacture into virtually all facets of industrial management.
William Deming (1900-1993) was one of the foremost experts in quality control and quality management. He was respected for his quality management methodologies by the Japanese. His principles of business and quality management, and his teachings of statistical process control and other techniques to the Japanese companies contributed in no small measure to the eventual dominance of the Japanese in global quality standards. He earned an enduring place in history not only for his expertise in applying statistics for quality improvement, but also for his principles of management focused on quality.
Joseph Juran (1904-2008) was an evangelist for quality and quality management who fused the best of oriental and western quality and management practices. Juran’s trilogy of quality planning, quality control and quality improvement and his advocacy of cross-functional participation in quality were unique for the times. His application and adaptation of Pareto Principle (“vital few and useful many”) to quality management, his focus on human and cultural issues in quality improvement and his amalgamation of Japanese quality circle concepts in his quality teachings enabled him to assume a broader role in quality management in Japan, USA as well as other countries.
Theodore Levitt (1925-2006), was an epitome of marketing vision and creativity. Rarely did a single thesis influence the course of the discussion in the domains of marketing and business strategy as did his paper on marketing myopia. His was perhaps the first clarion call for the CEOs to view their businesses in broader rather than narrower contexts and redefine their product-market strategies to spur growth. Levitt was insightful, provocative, practical and pragmatic, offering a unique synthesis of academic and industrial perspectives.
Alfred Chandler (1918-2007), the eminent business historian researched and wrote extensively on the scale, scope, strategy and structure of modern corporations. Chandler’s identification of the large industrial firm as the focus and driver of economic growth and his thesis on how structure follows strategy of a firm are solid foundations of the modern theory of firm. His proposition of managerial processes rather than the market forces as the prime component of industrial revolution was perhaps the precursor for the later day management thoughts on corporation as an entity of competencies and competitive strategies.
Robert Kaplan (born 1940), the co-creator with David Norton, of the Balanced Score Card (BSC) provided a mechanism to connect a company’s current actions to its long term goals. The BSC has helped the industry captains with a methodology to empower as well as control its senior executives by means of several indicators that balance the short term and the long term. The BSC methodology seeks to convert even seemingly qualitative goals and activities into measurable deliverables and efforts, integrating individual and functional or business unit performance into corporate performance.
C K Prahalad (born 1941) belongs to the new generation of management gurus who focused attention on the corporation as an entity. Known globally as one of the most incisive and influential management thinkers, Prahalad propounded the theory of core competencies. His later research focused on emerging countries and how fortune could be found at the bottom of the pyramid by deploying innovative products and services, and by relying on corporate constructs that reach every segment of the population.
Michael Porter (born 1947) literally took the world of strategic management by storm with his path-breaking theories of competitive advantage and comparative advantage. His distilled analysis of the five forces of competition, generic competitive strategies, strategic grouping, entry barriers and mobility barriers and value chain management have helped business strategists and industry chiefs position their companies in a competitive manner for sustainable growth. No other management thinker has probably propounded strategy as a key driver of corporate, industry or even national performance as Porter has done.
Eliyahu Goldratt (born 1948), created new paradigms in project management and capacity scheduling by deploying unique systemic approaches and software solutions. Goldratt’s theory of constraints and critical chain project management techniques are designed to unlock value from a company’s assets, overcoming and correcting traditional employee and corporate practices that sub-optimize goal setting and execution in organizations. Few management thinkers and practitioners have been as iconoclastic and aggressive as Goldratt has been in propagation of production and operations management techniques that avowedly seek to convert turnover into profit for organizations.
Michael Hammer (1946-2008), the creator of the theory of business process reengineering was a highly influential thinker who believed that corporations ought to reinvent and reengineer themselves to stay competitive. He proposed that the way a business organizes itself structurally and the manner in which it conducts its business processes would strongly influence the efficiency and effectiveness of its business. While he focused on the operating nuts and bolts of business, Hammer’s uniqueness was in his emphasis on business processes rather than individual tasks.
An evolutionary spectrum of theories
A review of the works and contributions of the above thought leaders points out a few major thought paradigms.
As industries began to evolve around organization of people and industrial structures began to emerge, initial focus was on employee as the fulcrum of productivity. However, as economics and industries began to globalize, and as the larger multinational corporations and conglomerates began to dominate, with their share of successes as well as failures, management thoughts started focusing on survival and growth of firms in the face of intense competitive pressures.
The first stream focused on Taylorisim which focused on getting the best out of an individual through time and motion studies and scientific principles of management. The overriding influence was one of rigorous control of an employee and the work practices to optimize the man-machine interface.
The second stream (eg., Maslow, McGregor and Likert) aimed at understanding the organization behavioural factors of employee motivation and developed paradigms that controlled an employee less but motivated him more.
The third stream focused on viewing the industrial operations as a technology-practice driven system and maximizing the efficiency and effectiveness of the system as a whole. Contributions by Hendry Ford and Taiichi Ohno fall under this category.
A set of management thinkers such as Alfred Sloan and Alfred Chandler saw the firm as a mega corporation with relevant structure, strategy and system that would drive growth.
Quality exponents such as Deming and Juran instead focused on product and process quality as the key determinant of corporate success. Japan’s global success clearly validated their focus on quality as a driver of competitive performance.
In a more contemporary era, management gurus such as Prahalad and Porter saw firms as embodiments of unique sets of strategies and competencies that provide competitive advantage and differentiation. The period also saw the revival of the efficiency movement in different hues of reengineering and project management (for eg., by Goldratt at shop floor level and by Kaplan at business unit level). Including the contributions made by other scholars such as Hammer, Goldratt and Kaplan, this later generation of management thinkers proposed management theories that focused on energizing a corporate entity for superior performance.
Techno-management as the next frontier
The relative dearth of breakthrough theories in management beyond Porter’s competitive strategy of the 1980s raises several questions. Has the era of cutting edge management thinkers come to a close all too soon? Have the management thinkers moved over to the relatively more cozy and remunerative areas of management consultancy? Are the thinkers busier with setting up organizations structured around their past theories rather than continuing with their innovative pathways? Or, are the management scholars overwhelmed by the scope and rapidity with which technology is redefining the sustainability of firms and industries?
The answer to the drought in management thinking may eventually be found in the waves of creativity and innovation that have been sweeping the technological landscape. However, while management is seemingly upstaged by technology, it also provides the opportunity for management thinkers to develop new fusion models of technology and management, which the author would like to call as “techno-management”.
The technological trends influencing the industrial and economic scene may be categorized under one or all of the following phenomena: (i) convergence of functionalities, (ii) miniaturization of form factor, (iii) maximization of product performance, (iv) greening of technologies and (v) dominance of the Internet. As a result, product-market segments are in a continuous churn and rejig, with exponential expansion in product categories, market segments and value points.
Arising from these technological changes, the pace of product development has already accelerated over the last 10 years. Just one breakthrough product concept ends up triggering a slew of differentiated clones, each seeking to achieve dominance over the pioneering concept, as also over the rest of clones. Nowhere is this evident as in the mobile phone industry where one iPhone has triggered hundreds of touch phones with multiple features in competition.
Convergence of functionalities as a phenomenon is applicable to, and transcends, multiple product platforms. For example, a mobile phone is no longer a mere phone; it is a complete audio-video device combining in it the functionalities of a music system, data storage system, smart office system, video and camera system, web browsing system and a global positioning system. So is a laptop, moving from a position of data processor into a smart office system, video conference system and even a 3G enabled caller phone system.
Complementing convergence, the form factor design dramatically alters the visual appeal and handling of different products providing the much needed product diversity and differentiation even within the convergence of functionalities. Evolution of laptops into netbooks and extension of cellular phones into smart phones are two examples.
Miniaturization, an essential component of form factor redesign, is also accompanied by maximization of performance. The processor speeds and memory capacities in various electronic devices have increased nearly 10 fold in just as many years even as the devices and equipments became smaller and lighter. From conventional televisions to flat panels to ultra-slim panels, form factors drove creation of new market segments. Response times in flat panel LCD TVs, for example improved from 10 ms to 1 ms while the contract ratios jumped from 2000:1 to as high as 200,000:1. Computer RAM capacities moved up from 256 MB to as much as 5 GB even as hard disk capacity jumped from 50 GB to 500 GB (and even to 2 TB more recently). Power to weight ratios of diesel engines, EMFs of motors, delivery heights of pumps, tractive ability of rail engines, thrust capacity of rocket and missile launchers, to quote other examples, have all moved up significantly.
The ubiquitous electronic chip, ever smaller and faster, has become an essential component of every technological and management innovation that is focused on functional convergence, form design and product performance.
Even as devices and equipment change dramatically in form, performance and functionality, the material components of devices and equipment, and the feedstock materials that help operate are set to undergo fundamental changes. From recyclable plastics and metals to bio and alternative fuels, the entire material consumption and usage paradigm would undergo transformational changes. Cross-connectivity between industries as distant as agriculture and automobiles illustrates the metamorphosis that could occur in the materials domain. The ultimate objective, in the context of climate change and global warming would be to make the planet an ecologically harmonious eco-system that is as life-preserving as it is lifestyle providing.
The Internet, against this background, is shaping into an exponentially expanding source of information and decision-making. The Internet is likely to enhance pressure on innovation with several facets of information hitherto considered proprietary becoming open source information. The Internet will also become increasingly a search space for guidance and decisions rather than for data or information. The Internet would free valuable physical space hitherto dedicated for data computing and storage, with the expansion of “cloud computing”. Several social and industrial activities may be deeply affected as innovative Internet applications provide the added advantage of physical feel to the virtual handling of data and information in the Internet (eg., readability in page-flip type book form).
Given the magnitude of technological changes, a new generation of management thinkers has to emerge who would weave creative management approaches around the booming technological innovation. The focus of techno-management thinking will be a structural transformation of firms and industries based on massive changes in technologies.
Techno-management needs to prepare the firms for the impending technological changes, in several cases prompting the firms to lead the changes to stay competitive. Organizational structures and strategies must be in a state of dynamic equilibrium with changing product-market profiles. The product and process value chains must be defined across multiple industrial sectors to cope with the changing cross-industrial alignments. The author hypothesizes that the new breed of management thinkers will be pioneers in scientific and technological forecasting who can foresee new businesses riding on the wings of hitherto unforeseen technological changes.
Posted by Dr CB Rao on July 28, 2009
Tuesday, July 28, 2009
Monday, July 20, 2009
Indian Medical Metropolis : A Conceptual Aspiration for Global Healthcare
Indian corporate hospitals, specialist doctors and surgeons have achieved a reputation for treating challenging diseases and surgical cases in a manner comparable with some of the world’s best hospitals. So much so, medical tourism has become an accepted phrase to define the phenomenon of overseas citizens, especially from emerging countries, visiting India to seek advanced treatments. Even the much derided government hospitals and also the better-respected railway hospitals have produced some of India’s finest physicians and surgeons. That said, Indian hospitals have some way to go before they match the best in the world in terms of hospital infrastructure, medical skills, nursing care and patient satisfaction. This paper develops a conceptual framework for a Medical Metropolis infrastructure in India that could lead a revolution in terms of India-centric global healthcare.
What constrains Indian hospitals?
The Indian hospital system has its basic roots and foundations in the government hospital network that focused on cities and towns, and in the public health and rural heath dispensary network that catered to the other parts of the country. Treatment was largely free but infrastructure (wards, theatres and equipment) tended to be poor and medical care insufficient. The public health system was constrained by low budgetary allocations and burdened by growing population. A few national health institutes were set up but to no avail, given the magnitude of healthcare needs. Despite successive five year plans, not much has changed in the public hospital system.
Though some great hospitals have been set up by industrialists and philanthropists, post-Indian independence in the private sector, it was only in the 1980s that the first Indian corporate initiative took shape in India. Since then, several corporate hospital establishments have emerged across the nation, some with geographic focus and some with pan-Indian footprint. Though most corporate initiatives confined themselves to metropolitan cities, a few have extended themselves to second tier cities. One group has ventured into rural medicine and tele-medicine as well. Charitable and voluntary health institutions have also been set up by socially conscious individuals and citizen groups.
Impressive as these achievements are, the Indian corporate hospital system, in the overall, is a relatively inaccessible monopoly with inadequate infrastructure and overworked doctors, insufficient nursing and uninsured patient population. The better known hospitals face severe patient and caretaker overload while ordinary hospitals lack the fundamentals of standard medical care. Even the larger hospitals fail to leverage information technology to achieve operational excellence and customer satisfaction.
Hospitals, the world over, face a classic efficacy-affordability dilemma. On one hand, cutting edge treatments cause cost increases while the growing burden of healthcare requires low cost treatment solutions. Typically, corporate structures drive up investor expectations of high returns while scale and scope demand infrastructural investments that have long gestation periods. If a truly global hospital system is to be established in India innovative financial solutions have to be formulated; however, prior to that what a truly global hospital system entails needs to be defined.
A global hospital system – the Medical Metropolis concept
A truly global hospital system needs to combine scale, scope and competence. In this model, it must have all the specialties relevant for alleviation of human suffering and promotion of wellness, not necessarily the few that drive high bed-occupancy or profitable corporate earnings.
From pediatrics to geriatrics, from initial birth to terminal illness and from planned treatment to emergency intervention, a world-class hospital system should be able to meet all the needs. In addition, the hospital should have an educational and social infrastructure that could position the hospital as a sustainable hub of medical tourism, and development. A hospital established on the above lines would, in fact, be a Medical Metropolis where the society develops around the hospital nucleus. However, to qualify as a growth trigger, the hospital should be truly world-class and differentiated.
Each such Medical Metropolis would need to build its outstanding and core competencies in some specialties while at the same time ensuring the presence of all the therapeutic categories, as a one-stop shop. This would be essential for timely and integrated patient care on a global scale. Ideally, therefore, a global hospital should have a three-tier system of super specialty, core specialty and generic specialty medical care.
In each specialty, there needs to be a relevant mix of cutting-edge physician and surgical services, state-of-the-art diagnostics, personalized nursing care, accessible pharmacy services and computerized patient management systems. Each specialty also must focus on a mix of outpatient and inpatient services to balance effective treatment with affordable cost. To support high standards of patient care and doctor availability, the hospital should take on board doctors and surgeons who are willing to dedicate themselves to only that institution.
A global hospital must compete favorably with the world’s best in terms of infrastructure and equipment. A futuristic corporate vision and a modular design strategy are essential to support competitive infrastructure. While the vision must be driven by corporate considerations of scale, scope and competence, the strategy must be driven by patient considerations of cure, care and comfort. Engineering provides the key to a synergistic fusion of these six essential attributes.
Indian hospitals suffer from a low priority accorded to facility engineering. Typically, all facilities and specialties are housed in one large block designed for a today that minimizes the investment rather than for a tomorrow that will see a patient surge. As a result, typical Indian hospitals suffer from crowded corridors and waiting rooms, cramped consultancy suites, shared diagnostic services, inadequate environmental controls and poor patient isolation systems. Walls, floors and ceilings are often of residential or commercial quality. The environmental standards and entry/exit protocols for operation theatres are not designed for 24 by 7 aseptic controls. Intensive care units are not designed around individual diseases and instead are used to house patients of diverse diseases, leading to possibilities of cross-infection.
