Kenichi Ohmae in his landmark book “The Mind of the Strategist” (first published in Japan in 1975, and republished in 1982 by McGraw Hill) provided several useful insights on strategic thinking. Though the book sought to provide a specific strategic perspective of doing business in Japan, the takeaways from the book have had universal appeal. The important insight was that the strategist should identify the key success factors related to the industry as well as the key strengths of the firm and then proceed to cause events that favor the firm’s strengths. The other insights related to differentiation of winners from losers in terms of specific attributes and distinguishing businesses from products. A relentless focus on customers and their needs was expected to consolidate the business base while an entrepreneurial thinking was hypothesized to drive growth. And typical of the Japanese thinking, Ohmae advocated addressing of the problem rather than the symptoms.
Several strategy gurus who came up with subsequent works presented multiple approaches for becoming winners rather than losers in the business arena. Whether Porter’s competitive advantage, Prahalad’s core competence or Hammer’s reengineering, such works focused on identifying the attributes and methodologies that would help companies gain advantage over the competitors. Most of these hypotheses, however, become relevant only in the context of emerging or established industrial structures. Typically, in such established industrial structures the forces of competition and the sources of competitive advantage can be well-identified enabling the strategy prescriptions work well. On the other hand, such strategy prescriptions fail to be less relevant in first-to-lead kind of business ventures. Save Prahalad’s later day classic “Fortune at the Bottom of the Pyramid” there have been very few prescriptions of how strategists need to think and act in pioneering businesses or with sunrise technologies.
Pioneering or sunrise sectors are like no other; they have no established business models, they have inviting but unclear regulatory framework, products incorporate experimental technologies, manufacturing requires multi-pronged collaboration, proven talent tends to be scarce, funding becomes difficult, customers tend to be cautious and even venture investors are prone to be risk-averse. In other words, all the classic strengths recommended for firms in established industries would be conspicuous by their absence for a pioneering firm. The only strength is that of being the first in terms of business ideation and technological commercialization. Even this strength is eroded by the likely competition from follow-on technologies which are likely to be more effective and more efficient, and catch-up players who are likely to have the benefit of knowing a priori the pioneer’s right and wrong moves. Yet, we have countless examples of how pioneers, from Sony and Microsoft to Google and Facebook built new industries around their first-to-think ventures. How then is the mind of a pioneering strategist different from that of an established strategist?
Triad of pioneering strategies
Pioneering has three facets: product, process and business. These three factors can be present in an enterprise independent of each other or all together as a combination.
A self-charging note book computer which uses its own heat to charge its batteries could be a product innovation. However, the notebook computer could be manufactured as per established processes and delivered in established business models. A cellular phone or a note book computer which also is capable of projection would be a product innovation but could share manufacturing processes of electronic devices and get delivered in the marketplace through established business models.
An automobile of established design could be manufactured out of just two monocoque (single shell) pressings (upper and lower) to deliver unique strength and lower cost. Conventional automobiles manufactured through such unconventional processes could still be marketed in conventional business models. An established drug which is chemically synthesized can be produced through a novel enzymatic process, or a known naturally fermented drug can be chemically synthesized as a novel route but neither case would alter the basic product characteristic or the business the concerned drug caters to.
On the other hand, conventional products, manufactured through conventional processes, could be delivered through pioneering business models, as Amazon did by marketing and distributing a whole breed of books and other items through the Web, leveraging electronically physical infrastructure. Disbursal of classic loan products to underprivileged sections of the population through microfinance business models represents a business innovation. If mobile telecommunication services take on the responsibility of being a platform for all online payments it would be a novel business model for such companies.
Similarly, there could be product and process innovations that are delivered through established business models. A biopharmaceutical product that is produced through mammalian cell culture represents a combination of product and process innovation that is ultimately sold in the established pharmaceutical business process. An established product such as computer was assembled through custom build process and delivered direct to customer by Dell in a novel combination of global customer-driven assembly process and business management.
Logically, an enterprise which has product, process and business pioneering rolled into one would taste success beyond anticipation. Google is a remarkable example. Its product offering of web search engine was unique and pioneering. The way it was “manufactured” was also pioneering, through a complex network of servers and nodes which could bring out millions of search products for billions of information seekers in milliseconds simultaneously. The business model which offered the web search service for free, earning revenues through web based advertising was also pioneering, integrating a huge market place and a large supplier network seamlessly. Companies which had two or more pioneering dimensions could create whole new industries effortlessly, or could reinvent themselves completely.
Triad of enabling attributes
While product, process and business are the fundamental drivers of a pioneering enterprise, establishment of a pioneering enterprise requires an enabling triad comprising intuition, passion and focus on the part of the founding team or management team. Pioneering enterprises are based on an unflinching faith of the founding members in their product, process and business concepts.
Intuition on the future rather than experience of the past counts as most pioneering enterprises are based on products, processes and business models that have not been fully tested. A keen observation of technological evolution, need fulfillment, customer segmentation and likely product appreciation in the marketplace together create an intuitive force that reinforces the pioneering spirit. This does not mean that experience is not required in setting up pioneer enterprises. Intuition borne out of experience helps pioneers tread new paths with confidence and innovation. JRD Tata, Chairman of India’s truck and bus giant Tata Motors (then Telco), while taking over a die and tool making shop in the 1960s stated that the acquisition would play a major role in shaping Telco as a major automobile corporation. As several subsequent events would prove, the tool and die infrastructure gave Telco a unique capability to design and manufacture cabs for trucks and later car bodies, making Telco lead the indigenous revolution in the Indian automobile industry that was hopelessly dependent on imported designs, tools, dies and pressings.
Passion is the second leg of the enabling triad. Passion has no limits. It is verily the fuel that provides the energy to the founding team to conquer the challenges and vicissitudes of a first-to-lead journey. The founders of Bell Labs, Sony, Panasonic, Apple, Microsoft, Google, Twitter and a host of pioneering companies powered by pioneering ideas had passionate founders and CEOs. The pre-independence industrialists of India, the Tatas and the Birlas, the license raj industrialists of India, the Bajajs, Godrejs, Mahindras, Ambanis, Jindals and Munjals and the post-liberalization entrepreneurs of India, Murthys, Reddys, Rajus and Raos , all of whom pursued completely different product, process and manufacturing approaches had only passion in common. The passion enabled all the pioneers, whatever the ilk or vintage, to keep pressing their innovative ideas to commercial fruition.
Focus typically characterizes all successful pioneering leaders, and is the third leg of the enabling triad. Exploration of the unexplored requires an ability to identify the precise directions which could lead to maximal discovery and commercialization opportunities. Products such as Ford’s Model T car , Sony’s Walkman, Microsoft’s Windows, Intel’s chip, Google’s search engine, Apple’s Mac and later iPod came with the ability to identify the right product niche and user functionality amongst several potential directions that could be possible in each case. Pioneering minds are creative but commercially pioneering minds are also focused. The focus typically also comes with the intuition that such leaders possess, and the passion that drives a single minded pursuit.
Triad of pioneering business strategies
The two triads we discussed, namely the pioneering triad of product, process and business, and enabling triad of intuition, passion and commitment often merge in different shades to result in three distinct models of pioneering strategy. These are inventive-pioneering, adaptive-pioneering and execution-pioneering models.
Inventive-pioneering strategy
Typically, the most successful business models are those set up by inventors who pioneered product, process or business discoveries. Ability to convert laboratory inventions of others into practical successes also pioneered growth of business houses. Sony was perhaps not the first to invent transistor radio but certainly was the first to pioneer commercialization of a practically ubiquitous transistor radio. It was also the harbinger of the iPod generation with the development of Walkman as a miniaturized rendering of tape recorder-player. Daimler-Benz created the first commercial automobile and a whole new industry around it. Bell Labs saw the invention of Graham Bell take shape as a commercial telecommunications reality. Ford’s innovation of standardized assembly line manufacturing process of cars helped Ford take his automobile company to a new trajectory. Microsoft grew based on the invention of commercial operating system for desktop personal computers by Gates and Allen.
Many companies make pioneering their strategic DNA by which inventions, either from their internal laboratories or external licenses, are constantly utilized to create new product lines and businesses. Popular perceptions of some companies such as DuPont, 3M, Google, Sony and a host of industrial leaders reflect the fact that such companies constantly look for pioneering ideas to drive new commercial successes. In fact, the ranking of top patent applicants by World Intellectual Patents Organization correlates with industrial leadership by companies. The largest and best-known companies such as Panasonic, Sony, NEC, Sharp, Toyota, Honda, Asahi, Fujitsu, Konika, NTN and Mitsubishi from Japan, Samsung and LG from Korea, Bosch, BASF, Philips, Siemens, Ericsson, Nokia, Unilever and Alcatel from Europe, Microsoft, HP, Proctor & Gamble, Intel, Lucent, Caterpillar, and Kimberly-Clark from US and Qualcomm from Canada rank high in PCT filings. Such patents usually cover product, component, process and usage innovations.
Loss of innovative edge leads to business decline and even structural atrophy of industries. Companies in the innovative pharmaceutical industry, in particular, survive and grow entirely on product patents. Lower ranking of pharmaceutical firms in global PCT ranking, declines in new drug approvals and reverse entry by innovator pharmaceutical companies into the generics industry are symptomatic of loss of pioneering as a theme in an important industrial sector. Strategists need to conceptualize alternative strategies to revive pioneering spirit in innovation strapped organizations. One such recent move has been by GSK to spin off its R&D organization into a number of discovery oriented venture teams. The other is a general realization in the pharmaceutical industry that creativity is better fostered in smaller organizations and larger organizations could benefit by either outsourcing research or in-licensing proven developments.
Adaptive-pioneering strategy
Not all pioneering ventures are based on discoveries and inventions. Thinkers who observe the innovative developments in different products or regions around the world adaptively weave such observations into pioneering ventures in other products and other regions. Apple’s iPod and iPhone brought touch screen technology from industrial sectors to a hand held product platform in a revolutionary form. Japanese automobile manufacturers were the pioneers in light, mini and micro truck technologies. However, it was an observant Indian truck manufacturer, Tata Motors, rather than any other Indo-Japanese automobile manufacturer or Indian manufacturer who walked away with laurels with an indigenously designed and manufactured mini truck, Ace. It was a perfect case of adaptive pioneering, successfully transplanting a proven concept to highly different regions and diverse user conditions.
Designs and processes that deliver new products with localized features and pricing have enabled many companies to pioneer new products for established and emerging markets. Brazil’s Marcopolo bus trains, Haier’s compact refrigerator with computer table, Tata Motors’ Nano car, Hindustan Unilever’s Pureit water purifier, and GE India’s VScan portable ultrasound machine and MACi, a portable ECG machine, Samsung’s and Nokia’s ultra low cost mobile phones for India are a few examples of corporations acting locally to pioneer revolutionary new products. Pioneer strategists of this ilk have a sharp sense of local user needs and market eco systems, besides a grasp of technological adaptation that could deliver new cost-effective utilitarian products.
Leveraging of technology for better enablement of consumer behavior and enhanced need fulfillment also lead to outstanding adaptive-pioneering models. Facebook has less of technology and more of social behavior as its bedrock. Digitization of people’s yearning to communicate and network with each other characterizes its initiation, evolution and ramp-up. So is twitter which leverages the concept that in an environment of information overload it is sufficient to have core thoughts not exceeding 140 letters as a requirement to create a universe of interconnected community. Differentiating themselves from Google’s question-answer and data mining model, Facebook and Twitter evolved a new information society based on social networking.
Critical observation and creative application of native practices and local cultures could also lead to pioneering ventures. Biodiversity has been a source of innovation for entrepreneurs with pioneering thinking, not necessarily pioneering inventions. Himalaya Drug Company of India pioneered traditional ayurvedic medicine for mass markets by applying modern characterization and manufacturing approaches even as global pharmaceutical firms with much greater resources remained diffident to the opportunity. Similarly, global giants such as Unilever and Colgate had been in India for decades but it was the innovation of Indian companies such as Dabur and Vicco that helped them to utilize Indian herbs, spices and plants to develop novel tooth pastes, hair oils and nutrition products. Traditional products such as honey and Indian foods have seen new products through technological translation. Adaptive-pioneering models are potentially the optimal models with a reasonable risk-reward ratio.
Execution-pioneering strategy
Mirroring more of business pioneering, execution-pioneering strategy combines firm level competitive advantage with national comparative advantage to pioneer effective business models in a globally competitive manner. The global delivery model of software services pioneered by the Indian software industry, the India-centric, fast-track and low-cost development of bulk drugs and generic formulations for global markets by the Indian pharmaceutical industry, the cost-efficient but curatively efficient medical tourism industry pioneered by the Indian corporate hospitals, the family oriented retail chains established by the Indian business houses are but a few examples of high caliber execution creating models of global comparative excellence. Execution pioneering is not necessarily dependent on scale; neither is it the preserve of large corporations. Accomplished teachers from India, individually for example, pioneered electronic tuitions to a global community of students.
Execution-pioneering creates centers of excellence in specific industrial and business sectors. India and China have executed successful models of global back office and global workshop respectively. Within broad industrial-country segments, some firms excel more than others by pioneering execution. A few Indian pharmaceutical companies have pioneered their entry over five decades ago but new entrepreneurial companies, despite much later start, achieved global leadership through their choice of niche therapeutic areas and efficient execution of research and manufacturing processes. Execution pioneering relies more on the enabling triad of intuition, focus and passion. These act as a synergistic winning combination motivating higher levels of performance.
An execution-pioneer usually happens to be a unique combination of reflective thinker and quick silver implementer. The strategist in him needs to understand the available windows to gain competitive advantage over others, whether in an emerging industry or established industry. Leaders in execution pioneer models typically have to choose one generic strategy or a combination of generic strategies from among scale leadership, cost leadership, differentiation and niche to achieve execution efficiency. Parallel processing of multiple activities and critical-path resolution skills enable a company become a pioneer in execution. Technology adds additional edge to execution capabilities. A construction firm can deploy novel foundation, column and slab laying technologies to execute projects in a pioneering fashion. Clearly, execution-pioneer depends on a high level of management capabilities to achieve innovative resource assembly and deployment.
Summary
A pioneering venture, as any of the successful corporations mentioned herein, is necessarily a resultant of one unique factor, or a combination of several unique factors that constitute the three triads of pioneering (of product, process or business), of enabling (intuition, passion and focus) and of establishing (inventive, adaptive and execution). A combination of pioneering and enabling triads, with all the six factors in full play, would help a company be at once an inventive, adaptive and execution pioneer with an outstanding success potential. Typically, most firms coast to success on a few factors, with product and process pioneering leading the way and passion and focus reinforcing grit and tenacity in the face of adversities that a pioneer has to necessarily face. At the same time successful pioneers tend to lose the edge on some of the core factors even as new pioneers begin to compete successfully with the established pioneers on the very same pioneering strengths. The mind of the pioneer verily works to institutionalize product, process and business creativity as well as stand by intuition, passion and focus in the organization for sustainable success.
Posted by Dr CB Rao on October 31, 2010
Sunday, October 31, 2010
Saturday, October 16, 2010
NextGen Professionals: Back to Fundamentals?
Technology evolves so rapidly that many conventional living tools and processes seem redundant time to time. We are in an age where computers have reduced the effort of human thinking, and algorithms have taken over the art of decision making. Many of the human faculties which in earlier generations used to be developed through challenged human effort from childhood are now automated through a plethora of electronic devices. A whole new generation is growing up with Google which answers every question through an instantaneous web of information, and with Facebook which connects millions in a borderless global society.
The world is moving into a counterintuitive phase where higher levels of technology which require greater levels of skill are also rendering larger numbers of people less skillful. Progressively, at a very basic level slide rules were replaced by calculators and calculators by computers in engineering education; switches of brain neurons got replaced by mere taps of fingers. From pilotless planes to driverless cars, and from synthetic music to combinatorial chemistry the future of automation is clear.
