Leaders are those at the apex of an organization or a movement. Leaders lead, transform and manage their organizations and movements to achieve national wealth or national good, as the case may be. We have probably several thousands of leaders who brought corporations to great heights, from humble beginnings, either as professional leaders or entrepreneurial leaders. Similarly, we have several hundreds of leaders who inspired and led several social, religious, political and national movements. While corporate leadership tends to be a singularly recognized effort, leaders do need teams to strategize, execute and deliver results. Even leadership of movements of whatever nature requires a close group of stalwarts on whom the leader relies on to create the organizational vehicles, channel mass energy, manage controlled behavior and finally deliver results. Just as leadership is indispensable for directed and inspired growth, leadership team is indispensable for structured and focused delivery.
The leader and the leadership team share a unique thesis of oneness and collaboration, and yet a disturbing antithesis of divergence and conflict. The history of corporations as well as movements clearly points out to the essential feature of leadership. Several corporations lose their path of growth and talent excellence even after spirited unison of leadership teams because resonance of shared vision is diluted by dissonance of individual ambitions, of either the leader or the leadership team members. Several national movements fail to consolidate the harnessed energy of the masses once a major milestone is achieved because the leader and the team members become occupied with supra-national and sub-national considerations respectively. Leaders and the leadership teams would never want their goals and successes defeated by their own goals and successes, but ironically that seems to be a reality that the universal history teaches us.
Lonely at the top
It is often said that it is lonely at the top. It is certainly true of leaders who are at the apex positions in the organizations. While they may have closely aligned leaders at the helm of functions, business units or regions, the inner motivations as well as the intrinsic challenges are never shared with anyone. The several biographies of corporate chieftains reveal how both the types of corporate leaders, the effusive ones as well as the reclusive ones, had aspirations and agendas that had to remain embedded within them, at least partially. Interestingly, it appears as if this is not so true in the case of leaders of movements. This is attributed to the fact that movements typically require their leaders to maintain mass contact to sustain energy and support. On a closer review it would emerge that even the leaders of movements tend to be lonely, unable to share their inner visions and turmoil with their close followers. The reasons for loneliness at the top have, therefore, merited much analysis and discussion. And much of this would also be applicable, in some form or the other, to leaders of strategic business units, heads of global functions or regional heads working with the global apex leaders.
In a recent article, Harvard Business Review summarized how lonely it would be as a Chief Executive Officer (CEO) of a corporation. Echoing what every leader felt, it also said such a feeling could be especially unsettling for new leaders. More troubling is the finding that 60 to 70 percent of the CEOs find such isolation affecting their performance adversely. As leaders move up the hierarchical ladder, they have fewer touch points within the organization with staff at senior and junior levels, and in spread out locations. This distancing becomes especially true in rapidly grown start-ups. The leaders thus get drawn into a vicious cycle where it is easy to lose touch with reality. In professionally managed organizations, this risk is ostensibly somewhat mitigated, but is never eliminated as direct reports often nurture strong business unit, functional or regional perspectives with overlays of aspirations on getting to the top position based on performance differential of the respective businesses, functions or regions. Within the alignment at the top, this induces a level of latent misalignment. Leading management institutes such as Harvard, Stanford and Wharton are therefore involved in strategic management research in this important area.
Pro-dotes to loneliness
Leadership loneliness has a strong organizational logic. The CEO is charged with the responsibility of fulfilling multiple stakeholder needs, including those of investors, employees and communities. Typically, that responsibility is fulfilled through being unbiased and proactive and leading growth oriented strategies and execution, creating wealth for all the stakeholders. This requires that the CEO is equi-positioned and equi-distanced with all business units, functions and regions, deciding on inter se priorities in an objective and clinical manner. This requires that the CEO is not seen as being close to either high-performing reports or protective of low-performing reports. Much as the CEO knows that today’s stars could turn into tomorrow’s laggards, and today’s losers could be transformed as tomorrow’s winners, the dynamics of organizational visibility makes the leader maintain an equidistant position within his or her leadership team.
The other cause of loneliness is the bet on the future of his organization that the CEO, and the CEO alone, can take. While there could be in the contemporary organizations a host of departments and consultants to analyze, chart and script future options, it is typically the CEO who needs to exercise his judgment based on intrinsic intuition, experience and expertise as well as extrinsic empathy, sensitivity and responsibility. The decisions a CEO takes are, therefore, not always the ones his leadership team appreciates, individually or collectively at times. This adds to loneliness at the top. Many times, it is assumed that the board of directors helps a CEO overcome the loneliness with its sage counsel and shared vision. While such a proposition is true, the very same considerations that influence the CEO to be equidistant with his team members typically also cause the boards to exercise independence and objectivity of equidistance and equal diversity.
Antidotes to loneliness
Contemporary management thought suggests several ways to reduce the loneliness at the top. Some of these could be options to convert the disadvantage of loneliness of the apex position into an advantage of organizational transformation. Probably, the first and foremost is the recommendation for a CEO to connect with other CEO peers and like-minded leaders through appropriate national or global business forums. Interaction in such forums not only leads to sharing of mutual knowledge but also enables benchmarking of his organization in a broader environment. In India, the Confederation of Indian Industry (CII) is a perfect forum for that. The second approach would be to build an aligned, trusted and trustworthy leadership team which not only assures him of collaboration but also inspires positivity across the organization. The third approach would be to connect and network with the corporation’s ecosystem as much as possible. Regardless of the functional or business specialization one comes from, the CEO could benefit from connecting with all the internal and external stakeholders, employees and customers being the primary respective ones periodically. Annual dealer conferences, supplier meets and employee get-togethers could be a great way to accomplish that. I had, in recent times, at firsthand, a remarkable example of a global leader spreading positive vibes and boundless energy across the organization through networking by various means. The same leader demonstrates how nurturing and leveraging the charismatic side of one’s leadership personality could eliminate loneliness not only at the top but across the entire employee team.
Notwithstanding the equidistance characteristics of the Board of Directors, the Board could be a great instrument of togetherness for a CEO. The value the Board brings as a springboard to support the CEO passions and to evaluate the strategic options developed by the CEO could be immense. By building a Board whose members represent multi- industry, multi-regional and multi-cultural expertise, and engaging the Board in formal and informal meetings beyond the needs and requirements of corporate law and governance, the CEO would be able to fend off the top level loneliness syndrome. Some literature also suggests having an industry veteran, management guru or leadership philosopher as a coach or mentor, especially for the first-time CEOs, entrepreneurial CEOs who grew their organizations rapidly and to CEOs who are required to take complex and painful decisions. The later class of coaches also help the leaders overcome their frailties if any, resolve the conflicts that are inevitable and explore the latent strengths for the common good. Balancing professional and personal life as well as harmonizing business and social responsibilities are two other powerful ways to reduce, if not eliminate, the top level loneliness.
Success mantra
Apex leadership has in its control, by and large, the greatest antidote to loneliness. Success of the corporation or the entity the CEO heads, or articulating the pathway to success, is the most effective way to inspire, and interact with, the larger organization. Great leaders who prime success are unlikely to be lonely as they share their success with the teams and followers. Great leaders also do successful things with, rather than without, the followers; they typically invite and motivate, rather than force and control the teams on the journey - as a result they are unlikely to be lonely. Great leaders grow the businesses continuously with their reports, ensuring that there is always room at the top for capable and successful potential leaders. Great leaders also do not let success become the barrier between them and the broader organization; they are always humble and curious, and continuously find ways and means to stay connected and inspire as well as get inspired by the rest of the organization. And finally -this is the most difficult part - great leaders display focus and courage unequivocally and take gutsy but calculated risks for their organizations and own up for the executing teams, while ensuring high level of competency and commitment in the organization.
Posted by Dr CB Rao on July 29, 2012
Sunday, July 29, 2012
Sunday, July 15, 2012
Specification Envelopes and Industry Frontiers: The New Drivers for Business Unbounded
For several decades, the products to make and the markets to serve have been the bedrock of all strategic plans. Strategic decisions of integration and diversification have, for long, been triggered or supported by individual product-market decisions. Four megatrends have, of late, been queering the pitch for simplistic product-market analysis, and conventional strategic planning. These are: enhanced level of competition marked by expanding number of entrants, rapidly saturating markets, exponentially evolving technologies and increasing desire of customers for differentiation. These four megatrends have rendered conventional methods of strategic planning, and functional cascading of strategies inefficient and ineffective, relative to the futuristic competitive requirements. This is mainly because of the structural rigidity and financial conservatism that drive most strategic planning processes, despite the desire of the firms to practice game changing theorems.
The conventional strategic planning is, in many ways, dictated by the state of a firm’s evolution in terms of the maturity and competitiveness of its core functions, and the visionary drive in the apex and functional leadership. More often than not, however, individual functional brilliance cannot by itself drive strategic brilliance in terms of handling the megatrends. It verily requires a corporate culture which always looks for the first opportunity to proactively raise barriers to entry, the next boundary to expand the markets, the likely future of technological innovation and the eagerness to serve its customers in a differentiated manner. These four capabilities together are the new competencies required of a firm to successfully ride the megatrends. As with everything, actions of the individual firms that are aimed at managing the megatrends constitute also the industry maturity, dictating in turn newer strategic actions to handle the megatrends more successfully.
Obsolescence redefined
The conventional strategist made his strategic choices on two fundamental parameters of obsolescence and innovation; both of these typically being the same side of the coin. An essential question for the new age strategist is whether the concept of obsolescence exists any longer. The question may appear counterintuitive but is very relevant given that the fundamental ways in which most products serve their customers have not changed. For example, a pen continues to be a writing instrument to capture one’s thoughts, a suitcase continues to be the travel companion to hold personal effects, a house continues to be a dwelling unit to provide shelter, an automobile continues to be a mover of people and cargo, a boiler continues to generate steam and a television continues to broadcast images. There can be scores of such examples that establish that nothing has indeed changed in fundamental product drivers. On the other hand, several products that are expected to become obsolete have made a strong comeback, be it a radio, watch or camera, each of which continues to fulfill the original purpose of invention.
One way to address the apparent enigma is to postulate that products may become obsolete but human needs will never. As long as a human being is governed by the five fundamental sensory attributes (see, hear, touch, taste and smell, that trigger human experiences) and certain gross and fine motor skills (such as movement and coordination that need to be enhanced or utilized) all product development will continue to cater to these fundamental human attributes and skills, satisfying as well as leveraging them in an increasing measure. As new technologies get developed and integrated into product design and manufacture, the way the products fulfill the human needs becomes more evolved. At an extreme, new technologies would mimic the fundamental human attributes and skills to achieve certain fundamental shift in the manner how humans would put their faculties to use. Pilotless planes, driverless cars, robotic surgical knives, and completely automated factories are some examples.
Specification envelopes
Working from the previous postulate, the follow-up question is whether the industry boundaries are changing or whether the product specifications are getting merely upgraded or expanded, all the while seeking to meet the established needs individually or in combinations. The answer to the question is a clear positive, whichever way the product-need combinations are analyzed. A watch whose goal at one time was merely to provide current time through mechanical movements has undergone tremendous change in specifications to include battery and solar drives, dual and multiple time zones, and chronograph and compass to achieve enhanced functionality. With newer materials and precious metals incorporated, the watch has also moved from being a functional accessory to becoming an accessory of esteem and prestige. Similar analysis can be made of any product which, while fulfilling several of the previously individualized needs in contemporary combinations, have also become lifestyle statements of human, business or industrial life.
It would appear, therefore, that a concept of ‘specification envelope’ is a well- validated hypothesis of what drives industry evolution and corporate strategy. The more are the technologies integrated in a product the more would be the customer needs that can be catered to in combination. The larger the specification envelope of a product or a firm, the greater would be the capability to serve the customers better (both in terms of sharpness and diversity), the ability to deepen and expand markets and, as a consequence, drive up scale and scope of the business for a firm. There is one pitfall, however, in assuming that determination of the right specification envelope (many times assumed to be simply a larger envelope) would be a surrogate for the right industry to operate in. This is because consumer needs are no longer fulfilled as a point of use; these are fulfilled as part of a systemic transformation of the paradigm of need fulfillment for better consumer satisfaction on one hand and better business efficiency on the other.
Industry frontiers
The typical firm is now required to take the concept of specification envelope as a given essential. The firm, however, is also required to constantly redefine the industry in which the firm should seek to operate. This strategic decision is larger than the strategic decision of product upgradation, market segmentation or market aggregation, typically addressed by the specification envelope concept. This strategic decision is also larger than the strategic decision of which businesses to operate in and how to operate, typically addressed by integration or diversification analysis. Rather, the question is whether the strategist would need to be constrained (or empowered) by his or hers firm’s functional or cultural thought processes so much so that he or she fails (or, succeeds) to recognize the megatrends. The answer to this lies in the firm viewing need fulfillment as an ecosystem phenomenon rather than as a customer-firm transaction. Megatrends, typically, overwhelm the firms when they spread across a social, industrial or economic system. The conventional view of strategy that it should be confined within the well-defined boundary of the industry needs to be challenged at least annually by the chief executive officers, functional leaders and strategic heads.