A global hospital could adopt as a design option, a hub and spoke facility engineering strategy. As per this, each specialty (super, core or generic) would be housed in a dedicated specialty block, with its own primary wards, diagnostic laboratories and operation theatres. All the specialty blocks would be connected to a central sophisticated diagnostic facility which will house only the highly advanced facilities such as Gamma Camera, PET Scanner and Multi-speed MRI. All other equipment such as X- ray, Ultra-sound, Doppler, ECG and CT Scanners would be housed in individual blocks. Where treatment requires additional sophisticated equipment (for example, the Gamma Knife, Linear Accelerator, Multilead Collimeter in respect of oncology, and Light Speed CT and Radial Lounge in respect of cardiovascular surgery) such facilities must be integrated within the specializations. While this design philosophy may appear to be investment-intensive, it would be relevant and beneficial in terms of fulfilling the above six attributes. Establishment of world scale capacity would be a prerequisite for a globally competitive hospital.
The facility design should provide separate entry corridors for unhindered emergency cases, backed by a multi-specialty emergency ward, with appropriate connectivity to the central hospital services.
Hospital acquired infections, especially from multi-drug resistant bugs is a world-wide concern. An ability to assure sterility in super-critical areas such as operation theatres, endotoxin-free environment in intensive care units and appropriate clean environment in all zones would be a key differentiator for a world-class hospital. It is essential to achieve this by adopting sterility assurance and clean room practices from pharmaceutical companies manufacturing aseptic products.
The design for sterility assurance would involve deployment of sophisticated HVAC systems with HEPA filters and ensuring requisite air changes. Operation theatres, together with preparation rooms, recovery rooms, dispensing rooms, equipment rooms should be treated as integrated units with positive air differentials and door locks as required.
Corridor design assumes great importance. A surgical floor especially would require at least two dedicated corridors, one for patients and doctors as well as sterile materials and the other for infectious materials. Lifts and elevators should be designed to facilitate non-contaminating movement as above. Change rooms, washing facilities, lockers for street clothes and infection eradicating solutions should be provided logically at applicable points.
It is also important to establish modern laundries on the site with steam sterilizers for patient, doctor and nurse gowning materials and autoclave equipment for sterilization of surgical garments and instruments. Fumigation systems, agents and cycles should be established and validated. Utilities for uninterrupted power, steam, air, oxygen and other hospital essentials have to be designed for peak performance of the hospital facility.
Medicare through systems and processes
The success of modern medicine and surgery lies in the rapid development of specializations and high-end pharmaceutical products. This emphasis on specialization has, at the same time, become the bane of modern medicine with the human body being treated as several specialized parts rather than one integrated whole. The premium for specialization has also placed skill ahead of system and ego ahead of empathy. Despite the growing evidence that several disorders are interconnected (eg., metabolic syndrome), that there is so much more to be understood of human physiology (eg., cancer), that pharmacogenomics is still a nascent science (eg., genetic variability) and that pharmaceutical treatment is still imprecise (eg., unknown side effects, drug interactions and contraindications), modern medical practitioners are increasingly dismissive of the need to treat any disease in a holistic way.
A true hospital should bring in systems and processes, leveraging information technology to a large extent, to keep a complete track of the patient’s physiology in a wholesome manner. Systems such as co-lead in treatment, peer review of treatment at entry and exit as well as progress milestones and independent quality audit of patient treatment need to be implemented.
As with aseptic pharmaceutical facilities, sterility has to be built in by design engineering, assured by validation processes, and further reinforced by infection control processes. This requires establishment of a quality assurance division, right from the green-field stage so that the facilities are designed and executed in the right manner, all equipment are validated and all processes are implemented with total compliance. Drawing up of SOPs and training of all personnel would be critical requirements. Defining and implementing Good Clinical Practice (GCP) would go a long way in not only sterility assurance and infection control but also in overall medical treatment.
Given the equal priority to be accorded to outpatient and inpatient care, it is imperative that the facilities are designed to separate the entry and exit systems for outpatients and inpatients and their respective caretakers, providing for adequate waiting space for different categories of patients and caretakers. Outpatient blocks should ideally be designed for different specialties and backed by relevant dedicated laboratory services.
The Medical Metropolis should have a wellness campus which provides rehabilitation and rejuvenation services, deploying a wide range of Indian and oriental methods. Yoga and meditation can contribute to a total treatment paradigm while Ayurveda can provide natural cures. A Spa, gymnasium, joggers’ track, nutritional laboratory and fitness studio can help the treated patients and their caretakers explore new horizons in healthy living.
Also relevant would be a geriatric medicine centre which could also extend into an old age home dedicated for the care of senior citizens with NGO or socially conscious corporate groups or charitable entities. Arguably, a home health service is also a primary need to take care of an ageing society. It will not only reduce the pressure on hospital services but also enhance customer relationship management, building in the process excellent brand equity for the Medical Metropolis.
Hospital as an eco-system
The above specifications would certainly help build and manage a world-class hospital. However, a more holistic living experience remains an aspiration and a gap. A hospital campus is almost inevitably seen as a place where concern, anxiety and seriousness reign supreme, to be ultimately relieved as a patient gets cured. The patient is central to the current hospital designs. Little emphasis is placed on caretakers and overall pre-admission and post-admission lives of either the patients or their caretakers. However, a hospital can be a microcosm of the society with all its thrills and frills. That alone can capture India’s potential as the global hub of medical tourism.
Entrepreneurs and corporate groups should look at setting up a global hospital in the larger canvas of creating a global metropolis, where the hospital is merely an integral and helpful part of a mini-society. The global hospital eco-system would have education, culture, entertainment, township for hospital employees, hotels and hospitality services, to mention a few social facets that would supplement the hospital infrastructure.
A global hospital eco-system should be a fountain of talent. Three types of educational institutions would provide an educational trigger for growth of the hospital system itself. A medical college dedicated to graduate, post-graduate and research courses, a paramedical college which is focused on developing paramedics such as physiotherapists, speech therapists, rehabilitation specialists, biochemists, laboratory and biomedical technicians and a nursing college which will provide the much-needed stock of qualified nurses would lay a robust talent base not only for the hospital but for the larger society itself.
Working in a global hospital which offers the world’s most competitive services will be a high pressure job, often involving extended sessions in theatres, wards and consultancy suites. The workforce would be productive and logistically efficient if the eco-system includes a township for different categories of employees including medical professionals. Quarters for nurses and technicians as well as employees of essential utilities would ensure that the hospital can be run with the highest degree of assurance as well as employee convenience.
Medical tourism would rest on a creative and comfortable exposure to the myriad hues of Indian culture. Ideally, the eco-system should have a cultural village where Indian arts, both ancient and contemporary, are showcased. The village could also house Indian handicrafts and organize periodic cultural fairs. Strategic tie-ups can be had with other cultural and tourist spots in the vicinity for providing a holistic cultural experience to the caretakers.
The medical eco-system will also house a multiplex which will offer state-of-the-art cinematic and artistic experiences alongside an exciting shopping experience. With multiple screens and stages catering to movies and fine arts in Indian and foreign languages the multiplex can attract not only the medical tourists but also the city residents themselves. The shopping complex should sport more Indian labels than foreign labels so that the medical tourists can carry back the high quality Indian goods at competitive prices. Textiles, handicrafts, jewellery and other consumer goods could have a pride of place.
In several hospitals the world over, the caretakers and families of the patients get short shrift. Overcrowding in hospital corridors and/or expensive stays at far-off places severely depress the emotional and economic wellbeing of the families of the patients. Establishment of caretaker dormitories and budget as well as star hotels for the visiting families would help the families of patients visit India with greater assurance and comfort. A spectrum of restaurants offering the wide range of Indian cuisine would complete the picture.
Needless to add, the eco-system will be efficient only when it has banking services (including ATMs), travel services and telecommunication services in ample measure. Complete wi-fi coverage all across the Medical Metropolis would be essential in these times. Rental services for cellular phones, laptops, net books and other gadgets will help the caretakers remain connected and even carry out official and personal chores seamlessly.
Financing the Metropolis
A globally-competitive yet uniquely Indian Medical Metropolis is probably akin to creating a whole new city based on medical science and expertise. At the very least, a Medical Metropolis of the order envisaged would require land bank of 2500 to 5000 acres with approved land-use zoning and future expansion opportunities. It would well qualify as an infrastructural project.
The Indian governments (Central and State) should support the Medical Metropolis projects by providing land at subsidized rates in return for a mix of free treatment, free beds for below-the-poverty-line (BPL) population and royalties from revenues. This would need to be supplemented by soft loans from banking institutions for project funding.
The financial profile of India Corporate hospitals significantly varies, given the vast difference in bed strength, from say 80 to 8000 beds, and in the network of hospitals, from 1 to 40. Two of the largest groups have deployed USD 150 million and USD 360 million as capital to develop network of 10 and 40 hospitals respectively, with bed strengths of 2000 and 7500 respectively. Clearly, even with corporate structures, Indian hospitals are substantially cheaper to establish and operate.
Given the scale and scope of facilities proposed for a Medical Metropolis it is to be expected that the investment cost will be around 2X of the current investment norms. It may also be economically unviable for a single entity to bear all the infrastructural investments relating to the non-hospital assets. The governments and the lending institutions should allow the lead sponsor to rope in partners for each of the additional social infrastructural items such as education, culture, entertainment, hotels and hospitality services. A special purpose vehicle backed by a consortium of corporations with expertise in each of the areas and private equity firms will be ideally equipped to launch and develop the Medical Metropolis concept.
The concept of Medical Metropolis could achieve for India, in the healthcare sector, what the concept of industrial estates and special economic zones have done for China (and even India) in terms of globally competitive development, benefitting not only the national economy but national and international healthcare as well.
Posted by Dr CB Rao on July 20, 2009.
What constrains Indian hospitals?
The Indian hospital system has its basic roots and foundations in the government hospital network that focused on cities and towns, and in the public health and rural heath dispensary network that catered to the other parts of the country. Treatment was largely free but infrastructure (wards, theatres and equipment) tended to be poor and medical care insufficient. The public health system was constrained by low budgetary allocations and burdened by growing population. A few national health institutes were set up but to no avail, given the magnitude of healthcare needs. Despite successive five year plans, not much has changed in the public hospital system.
Though some great hospitals have been set up by industrialists and philanthropists, post-Indian independence in the private sector, it was only in the 1980s that the first Indian corporate initiative took shape in India. Since then, several corporate hospital establishments have emerged across the nation, some with geographic focus and some with pan-Indian footprint. Though most corporate initiatives confined themselves to metropolitan cities, a few have extended themselves to second tier cities. One group has ventured into rural medicine and tele-medicine as well. Charitable and voluntary health institutions have also been set up by socially conscious individuals and citizen groups.
Impressive as these achievements are, the Indian corporate hospital system, in the overall, is a relatively inaccessible monopoly with inadequate infrastructure and overworked doctors, insufficient nursing and uninsured patient population. The better known hospitals face severe patient and caretaker overload while ordinary hospitals lack the fundamentals of standard medical care. Even the larger hospitals fail to leverage information technology to achieve operational excellence and customer satisfaction.
Hospitals, the world over, face a classic efficacy-affordability dilemma. On one hand, cutting edge treatments cause cost increases while the growing burden of healthcare requires low cost treatment solutions. Typically, corporate structures drive up investor expectations of high returns while scale and scope demand infrastructural investments that have long gestation periods. If a truly global hospital system is to be established in India innovative financial solutions have to be formulated; however, prior to that what a truly global hospital system entails needs to be defined.
A global hospital system – the Medical Metropolis concept
A truly global hospital system needs to combine scale, scope and competence. In this model, it must have all the specialties relevant for alleviation of human suffering and promotion of wellness, not necessarily the few that drive high bed-occupancy or profitable corporate earnings.
From pediatrics to geriatrics, from initial birth to terminal illness and from planned treatment to emergency intervention, a world-class hospital system should be able to meet all the needs. In addition, the hospital should have an educational and social infrastructure that could position the hospital as a sustainable hub of medical tourism, and development. A hospital established on the above lines would, in fact, be a Medical Metropolis where the society develops around the hospital nucleus. However, to qualify as a growth trigger, the hospital should be truly world-class and differentiated.
Each such Medical Metropolis would need to build its outstanding and core competencies in some specialties while at the same time ensuring the presence of all the therapeutic categories, as a one-stop shop. This would be essential for timely and integrated patient care on a global scale. Ideally, therefore, a global hospital should have a three-tier system of super specialty, core specialty and generic specialty medical care.
In each specialty, there needs to be a relevant mix of cutting-edge physician and surgical services, state-of-the-art diagnostics, personalized nursing care, accessible pharmacy services and computerized patient management systems. Each specialty also must focus on a mix of outpatient and inpatient services to balance effective treatment with affordable cost. To support high standards of patient care and doctor availability, the hospital should take on board doctors and surgeons who are willing to dedicate themselves to only that institution.
A global hospital must compete favorably with the world’s best in terms of infrastructure and equipment. A futuristic corporate vision and a modular design strategy are essential to support competitive infrastructure. While the vision must be driven by corporate considerations of scale, scope and competence, the strategy must be driven by patient considerations of cure, care and comfort. Engineering provides the key to a synergistic fusion of these six essential attributes.
Indian hospitals suffer from a low priority accorded to facility engineering. Typically, all facilities and specialties are housed in one large block designed for a today that minimizes the investment rather than for a tomorrow that will see a patient surge. As a result, typical Indian hospitals suffer from crowded corridors and waiting rooms, cramped consultancy suites, shared diagnostic services, inadequate environmental controls and poor patient isolation systems. Walls, floors and ceilings are often of residential or commercial quality. The environmental standards and entry/exit protocols for operation theatres are not designed for 24 by 7 aseptic controls. Intensive care units are not designed around individual diseases and instead are used to house patients of diverse diseases, leading to possibilities of cross-infection.
A global hospital could adopt as a design option, a hub and spoke facility engineering strategy. As per this, each specialty (super, core or generic) would be housed in a dedicated specialty block, with its own primary wards, diagnostic laboratories and operation theatres. All the specialty blocks would be connected to a central sophisticated diagnostic facility which will house only the highly advanced facilities such as Gamma Camera, PET Scanner and Multi-speed MRI. All other equipment such as X- ray, Ultra-sound, Doppler, ECG and CT Scanners would be housed in individual blocks. Where treatment requires additional sophisticated equipment (for example, the Gamma Knife, Linear Accelerator, Multilead Collimeter in respect of oncology, and Light Speed CT and Radial Lounge in respect of cardiovascular surgery) such facilities must be integrated within the specializations. While this design philosophy may appear to be investment-intensive, it would be relevant and beneficial in terms of fulfilling the above six attributes. Establishment of world scale capacity would be a prerequisite for a globally competitive hospital.
The facility design should provide separate entry corridors for unhindered emergency cases, backed by a multi-specialty emergency ward, with appropriate connectivity to the central hospital services.
Hospital acquired infections, especially from multi-drug resistant bugs is a world-wide concern. An ability to assure sterility in super-critical areas such as operation theatres, endotoxin-free environment in intensive care units and appropriate clean environment in all zones would be a key differentiator for a world-class hospital. It is essential to achieve this by adopting sterility assurance and clean room practices from pharmaceutical companies manufacturing aseptic products.