The relentless progress of science and technology is, without notice and awareness, creating an intellectual skew. While a few elite educational and research institutions will keep developing experts who can develop such controlling technologies the broader universe of educational institutions are likely to churn out multitudes of professionals who are induced to subordinate conventional braininess to the more convenient electronic guidance. Increasing technological intensity also makes individuals introverted and impersonal, depriving them of social skills.
The technological trends and educational mores raise serious questions. Will the Next Generation Professional be any longer an original thinker or guided doer? Addicted as he or she is to smart devices and virtual networks would the professional of the future be able to connect with the society as the previous generation professionals were? Do we need to consciously reinvent the process of professionalization to restore the human element of an increasingly overwhelming techno-economic system? Will the new generation focus only on economic prosperity to the detriment of social equity? The answer lies in reeducating the new generation through a mix of rational and emotional skills.
Rational and emotional skills
As long as society remains an agglomeration of human beings, and not robots and not even humanoids, human being has a great responsibility to retain the essential skills that characterize fundamental human capabilities. From a viewpoint of an economic society or a business organization from the plethora of human capabilities and attributes, a prioritized set of rational and emotional skills can be identified that must be nurtured through generations.
The five rational skills are Optimal Reading, Manual Writing, Mental Calculation, Extended Memory, and Physical Artistry. The five emotional skills are Dynamic Self-worth, Collaborative Competition, Respectful Independence, Ethical Compliance and Social Trusteeship. The rational skills are so named because of the need to steer the learning generation, through conscious efforts, away from electronic dependence of minds to rediscovery of original thinking and natural performance. The emotional skills are so named because of the need to combine the very many emotions a human being has into synergistic combinations that enhance human personality and social relatedness.
These ten rational and emotional skills ensure that the generations regain their intuitive and intrinsic ability for (i) multi-faculty development, (ii) synchronization of the mind and the limbs, (iii) alignment of the head and the heart, (iv) complementing of the gut and the soul, and (v) harmonization of the individual and the society. Development and utilization of these skills will ensure that technology makes life lively than lifeless. Science, technology and business will have humanization theme as the core of development. Every turn of technological development must be utilized to reinforce these rational and emotional skills.
Rational skill development
The hypothesis of this Blog Post may be counter to the beliefs of the new techno-generation which believes that simplification, virtualization and even elimination of established practices is inevitable and irreversible. The reality, however, is that such technology buffs are losing their mental and intellectual acumen because of dependence on electronic gadgets and software tools. Without attempting to reverse technological evolution there is a great potential to combine new technologies and past practices to enhance the intellectual capabilities in the overall. Mercifully, technological evolution is so diverse that the essentials of life and living, seen to be under extinction, come back to life, albeit reinvented with greater sophistication. As discussed below, this exciting nature of technological evolution is the core of human skill development too.
Optimal reading
Dr Samuel Johnson, the British author par excellence stated “Books, like friends must be few and well-chosen”. John Ruskin, the great literary expert stated “All books are divisible into two classes: the books of the hour, and the books of all time”. Digitization of print and writing, and emergence of electronic readers have placed in our hands unimaginable bytes of reading material. The new generation must, however, learn to be discerning and focused even as it is enabled to be diversified and unbounded in its quest for knowledge. Digital libraries are a highly portable boon which can be effectively utilized to scan the world of writings. However, every reader must have his own physical book shelf which stores for him the “well-chosen books of all time”. An optimal mix of digital and physical book reading keeps a person better informed and better equipped.
Manual writing
With the ubiquitous growth of the personal and laptop computers and their typewriting style key boards it looked as if the new generations would be completely oblivious of handwriting. For those generations of teachers and taught that started their education on slate and chalk the key board threatened to be the greatest disconnect with the fundamentals of learning. With tablets (thank Apple, once again) coming onto center stage vigorously a human hand and an electronic slate can coexist harmoniously, and even productively. Manual writing provides for free flow of thought and calibrated conversion of thoughts into letters. The beauty and the orderliness with which one’s letters are formed constitute the positive reflections of one’s personality. Unlike the rigidity of a key board typing, the flexibility of hand written scribbles is often the fountainhead of spontaneous creativity. One should never lose the touch and feel of manual writing to be able to stay innovative.
Mental calculation
Ever since the discovery of numbers took place, human life became dependent on the mastery of numbers. Such mastery has two components: an ability to form the numbers, and an ability to interpret numbers. Calculative abilities in the past distinguished one over the other in sizing up and scaling up challenges and opportunities. With the advent of calculators, people lost the ability to make quick mental calculations. The adverse impact of this sadly goes beyond the obvious; it impacts the spatial ability of a person. While there may be no educational need in today’s world to practice multiplications and divisions of double digit numbers, a grip on number manipulation and computation provides a significant strength to tactical transaction and strategic investment perspectives of social and economic life.
Extended memory
Open book examinations and multiple choice questions have served to reduce mindless cramming and to make solution development a guided activity for students. However, technology has taken over the minds of people making the human race virtually memory-averse. This is a great risk for human genetics and the evolution of the intellectual part of the DNA. Today’s student or citizen has ceased to memorize and is instead tempted to “googlize” himself or herself. It is the Cloud that feeds instant information and solutions to any questions and problems. Considering that the human brain has an enormous capability to store and process data, the addiction and resort to search engines on the Web rather than the processing capabilities in the brain is quite capable of causing human atrophy. We should encourage ourselves to memorize in competition to Google, using the search engine to extend our memory to digital depths and expanses previously not capable of being handled. As one googles by habit as well as temptation, it pays to recreate questions, inter-relate answers, and acquire scan-and-store memorizing capabilities.
Physical artistry
Many things may change in life with technology but physical activity and artistic expression tend to be fundamentally unchanged at the core. Sports and arts are the best expressions of learning effort and execution perfection. They signify the core of mind-body coordination that can provide unchanged levels of physico-mental challenge. As a corollary, sports and arts are best suited to restore the eroding capabilities of the human race. Extra-curricular activities in academic and business settings will go a long way in enabling a human being function at his or her maximal capabilities. The strength of public performance, testing the limits of physical and mental endurance, is often a great influence on the performers as well as the spectators. Activity and artistry come naturally to human life; the new generation should get over synthetic technology and sedentary living to realize the natural potential of hard sports and fine arts.
Emotional skill development
If rational skills enable performance at a fundamental level, emotional skills accentuate or attenuate performance. Performance often takes place in a team setting, within a company, an industry, a country, and even globally. An ability to relate oneself to the individual and group dynamics, and in a broader sense to the larger society, is essential to complement rational skills. However singular emotions are less relevant than specific combinations of emotions if the rational skills are to be meaningfully reinforced. A conceptual framework of emotional skillsis presented below.
Dynamic self-worth
Every human being has some worth as every activity he or she is capable of performing has some value. It is important for individuals therefore to be constructively aware of the value they can bring to the table. The greater the rational skill level one has, the greater will be the value that one can bring to one’s organization. The greater the extent to which one is self-reliant, the greater is also the worth that one has. A heightened awareness of self-worth on the part of each team member is essential for healthy team dynamics. At the same time, the concept of self-worth has to be tested dynamically with the changing needs and contemporary skill availability. If a person fails to update skills in dynamic equilibrium with the environment self-worth that was justifiable at an earlier point of time would simply become an egoistic state of mind.
Collaborative competition
A techno-savvy generation tends be confident of its ability to manage challenges through technology. A high level of skill inventory is desirable but not always possible. This applies to individuals as much as to organizations or corporations. Individuals and companies that place excessive emphasis on self-reliance and are aggressive in competing with all others are likely to be uncompetitive in the end. An ability to leverage on each other’s skills and assets helps individuals and corporations to optimize on costs and efforts. The ability of Sony and Samsung to collaborate on flat panels helped both organizations enhance scale and competitiveness. Automobile makers and component makers have succeeded in continuous product value addition through working as competitive partners rather than wielders of buyer or supplier power. For-profit and not-for-profit organizations can collaborate for greater economic and social synergy. An ability to collaborate with apparently competing or contesting team members, departments or domains requires high strategic maturity.
Respectful independence
The new generation is independent, emotionally and economically. Even in countries that traditionally believed in joint family system proximity rather than togetherness seems to be gaining ground. Certain advanced countries which inculcate independence from the very early years probably promote a culture of independence far too aggressively. Such culture could potentially fail to take advantage of the wisdom that comes with experience and the maturity that comes with age. Generational gaps have been a reality of human evolution, with each successive generation believing that it knew better than the previous generation. History, however, is replete with examples of how heeding to seasoned advice would have led to more favorable outcomes. Regardless of integration of such cultural hues in the family and educational systems, professionals should make special efforts to balance the urge for independence with the desirability of gaining from the seasoned and experienced seniors.
Ethical compliance
Ethics are what differentiate a true professional from an opportunistic player. Ethics are easy to espouse but hard to live by. Ethical compliance comes from a value system that is ingrained deep within the psyche of each individual. Lasting recognition follows ethical compliance. Ethical compliance often demands sacrifices that go beyond the call of normal work and a level of transparency that builds trust all around. Mahatma Gandhi epitomized ethical living through a noble cause, beyond compare. In each person’s life there would be opportunities to demonstrate through diligence and dutifulness, candor and collaboration, as well as concern and caring how personal and professional lives can be role models for others.
Social trusteeship
Pursuit of materialism is a concomitant of economic capitalism. As economic affluence grows and purchasing power increases the new generation understands the success of prosperity rather than the tribulations of poverty. On the other hand, professionals have an important role in influencing how wealth is generated and deployed for the good of the society. These extend from choice of product lines, business spaces, product development, and manufacturing efficiencies to customer service and corporate social responsibility. The new generation should utilize science and technology to develop products and services for the bottom of the social pyramid.
NextGen: Skill matrix
Human life is paradoxical. One (either individual or organization) needs to score over the others to remain competitive and generate wealth. Yet, one needs to live for others to lend equity and stability to social and economic systems. Both the objectives are essential and complementary. The former needs rational skills and the latter emotional skills. As new generations raise immersed in new technologies it is likely that they miss out on their intrinsic physic-mental faculties and relationship human skills. Only by committing to combine rational skills with emotional skills the new generation can make the society a better place.
Posted by Dr CB Rao on October 16, 2010
The world is moving into a counterintuitive phase where higher levels of technology which require greater levels of skill are also rendering larger numbers of people less skillful. Progressively, at a very basic level slide rules were replaced by calculators and calculators by computers in engineering education; switches of brain neurons got replaced by mere taps of fingers. From pilotless planes to driverless cars, and from synthetic music to combinatorial chemistry the future of automation is clear.
The relentless progress of science and technology is, without notice and awareness, creating an intellectual skew. While a few elite educational and research institutions will keep developing experts who can develop such controlling technologies the broader universe of educational institutions are likely to churn out multitudes of professionals who are induced to subordinate conventional braininess to the more convenient electronic guidance. Increasing technological intensity also makes individuals introverted and impersonal, depriving them of social skills.
The technological trends and educational mores raise serious questions. Will the Next Generation Professional be any longer an original thinker or guided doer? Addicted as he or she is to smart devices and virtual networks would the professional of the future be able to connect with the society as the previous generation professionals were? Do we need to consciously reinvent the process of professionalization to restore the human element of an increasingly overwhelming techno-economic system? Will the new generation focus only on economic prosperity to the detriment of social equity? The answer lies in reeducating the new generation through a mix of rational and emotional skills.
Rational and emotional skills
As long as society remains an agglomeration of human beings, and not robots and not even humanoids, human being has a great responsibility to retain the essential skills that characterize fundamental human capabilities. From a viewpoint of an economic society or a business organization from the plethora of human capabilities and attributes, a prioritized set of rational and emotional skills can be identified that must be nurtured through generations.
The five rational skills are Optimal Reading, Manual Writing, Mental Calculation, Extended Memory, and Physical Artistry. The five emotional skills are Dynamic Self-worth, Collaborative Competition, Respectful Independence, Ethical Compliance and Social Trusteeship. The rational skills are so named because of the need to steer the learning generation, through conscious efforts, away from electronic dependence of minds to rediscovery of original thinking and natural performance. The emotional skills are so named because of the need to combine the very many emotions a human being has into synergistic combinations that enhance human personality and social relatedness.
These ten rational and emotional skills ensure that the generations regain their intuitive and intrinsic ability for (i) multi-faculty development, (ii) synchronization of the mind and the limbs, (iii) alignment of the head and the heart, (iv) complementing of the gut and the soul, and (v) harmonization of the individual and the society. Development and utilization of these skills will ensure that technology makes life lively than lifeless. Science, technology and business will have humanization theme as the core of development. Every turn of technological development must be utilized to reinforce these rational and emotional skills.
Rational skill development
The hypothesis of this Blog Post may be counter to the beliefs of the new techno-generation which believes that simplification, virtualization and even elimination of established practices is inevitable and irreversible. The reality, however, is that such technology buffs are losing their mental and intellectual acumen because of dependence on electronic gadgets and software tools. Without attempting to reverse technological evolution there is a great potential to combine new technologies and past practices to enhance the intellectual capabilities in the overall. Mercifully, technological evolution is so diverse that the essentials of life and living, seen to be under extinction, come back to life, albeit reinvented with greater sophistication. As discussed below, this exciting nature of technological evolution is the core of human skill development too.
Optimal reading
Dr Samuel Johnson, the British author par excellence stated “Books, like friends must be few and well-chosen”. John Ruskin, the great literary expert stated “All books are divisible into two classes: the books of the hour, and the books of all time”. Digitization of print and writing, and emergence of electronic readers have placed in our hands unimaginable bytes of reading material. The new generation must, however, learn to be discerning and focused even as it is enabled to be diversified and unbounded in its quest for knowledge. Digital libraries are a highly portable boon which can be effectively utilized to scan the world of writings. However, every reader must have his own physical book shelf which stores for him the “well-chosen books of all time”. An optimal mix of digital and physical book reading keeps a person better informed and better equipped.
Manual writing
With the ubiquitous growth of the personal and laptop computers and their typewriting style key boards it looked as if the new generations would be completely oblivious of handwriting. For those generations of teachers and taught that started their education on slate and chalk the key board threatened to be the greatest disconnect with the fundamentals of learning. With tablets (thank Apple, once again) coming onto center stage vigorously a human hand and an electronic slate can coexist harmoniously, and even productively. Manual writing provides for free flow of thought and calibrated conversion of thoughts into letters. The beauty and the orderliness with which one’s letters are formed constitute the positive reflections of one’s personality. Unlike the rigidity of a key board typing, the flexibility of hand written scribbles is often the fountainhead of spontaneous creativity. One should never lose the touch and feel of manual writing to be able to stay innovative.
Mental calculation
Ever since the discovery of numbers took place, human life became dependent on the mastery of numbers. Such mastery has two components: an ability to form the numbers, and an ability to interpret numbers. Calculative abilities in the past distinguished one over the other in sizing up and scaling up challenges and opportunities. With the advent of calculators, people lost the ability to make quick mental calculations. The adverse impact of this sadly goes beyond the obvious; it impacts the spatial ability of a person. While there may be no educational need in today’s world to practice multiplications and divisions of double digit numbers, a grip on number manipulation and computation provides a significant strength to tactical transaction and strategic investment perspectives of social and economic life.
Extended memory
Open book examinations and multiple choice questions have served to reduce mindless cramming and to make solution development a guided activity for students. However, technology has taken over the minds of people making the human race virtually memory-averse. This is a great risk for human genetics and the evolution of the intellectual part of the DNA. Today’s student or citizen has ceased to memorize and is instead tempted to “googlize” himself or herself. It is the Cloud that feeds instant information and solutions to any questions and problems. Considering that the human brain has an enormous capability to store and process data, the addiction and resort to search engines on the Web rather than the processing capabilities in the brain is quite capable of causing human atrophy. We should encourage ourselves to memorize in competition to Google, using the search engine to extend our memory to digital depths and expanses previously not capable of being handled. As one googles by habit as well as temptation, it pays to recreate questions, inter-relate answers, and acquire scan-and-store memorizing capabilities.