It is quite possible that multiple firms could view the same industry from different perspectives. Becton Dickinson (BD), the world leader in syringes, needles and insulin pen micro needles has thought it fit to remain as a component and an accessories player for injectable drugs, more so for specialized and increasingly popular insulin pens. BD has never thought it appropriate to move into the sourcing, manufacture or marketing of insulins. On the other hand, Novo Nordisk (NN), the world leader in injectable insulin drugs has thought it appropriate to have its own insulin pens and needles. Neither BD nor NN has deemed it appropriate to be in the business of diabetes diagnosis or blood sugar measurement devices, which is left to the likes of Johnson & Johnson (J&J). In the context of the topic of industry definition being discussed in this blog post, the issue is not how the industry to operate is defined by firms. In this case, the industry to operate in is defined in three different ways by the three leading firms, although anchored around in one area of diabetes management. The submission of this blog post is that such industry definitions miss the megatrend that could be emerging in total diabetes management, from genetic marking and stem cell treatment to day to day diabetes diagnosis and management by all ways that are possible. As a start, the phrase ‘industry boundary’ would need to be replaced by the phrase ‘industry frontier’.
Business unbounded
Once the human needs are viewed from a systemic perspective, it becomes easy to appreciate that the traditional industry boundaries are resultants of tunnel vision and structured strategies laboring under the constraints of past capabilities. On the other hand, a systemic view unleashes the imagination to seek new frontiers of industry, and eventually an industry and a business that are unbounded. The current wave of integrating computing devices, communication devices, cloud storage, cloud computing, application development and social networking is a vivid example of how several industries hitherto seen to be different are brought under one mega industry of seamless computing, connectivity, communication, entertainment and socialization. From education to employment, many others also get added to the paradigm. As a result of taking such an approach, Apple has been able to gain distinct competitive lead in the journey of unbounded business. And, a few others including Microsoft are seeking to share such competitive lead. In this journey of unbounded business, what were once supportive or unrelated technologies tend to become related, and even core technologies as firms move forward on their “business unbounded” mission.
The potential for the concept of business unbounded is simply enormous. A seemingly worrisome threat of saturated market can be converted into unbounded business potentialities by firms. For example, L&T which is a construction giant of India executing all types of infrastructural projects, from highways to metro rails, and from residential townships to industrial parks can discover unbounded business through an innovative goal of building integrated intelligent cities of the future. In the ultimate analysis, all mega corporations would have only one goal – that of serving life. It is no wonder, therefore, that Toyota sees as much future in building intelligent and ecologically friendly homes as in maintaining its global leadership in automobiles, the latter increasingly through environmentally friendly electric and hybrid vehicles. Similarly, Samsung could be foreseeing a merger of all of its electronic device and chip technologies with healthcare, among others, leading to an apparently surprising foray by the firm into biologic drugs. While all firms may not be able to pursue exotic frontiers dedicated to total life management, virtually all firms can discover huge untapped potentialities in the domains and markets they serve by opting to drive for specification envelopes than getting limited by specification updates, and more fundamentally by seeking to pursue broader industry frontiers than getting constrained by established industry boundaries.
Posted by Dr CB Rao on July 15, 2012
The conventional strategic planning is, in many ways, dictated by the state of a firm’s evolution in terms of the maturity and competitiveness of its core functions, and the visionary drive in the apex and functional leadership. More often than not, however, individual functional brilliance cannot by itself drive strategic brilliance in terms of handling the megatrends. It verily requires a corporate culture which always looks for the first opportunity to proactively raise barriers to entry, the next boundary to expand the markets, the likely future of technological innovation and the eagerness to serve its customers in a differentiated manner. These four capabilities together are the new competencies required of a firm to successfully ride the megatrends. As with everything, actions of the individual firms that are aimed at managing the megatrends constitute also the industry maturity, dictating in turn newer strategic actions to handle the megatrends more successfully.
Obsolescence redefined
The conventional strategist made his strategic choices on two fundamental parameters of obsolescence and innovation; both of these typically being the same side of the coin. An essential question for the new age strategist is whether the concept of obsolescence exists any longer. The question may appear counterintuitive but is very relevant given that the fundamental ways in which most products serve their customers have not changed. For example, a pen continues to be a writing instrument to capture one’s thoughts, a suitcase continues to be the travel companion to hold personal effects, a house continues to be a dwelling unit to provide shelter, an automobile continues to be a mover of people and cargo, a boiler continues to generate steam and a television continues to broadcast images. There can be scores of such examples that establish that nothing has indeed changed in fundamental product drivers. On the other hand, several products that are expected to become obsolete have made a strong comeback, be it a radio, watch or camera, each of which continues to fulfill the original purpose of invention.
One way to address the apparent enigma is to postulate that products may become obsolete but human needs will never. As long as a human being is governed by the five fundamental sensory attributes (see, hear, touch, taste and smell, that trigger human experiences) and certain gross and fine motor skills (such as movement and coordination that need to be enhanced or utilized) all product development will continue to cater to these fundamental human attributes and skills, satisfying as well as leveraging them in an increasing measure. As new technologies get developed and integrated into product design and manufacture, the way the products fulfill the human needs becomes more evolved. At an extreme, new technologies would mimic the fundamental human attributes and skills to achieve certain fundamental shift in the manner how humans would put their faculties to use. Pilotless planes, driverless cars, robotic surgical knives, and completely automated factories are some examples.
Specification envelopes
Working from the previous postulate, the follow-up question is whether the industry boundaries are changing or whether the product specifications are getting merely upgraded or expanded, all the while seeking to meet the established needs individually or in combinations. The answer to the question is a clear positive, whichever way the product-need combinations are analyzed. A watch whose goal at one time was merely to provide current time through mechanical movements has undergone tremendous change in specifications to include battery and solar drives, dual and multiple time zones, and chronograph and compass to achieve enhanced functionality. With newer materials and precious metals incorporated, the watch has also moved from being a functional accessory to becoming an accessory of esteem and prestige. Similar analysis can be made of any product which, while fulfilling several of the previously individualized needs in contemporary combinations, have also become lifestyle statements of human, business or industrial life.
It would appear, therefore, that a concept of ‘specification envelope’ is a well- validated hypothesis of what drives industry evolution and corporate strategy. The more are the technologies integrated in a product the more would be the customer needs that can be catered to in combination. The larger the specification envelope of a product or a firm, the greater would be the capability to serve the customers better (both in terms of sharpness and diversity), the ability to deepen and expand markets and, as a consequence, drive up scale and scope of the business for a firm. There is one pitfall, however, in assuming that determination of the right specification envelope (many times assumed to be simply a larger envelope) would be a surrogate for the right industry to operate in. This is because consumer needs are no longer fulfilled as a point of use; these are fulfilled as part of a systemic transformation of the paradigm of need fulfillment for better consumer satisfaction on one hand and better business efficiency on the other.
Industry frontiers
The typical firm is now required to take the concept of specification envelope as a given essential. The firm, however, is also required to constantly redefine the industry in which the firm should seek to operate. This strategic decision is larger than the strategic decision of product upgradation, market segmentation or market aggregation, typically addressed by the specification envelope concept. This strategic decision is also larger than the strategic decision of which businesses to operate in and how to operate, typically addressed by integration or diversification analysis. Rather, the question is whether the strategist would need to be constrained (or empowered) by his or hers firm’s functional or cultural thought processes so much so that he or she fails (or, succeeds) to recognize the megatrends. The answer to this lies in the firm viewing need fulfillment as an ecosystem phenomenon rather than as a customer-firm transaction. Megatrends, typically, overwhelm the firms when they spread across a social, industrial or economic system. The conventional view of strategy that it should be confined within the well-defined boundary of the industry needs to be challenged at least annually by the chief executive officers, functional leaders and strategic heads.
It is quite possible that multiple firms could view the same industry from different perspectives. Becton Dickinson (BD), the world leader in syringes, needles and insulin pen micro needles has thought it fit to remain as a component and an accessories player for injectable drugs, more so for specialized and increasingly popular insulin pens. BD has never thought it appropriate to move into the sourcing, manufacture or marketing of insulins. On the other hand, Novo Nordisk (NN), the world leader in injectable insulin drugs has thought it appropriate to have its own insulin pens and needles. Neither BD nor NN has deemed it appropriate to be in the business of diabetes diagnosis or blood sugar measurement devices, which is left to the likes of Johnson & Johnson (J&J). In the context of the topic of industry definition being discussed in this blog post, the issue is not how the industry to operate is defined by firms. In this case, the industry to operate in is defined in three different ways by the three leading firms, although anchored around in one area of diabetes management. The submission of this blog post is that such industry definitions miss the megatrend that could be emerging in total diabetes management, from genetic marking and stem cell treatment to day to day diabetes diagnosis and management by all ways that are possible. As a start, the phrase ‘industry boundary’ would need to be replaced by the phrase ‘industry frontier’.
Business unbounded
Once the human needs are viewed from a systemic perspective, it becomes easy to appreciate that the traditional industry boundaries are resultants of tunnel vision and structured strategies laboring under the constraints of past capabilities. On the other hand, a systemic view unleashes the imagination to seek new frontiers of industry, and eventually an industry and a business that are unbounded. The current wave of integrating computing devices, communication devices, cloud storage, cloud computing, application development and social networking is a vivid example of how several industries hitherto seen to be different are brought under one mega industry of seamless computing, connectivity, communication, entertainment and socialization. From education to employment, many others also get added to the paradigm. As a result of taking such an approach, Apple has been able to gain distinct competitive lead in the journey of unbounded business. And, a few others including Microsoft are seeking to share such competitive lead. In this journey of unbounded business, what were once supportive or unrelated technologies tend to become related, and even core technologies as firms move forward on their “business unbounded” mission.
The potential for the concept of business unbounded is simply enormous. A seemingly worrisome threat of saturated market can be converted into unbounded business potentialities by firms. For example, L&T which is a construction giant of India executing all types of infrastructural projects, from highways to metro rails, and from residential townships to industrial parks can discover unbounded business through an innovative goal of building integrated intelligent cities of the future. In the ultimate analysis, all mega corporations would have only one goal – that of serving life. It is no wonder, therefore, that Toyota sees as much future in building intelligent and ecologically friendly homes as in maintaining its global leadership in automobiles, the latter increasingly through environmentally friendly electric and hybrid vehicles. Similarly, Samsung could be foreseeing a merger of all of its electronic device and chip technologies with healthcare, among others, leading to an apparently surprising foray by the firm into biologic drugs. While all firms may not be able to pursue exotic frontiers dedicated to total life management, virtually all firms can discover huge untapped potentialities in the domains and markets they serve by opting to drive for specification envelopes than getting limited by specification updates, and more fundamentally by seeking to pursue broader industry frontiers than getting constrained by established industry boundaries.
Posted by Dr CB Rao on July 15, 2012
Sunday, July 8, 2012
From Incremental Growth to Breakthrough Development: A Paradigm Shift for Indian Economic Planning
Post-independence India has been a pioneer in establishing a cycle of five year national economic planning which spelt out a strategic approach to allocation of resources by the Central and State governments on various projects, including their execution and review by various governmental agencies. The five year planning process is managed by the Planning Commission. Starting in 1951, the five year planning process has so far seen eleven cycles, with the eleventh five-year plan (2007-2012) having just concluded. The economic planning process has been helpful for the Indian economic planners in the socialistic command economy regime that prevailed till 1992, the year of economic realization which ushered in massive increase in private and foreign investments. From a total budget of Rs 23,560 million that the first five year plan entailed, the plan budgets, central, states and union territories, steadily grew over the decades to reach Rs 36,447,180 million, constituting nearly 14 percent of GDP.
Despite the steady growth in the profile of financial investments under the economic planning process, the economic growth and infrastructure development have failed to lead the kind of quantitative and qualitative development that are required of India’s emergence as an economic superpower. One of the reasons could be the anxiety of the Planning Commission to view egalitarian issues through economic lenses and vice versa. In the eleventh plan document spanning 386 pages, only 11 pages were devoted for infrastructure development while thematic issues such as employment, social justice, innovation, technology, spatial development, regional imbalances, environment, climate change, governance, consumer protection and competition policy were covered in about 200 pages. This cannot be faulted per se; probably needs to be even welcomed as the Commission’s commitment to inclusive growth. Without getting biased by the current planning paradigm, however, we need to analyze why the economic planning process is yet to deliver resoundingly for India an assured measure of global competitiveness across the board and a quality of life that is sustainable even for indigent sections of the population.