The design for sterility assurance would involve deployment of sophisticated HVAC systems with HEPA filters and ensuring requisite air changes. Operation theatres, together with preparation rooms, recovery rooms, dispensing rooms, equipment rooms should be treated as integrated units with positive air differentials and door locks as required.
Corridor design assumes great importance. A surgical floor especially would require at least two dedicated corridors, one for patients and doctors as well as sterile materials and the other for infectious materials. Lifts and elevators should be designed to facilitate non-contaminating movement as above. Change rooms, washing facilities, lockers for street clothes and infection eradicating solutions should be provided logically at applicable points.
It is also important to establish modern laundries on the site with steam sterilizers for patient, doctor and nurse gowning materials and autoclave equipment for sterilization of surgical garments and instruments. Fumigation systems, agents and cycles should be established and validated. Utilities for uninterrupted power, steam, air, oxygen and other hospital essentials have to be designed for peak performance of the hospital facility.
Medicare through systems and processes
The success of modern medicine and surgery lies in the rapid development of specializations and high-end pharmaceutical products. This emphasis on specialization has, at the same time, become the bane of modern medicine with the human body being treated as several specialized parts rather than one integrated whole. The premium for specialization has also placed skill ahead of system and ego ahead of empathy. Despite the growing evidence that several disorders are interconnected (eg., metabolic syndrome), that there is so much more to be understood of human physiology (eg., cancer), that pharmacogenomics is still a nascent science (eg., genetic variability) and that pharmaceutical treatment is still imprecise (eg., unknown side effects, drug interactions and contraindications), modern medical practitioners are increasingly dismissive of the need to treat any disease in a holistic way.
A true hospital should bring in systems and processes, leveraging information technology to a large extent, to keep a complete track of the patient’s physiology in a wholesome manner. Systems such as co-lead in treatment, peer review of treatment at entry and exit as well as progress milestones and independent quality audit of patient treatment need to be implemented.
As with aseptic pharmaceutical facilities, sterility has to be built in by design engineering, assured by validation processes, and further reinforced by infection control processes. This requires establishment of a quality assurance division, right from the green-field stage so that the facilities are designed and executed in the right manner, all equipment are validated and all processes are implemented with total compliance. Drawing up of SOPs and training of all personnel would be critical requirements. Defining and implementing Good Clinical Practice (GCP) would go a long way in not only sterility assurance and infection control but also in overall medical treatment.
Given the equal priority to be accorded to outpatient and inpatient care, it is imperative that the facilities are designed to separate the entry and exit systems for outpatients and inpatients and their respective caretakers, providing for adequate waiting space for different categories of patients and caretakers. Outpatient blocks should ideally be designed for different specialties and backed by relevant dedicated laboratory services.
The Medical Metropolis should have a wellness campus which provides rehabilitation and rejuvenation services, deploying a wide range of Indian and oriental methods. Yoga and meditation can contribute to a total treatment paradigm while Ayurveda can provide natural cures. A Spa, gymnasium, joggers’ track, nutritional laboratory and fitness studio can help the treated patients and their caretakers explore new horizons in healthy living.
Also relevant would be a geriatric medicine centre which could also extend into an old age home dedicated for the care of senior citizens with NGO or socially conscious corporate groups or charitable entities. Arguably, a home health service is also a primary need to take care of an ageing society. It will not only reduce the pressure on hospital services but also enhance customer relationship management, building in the process excellent brand equity for the Medical Metropolis.
Hospital as an eco-system
The above specifications would certainly help build and manage a world-class hospital. However, a more holistic living experience remains an aspiration and a gap. A hospital campus is almost inevitably seen as a place where concern, anxiety and seriousness reign supreme, to be ultimately relieved as a patient gets cured. The patient is central to the current hospital designs. Little emphasis is placed on caretakers and overall pre-admission and post-admission lives of either the patients or their caretakers. However, a hospital can be a microcosm of the society with all its thrills and frills. That alone can capture India’s potential as the global hub of medical tourism.
Entrepreneurs and corporate groups should look at setting up a global hospital in the larger canvas of creating a global metropolis, where the hospital is merely an integral and helpful part of a mini-society. The global hospital eco-system would have education, culture, entertainment, township for hospital employees, hotels and hospitality services, to mention a few social facets that would supplement the hospital infrastructure.
A global hospital eco-system should be a fountain of talent. Three types of educational institutions would provide an educational trigger for growth of the hospital system itself. A medical college dedicated to graduate, post-graduate and research courses, a paramedical college which is focused on developing paramedics such as physiotherapists, speech therapists, rehabilitation specialists, biochemists, laboratory and biomedical technicians and a nursing college which will provide the much-needed stock of qualified nurses would lay a robust talent base not only for the hospital but for the larger society itself.
Working in a global hospital which offers the world’s most competitive services will be a high pressure job, often involving extended sessions in theatres, wards and consultancy suites. The workforce would be productive and logistically efficient if the eco-system includes a township for different categories of employees including medical professionals. Quarters for nurses and technicians as well as employees of essential utilities would ensure that the hospital can be run with the highest degree of assurance as well as employee convenience.
Medical tourism would rest on a creative and comfortable exposure to the myriad hues of Indian culture. Ideally, the eco-system should have a cultural village where Indian arts, both ancient and contemporary, are showcased. The village could also house Indian handicrafts and organize periodic cultural fairs. Strategic tie-ups can be had with other cultural and tourist spots in the vicinity for providing a holistic cultural experience to the caretakers.
The medical eco-system will also house a multiplex which will offer state-of-the-art cinematic and artistic experiences alongside an exciting shopping experience. With multiple screens and stages catering to movies and fine arts in Indian and foreign languages the multiplex can attract not only the medical tourists but also the city residents themselves. The shopping complex should sport more Indian labels than foreign labels so that the medical tourists can carry back the high quality Indian goods at competitive prices. Textiles, handicrafts, jewellery and other consumer goods could have a pride of place.
In several hospitals the world over, the caretakers and families of the patients get short shrift. Overcrowding in hospital corridors and/or expensive stays at far-off places severely depress the emotional and economic wellbeing of the families of the patients. Establishment of caretaker dormitories and budget as well as star hotels for the visiting families would help the families of patients visit India with greater assurance and comfort. A spectrum of restaurants offering the wide range of Indian cuisine would complete the picture.
Needless to add, the eco-system will be efficient only when it has banking services (including ATMs), travel services and telecommunication services in ample measure. Complete wi-fi coverage all across the Medical Metropolis would be essential in these times. Rental services for cellular phones, laptops, net books and other gadgets will help the caretakers remain connected and even carry out official and personal chores seamlessly.
Financing the Metropolis
A globally-competitive yet uniquely Indian Medical Metropolis is probably akin to creating a whole new city based on medical science and expertise. At the very least, a Medical Metropolis of the order envisaged would require land bank of 2500 to 5000 acres with approved land-use zoning and future expansion opportunities. It would well qualify as an infrastructural project.
The Indian governments (Central and State) should support the Medical Metropolis projects by providing land at subsidized rates in return for a mix of free treatment, free beds for below-the-poverty-line (BPL) population and royalties from revenues. This would need to be supplemented by soft loans from banking institutions for project funding.
The financial profile of India Corporate hospitals significantly varies, given the vast difference in bed strength, from say 80 to 8000 beds, and in the network of hospitals, from 1 to 40. Two of the largest groups have deployed USD 150 million and USD 360 million as capital to develop network of 10 and 40 hospitals respectively, with bed strengths of 2000 and 7500 respectively. Clearly, even with corporate structures, Indian hospitals are substantially cheaper to establish and operate.
Given the scale and scope of facilities proposed for a Medical Metropolis it is to be expected that the investment cost will be around 2X of the current investment norms. It may also be economically unviable for a single entity to bear all the infrastructural investments relating to the non-hospital assets. The governments and the lending institutions should allow the lead sponsor to rope in partners for each of the additional social infrastructural items such as education, culture, entertainment, hotels and hospitality services. A special purpose vehicle backed by a consortium of corporations with expertise in each of the areas and private equity firms will be ideally equipped to launch and develop the Medical Metropolis concept.
The concept of Medical Metropolis could achieve for India, in the healthcare sector, what the concept of industrial estates and special economic zones have done for China (and even India) in terms of globally competitive development, benefitting not only the national economy but national and international healthcare as well.
Posted by Dr CB Rao on July 20, 2009.
Sunday, July 12, 2009
From Failure to Success: Can Leaders Reinvent Themselves?
All leaders grow corporations but some of them cause their collapse too. Mostly, the same successful leaders who have led the growth of their corporations through their competencies also cause their downfall. Control mechanisms such as boards, stock exchange reporting, share holder meetings have been unable to detect and correct the leadership failures that undo their own successful past. Two questions arise: What are the negative leadership attributes that lead to leadership failures? Can failed leaders rework their success through appropriate corrective actions? The case of Jan Baan answers these two questions but still the underlying leadership behavior is not adequately hypothesized.
Jan Baan : boon and bane for BAAN
BAAN, the ERP company was one of the technology success stories of the 1990s. BAAN benefited from the entrepreneurial and communication skills of the then chief executive officer and founder Jan Baan. A pioneer in ERP technologies of that era, BAAN nevertheless lacked basic management skills, grew under opaque and incorrect accounting practices and, by Jan Baan’s own later time admission, suffered from his ego and greed as a corporate leader. He had to eventually sell the company and exit the board.
The spirit of a pioneer, if he is also an entrepreneur, perhaps cannot be held back. Jan Baan became a VC and helped two established companies with pioneering technologies grow. The first one was WebExpress which pioneered global connectivity and conferencing solutions and the other was TopTier which pioneered portal solutions for ERP systems. WebExpress was sold to CISCO while TopTier was sold to SAP, both for handsome valuations. Both platforms continue to lead with their technologies in the new homes. Presently, Jan Baan is leading his own new entrepreneurial venture, Cordys which is engaged in cloud computing architecture which Google is pursuing as a game-changer.
Jan Baan’s track record with BAAN reflects a hypothesis that a leader fails when ego and greed overshadow his capabilities and competencies. Baan’s later day successes with the three follow-on companies suggests also that a leader can rediscover his touch as long as he retains his core competencies, overcomes his weaknesses and controls his ego and greed.
Leadership decline : causes
Reversing leadership failure through retained competencies and corrected behavior is easier said than done. Very few leaders would have it in them to acknowledge their weaknesses and failures even tacitly and embark upon a plan of professional reconstruction. Leaders of failing organizations often are drawn into seclusion, are distanced from competent but independent executives, are influenced by a servile coterie of incompetent executives and continue to be driven by an imagery of super-performance.
Only when performance becomes hopelessly eroded and stakeholder environment turns openly hostile such leaders recognize that they are confronted with, and confounded by, the worst phase of their careers. Leaders in such situations give up or are forced to give up their companies. The leaders have few options left in such terminal situations; seek external professional help (eg., turnaround consultancy), seek corporate alliances (eg., mergers or investments by larger firms, or take recourse to corporate law (eg., bankruptcy) to pull the chestnuts out of the fire. Few investors or boards, or for that matter the leaders themselves, can consider any other alternative.
It is indeed a personal decision by a leader to decide on the path he or she should take, given a legacy of dramatic growth which is followed by dismal collapse. The leader should recognize that timely admission of failure helps not only his company but also his own stature. From a situation in which events would control him he can then look forward to a possibility of his basic competencies being considered for a genuine revival process. More fundamentally, he should also recognize that he would no longer have implicit trust as in the past; and that he has to earn the trust once again, and with much greater effort.
A failed leader rarely gets a chance to manage a corporate turnaround. This stems from the fact that typically not only he would have contributed to the mess but would, more often than not, be refusing to recognize that that he, in fact, contributed to the mess. The logical and rational part of such leaders is overwhelmed by the emotional and egoistic part, ruling out any chance of voluntary course correction. Many times such leaders and their coterie of executives would continue to lead and manage their corporations till the doomsday without any change in professional style and without any corrective action, hoping rather naively that a dramatic plan or sudden breakthrough would still help them tide over the crisis.
Timely recognition of an impending crisis is as much a hallmark of a true leader as identification of an emerging opportunity is. Why then leaders fail to recognize the crisis so often? Leaders gloss over the emergence of crises because they tend to believe that their leadership is unassailable and the environment is not unmanageable. All the failed chiefs of bankrupt corporations, from Bear Stearns to General Motors, refused to recognize and respond to crises in logical, timely and transparent manner. This refusal syndrome is the common factor in failures of leadership.
This ostrich-like leadership behavior defies logic when one considers that there are several metrics of performance that are available for a leader to easily understand whether his firm is sliding into a crisis situation. These relate to competition, market share, growth rate, customer access, productivity, attrition, and a host of profitability ratios. Some very relevant financial metrics include asset turnover ratio, capital output ratio, debt equity ratio, interest cover, receivables percentage, payables percentage, profitability margins and so on. The catch is that leaders oftentimes view these as functional metrics relevant for functional heads rather than as corporate metrics that are even more applicable to the chief executives themselves. That each of these parameters has a vital bearing on the overall health of the corporation is not recognized by such leaders until it is too late.
Possibly, in some cases, an insecurity of losing managerial control obscures the clarity of thought in failing leaders and spurs them to try to work their way under a façade. A leader who overcomes this vulnerability can possibly recapture his magic, working in collaboration with an intelligent and mentoring board and a positively activist shareholder base. Except in cases of wanton mal-governance and illegitimate activities, a leader can offer himself to revive the company he led to growth first and to collapse next.
Pathways to correction
Even great organizations had failed in the past. IBM of the 1970s and 1980s is a case in point. As IBM historians state its leadership was in disconnect with the market as well its own organization. According to them, “IBM had all the ingredients for failure: arrogance, complacency, bureaucracy, a sense of malaise in the organization." A realization of failure and a new leadership model which emphasized contemporary management processes led to a revival. If a new leadership can achieve corporate revival there is no reason why an existing leader cannot do so, provided he rediscovers himself. A leader in crisis has to bring in positive change as a proactive alternative to being out of the leadership role.
Obviously there are pros and cons of an existing leader trying to retrieve the firm from a crisis vis-Ã -vis a new leader wielding the broom. Fundamentally, an existing leader can be a successful turnaround manager if he has reformed himself and is willing to live down his past in a transparent manner and redeem the future with constructive creativity. Such a leader will of course require strong support from the investors and board to lead the turnaround. As mentioned earlier, trust for failed leaders would not be forthcoming automatically but has to be sought assiduously. On the other hand, a new leader comes with little baggage of the past and with the full and automatic support of the stakeholders. He can thus take radical actions but, given his relative lack of understanding of the company, runs the risk of throwing the baby with the bathwater. The boards and investors who would have committed unflinching support unconditionally upfront would think twice before questioning the new turnaround leaders all too quickly.
In sum, if a failed leader recognizes a crisis in time and is willing to make a clean break to overcome the crisis there is possibly merit in trusting him on a revival path. There are, several actions a failed leader, his board and the investors can consider to preserve the virtuous part of the past while chiseling away the infamous blemishes and building a new genuine strength in the failed leader.