Physical artistry
Many things may change in life with technology but physical activity and artistic expression tend to be fundamentally unchanged at the core. Sports and arts are the best expressions of learning effort and execution perfection. They signify the core of mind-body coordination that can provide unchanged levels of physico-mental challenge. As a corollary, sports and arts are best suited to restore the eroding capabilities of the human race. Extra-curricular activities in academic and business settings will go a long way in enabling a human being function at his or her maximal capabilities. The strength of public performance, testing the limits of physical and mental endurance, is often a great influence on the performers as well as the spectators. Activity and artistry come naturally to human life; the new generation should get over synthetic technology and sedentary living to realize the natural potential of hard sports and fine arts.
Emotional skill development
If rational skills enable performance at a fundamental level, emotional skills accentuate or attenuate performance. Performance often takes place in a team setting, within a company, an industry, a country, and even globally. An ability to relate oneself to the individual and group dynamics, and in a broader sense to the larger society, is essential to complement rational skills. However singular emotions are less relevant than specific combinations of emotions if the rational skills are to be meaningfully reinforced. A conceptual framework of emotional skillsis presented below.
Dynamic self-worth
Every human being has some worth as every activity he or she is capable of performing has some value. It is important for individuals therefore to be constructively aware of the value they can bring to the table. The greater the rational skill level one has, the greater will be the value that one can bring to one’s organization. The greater the extent to which one is self-reliant, the greater is also the worth that one has. A heightened awareness of self-worth on the part of each team member is essential for healthy team dynamics. At the same time, the concept of self-worth has to be tested dynamically with the changing needs and contemporary skill availability. If a person fails to update skills in dynamic equilibrium with the environment self-worth that was justifiable at an earlier point of time would simply become an egoistic state of mind.
Collaborative competition
A techno-savvy generation tends be confident of its ability to manage challenges through technology. A high level of skill inventory is desirable but not always possible. This applies to individuals as much as to organizations or corporations. Individuals and companies that place excessive emphasis on self-reliance and are aggressive in competing with all others are likely to be uncompetitive in the end. An ability to leverage on each other’s skills and assets helps individuals and corporations to optimize on costs and efforts. The ability of Sony and Samsung to collaborate on flat panels helped both organizations enhance scale and competitiveness. Automobile makers and component makers have succeeded in continuous product value addition through working as competitive partners rather than wielders of buyer or supplier power. For-profit and not-for-profit organizations can collaborate for greater economic and social synergy. An ability to collaborate with apparently competing or contesting team members, departments or domains requires high strategic maturity.
Respectful independence
The new generation is independent, emotionally and economically. Even in countries that traditionally believed in joint family system proximity rather than togetherness seems to be gaining ground. Certain advanced countries which inculcate independence from the very early years probably promote a culture of independence far too aggressively. Such culture could potentially fail to take advantage of the wisdom that comes with experience and the maturity that comes with age. Generational gaps have been a reality of human evolution, with each successive generation believing that it knew better than the previous generation. History, however, is replete with examples of how heeding to seasoned advice would have led to more favorable outcomes. Regardless of integration of such cultural hues in the family and educational systems, professionals should make special efforts to balance the urge for independence with the desirability of gaining from the seasoned and experienced seniors.
Ethical compliance
Ethics are what differentiate a true professional from an opportunistic player. Ethics are easy to espouse but hard to live by. Ethical compliance comes from a value system that is ingrained deep within the psyche of each individual. Lasting recognition follows ethical compliance. Ethical compliance often demands sacrifices that go beyond the call of normal work and a level of transparency that builds trust all around. Mahatma Gandhi epitomized ethical living through a noble cause, beyond compare. In each person’s life there would be opportunities to demonstrate through diligence and dutifulness, candor and collaboration, as well as concern and caring how personal and professional lives can be role models for others.
Social trusteeship
Pursuit of materialism is a concomitant of economic capitalism. As economic affluence grows and purchasing power increases the new generation understands the success of prosperity rather than the tribulations of poverty. On the other hand, professionals have an important role in influencing how wealth is generated and deployed for the good of the society. These extend from choice of product lines, business spaces, product development, and manufacturing efficiencies to customer service and corporate social responsibility. The new generation should utilize science and technology to develop products and services for the bottom of the social pyramid.
NextGen: Skill matrix
Human life is paradoxical. One (either individual or organization) needs to score over the others to remain competitive and generate wealth. Yet, one needs to live for others to lend equity and stability to social and economic systems. Both the objectives are essential and complementary. The former needs rational skills and the latter emotional skills. As new generations raise immersed in new technologies it is likely that they miss out on their intrinsic physic-mental faculties and relationship human skills. Only by committing to combine rational skills with emotional skills the new generation can make the society a better place.
Posted by Dr CB Rao on October 16, 2010
Saturday, September 11, 2010
Engineering Strategic Shifts: Managing Dynamic Future
Times are changing more rapidly than ever for businesses. Whether economies are constrained by recession or are bolstered by growth, competition is becoming more intense than ever. Changes in technology are enabling certain agile firms to customize products and services to meet challenges of recession and growth, and of cost effectiveness and feature differentiation, simultaneously as well as effectively. Such firms are achieving competitive advantage through innovative strategic shifts, and are even opening up new industrial and market segments. The larger universe of established corporations which stand dedicated to strategies that are pre-fixed for the long term, in contrast, are likely to face competitive disadvantage if they do not recognize the need for dynamic strategic shifts.
Strategic shifts
Strategic shifts are deliberate moves by organizations to expand business potential by creating products and services that are out of box with respect to current strategies of the firm. The established strategic paradigm has four components of (i) defining a strategy for a fixed period of 5 to 10 years, (ii) defining the boundaries of industry to operate in, (iii) creating fixed asset infrastructure for organic growth, and (iv) staying focused on established market segments. This rigid strategic framework would soon be archaic for firms which aspire to stay ahead, and lead rather than follow competition. Shifts in strategy rather than compliance to strategy would be the future growth triggers. These strategic shifts are broader in scope and impact than the usual competitive strategies that seek superiority for firms in the marketplace through a mix of generic strategies.
Strategic shifts can be expansionistic as well as minimalistic. The fundamental driver for a successful strategic shift is an identification of a potential fit between a firm’s current competencies that can be leveraged and the environment’s emerging opportunities that can be harnessed. Google offers a towering example of engineering successful and expansionistic strategic shifts. From being a universal search engine to becoming an email medium, video sharing platform, global mapping systems, cloud infrastructure, operating system for mobile and computing devices, and branded mobile devices, Google has engineered a series of well thought out strategic shifts. Intel offers a superb example of leveraging core competencies of chip development and manufacture to align itself with, or even lead the multifarious strategic shifts in computing and connectivity platforms.
Strategic shifts can be proactive or reactive. Use of touch technology , streaming of online music or creation of mobile applications are innovative and proactive moves that helped Apple diversify into mobile audio and video devices, and quickly assume leadership position in compact music and mobile devices. Once a proactive strategic shift is made by a firm, it becomes doubly difficult for incumbent firms to defend their positions with reactive strategic shifts. To gain advantage over proactive leaders, reactive strategic shifts need to have some element of differentiation. Toyota Prius was probably not the first hybrid car ever; the concept of hybrid cars was decades old while Honda Insight was the first commercial scale hybrid car. However, by engineering Prius to the same levels of performance as a conventional car with the added advantages of fuel economy and minimal pollution of a green car Toyota demonstrated how a reactive strategic shift can be successful.
Subtle or sweeping?
Strategic shifts can be subtle or sweeping over time. From adding products within a business, and adding related and unrelated businesses to totally jettisoning originating industries, and leapfrogging into sunrise sectors, models of strategic shift take several hues. The motivation for strategic shifts, and preference for discrete models of shift stem from a combination of market opportunity, industry context, and professional entrepreneurialism. A few industries, in particular, are notable for keeping their firms specialized in the respective industries irrespective of market vicissitudes while growth aspirations of entrepreneurs and firms induce firms to consciously explore strategic shifts.
Automobile and pharmaceutical industries are particularly notable for specialization. Nonetheless, strategic shifts which appear subtle or related could have profound business impact. For example, Wyeth’s decision to add vaccines and biopharmaceuticals made the company highly valuable. In the automobile industry, moves from sedans to small cars or vice versa, and from cars to commercial vehicles or vice versa were subtle strategic shifts that generated profound impact on global business development of the involved companies. For example, had Hyundai not moved to develop a small car in mid-1990s its entry into the Indian automotive market would not have been as enormous and successful as it is today.
In another facet of subtle strategic shifting, base or commodity product manufacturers tend to add value added finished products to their portfolio. While in conventional strategic terms such shifts are classified as integration moves the importance of organizations mastering a shift in strategic thought cannot be underemphasized. Steel manufacturers moving into steel products, paper manufacturers moving into stationery items and bulk drug manufacturers moving into finished dosage forms represent a different class of subtle yet value-adding strategic shifts.
As companies take more remarkable strategic shifts in steps, product lines get added, changing business mix over time, in some cases transforming companies into conglomerates. Wipro which started in 1945 as a vegetable oil company with 100 percent of its revenues from oils and soaps is today a software giant with over 80 percent of revenues accruing from software services, but still dealing in soaps, oils and other consumer products. Reliance Industries which started as a small textile mill in 1975 is today an oil, gas and petrochemical conglomerate with continued presence in textiles. Many conglomerates are, in fact, a direct result of a series of strategic shifts.
It is, however, more interesting that certain sweeping strategic shifts taken at the inflection points of technological development can completely disconnect the companies from their origins and radically transform them. Set up in 1865 as a riverside paper mill in Finland Nokia completely transformed itself into a telecommunications and mobile devices global giant in an amazing story of strategic shifts from paper to rubber to cables, and to electronics (from 1967). Toyoda family first set up Toyoda Automatic Loom Works in 1926 but took an important strategic shift to set up Toyota Motor in 1933. India’s automotive major Tata Motors was first set up in 1945 to manufacture railway locomotives and engineering products but took a strategic shift towards truck manufacturing in 1954.
Companies which stand steadfastly committed to their core or original product and business lines without considering any type of strategic shift, subtle or sweeping, on the other hand, face economic pressures. At one end of the spectrum, technological changes cause obsolescence and call for timely strategic shifts. For example, manufacturers of type writers, dot matrix printers, incandescent bulbs, long playing records, and audio tapes failed to see the compulsions of technological change that destroyed the functionality and economics of the applicable industries. At the other end of the spectrum, market forces dictate the need for strategic shifts even in technologically vibrant and economically viable industries. For example, innovator pharmaceutical companies failed to see the imperatives for lower healthcare costs and the growing need for affordable generic medicines and lost significant time in taking decisive steps towards generics and/or new classes of innovative therapies.
Clearly, strategic shift is an essential element of corporate development and growth. Strategy departments often get robotized with time-bound long range planning or corporate planning exercises. The larger a company is the more bureaucratic and voluminous the work becomes, making the strategists impervious to the undercurrents that dictate the need for strategic shifts. In the alternative, strategy departments get excited with current strategic flavors, be it a merger, an acquisition or a licensing trend. The greater the cash resources of a company the greater is the risk of hasty cash deployment on the strategy of the season. There is, therefore, need for strategy departments to have strategists who can identify emerging shades of competitive disadvantage and who can visualize the drivers of future competitive advantage. They need to have the ability to influence the firms to see the future of strategic shifts the way they do.
Mindset shifts
Successful strategic shifts require dramatic mindset shifts. Strategists, despite the capability and responsibility for long term planning tend to become rigid and inflexible towards strategic mobility. Strategic projects do involve creation of assets and organizations and require lead times to develop, manufacture and launch products. This cannot be an alibi for not evaluating dynamic strategic shifts. In fact, a successful and agile firm would be adept at identifying strategic overlaps and overlays. Commitment to a strategic direction, which certainly is required, should not lead to an inflexible mindset that fails to visualize a dynamic future. Mindset mobility, especially at the level of chief officers of the company is essential to trigger successful strategic shifts. The mindset shifts are typically threefold.
From established to emerging. It is important for firms to set targets of certain percentages of their current resources to be expended on, and certain percentages of their future revenues to be obtained from emerging fields. As an extension of the McKinsey Alchemy of Growth Model the third horizon of growth should by design be something of real future. A company specializing in conventional energy in India, for example, needs to commence allocating resources to emerging energy sources like nuclear and solar. An energy equipment manufacturer would need to similarly redirect its strategies to enabling such emerging energy opportunities. The concept of entry into emerging areas cannot merely be R&D oriented thinking; this concept cannot also be mere business diversification either. It has to be an all-encompassing mindset shift to enter and succeed in new industrial or business lines, even though the current going seems to be adequate.
From conventional to creative. Firms that desire to be agile in strategic shifts cannot be conventional in the processes to achieve such shifts. The conventional in-house design-develop-manufacture-market cycle is highly asset dependent and time intensive. As a result, the cycle needs to be commenced far too ahead of the opportunity without any platform technologies and with all the attendant risks. If firms are willing to be creative by deploying emerging technologies and adapting novel platforms that have been proven in other domains, strategic breakthroughs can be achieved with lower investment intensity and reasonable risk profiles. The charm of the modern automobile, for example, lies in the creative integration of electronics, proven elsewhere. The ease of modern surgery, for example, lies in dramatically reducing invasion-intensity through better intra-body imaging and navigation techniques.
From continuity to discontinuity. Oftentimes, a dramatic and much needed mindset shift is induced by mandatorily welcoming discontinuity into the system. Discontinuity can be technology driven like the use of robots, lasers and photonics in surgery, medicine and diagnostics. It can simply, but yet profoundly, be people driven by shaking up an in-bred organization with massive induction of multi-cultural high talent. The decision by the Government of India to allow its prestigious technological institutions, Indian Institutes of Technology (IITs) to offer medical courses and induct foreign faculty and students is a perfect example of discontinuity as a game changer. Treating cancer through cell apoptosis and tumor starving mechanisms as well as bio-marker based directed drug delivery, as opposed to treating it solely through cytotoxic mechanisms, represented discontinuity in thinking that expanded medicine and benefitted society.
Structural shifts
Successful strategic shifts also require significant structural shifts in the ways of doing business. Over time, managers and organizations become overly proud of their creations and achievements, and fail to see the benefit of alternative structural solutions to their business needs. This structural inflexibility becomes a big barrier to the advocacy of even logical strategic shifts. This weakness tends to be more palpable in firms that have been traditionally integrated and introverted. Successful strategic shifts can be pursued through three types of structural reconfiguration of doing business.
From competition to collaboration. The conventional wisdom has been that a manufacturer of an end- product can cooperate with only a component manufacturer and not with another end-product manufacturer. The conventional wisdom has also been that platforms have to be kept proprietary to achieve sustainable competitive advantage. This outlook has made firms in established industries become asset intensive and lose the ability to leverage the assets available elsewhere for a quick go-to-market strategy. Interestingly, electronics industry has rewritten the rules of competition and collaboration for overall synergy. Operating systems, displays, chips and build facilities are widely shared amongst overt competitors providing latent synergies to all players. Traditional industries and go-solo firms would need to accept more collaborative models with competitors.
From in-housing to out-sourcing. The riskiness of integration increases proportionally with the speed of technological change. Only those product launches which recover the asset costs in a short period of time can hope to balance the twin challenges of manufacturing integration and design differentiation. This is typically feasible in fast moving consumer and retail electronics products marketed by global majors with considerable distribution and selling power. Most other manufacturers would need to keep their fixed asset costs down by relying on out-sourcing as a means of securing the advantages of specialization without the burden of integration.