The long project cycle
Economic planning for a country is not the same in scale or scope as strategic planning for a firm. It may be appropriate to visualize a firm’s transformation in five year cycles but it is probably inadequate to visualize an economy’s progress in five year cycles. The fundamental lacuna in India’s economic planning process relates to the incremental visualization in steps of five years. Some State governments have, in fact, been quick to recognize this and launch 10, 15 or 20 year visions. A durable framework for strategic economic development and asset creation can emerge only when the central and state plans are synchronized in a much longer time frame of at least 10 to 15 years at least. The strength of today’s developed world would lie in their development of infrastructure projects that would take a decade or two to build but would last several generational lifetimes. Whether it is the labyrinth of highly intricate and synchronized underground and on or over ground metro rail systems of Tokyo and London or the elaborate national and state highway systems of the USA, the ability to visualize breakthrough projects of benefit for future centuries is the hallmark of enlightened economic planning.
Given India’s aspirations, and potential, for emergence as the third largest economic power, planning cycles have to be reasonably long. This, coupled with the fact that public sector and infrastructure projects in India are beset by significant delays, dictates the need for planning with at least a 15 to 20 year planning horizon. It is not unusual in India for projects taken up under the aegis of a five year plan remain not only incomplete at the end of the five year plan but also found to be insufficient in the context of population and economic growth dynamics. Airport modernization in the four metropolitan cities is a classic example of development being too little in scale and scope and too late in completion, and necessitating in all cases the need to commence work on new airports. The advantage of a really long range planning framework is that economic projects which are to meet the requirements of future generations are conceived with appropriate scale and scope as well as investment, and understanding of the payback periods.
Incremental versus breakthrough
In economic planning of developing economies which requires allocation of scarce resources on a number of conflicting priorities across urban and rural spectra it is easy and even often compelling to spread resources on projects that meet pending needs, not even current needs. Incremental growth, which mostly is also inadequate often, is the usual prescription. The golden quadrilateral of highways is a good example of how long term planning can create economic assets useful for generations. Yet, when it comes to bullet trains not more than two inter-city sectors are being considered as opposed to the need for a national bullet train grid which could dramatically transform the social, industrial and economic connectivity in this vast nation. There are several areas which lend themselves to the incremental versus breakthrough dilemma, with ideal choices needing to be in favor of breakthrough development. Examples abound not only in infrastructure like roads, ports, airports, railways, airways, shipping and highways but also in social sectors such as healthcare, education, irrigation, public distribution and housing, to name a few.
Breakthrough development requires, fundamentally, modeling of future population and demographic trends and economic parameters that can support the GDP growth targets in time spans ranging from ten to twenty years. In the healthcare sector, for example, the current network of government run general hospitals would be grossly inadequate when the rapid extension of metropolitan areas is factored in. Breakthrough development would require not only doubling or trebling of bed capacity in the existing general hospitals but also potentially setting up of at least four new general hospitals in each of the northern, southern, eastern and western peripheries of each expanding city. Similarly, each of the economic and social infrastructure sectors requires breakthrough concepts. In the infrastructure area, projects must be set up to lead economic and social development. In the field of ports, for example, it could be setting up of a port for every 200 kilometers of coastline. In the field of education, for example, it could be a Kendriya Vidyalaya in each town, an institute of higher research in each state and as many IITs and IIMs as there are states of India.
Breakthrough is a mindset
Breakthrough is essentially a matter of mindset. I can recall a day two decades ago when I was asked to mention, as a strategic planner, what I would do to reverse the low market share position in truck segment of my firm. I said that the firm should offer air-conditioned factory built cabs. Obviously, the suggestion was received with shock given the reluctance of the firm to be able to offer even a front-end structure. Today, twenty years later, most truck majors are willing to offer fully-built trucks with air-conditioned cabs as a competitive offering. In a similar manner Volvo rewrote the nature of inter-city passenger transport diligently over two decades through its high performance buses. These are just two examples of how proactive and innovative mindset would advance progress through breakthrough concepts. Planners, in terms of choices, may simply wonder at the amazing progress of Tokyo, Shanghai or Dubai but conclude it as inappropriate for India, or create our own tapestry of Chinese type urban development and Japanese type rural development. Whichever route is taken, it is the passion and commitment of the decision makers to progress that determines how differentiated the future would be.
An essential component of the breakthrough mindset relates to the deployment of advanced technology and innovative ways of execution. India has been a pioneer in the use of electronic voting machines in the highly spread-out national and state elections, at a global level even compared to advanced nations. India has been implementing a project of ensuring a UID to all of its 1.3 billion plus population, which are no mean examples of deploying technology. This progressive mindset with interconnectivity across all regions and sectors needs to be deployed in all aspects of infrastructure. Given the will, superior technology with lower costs can be achieved by India. The CEO of Renault-Nissan, for example, had gone on record that he had come to establish car manufacturing plant in India not merely for market but more for the capability of engineers to design and engineer modern projects at lower costs. This competitiveness should be applicable to a host of sectors as well. There should be a technology planning cell as part of the planning commission infrastructure in India to be able to integrate technology in national projects.
Collaboration is the key
Epoch-making transformation needs total alignment in the national setting. It is not sufficient to conceive of individual projects and hope that they would deliver as uncoordinated initiatives by Central or State governments and in public sector or private sector. Spatial planning, connectivity planning, services requirements analysis, and infrastructure development must be undertaken as a prior condition of any development. If political and regional differences are overcome asset creation of the best standards can take place to cater to the needs of current and future generations. Collaboration should also include arrangements with foreign governments and entities to bring the best of technologies and processes as well as expertise to India. Policies related to induction of the best of technologies in uncovered sectors such as airways, retail, insurance, and several other infrastructure sectors need to be formulated.
Moving from incremental growth to breakthrough development requires all-round collaboration amongst all stake holders. The first step is to move from a five year planning concept to a fifteen year (if not a twenty year) planning concept and also expand planning commission as a collaborating body of all stakeholders, central and state governments with expert support from public and private sector corporations and linkages with new technologies and expertise of whatever origin, not found but required in India. In doing so, however, the dilemma would be the classic choice between centralization and decentralization of planning. From the perspectives of the big picture visualization, strategic direction, center-state coordination, integration of technologies, resource mobilization and allocation, external collaborations, definition of strategic projects and thematic goals centralization is required. From the perspective of state level value propositions, detailing of projects and their execution, people and skill development, leading social infrastructure and customizing various initiatives to the specific needs of the individual states, decentralization would be required.
Posted by Dr CB Rao on July 8, 2012
Despite the steady growth in the profile of financial investments under the economic planning process, the economic growth and infrastructure development have failed to lead the kind of quantitative and qualitative development that are required of India’s emergence as an economic superpower. One of the reasons could be the anxiety of the Planning Commission to view egalitarian issues through economic lenses and vice versa. In the eleventh plan document spanning 386 pages, only 11 pages were devoted for infrastructure development while thematic issues such as employment, social justice, innovation, technology, spatial development, regional imbalances, environment, climate change, governance, consumer protection and competition policy were covered in about 200 pages. This cannot be faulted per se; probably needs to be even welcomed as the Commission’s commitment to inclusive growth. Without getting biased by the current planning paradigm, however, we need to analyze why the economic planning process is yet to deliver resoundingly for India an assured measure of global competitiveness across the board and a quality of life that is sustainable even for indigent sections of the population.
The long project cycle
Economic planning for a country is not the same in scale or scope as strategic planning for a firm. It may be appropriate to visualize a firm’s transformation in five year cycles but it is probably inadequate to visualize an economy’s progress in five year cycles. The fundamental lacuna in India’s economic planning process relates to the incremental visualization in steps of five years. Some State governments have, in fact, been quick to recognize this and launch 10, 15 or 20 year visions. A durable framework for strategic economic development and asset creation can emerge only when the central and state plans are synchronized in a much longer time frame of at least 10 to 15 years at least. The strength of today’s developed world would lie in their development of infrastructure projects that would take a decade or two to build but would last several generational lifetimes. Whether it is the labyrinth of highly intricate and synchronized underground and on or over ground metro rail systems of Tokyo and London or the elaborate national and state highway systems of the USA, the ability to visualize breakthrough projects of benefit for future centuries is the hallmark of enlightened economic planning.
Given India’s aspirations, and potential, for emergence as the third largest economic power, planning cycles have to be reasonably long. This, coupled with the fact that public sector and infrastructure projects in India are beset by significant delays, dictates the need for planning with at least a 15 to 20 year planning horizon. It is not unusual in India for projects taken up under the aegis of a five year plan remain not only incomplete at the end of the five year plan but also found to be insufficient in the context of population and economic growth dynamics. Airport modernization in the four metropolitan cities is a classic example of development being too little in scale and scope and too late in completion, and necessitating in all cases the need to commence work on new airports. The advantage of a really long range planning framework is that economic projects which are to meet the requirements of future generations are conceived with appropriate scale and scope as well as investment, and understanding of the payback periods.
Incremental versus breakthrough
In economic planning of developing economies which requires allocation of scarce resources on a number of conflicting priorities across urban and rural spectra it is easy and even often compelling to spread resources on projects that meet pending needs, not even current needs. Incremental growth, which mostly is also inadequate often, is the usual prescription. The golden quadrilateral of highways is a good example of how long term planning can create economic assets useful for generations. Yet, when it comes to bullet trains not more than two inter-city sectors are being considered as opposed to the need for a national bullet train grid which could dramatically transform the social, industrial and economic connectivity in this vast nation. There are several areas which lend themselves to the incremental versus breakthrough dilemma, with ideal choices needing to be in favor of breakthrough development. Examples abound not only in infrastructure like roads, ports, airports, railways, airways, shipping and highways but also in social sectors such as healthcare, education, irrigation, public distribution and housing, to name a few.
Breakthrough development requires, fundamentally, modeling of future population and demographic trends and economic parameters that can support the GDP growth targets in time spans ranging from ten to twenty years. In the healthcare sector, for example, the current network of government run general hospitals would be grossly inadequate when the rapid extension of metropolitan areas is factored in. Breakthrough development would require not only doubling or trebling of bed capacity in the existing general hospitals but also potentially setting up of at least four new general hospitals in each of the northern, southern, eastern and western peripheries of each expanding city. Similarly, each of the economic and social infrastructure sectors requires breakthrough concepts. In the infrastructure area, projects must be set up to lead economic and social development. In the field of ports, for example, it could be setting up of a port for every 200 kilometers of coastline. In the field of education, for example, it could be a Kendriya Vidyalaya in each town, an institute of higher research in each state and as many IITs and IIMs as there are states of India.
Breakthrough is a mindset
Breakthrough is essentially a matter of mindset. I can recall a day two decades ago when I was asked to mention, as a strategic planner, what I would do to reverse the low market share position in truck segment of my firm. I said that the firm should offer air-conditioned factory built cabs. Obviously, the suggestion was received with shock given the reluctance of the firm to be able to offer even a front-end structure. Today, twenty years later, most truck majors are willing to offer fully-built trucks with air-conditioned cabs as a competitive offering. In a similar manner Volvo rewrote the nature of inter-city passenger transport diligently over two decades through its high performance buses. These are just two examples of how proactive and innovative mindset would advance progress through breakthrough concepts. Planners, in terms of choices, may simply wonder at the amazing progress of Tokyo, Shanghai or Dubai but conclude it as inappropriate for India, or create our own tapestry of Chinese type urban development and Japanese type rural development. Whichever route is taken, it is the passion and commitment of the decision makers to progress that determines how differentiated the future would be.
An essential component of the breakthrough mindset relates to the deployment of advanced technology and innovative ways of execution. India has been a pioneer in the use of electronic voting machines in the highly spread-out national and state elections, at a global level even compared to advanced nations. India has been implementing a project of ensuring a UID to all of its 1.3 billion plus population, which are no mean examples of deploying technology. This progressive mindset with interconnectivity across all regions and sectors needs to be deployed in all aspects of infrastructure. Given the will, superior technology with lower costs can be achieved by India. The CEO of Renault-Nissan, for example, had gone on record that he had come to establish car manufacturing plant in India not merely for market but more for the capability of engineers to design and engineer modern projects at lower costs. This competitiveness should be applicable to a host of sectors as well. There should be a technology planning cell as part of the planning commission infrastructure in India to be able to integrate technology in national projects.
Collaboration is the key
Epoch-making transformation needs total alignment in the national setting. It is not sufficient to conceive of individual projects and hope that they would deliver as uncoordinated initiatives by Central or State governments and in public sector or private sector. Spatial planning, connectivity planning, services requirements analysis, and infrastructure development must be undertaken as a prior condition of any development. If political and regional differences are overcome asset creation of the best standards can take place to cater to the needs of current and future generations. Collaboration should also include arrangements with foreign governments and entities to bring the best of technologies and processes as well as expertise to India. Policies related to induction of the best of technologies in uncovered sectors such as airways, retail, insurance, and several other infrastructure sectors need to be formulated.