Fundamentally, the leader has to admit the impending crisis with his board on one hand and with his senior executive ream on the other. Such a move, no doubt, explodes the myth of invincibility and infallibility of single-handed achievement that he has built. But it also helps him to come to terms in a non-egoistic manner with the new reality of a potential failure that could occur if he takes no corrective action in a collaborative manner. This openness should lead to a five-step process of corporate correction: problem definition, solution definition, talent induction, strategic transformation and performance improvement.
Corporate failure is caused by loss of competitiveness vis-Ã -vis other competitors. Competitiveness is determined by benchmarking the company against the more successful players in the industry in a transparent manner. Benchmarking helps a leader define the problem in a cohesive manner. The leader then has to introspect on the roles played by his leadership style and the available talent pool in the loss of competitiveness. Once the company’s pecking order on the competitiveness parameters is determined, the leader has to put in place a framework of strategies to improve the company on its pecking order.
The turnaround strategy mix could comprise seemingly contradictory activities such as expanding viable businesses, shrinking or spinning off unviable businesses, enhancing asset utilization, selling off wasting assets, investing in new growth engines, retiring incompetent people, inducting new talent, raising fresh finance, driving innovation and creating new management processes. The strategy mix, when implemented in totality by an organization of competent and refurbished talent, would lead to a total strategic transformation of the company. Sustained performance would lead to the reemergence of the company as a healthy and profitable entity, once again firmly on the growth path.
Self-sustaining cash flow is ultimately the fundamental goal of any business -- it makes the company valuable to shareholders, employees, suppliers and customers, and the society at large. A leadership which stays connected with the imperative of business competitiveness is bound to succeed.
Cases of corporate revival through leadership
There are legions of companies that went through growth, mismanagement and performance failure to only prosper again through leadership reform and strategic change. Xerox, HP, Sony, AT&T, IBM, Renault, Nissan are but a few standing examples in the international scene. Lupin, Bata India, Singareni Colleries, HMT, Essar Steel, Balsaras, United Bank of India, Tanishq, Indian Railways, Reliance Communications, Britannia, and scores of other companies had seen turnaround through corrected and spirited leadership in India.
Leaders who presided over the failures of companies should question themselves why they cannot turnaround their own companies if historically other companies could be turned around by existing owners or leaders at least in some cases, and by new owners and leaders in most cases. It is also up to them to analyze as reformed leaders whether they would be able to turnaround their companies despite the negative overhang on their reputation, or try out their competencies in newer, relatively, unbiased settings. Whichever path is chosen, an honest self-evaluation of their leadership role in the corporate collapse is the first step towards that process. There will be two major hurdles in the way of such candid self-evaluation by a leader: firstly, the ego state of the leader and secondly, the obsessive state of his team. It is however a moot question whether failed leaders and their teams would make wise and timely choices in their moments of crisis, and become creators of positive change rather than end up as chapters of a frozen history.
Posted by Dr CB Rao on June 12, 2009
Jan Baan : boon and bane for BAAN
BAAN, the ERP company was one of the technology success stories of the 1990s. BAAN benefited from the entrepreneurial and communication skills of the then chief executive officer and founder Jan Baan. A pioneer in ERP technologies of that era, BAAN nevertheless lacked basic management skills, grew under opaque and incorrect accounting practices and, by Jan Baan’s own later time admission, suffered from his ego and greed as a corporate leader. He had to eventually sell the company and exit the board.
The spirit of a pioneer, if he is also an entrepreneur, perhaps cannot be held back. Jan Baan became a VC and helped two established companies with pioneering technologies grow. The first one was WebExpress which pioneered global connectivity and conferencing solutions and the other was TopTier which pioneered portal solutions for ERP systems. WebExpress was sold to CISCO while TopTier was sold to SAP, both for handsome valuations. Both platforms continue to lead with their technologies in the new homes. Presently, Jan Baan is leading his own new entrepreneurial venture, Cordys which is engaged in cloud computing architecture which Google is pursuing as a game-changer.
Jan Baan’s track record with BAAN reflects a hypothesis that a leader fails when ego and greed overshadow his capabilities and competencies. Baan’s later day successes with the three follow-on companies suggests also that a leader can rediscover his touch as long as he retains his core competencies, overcomes his weaknesses and controls his ego and greed.
Leadership decline : causes
Reversing leadership failure through retained competencies and corrected behavior is easier said than done. Very few leaders would have it in them to acknowledge their weaknesses and failures even tacitly and embark upon a plan of professional reconstruction. Leaders of failing organizations often are drawn into seclusion, are distanced from competent but independent executives, are influenced by a servile coterie of incompetent executives and continue to be driven by an imagery of super-performance.
Only when performance becomes hopelessly eroded and stakeholder environment turns openly hostile such leaders recognize that they are confronted with, and confounded by, the worst phase of their careers. Leaders in such situations give up or are forced to give up their companies. The leaders have few options left in such terminal situations; seek external professional help (eg., turnaround consultancy), seek corporate alliances (eg., mergers or investments by larger firms, or take recourse to corporate law (eg., bankruptcy) to pull the chestnuts out of the fire. Few investors or boards, or for that matter the leaders themselves, can consider any other alternative.
It is indeed a personal decision by a leader to decide on the path he or she should take, given a legacy of dramatic growth which is followed by dismal collapse. The leader should recognize that timely admission of failure helps not only his company but also his own stature. From a situation in which events would control him he can then look forward to a possibility of his basic competencies being considered for a genuine revival process. More fundamentally, he should also recognize that he would no longer have implicit trust as in the past; and that he has to earn the trust once again, and with much greater effort.
A failed leader rarely gets a chance to manage a corporate turnaround. This stems from the fact that typically not only he would have contributed to the mess but would, more often than not, be refusing to recognize that that he, in fact, contributed to the mess. The logical and rational part of such leaders is overwhelmed by the emotional and egoistic part, ruling out any chance of voluntary course correction. Many times such leaders and their coterie of executives would continue to lead and manage their corporations till the doomsday without any change in professional style and without any corrective action, hoping rather naively that a dramatic plan or sudden breakthrough would still help them tide over the crisis.
Timely recognition of an impending crisis is as much a hallmark of a true leader as identification of an emerging opportunity is. Why then leaders fail to recognize the crisis so often? Leaders gloss over the emergence of crises because they tend to believe that their leadership is unassailable and the environment is not unmanageable. All the failed chiefs of bankrupt corporations, from Bear Stearns to General Motors, refused to recognize and respond to crises in logical, timely and transparent manner. This refusal syndrome is the common factor in failures of leadership.
This ostrich-like leadership behavior defies logic when one considers that there are several metrics of performance that are available for a leader to easily understand whether his firm is sliding into a crisis situation. These relate to competition, market share, growth rate, customer access, productivity, attrition, and a host of profitability ratios. Some very relevant financial metrics include asset turnover ratio, capital output ratio, debt equity ratio, interest cover, receivables percentage, payables percentage, profitability margins and so on. The catch is that leaders oftentimes view these as functional metrics relevant for functional heads rather than as corporate metrics that are even more applicable to the chief executives themselves. That each of these parameters has a vital bearing on the overall health of the corporation is not recognized by such leaders until it is too late.
Possibly, in some cases, an insecurity of losing managerial control obscures the clarity of thought in failing leaders and spurs them to try to work their way under a façade. A leader who overcomes this vulnerability can possibly recapture his magic, working in collaboration with an intelligent and mentoring board and a positively activist shareholder base. Except in cases of wanton mal-governance and illegitimate activities, a leader can offer himself to revive the company he led to growth first and to collapse next.
Pathways to correction
Even great organizations had failed in the past. IBM of the 1970s and 1980s is a case in point. As IBM historians state its leadership was in disconnect with the market as well its own organization. According to them, “IBM had all the ingredients for failure: arrogance, complacency, bureaucracy, a sense of malaise in the organization." A realization of failure and a new leadership model which emphasized contemporary management processes led to a revival. If a new leadership can achieve corporate revival there is no reason why an existing leader cannot do so, provided he rediscovers himself. A leader in crisis has to bring in positive change as a proactive alternative to being out of the leadership role.
Obviously there are pros and cons of an existing leader trying to retrieve the firm from a crisis vis-Ã -vis a new leader wielding the broom. Fundamentally, an existing leader can be a successful turnaround manager if he has reformed himself and is willing to live down his past in a transparent manner and redeem the future with constructive creativity. Such a leader will of course require strong support from the investors and board to lead the turnaround. As mentioned earlier, trust for failed leaders would not be forthcoming automatically but has to be sought assiduously. On the other hand, a new leader comes with little baggage of the past and with the full and automatic support of the stakeholders. He can thus take radical actions but, given his relative lack of understanding of the company, runs the risk of throwing the baby with the bathwater. The boards and investors who would have committed unflinching support unconditionally upfront would think twice before questioning the new turnaround leaders all too quickly.
In sum, if a failed leader recognizes a crisis in time and is willing to make a clean break to overcome the crisis there is possibly merit in trusting him on a revival path. There are, several actions a failed leader, his board and the investors can consider to preserve the virtuous part of the past while chiseling away the infamous blemishes and building a new genuine strength in the failed leader.
Fundamentally, the leader has to admit the impending crisis with his board on one hand and with his senior executive ream on the other. Such a move, no doubt, explodes the myth of invincibility and infallibility of single-handed achievement that he has built. But it also helps him to come to terms in a non-egoistic manner with the new reality of a potential failure that could occur if he takes no corrective action in a collaborative manner. This openness should lead to a five-step process of corporate correction: problem definition, solution definition, talent induction, strategic transformation and performance improvement.
Corporate failure is caused by loss of competitiveness vis-Ã -vis other competitors. Competitiveness is determined by benchmarking the company against the more successful players in the industry in a transparent manner. Benchmarking helps a leader define the problem in a cohesive manner. The leader then has to introspect on the roles played by his leadership style and the available talent pool in the loss of competitiveness. Once the company’s pecking order on the competitiveness parameters is determined, the leader has to put in place a framework of strategies to improve the company on its pecking order.
The turnaround strategy mix could comprise seemingly contradictory activities such as expanding viable businesses, shrinking or spinning off unviable businesses, enhancing asset utilization, selling off wasting assets, investing in new growth engines, retiring incompetent people, inducting new talent, raising fresh finance, driving innovation and creating new management processes. The strategy mix, when implemented in totality by an organization of competent and refurbished talent, would lead to a total strategic transformation of the company. Sustained performance would lead to the reemergence of the company as a healthy and profitable entity, once again firmly on the growth path.
Self-sustaining cash flow is ultimately the fundamental goal of any business -- it makes the company valuable to shareholders, employees, suppliers and customers, and the society at large. A leadership which stays connected with the imperative of business competitiveness is bound to succeed.
Cases of corporate revival through leadership
There are legions of companies that went through growth, mismanagement and performance failure to only prosper again through leadership reform and strategic change. Xerox, HP, Sony, AT&T, IBM, Renault, Nissan are but a few standing examples in the international scene. Lupin, Bata India, Singareni Colleries, HMT, Essar Steel, Balsaras, United Bank of India, Tanishq, Indian Railways, Reliance Communications, Britannia, and scores of other companies had seen turnaround through corrected and spirited leadership in India.
Leaders who presided over the failures of companies should question themselves why they cannot turnaround their own companies if historically other companies could be turned around by existing owners or leaders at least in some cases, and by new owners and leaders in most cases. It is also up to them to analyze as reformed leaders whether they would be able to turnaround their companies despite the negative overhang on their reputation, or try out their competencies in newer, relatively, unbiased settings. Whichever path is chosen, an honest self-evaluation of their leadership role in the corporate collapse is the first step towards that process. There will be two major hurdles in the way of such candid self-evaluation by a leader: firstly, the ego state of the leader and secondly, the obsessive state of his team. It is however a moot question whether failed leaders and their teams would make wise and timely choices in their moments of crisis, and become creators of positive change rather than end up as chapters of a frozen history.
Posted by Dr CB Rao on June 12, 2009
Monday, June 29, 2009
Michael Jackson, the Phenomenon : An Eternity of Music and Dance; Energy and Enigma
Michael Jackson (1958-2009), the King of Pop, is no more. Yet, as universally acknowledged, his captivating music and mesmerizing dance will not merely survive him but keep growing in popular esteem, for the sheer vibrancy and versatility. Though he has not been cutting music albums and conducting public shows for the last several years, the spontaneous groundswell of acclaim, post-his sudden demise, for his unique genre of pop music demonstrates that truly original music never ebbs in its charismatic appeal.
The unbelievable progression of Michael Jackson (MJ) from a child singer who bloomed at a tender age of 6 to a global pop icon by the age of 21 has few parallels. MJ’s life as a public performer, however, contrasted enormously with his life as a private person. His pristine creativity was accompanied by pathetic eccentricity; his unmatched ability to connect with his audience was contradicted by an inexplicable refusal to communicate with the society; and his innate ability to institutionalize his originality was eroded by an overt inability to be bound by any established cultural consonance. MJ was mighty and maverick in his music, dazzling and dumb-founding in his dance, lofty and lavish in his living, and encompassing yet elusive as a global citizen.
The enthralling fusion of music and dance that he characterized demonstrates that true originality and genuine artistry do not stay static in time; they are dynamic and inventive, always changing over time. If his initial albums such as Off the Wall (1979), Thriller (1982) and Bad (1987) reflected the social dynamics of an American Street of the times, his later ones such as Dangerous (1991), HIStory (1995) and Invincible (2001) reflected a more universal, even if esoteric multi-cultural tapestry. From beating the norms to healing the world, his music encompassed myriad patterns of social and human behavior.
MJ’s voice had a rare range that few in the western music industry possessed. From high-pitched vocals that characterized most of his musical works to mind-soothing wafts like Heal the World that underscored his musical versatility, MJ covered it all. It is however his dance movements that remain to date truly iconic. Whether it is his virtually patented, inimitable moon-walking or lightning body movements, there has not been, and would not perhaps be, any other dancer who combined such vigorous stylistic dancing with rhythmically pulsating music in a completely harmonious and soulful manner.
The life of MJ, however, has its lessons too. The first and foremost lesson is that while the human body and mind can be pushed to unimaginable limits of performance and endurance, any endeavor to drive it with medicines comes at a huge cost to the very life itself. Second, as a person grows in public stature personal life can never be separated from public posture. Third, as one epitomizes universal art, one’s heart and brain as well as mind and body must collaborate rather than conflict with each other. Fourth, as a public performer turns recluse, creativity is often overshadowed by eccentricity and purposive actions are often tripped by bizarre behaviors. Fifth, compensating a painful past by a perverse present can only lead to a fractured future.
Over the last few years, mystique and mystery, charity and charade, sophistry and scandal co-existed in a quixotic manner in MJ’s life. Whether MJ was child-like or childish and whether he was intriguing or had intrigue in him would perhaps be never known. Leaving aside these sad and complex facets of his life and personality, history would certainly remember MJ for what he is best at – his musical genius and dancing sprite.