From integration to incubation. Strategic shifts of firms involve entry into new areas, through new products and new services to which the organization is not used to. Many times, firms make the mistake of entrusting strategic shifts to divisions that are seen to be allied to the new ventures. While it may be cost-effective to do so, it would not be the best way to execute a strategic shift. Strategic shifts are very much like start-ups which require technological novelty, process creativity, entrepreneurial passion and dedicated funding. Firms undertaking strategic shifts would need to incubate such undertakings with organizational leaders and structures that enable the above four characteristics.
Summary
Strategic shifts are essential for growth aspiring firms to visualize and manage a dynamic future ahead of competition. Firms need to be able to proactively identify the declining status of current businesses and product lines and visualize the need for appropriate strategic shifts. There is challenge involved in undertaking a strategic shift. Strategists and chief officers should embrace mindset changes that passionately look for emerging opportunities, creatively manage new product or service developments and deploy discontinuities to advantage. In addition, firms should pursue beneficial structural configurations that favor collaboration, out-sourcing and incubation to make strategic shifts truly transformational.
Posted by Dr CB Rao on September 11, 2010
Strategic shifts
Strategic shifts are deliberate moves by organizations to expand business potential by creating products and services that are out of box with respect to current strategies of the firm. The established strategic paradigm has four components of (i) defining a strategy for a fixed period of 5 to 10 years, (ii) defining the boundaries of industry to operate in, (iii) creating fixed asset infrastructure for organic growth, and (iv) staying focused on established market segments. This rigid strategic framework would soon be archaic for firms which aspire to stay ahead, and lead rather than follow competition. Shifts in strategy rather than compliance to strategy would be the future growth triggers. These strategic shifts are broader in scope and impact than the usual competitive strategies that seek superiority for firms in the marketplace through a mix of generic strategies.
Strategic shifts can be expansionistic as well as minimalistic. The fundamental driver for a successful strategic shift is an identification of a potential fit between a firm’s current competencies that can be leveraged and the environment’s emerging opportunities that can be harnessed. Google offers a towering example of engineering successful and expansionistic strategic shifts. From being a universal search engine to becoming an email medium, video sharing platform, global mapping systems, cloud infrastructure, operating system for mobile and computing devices, and branded mobile devices, Google has engineered a series of well thought out strategic shifts. Intel offers a superb example of leveraging core competencies of chip development and manufacture to align itself with, or even lead the multifarious strategic shifts in computing and connectivity platforms.
Strategic shifts can be proactive or reactive. Use of touch technology , streaming of online music or creation of mobile applications are innovative and proactive moves that helped Apple diversify into mobile audio and video devices, and quickly assume leadership position in compact music and mobile devices. Once a proactive strategic shift is made by a firm, it becomes doubly difficult for incumbent firms to defend their positions with reactive strategic shifts. To gain advantage over proactive leaders, reactive strategic shifts need to have some element of differentiation. Toyota Prius was probably not the first hybrid car ever; the concept of hybrid cars was decades old while Honda Insight was the first commercial scale hybrid car. However, by engineering Prius to the same levels of performance as a conventional car with the added advantages of fuel economy and minimal pollution of a green car Toyota demonstrated how a reactive strategic shift can be successful.
Subtle or sweeping?
Strategic shifts can be subtle or sweeping over time. From adding products within a business, and adding related and unrelated businesses to totally jettisoning originating industries, and leapfrogging into sunrise sectors, models of strategic shift take several hues. The motivation for strategic shifts, and preference for discrete models of shift stem from a combination of market opportunity, industry context, and professional entrepreneurialism. A few industries, in particular, are notable for keeping their firms specialized in the respective industries irrespective of market vicissitudes while growth aspirations of entrepreneurs and firms induce firms to consciously explore strategic shifts.
Automobile and pharmaceutical industries are particularly notable for specialization. Nonetheless, strategic shifts which appear subtle or related could have profound business impact. For example, Wyeth’s decision to add vaccines and biopharmaceuticals made the company highly valuable. In the automobile industry, moves from sedans to small cars or vice versa, and from cars to commercial vehicles or vice versa were subtle strategic shifts that generated profound impact on global business development of the involved companies. For example, had Hyundai not moved to develop a small car in mid-1990s its entry into the Indian automotive market would not have been as enormous and successful as it is today.
In another facet of subtle strategic shifting, base or commodity product manufacturers tend to add value added finished products to their portfolio. While in conventional strategic terms such shifts are classified as integration moves the importance of organizations mastering a shift in strategic thought cannot be underemphasized. Steel manufacturers moving into steel products, paper manufacturers moving into stationery items and bulk drug manufacturers moving into finished dosage forms represent a different class of subtle yet value-adding strategic shifts.
As companies take more remarkable strategic shifts in steps, product lines get added, changing business mix over time, in some cases transforming companies into conglomerates. Wipro which started in 1945 as a vegetable oil company with 100 percent of its revenues from oils and soaps is today a software giant with over 80 percent of revenues accruing from software services, but still dealing in soaps, oils and other consumer products. Reliance Industries which started as a small textile mill in 1975 is today an oil, gas and petrochemical conglomerate with continued presence in textiles. Many conglomerates are, in fact, a direct result of a series of strategic shifts.
It is, however, more interesting that certain sweeping strategic shifts taken at the inflection points of technological development can completely disconnect the companies from their origins and radically transform them. Set up in 1865 as a riverside paper mill in Finland Nokia completely transformed itself into a telecommunications and mobile devices global giant in an amazing story of strategic shifts from paper to rubber to cables, and to electronics (from 1967). Toyoda family first set up Toyoda Automatic Loom Works in 1926 but took an important strategic shift to set up Toyota Motor in 1933. India’s automotive major Tata Motors was first set up in 1945 to manufacture railway locomotives and engineering products but took a strategic shift towards truck manufacturing in 1954.
Companies which stand steadfastly committed to their core or original product and business lines without considering any type of strategic shift, subtle or sweeping, on the other hand, face economic pressures. At one end of the spectrum, technological changes cause obsolescence and call for timely strategic shifts. For example, manufacturers of type writers, dot matrix printers, incandescent bulbs, long playing records, and audio tapes failed to see the compulsions of technological change that destroyed the functionality and economics of the applicable industries. At the other end of the spectrum, market forces dictate the need for strategic shifts even in technologically vibrant and economically viable industries. For example, innovator pharmaceutical companies failed to see the imperatives for lower healthcare costs and the growing need for affordable generic medicines and lost significant time in taking decisive steps towards generics and/or new classes of innovative therapies.
Clearly, strategic shift is an essential element of corporate development and growth. Strategy departments often get robotized with time-bound long range planning or corporate planning exercises. The larger a company is the more bureaucratic and voluminous the work becomes, making the strategists impervious to the undercurrents that dictate the need for strategic shifts. In the alternative, strategy departments get excited with current strategic flavors, be it a merger, an acquisition or a licensing trend. The greater the cash resources of a company the greater is the risk of hasty cash deployment on the strategy of the season. There is, therefore, need for strategy departments to have strategists who can identify emerging shades of competitive disadvantage and who can visualize the drivers of future competitive advantage. They need to have the ability to influence the firms to see the future of strategic shifts the way they do.
Mindset shifts
Successful strategic shifts require dramatic mindset shifts. Strategists, despite the capability and responsibility for long term planning tend to become rigid and inflexible towards strategic mobility. Strategic projects do involve creation of assets and organizations and require lead times to develop, manufacture and launch products. This cannot be an alibi for not evaluating dynamic strategic shifts. In fact, a successful and agile firm would be adept at identifying strategic overlaps and overlays. Commitment to a strategic direction, which certainly is required, should not lead to an inflexible mindset that fails to visualize a dynamic future. Mindset mobility, especially at the level of chief officers of the company is essential to trigger successful strategic shifts. The mindset shifts are typically threefold.
From established to emerging. It is important for firms to set targets of certain percentages of their current resources to be expended on, and certain percentages of their future revenues to be obtained from emerging fields. As an extension of the McKinsey Alchemy of Growth Model the third horizon of growth should by design be something of real future. A company specializing in conventional energy in India, for example, needs to commence allocating resources to emerging energy sources like nuclear and solar. An energy equipment manufacturer would need to similarly redirect its strategies to enabling such emerging energy opportunities. The concept of entry into emerging areas cannot merely be R&D oriented thinking; this concept cannot also be mere business diversification either. It has to be an all-encompassing mindset shift to enter and succeed in new industrial or business lines, even though the current going seems to be adequate.
From conventional to creative. Firms that desire to be agile in strategic shifts cannot be conventional in the processes to achieve such shifts. The conventional in-house design-develop-manufacture-market cycle is highly asset dependent and time intensive. As a result, the cycle needs to be commenced far too ahead of the opportunity without any platform technologies and with all the attendant risks. If firms are willing to be creative by deploying emerging technologies and adapting novel platforms that have been proven in other domains, strategic breakthroughs can be achieved with lower investment intensity and reasonable risk profiles. The charm of the modern automobile, for example, lies in the creative integration of electronics, proven elsewhere. The ease of modern surgery, for example, lies in dramatically reducing invasion-intensity through better intra-body imaging and navigation techniques.
From continuity to discontinuity. Oftentimes, a dramatic and much needed mindset shift is induced by mandatorily welcoming discontinuity into the system. Discontinuity can be technology driven like the use of robots, lasers and photonics in surgery, medicine and diagnostics. It can simply, but yet profoundly, be people driven by shaking up an in-bred organization with massive induction of multi-cultural high talent. The decision by the Government of India to allow its prestigious technological institutions, Indian Institutes of Technology (IITs) to offer medical courses and induct foreign faculty and students is a perfect example of discontinuity as a game changer. Treating cancer through cell apoptosis and tumor starving mechanisms as well as bio-marker based directed drug delivery, as opposed to treating it solely through cytotoxic mechanisms, represented discontinuity in thinking that expanded medicine and benefitted society.
Structural shifts
Successful strategic shifts also require significant structural shifts in the ways of doing business. Over time, managers and organizations become overly proud of their creations and achievements, and fail to see the benefit of alternative structural solutions to their business needs. This structural inflexibility becomes a big barrier to the advocacy of even logical strategic shifts. This weakness tends to be more palpable in firms that have been traditionally integrated and introverted. Successful strategic shifts can be pursued through three types of structural reconfiguration of doing business.
From competition to collaboration. The conventional wisdom has been that a manufacturer of an end- product can cooperate with only a component manufacturer and not with another end-product manufacturer. The conventional wisdom has also been that platforms have to be kept proprietary to achieve sustainable competitive advantage. This outlook has made firms in established industries become asset intensive and lose the ability to leverage the assets available elsewhere for a quick go-to-market strategy. Interestingly, electronics industry has rewritten the rules of competition and collaboration for overall synergy. Operating systems, displays, chips and build facilities are widely shared amongst overt competitors providing latent synergies to all players. Traditional industries and go-solo firms would need to accept more collaborative models with competitors.
From in-housing to out-sourcing. The riskiness of integration increases proportionally with the speed of technological change. Only those product launches which recover the asset costs in a short period of time can hope to balance the twin challenges of manufacturing integration and design differentiation. This is typically feasible in fast moving consumer and retail electronics products marketed by global majors with considerable distribution and selling power. Most other manufacturers would need to keep their fixed asset costs down by relying on out-sourcing as a means of securing the advantages of specialization without the burden of integration.
From integration to incubation. Strategic shifts of firms involve entry into new areas, through new products and new services to which the organization is not used to. Many times, firms make the mistake of entrusting strategic shifts to divisions that are seen to be allied to the new ventures. While it may be cost-effective to do so, it would not be the best way to execute a strategic shift. Strategic shifts are very much like start-ups which require technological novelty, process creativity, entrepreneurial passion and dedicated funding. Firms undertaking strategic shifts would need to incubate such undertakings with organizational leaders and structures that enable the above four characteristics.
Summary
Strategic shifts are essential for growth aspiring firms to visualize and manage a dynamic future ahead of competition. Firms need to be able to proactively identify the declining status of current businesses and product lines and visualize the need for appropriate strategic shifts. There is challenge involved in undertaking a strategic shift. Strategists and chief officers should embrace mindset changes that passionately look for emerging opportunities, creatively manage new product or service developments and deploy discontinuities to advantage. In addition, firms should pursue beneficial structural configurations that favor collaboration, out-sourcing and incubation to make strategic shifts truly transformational.
Posted by Dr CB Rao on September 11, 2010
Monday, August 16, 2010
Life Science Technologies: The Next Frontier for the IITs
The Indian Institute of Technology Madras (IITM) organized on August 14, 2010 a symposium titled “Medical Education and Research in Independent India: A Critical Review and Projected Role of IITs in Post-graduate Medical Education and Research” at its campus. Apart from the Director of IITM, Professor M S Ananth, two eminent medical professionals, Professor B M Hegde (a noted cardiologist, former vice-chancellor of Manipal University and a recipient of the Padma Bhushan award) and Dr C V Krishnaswamy (a renowned diabetologist and a pioneer in affordable diabetes treatment for the needy through the Voluntary Health Services, Chennai) delivered critical review lectures. An eminent chemist, Dr Lalitha and a reputed physicist Dr Srinivasan provided additional perspectives as panelists.
The symposium raised several open issues with the very relevance and appropriateness of modern medicine as is taught and practiced coming under serious critique by the two distinguished invitees. Both the speakers are well-known for their erudition as well as campaign against exploitative medicine. Both the speakers consider the human body as a technological energy-house, capable of rewiring itself and requiring only a minimalist medical or surgical intervention. It is not surprising therefore that Professor Ananth admitted that he stood confused after listening to their lectures. If the symposium was intended to lay a charter for the IITs in medical education, the purpose was far from accomplished. Yet, the very act of focusing on the potential role of the IITs in medical education is a ground-breaking thought. Dr Ananth deserves kudos for germinating and pursuing this thought.
The proposition of medical education in the IITs appears highly counter-intuitive given that the IITs had been established solely for excellence in higher technological education and research. The proposition appears to go against the Indian educational eco-system which for decades saw engineering and medicine as two distinct (and almost non-complementary) streams of education. So much so, at school finishing level itself the students are required to choose between a mathematics-physics-chemistry stream, which is a prerequisite for engineering education, and a biology-physics-chemistry stream, which is a pre-requisite for medical education. Given the resource scarcity in higher education in India it is also debatable if additional resources of the IITs should be spent on diversifying into medical education and research or on deepening the core competencies in scientific and technological education and research. Though the proposition, on the above counts, appears counter-intuitive to the Indian context there is a strong case for analyzing the proposal with due objectivity.
The macro-case for the IITs
The Indian Institutes of Technology (IITs) are a group of 15 autonomous engineering and technology-oriented institutes of higher education established and declared as Institutes of National Importance by the Parliament of India, and hence established directly by the Central government. The IITs were created to train scientists and engineers, with the aim of developing a skilled workforce to support the economic and social development of India after independence in 1947. In order of establishment, they are located in Kharagpur (1950; as IIT 1951), Mumbai (1958), Chennai (formerly Madras) (1959), Kanpur (1959), Delhi (1961; as IIT 1963), Guwahati (1994), Roorkee (1847; as IIT 2001), Ropar (2008), Bhubaneswar (2008), Gandhinagar (2008), Hyderabad (2008), Patna (2008), Jodhpur (2008), Indore (2009) and Mandi (2009). Some IITs were established with financial assistance and technical expertise from UNESCO, Germany, the United States, Japan and the Soviet Union.