Moving from incremental growth to breakthrough development requires all-round collaboration amongst all stake holders. The first step is to move from a five year planning concept to a fifteen year (if not a twenty year) planning concept and also expand planning commission as a collaborating body of all stakeholders, central and state governments with expert support from public and private sector corporations and linkages with new technologies and expertise of whatever origin, not found but required in India. In doing so, however, the dilemma would be the classic choice between centralization and decentralization of planning. From the perspectives of the big picture visualization, strategic direction, center-state coordination, integration of technologies, resource mobilization and allocation, external collaborations, definition of strategic projects and thematic goals centralization is required. From the perspective of state level value propositions, detailing of projects and their execution, people and skill development, leading social infrastructure and customizing various initiatives to the specific needs of the individual states, decentralization would be required.
Posted by Dr CB Rao on July 8, 2012
Saturday, June 30, 2012
Strategic Adjacency: A New Model of Integrated Diversification
Microsoft has made a stunning strategic move in recent days with the announcement of its own tablet computer, named Surface. For a technology giant and software pioneer whose business model, ever since inception, focused only on developing and supplying software for computer manufacturers and computer users, this move signals the company's significant shift in strategy. It is, however, not the first time that Microsoft forayed into hardware. Its X Box and Kinect gaming devices have been runaway hits; however, they have been hardware forays into a new domain of entertainment and gaming for the company. The entry into tablet manufacture represents its first move to forward-integrate into an adjacent product-market segment.
Microsoft has not been the first or the only one to do so, however. Google, the developer and supplier of Android mobile operating system, launched its own Nexus mobile phone a few years ago and has followed up with the acquisition of Motorola Mobility for adding on robust mobile phone development and manufacturing capability. It has also ventured in earler years into development of its own software akin to Office suite (pioneeringly on cloud platform), development of Chrome computers (extending the search concept) and now into tablet computers (a personal connectivity move announced just a few days ago). Amazon and Barnes & Noble have forward-integrated into electronic reading business through their e-readers and media tablets (Kindle, Fire and Nook) over the last few years. In old-world language these would have been defined as integration or diversification moves. This blog post proposes that in today's world, we need to conceptualize these moves differently.
Strategic adjacency
The above moves by companies which have achieved iconic status in their core technologies and businesses are not classic integration models as such moves are also accompanied by significant outsourcing. They are also not classic diversification moves which seek new diversified market segments, related or unrelated. Rather, these represent a definite attempt to move into strategically adjacent areas. The example of Apple having its own integrated software and hardware platforms, and the likelihood of personal computers being phased out by tablets have, no doubt, prompted Microsoft to protect, if not expand, its business by moving into the tablet computer domain. Faced with the lost time in developing an appropriate chip for smartphones that allowed other chip makers to dominate the mobile space, Intel is now leveraging its own Atom mobile chip with a newly launched Intel branded smartphone combination. Simultaneous dvelopments of convergence and divergence in an industry or related industries are blurring the definition of industry. This represents both an opportunity and a challenge for firms. Strategic adjacency provides a model to handle these.
Strategic adjacency could be seen as a sequential, and sometimes simultaneous, move to expand the business canvas, keping the ultimate customer focus unchanged while providing enhanced user functionality. For Microsoft, computer manufacturers were intermediaries and operating systems were enablers to reach to the computer user. Through Surface tablet, the firm is attempting a paradigm shift to reach the end-user dirctly. When Apple moves into its proprietary televisions the focus would still be on the same consumer who uses its iPhones, iPads and iPods, and who is traditionally covered by Apple with its unique ecosystem. Theoretically, any domain that helps the human being, operating as a domestic person or as a business person, fulfill his needs could result in strategic adjacency. Apple one day could create global tele-presence solutions and Microsoft could help in remote management of offices and homes. Google can help one visualize and rlat to the whole world from one spot. Facebook could institutionalize its own way of global social networking throgh its own branded mobile and tablet devices and exclusive email addresses. The question, then, relates to the basic triggers for firms to achieve strategic adjacency.
Competence versus commoditization
Competence, or core competence has, in the past, been the primary driver of business focus. Multiple competencies enabled companies to become corporate groups or conglomerates dealing in integrated or divrsified businesses. Rarely competencies were seen as enablers to move up or down, or even sideways in strategic spaces within an evolving broader domain. Traditionally, a truck manufacturer never sought to become a transport service provider. Nor did component maker aspired to become a truck manufacturer. The concept of competence as a driver, and also as a limitation of business, was well recognized and respected. Companies typically used different filters (technology, product, channel, market for example) to identify competencies that could drive business expansion and diversification. All of these tended to be company specific and investment intensive and zealously protected by owners or innovators of such proprietary technologies.
Recent times have seen a fundamental shift in understanding competencies. A central core competncy is now considerd enough to integrate multiple competencies. Innovation that has been the driver of competencies has, by and large, become commoditized with early commercialization to multiple partners. Notwithstanding hundreds of patents, companies are unable to hold off industry-wide replication as well as outsourcing and inlicensing of products. No single company today needs to be the in-house innovator of bundles of all the tchnologies, components and systems. Many innovator firms are keen to outlicense their patented or proprietary components to as many end-products as possible. Even large firms which have proprietary internals are willing to provide their parts to competitors. As a result, any company with access to reasonable finances can develop a new end-product in a strategically adjacent space.
Competence within commoditization
Despite the lowered entry and exit barriers however, it is still left only to a few firms to make an optimum use of strategic adjacency. This is due to the capability of such firms to achieve competence within the aspects of commoditization. Samsung has achieved uniqueness in the already standardized (or commoditized) ultrabook computer market by becoming the only ultrabook with optical DVD drive. Microsoft is planning to achieve similar uniqueness in its Surface tablet by offering standard USB 3.0 port (to ensure compatibility with the established computing devices as well as easy portability of data) and by converting the front cover into a key board (to gain an innovative advantage over conventional tablets in space usage). Clearly, seamless portability and integration between established PC usage power and contemporary tablet usage profile is seen to be the unique selling proposition. In designing Windows 8, Microsoft has sought to overcome its delay handicap with an operating systm that straddles multiple mobile, media and computing applications seamlessly.
The unique competency paradigm clearly counters the limitations of commoditized innovation. When Audi designed its Q3 SUV it showed the competence to bring in the larger Q5 SUV architecture into a smaller space at a lower price point. Another classic case is that of Samsung Galaxy Note which brought back the stylus to provide drawing and writing capabilities onto a smart phone . However, competence in a commoditized world offers no permanent protection against other follow-on moves. It is necessary for such firms to achieve rapid success and huge scale to ensure that replication of the paradigm by others would be delayed, if not deterred. Typically, such firms project their uniqueness very strongly to the customers to be able to capitalize. Sony could bring Xperia series of camera phones into competitive reckoning by focusing on Bravia engine and better camera sensors. In contrast, the reluctance of Nokia to project its unique Pure View camera phone with an unprecedented 41 megapixel camera demonstrates how the potential benefits of competency could be frittered away by hesitant marketing.
Integrated diversification
The concept of stratgic adjacency is the building block of a new model of integrated diversification. A combination of central organic core comptence and multiple acquired, licensed or leveraged competencies enables the modern firm to define its marketplace as an ecosystem of adjunct products and services that redfine the marketplace in an ever enlarging manner. This would typically require a conflunce of technologies. All of these, do not change the central focus of the marketplace but could change how the marketplace could be served, either incrementally or in a breakthrough manner. As an example of technology kaizen (continuous improvement), we can think of enhanced driving experince. Today, GPS systems in automobiles are seen to be an accessory, with destinatioms to be keyed in. In future, SIRI type of voice recognition and response technology could enable the user or the driver just state the destination orally whereupon the driving assistant takes over and guides the user to the destination. This would involve bundled strategy with the satellite communication system providers. Other improvements could involve the automobile recognizing the driving concentration when the drivers speak on cellular speaker phones and alerting the drivers. Future cars could become driverless, or be capable of selective autopilot at least based on robotics and continuous distance measurement technologies.
As a breakthrough adjacency, one can consider the provision of power to home consumers by public sector electric utilities in India. Faced with shortages in power generation leading to daily power cuts and the consequent consumer distress, the utilities may diversify into solar power generation and undertake to establish solar power plants in every home they serve. The utilities thus can not only diversify their offering through strategic adjacency but also in the process serve the same consumer in a much better fashion. Another breakthrough adjacency could be in terms of hospitals opening mobile diagnostic and mobile home treatment clinics with fully equipped buses bringing healthcare to the home (socially too, one wishes the hospitals would show the same empathy in bringing healthcare to the patients' doorstep as well as they display in deploying ambulances to bring patients to hospitals for critical care). A leading business process outsourcing firm in India has found a new strategic adjacency in adding analytics to its core business of transaction processing.
Strategic adjacencies and ecosystems
This blog post has provided several examples of the concept of strategic adjacency. It has also showed variations in terms of incremental steps as well as breakthrough strides in serving the customers. Starbucks' phenomenal growth has been in terms of finding strategic adjacncies in an incremental fashion while Amazon's phenomenal growth has been through strategic adjacencies of a breakthrough nature. Both approaches work admirably given appropriate technological and business contexts. The beauty of the stratgic adjacency model is that the firm evolves and grows while creating a new ecosystem around the same marketplace. In that sense it provides a smart way for integrated diversification without the investment intensity that the classical models of integration and diversification entail. Ecosystems created by the model of strategic adjacencies provide enhanced customer fulfillment and sustainable growth for firms.
Posted by Dr CB Rao on June 30, 2012
Microsoft has not been the first or the only one to do so, however. Google, the developer and supplier of Android mobile operating system, launched its own Nexus mobile phone a few years ago and has followed up with the acquisition of Motorola Mobility for adding on robust mobile phone development and manufacturing capability. It has also ventured in earler years into development of its own software akin to Office suite (pioneeringly on cloud platform), development of Chrome computers (extending the search concept) and now into tablet computers (a personal connectivity move announced just a few days ago). Amazon and Barnes & Noble have forward-integrated into electronic reading business through their e-readers and media tablets (Kindle, Fire and Nook) over the last few years. In old-world language these would have been defined as integration or diversification moves. This blog post proposes that in today's world, we need to conceptualize these moves differently.
Strategic adjacency
The above moves by companies which have achieved iconic status in their core technologies and businesses are not classic integration models as such moves are also accompanied by significant outsourcing. They are also not classic diversification moves which seek new diversified market segments, related or unrelated. Rather, these represent a definite attempt to move into strategically adjacent areas. The example of Apple having its own integrated software and hardware platforms, and the likelihood of personal computers being phased out by tablets have, no doubt, prompted Microsoft to protect, if not expand, its business by moving into the tablet computer domain. Faced with the lost time in developing an appropriate chip for smartphones that allowed other chip makers to dominate the mobile space, Intel is now leveraging its own Atom mobile chip with a newly launched Intel branded smartphone combination. Simultaneous dvelopments of convergence and divergence in an industry or related industries are blurring the definition of industry. This represents both an opportunity and a challenge for firms. Strategic adjacency provides a model to handle these.
Strategic adjacency could be seen as a sequential, and sometimes simultaneous, move to expand the business canvas, keping the ultimate customer focus unchanged while providing enhanced user functionality. For Microsoft, computer manufacturers were intermediaries and operating systems were enablers to reach to the computer user. Through Surface tablet, the firm is attempting a paradigm shift to reach the end-user dirctly. When Apple moves into its proprietary televisions the focus would still be on the same consumer who uses its iPhones, iPads and iPods, and who is traditionally covered by Apple with its unique ecosystem. Theoretically, any domain that helps the human being, operating as a domestic person or as a business person, fulfill his needs could result in strategic adjacency. Apple one day could create global tele-presence solutions and Microsoft could help in remote management of offices and homes. Google can help one visualize and rlat to the whole world from one spot. Facebook could institutionalize its own way of global social networking throgh its own branded mobile and tablet devices and exclusive email addresses. The question, then, relates to the basic triggers for firms to achieve strategic adjacency.
Competence versus commoditization
Competence, or core competence has, in the past, been the primary driver of business focus. Multiple competencies enabled companies to become corporate groups or conglomerates dealing in integrated or divrsified businesses. Rarely competencies were seen as enablers to move up or down, or even sideways in strategic spaces within an evolving broader domain. Traditionally, a truck manufacturer never sought to become a transport service provider. Nor did component maker aspired to become a truck manufacturer. The concept of competence as a driver, and also as a limitation of business, was well recognized and respected. Companies typically used different filters (technology, product, channel, market for example) to identify competencies that could drive business expansion and diversification. All of these tended to be company specific and investment intensive and zealously protected by owners or innovators of such proprietary technologies.