From the point of view of transforming an intrinsic skill into a cult phenomenon and channeling superlative passion into mind-blowing performance, MJ had few parallels. Yet, it would have been difficult even for MJ to have generated that kind of impact, were it not for his astute association with brilliant music producers such as Quincey Jones and world-class global music distributors such as Sony on one hand, and the pioneering use of contemporary technologies in stage-setting and videography, on the other. Had MJ continued to pursue creativity, technique and technology as enablers, instead of relying on pharmaceuticals and fantasies, he would have perhaps lived on to score and stage another 50 years of scintillating music and dance.
MJ as a phenomenon would live forever in the hearts of music and dance lovers. Whether one likes his unique, and occasionally ribald, form of music and dance or not, it is impossible for one not to acknowledge and be mesmerized by MJ’s sheer musical brilliance and dancing prowess. MJ will remain as an icon of trend-setting creativity, boundless energy and consummate artistry albeit with avoidable enigma, in the global music and dance space, eternally.
Posted by Dr CB Rao on June 29, 2009
The unbelievable progression of Michael Jackson (MJ) from a child singer who bloomed at a tender age of 6 to a global pop icon by the age of 21 has few parallels. MJ’s life as a public performer, however, contrasted enormously with his life as a private person. His pristine creativity was accompanied by pathetic eccentricity; his unmatched ability to connect with his audience was contradicted by an inexplicable refusal to communicate with the society; and his innate ability to institutionalize his originality was eroded by an overt inability to be bound by any established cultural consonance. MJ was mighty and maverick in his music, dazzling and dumb-founding in his dance, lofty and lavish in his living, and encompassing yet elusive as a global citizen.
The enthralling fusion of music and dance that he characterized demonstrates that true originality and genuine artistry do not stay static in time; they are dynamic and inventive, always changing over time. If his initial albums such as Off the Wall (1979), Thriller (1982) and Bad (1987) reflected the social dynamics of an American Street of the times, his later ones such as Dangerous (1991), HIStory (1995) and Invincible (2001) reflected a more universal, even if esoteric multi-cultural tapestry. From beating the norms to healing the world, his music encompassed myriad patterns of social and human behavior.
MJ’s voice had a rare range that few in the western music industry possessed. From high-pitched vocals that characterized most of his musical works to mind-soothing wafts like Heal the World that underscored his musical versatility, MJ covered it all. It is however his dance movements that remain to date truly iconic. Whether it is his virtually patented, inimitable moon-walking or lightning body movements, there has not been, and would not perhaps be, any other dancer who combined such vigorous stylistic dancing with rhythmically pulsating music in a completely harmonious and soulful manner.
The life of MJ, however, has its lessons too. The first and foremost lesson is that while the human body and mind can be pushed to unimaginable limits of performance and endurance, any endeavor to drive it with medicines comes at a huge cost to the very life itself. Second, as a person grows in public stature personal life can never be separated from public posture. Third, as one epitomizes universal art, one’s heart and brain as well as mind and body must collaborate rather than conflict with each other. Fourth, as a public performer turns recluse, creativity is often overshadowed by eccentricity and purposive actions are often tripped by bizarre behaviors. Fifth, compensating a painful past by a perverse present can only lead to a fractured future.
Over the last few years, mystique and mystery, charity and charade, sophistry and scandal co-existed in a quixotic manner in MJ’s life. Whether MJ was child-like or childish and whether he was intriguing or had intrigue in him would perhaps be never known. Leaving aside these sad and complex facets of his life and personality, history would certainly remember MJ for what he is best at – his musical genius and dancing sprite.
From the point of view of transforming an intrinsic skill into a cult phenomenon and channeling superlative passion into mind-blowing performance, MJ had few parallels. Yet, it would have been difficult even for MJ to have generated that kind of impact, were it not for his astute association with brilliant music producers such as Quincey Jones and world-class global music distributors such as Sony on one hand, and the pioneering use of contemporary technologies in stage-setting and videography, on the other. Had MJ continued to pursue creativity, technique and technology as enablers, instead of relying on pharmaceuticals and fantasies, he would have perhaps lived on to score and stage another 50 years of scintillating music and dance.
MJ as a phenomenon would live forever in the hearts of music and dance lovers. Whether one likes his unique, and occasionally ribald, form of music and dance or not, it is impossible for one not to acknowledge and be mesmerized by MJ’s sheer musical brilliance and dancing prowess. MJ will remain as an icon of trend-setting creativity, boundless energy and consummate artistry albeit with avoidable enigma, in the global music and dance space, eternally.
Posted by Dr CB Rao on June 29, 2009
Saturday, May 30, 2009
HR Challenges in Integrated and Diversified Business Entities
Human Resources (HR) functions of companies face major challenges today as businesses struggle to remain competitive and retain markets. Companies across sectors are facing the challenges of physical and financial performance. While certain industries may be considered to be relatively insulated from economic downturn, one cannot be complacent as the bottom of the meltdown is perhaps not tested yet. In any case, even in the best of the times being efficient and productive is the only way to have a competitive advantage in the market place.
From a positive side, companies which have a high level of integration or operate in multiple business segments seem to offer continued sustainability. Integrated companies are expected to be more cost competitive, and thus secure market share. For example, an automaker with capability to make its own castings and forgings has higher cost efficiencies. Diversified businesses are expected to demonstrate increased business potential in terms of catering to multiple segments at diverse price points. For example, a hotel chain which has a cluster of hotels from luxury to budget hotels has a greater probability of sustenance than a hotel with only luxury properties. A full-line automotive maker has better chances of growth than only a focused car maker or truck maker. In addition, diversified entities would have the capability to shuffle resources across businesses. At the same time, integration or diversification imposes great challenges in building and managing facility and organizational infrastructure in an environment of economic downturn.
In today’s environment, businesses whether integrated or diversified can grow only based on competitiveness. Competitiveness of a business or an organization is derived from a host of factors such as science & technology, facilities, people and finances. Competitiveness is essentially deriving greater value at lower cost. Organizations typically focus less on value and more on cost, in recessionary times. While such organizations would certainly survive and consolidate during the troubled times, they would be incapable of riding the wave of growth when the economies begin to boom again. The concept of competitiveness which focuses on both the elements of value and cost would ensure that the organizations become not only efficient and productive for today but also innovative and creative for the future.
Going forward, HR needs to be particularly conscious of its role in the game of competitiveness. In this context, HR needs to focus on four important challenges: (i) business, (ii) structure, (iii) talent and (iv) performance.
Business:
Integration of manufacturing lines is an enabler for achieving industry dominance with end-to-end connectivity. Diversification of product-market segments is a hedge against recession and an insulation against risk. Yet such strategies carry certain inherent challenges.
The challenge for integrated companies is that such companies run the risk of a significant disconnect between the asset base and turnover scale. Integrated businesses tend to accumulate assets relative to a narrow market base and hence would need to move from being asset-centric to being market or customer-centric, to ensure business profitability. Diversified businesses which are also fully integrated in each business segment would carry maximal asset risk which can be catered to only by maximization of each market opportunity.
The challenge for diversified entities is that any diversification strategy needs to be dynamic. In any good diversification business strategy, with time each business needs to move into the pre-cursor fundamental business thus strengthening the bottom of the business pyramid even as newer businesses enter the futuristic segments. This implies that existing businesses have to be grown and new businesses initiated at a rapid clip.
The common challenge relates to understanding and balancing the two factors that are cost related, both for integrated and diversified companies. One relates to the cost of doing a business and the other relates to the price at which a business can be done. Organizations with integrated or diversified businesses (more so if each of the businesses is a long gestation activity) have to bear huge pre-operative costs before such businesses generate revenues. Such asset-intensive or long-gestation businesses have a cost to operate and the companies should be prepared to bear it. The second relates to the price at which the business can be done. In the final count, a distinct value proposition (quality-cost balance) is required for each product or service offered by the company. Integrated companies face competition from firms which focus only on end-product manufacture and have competencies in outsourcing efficiently. Diversified companies face competition in each of their business segments from leaner and more competitive companies which are more efficient because of lower investments in the respective limited business horizons. Merely being integrated or diversified with world-class assets, may not support high levels of pricing.
There are three compelling lessons from the above in terms of business considerations. Integrated or diversified companies should enable businesses to be revenue and profit accretive as speedily as possible so that there is a virtuous sequence of consolidation and growth in businesses. Organization structure and talent space should be strengthened so that asset capabilities and market needs are closely aligned. Despite being a large corporation, each of the segments has to be appropriately lean, efficient and competitive on a stand alone basis, in respect of each manufacturing line or business segment.
Structure:
Organization structure is an instrument to translate strategy into performance. An organization structure has to be clearly delineated and dovetailed with the objectives of the business. An integrated company often suffers from a staid and rigid organization structure. A diversified company with a common ownership structure encounters several organizational dynamics, related to multiple business eco-systems. Several organization structures have been experimented from time to time such as product organization, geographical organization, functional organization, business organization and matrix organization in such entities. No individual structure, however, provides comprehensive solutions to all the requirements.
Dilemmas with reference to organization structure are common across companies, in terms of experimentation from time to time. A unique and almost genetic problem is one of overlapping structures and unclear responsibilities. While collective responsibility and accountability are important components of team functioning and delivery, individual clarity and focus are equally important to ensure focused and timely delivery, with due accountability.
HR has the primary responsibility in designing and implementing an organization structure that enables a company achieve its business objectives through a robust business strategy and coordinated execution. The structure also has to recognize the desirable aspects of an organization’s positive culture and also integrate the desirable needs of performance competitiveness.
Given the long value chains that integrated companies have or multiple business segments that diversified companies operate in, structures that enable integrated business responsibility, often called P&L responsibility, or at least integrated resource management, could help companies achieve the business imperatives. In order to guard against excessive individualization of businesses, such business-centric organizations have to be integrated under a group ambit through appropriate mechanisms such as a corporate centre, leadership council or executive board.
Talent:
Building of cost-effective talent pools is a major challenge in a recessionary environment. The problem increases exponentially in diversified companies. In the past, companies have been able to attract and retain talent on the basis of opportunity and compensation. In some cases, positive culture and professional empowerment have been additional points of attraction. In today’s market, value propositions need to be more discriminating. The enduring talent model that meets the requirements of all economic cycles is paradoxically internally focused.
One needs to refer to the scores of books on Toyota’s legendary organizational capabilities to realize that an unrelenting focus on systems and people has been at the core of Toyota’s success. The Toyota Production System has been accepted as the global benchmark for efficiency in automobile manufacture as it delivers consistent quality at competitive prices. The system demands high capability to operate which in turn demands highly skilled human resource base. Toyota does (and most Japanese companies do) a few things differently. In recruitment stage, specification of people-quality is translated to actual selection of people with high quality. During the training period and in the early years, continuous product and process exposure is provided to employees while regular job redeployment and job rotation are practised in mid-career stages. Business systems are designed in a manner that requires high capability while continuous training of people to better their own benchmarks. Toyota thus integrates every conceivable facet of talent management with a focus on operational excellence through people skills.
Generically, in a typical Japanese corporation, conceptual and analytical processes are standardized in the organization as an intrinsic core capability. Whether it is a legal department or a research department, and whether it is a technical department or a business department, the employees are trained to analyze and solve problems in a particular framework which follows the essential sequence. (i) definition of the problem, (ii) analysis of causes, (iii) development of solutions, (iv) evaluation of alternatives, (v) prioritization and selection of solutions and (vi) evolution of consensus on the chosen solutions. Probably, this unique thinking emanates from the way pedagogy is practiced at the school and college levels in Japan and from the unique participative and consensual culture of the Japanese society. This peculiarity of Japan however should not be an alibi for not following such methodology. Reputed international consulting organizations such as McKinsey also owe their success to the above methodology, at least in terms of the first five points. It is probably time that HR in companies thought about enhancing the conceptual and analytical capability of the employee base individually and as a whole.
Performance:
Individuals in organizations exist to generate revenues and profits for the company. Some creatively identify opportunities, some execute creditably for the opportunities and some review the opportunity-performance relationship. Some contribute by saving costs and some contribute by building value. Together the organization must tick to execute a sustainable business model that optimizes revenues and profits for the short term as well as for the long term.
Here again, much research has gone into the ideal way to measure the performance of an organization, its sub-units and individuals. From annual performance appraisals to 360 degrees assessment centres no system has been wholly satisfactory. Short term results and individual comfort factors continue to influence how performance is captured, interpreted and rewarded. Very often individual performance and corporate performance on one hand and as well as short term performance and long term viability lack alignment. In this context, the Balanced Score Card (BSC) methodology pioneered by Robert Kaplan and David Norton has been widely recognized as capable of integrating all factors of performance such as efforts and results covering both the short term and long term. It also focuses on aspects which are almost always missed out (for eg., process capability and learning interest). It also uniquely quantifies even apparently qualitative and conceptual factors.
With the economy and business environment having undergone a major change, corporate strategies and objectives also require matching changes to remain competitive. Also, quite apart from operations and facilities, corporate functions and shared services also require their own scorecards. In a typical company, one can conceptualize hundreds of initiatives covering multiple domains spanning the four BSC dimensions of Financial, Customer, Internal Business Process and Learning & Development. It is indeed a full-time responsibility for a business and execution savvy team to do justice to the BSC initiative, particularly in a diversified company, which has to cater to multiple business characteristics and talent needs.
HR has major challenges from a business perspective in the current turbulent times, more so in highly integrated and / or diversified entities. There are several strategic and operational perspectives that are relevant for HR to effectively fulfill its role in such entities. Fundamentally, HR would need to be an integral component of all key business processes, given the complexities of business management in such entities. HR’s contribution to business competitiveness would be immensely enhanced by itself being an organizational role model of understanding and enabling business competitiveness.
Posted by Dr CB Rao on May 31, 2009
From a positive side, companies which have a high level of integration or operate in multiple business segments seem to offer continued sustainability. Integrated companies are expected to be more cost competitive, and thus secure market share. For example, an automaker with capability to make its own castings and forgings has higher cost efficiencies. Diversified businesses are expected to demonstrate increased business potential in terms of catering to multiple segments at diverse price points. For example, a hotel chain which has a cluster of hotels from luxury to budget hotels has a greater probability of sustenance than a hotel with only luxury properties. A full-line automotive maker has better chances of growth than only a focused car maker or truck maker. In addition, diversified entities would have the capability to shuffle resources across businesses. At the same time, integration or diversification imposes great challenges in building and managing facility and organizational infrastructure in an environment of economic downturn.
In today’s environment, businesses whether integrated or diversified can grow only based on competitiveness. Competitiveness of a business or an organization is derived from a host of factors such as science & technology, facilities, people and finances. Competitiveness is essentially deriving greater value at lower cost. Organizations typically focus less on value and more on cost, in recessionary times. While such organizations would certainly survive and consolidate during the troubled times, they would be incapable of riding the wave of growth when the economies begin to boom again. The concept of competitiveness which focuses on both the elements of value and cost would ensure that the organizations become not only efficient and productive for today but also innovative and creative for the future.
Going forward, HR needs to be particularly conscious of its role in the game of competitiveness. In this context, HR needs to focus on four important challenges: (i) business, (ii) structure, (iii) talent and (iv) performance.