Each IIT is an autonomous university, linked to the others through a common IIT Council, which oversees their administration. They have a common admission process for undergraduate admissions, using the Joint Entrance Examination (popularly known as IIT-JEE) to select around 8,000 undergraduate candidates a year. Postgraduate admissions are done on the basis of the national competitive examinations called GATE, JMET, JAM and CEED. About 15,500 undergraduate and 12,000 graduate students study in the IITs, in addition to several hundred research scholars. The alumni of the IITs have become top-ranking scientists, technologists, managers, and entrepreneurs globally. The IITs, especially the ones with long history, have won consistent ratings among the top technological institutions of the world. In more ways than one, the IITs have become global institutions and brands of India, attracting the best students and teachers in India.
In contrast, higher medical education in India has largely been introverted, partly due to the institutional constraints and partly due to the reluctance of advanced economies to open up to foreign doctors. Neither has it been promoted as an educational mission of national importance by the Central government as it did in the case of IITs. There are only a few national medical institutions such as AIIMS, Delhi and JIPMER, Puducherry, which are centrally sponsored. Most other medical institutions are State sponsored or private sponsored and have won reputation as teaching hospitals. If the concept of IITs as institutes of national importance has paid off, an analogous concept in medical education as a mission of national importance should be equally relevant and feasible. By extending the scope of IITs to include medical education, potentially the 5 decade experience and institutional structure of the IITs can be effectively leveraged for medical education.
The other logical treatise relates to the role of science and engineering in the field of medicine. From diagnostics to surgery, and from pharmaceuticals to human organs technology plays a major role as never before. The body scanning and blood analysis equipment and processes are getting advanced each year with more sophisticated imaging systems, informatics and predictive capability. As the sciences of human genetics and genetic engineering become more advanced the ability to predict likely disease incidence and therapeutic efficacy would only increase in future. At the other end of the spectrum, minimally invasive surgical methods, utilizing robotics and laser surgery on one hand and regenerative medicine including transfused and auto stem cell therapies would substitute the classic surgical scalpel. In more senses than one, future physicians and surgeons need to be expert biologists, physicists, chemists, engineers and technologists, all rolled into one. This indeed is a tough call and requires a highly communicative, collaborative and networked community of scientists and technologists.
By letting the current graduate studies in sciences, engineering and medicine consolidate as at present but establishing a new paradigm of post-graduate and research studies in life science technologies, the IITs can certainly make biology and technology work for medicine. The challenge is, therefore, not merely one of teaching medicine in the IITs; it is one of defining a whole new stream of life sciences technology. This would involve understanding the human body better through deployment of engineering tools, individualizing diagnosis and therapeutics through deployment of genetics, potentiating pharmaceuticals through newer molecular moieties, more patient-friendly and more efficacious delivery systems, moving surgery into an almost non-invasive technological tool, and regenerating the human body through its own immune and cellular therapeutics. IITs can certainly create these new life science technological substrates through higher education and research. Respecting that human beings can never arrogate themselves to create or modify life which is God’s great creation, some of the potential life cycle technological theorems are hypothesized below.
Modeling the human body and mind
Cellular technologies. Engineering aims to reduce the abstract to precise, visualize the hidden and optimize performance. From mathematical equations to heuristic algorithms, and from simulation to fuzzy logic multiple engineering approaches are available to model systems. Biological and medical sciences have so far used in vitro and in vivo animal models to understand how human body gets affected by disease and how it is cured by medicines. This modeling continues the principal theme of medical development despite the knowledge that exists that animal modeling does not simulate, replicate or predict human modeling. If the fundamental building block of human body, or for that matter any living organism, the “cell” is understood better the science of life and living becomes stronger. Considering that the human body is made of trillions of cells as building blocks, with different types of cells conducting different tasks, modeling, engineering and optimizing cellular behavior is the fundamental challenge as well as opportunity for newer life science technologies.
NIGA models. Engineering has moved from designing and manufacturing machines operated by human beings to designing, manufacturing and operating human-like machines, the humanoids. Science has moved from explaining the laws of physics, chemistry and biology to cloning and creating biological organisms leveraging the laws that have been discovered and defined. Yet, what propels cells to do what they do has not been understood yet. The nutrition-immunity-growth-aging (NIGA) model (the author’s unique acronym) has not been understood either as an individual model or collective system. Energy is essential for growth; yet it is not understood at what points of time, and in which manners, energy supply to, and consumption by, the human body become optimal or sub-optimal. Relating cell growth and death to alternative models of nutrition and energy would be an essential component of life science technologies. IITs, having mastered mechanical, electrical, electronics and computer engineering domains can apply these principles to establish and validate customized NIGA models at cellular levels.
Networking solutions. The human body is an impossibly complex electro-mechanical, neuron-capillary network with multiple biological pumps and filters that maintain the body and mind in harmony with themselves and in dynamic equilibrium with an often hostile environment. Principles of engineering can be utilized to model these interactions. For example, failure of venous pumps in legs causes accumulation of blood in capillaries and swelling of either peripheral or deep veins. Engineering rather than medical solutions to correct the pumping abnormalities are perhaps called for. Mapping of brain exteriors as well as interiors in neurologically challenged persons, and reviving of neural networks in brains of strokes-incapacitated patients is yet another area where electrical engineering could offer relevant solutions.
Diagnostic solutions. Clearly, major strides have been taken in developing diagnostic equipment which produce highly granulated images of the human body based on computer aided, magnetic resonance aided, and positive emission aided scanning devices. While the current equipment are minimally invasive and much faster compared to the earlier generation equipment, the continued use of radiation and radiological contrasting agents bring in risks of invasive analysis and discomfort. It is necessary to work on continued engineering solutions which not only sharpen the imaging capabilities but also correlate with clinical outcomes in auto diagnosis as well as in feedback correction model.
Robotic solutions. The use of robots for surgery has indeed been a game changer. Large incisions have now given way to key-hole surgeries. Use of robots in surgery can go a step further as new technologies enable slender, flexible arms to navigate through the contoured internals of the human body. While so far robots have provided better magnification and manipulative skills in one to one relationship with surgeons, it is possible to envisage a future whereby more than one robot could be pressed into service to perform multiple tasks simultaneously. It is also possible to envisage miniaturized robots and nano robots which can actually be placed in the internal body systems for more precise nature of body responses during the surgical processes.
Materials solutions. From creation of synthetic organs to development of artificial blood, engineering can play a major role. Discovery and development of more bio-compatible materials together with in situ design and manufacture of required human parts could lead to better outcomes, especially in orthopaedic, cardiac and cosmetic surgeries. Materials which minimize blood loss, suturing systems which promote rapid self-healing, carriers and excipients that enable better bioavailability for pharmaceuticals are all within the realms of engineering possibility.
Pharmaceutical solutions. IITs have a great track record in the sciences of chemistry and physics. Chemistry is traditionally focused on engineering kinetics and dynamics in a machine system rather than on kinetics and dynamics of molecules in a human system. Yes, these two key disciplines, can be supplemented to develop powerhouses of new chemical entities and new drug delivery systems. With the addition of newer disciplines of biotechnology and nanotechnology, the IITs are well positioned to drug discovery and drug development activities in both small molecule and large molecules spaces.
Device Solutions. Medical devices are increasingly playing a major role in monitoring patient condition, bedside. The ultimate destination of this quest should be to have a patch which when worn on the patient’s skin can provide a complete readout of all the body parameters. New biochemistry and bio-enzyme technologies would be required which could apply principles of microporosis and generate inputs to a wide range of conditions like salt and electrolyte balances in the body. This, coupled with devices which are capable of programming, feedback and self-regulation could take medicine to an auto-management mode.
IT-enabled Personalized Medicine. The IITs decades ago pioneered computer education. They also have been pioneers in mathematical and stochastic modeling as well as application of statistics and economics. All these capabilities can be applied for developing new frontiers of personalized medicine to eliminate variability in person-to-person therapeutic efficacy. A host of clinical and medical sciences such as pharmaco-genomics, pharmaco-economics, genetic prescription, personalized medicine can be expanded based on application of computer sciences. From simple archiving and analysis of clinical data to complex predictive modeling IITs can harness their computer skills to enable personalized medicine.
The above are only a few illustrative areas indicative of the capability of engineering to redefine higher medical education and research.
Life science technologies – actions for the IITs
Clearly, there are a number of domains and applications where the principles of engineering and physical sciences, including mathematics, when combined with the principles of biological sciences can provide breakthrough solutions for medical needs that are unmet or can be better met. Clearly the current medical schools which have no engineering background are not the campuses to aim for such new developments. On the other hand, given the preponderant use of science and engineering, the IITs could be the campuses where such new life science technologies can be developed.
The route to such development lies in creating centers of excellence, for each of the solution areas that have been discussed in the foregoing in an illustrative manner. For example, there could be centres of excellence for cellular engineering, NCGA modeling, network rejuvenation, diagnostic efficiency, robotic surgery, bio-materials development, pharmaceutical discovery and device optimization. These, and other similar centers, should be bound together by an integrated human life science technology system which understands the engineering of the human body and mind in a holistic manner.
As a fundamental requirement for the new stream of life science technologies, the current distinction between biological sciences oriented curricula and the mathematics oriented curricula (the former leading to medicine and the latter leading to engineering) needs to be done away with. Undergraduate students should be provided with equal grounding in physical sciences and biological sciences to be able to absorb the nuances of medicine and engineering effortlessly.
If the medical education as envisaged herein needs to take root in the IITs, the analytical capabilities need a significant leg-up. More powerful liquid and gas chromatography and mass spectroscopy instruments capable of not only conventional analytical research but also bio-analytical development and detection of entities in the minutest pico and ppq ranges would be required. Similarly, biological laboratories which can develop in vitro cellular models based on genetic sciences will also be required. New genetic engineering equipment such as protein extraction and purification equipment, gene sequences, microarrays will need to be installed. It is likely that upgradation of infrastructure alone would be in the order of one billion dollars for say five IITs together to start with.
Integrated life science technology programs at higher levels of education (post-graduation and research including doctoral and post-doctoral programs) must be flexible to accept entrants via basic bachelor’s degree in engineering or medicine. Establishment of autonomous life science technology centers within the IITs with their own dedicated programs will see a new dream fulfilled in higher education scene in India. Probably with such an effort, India could lead an educational revolution in life science technologies even on a global basis.
Posted by Dr CB Rao on August 16, 2010 (an alumnus of M Tech and Ph D programs of IITM)
The symposium raised several open issues with the very relevance and appropriateness of modern medicine as is taught and practiced coming under serious critique by the two distinguished invitees. Both the speakers are well-known for their erudition as well as campaign against exploitative medicine. Both the speakers consider the human body as a technological energy-house, capable of rewiring itself and requiring only a minimalist medical or surgical intervention. It is not surprising therefore that Professor Ananth admitted that he stood confused after listening to their lectures. If the symposium was intended to lay a charter for the IITs in medical education, the purpose was far from accomplished. Yet, the very act of focusing on the potential role of the IITs in medical education is a ground-breaking thought. Dr Ananth deserves kudos for germinating and pursuing this thought.
The proposition of medical education in the IITs appears highly counter-intuitive given that the IITs had been established solely for excellence in higher technological education and research. The proposition appears to go against the Indian educational eco-system which for decades saw engineering and medicine as two distinct (and almost non-complementary) streams of education. So much so, at school finishing level itself the students are required to choose between a mathematics-physics-chemistry stream, which is a prerequisite for engineering education, and a biology-physics-chemistry stream, which is a pre-requisite for medical education. Given the resource scarcity in higher education in India it is also debatable if additional resources of the IITs should be spent on diversifying into medical education and research or on deepening the core competencies in scientific and technological education and research. Though the proposition, on the above counts, appears counter-intuitive to the Indian context there is a strong case for analyzing the proposal with due objectivity.
The macro-case for the IITs
The Indian Institutes of Technology (IITs) are a group of 15 autonomous engineering and technology-oriented institutes of higher education established and declared as Institutes of National Importance by the Parliament of India, and hence established directly by the Central government. The IITs were created to train scientists and engineers, with the aim of developing a skilled workforce to support the economic and social development of India after independence in 1947. In order of establishment, they are located in Kharagpur (1950; as IIT 1951), Mumbai (1958), Chennai (formerly Madras) (1959), Kanpur (1959), Delhi (1961; as IIT 1963), Guwahati (1994), Roorkee (1847; as IIT 2001), Ropar (2008), Bhubaneswar (2008), Gandhinagar (2008), Hyderabad (2008), Patna (2008), Jodhpur (2008), Indore (2009) and Mandi (2009). Some IITs were established with financial assistance and technical expertise from UNESCO, Germany, the United States, Japan and the Soviet Union.
Each IIT is an autonomous university, linked to the others through a common IIT Council, which oversees their administration. They have a common admission process for undergraduate admissions, using the Joint Entrance Examination (popularly known as IIT-JEE) to select around 8,000 undergraduate candidates a year. Postgraduate admissions are done on the basis of the national competitive examinations called GATE, JMET, JAM and CEED. About 15,500 undergraduate and 12,000 graduate students study in the IITs, in addition to several hundred research scholars. The alumni of the IITs have become top-ranking scientists, technologists, managers, and entrepreneurs globally. The IITs, especially the ones with long history, have won consistent ratings among the top technological institutions of the world. In more ways than one, the IITs have become global institutions and brands of India, attracting the best students and teachers in India.
In contrast, higher medical education in India has largely been introverted, partly due to the institutional constraints and partly due to the reluctance of advanced economies to open up to foreign doctors. Neither has it been promoted as an educational mission of national importance by the Central government as it did in the case of IITs. There are only a few national medical institutions such as AIIMS, Delhi and JIPMER, Puducherry, which are centrally sponsored. Most other medical institutions are State sponsored or private sponsored and have won reputation as teaching hospitals. If the concept of IITs as institutes of national importance has paid off, an analogous concept in medical education as a mission of national importance should be equally relevant and feasible. By extending the scope of IITs to include medical education, potentially the 5 decade experience and institutional structure of the IITs can be effectively leveraged for medical education.
The other logical treatise relates to the role of science and engineering in the field of medicine. From diagnostics to surgery, and from pharmaceuticals to human organs technology plays a major role as never before. The body scanning and blood analysis equipment and processes are getting advanced each year with more sophisticated imaging systems, informatics and predictive capability. As the sciences of human genetics and genetic engineering become more advanced the ability to predict likely disease incidence and therapeutic efficacy would only increase in future. At the other end of the spectrum, minimally invasive surgical methods, utilizing robotics and laser surgery on one hand and regenerative medicine including transfused and auto stem cell therapies would substitute the classic surgical scalpel. In more senses than one, future physicians and surgeons need to be expert biologists, physicists, chemists, engineers and technologists, all rolled into one. This indeed is a tough call and requires a highly communicative, collaborative and networked community of scientists and technologists.
By letting the current graduate studies in sciences, engineering and medicine consolidate as at present but establishing a new paradigm of post-graduate and research studies in life science technologies, the IITs can certainly make biology and technology work for medicine. The challenge is, therefore, not merely one of teaching medicine in the IITs; it is one of defining a whole new stream of life sciences technology. This would involve understanding the human body better through deployment of engineering tools, individualizing diagnosis and therapeutics through deployment of genetics, potentiating pharmaceuticals through newer molecular moieties, more patient-friendly and more efficacious delivery systems, moving surgery into an almost non-invasive technological tool, and regenerating the human body through its own immune and cellular therapeutics. IITs can certainly create these new life science technological substrates through higher education and research. Respecting that human beings can never arrogate themselves to create or modify life which is God’s great creation, some of the potential life cycle technological theorems are hypothesized below.
Modeling the human body and mind
Cellular technologies. Engineering aims to reduce the abstract to precise, visualize the hidden and optimize performance. From mathematical equations to heuristic algorithms, and from simulation to fuzzy logic multiple engineering approaches are available to model systems. Biological and medical sciences have so far used in vitro and in vivo animal models to understand how human body gets affected by disease and how it is cured by medicines. This modeling continues the principal theme of medical development despite the knowledge that exists that animal modeling does not simulate, replicate or predict human modeling. If the fundamental building block of human body, or for that matter any living organism, the “cell” is understood better the science of life and living becomes stronger. Considering that the human body is made of trillions of cells as building blocks, with different types of cells conducting different tasks, modeling, engineering and optimizing cellular behavior is the fundamental challenge as well as opportunity for newer life science technologies.