Recent times have seen a fundamental shift in understanding competencies. A central core competncy is now considerd enough to integrate multiple competencies. Innovation that has been the driver of competencies has, by and large, become commoditized with early commercialization to multiple partners. Notwithstanding hundreds of patents, companies are unable to hold off industry-wide replication as well as outsourcing and inlicensing of products. No single company today needs to be the in-house innovator of bundles of all the tchnologies, components and systems. Many innovator firms are keen to outlicense their patented or proprietary components to as many end-products as possible. Even large firms which have proprietary internals are willing to provide their parts to competitors. As a result, any company with access to reasonable finances can develop a new end-product in a strategically adjacent space.
Competence within commoditization
Despite the lowered entry and exit barriers however, it is still left only to a few firms to make an optimum use of strategic adjacency. This is due to the capability of such firms to achieve competence within the aspects of commoditization. Samsung has achieved uniqueness in the already standardized (or commoditized) ultrabook computer market by becoming the only ultrabook with optical DVD drive. Microsoft is planning to achieve similar uniqueness in its Surface tablet by offering standard USB 3.0 port (to ensure compatibility with the established computing devices as well as easy portability of data) and by converting the front cover into a key board (to gain an innovative advantage over conventional tablets in space usage). Clearly, seamless portability and integration between established PC usage power and contemporary tablet usage profile is seen to be the unique selling proposition. In designing Windows 8, Microsoft has sought to overcome its delay handicap with an operating systm that straddles multiple mobile, media and computing applications seamlessly.
The unique competency paradigm clearly counters the limitations of commoditized innovation. When Audi designed its Q3 SUV it showed the competence to bring in the larger Q5 SUV architecture into a smaller space at a lower price point. Another classic case is that of Samsung Galaxy Note which brought back the stylus to provide drawing and writing capabilities onto a smart phone . However, competence in a commoditized world offers no permanent protection against other follow-on moves. It is necessary for such firms to achieve rapid success and huge scale to ensure that replication of the paradigm by others would be delayed, if not deterred. Typically, such firms project their uniqueness very strongly to the customers to be able to capitalize. Sony could bring Xperia series of camera phones into competitive reckoning by focusing on Bravia engine and better camera sensors. In contrast, the reluctance of Nokia to project its unique Pure View camera phone with an unprecedented 41 megapixel camera demonstrates how the potential benefits of competency could be frittered away by hesitant marketing.
Integrated diversification
The concept of stratgic adjacency is the building block of a new model of integrated diversification. A combination of central organic core comptence and multiple acquired, licensed or leveraged competencies enables the modern firm to define its marketplace as an ecosystem of adjunct products and services that redfine the marketplace in an ever enlarging manner. This would typically require a conflunce of technologies. All of these, do not change the central focus of the marketplace but could change how the marketplace could be served, either incrementally or in a breakthrough manner. As an example of technology kaizen (continuous improvement), we can think of enhanced driving experince. Today, GPS systems in automobiles are seen to be an accessory, with destinatioms to be keyed in. In future, SIRI type of voice recognition and response technology could enable the user or the driver just state the destination orally whereupon the driving assistant takes over and guides the user to the destination. This would involve bundled strategy with the satellite communication system providers. Other improvements could involve the automobile recognizing the driving concentration when the drivers speak on cellular speaker phones and alerting the drivers. Future cars could become driverless, or be capable of selective autopilot at least based on robotics and continuous distance measurement technologies.
As a breakthrough adjacency, one can consider the provision of power to home consumers by public sector electric utilities in India. Faced with shortages in power generation leading to daily power cuts and the consequent consumer distress, the utilities may diversify into solar power generation and undertake to establish solar power plants in every home they serve. The utilities thus can not only diversify their offering through strategic adjacency but also in the process serve the same consumer in a much better fashion. Another breakthrough adjacency could be in terms of hospitals opening mobile diagnostic and mobile home treatment clinics with fully equipped buses bringing healthcare to the home (socially too, one wishes the hospitals would show the same empathy in bringing healthcare to the patients' doorstep as well as they display in deploying ambulances to bring patients to hospitals for critical care). A leading business process outsourcing firm in India has found a new strategic adjacency in adding analytics to its core business of transaction processing.
Strategic adjacencies and ecosystems
This blog post has provided several examples of the concept of strategic adjacency. It has also showed variations in terms of incremental steps as well as breakthrough strides in serving the customers. Starbucks' phenomenal growth has been in terms of finding strategic adjacncies in an incremental fashion while Amazon's phenomenal growth has been through strategic adjacencies of a breakthrough nature. Both approaches work admirably given appropriate technological and business contexts. The beauty of the stratgic adjacency model is that the firm evolves and grows while creating a new ecosystem around the same marketplace. In that sense it provides a smart way for integrated diversification without the investment intensity that the classical models of integration and diversification entail. Ecosystems created by the model of strategic adjacencies provide enhanced customer fulfillment and sustainable growth for firms.
Posted by Dr CB Rao on June 30, 2012
Sunday, June 17, 2012
Father as Life Manager: A Father’s Day Tribute
It is impossible to hypothesize who is more important to a family; the father or mother. As with formation of human life, in its evolution as well both are essential. The roles are, however, different; neither being less important than the other. Times may have changed with mothers becoming career women and fathers becoming more involved in home making but the basic attributes of each role have not changed much. As with a mother, a father also represents a leadership role in bringing up of a family. This blog featured a post on the role of the mother in the post “The Quintessential Indian Mother: Subtle Principles of Management”, Strategy Musings, May 13, 2012. This Father’s Day, this blog post features a tribute to the Father. The role of a father, however, is best told by his sons or daughters as they travel through the time machine on the Father’s Day, or any day for that matter.
Life has relative permanence but unfortunately humans have no permanence. Yet, as long as one has the powers of remembrance, one can never forget the intents, acts and emotions that personified the father, fondly called “naanna”, “appa” or “bapa” in some Indian languages. Tragically, in most cases the children lack the maturity and ability to identify and analyze what the father meant to him or her. By the time the required level of competence is reached, in some cases it becomes too late pay back with gratitude what the father did for him or her. As one reflects, one sees his or her father as a co-builder of the family institution, endeavoring always to make the children better endowed and more successful in life than he himself has been. He plays a leadership role as the chief executive of the family even if he is just a humble worker, an emerging executive or an established manager, essentially one among many in an organization.
Caretaker and Educator
The earliest memories of the father are always those of a caretaker; helping one as a baby make the first crawls and take the first steps in life, and later holding the hand to stroll, shop and enjoy in the seemingly vast and perpetually exciting places of parks, shops and movie halls. The father is always there to take the child to a doctor when the child turns sick and to take turns with the mother to follow the doctor’s instructions; measuring temperature, administering medicine, providing the prescribed diet, and maintaining all-night vigil. The greater the sickness the greater is the concern and the weaker the child the greater is the attention. The seemingly unending advices and the occasionally unnerving admonishments have always only one objective of seeing the child grow strong and healthy. Many advices of good health given by father unfortunately ring true only when one grows up!
Even as he is a caretaker par excellence, the father is a great educator too, regardless of his own level of education. Right from the selection of pre-school to the high school and college, he always tries to do the best within the means in terms of providing the best education in the best institutions possible. The care he takes to buy the school books, wrap them and pack them in the school bag leaves impressions on a child’s mind even when he or she becomes a parent. A time does come in the family’s development to leave the growing child in the hostel as he or she enters the portals of a college. The joy of the father knows no bounds when the graduation happens and the first job is taken. Many times, the father is more interested than the son or daughter to secure the best career opening. Unknown to the son or daughter, the father seeks the best advice from his peers and well-wishers on appropriate career options and job openings. He looks for the best competitive examinations, the best services and organizations and looks over, or even rough-fills, the application forms as they get prepared.
Toiler and Breadwinner
Probably, the more profound images of a father in a child are those of his being a toiler and breadwinner for the family. A mother may take on additional pressure to have a working life and supplement income but the father’s hard work remains the sheet anchor to create wealth for the family. Despite facing the pressures of working life, the ideal father always has time for the family, playing light games such as chess, caroms and cards with the children whenever. Work life is never easy for the aspiring father. Roving across the country, leaving the home state, and often even separating from family for years, or even going abroad alone, the father stakes the best part of his life for earning for the family.
Typically, the father earns to save, and saves to pass on wealth and security to the succeeding generations. While maximizing his earning potential, the good father, however, controls the spending power of his children. The value of money is known when the money at hand is less than the desires in the mind. That money comes from toil and toil comes from commitment is a fundamental principle that is passed on from generation to generation of successful families. The new clothes the father brings home on the eve of each festival, the crackers and fireworks he buys for the Festival of Lights ( Diwali), and the care he takes in spending money on vacations, the first child savings bank account he opens reinforce the smiles that money can bring to the family but more importantly how careful saving and investment habits can sustain the smiles.
Characterizer and Motivator
An ideal father builds the character of the child; values such as integrity, rectitude, helpfulness, friendliness, piety, sincerity, discipline, diligence, religiousness, dedication and service are imbibed in the child as one watches the father reflect those positive values in his professional and personal life. The kindness and caring with which one treats his parents, wife, children, relatives, and friends has a lasting bearing on the evolution of the child’s personality and potentially lays the foundation for the development of his interpersonal skills. While the genetic disposition on personality development cannot be predicted or controlled, the father, along with the mother does play an important and integral role in characterizing the right personal and professional traits in the child over years of childhood, adolescence and teenage.
Motivation is one factor that separates achievers from non-achievers. Whether one achieves certain material comforts and social status or not, one’s level of motivation must never ebb. In many ways, motivation by itself is the single most important factor for any human being to have faith and optimism in life. Motivation is that faculty of a human being to stay focused, fight against odds and seek higher goals even as earlier goals are achieved. A strong sense of self-worth and a keen sense of learning from experience help one stay motivated. The motivation the father displays in handling his work and family matters despite the enormous pressures of continuing education and career development, the stability he displays in handling the difficulties and pressures of family life, from sicknesses to celebrations, provide a motivating impact on the child.
Protector and Mentor
The father protects; he observes and analyzes what is good and beneficial for the family, from his own life to shaping the life of the other members of the family. He is always watchful of how the family is shaping up and how the children, especially the girl child, is able to cope with the hostile conditions of the world. From providing the fundamentals of day to day security of housing, food and clothing to the enablers of higher living such as education and lifestyle goods, protection is always felt by the children without the father ever being explicit about it. A father who protects his parents and wife provides a solid feeling of protection to the children.
As the child grows and matures, gets educated and employed, and becomes empowered and independent, and as the father himself becomes aged and progressively dependent, the role of the father changes from that of caretaker and protector to one of mentor. The ability of the father to transition from a relatively influential role to one of relatively guidance role, providing life's wisdom in a contemporaneously acceptable manner, calls for significant equanimity while the ability of the son or daughter to deal with the transition with respect and understanding, and with the wisdom to benefit from the wisdom of the elders, determines the mutual happiness all members of the family would derive. The dutiful child never considers himself or herself as someone who could forget the past in which the parents brought him or her up.
The child is the father…
The circle of life has neither a beginning nor an end, even as humans enter, age, accomplish and leave this world. Within the impermanence of life, the intents, thoughts, expressions, actions and memories of positive guidance, good living, emotional loving and fulfilled life are the relatively permanent ones. As the child grows into an adult, and becomes a father himself or mother herself, the love and affection showered by the father (not to mention the mother) need to be fondly remembered and repaid with gratitude through respectful caretaking in the twilight years by the younger ones.
Posted by Dr CB Rao on June 17, 2012
Life has relative permanence but unfortunately humans have no permanence. Yet, as long as one has the powers of remembrance, one can never forget the intents, acts and emotions that personified the father, fondly called “naanna”, “appa” or “bapa” in some Indian languages. Tragically, in most cases the children lack the maturity and ability to identify and analyze what the father meant to him or her. By the time the required level of competence is reached, in some cases it becomes too late pay back with gratitude what the father did for him or her. As one reflects, one sees his or her father as a co-builder of the family institution, endeavoring always to make the children better endowed and more successful in life than he himself has been. He plays a leadership role as the chief executive of the family even if he is just a humble worker, an emerging executive or an established manager, essentially one among many in an organization.
Caretaker and Educator
The earliest memories of the father are always those of a caretaker; helping one as a baby make the first crawls and take the first steps in life, and later holding the hand to stroll, shop and enjoy in the seemingly vast and perpetually exciting places of parks, shops and movie halls. The father is always there to take the child to a doctor when the child turns sick and to take turns with the mother to follow the doctor’s instructions; measuring temperature, administering medicine, providing the prescribed diet, and maintaining all-night vigil. The greater the sickness the greater is the concern and the weaker the child the greater is the attention. The seemingly unending advices and the occasionally unnerving admonishments have always only one objective of seeing the child grow strong and healthy. Many advices of good health given by father unfortunately ring true only when one grows up!