Business:
Integration of manufacturing lines is an enabler for achieving industry dominance with end-to-end connectivity. Diversification of product-market segments is a hedge against recession and an insulation against risk. Yet such strategies carry certain inherent challenges.
The challenge for integrated companies is that such companies run the risk of a significant disconnect between the asset base and turnover scale. Integrated businesses tend to accumulate assets relative to a narrow market base and hence would need to move from being asset-centric to being market or customer-centric, to ensure business profitability. Diversified businesses which are also fully integrated in each business segment would carry maximal asset risk which can be catered to only by maximization of each market opportunity.
The challenge for diversified entities is that any diversification strategy needs to be dynamic. In any good diversification business strategy, with time each business needs to move into the pre-cursor fundamental business thus strengthening the bottom of the business pyramid even as newer businesses enter the futuristic segments. This implies that existing businesses have to be grown and new businesses initiated at a rapid clip.
The common challenge relates to understanding and balancing the two factors that are cost related, both for integrated and diversified companies. One relates to the cost of doing a business and the other relates to the price at which a business can be done. Organizations with integrated or diversified businesses (more so if each of the businesses is a long gestation activity) have to bear huge pre-operative costs before such businesses generate revenues. Such asset-intensive or long-gestation businesses have a cost to operate and the companies should be prepared to bear it. The second relates to the price at which the business can be done. In the final count, a distinct value proposition (quality-cost balance) is required for each product or service offered by the company. Integrated companies face competition from firms which focus only on end-product manufacture and have competencies in outsourcing efficiently. Diversified companies face competition in each of their business segments from leaner and more competitive companies which are more efficient because of lower investments in the respective limited business horizons. Merely being integrated or diversified with world-class assets, may not support high levels of pricing.
There are three compelling lessons from the above in terms of business considerations. Integrated or diversified companies should enable businesses to be revenue and profit accretive as speedily as possible so that there is a virtuous sequence of consolidation and growth in businesses. Organization structure and talent space should be strengthened so that asset capabilities and market needs are closely aligned. Despite being a large corporation, each of the segments has to be appropriately lean, efficient and competitive on a stand alone basis, in respect of each manufacturing line or business segment.
Structure:
Organization structure is an instrument to translate strategy into performance. An organization structure has to be clearly delineated and dovetailed with the objectives of the business. An integrated company often suffers from a staid and rigid organization structure. A diversified company with a common ownership structure encounters several organizational dynamics, related to multiple business eco-systems. Several organization structures have been experimented from time to time such as product organization, geographical organization, functional organization, business organization and matrix organization in such entities. No individual structure, however, provides comprehensive solutions to all the requirements.
Dilemmas with reference to organization structure are common across companies, in terms of experimentation from time to time. A unique and almost genetic problem is one of overlapping structures and unclear responsibilities. While collective responsibility and accountability are important components of team functioning and delivery, individual clarity and focus are equally important to ensure focused and timely delivery, with due accountability.
HR has the primary responsibility in designing and implementing an organization structure that enables a company achieve its business objectives through a robust business strategy and coordinated execution. The structure also has to recognize the desirable aspects of an organization’s positive culture and also integrate the desirable needs of performance competitiveness.
Given the long value chains that integrated companies have or multiple business segments that diversified companies operate in, structures that enable integrated business responsibility, often called P&L responsibility, or at least integrated resource management, could help companies achieve the business imperatives. In order to guard against excessive individualization of businesses, such business-centric organizations have to be integrated under a group ambit through appropriate mechanisms such as a corporate centre, leadership council or executive board.
Talent:
Building of cost-effective talent pools is a major challenge in a recessionary environment. The problem increases exponentially in diversified companies. In the past, companies have been able to attract and retain talent on the basis of opportunity and compensation. In some cases, positive culture and professional empowerment have been additional points of attraction. In today’s market, value propositions need to be more discriminating. The enduring talent model that meets the requirements of all economic cycles is paradoxically internally focused.
One needs to refer to the scores of books on Toyota’s legendary organizational capabilities to realize that an unrelenting focus on systems and people has been at the core of Toyota’s success. The Toyota Production System has been accepted as the global benchmark for efficiency in automobile manufacture as it delivers consistent quality at competitive prices. The system demands high capability to operate which in turn demands highly skilled human resource base. Toyota does (and most Japanese companies do) a few things differently. In recruitment stage, specification of people-quality is translated to actual selection of people with high quality. During the training period and in the early years, continuous product and process exposure is provided to employees while regular job redeployment and job rotation are practised in mid-career stages. Business systems are designed in a manner that requires high capability while continuous training of people to better their own benchmarks. Toyota thus integrates every conceivable facet of talent management with a focus on operational excellence through people skills.
Generically, in a typical Japanese corporation, conceptual and analytical processes are standardized in the organization as an intrinsic core capability. Whether it is a legal department or a research department, and whether it is a technical department or a business department, the employees are trained to analyze and solve problems in a particular framework which follows the essential sequence. (i) definition of the problem, (ii) analysis of causes, (iii) development of solutions, (iv) evaluation of alternatives, (v) prioritization and selection of solutions and (vi) evolution of consensus on the chosen solutions. Probably, this unique thinking emanates from the way pedagogy is practiced at the school and college levels in Japan and from the unique participative and consensual culture of the Japanese society. This peculiarity of Japan however should not be an alibi for not following such methodology. Reputed international consulting organizations such as McKinsey also owe their success to the above methodology, at least in terms of the first five points. It is probably time that HR in companies thought about enhancing the conceptual and analytical capability of the employee base individually and as a whole.
Performance:
Individuals in organizations exist to generate revenues and profits for the company. Some creatively identify opportunities, some execute creditably for the opportunities and some review the opportunity-performance relationship. Some contribute by saving costs and some contribute by building value. Together the organization must tick to execute a sustainable business model that optimizes revenues and profits for the short term as well as for the long term.
Here again, much research has gone into the ideal way to measure the performance of an organization, its sub-units and individuals. From annual performance appraisals to 360 degrees assessment centres no system has been wholly satisfactory. Short term results and individual comfort factors continue to influence how performance is captured, interpreted and rewarded. Very often individual performance and corporate performance on one hand and as well as short term performance and long term viability lack alignment. In this context, the Balanced Score Card (BSC) methodology pioneered by Robert Kaplan and David Norton has been widely recognized as capable of integrating all factors of performance such as efforts and results covering both the short term and long term. It also focuses on aspects which are almost always missed out (for eg., process capability and learning interest). It also uniquely quantifies even apparently qualitative and conceptual factors.
With the economy and business environment having undergone a major change, corporate strategies and objectives also require matching changes to remain competitive. Also, quite apart from operations and facilities, corporate functions and shared services also require their own scorecards. In a typical company, one can conceptualize hundreds of initiatives covering multiple domains spanning the four BSC dimensions of Financial, Customer, Internal Business Process and Learning & Development. It is indeed a full-time responsibility for a business and execution savvy team to do justice to the BSC initiative, particularly in a diversified company, which has to cater to multiple business characteristics and talent needs.
HR has major challenges from a business perspective in the current turbulent times, more so in highly integrated and / or diversified entities. There are several strategic and operational perspectives that are relevant for HR to effectively fulfill its role in such entities. Fundamentally, HR would need to be an integral component of all key business processes, given the complexities of business management in such entities. HR’s contribution to business competitiveness would be immensely enhanced by itself being an organizational role model of understanding and enabling business competitiveness.
Posted by Dr CB Rao on May 31, 2009
Priming the Indian Economy:Suggestions for Dr Manmohan Singh Government
Undoubtedly, India has managed its economy well amidst the global gloom and turbulence, relative to several advanced and emerging countries. Nevertheless, given our growth aspirations, the lower GDP growth rate (even if it went beyond the muted expectations) and the reduced level of investor confidence need to be addressed quickly by the new administration. In particular, the sharp decline in growth rates of the manufacturing and construction sectors is a cause for worry due to the likely cascading effect.
The positive vote received by the Congress Party and the UPA Government led by Dr Manmohan Singh reflects the desire of the people of India to build on the robust management of the economy for higher growth. Given that the previous Government desisted from unveiling a major economic stimulus plan possibly due to impending elections, and given also the unfinished economic reforms agenda there is a great potential for the new government to trigger major positive changes in the economy. This note summarizes the elements of a grand stimulus plan to take the economy to a double digit growth track.
Transportation Infrastructure
There can be no two views that the infrastructure in India is woefully inadequate, in terms of spread, scale, scope and efficiency. There is an urgent need for massive building of rail stations, bus stations, airports, sea ports, roads and bridges and waterways across the nation, spanning urban and rural areas.
India also lags the emerging economies such as China in terms of fast and economic transportation. Huge and productive investments need to be made in bullet trains, elevated rails, public transport buses and freight trains to ensure high productivity in transportation of men and materials in the country.
Together, the fixed infrastructure and mobility infrastructure should be the core of the economic stimulus package for the new Government. These investments will have positive cascading and multiplier effects across all industrial sectors and create millions of jobs, quite apart from enhancing productivity of life, and driving down the transaction costs.
Energy Infrastructure
Energy security is one of the critical needs of the economy. Energy shortages frequently cripple industrial and social activities in the country. The economic stimulus package will not be effective without a major thrust on energy. Building of new oil and gas rigs, greater exploitation of on-site and off-site energy sources, acquisition of overseas energy sources, building of nationwide oil and gas pipelines should merit urgent attention. These again will have significant cascading impact in terms of power and energy equipment manufacturing sector and construction sector. Within the energy sector, setting up of a whole new infrastructure for nuclear energy should form a discrete strategy. A mix of all sources of energy; conventional and non-conventional covering hydel, wind, solar, thermal and nuclear energy options need to be vigorously pursued.
Sunrise Infrastructure
Distinct from the core infrastructure is the sunrise infrastructure, which would be the Green Technologies. Alternative sources of energy, clean vehicles, green buildings, energy-efficient equipment are capable of priming a totally new wave of research and manufacture. They will help in the creation of a new genre of industries which will minimize energy consumption and enhance harmony with environment, while at the same time creating jobs from the most advanced research layers to the most needed basic foundations.
Positive Globalization
Globalization has come to stay; yet it is under threat due to a rising wave of protectionism in advanced countries. Positive globalization has three parts; (i) the globalization of value chain with a fair share for emerging markets based on factor competencies (not merely labor cost advantage), (ii) harmonization and opening up of all markets (in terms of customer access and transparent regulatory systems) and (iii) continuous churn of new technologies in the developed markets (leveraging the fundamental university competencies and funding strengths). The way China and Japan have collaborated in such globalization is an instructive model for other combinations of advanced and emerging markets.
India must participate in positive globalization by developing products for a wide spectrum of needs. Even as one generation of products is extensively globalized across the world, a new generation of products must take root. In such a model, products get developed in line with multiple market needs and purchasing power slabs, allowing whichever country is the inventive country to hold technological leadership in the new generation of products. India, of course, must play for inventive niche areas quite apart from becoming the manufacturing hub for the world.
University and Laboratory Innovation
In spite of all the failures that have come the way of advanced countries, these universities still remain the bedrock of science, technology and management, with the potential to trigger new waves of innovation and creativity. India has indeed a long, long way to go before university-led innovation becomes a national comparative advantage as in the US or Japan. It is necessary for the new government to step up investments in universities in frontier fields such as nanotechnology, stem cells, recycling, solar energy, biofuels, energy-efficient equipment and so on.
As in the case of National Institutes of Health in the US, it would be appropriate to set up new national institutes not only for health sciences but also for each of such sectors, if needed in 50:50 public-private partnerships.
Main Street and Dalal Street
One of the most profound observations made by President Obama in US is that there cannot be a thriving Wall Street without a thriving Main Street. It is indeed a universal truth for the modern times. The Main Street itself rests on a trio of education, industry and social services. Markets for products and services have to continually expand based on innovative and cost competitive products and services so that corporates can maximize wealth generation and the Dalal Street can then take a share of the wealth.
The core of the strategy should therefore be in terms of enhancing industrial and business competitiveness. All tools, from more efficient design to value engineering, from manufacturing productivity to supply chain efficiency and from information technology to artificial intelligence would need to be deployed to commercialize constantly new waves of products and services. Tax breaks for genuinely innovative R&D and manufacturing productivity, whether politically correct or not, appear to be economically justified.
Simultaneously, the Main Street corporates have to be released from the tyranny of Dalal Street (whether it is of quarterly guidance, analyst calls or rating scrutiny) as much as subject to competition from more competitive global companies. In the absence of such of thin and balanced approach, CEOs and CFOs would only be emphasizing the short run revenue and profit maximization to the detriment of long term innovation and strategic strengths of corporates. SEBI and the Ministry of Corporate Affairs must examine alternative reporting systems which focus on long term sustainability of businesses and corporates.
Affordable Healthcare
Healthcare continues to be a major concern in India. Cheap generic drugs provided some relief until recently due to India following a different patent regime. With harmonization of product patent regime that advantage has disappeared. The Indian society which is in any case faced with inadequate hospital infrastructure is now faced with high cost of medical treatment, whether domiciliary or hospital-based.
In this background, the unique “Arogya Sri” policy of the Government of Andhra Pradesh has served to revolutionalize healthcare for the masses in the state. This coupled with the state-wide emergency 108 service, has brought healthcare closer to the masses in Andhra Pradesh. Much more can be done in this area under such a progressive strategy, with public-private participation. The Arogya Sri concept needs to be reinforced and expanded on a national-wide basis by the new regime.
Simultaneously pharmaceutical firms need to be enabled to generate profits that can help them discover new drugs and manufacture high quality products. Pharmaceutical, medical and clinical research should be provided with liberal grants and tax breaks.
Tax and pricing breaks for industrial research
It is important that innovation in industrial research is continuously encouraged. It is disconcerting to see in this context that Indian firms have been unable to build critical mass of research. India is perhaps ranking lower both in technology innovation as well as technology imports (and absorption). These short-sighted approaches are clearly meant to manage the short run profit pressures. The new government should positively consider tax breaks for firms which invest in new product developments; each additional product domain entitling the company for a higher weighted average reduction of R&D investments.
Summary
A multi-pronged strategy of boosting investments in infrastructure, education and research, healthcare and positive globalization will constitute a grand economic stimulus which India needs to become an economic power-house in the years
Posted by Dr CB Rao on May 31, 2009
The positive vote received by the Congress Party and the UPA Government led by Dr Manmohan Singh reflects the desire of the people of India to build on the robust management of the economy for higher growth. Given that the previous Government desisted from unveiling a major economic stimulus plan possibly due to impending elections, and given also the unfinished economic reforms agenda there is a great potential for the new government to trigger major positive changes in the economy. This note summarizes the elements of a grand stimulus plan to take the economy to a double digit growth track.
Transportation Infrastructure
There can be no two views that the infrastructure in India is woefully inadequate, in terms of spread, scale, scope and efficiency. There is an urgent need for massive building of rail stations, bus stations, airports, sea ports, roads and bridges and waterways across the nation, spanning urban and rural areas.
India also lags the emerging economies such as China in terms of fast and economic transportation. Huge and productive investments need to be made in bullet trains, elevated rails, public transport buses and freight trains to ensure high productivity in transportation of men and materials in the country.