NIGA models. Engineering has moved from designing and manufacturing machines operated by human beings to designing, manufacturing and operating human-like machines, the humanoids. Science has moved from explaining the laws of physics, chemistry and biology to cloning and creating biological organisms leveraging the laws that have been discovered and defined. Yet, what propels cells to do what they do has not been understood yet. The nutrition-immunity-growth-aging (NIGA) model (the author’s unique acronym) has not been understood either as an individual model or collective system. Energy is essential for growth; yet it is not understood at what points of time, and in which manners, energy supply to, and consumption by, the human body become optimal or sub-optimal. Relating cell growth and death to alternative models of nutrition and energy would be an essential component of life science technologies. IITs, having mastered mechanical, electrical, electronics and computer engineering domains can apply these principles to establish and validate customized NIGA models at cellular levels.
Networking solutions. The human body is an impossibly complex electro-mechanical, neuron-capillary network with multiple biological pumps and filters that maintain the body and mind in harmony with themselves and in dynamic equilibrium with an often hostile environment. Principles of engineering can be utilized to model these interactions. For example, failure of venous pumps in legs causes accumulation of blood in capillaries and swelling of either peripheral or deep veins. Engineering rather than medical solutions to correct the pumping abnormalities are perhaps called for. Mapping of brain exteriors as well as interiors in neurologically challenged persons, and reviving of neural networks in brains of strokes-incapacitated patients is yet another area where electrical engineering could offer relevant solutions.
Diagnostic solutions. Clearly, major strides have been taken in developing diagnostic equipment which produce highly granulated images of the human body based on computer aided, magnetic resonance aided, and positive emission aided scanning devices. While the current equipment are minimally invasive and much faster compared to the earlier generation equipment, the continued use of radiation and radiological contrasting agents bring in risks of invasive analysis and discomfort. It is necessary to work on continued engineering solutions which not only sharpen the imaging capabilities but also correlate with clinical outcomes in auto diagnosis as well as in feedback correction model.
Robotic solutions. The use of robots for surgery has indeed been a game changer. Large incisions have now given way to key-hole surgeries. Use of robots in surgery can go a step further as new technologies enable slender, flexible arms to navigate through the contoured internals of the human body. While so far robots have provided better magnification and manipulative skills in one to one relationship with surgeons, it is possible to envisage a future whereby more than one robot could be pressed into service to perform multiple tasks simultaneously. It is also possible to envisage miniaturized robots and nano robots which can actually be placed in the internal body systems for more precise nature of body responses during the surgical processes.
Materials solutions. From creation of synthetic organs to development of artificial blood, engineering can play a major role. Discovery and development of more bio-compatible materials together with in situ design and manufacture of required human parts could lead to better outcomes, especially in orthopaedic, cardiac and cosmetic surgeries. Materials which minimize blood loss, suturing systems which promote rapid self-healing, carriers and excipients that enable better bioavailability for pharmaceuticals are all within the realms of engineering possibility.
Pharmaceutical solutions. IITs have a great track record in the sciences of chemistry and physics. Chemistry is traditionally focused on engineering kinetics and dynamics in a machine system rather than on kinetics and dynamics of molecules in a human system. Yes, these two key disciplines, can be supplemented to develop powerhouses of new chemical entities and new drug delivery systems. With the addition of newer disciplines of biotechnology and nanotechnology, the IITs are well positioned to drug discovery and drug development activities in both small molecule and large molecules spaces.
Device Solutions. Medical devices are increasingly playing a major role in monitoring patient condition, bedside. The ultimate destination of this quest should be to have a patch which when worn on the patient’s skin can provide a complete readout of all the body parameters. New biochemistry and bio-enzyme technologies would be required which could apply principles of microporosis and generate inputs to a wide range of conditions like salt and electrolyte balances in the body. This, coupled with devices which are capable of programming, feedback and self-regulation could take medicine to an auto-management mode.
IT-enabled Personalized Medicine. The IITs decades ago pioneered computer education. They also have been pioneers in mathematical and stochastic modeling as well as application of statistics and economics. All these capabilities can be applied for developing new frontiers of personalized medicine to eliminate variability in person-to-person therapeutic efficacy. A host of clinical and medical sciences such as pharmaco-genomics, pharmaco-economics, genetic prescription, personalized medicine can be expanded based on application of computer sciences. From simple archiving and analysis of clinical data to complex predictive modeling IITs can harness their computer skills to enable personalized medicine.
The above are only a few illustrative areas indicative of the capability of engineering to redefine higher medical education and research.
Life science technologies – actions for the IITs
Clearly, there are a number of domains and applications where the principles of engineering and physical sciences, including mathematics, when combined with the principles of biological sciences can provide breakthrough solutions for medical needs that are unmet or can be better met. Clearly the current medical schools which have no engineering background are not the campuses to aim for such new developments. On the other hand, given the preponderant use of science and engineering, the IITs could be the campuses where such new life science technologies can be developed.
The route to such development lies in creating centers of excellence, for each of the solution areas that have been discussed in the foregoing in an illustrative manner. For example, there could be centres of excellence for cellular engineering, NCGA modeling, network rejuvenation, diagnostic efficiency, robotic surgery, bio-materials development, pharmaceutical discovery and device optimization. These, and other similar centers, should be bound together by an integrated human life science technology system which understands the engineering of the human body and mind in a holistic manner.
As a fundamental requirement for the new stream of life science technologies, the current distinction between biological sciences oriented curricula and the mathematics oriented curricula (the former leading to medicine and the latter leading to engineering) needs to be done away with. Undergraduate students should be provided with equal grounding in physical sciences and biological sciences to be able to absorb the nuances of medicine and engineering effortlessly.
If the medical education as envisaged herein needs to take root in the IITs, the analytical capabilities need a significant leg-up. More powerful liquid and gas chromatography and mass spectroscopy instruments capable of not only conventional analytical research but also bio-analytical development and detection of entities in the minutest pico and ppq ranges would be required. Similarly, biological laboratories which can develop in vitro cellular models based on genetic sciences will also be required. New genetic engineering equipment such as protein extraction and purification equipment, gene sequences, microarrays will need to be installed. It is likely that upgradation of infrastructure alone would be in the order of one billion dollars for say five IITs together to start with.
Integrated life science technology programs at higher levels of education (post-graduation and research including doctoral and post-doctoral programs) must be flexible to accept entrants via basic bachelor’s degree in engineering or medicine. Establishment of autonomous life science technology centers within the IITs with their own dedicated programs will see a new dream fulfilled in higher education scene in India. Probably with such an effort, India could lead an educational revolution in life science technologies even on a global basis.
Posted by Dr CB Rao on August 16, 2010 (an alumnus of M Tech and Ph D programs of IITM)
Monday, August 9, 2010
Successful CEO Succession: Model of Continuity with Change
Corporate India woke up on August 5, 2010 to the news that the Tata Group, the largest Indian industrial conglomerate, would look for a successor to group chairman Ratan Tata, who is due to retire when he turns 75 in December 2012 as per the group retirement policy, which he himself had put in place. Tata Sons, the holding company of the group, stated that it had set up a panel to begin a global search for a successor, considering external or internal candidates, to replace the veteran leader who took the Tata Group to new international glory. The Group would like to complete the search process for the Chairman by March 2011.
The 142 year-old Tata Group, founded in 1868 by Jamsetji Nusserwanji Tata and developed further by Sir Dorab Tata, has a formidable reputation for its business track record and corporate value system. Tata companies operate in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. They are, by and large, based in India and have significant international operations. The total revenue of Tata companies, taken together, was reportedly USD 78 billion (around Rs 358,800 crore) in 2009-10, with over 65 per cent of this coming from business outside India. The group probably employs nearly 400,000 people worldwide. The Tata name has consistently been respected over 14 long decades for its adherence to strong values and business ethics.
The legacy of Jamsetji Tata and Dorab Tata was taken to greater heights by JRD Tata who took over the reigns in 1938 (in his five decade tenure, covering the period 1938 to 1988, the Group grew from Rs 620 million to over Rs 100 billion and from 14 companies to 95 enterprises, and as a brand in itself). Ratan Tata who took over in 1991 from JRD steered the group into the international league. Ratan at that time was relatively an untested leader for the conglomerate as a whole, despite playing a role in certain Tata businesses. Ratan confounded analysts who were concerned that the different constituent companies, each with a powerful leader, would pull apart disparately. He represented continuity by preserving and institutionalizing the core Tata values but also led a positive change with a unique alchemy of consolidation, diversification, globalization and performance management.
Given the remarkable contributions of Ratan, it is not surprising that some wonder if the group would be able to find a leader who would match Ratan’s track record. Future proceedings would, no doubt, provide the answer in a positive manner, particularly in the context of the diligent manner the group has applied itself to the challenge of finding a fitting successor to Ratan Tata. The question of leadership succession, however, has connotations that are universally relevant to any firm in any industry and in any country.
Inevitability of succession
Virtuous institutions outlast capable individuals. Virtuous institutions are managerially programmed to grow. Individuals, however capable they are, on the other hand are genetically programmed and administratively ordained to retire. Leadership succession, especially at the Chief Executive Officer (CEO) level, is therefore of considerable importance. Not surprisingly, numerous books and papers have been written about the challenges and opportunities of leadership succession planning.
Some leadership successions, as with GE and now with Tata, are meticulously planned and executed to achieve remarkable continuity and growth. Some successions are accelerated when the leaders die in harness, as was the case with Dhirubhai Ambani’s Reliance group. Some successions are opportunistically handled, as with Apple when Steve Jobs returned in 1997, but are nevertheless dramatically successful. Some successions are seamlessly and consensually managed as with Infosys. A few others are cataclysmically induced, as experienced, for example, by a troubled BP with the major safety incident in Gulf, by certain Wall Street corporations that caused, or were impacted by, the global meltdown or by a highly successful HP facing a sudden CEO discharge. Various experiences teach us that leadership successions could be badly stuck in the middle unless well planned in advance, and as both cause and consequence, unable to balance change with continuity, and growth with stability.
The challenge of succession management lies in the fact that apex level leadership changes often assume larger than life dimensions, more so when charismatic incumbents are involved. A leadership succession is, more often than not, pivoted around the personalities of the incumbent leader and the new leader in terms of not merely their capabilities but also in terms of the new leader managing and exceeding the stakeholder expectations, relative to the incumbent leader. Most corporations, through their boards and shareholder expectations, create a halo around leadership succession leading to an overarching emphasis on results rather than means, and change rather than continuity.
An ancillary reason is that most leaders fail to recognize the transient nature of their own sojourn in their corporations and unwittingly make leadership and management a highly personalized effort. The more charismatic and aggressive a leader is, the more of a cult phenomenon leadership becomes in such organizations. The successor in such cases has not only a legacy that he has to live up to but also a perception that he needs to overwrite. Leaders often make it difficult for their successors to steer their companies in alignment with a changing environment. Comparisons with a larger than life Jack Welch at GE, for example, took long for an equally capable, but differently styled, Jeff Immelt to overcome.
Models of succession management
Ram Charan, in his paper, “Ending the CEO succession Crisis”, Harvard Business Review, February 2005, refers to the track record of perennial performance powerhouses such as GE and Colgate-Palmolive and points out that nothing affects a company’s future more than CEO succession. He proposes internal leadership development and active involvement by the Boards as critical components of a successful succession exercise. He recommends incorporation of certain non-negotiable aspects such as talent, know-how and experience in the process. Kenneth W Freeman in his article “The CEO’s Real Legacy”, Harvard Business Review, November 2004, states that CEOs have a mindset of being unable to imagine anyone adequately replacing them, which thus constitutes a major roadblock to timely succession. A non-egoistic effort by incumbent CEOs to initiate and manage selection and grooming of successors with effective board involvement is suggested by the author.
Manfred F R Kets De Vries in “The Dark Side of CEO Succession” Harvard Business Review, January-February 1988, examines the unconscious emotions that come into play during changes in a company’s top leadership. While any leadership change is unsettling, the incumbent CEO, board of directors and other top managers become particularly vulnerable to unconscious emotions during three specific points in the succession process. These time points relate to when the decision is taken on the need to hire a successor, when the successor is chosen and when the new CEO takes charge. Management of emotions based on knowledge of these time points is seen to promote a positive CEO transition.
General Electric has seen successful CEO successions over time. In 1981, Jack Welch succeeded Reginald Jones as the CEO in a process that was personally driven by Jones as the incumbent CEO. A significant nomination input from several likely candidates followed by in-depth interviews with candidates helped the process. Twenty years later, Jack Welch named Jeffrey Immelt as his successor based on a detailed evaluation of, and discussions with, three potential candidates. Welch focused on the values that he instilled in the GE’s management – speed, simplicity, self-confidence and boundarylessness – as filters to select. A larger discussion of the GE succession process can be had in James Heskett, “Succession at GE: What’s Next?”, Harvard Business School, Working Knowledge, November 2006.
Glaxo SmithKline’s (GSK’s) succession planning process was uniquely different. Dennis Carey et al discuss the GSK process in their paper “Picking the Right Insider for CEO Succession”, Harvard Business Review, January 2009. GSK took the daring decision of making its top three internal candidates very publicly compete with each other to become the CEO. While each was well qualified to run the business, GSK decided to ask them take on year long CEO-level projects under the discerning eyes of the directors and the incumbent CEO. The projects were individually different covering supply chain management, product safety and sales & marketing. The process was also expanded to include outsiders’ evaluation of the three candidates. The way the succession planning process was conducted at GSK resulted in the departure of the two unsuccessful candidates to their own new CEO pastures, despite efforts to retain them.
Leadership succession, not unnaturally, is a favorite topic of executive search firms as well. Max Landsberg, Head of Heidrick & Struggles’ Leadership Consulting Practice, in a 2006 paper (“In Search of Excellence in CEO Succession”) places selection of the new CEO on par with another crucial task of a Board viz., a decision to merge or sell the company. He argues that association of outside agencies helps in a structured and systematic review of all options and selection of the most appropriate choice which could also be potentially followed up with transition support. He advocates prior framing of the ‘‘persona” of the CEO to support the process. According to him, correct CEO succession can create substantial market value for the company while longer term and broader reviewing of the company’s senior executive cadre and succession pipeline can support both the selection of the next CEO, and also the strategic growth of the company.
Infosys, India’s leading information technology company, has been in the forefront of succession planning in India. It has demonstrated how a highly capable and collaborative team of founders could provide a rich pipeline of leadership succession. The principal founder and CEO, N R Narayana Murthy who founded the company with six others in 1981 passed on the baton of CEO when he was at his prime to his deputy and co-founder, Nandan M Nilekani in March 2002, and became the Chief Mentor. Nandan, in turn, passed on the CEO baton to S Gopalakrishnan, another co-founder after just after five years in June 2007. On August 10, 2010 Infosys took one more stride in orderly succession management by initiating a search for its Chief Mentor. Infosys model of collaborative leadership succession, from within the promoter group, meeting all the tests of merit, performance, stability and continuity is indeed unique even in a global context.
