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TRIMILLENNIUM
MANAGEMENT Changing Face of Corporate India By Vinod Gupta The face of the corporate India has changed whichever way one looks at it. Using revenues as the measure of size of the business, many of the companies, which formed the elite group of top hundred in 1978, do not figure in top 100 of 1998. Some of these companies are Dunlop, Calico, Union Carbide, GKW, Metal Box, Rohtas Industries etc. However, now a days revenue is not the yardstick on which corporates are assessed. It is the shareholder value. Ten out of today's top 30 companies measured on shareholder value were almost unknown just 10 years back. These include names like Infosys, NIIT, Wipro, Ranbaxy, Gujrat Ambuja, Tata Infotech and HDFC. What does it signify? It has been established beyond any doubt that the past success is no indication of what has to come in future. And this change is happening at such a rapid pace that only those organisations will be able to survive and grow which are able to change and adapt to the future. In India, we have not yet begun to realise the extent of change, which is going to hit us in the short span of next 5 to 10 years. Forces driving the need for Change There are major economical and social forces across the world driving the need for change in Indian organisations. The new millenium may see the manufacturing become the domain of a few technologically rich contract manufacturers in the developed countries and large labour rich global services suppliers in the developing world. Where does India fit in this Scenario? International economic integration is leading to breaking up the tariff walls. There are more flows of capital across borders. In not so distant future labour markets across the world may also get integrated. This integration coupled with the technological change ushered in by the Internet revolution is connecting people globally both physically and emotionally. Indian corporates have been doubly hit. Firstly they are being exposed to the global markets and global competition for the first time. Secondly, globally the scenario itself is gaining high acceleration through the internet revolution. How many Indian corporate are thinking about this and preparing themselves for this future? And how many will be able to cope up with this tremendous change? Sumantra Ghoshal and Christopher A. Bartlett have propounded the Hailey's Comet Theory of Organisation Change. According to this theory businesses also follow a 75 years cycle of change. The first major change happened in mid 1800's with the advent of industrial revolution. The production was mechanised. The producer of goods i.e. workers no longer owned neither the goods they produced nor the means of production. The word "management" was invented. The next major change happened in 1910-1920's when the whole production process was revolutioned using the mass production and assembly line techniques. The large companies were functionally organised to handle the extent of complexity generated due to this change. Around this time, the father of modern management Alfred Sloan created the concept of divisional organisation model. While efficiency became the buzzword, it killed whatever little pride producers (workers) felt towards their outputs i.e. the products which they produced. They contributed their physical labour only while keeping themselves emotionally detached from the whole scene. The organisational paradigm for the last 75 years has been:
Low risk taking We are in the midst of next major change. This change began 8 to 10 years ago. It was becoming increasingly clear that today's complexity could not be handled by yesterday's paradigms. The role of management changed. The role of top management is not to manage but to provide leadership i.e. they have to shift the focus from strategies, budgets, plans etc. and build institutions instead based on vision and values. Senior management has to become leaders of people and not mere manipulators of strategies, systems and structures. Employees are to be treated as human beings who have brains as well in addition to having just hands. Leaders need to become capability developers through coaching, guiding, mentoring, sharing of best practices and creating networks of knowledgeable people. The new organisation paradigm is evolving which is
The Indian organisations can not cope up with the 21st century competition with 20th century organisation structures and systems and 19th century feudal mindset managers. Indian organisations find themselves catapulted straight from 19th century into 21st century and they do not have much time to learn. They cannot afford to experiment and learn by their own mistakes. Currently they lack precision. They lack transparency in their work i.e. information is confined to a handful few who only know what is being done and why. There is superficial application of tools like ISO-9000 and quality systems. That too is applied to poor efficiency standards. Most Indian managers lack imagination and initiative. If somebody tells them to do something, they do it better than anybody else, but they hardly ever do on their own. That is the reason why several multinational corporations who have imported with them their own management technology are doing exceedingly well in India. My own experience of working within the Modicorp Group which has companies like Modi Xerox and Modi Rubber within its fold more than confirms this hypothesis. However, I will like to add here that Indian worker is doing his/her job