Together, the fixed infrastructure and mobility infrastructure should be the core of the economic stimulus package for the new Government. These investments will have positive cascading and multiplier effects across all industrial sectors and create millions of jobs, quite apart from enhancing productivity of life, and driving down the transaction costs.
Energy Infrastructure
Energy security is one of the critical needs of the economy. Energy shortages frequently cripple industrial and social activities in the country. The economic stimulus package will not be effective without a major thrust on energy. Building of new oil and gas rigs, greater exploitation of on-site and off-site energy sources, acquisition of overseas energy sources, building of nationwide oil and gas pipelines should merit urgent attention. These again will have significant cascading impact in terms of power and energy equipment manufacturing sector and construction sector. Within the energy sector, setting up of a whole new infrastructure for nuclear energy should form a discrete strategy. A mix of all sources of energy; conventional and non-conventional covering hydel, wind, solar, thermal and nuclear energy options need to be vigorously pursued.
Sunrise Infrastructure
Distinct from the core infrastructure is the sunrise infrastructure, which would be the Green Technologies. Alternative sources of energy, clean vehicles, green buildings, energy-efficient equipment are capable of priming a totally new wave of research and manufacture. They will help in the creation of a new genre of industries which will minimize energy consumption and enhance harmony with environment, while at the same time creating jobs from the most advanced research layers to the most needed basic foundations.
Positive Globalization
Globalization has come to stay; yet it is under threat due to a rising wave of protectionism in advanced countries. Positive globalization has three parts; (i) the globalization of value chain with a fair share for emerging markets based on factor competencies (not merely labor cost advantage), (ii) harmonization and opening up of all markets (in terms of customer access and transparent regulatory systems) and (iii) continuous churn of new technologies in the developed markets (leveraging the fundamental university competencies and funding strengths). The way China and Japan have collaborated in such globalization is an instructive model for other combinations of advanced and emerging markets.
India must participate in positive globalization by developing products for a wide spectrum of needs. Even as one generation of products is extensively globalized across the world, a new generation of products must take root. In such a model, products get developed in line with multiple market needs and purchasing power slabs, allowing whichever country is the inventive country to hold technological leadership in the new generation of products. India, of course, must play for inventive niche areas quite apart from becoming the manufacturing hub for the world.
University and Laboratory Innovation
In spite of all the failures that have come the way of advanced countries, these universities still remain the bedrock of science, technology and management, with the potential to trigger new waves of innovation and creativity. India has indeed a long, long way to go before university-led innovation becomes a national comparative advantage as in the US or Japan. It is necessary for the new government to step up investments in universities in frontier fields such as nanotechnology, stem cells, recycling, solar energy, biofuels, energy-efficient equipment and so on.
As in the case of National Institutes of Health in the US, it would be appropriate to set up new national institutes not only for health sciences but also for each of such sectors, if needed in 50:50 public-private partnerships.
Main Street and Dalal Street
One of the most profound observations made by President Obama in US is that there cannot be a thriving Wall Street without a thriving Main Street. It is indeed a universal truth for the modern times. The Main Street itself rests on a trio of education, industry and social services. Markets for products and services have to continually expand based on innovative and cost competitive products and services so that corporates can maximize wealth generation and the Dalal Street can then take a share of the wealth.
The core of the strategy should therefore be in terms of enhancing industrial and business competitiveness. All tools, from more efficient design to value engineering, from manufacturing productivity to supply chain efficiency and from information technology to artificial intelligence would need to be deployed to commercialize constantly new waves of products and services. Tax breaks for genuinely innovative R&D and manufacturing productivity, whether politically correct or not, appear to be economically justified.
Simultaneously, the Main Street corporates have to be released from the tyranny of Dalal Street (whether it is of quarterly guidance, analyst calls or rating scrutiny) as much as subject to competition from more competitive global companies. In the absence of such of thin and balanced approach, CEOs and CFOs would only be emphasizing the short run revenue and profit maximization to the detriment of long term innovation and strategic strengths of corporates. SEBI and the Ministry of Corporate Affairs must examine alternative reporting systems which focus on long term sustainability of businesses and corporates.
Affordable Healthcare
Healthcare continues to be a major concern in India. Cheap generic drugs provided some relief until recently due to India following a different patent regime. With harmonization of product patent regime that advantage has disappeared. The Indian society which is in any case faced with inadequate hospital infrastructure is now faced with high cost of medical treatment, whether domiciliary or hospital-based.
In this background, the unique “Arogya Sri” policy of the Government of Andhra Pradesh has served to revolutionalize healthcare for the masses in the state. This coupled with the state-wide emergency 108 service, has brought healthcare closer to the masses in Andhra Pradesh. Much more can be done in this area under such a progressive strategy, with public-private participation. The Arogya Sri concept needs to be reinforced and expanded on a national-wide basis by the new regime.
Simultaneously pharmaceutical firms need to be enabled to generate profits that can help them discover new drugs and manufacture high quality products. Pharmaceutical, medical and clinical research should be provided with liberal grants and tax breaks.
Tax and pricing breaks for industrial research
It is important that innovation in industrial research is continuously encouraged. It is disconcerting to see in this context that Indian firms have been unable to build critical mass of research. India is perhaps ranking lower both in technology innovation as well as technology imports (and absorption). These short-sighted approaches are clearly meant to manage the short run profit pressures. The new government should positively consider tax breaks for firms which invest in new product developments; each additional product domain entitling the company for a higher weighted average reduction of R&D investments.
Summary
A multi-pronged strategy of boosting investments in infrastructure, education and research, healthcare and positive globalization will constitute a grand economic stimulus which India needs to become an economic power-house in the years
Posted by Dr CB Rao on May 31, 2009
Monday, April 20, 2009
Cubic Leadership Model and Iconic Business Leaders
Management literature is filled with several leadership models which capture multiple skills and styles that are required of a leader. Yet there is a gap in the understanding of the uniquely contextual nature as well as certain common facets of leadership that are expected at the apex level of organizations, say as a Chief Executive Officer (CEO). This paper proposes a cubic leadership model relevant for the CEOs and illustrates its relevance and applicability through three iconic business leaders.
Leadership Cubes and Sub-cubes
The cubic model of leadership at CEO level is three dimensional, covering operating results, management processes and intellectual competencies. Each of the three primary dimensions has, in turn, three critical components. The resultant combinations uniquely differentiate a CEO’s overall leadership model.
On the result-orientation dimension, a CEO has three typical profiles: revenue driver, profit maker and value builder. A revenue driving CEO often seeks to develop and manage large businesses, driving primarily turnover. He or she is scale and scope oriented. Although, often profitability is seen as a function of revenue, some CEOs emerge as predominantly profit makers rather than revenue drivers. A profit oriented CEO achieves this by taking the right strategic decisions, timing the strategic decisions right, establishing market positions, striking remunerative alliances, creating and licensing intellectual property and swinging lucrative financial deals. Less visible, but equally important is a smaller but important set of CEOs who build institutions for future value. A value building CEO aggressively diversifies into newer business horizons periodically.
In respect of the process dimension, three facets of a CEO emerge: the visionary, the strategist and the implementer. The visionary CEO continually drives his organization towards newer horizons. The strategist CEO extends the vision into a strategy which can convert aspirations into achievements. Implementer CEO tends to be extremely task oriented. An implementer CEO is highly sensitive to the fact that even an indifferent vision or strategy gets enhanced by effective execution while a superior vision and strategy can become sub-optimal if execution is poor.
The intellectual dimension of a CEO encompasses three sub-dimensions, the Mentor, the Communicator and the Networker. A CEO’s domain knowledge, expertise and years of achievement naturally positions him well as a coach and mentor. The mentor CEO thus plays a major role in competency development in his organization. A CEO has also to be a communicator who articulates vision and strategy and emphasizes execution across the organisation. An articulate CEO when externally focused becomes a networker, connecting his organization with a host of customer and collaborator organizations.
Leadership cubes of different hues
The nine sub-dimensions discussed above occur in different combinations shaping the CEO leadership profiles in several synergistic and differentiated ways. For example, implementation, execution, communication and revenue driving facets particularly go well together. Aspects such as communication, networking, alliance building, competency leveraging and profit making synergize well. Mentoring and articulation of a vision, strategy development and organizational communication also have natural mutuality.
Strategy development and execution would be required for good communication and execution skills to convey the requirements across the organization and drive organizational performance. A visionary and strategist CEO would also be a value builder as he would recognize the importance of building organizational infrastructure for the future. Several meaningful and synergistic leadership cubes could thus emerge.
Each CEO would eventually develop his own balance of performance, leadership and competency dimensions. Profiling of successful CEOs could reflect a normal distribution, with a peak area of about 70 percent for driving revenue and profit growth. The outlying areas, on either side, of about 15 percent each could deal with value building and smart delivery. Variations to this distribution usually relate to the evolutionary stage of an organization. A firm in its early growth phase would require the CEO to focus in a preponderant manner on infrastructure and value building. A firm in its mid-growth phase would require the CEO to focus on revenue and profit generation. A mature corporation, on the other hand, would require the CEO to leverage the organisational capabilities to take the company to the a higher growth trajectory by building the next level of value and mentoring the employees for change management.
Certain unique global leaders, however, reflect an all-encompassing coverage of the multiple dimensions and sub-dimensions of the leadership cube. Three legendary leaders bring out the relevance of the cubic model, with common characteristics and subtle variations depending on the CEO, the industry and the firm.
Three cubic legends
Three iconic leaders, Jack Welch, Bill Gates and Carlos Ghosn epitomize the diverse yet integrated facets of a global CEO. Each leader represents an entirely different industrial or business setting; Jack Welch as the head of the largest multi-product global conglomerate, Bill Gates as the head of world’s most powerful software firm and Carlos Ghosn as the turnaround czar of the global auto industry. Yet, the model of leadership cubes comprehensively and meaningfully describes each of these three exemplary CEOs, in pertinent dimensions and their combinations.
Jack Welch : Jack and master of all
Jack Welch, a brilliant doctoral chemical engineer, was a veteran of General Electric (GE), having joined GE in 1960. He quickly rose in the hierarchy, becoming GE’s youngest Chairman and CEO in 1981. He was at the helm of GE for two decades, transforming it into an outstanding global company. Jack Welch’s legendary leadership qualities are well-documented. Jack is a fascinating personification of the leadership cube.
On the competency dimension, Jack Welch was an outstanding intellectual, communicator and networker, all rolled into one. He transformed GE into a competency based organization. He was a communicator par excellence, who effectively communicated his key ideas to rest of the organization, not only by delivering messages but also by persistently repeating them over and over, and ultimately securing the buy-in across the organization. More importantly, he created and institutionalized a learning environment in GE, including by setting up the famed leadership development institute at Crontonville. He networked globally, representing the collaborative and energetic face of GE to other firms and other nations. For example, he has been an early pioneer in spotting the capability of India as a futuristic base for R&D and business process outsourcing.
On the leadership dimension, Jack was a visionary who dreamt big, strategised to the finest detail and implemented for precise outcomes. His vision was that GE as a global player should have nothing less than the No. 1 or No. 2 status in whatever product or service it operates in. Such a vision set the tone for an aggressive strategy and effective execution. Fusing his envisioning and communication capabilities, he motivated the entire organization to own his vision. On the strategy front, he adopted a straight-to-action, street-smart format which focused on business viability and growth, with aggressive divestment and acquisition moves. The vision and strategy were seamlessly rolled into execution by focusing on effective project implementation and operational excellence, including the famous six-sigma practice.
As a result of the unique synergy between the competence and leadership dimensions, GE under Jack Welch delivered significant shareholder value. Revenues and Profits grew dramatically. Non-value adding businesses were divested, value adding facilities were established and business productivity enhanced across the organization. GE’s market capitalisation increased from USD 12 billion in 1981, the year of his taking over as the CEO, to USD 280 billion in 2001 when he passed on the baton. The rise of GE to the status of the most admired company under Jack Welch clearly points to the relevance of the cubic model of a CEO.
Bill Gates : Gateway to software leadership
Bill Gates, the chairman (and until recently the chief software architect) of Microsoft Corporation is yet another personification of the leadership cube. Microsoft, established by Bill Gates and Paul Allen as a two-man enterprise in 1975, has grown to revenues of USD 44 billion, employing more than 55,000 people in 85 countries. The technology-savvy manner in which Gates amalgamated competence and leadership into business deliverables has been largely responsible for the astounding growth and competitive stamina of Microsoft.
Domain knowledge and technology vision enabled Gates drive the software revolution and weave a virtual monopolistic global business around it for over twenty five years. Gates’ vision of user-friendly personal computing has been central to the success of not only Microsoft but the entire software industry. Though not as passionate on communication as Jack Welch, Gates has been eminently successful in propagating his mission to continually advance and improve software technology and to make it easier, more effective and more enjoyable for people to use. By establishing unique mission-critical projects and domain-dominant technologies, he catapulted Microsoft into a leadership position globally.
Gates may be seen to differ from Jack Welch in that he has chosen to play a lead role only in certain critical facets of the CEO cube. He has, for example, co-opted a powerful leader in Steve Ballmer to drive the strategy, execution and networking aspects of his business. This brings out that the cubic model would work equally well with a synergistic combination of two chief executives, complementing the skills of each other to deliver greater value for the company.
The deliverables of the cubic model of leadership for Microsoft are evident in terms of an ability to grow its software business despite hostile regulation and intense competition (from open source and Internet initiatives), a capacity to build value through new convergence platforms and a smartness to leverage technology and market dominance for customer value.
It is a moot point if an excessive focus on revenue and profit generation by Gates has also resulted in the organization becoming a trifle smug and unprepared for competitive changes such as the Internet. It is however to Gates’ credit that he has recently redefined his own role and nurtured a new generation of technology experts in the context of the shift to the Internet as the core of new age communication and computing. He also laid out a new path for leadership by extending his visionary leadership skills for the benefit of global healthcare. These moves by Bill Gates only reinforce the model of a global CEO being a truly multifaceted, innovative and adaptive personality in terms of a leadership cube that is based on responsibility, leadership and competence.
Carlos Ghosn : From lows to highs, always
The third icon in the context of the cubic model, Carlos Ghosn, represents an entirely different CEO personality, but encompasses the same underlying cubic dimensions. Every company Ghosn has been associated with, be it Michelin of South America, Michelin of North America, Renault of France or Nissan of Japan has been a case study in corporate misdirection, strategic confusion or operational erosion, until he has taken over the company. He brought all these companies, each with a different national and cultural milieu, onto impressive growth tracks.
A Masters degree holder and an intellectual initially inclined to pursue a doctoral study, Ghosn joined the troubled Michelin South America in 1978 and became a chief operating officer in 1985 when he was just thirty. Since then there has been no looking back for him as he turned around companies; slashing costs, streamlining operations and enhancing revenues and profits. In 1999, he moved to Nissan as its chief operating officer from the position of executive vice president in Renault, the French auto major which took a 44 percent stake in Nissan. At that point of time, Nissan was in dire straits. It had a staggering USD 22 billion in debt and slid to a low domestic market share of 19 percent from the peak of 34 percent it achieved in 1974. Its global market share declined from 6.6 percent in 1991 to 4.9 percent in 1999. During that eight year period, Nissan made losses in all the years, except one.