Not all leaders happen to be internally developed, however, in the global canvas. Internal development is a strong possibility, and an appropriate option, when companies have been on a consistent growth track. Such companies usually brim with talent and are potentially CEO factories (for example, GE, Unilever, Infosys, Tata, Proctor & Gamble). On the other hand, companies which need turnaround or which operate in highly competitive and volatile industries tend to look at experts from outside the industry to rejuvenate the businesses. Nor has it been found necessary for firms to have CEOs only from the core competency backgrounds of the firms. Allan Mulley from aircraft maker Boeing helped Ford, the automobile maker revitalize itself. Sergio Marchionne who engineered a stunning turnaround of Fiat (which was facing bankruptcy) in mid-2000s was a lawyer and accountant by qualification and practice, with a prior background in chemicals and banking sector. Pfizer, the world’s largest pharmaceuticals company is headed by a legal expert. So has been the world’s leading technology firm Intel, choosing to be led for the first time with a chief executive without a degree in science or engineering. The models of CEO succession thus defy easy classification in any fixed templates.
Ken Favaro et al, based on a study of the World’s 2500 largest public companies identified several trends in CEO succession covering the recent decade. The paper titled “CEO Succession 2000-2009: A Decade of Convergence and Compression” in Strategy + Business, Issue 59, Summer 2010, identifies four key trends that were discernable – the predominance of insiders, the split of the CEO and Chairman roles, the growth of the apprentice model (in which the new CEO’s predecessor assumes the job of board Chairman) and the consistence of CEO turnover rates. Importantly, natural and planned successions are being increasingly seen as the foundations for continued growth in difficult times.
The key aspect of leadership succession whether in successful corporations or unsuccessful corporations, and whether it is through internal development or external induction, is continued corporate growth and profitability. Equally importantly, the focus is on sustainable vitality in the face of increased volatility of economies, enhanced intensity of competition and heightened discontinuities in key technologies. The fact that an incumbent leader has a larger than life image of his or her contributions to the company’s progress puts a significant pressure on the new leader. In addition, the more high profile and the more comprehensive the succession process is, the greater would be the level of public approval or disapproval of the new leader’s performance. These factors bring to the fore issues in management of continuity and change arising out of leadership succession. All these issues would be further amplified in the case of succession to the top position in a conglomerate.
Recent research by Bain & Company, the noted management consulting firm, that was based on a study of 44 top Indian firms suggested that only one in five board members was even involved in talks about a CEO’s succession and little effort was made at board level to groom top leadership. By comparison, more than 60 percent of the boards at the top-ranked S&P 500 companies in the US are said to discuss CEO succession at least once a year and 80 percent of these companies have emergency succession plans in place. Building on the report, Financial Times (August 7/August 8, 2010; “beyond brics:www.ft.com/bb) stated that lack of succession planning was a key failure of boards at many family-owned businesses in India, leaving them highly vulnerable after the retirement or loss of their leaders. According to the paper, such an omission is a drag on investor appeal for many of India’s largest, fast-expanding companies. Indecision on leadership has led to family disputes that have split or disrupted companies.
The announcement by the Tata group to find a successor for Mr Ratan Tata, several months ahead of his planned retirement (to enable the successor work with Ratan and then takeover in full) demonstrates the progress the Indian businesses can make in terms of succession planning. Considering that large industrial houses and firms are grown typically by established business families and self-made entrepreneurs, the challenges of planned succession are all the greater in India. While the Tata Group and Infosys have been ahead of the rest in the systematization and professionalization of the succession issues, others such as the Birla group, Murugappa Group, Godrej group, GMR group, HCL group, Apollo group and Bharti group have started putting in place governance structures and processes to not only plan a successor, whether from the promoter group or from the non-promoter group, but also to ensure an appropriate demarcation between the promoters and the firms that they helped promote.
Tatas’ model of succession management
The review of literature on succession suggests that the more planned and the more contextual the succession is, the greater is the likelihood of its success. There can, therefore, be no singular model of succession that can be adopted by all firms. On the other hand, the right parameters for selection of the successor become paramount for each firm. Depending on the strategic needs of the firm which could range from turnaround to ramp-up on one hand and from efficiency to innovation on the other the screens for selection of the successor could also vary; relevant screens, however, are essential.
Boards and search agencies often attempt to err on the safe side by defining too idealistic a persona for the future CEO. Maxs Landsberg of Heidrick & Struggles, for example, in the earlier quoted paper rhetorically prescribes ten dimensions on which he expects leadership from an ideal CEO. He defines the ten persona of the CEO as Grand Master of Corporate Strategy, Chief Architect of the Corporate Structure, Vocal Exponent of the Corporate Values, Rigorous Shaper of the Talent Portfolio, Inspiring Forger of Exemplary Top Teamwork, Brahma-Creator; Vishnu-Maintainer; Shiva-Destroyer, Scrutineer of Quality Customer Service, Executive Settler of Disputes and Resolver of Dilemmas, Umblical Cord to Chairman and Board, and Fluent Spokesperson to the World. It appears that such a prescription is not only utopian but also off-mark in today’s competitive and unpredictable environment.
A more appropriate hypothesis is that the successful CEO of this generation requires a contextually appropriate mindset rather than a theoretically winning skill-set. The components of the CEO mindset include an ability to tailor corporate strategy to a volatile environment, a flexibility to constantly realign the organization structure to a dynamic strategy, a penchant to institutionalize operational excellence, a passion to leverage science and technology for new products and processes, a flair to connect with all stakeholders, a promise to provide an enriched work environment to employees, an evangelical commitment to quality and most importantly, balancing change with continuity. The CEO’s role is increasingly going to be mind-play rather than skill-deployment.
To validate the above hypothesis, one would need to only look at how Ratan Tata redefined Tata Group ever since he took over the reigns in 1991, confounding the analysts who doubted if he had the required skill-set for steering a highly diversified group of companies. Over and over again, it was Ratan’s mindset that led to appropriate strategies that grew as well as coalesced over hundred companies of the group into the largest Indian conglomerate. Aligning the virtually independent companies and leaders of the group to a common credo (Tata branding, values and retirement age), fusing indigenization with innovation (Indica and Nano cars , Sumo and Safari SUVs, Ace trucks), empowering individual companies to undertake ambitious global acquisitions (Tetley, Corus, Daewoo, Jaguar, Land Rover assets and marques), scaling up companies to top national and international rankings (Tata Motors, Tata Steel, Tata Consultancy Services) and numerous other business initiatives have been primarily a resultant of a winning Indian mindset that spurred bold and innovative strategies.
HBS professors Tarun Khanna and Krishna G. Palepu, authors of the new book “Winning in Emerging Markets: A Road Map for Strategy and Execution”, Harvard Business Press, 2010, speak glowingly of the contribution Ratan Tata made to the Tata Group and how it could become a role model for emerging markets. As they observe, when markets in India opened in 1992, around the time Ratan Tata became the Chairman of the group, the Tata Group had been in existence for more than a hundred years. Yet as a sprawling, diversified business group spanning nearly 100 businesses, each of which was not performing up to its full potential, it was uncompetitive. According to them, the Chairman of the group, Ratan Tata, creatively reorganized the group to make it survive in the new open global economy, and then challenged the individual companies to innovate. At the same time, Ratan Tata motivated his companies to think globally, attempting some of the never-before global acquisitions. Khanna and Palepu are right when they conclude that the Tata Group is a great example of a company that transformed itself from a successful company in a closed, local environment to a fairly aggressive player that has fostered innovation and globalization in almost a trendsetting manner in a completely different, globalized environment of rapid growth and extreme competition.
Change with continuity model
At the core of Ratan Tata’s success has been the plank of change with continuity. Following serves as an effective model of change with continuity, on a foundation of the basic Tata philosophy that the group is a trustee of the wealth that the group creates for the nation.
Investment + divestment. When Ratan took over he inherited a large diversified group of businesses. Rather than abandon the diversification strategy, he defined core businesses and reinforced them (for example, automobiles, steel, beverages, chemicals, information technology, hotels) even as he exited non-core businesses (for example, generic pharmaceuticals, soaps and detergents) and entered into new potential businesses (for example, retail, realty, telecommunications, infrastructure). Divestment of non-core was not seen as a failure to compete; it was seen more as a strategy to make the group more competent and competitive as a whole.
Consolidation + professionalization. The striking feature of the Tata group of companies in the 1980s was that most of these were led by leaders who were stalwarts in their own ways but were also highly independent. This acted to the detriment of group cohesion often. Ratan not only reigned in the individualism of the leaders but also reinforced professionalism in the group through structured retirement and succession policies as well as induction of external talent (for example, Sumatran and Ravi Kant for Tata Motors, Gopalakrishnan for Tata Sons and a few experienced expats from time to time). All through, considerable emphasis was laid in taking forward the legacy of building internal leadership talent left behind by Jamsetji, Dorab and JRD.
Growth + security. When Ratan Tata took over, the holdings of the Tatas in the group companies were in low teen percentages, making the companies vulnerable to takeovers in an economy set to open up. While the public fascination for the indigenous Tata ownership was a powerful counter to takeover attempts, he recognized that more structural defences were needed. He quickly reinforced the capital structure of the holding company, Tata Sons as well as its holdings in the group companies. Limited divestments in non-core businesses were utilized to reinforce equity consolidation. This, coupled with aggressive global acquisitions required the group to be financially bold as well as prudent in terms of global fund raising, which was also accomplished.
Globalization + acquisitions. Ratan’s key change driver has been in the group’s approach towards globalization. From 2002, the group pursued a strategy of aggressive globalization acquiring overseas companies, businesses and brands. These important acquisitions and mergers were aimed at expanding and globalizing the footprints of core companies. Close to USD 5 billion was spent by the group between 2002 and 2010 in nearly 70 mergers and acquisitions across the globe, including such high profile ones as Tetley Tea, Corus Steel, Daewoo, JLR and Hispano. Almost all of these have been successful reflecting positively on the group’s technical and managerial capabilities to integrate new businesses and operations.
Innovation + competitiveness. Scale, scope and technology were used by Ratan to make the group competitive as well as innovative. It has always been in the DNA of the Tata group to be pioneering, whether it was putting up a steel mill in the British-occupied India in early 1900s, introducing new commercial vehicles in the 1970s and 1980s, developing the first indigenous car in the 1990s and ultimately launching the world’s cheapest family car in the 2000s. With Ratan at the helm, the latter day innovations have sought to promote self-reliance, functionality and affordability for making greater numbers of Indians happy, as a true tribute to the expressed philosophy of JRD Tata.
The ten-element strategic framework as above could be effectively practised by Ratan Tata with institutional support in his office, through the Group Executive Office (GEO) and Group Corporate Centre (GCC). The former conducts strategic analysis and develops strategic decisions while the latter provides policy support and conducts portfolio and business reviews. These two entities, chaired by Ratan Tata have the top Tata leaders, R K Krishnakumar, Ishaat Hussain, Kishor Chaukar, J J Irani, R Gopalakrishnan, and Arunkumar Gandhi as their members.
Summary
India’s Tata Group has demonstrated, independent of Western management thought and practice, for several decades that Indian entrepreneurs and professionals of the Group can create a world-class conglomerate as an inspired national endeavor and with an unflinching social purpose. Ratan Tata’s growth model based on change with continuity is an eminently commendable model for effective succession management. Under the overarching umbrella of Tata vision with values, the ten self-balanced components of refining core with divesting non-core, leadership consolidation with professionalization, business growth with ownership security, globalization with acquisitions, and innovation with competitiveness, a uniquely Indian, and a characteristically Tata-stamped succession model has been brought to the fore.
It is a moot point whether the successor to Ratan Tata would follow, or would need to follow, the business strategy established by Ratan Tata in a rapidly changing global environment. Whether the successor would need to discover new core businesses such as clean and alternate energy generation, aerospace and satellite businesses, infrastructure building and management, healthcare and life sciences, and in doing so would need to adopt different strategic planks is a matter for the future. What can be certainly predicted is that the Tata Group would continue to aim at conglomerate leadership with social trust, and the successor to Ratan Tata would achieve success by following the proven succession model of “change with continuity”.
Posted by Dr CB Rao on August 9, 2010.
The 142 year-old Tata Group, founded in 1868 by Jamsetji Nusserwanji Tata and developed further by Sir Dorab Tata, has a formidable reputation for its business track record and corporate value system. Tata companies operate in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. They are, by and large, based in India and have significant international operations. The total revenue of Tata companies, taken together, was reportedly USD 78 billion (around Rs 358,800 crore) in 2009-10, with over 65 per cent of this coming from business outside India. The group probably employs nearly 400,000 people worldwide. The Tata name has consistently been respected over 14 long decades for its adherence to strong values and business ethics.
The legacy of Jamsetji Tata and Dorab Tata was taken to greater heights by JRD Tata who took over the reigns in 1938 (in his five decade tenure, covering the period 1938 to 1988, the Group grew from Rs 620 million to over Rs 100 billion and from 14 companies to 95 enterprises, and as a brand in itself). Ratan Tata who took over in 1991 from JRD steered the group into the international league. Ratan at that time was relatively an untested leader for the conglomerate as a whole, despite playing a role in certain Tata businesses. Ratan confounded analysts who were concerned that the different constituent companies, each with a powerful leader, would pull apart disparately. He represented continuity by preserving and institutionalizing the core Tata values but also led a positive change with a unique alchemy of consolidation, diversification, globalization and performance management.
Given the remarkable contributions of Ratan, it is not surprising that some wonder if the group would be able to find a leader who would match Ratan’s track record. Future proceedings would, no doubt, provide the answer in a positive manner, particularly in the context of the diligent manner the group has applied itself to the challenge of finding a fitting successor to Ratan Tata. The question of leadership succession, however, has connotations that are universally relevant to any firm in any industry and in any country.
Inevitability of succession
Virtuous institutions outlast capable individuals. Virtuous institutions are managerially programmed to grow. Individuals, however capable they are, on the other hand are genetically programmed and administratively ordained to retire. Leadership succession, especially at the Chief Executive Officer (CEO) level, is therefore of considerable importance. Not surprisingly, numerous books and papers have been written about the challenges and opportunities of leadership succession planning.
Some leadership successions, as with GE and now with Tata, are meticulously planned and executed to achieve remarkable continuity and growth. Some successions are accelerated when the leaders die in harness, as was the case with Dhirubhai Ambani’s Reliance group. Some successions are opportunistically handled, as with Apple when Steve Jobs returned in 1997, but are nevertheless dramatically successful. Some successions are seamlessly and consensually managed as with Infosys. A few others are cataclysmically induced, as experienced, for example, by a troubled BP with the major safety incident in Gulf, by certain Wall Street corporations that caused, or were impacted by, the global meltdown or by a highly successful HP facing a sudden CEO discharge. Various experiences teach us that leadership successions could be badly stuck in the middle unless well planned in advance, and as both cause and consequence, unable to balance change with continuity, and growth with stability.
The challenge of succession management lies in the fact that apex level leadership changes often assume larger than life dimensions, more so when charismatic incumbents are involved. A leadership succession is, more often than not, pivoted around the personalities of the incumbent leader and the new leader in terms of not merely their capabilities but also in terms of the new leader managing and exceeding the stakeholder expectations, relative to the incumbent leader. Most corporations, through their boards and shareholder expectations, create a halo around leadership succession leading to an overarching emphasis on results rather than means, and change rather than continuity.
An ancillary reason is that most leaders fail to recognize the transient nature of their own sojourn in their corporations and unwittingly make leadership and management a highly personalized effort. The more charismatic and aggressive a leader is, the more of a cult phenomenon leadership becomes in such organizations. The successor in such cases has not only a legacy that he has to live up to but also a perception that he needs to overwrite. Leaders often make it difficult for their successors to steer their companies in alignment with a changing environment. Comparisons with a larger than life Jack Welch at GE, for example, took long for an equally capable, but differently styled, Jeff Immelt to overcome.