to quite an extent. It is the Indian managers who have failed. They are not willing to take any risks and are happy in a supervisor role of working on operation details. They are not willing to apply their minds to improvements or breakthroughs. There is much talk about FDI (Foreign Direct Investment) regarding how India is lagging far behind China. In my view, we do not need too much foreign capital or even foreign technology, what we need is Management Technology. We simply do now know how to manage for medium to long term growth in a highly competitive environment. Employing a few senior managers with experience of managing global transnational organisations is not going to serve the purpose. What is required is a total overhaul of the management system and building of an entirely new result work oriented culture as opposed to the current activity oriented culture. Implications for Indian Organisations All Indian organisations do not fall in the same category and therefore no single recipe is going to work. On one extreme are Indian organisations, which are still living in the 19th century feudal system and on the other extreme there are the Indian organisations, which have achieved international standards and are competing in the global markets. Most Indian organisations fall in the first category while the new age organisations in software and IT technology fall in the later. Consider the second category first. The economic growth of these organisations i.e. organisations operating in the global software markets will not come from putting more people to work as much of it has come in the past. It will come from a very sharp and continuing increase in the productivity of the one resource in which developed countries still have a competitive edge - knowledge work and knowledge workers. Knowledge is different from all other kinds of resources. It makes itself obsolete with the result that today's advanced knowledge is tomorrow's ignorance. And the knowledge that matters is subject to rapid and abrupt shifts. Also knowledge makes the resources mobile. The major concern in front of Indian software companies is that how do they retain the talent and prevent it from migrating to the U.S. and other developed markets. How do they manage this rapidly shifting and highly mobile "knowledge"? This has implication for the very word "management" and "organisation". Traditional ways of "managing" and "organisation" will not work here. There has been a constant search for the "right" organisation. There can not be any such thing as the "right organisation". Every organisation will have to be designed for a specific task, time, place and culture. I envisage that the management science may take a full circle back to where it started. Before the advent of organisations, each person was an artisan and produced goods and services based on his own knowledge and capability and later bartered these goods and services for other goods and services. Similar may be the case with the knowledge worker of the future. He will work in a virtual organisation, creating "goods" out of his own knowledge and bartering with the highest bidder. The word "organisation" will not have much meaning for such a knowledge worker. The only way a company will be able to keep such a worker attached to it is by helping him to give his best and facilitate his learning in the process. This will be the only real source of competitive advantage in the war for talent in the knowledge market. Not many companies are succeeding in this war. Stock options may partly provide a solution. However, lure for money and therefore a place in the list of Indian billionnaires will have to be coupled with a meaningful work in the leading edge technology areas. Standard of living and quality of life in India may also be the contributing factors which are beyond the control of the organisations. The recipe for the first category organisations, which lack in management technology, is straightforward but more difficult. They have to fight a battle at the level of behaviour of each individual in the organisation and thereby bring about a major cultural change in the organisation. The kind of culture which is required in a competitive environment of the 21st century will be far removed from the command and control culture which most Indian organisations are used to. This culture will have to be externally oriented, customer driven, which empowers all employees to make quick decisions to serve their customers. The environment should promote open and candid dialogues both horizontally and vertically. All employees are to be encouraged to take risks and work towards continuous improvements and breakthroughs. The structures and systems will have to align themselves to promote the culture described above. The structure will have to be non-bureaucratic with fewer rules, will be flatter with fewer layers, or will be so organised so as to encourage leadership at all levels. The policies and procedures will be such as to produce the minimal internal interdependence needed to serve customers. The systems should be designed to make the information available as widely as possible. Above everything all employees should be treated human beings who also have some purpose in life. The basic belief in employees and their capability to contribute has to be accepted. It may be necessary to place employees even before the customers as dissatisfied employees cannot satisfy customers. Vinod Gupta, Director, Modicorp Learning institute
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