Even as he is a caretaker par excellence, the father is a great educator too, regardless of his own level of education. Right from the selection of pre-school to the high school and college, he always tries to do the best within the means in terms of providing the best education in the best institutions possible. The care he takes to buy the school books, wrap them and pack them in the school bag leaves impressions on a child’s mind even when he or she becomes a parent. A time does come in the family’s development to leave the growing child in the hostel as he or she enters the portals of a college. The joy of the father knows no bounds when the graduation happens and the first job is taken. Many times, the father is more interested than the son or daughter to secure the best career opening. Unknown to the son or daughter, the father seeks the best advice from his peers and well-wishers on appropriate career options and job openings. He looks for the best competitive examinations, the best services and organizations and looks over, or even rough-fills, the application forms as they get prepared.
Toiler and Breadwinner
Probably, the more profound images of a father in a child are those of his being a toiler and breadwinner for the family. A mother may take on additional pressure to have a working life and supplement income but the father’s hard work remains the sheet anchor to create wealth for the family. Despite facing the pressures of working life, the ideal father always has time for the family, playing light games such as chess, caroms and cards with the children whenever. Work life is never easy for the aspiring father. Roving across the country, leaving the home state, and often even separating from family for years, or even going abroad alone, the father stakes the best part of his life for earning for the family.
Typically, the father earns to save, and saves to pass on wealth and security to the succeeding generations. While maximizing his earning potential, the good father, however, controls the spending power of his children. The value of money is known when the money at hand is less than the desires in the mind. That money comes from toil and toil comes from commitment is a fundamental principle that is passed on from generation to generation of successful families. The new clothes the father brings home on the eve of each festival, the crackers and fireworks he buys for the Festival of Lights ( Diwali), and the care he takes in spending money on vacations, the first child savings bank account he opens reinforce the smiles that money can bring to the family but more importantly how careful saving and investment habits can sustain the smiles.
Characterizer and Motivator
An ideal father builds the character of the child; values such as integrity, rectitude, helpfulness, friendliness, piety, sincerity, discipline, diligence, religiousness, dedication and service are imbibed in the child as one watches the father reflect those positive values in his professional and personal life. The kindness and caring with which one treats his parents, wife, children, relatives, and friends has a lasting bearing on the evolution of the child’s personality and potentially lays the foundation for the development of his interpersonal skills. While the genetic disposition on personality development cannot be predicted or controlled, the father, along with the mother does play an important and integral role in characterizing the right personal and professional traits in the child over years of childhood, adolescence and teenage.
Motivation is one factor that separates achievers from non-achievers. Whether one achieves certain material comforts and social status or not, one’s level of motivation must never ebb. In many ways, motivation by itself is the single most important factor for any human being to have faith and optimism in life. Motivation is that faculty of a human being to stay focused, fight against odds and seek higher goals even as earlier goals are achieved. A strong sense of self-worth and a keen sense of learning from experience help one stay motivated. The motivation the father displays in handling his work and family matters despite the enormous pressures of continuing education and career development, the stability he displays in handling the difficulties and pressures of family life, from sicknesses to celebrations, provide a motivating impact on the child.
Protector and Mentor
The father protects; he observes and analyzes what is good and beneficial for the family, from his own life to shaping the life of the other members of the family. He is always watchful of how the family is shaping up and how the children, especially the girl child, is able to cope with the hostile conditions of the world. From providing the fundamentals of day to day security of housing, food and clothing to the enablers of higher living such as education and lifestyle goods, protection is always felt by the children without the father ever being explicit about it. A father who protects his parents and wife provides a solid feeling of protection to the children.
As the child grows and matures, gets educated and employed, and becomes empowered and independent, and as the father himself becomes aged and progressively dependent, the role of the father changes from that of caretaker and protector to one of mentor. The ability of the father to transition from a relatively influential role to one of relatively guidance role, providing life's wisdom in a contemporaneously acceptable manner, calls for significant equanimity while the ability of the son or daughter to deal with the transition with respect and understanding, and with the wisdom to benefit from the wisdom of the elders, determines the mutual happiness all members of the family would derive. The dutiful child never considers himself or herself as someone who could forget the past in which the parents brought him or her up.
The child is the father…
The circle of life has neither a beginning nor an end, even as humans enter, age, accomplish and leave this world. Within the impermanence of life, the intents, thoughts, expressions, actions and memories of positive guidance, good living, emotional loving and fulfilled life are the relatively permanent ones. As the child grows into an adult, and becomes a father himself or mother herself, the love and affection showered by the father (not to mention the mother) need to be fondly remembered and repaid with gratitude through respectful caretaking in the twilight years by the younger ones.
Posted by Dr CB Rao on June 17, 2012
Saturday, June 16, 2012
Entrepreneurial Professionalism: Convergence of Leadership Duality
The theories of entrepreneurship and professionalism in management border on extremes at times, equating entrepreneurship to compulsive adventurism and professionalism to ossified bureaucracy. As with most positions, the true mean lies in the middle. Industrial and national development requires entrepreneurship as much as professionalism. This blog post explores the duality and proposes principles of convergence based on a well-known Indian industrial conglomerate group.
The duality
An entrepreneur takes risks to establish something of substantial business value from almost nothing essentially through his vision and passion. A professional optimizes, expands and diversifies an existing business to drive greater value. Almost all new businesses are established through entrepreneurial energy and are developed further through professional panache. Both the classes, entrepreneurs and professionals, thus seek to generate more wealth (revenues and profits) and facilitate better quality of life through products and services that serve the consumers. Yet, both the classes also unwittingly destroy value while performing their roles. This occurs mostly due to the different drivers that trigger the leadership and managerial activity in each class and the different routes taken by both the classes. By and large, one may say that an entrepreneurial way of work and a professional way of work tend to significantly differ, even if both the sets of leaders may have gone through similar streams of education and experience. The fundamental difference relates probably to how the two classes of leaders perceive risk and safety in business.
In an effort to derive synergies, if not wish away the differences, management experts suggest that entrepreneurs should have with them a set of professionals who counter and manage the entrepreneurs’ runaway growth instincts. Similarly, professionals are expected to have entrepreneurial drive to be able to drive businesses with less bureaucracy. While this appears to a great hybrid model, very often the model does not work the way it ought to. The reasons are essentially twofold. Firstly, the organizational ecosystem tends to develop a particular ethos, which is immutable, depending on whether the firm is founder-led or professional-led, in all senses of the power play. Secondly, the incentives or rewards, and the perceptions of risks and penalties work entirely differently for the entrepreneurs and professionals. The way opportunities and challenges are viewed in the decision making approaches tend to be accordingly different. The challenge for both the entrepreneurs and professionals is to explore how the duality can converge to deliver superior value building for all classes of organizations, whether entrepreneurial or professional.
Entry deterrent bets
Business grows on risky bets; bets that the market opportunity that is perceived is real and realizable, the investments will be productive and profitable, and the organization has strengths that are clear and competitive. Entrepreneurs take such bets based on their education, experience and more importantly intuition, with intuition clearly dominating the mix. No research, for example, has ever established the need for iPod, iPhone or iPad. Steve Jobs, who developed these products out of ingenuity and passion, was therefore an entrepreneur par excellence. Professionals do also take bets out of the same three factors of education, experience and intuition but tend to deliberately substitute intuition with analytics. An entrepreneur, almost by definition, never takes a bet which has no risk. That is the typical entrepreneurial way of being ahead of the pack and monopolizing the emerging or latent market. In several ways, a really passionate entrepreneur takes a bet that has a level of entry deterrent risk. This is an interesting concept that gets actualized time and again in entrepreneurial chapters, even in an emerging country such as India.
When J N Tata ventured to set up a luxury hotel in Bombay, now Mumbai (1902), a steel plant in Bihar (1907) and an electric utility in Bombay (1910) under the British regime, clearly each of them was a move with entry deterrent risk; but it laid the foundations of the largest, most diversified entrepreneurial group in India. What Nirma did in terms of affordable detergent powder (1980) challenging the hegemony of established multinational it was a risk even larger companies were not prepared to take; today it is a FMCG giant in its own right. When Reliance decided to enter the privatized oil exploration (2000), not many followed as it was a move with considerable risk. It, however, represented a genetic corporate trend that was uniquely that of Reliance of daring to go early into capital intensive areas (from textiles to oil and telecom as well as retail). When Dr Pratap Reddy established Apollo Hospitals (1983) as the first corporate hospital he was taking as much risk as a skilled surgeon would take in carrying out a complex surgery and the outcome has been equally successful; Apollo is the largest corporate hospital chain in India. Examples abound of entry deterrent risk taking providing significant early mover advantage to entrepreneurs.
Fall protecting nets
As opposed to the entrepreneurial trend of taking entry deterrent risks, professionals tend to have the practice of establishing fall protecting safety nets. The safety nets established by professionals range from scenario development to staged execution. Many times, professionals by virtue of their knowledge and experience, have the ability to ideate far more profoundly than entrepreneurs would. However, the time taken to convert ideas from concepts to constructs traversing collaboratively as well as contentiously through a whole series of analytical and consensual exercises dilutes leading ideas into trailing projects. Also, even when taken up for execution the projects tend to be sequentially stage-gated with options to make “go or no-go” decisions after detailed reviews at the end of each stage gate. The time lost in that sequential stage-gated process leads to significant delays in go-to-market. Interestingly, quick-thinking and rapid-acting entrepreneurial organizations turn into deep-thinking and slow-acting professional organizations all too soon as a result of which the lag between right ideation and smart execution increases over time. For example, Microsoft ideated the tablet computer in 2000 but Apple walked away with smart execution in 2010!
There are several examples of how fall protecting nets delay market development and penetration. Several Japanese companies have been ahead of Hyundai in India, including Toyota which did its feasibility studies for entry into India at the same time as Hyundai (around 1995). Yet, Hyundai entered earlier and became a much bigger volume player in India much faster than Toyota. The difference has primarily been due to the stage gates that Toyota set for itself, from market research to market entry. On the other hand, Hyundai has been less concerned about error-proofing its corporate strategy than achieving diversified and accelerated market entry. While this may be seen as a company specific observation it may also be seen as a national culture too, given the repetition of similar pattern between Korean and Japanese firms in a wide range of industries. The question, therefore, is whether entrepreneurial skill which is considered an individual skill could be extended into a corporate competence. The example of Tata group of India illustrates that it is indeed possible to converge the duality of entrepreneurial and professional approaches to achieve superior competitive advantage.
Convergence of duality
Tata Group is one of India's largest and most respected business groups. Tata Group's name is synonymous with India's industrialization. The Group gave India her first luxury hotel, first steel plant, hydro-electric plant, inorganic chemistry plant, first global software services company, first integrated automobile company and created a reservoir of scientific and technological manpower for the country. Its Trusts have instituted the first integrated engineering and biology educational infrastructure, Indian Institute of Science in 1909, the Tata Institute of Social Sciences in 1936; India's first cancer hospital, the Tata Memorial in 1941, and in 1945, the Tata Institute of Fundamental Research, which became the cradle of India's Atomic energy program. Today, Tata Group comprises 100 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Group has operations in more than 54 countries across six continents, and its companies export products and services to 120 nations. It has been also in the forefront of India’s largest and most effective global acquisitions including, Tetley Tea, Corus Steel, Jaguar-Land Rover, and Daewoo Heavy Vehicles. In terms of specific product innovations too, the Group has been ahead of the rest in the Indian industry, more so in the automobile industry, with a slew of continuous product innovations.
There are a few principles of entrepreneurial professionalism, which though could be commonly espoused in various other firms, are practiced rather uniquely in the Tata Group. Some of these are: a national fervor (from the very inception of the group in 1868), continuing iconic group leadership, across generations (JN Tata, JRD Tata, Ratan Tata), visionary leadership at the top (a 14 member group level board of directors), world-class leadership talent at firm levels (organic succession in each firm), defined group, firm and business structures, impeccable value system (5 core values of Integrity, Understanding, Excellence, Unity and Responsibility), heightened social responsibility (from hospitals to educational institutions in factory communities and other cities), robust corporate governance (mix of talented independent directors at firm level), commitment to technology, quality and safety (continuous knowledge audits), top-class cadre build-up from the bottom (massive graduate and post graduate recruitment programs and Tata Administrative System), responsible competition and competitiveness (fair industry practices), and globalized outlook (internationalization through physical overseas expansion and global acquisitions).
Typically, the Tata model comprised balanced and bright leadership at all levels and in all firms, including a good and healthy combination of technical leadership and business leadership. The model also comprised a vision that combined technological modernity and business competitiveness with social sensitivity. The sum of the parts proved better than the parts and the wisdom at the top helped to provide the right balance of entrepreneurship (as demonstrated by an endless stream of business firsts) and professionalism (as demonstrated by an endless saga of expansion and diversification). The Group could take risks that were entry deterrent for its competitors despite having fall preventing safety nets that did not slow down progress. The Tata group validates the hypothesis of this blog post that it is indeed possible to achieve the best of entrepreneurial and professional leadership based on the right principles, effectively practiced.