While Carlos had a clear revival plan that turned around Nissan, it was his leadership model that worked as the underlying growth engine. He came to Nissan with complete automobile domain knowledge but was prepared to construct a customized plan for Nissan from a zero base, learning all he could of Nissan. In this process, he communicated intensely with employees at all levels and in all locations, networked with vendors, dealers and customers and developed strategies and execution plans which had solid ownership at all levels of the organization. He institutionalized domain expertise, communication and networking in the organization through cross-functional teams.
Carlos had a lucid and transparent vision which was backed by clear strategy and effective execution. His three-year Nissan Revival Plan which started in 2000, achieved dramatic reductions in debt and operational costs while boosting sales and profits, a year ahead of schedule. Given the unique cultural factors of Japan, Carlos had to network with government leaders, industry insiders, media professionals and opinion makers to effectively communicate his revival plan and win their acceptance. Equally important was the need to network with vendors to slash costs and to communicate with employees to accept plant closures and job cuts. At the same time, he used his technical and managerial skills to encourage the design of new leading edge products, simplification of complex manufacturing structures and building of new brand identity, thus dramatically repositioning Nissan in the marketplace.
The results were dramatic; he took the company from a USD 5.6 billion loss in fiscal 2000 to a USD 2.5 billion profit in the very first year of his revival plan. He followed up the Nissan Revival Plan with the Nissan 180 Plan and Nissan Value Up Plan, each equally successful. Prior to the economic meltdown which hit all companies, including the legendary Toyota, Nissan had an operating margin of 10 percent, higher than Toyota’s 9 percent and BMW’s 7 percent. It was not surprising, therefore, that Carlos was chosen to head the USD 55 billion Renault while retaining the CEO position at the USD 88 billion Nissan, thus running simultaneously two globe-spanning giant auto makers, an altogether industry first. The subsequent move to rope in Nissan and Renault in a trans-border rescue attempt for the beleaguered General Motors (GM) was driven essentially by the desire of the investors to access Carlos’ legendary turnaround skills for the benefit of GM. Had this happened, probably GM would not have been in the beleaguered state that it is now. The saga of Carlos Ghosn underlines the integrating power of the global CEO model.
Summing Up
There is an instructive lesson that arises from the study of leadership cubes and certain exemplary leaders. One person at the helm, the CEO, can make all the difference to an organization. Each of these iconic CEOs discussed here reflects the leadership cube that integrated competency profile, leadership styles and responsibility foci, albeit in subtle variations, but in a synergistic industry leading performance template.
References
1. Gates, Bill with Collins Hemingway (1999), “Business@ the Speed of Thought:. Using a Digital Nervous System”, Warner Books, New York.
2. Magee, David (2003), “Turnaround: How Carlos Ghosn Rescued Nissan”, Harper Collins Publishers, New York.
3. Slater, Robert (2000), “The GE Way Field Book” McGraw-Hill, New York.
4. Welch, Jack with Suzy Welch (2005), “Winning”, HarperCollins Publishers, London
Posted by Dr CB Rao on April 20, 2009
Leadership Cubes and Sub-cubes
The cubic model of leadership at CEO level is three dimensional, covering operating results, management processes and intellectual competencies. Each of the three primary dimensions has, in turn, three critical components. The resultant combinations uniquely differentiate a CEO’s overall leadership model.
On the result-orientation dimension, a CEO has three typical profiles: revenue driver, profit maker and value builder. A revenue driving CEO often seeks to develop and manage large businesses, driving primarily turnover. He or she is scale and scope oriented. Although, often profitability is seen as a function of revenue, some CEOs emerge as predominantly profit makers rather than revenue drivers. A profit oriented CEO achieves this by taking the right strategic decisions, timing the strategic decisions right, establishing market positions, striking remunerative alliances, creating and licensing intellectual property and swinging lucrative financial deals. Less visible, but equally important is a smaller but important set of CEOs who build institutions for future value. A value building CEO aggressively diversifies into newer business horizons periodically.
In respect of the process dimension, three facets of a CEO emerge: the visionary, the strategist and the implementer. The visionary CEO continually drives his organization towards newer horizons. The strategist CEO extends the vision into a strategy which can convert aspirations into achievements. Implementer CEO tends to be extremely task oriented. An implementer CEO is highly sensitive to the fact that even an indifferent vision or strategy gets enhanced by effective execution while a superior vision and strategy can become sub-optimal if execution is poor.
The intellectual dimension of a CEO encompasses three sub-dimensions, the Mentor, the Communicator and the Networker. A CEO’s domain knowledge, expertise and years of achievement naturally positions him well as a coach and mentor. The mentor CEO thus plays a major role in competency development in his organization. A CEO has also to be a communicator who articulates vision and strategy and emphasizes execution across the organisation. An articulate CEO when externally focused becomes a networker, connecting his organization with a host of customer and collaborator organizations.
Leadership cubes of different hues
The nine sub-dimensions discussed above occur in different combinations shaping the CEO leadership profiles in several synergistic and differentiated ways. For example, implementation, execution, communication and revenue driving facets particularly go well together. Aspects such as communication, networking, alliance building, competency leveraging and profit making synergize well. Mentoring and articulation of a vision, strategy development and organizational communication also have natural mutuality.
Strategy development and execution would be required for good communication and execution skills to convey the requirements across the organization and drive organizational performance. A visionary and strategist CEO would also be a value builder as he would recognize the importance of building organizational infrastructure for the future. Several meaningful and synergistic leadership cubes could thus emerge.
Each CEO would eventually develop his own balance of performance, leadership and competency dimensions. Profiling of successful CEOs could reflect a normal distribution, with a peak area of about 70 percent for driving revenue and profit growth. The outlying areas, on either side, of about 15 percent each could deal with value building and smart delivery. Variations to this distribution usually relate to the evolutionary stage of an organization. A firm in its early growth phase would require the CEO to focus in a preponderant manner on infrastructure and value building. A firm in its mid-growth phase would require the CEO to focus on revenue and profit generation. A mature corporation, on the other hand, would require the CEO to leverage the organisational capabilities to take the company to the a higher growth trajectory by building the next level of value and mentoring the employees for change management.
Certain unique global leaders, however, reflect an all-encompassing coverage of the multiple dimensions and sub-dimensions of the leadership cube. Three legendary leaders bring out the relevance of the cubic model, with common characteristics and subtle variations depending on the CEO, the industry and the firm.
Three cubic legends
Three iconic leaders, Jack Welch, Bill Gates and Carlos Ghosn epitomize the diverse yet integrated facets of a global CEO. Each leader represents an entirely different industrial or business setting; Jack Welch as the head of the largest multi-product global conglomerate, Bill Gates as the head of world’s most powerful software firm and Carlos Ghosn as the turnaround czar of the global auto industry. Yet, the model of leadership cubes comprehensively and meaningfully describes each of these three exemplary CEOs, in pertinent dimensions and their combinations.
Jack Welch : Jack and master of all
Jack Welch, a brilliant doctoral chemical engineer, was a veteran of General Electric (GE), having joined GE in 1960. He quickly rose in the hierarchy, becoming GE’s youngest Chairman and CEO in 1981. He was at the helm of GE for two decades, transforming it into an outstanding global company. Jack Welch’s legendary leadership qualities are well-documented. Jack is a fascinating personification of the leadership cube.
On the competency dimension, Jack Welch was an outstanding intellectual, communicator and networker, all rolled into one. He transformed GE into a competency based organization. He was a communicator par excellence, who effectively communicated his key ideas to rest of the organization, not only by delivering messages but also by persistently repeating them over and over, and ultimately securing the buy-in across the organization. More importantly, he created and institutionalized a learning environment in GE, including by setting up the famed leadership development institute at Crontonville. He networked globally, representing the collaborative and energetic face of GE to other firms and other nations. For example, he has been an early pioneer in spotting the capability of India as a futuristic base for R&D and business process outsourcing.
On the leadership dimension, Jack was a visionary who dreamt big, strategised to the finest detail and implemented for precise outcomes. His vision was that GE as a global player should have nothing less than the No. 1 or No. 2 status in whatever product or service it operates in. Such a vision set the tone for an aggressive strategy and effective execution. Fusing his envisioning and communication capabilities, he motivated the entire organization to own his vision. On the strategy front, he adopted a straight-to-action, street-smart format which focused on business viability and growth, with aggressive divestment and acquisition moves. The vision and strategy were seamlessly rolled into execution by focusing on effective project implementation and operational excellence, including the famous six-sigma practice.
As a result of the unique synergy between the competence and leadership dimensions, GE under Jack Welch delivered significant shareholder value. Revenues and Profits grew dramatically. Non-value adding businesses were divested, value adding facilities were established and business productivity enhanced across the organization. GE’s market capitalisation increased from USD 12 billion in 1981, the year of his taking over as the CEO, to USD 280 billion in 2001 when he passed on the baton. The rise of GE to the status of the most admired company under Jack Welch clearly points to the relevance of the cubic model of a CEO.
Bill Gates : Gateway to software leadership
Bill Gates, the chairman (and until recently the chief software architect) of Microsoft Corporation is yet another personification of the leadership cube. Microsoft, established by Bill Gates and Paul Allen as a two-man enterprise in 1975, has grown to revenues of USD 44 billion, employing more than 55,000 people in 85 countries. The technology-savvy manner in which Gates amalgamated competence and leadership into business deliverables has been largely responsible for the astounding growth and competitive stamina of Microsoft.
Domain knowledge and technology vision enabled Gates drive the software revolution and weave a virtual monopolistic global business around it for over twenty five years. Gates’ vision of user-friendly personal computing has been central to the success of not only Microsoft but the entire software industry. Though not as passionate on communication as Jack Welch, Gates has been eminently successful in propagating his mission to continually advance and improve software technology and to make it easier, more effective and more enjoyable for people to use. By establishing unique mission-critical projects and domain-dominant technologies, he catapulted Microsoft into a leadership position globally.
Gates may be seen to differ from Jack Welch in that he has chosen to play a lead role only in certain critical facets of the CEO cube. He has, for example, co-opted a powerful leader in Steve Ballmer to drive the strategy, execution and networking aspects of his business. This brings out that the cubic model would work equally well with a synergistic combination of two chief executives, complementing the skills of each other to deliver greater value for the company.
The deliverables of the cubic model of leadership for Microsoft are evident in terms of an ability to grow its software business despite hostile regulation and intense competition (from open source and Internet initiatives), a capacity to build value through new convergence platforms and a smartness to leverage technology and market dominance for customer value.
It is a moot point if an excessive focus on revenue and profit generation by Gates has also resulted in the organization becoming a trifle smug and unprepared for competitive changes such as the Internet. It is however to Gates’ credit that he has recently redefined his own role and nurtured a new generation of technology experts in the context of the shift to the Internet as the core of new age communication and computing. He also laid out a new path for leadership by extending his visionary leadership skills for the benefit of global healthcare. These moves by Bill Gates only reinforce the model of a global CEO being a truly multifaceted, innovative and adaptive personality in terms of a leadership cube that is based on responsibility, leadership and competence.
Carlos Ghosn : From lows to highs, always
The third icon in the context of the cubic model, Carlos Ghosn, represents an entirely different CEO personality, but encompasses the same underlying cubic dimensions. Every company Ghosn has been associated with, be it Michelin of South America, Michelin of North America, Renault of France or Nissan of Japan has been a case study in corporate misdirection, strategic confusion or operational erosion, until he has taken over the company. He brought all these companies, each with a different national and cultural milieu, onto impressive growth tracks.
A Masters degree holder and an intellectual initially inclined to pursue a doctoral study, Ghosn joined the troubled Michelin South America in 1978 and became a chief operating officer in 1985 when he was just thirty. Since then there has been no looking back for him as he turned around companies; slashing costs, streamlining operations and enhancing revenues and profits. In 1999, he moved to Nissan as its chief operating officer from the position of executive vice president in Renault, the French auto major which took a 44 percent stake in Nissan. At that point of time, Nissan was in dire straits. It had a staggering USD 22 billion in debt and slid to a low domestic market share of 19 percent from the peak of 34 percent it achieved in 1974. Its global market share declined from 6.6 percent in 1991 to 4.9 percent in 1999. During that eight year period, Nissan made losses in all the years, except one.
While Carlos had a clear revival plan that turned around Nissan, it was his leadership model that worked as the underlying growth engine. He came to Nissan with complete automobile domain knowledge but was prepared to construct a customized plan for Nissan from a zero base, learning all he could of Nissan. In this process, he communicated intensely with employees at all levels and in all locations, networked with vendors, dealers and customers and developed strategies and execution plans which had solid ownership at all levels of the organization. He institutionalized domain expertise, communication and networking in the organization through cross-functional teams.
Carlos had a lucid and transparent vision which was backed by clear strategy and effective execution. His three-year Nissan Revival Plan which started in 2000, achieved dramatic reductions in debt and operational costs while boosting sales and profits, a year ahead of schedule. Given the unique cultural factors of Japan, Carlos had to network with government leaders, industry insiders, media professionals and opinion makers to effectively communicate his revival plan and win their acceptance. Equally important was the need to network with vendors to slash costs and to communicate with employees to accept plant closures and job cuts. At the same time, he used his technical and managerial skills to encourage the design of new leading edge products, simplification of complex manufacturing structures and building of new brand identity, thus dramatically repositioning Nissan in the marketplace.
The results were dramatic; he took the company from a USD 5.6 billion loss in fiscal 2000 to a USD 2.5 billion profit in the very first year of his revival plan. He followed up the Nissan Revival Plan with the Nissan 180 Plan and Nissan Value Up Plan, each equally successful. Prior to the economic meltdown which hit all companies, including the legendary Toyota, Nissan had an operating margin of 10 percent, higher than Toyota’s 9 percent and BMW’s 7 percent. It was not surprising, therefore, that Carlos was chosen to head the USD 55 billion Renault while retaining the CEO position at the USD 88 billion Nissan, thus running simultaneously two globe-spanning giant auto makers, an altogether industry first. The subsequent move to rope in Nissan and Renault in a trans-border rescue attempt for the beleaguered General Motors (GM) was driven essentially by the desire of the investors to access Carlos’ legendary turnaround skills for the benefit of GM. Had this happened, probably GM would not have been in the beleaguered state that it is now. The saga of Carlos Ghosn underlines the integrating power of the global CEO model.
Summing Up
There is an instructive lesson that arises from the study of leadership cubes and certain exemplary leaders. One person at the helm, the CEO, can make all the difference to an organization. Each of these iconic CEOs discussed here reflects the leadership cube that integrated competency profile, leadership styles and responsibility foci, albeit in subtle variations, but in a synergistic industry leading performance template.
References
1. Gates, Bill with Collins Hemingway (1999), “Business@ the Speed of Thought:. Using a Digital Nervous System”, Warner Books, New York.
2. Magee, David (2003), “Turnaround: How Carlos Ghosn Rescued Nissan”, Harper Collins Publishers, New York.
3. Slater, Robert (2000), “The GE Way Field Book” McGraw-Hill, New York.
4. Welch, Jack with Suzy Welch (2005), “Winning”, HarperCollins Publishers, London
Posted by Dr CB Rao on April 20, 2009
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