Models of succession management
Ram Charan, in his paper, “Ending the CEO succession Crisis”, Harvard Business Review, February 2005, refers to the track record of perennial performance powerhouses such as GE and Colgate-Palmolive and points out that nothing affects a company’s future more than CEO succession. He proposes internal leadership development and active involvement by the Boards as critical components of a successful succession exercise. He recommends incorporation of certain non-negotiable aspects such as talent, know-how and experience in the process. Kenneth W Freeman in his article “The CEO’s Real Legacy”, Harvard Business Review, November 2004, states that CEOs have a mindset of being unable to imagine anyone adequately replacing them, which thus constitutes a major roadblock to timely succession. A non-egoistic effort by incumbent CEOs to initiate and manage selection and grooming of successors with effective board involvement is suggested by the author.
Manfred F R Kets De Vries in “The Dark Side of CEO Succession” Harvard Business Review, January-February 1988, examines the unconscious emotions that come into play during changes in a company’s top leadership. While any leadership change is unsettling, the incumbent CEO, board of directors and other top managers become particularly vulnerable to unconscious emotions during three specific points in the succession process. These time points relate to when the decision is taken on the need to hire a successor, when the successor is chosen and when the new CEO takes charge. Management of emotions based on knowledge of these time points is seen to promote a positive CEO transition.
General Electric has seen successful CEO successions over time. In 1981, Jack Welch succeeded Reginald Jones as the CEO in a process that was personally driven by Jones as the incumbent CEO. A significant nomination input from several likely candidates followed by in-depth interviews with candidates helped the process. Twenty years later, Jack Welch named Jeffrey Immelt as his successor based on a detailed evaluation of, and discussions with, three potential candidates. Welch focused on the values that he instilled in the GE’s management – speed, simplicity, self-confidence and boundarylessness – as filters to select. A larger discussion of the GE succession process can be had in James Heskett, “Succession at GE: What’s Next?”, Harvard Business School, Working Knowledge, November 2006.
Glaxo SmithKline’s (GSK’s) succession planning process was uniquely different. Dennis Carey et al discuss the GSK process in their paper “Picking the Right Insider for CEO Succession”, Harvard Business Review, January 2009. GSK took the daring decision of making its top three internal candidates very publicly compete with each other to become the CEO. While each was well qualified to run the business, GSK decided to ask them take on year long CEO-level projects under the discerning eyes of the directors and the incumbent CEO. The projects were individually different covering supply chain management, product safety and sales & marketing. The process was also expanded to include outsiders’ evaluation of the three candidates. The way the succession planning process was conducted at GSK resulted in the departure of the two unsuccessful candidates to their own new CEO pastures, despite efforts to retain them.
Leadership succession, not unnaturally, is a favorite topic of executive search firms as well. Max Landsberg, Head of Heidrick & Struggles’ Leadership Consulting Practice, in a 2006 paper (“In Search of Excellence in CEO Succession”) places selection of the new CEO on par with another crucial task of a Board viz., a decision to merge or sell the company. He argues that association of outside agencies helps in a structured and systematic review of all options and selection of the most appropriate choice which could also be potentially followed up with transition support. He advocates prior framing of the ‘‘persona” of the CEO to support the process. According to him, correct CEO succession can create substantial market value for the company while longer term and broader reviewing of the company’s senior executive cadre and succession pipeline can support both the selection of the next CEO, and also the strategic growth of the company.
Infosys, India’s leading information technology company, has been in the forefront of succession planning in India. It has demonstrated how a highly capable and collaborative team of founders could provide a rich pipeline of leadership succession. The principal founder and CEO, N R Narayana Murthy who founded the company with six others in 1981 passed on the baton of CEO when he was at his prime to his deputy and co-founder, Nandan M Nilekani in March 2002, and became the Chief Mentor. Nandan, in turn, passed on the CEO baton to S Gopalakrishnan, another co-founder after just after five years in June 2007. On August 10, 2010 Infosys took one more stride in orderly succession management by initiating a search for its Chief Mentor. Infosys model of collaborative leadership succession, from within the promoter group, meeting all the tests of merit, performance, stability and continuity is indeed unique even in a global context.
Not all leaders happen to be internally developed, however, in the global canvas. Internal development is a strong possibility, and an appropriate option, when companies have been on a consistent growth track. Such companies usually brim with talent and are potentially CEO factories (for example, GE, Unilever, Infosys, Tata, Proctor & Gamble). On the other hand, companies which need turnaround or which operate in highly competitive and volatile industries tend to look at experts from outside the industry to rejuvenate the businesses. Nor has it been found necessary for firms to have CEOs only from the core competency backgrounds of the firms. Allan Mulley from aircraft maker Boeing helped Ford, the automobile maker revitalize itself. Sergio Marchionne who engineered a stunning turnaround of Fiat (which was facing bankruptcy) in mid-2000s was a lawyer and accountant by qualification and practice, with a prior background in chemicals and banking sector. Pfizer, the world’s largest pharmaceuticals company is headed by a legal expert. So has been the world’s leading technology firm Intel, choosing to be led for the first time with a chief executive without a degree in science or engineering. The models of CEO succession thus defy easy classification in any fixed templates.
Ken Favaro et al, based on a study of the World’s 2500 largest public companies identified several trends in CEO succession covering the recent decade. The paper titled “CEO Succession 2000-2009: A Decade of Convergence and Compression” in Strategy + Business, Issue 59, Summer 2010, identifies four key trends that were discernable – the predominance of insiders, the split of the CEO and Chairman roles, the growth of the apprentice model (in which the new CEO’s predecessor assumes the job of board Chairman) and the consistence of CEO turnover rates. Importantly, natural and planned successions are being increasingly seen as the foundations for continued growth in difficult times.
The key aspect of leadership succession whether in successful corporations or unsuccessful corporations, and whether it is through internal development or external induction, is continued corporate growth and profitability. Equally importantly, the focus is on sustainable vitality in the face of increased volatility of economies, enhanced intensity of competition and heightened discontinuities in key technologies. The fact that an incumbent leader has a larger than life image of his or her contributions to the company’s progress puts a significant pressure on the new leader. In addition, the more high profile and the more comprehensive the succession process is, the greater would be the level of public approval or disapproval of the new leader’s performance. These factors bring to the fore issues in management of continuity and change arising out of leadership succession. All these issues would be further amplified in the case of succession to the top position in a conglomerate.
Recent research by Bain & Company, the noted management consulting firm, that was based on a study of 44 top Indian firms suggested that only one in five board members was even involved in talks about a CEO’s succession and little effort was made at board level to groom top leadership. By comparison, more than 60 percent of the boards at the top-ranked S&P 500 companies in the US are said to discuss CEO succession at least once a year and 80 percent of these companies have emergency succession plans in place. Building on the report, Financial Times (August 7/August 8, 2010; “beyond brics:www.ft.com/bb) stated that lack of succession planning was a key failure of boards at many family-owned businesses in India, leaving them highly vulnerable after the retirement or loss of their leaders. According to the paper, such an omission is a drag on investor appeal for many of India’s largest, fast-expanding companies. Indecision on leadership has led to family disputes that have split or disrupted companies.
The announcement by the Tata group to find a successor for Mr Ratan Tata, several months ahead of his planned retirement (to enable the successor work with Ratan and then takeover in full) demonstrates the progress the Indian businesses can make in terms of succession planning. Considering that large industrial houses and firms are grown typically by established business families and self-made entrepreneurs, the challenges of planned succession are all the greater in India. While the Tata Group and Infosys have been ahead of the rest in the systematization and professionalization of the succession issues, others such as the Birla group, Murugappa Group, Godrej group, GMR group, HCL group, Apollo group and Bharti group have started putting in place governance structures and processes to not only plan a successor, whether from the promoter group or from the non-promoter group, but also to ensure an appropriate demarcation between the promoters and the firms that they helped promote.
Tatas’ model of succession management
The review of literature on succession suggests that the more planned and the more contextual the succession is, the greater is the likelihood of its success. There can, therefore, be no singular model of succession that can be adopted by all firms. On the other hand, the right parameters for selection of the successor become paramount for each firm. Depending on the strategic needs of the firm which could range from turnaround to ramp-up on one hand and from efficiency to innovation on the other the screens for selection of the successor could also vary; relevant screens, however, are essential.
Boards and search agencies often attempt to err on the safe side by defining too idealistic a persona for the future CEO. Maxs Landsberg of Heidrick & Struggles, for example, in the earlier quoted paper rhetorically prescribes ten dimensions on which he expects leadership from an ideal CEO. He defines the ten persona of the CEO as Grand Master of Corporate Strategy, Chief Architect of the Corporate Structure, Vocal Exponent of the Corporate Values, Rigorous Shaper of the Talent Portfolio, Inspiring Forger of Exemplary Top Teamwork, Brahma-Creator; Vishnu-Maintainer; Shiva-Destroyer, Scrutineer of Quality Customer Service, Executive Settler of Disputes and Resolver of Dilemmas, Umblical Cord to Chairman and Board, and Fluent Spokesperson to the World. It appears that such a prescription is not only utopian but also off-mark in today’s competitive and unpredictable environment.
A more appropriate hypothesis is that the successful CEO of this generation requires a contextually appropriate mindset rather than a theoretically winning skill-set. The components of the CEO mindset include an ability to tailor corporate strategy to a volatile environment, a flexibility to constantly realign the organization structure to a dynamic strategy, a penchant to institutionalize operational excellence, a passion to leverage science and technology for new products and processes, a flair to connect with all stakeholders, a promise to provide an enriched work environment to employees, an evangelical commitment to quality and most importantly, balancing change with continuity. The CEO’s role is increasingly going to be mind-play rather than skill-deployment.
To validate the above hypothesis, one would need to only look at how Ratan Tata redefined Tata Group ever since he took over the reigns in 1991, confounding the analysts who doubted if he had the required skill-set for steering a highly diversified group of companies. Over and over again, it was Ratan’s mindset that led to appropriate strategies that grew as well as coalesced over hundred companies of the group into the largest Indian conglomerate. Aligning the virtually independent companies and leaders of the group to a common credo (Tata branding, values and retirement age), fusing indigenization with innovation (Indica and Nano cars , Sumo and Safari SUVs, Ace trucks), empowering individual companies to undertake ambitious global acquisitions (Tetley, Corus, Daewoo, Jaguar, Land Rover assets and marques), scaling up companies to top national and international rankings (Tata Motors, Tata Steel, Tata Consultancy Services) and numerous other business initiatives have been primarily a resultant of a winning Indian mindset that spurred bold and innovative strategies.
HBS professors Tarun Khanna and Krishna G. Palepu, authors of the new book “Winning in Emerging Markets: A Road Map for Strategy and Execution”, Harvard Business Press, 2010, speak glowingly of the contribution Ratan Tata made to the Tata Group and how it could become a role model for emerging markets. As they observe, when markets in India opened in 1992, around the time Ratan Tata became the Chairman of the group, the Tata Group had been in existence for more than a hundred years. Yet as a sprawling, diversified business group spanning nearly 100 businesses, each of which was not performing up to its full potential, it was uncompetitive. According to them, the Chairman of the group, Ratan Tata, creatively reorganized the group to make it survive in the new open global economy, and then challenged the individual companies to innovate. At the same time, Ratan Tata motivated his companies to think globally, attempting some of the never-before global acquisitions. Khanna and Palepu are right when they conclude that the Tata Group is a great example of a company that transformed itself from a successful company in a closed, local environment to a fairly aggressive player that has fostered innovation and globalization in almost a trendsetting manner in a completely different, globalized environment of rapid growth and extreme competition.
Change with continuity model
At the core of Ratan Tata’s success has been the plank of change with continuity. Following serves as an effective model of change with continuity, on a foundation of the basic Tata philosophy that the group is a trustee of the wealth that the group creates for the nation.
Investment + divestment. When Ratan took over he inherited a large diversified group of businesses. Rather than abandon the diversification strategy, he defined core businesses and reinforced them (for example, automobiles, steel, beverages, chemicals, information technology, hotels) even as he exited non-core businesses (for example, generic pharmaceuticals, soaps and detergents) and entered into new potential businesses (for example, retail, realty, telecommunications, infrastructure). Divestment of non-core was not seen as a failure to compete; it was seen more as a strategy to make the group more competent and competitive as a whole.
Consolidation + professionalization. The striking feature of the Tata group of companies in the 1980s was that most of these were led by leaders who were stalwarts in their own ways but were also highly independent. This acted to the detriment of group cohesion often. Ratan not only reigned in the individualism of the leaders but also reinforced professionalism in the group through structured retirement and succession policies as well as induction of external talent (for example, Sumatran and Ravi Kant for Tata Motors, Gopalakrishnan for Tata Sons and a few experienced expats from time to time). All through, considerable emphasis was laid in taking forward the legacy of building internal leadership talent left behind by Jamsetji, Dorab and JRD.
Growth + security. When Ratan Tata took over, the holdings of the Tatas in the group companies were in low teen percentages, making the companies vulnerable to takeovers in an economy set to open up. While the public fascination for the indigenous Tata ownership was a powerful counter to takeover attempts, he recognized that more structural defences were needed. He quickly reinforced the capital structure of the holding company, Tata Sons as well as its holdings in the group companies. Limited divestments in non-core businesses were utilized to reinforce equity consolidation. This, coupled with aggressive global acquisitions required the group to be financially bold as well as prudent in terms of global fund raising, which was also accomplished.
Globalization + acquisitions. Ratan’s key change driver has been in the group’s approach towards globalization. From 2002, the group pursued a strategy of aggressive globalization acquiring overseas companies, businesses and brands. These important acquisitions and mergers were aimed at expanding and globalizing the footprints of core companies. Close to USD 5 billion was spent by the group between 2002 and 2010 in nearly 70 mergers and acquisitions across the globe, including such high profile ones as Tetley Tea, Corus Steel, Daewoo, JLR and Hispano. Almost all of these have been successful reflecting positively on the group’s technical and managerial capabilities to integrate new businesses and operations.
Innovation + competitiveness. Scale, scope and technology were used by Ratan to make the group competitive as well as innovative. It has always been in the DNA of the Tata group to be pioneering, whether it was putting up a steel mill in the British-occupied India in early 1900s, introducing new commercial vehicles in the 1970s and 1980s, developing the first indigenous car in the 1990s and ultimately launching the world’s cheapest family car in the 2000s. With Ratan at the helm, the latter day innovations have sought to promote self-reliance, functionality and affordability for making greater numbers of Indians happy, as a true tribute to the expressed philosophy of JRD Tata.
The ten-element strategic framework as above could be effectively practised by Ratan Tata with institutional support in his office, through the Group Executive Office (GEO) and Group Corporate Centre (GCC). The former conducts strategic analysis and develops strategic decisions while the latter provides policy support and conducts portfolio and business reviews. These two entities, chaired by Ratan Tata have the top Tata leaders, R K Krishnakumar, Ishaat Hussain, Kishor Chaukar, J J Irani, R Gopalakrishnan, and Arunkumar Gandhi as their members.
Summary
India’s Tata Group has demonstrated, independent of Western management thought and practice, for several decades that Indian entrepreneurs and professionals of the Group can create a world-class conglomerate as an inspired national endeavor and with an unflinching social purpose. Ratan Tata’s growth model based on change with continuity is an eminently commendable model for effective succession management. Under the overarching umbrella of Tata vision with values, the ten self-balanced components of refining core with divesting non-core, leadership consolidation with professionalization, business growth with ownership security, globalization with acquisitions, and innovation with competitiveness, a uniquely Indian, and a characteristically Tata-stamped succession model has been brought to the fore.
It is a moot point whether the successor to Ratan Tata would follow, or would need to follow, the business strategy established by Ratan Tata in a rapidly changing global environment. Whether the successor would need to discover new core businesses such as clean and alternate energy generation, aerospace and satellite businesses, infrastructure building and management, healthcare and life sciences, and in doing so would need to adopt different strategic planks is a matter for the future. What can be certainly predicted is that the Tata Group would continue to aim at conglomerate leadership with social trust, and the successor to Ratan Tata would achieve success by following the proven succession model of “change with continuity”.
Posted by Dr CB Rao on August 9, 2010.
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