Posted by Dr CB Rao on June 16, 2012
The duality
An entrepreneur takes risks to establish something of substantial business value from almost nothing essentially through his vision and passion. A professional optimizes, expands and diversifies an existing business to drive greater value. Almost all new businesses are established through entrepreneurial energy and are developed further through professional panache. Both the classes, entrepreneurs and professionals, thus seek to generate more wealth (revenues and profits) and facilitate better quality of life through products and services that serve the consumers. Yet, both the classes also unwittingly destroy value while performing their roles. This occurs mostly due to the different drivers that trigger the leadership and managerial activity in each class and the different routes taken by both the classes. By and large, one may say that an entrepreneurial way of work and a professional way of work tend to significantly differ, even if both the sets of leaders may have gone through similar streams of education and experience. The fundamental difference relates probably to how the two classes of leaders perceive risk and safety in business.
In an effort to derive synergies, if not wish away the differences, management experts suggest that entrepreneurs should have with them a set of professionals who counter and manage the entrepreneurs’ runaway growth instincts. Similarly, professionals are expected to have entrepreneurial drive to be able to drive businesses with less bureaucracy. While this appears to a great hybrid model, very often the model does not work the way it ought to. The reasons are essentially twofold. Firstly, the organizational ecosystem tends to develop a particular ethos, which is immutable, depending on whether the firm is founder-led or professional-led, in all senses of the power play. Secondly, the incentives or rewards, and the perceptions of risks and penalties work entirely differently for the entrepreneurs and professionals. The way opportunities and challenges are viewed in the decision making approaches tend to be accordingly different. The challenge for both the entrepreneurs and professionals is to explore how the duality can converge to deliver superior value building for all classes of organizations, whether entrepreneurial or professional.
Entry deterrent bets
Business grows on risky bets; bets that the market opportunity that is perceived is real and realizable, the investments will be productive and profitable, and the organization has strengths that are clear and competitive. Entrepreneurs take such bets based on their education, experience and more importantly intuition, with intuition clearly dominating the mix. No research, for example, has ever established the need for iPod, iPhone or iPad. Steve Jobs, who developed these products out of ingenuity and passion, was therefore an entrepreneur par excellence. Professionals do also take bets out of the same three factors of education, experience and intuition but tend to deliberately substitute intuition with analytics. An entrepreneur, almost by definition, never takes a bet which has no risk. That is the typical entrepreneurial way of being ahead of the pack and monopolizing the emerging or latent market. In several ways, a really passionate entrepreneur takes a bet that has a level of entry deterrent risk. This is an interesting concept that gets actualized time and again in entrepreneurial chapters, even in an emerging country such as India.
When J N Tata ventured to set up a luxury hotel in Bombay, now Mumbai (1902), a steel plant in Bihar (1907) and an electric utility in Bombay (1910) under the British regime, clearly each of them was a move with entry deterrent risk; but it laid the foundations of the largest, most diversified entrepreneurial group in India. What Nirma did in terms of affordable detergent powder (1980) challenging the hegemony of established multinational it was a risk even larger companies were not prepared to take; today it is a FMCG giant in its own right. When Reliance decided to enter the privatized oil exploration (2000), not many followed as it was a move with considerable risk. It, however, represented a genetic corporate trend that was uniquely that of Reliance of daring to go early into capital intensive areas (from textiles to oil and telecom as well as retail). When Dr Pratap Reddy established Apollo Hospitals (1983) as the first corporate hospital he was taking as much risk as a skilled surgeon would take in carrying out a complex surgery and the outcome has been equally successful; Apollo is the largest corporate hospital chain in India. Examples abound of entry deterrent risk taking providing significant early mover advantage to entrepreneurs.
Fall protecting nets
As opposed to the entrepreneurial trend of taking entry deterrent risks, professionals tend to have the practice of establishing fall protecting safety nets. The safety nets established by professionals range from scenario development to staged execution. Many times, professionals by virtue of their knowledge and experience, have the ability to ideate far more profoundly than entrepreneurs would. However, the time taken to convert ideas from concepts to constructs traversing collaboratively as well as contentiously through a whole series of analytical and consensual exercises dilutes leading ideas into trailing projects. Also, even when taken up for execution the projects tend to be sequentially stage-gated with options to make “go or no-go” decisions after detailed reviews at the end of each stage gate. The time lost in that sequential stage-gated process leads to significant delays in go-to-market. Interestingly, quick-thinking and rapid-acting entrepreneurial organizations turn into deep-thinking and slow-acting professional organizations all too soon as a result of which the lag between right ideation and smart execution increases over time. For example, Microsoft ideated the tablet computer in 2000 but Apple walked away with smart execution in 2010!
There are several examples of how fall protecting nets delay market development and penetration. Several Japanese companies have been ahead of Hyundai in India, including Toyota which did its feasibility studies for entry into India at the same time as Hyundai (around 1995). Yet, Hyundai entered earlier and became a much bigger volume player in India much faster than Toyota. The difference has primarily been due to the stage gates that Toyota set for itself, from market research to market entry. On the other hand, Hyundai has been less concerned about error-proofing its corporate strategy than achieving diversified and accelerated market entry. While this may be seen as a company specific observation it may also be seen as a national culture too, given the repetition of similar pattern between Korean and Japanese firms in a wide range of industries. The question, therefore, is whether entrepreneurial skill which is considered an individual skill could be extended into a corporate competence. The example of Tata group of India illustrates that it is indeed possible to converge the duality of entrepreneurial and professional approaches to achieve superior competitive advantage.
Convergence of duality
Tata Group is one of India's largest and most respected business groups. Tata Group's name is synonymous with India's industrialization. The Group gave India her first luxury hotel, first steel plant, hydro-electric plant, inorganic chemistry plant, first global software services company, first integrated automobile company and created a reservoir of scientific and technological manpower for the country. Its Trusts have instituted the first integrated engineering and biology educational infrastructure, Indian Institute of Science in 1909, the Tata Institute of Social Sciences in 1936; India's first cancer hospital, the Tata Memorial in 1941, and in 1945, the Tata Institute of Fundamental Research, which became the cradle of India's Atomic energy program. Today, Tata Group comprises 100 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Group has operations in more than 54 countries across six continents, and its companies export products and services to 120 nations. It has been also in the forefront of India’s largest and most effective global acquisitions including, Tetley Tea, Corus Steel, Jaguar-Land Rover, and Daewoo Heavy Vehicles. In terms of specific product innovations too, the Group has been ahead of the rest in the Indian industry, more so in the automobile industry, with a slew of continuous product innovations.
There are a few principles of entrepreneurial professionalism, which though could be commonly espoused in various other firms, are practiced rather uniquely in the Tata Group. Some of these are: a national fervor (from the very inception of the group in 1868), continuing iconic group leadership, across generations (JN Tata, JRD Tata, Ratan Tata), visionary leadership at the top (a 14 member group level board of directors), world-class leadership talent at firm levels (organic succession in each firm), defined group, firm and business structures, impeccable value system (5 core values of Integrity, Understanding, Excellence, Unity and Responsibility), heightened social responsibility (from hospitals to educational institutions in factory communities and other cities), robust corporate governance (mix of talented independent directors at firm level), commitment to technology, quality and safety (continuous knowledge audits), top-class cadre build-up from the bottom (massive graduate and post graduate recruitment programs and Tata Administrative System), responsible competition and competitiveness (fair industry practices), and globalized outlook (internationalization through physical overseas expansion and global acquisitions).
Typically, the Tata model comprised balanced and bright leadership at all levels and in all firms, including a good and healthy combination of technical leadership and business leadership. The model also comprised a vision that combined technological modernity and business competitiveness with social sensitivity. The sum of the parts proved better than the parts and the wisdom at the top helped to provide the right balance of entrepreneurship (as demonstrated by an endless stream of business firsts) and professionalism (as demonstrated by an endless saga of expansion and diversification). The Group could take risks that were entry deterrent for its competitors despite having fall preventing safety nets that did not slow down progress. The Tata group validates the hypothesis of this blog post that it is indeed possible to achieve the best of entrepreneurial and professional leadership based on the right principles, effectively practiced.
Posted by Dr CB Rao on June 16, 2012
Saturday, June 9, 2012
The Making (and Unmaking) of Future Leaders: The Natural Leadership Development (NLD) Model
Leaders have a great role in the making and unmaking of future leaders. Leaders, almost by definition, are those who look for a future of the organization they lead that is far beyond their own tenure, or even their own professional lifespan. Availability and development of a capable pool of future leaders has to be an essential objective of a leader. It is, therefore, paradoxical that several organizational contexts and leadership settings involve unmaking as much as making of future leaders. While great organizations have several structured programs of leadership development, synthetic leadership development (by sporadic programs by internal or external faculty, however capable they may be) is hardly comparable to natural leadership development (through continuous experience and observation of masterly leaders). This blog post seeks to propose a model of natural leadership development which is decidedly preferable and executable. It also offers clear insights into the factors that reinforce or impede natural leadership development.
Natural leadership development
Leadership development occurs naturally, spontaneously and continuously when potential leaders are associated with proven leaders from the inception of their career. There are several interesting pathways by which natural leadership development (NLD) occurs. The fundamental prerequisite, of course, is the presence of capable leaders as the heads of functions, locations or businesses and an iconic leader at the helm of the organization as the chief executive officer (CEO). Under such a virtuous scenario, leadership development occurs on a two track basis. Even as functional or unit leaders get developed by their CEO, they in turn develop the young executives into future leaders. While this process is largely hierarchical, at times potential exists for young leaders to directly interact with the CEO and for young entrants to directly work with unit or business leaders. This leadership development process occurs as a continuous process all through the careers of leaders as well as aspirants.
The lateral entry of leaders from other organizations occasionally is indicative of deficiencies in the NLD process of an organization but does not necessarily constitute the derailment of the NLD process. In many cases, entry of such leadership talent provides new opportunities for reinforcing the NLD process in the organization. A reality check as to whether the current leadership is adequate in the face of competitive environment often provides an answer as to whether or not lateral leadership entry is appropriate or not. That said, however, each organization must always be aware of the potential factors of reinforcement and derailment (reinforcers and derailers respectively). The two important reinforcers are the competitive drive and leadership harmony of an organization. The two important derailers are the environmental unpredictability and leadership trivia of an organization. Clearly, leveraging the reinforcers and eliminating the derailers provides the best assurance of NLD in an organization.
Competitive drive
The fundamental prerequisite for successful NLD is the alignment of leadership not only to the current competitive imperatives but also to the future corporate development perspectives. A holistic organizational development blueprint provides the basis for developing natural leaders from within, and also as a pool of leaders which is constantly recharged with fresh leadership assignments across the hierarchy. The competitive drive of an organization and its leadership has the most significant influence on the NLD processes in an organization. Though there is a debate whether the leadership talent in an organization is a trigger or an outcome of the strategic vision and roadmap of an organization, for the purposes of NLD it is the competitive ecosystem of the firm that influences the NLD processes. Regardless of whether the firm is in a growth mode or turnaround mode, if the leadership challenges are harnessed and percolated down in the organization, the NLD processes will bloom well.
The competitive drive for leadership in a growth mode largely requires leaders to seek new opportunities, design new products, explore new markets, pioneer new technologies and sometimes become adventurous and risk-prone to enter sunrise sectors. This gives tremendous opportunity for the CEO to script a new strategic vision, for his deputies (the other CXOs) to pilot and lead new businesses, and for several young leaders to participate in the growth processes in various product-market segments and leverage their fresh ideas and youthful enthusiasm. The competitive drive for leadership in a turnaround mode largely requires leaders to seek operational excellence and cost efficiencies, improve capacity utilization, enhance market penetration, extend product life cycles and optimize risks. This requires the CEO, the CXOS and other leaders to benchmark the firm in term of the best practices and restore the competitive edge. Typically, the competitive drive in an organization entails both growth and turnaround providing ample opportunities for NLD.
Leadership harmony
Leadership harmony at the CXO level is a key determinant of the NLD processes in an organization. Leadership harmony occurs when the vision and strategy are developed and executed with shared ownership between the CXOs and the CEO. Leadership harmony requires that the organizational ecosystem treats all the business verticals or units equitably in terms of budgets and metrics. It also requires that line and staff leaders work collaboratively without perceptions of superiority. Though there is a debate if organizational structures and processes enable leadership harmony or if leadership harmony optimizes structures and processes, for the purposes of NLD it is the maturity level of the leaders that determines the positivity of the NLD processes. Whether or not the top management meetings are visible and transparent (to the organization) in terms of structures and processes, leadership harmony has a way of breathing life and energy into the organization.
Young leaders, and the CXOs themselves, are greatly benefitted in an environment of collaborative leadership. In such an internal environment, the leaders tend to engage amongst themselves openly and synergistically providing the needed impetus for collaborative cascades horizontally and vertically at all levels of the organization. For organizations in growth mode, leadership harmony provides mutual reinforcement and risk optimization. Multiple skills become available to debate and diagnose the unknowns of growth. For organizations in turnaround mode, leadership harmony eases the pain of restructuring, enables harmonious redeployments and leads the company to successful turnaround faster. Leadership harmony provides higher levels of empowerment across the organization enabling speedier and focused decision making and execution. Needless to add, the factors of reinforcement, competitive drive and leadership harmony need to coexist for each to be successful. Without leadership harmony, competitive drive gets blunted while without competitive drive, leadership harmony leads to corporate smugness, both situations leading to eventual stagnation.
Environmental unpredictability
Economic cycles have long been a fascinating aspect of economic analysis with leaders of the governments and businesses always trying to bring some predictability of economic environment to decision making. The task, however, has become increasingly challenging as economic environment has become more unpredictable and volatile with several countries staying in deep recession for years on. The price movements in oil, commodities, industrial metals, and precious metals have become unpredictable while currency exchange rates have become major distorters of orderly globalization. Global investment flows have become equally unpredictable while the global banking institutions have become fragile. Massive investments in infrastructure and sector-specific stimulus programs have supported global recovery but have not resulted in global growth. Economic and financial instability in the Euro Zone has been threatening the fragile global recovery. Even economies such as India and China that were expected to sustain world leading economic growth rates based on strong domestic demand have begun to falter.
The industry and business are dependent on a positive investment environment for funding the growth or turnaround plans as the case may be. The funding environment being uncertain, neither the growth plans nor the turnaround plans can be implemented decisively. Various companies, from Apple and Microsoft in the US to Infosys and Reliance in India, have been sitting on cash piles rather than aggressively investing for growth. Even if reinforcers such as competitive drive and leadership harmony exist, economic unpredictability tends to derail even the best laid plans, growth or turnaround, and most harmonious organizational structures and processes. In addition, forces of environmental and social activism as well as governmental and legal review processes tend to block or reopen the apparently settled projects. Organizations are often forced to tailor leadership aspirations and expectations to what geo-economic and geo-political considerations allow.
Leadership trivia
Not all derailers for the NLD processes come from external environment. Some emerge from certain leadership trivia, which often erode leadership effectiveness and impact. Two of the important trivia are bipolar leadership and anchored leadership. Bipolar leadership connotes a leadership behavior that swings rapidly and unpredictably between two extremes in either environmental sensitivity or interpersonal relationship. The extremes of bipolar leadership behavior covers the extremes of optimism and pessimism (in assessing business situations), collaboration and confrontation (in people management), decisiveness and procrastination (in decision making), sparkling intuition and paralytic analysis (in strategic management), extroversion and introversion (in communication), permissiveness and authoritarianism (in empowerment), forgiveness and vindictiveness (in performance management), transparency and opaqueness (in visibility) and so on. Such widely contrasting behavior patterns are occasionally adopted by certain maverick leaders to remain inscrutable but ultimately result in only unmaking of current and future leaders rather than in natural leadership development.
The other leadership aberration is one of anchored leadership. True leadership is equidistant from, and equipotent with, all functions, units, locations and businesses of the corporation, and its specific leaders. At times, leaders tend to be anchored around one platform or one leader to the detriment of other equally important platforms and prospective leaders because such platforms provide immediate growth or essential turnaround possibilities, or for the sheer comfort of dependence on known platforms and leaders. Such excessive dependence induces real or perceived bias in leadership behavior, transcending into bias in decision making, execution, and performance management. Factors of reinforcement, namely corporate drive and leadership harmony, are maximized when leadership is not only actually and but also perceptually, seen to be accessible, unbiased and objective towards all of its businesses and entities. Leadership trivia point out how important it is for leadership to be personable in relationships but impersonal in terms of reflecting the relationships in execution.
Life’s experience
Natural leadership development is akin to gaining life’s experience, molded by caring and disciplined parents, and diligent and committed teachers. In the challenging world of competitive career development leaders constitute the beacon and inspiration for young executives and leaders. Learning experientially with leaders committed to leadership development is fruitful and long lasting for aspirants. Competitive drive and leadership harmony in an appropriate organizational ecosystem enable and reinforce natural leadership development in organizations. The making of leadership thus happens by design and organizations that facilitate natural leadership development are bound to be successful in creating a vast pool of leadership talent for sustainable competitive advantage.
Posted by Dr CB Rao on June 9, 2012
Natural leadership development
Leadership development occurs naturally, spontaneously and continuously when potential leaders are associated with proven leaders from the inception of their career. There are several interesting pathways by which natural leadership development (NLD) occurs. The fundamental prerequisite, of course, is the presence of capable leaders as the heads of functions, locations or businesses and an iconic leader at the helm of the organization as the chief executive officer (CEO). Under such a virtuous scenario, leadership development occurs on a two track basis. Even as functional or unit leaders get developed by their CEO, they in turn develop the young executives into future leaders. While this process is largely hierarchical, at times potential exists for young leaders to directly interact with the CEO and for young entrants to directly work with unit or business leaders. This leadership development process occurs as a continuous process all through the careers of leaders as well as aspirants.
The lateral entry of leaders from other organizations occasionally is indicative of deficiencies in the NLD process of an organization but does not necessarily constitute the derailment of the NLD process. In many cases, entry of such leadership talent provides new opportunities for reinforcing the NLD process in the organization. A reality check as to whether the current leadership is adequate in the face of competitive environment often provides an answer as to whether or not lateral leadership entry is appropriate or not. That said, however, each organization must always be aware of the potential factors of reinforcement and derailment (reinforcers and derailers respectively). The two important reinforcers are the competitive drive and leadership harmony of an organization. The two important derailers are the environmental unpredictability and leadership trivia of an organization. Clearly, leveraging the reinforcers and eliminating the derailers provides the best assurance of NLD in an organization.
Competitive drive
The fundamental prerequisite for successful NLD is the alignment of leadership not only to the current competitive imperatives but also to the future corporate development perspectives. A holistic organizational development blueprint provides the basis for developing natural leaders from within, and also as a pool of leaders which is constantly recharged with fresh leadership assignments across the hierarchy. The competitive drive of an organization and its leadership has the most significant influence on the NLD processes in an organization. Though there is a debate whether the leadership talent in an organization is a trigger or an outcome of the strategic vision and roadmap of an organization, for the purposes of NLD it is the competitive ecosystem of the firm that influences the NLD processes. Regardless of whether the firm is in a growth mode or turnaround mode, if the leadership challenges are harnessed and percolated down in the organization, the NLD processes will bloom well.
The competitive drive for leadership in a growth mode largely requires leaders to seek new opportunities, design new products, explore new markets, pioneer new technologies and sometimes become adventurous and risk-prone to enter sunrise sectors. This gives tremendous opportunity for the CEO to script a new strategic vision, for his deputies (the other CXOs) to pilot and lead new businesses, and for several young leaders to participate in the growth processes in various product-market segments and leverage their fresh ideas and youthful enthusiasm. The competitive drive for leadership in a turnaround mode largely requires leaders to seek operational excellence and cost efficiencies, improve capacity utilization, enhance market penetration, extend product life cycles and optimize risks. This requires the CEO, the CXOS and other leaders to benchmark the firm in term of the best practices and restore the competitive edge. Typically, the competitive drive in an organization entails both growth and turnaround providing ample opportunities for NLD.
Leadership harmony
Leadership harmony at the CXO level is a key determinant of the NLD processes in an organization. Leadership harmony occurs when the vision and strategy are developed and executed with shared ownership between the CXOs and the CEO. Leadership harmony requires that the organizational ecosystem treats all the business verticals or units equitably in terms of budgets and metrics. It also requires that line and staff leaders work collaboratively without perceptions of superiority. Though there is a debate if organizational structures and processes enable leadership harmony or if leadership harmony optimizes structures and processes, for the purposes of NLD it is the maturity level of the leaders that determines the positivity of the NLD processes. Whether or not the top management meetings are visible and transparent (to the organization) in terms of structures and processes, leadership harmony has a way of breathing life and energy into the organization.
Young leaders, and the CXOs themselves, are greatly benefitted in an environment of collaborative leadership. In such an internal environment, the leaders tend to engage amongst themselves openly and synergistically providing the needed impetus for collaborative cascades horizontally and vertically at all levels of the organization. For organizations in growth mode, leadership harmony provides mutual reinforcement and risk optimization. Multiple skills become available to debate and diagnose the unknowns of growth. For organizations in turnaround mode, leadership harmony eases the pain of restructuring, enables harmonious redeployments and leads the company to successful turnaround faster. Leadership harmony provides higher levels of empowerment across the organization enabling speedier and focused decision making and execution. Needless to add, the factors of reinforcement, competitive drive and leadership harmony need to coexist for each to be successful. Without leadership harmony, competitive drive gets blunted while without competitive drive, leadership harmony leads to corporate smugness, both situations leading to eventual stagnation.
Environmental unpredictability
Economic cycles have long been a fascinating aspect of economic analysis with leaders of the governments and businesses always trying to bring some predictability of economic environment to decision making. The task, however, has become increasingly challenging as economic environment has become more unpredictable and volatile with several countries staying in deep recession for years on. The price movements in oil, commodities, industrial metals, and precious metals have become unpredictable while currency exchange rates have become major distorters of orderly globalization. Global investment flows have become equally unpredictable while the global banking institutions have become fragile. Massive investments in infrastructure and sector-specific stimulus programs have supported global recovery but have not resulted in global growth. Economic and financial instability in the Euro Zone has been threatening the fragile global recovery. Even economies such as India and China that were expected to sustain world leading economic growth rates based on strong domestic demand have begun to falter.
The industry and business are dependent on a positive investment environment for funding the growth or turnaround plans as the case may be. The funding environment being uncertain, neither the growth plans nor the turnaround plans can be implemented decisively. Various companies, from Apple and Microsoft in the US to Infosys and Reliance in India, have been sitting on cash piles rather than aggressively investing for growth. Even if reinforcers such as competitive drive and leadership harmony exist, economic unpredictability tends to derail even the best laid plans, growth or turnaround, and most harmonious organizational structures and processes. In addition, forces of environmental and social activism as well as governmental and legal review processes tend to block or reopen the apparently settled projects. Organizations are often forced to tailor leadership aspirations and expectations to what geo-economic and geo-political considerations allow.
Leadership trivia
Not all derailers for the NLD processes come from external environment. Some emerge from certain leadership trivia, which often erode leadership effectiveness and impact. Two of the important trivia are bipolar leadership and anchored leadership. Bipolar leadership connotes a leadership behavior that swings rapidly and unpredictably between two extremes in either environmental sensitivity or interpersonal relationship. The extremes of bipolar leadership behavior covers the extremes of optimism and pessimism (in assessing business situations), collaboration and confrontation (in people management), decisiveness and procrastination (in decision making), sparkling intuition and paralytic analysis (in strategic management), extroversion and introversion (in communication), permissiveness and authoritarianism (in empowerment), forgiveness and vindictiveness (in performance management), transparency and opaqueness (in visibility) and so on. Such widely contrasting behavior patterns are occasionally adopted by certain maverick leaders to remain inscrutable but ultimately result in only unmaking of current and future leaders rather than in natural leadership development.
The other leadership aberration is one of anchored leadership. True leadership is equidistant from, and equipotent with, all functions, units, locations and businesses of the corporation, and its specific leaders. At times, leaders tend to be anchored around one platform or one leader to the detriment of other equally important platforms and prospective leaders because such platforms provide immediate growth or essential turnaround possibilities, or for the sheer comfort of dependence on known platforms and leaders. Such excessive dependence induces real or perceived bias in leadership behavior, transcending into bias in decision making, execution, and performance management. Factors of reinforcement, namely corporate drive and leadership harmony, are maximized when leadership is not only actually and but also perceptually, seen to be accessible, unbiased and objective towards all of its businesses and entities. Leadership trivia point out how important it is for leadership to be personable in relationships but impersonal in terms of reflecting the relationships in execution.
Life’s experience
Natural leadership development is akin to gaining life’s experience, molded by caring and disciplined parents, and diligent and committed teachers. In the challenging world of competitive career development leaders constitute the beacon and inspiration for young executives and leaders. Learning experientially with leaders committed to leadership development is fruitful and long lasting for aspirants. Competitive drive and leadership harmony in an appropriate organizational ecosystem enable and reinforce natural leadership development in organizations. The making of leadership thus happens by design and organizations that facilitate natural leadership development are bound to be successful in creating a vast pool of leadership talent for sustainable competitive advantage.
Posted by Dr CB Rao on June 9, 2012
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