Cover Story: Restructuring for Excellence; Pg 2

Beyond broad guidelines, the model has no prescriptions, and is extensively adaptable. The choices of the tools of implementation lie entirely with the company, as does the method of deployment. The model also shies away from making any suggestions about how the organisation should be structured, whether they should have quality-planning departments or not, and any suggestions about starting-points, systems, tools, and techniques. Here's how the TBEM drives excellence across functions:

Indeed, finding a common platform of implementation between companies where the initiative has seeped well into the organisation and the ones where it is just about starting will be difficult. B.G. Dwarkanath, Vice-President (Horology & Manufacturing Technologies) at Titan prefers to judge the level of implementation by clubbing employees into 4 groups: Category 1, who claim that they do not know anything; Category 2, who feel that they understand, but cannot possibly help in doing anything; Category 3, who say they understand and can take action, but cannot teach; and Category 4, who say that they understand, can take action, and teach. Agrees Gopalakrishnan: "It is going to take time before it percolates to the `Pandu' on the factory floor." Working with this parameter of percolation in the organisation, companies like Tata Steel, Titan, Taj Residency, Bangalore, and Tata Infotech would fall into Category 4. Most of the other companies are starting from scratch this year, and will find their own modus operandi to implement the TBEM.

Indian Hotels first made a pitch for the award in 1995-96 with its Bangalore-based luxury hotel, Taj Residency. As an extension of this, the company has chosen its luxury hotels division to kick off the implementation of the model. The choice was based on the reasoning that 60 per cent of the company's revenues and 70 per cent of its profits came from this division.

On the other hand, Tata International prefers to immerse its 6 businesses all at once. Says Sudhir Deoras, 52, Managing Director, Tata International: "I feel it is necessary to take the organisation through the TBEM together instead of a piecemeal effort." His decision stems from his experience as head of Tata Bearings, where he implemented the ISO-9000 programme. He feels that isolating just that 1 subsidiary of Tata Steel for the implementation of the programme made the spread of the initiative sluggish.

Whatever the approach, the communication is a critical element in all of them. Titan has conducted over 30 awareness programmes to spread the TBEM message. Tata Steel now conducts a Senior Dialogue, Junior Dialogue, Spouses Dialogue, and a Workers Union-Management Dialogue to assure all-around support.

It was this non-prescriptive aspect of the model that attracted the Group towards it in the first place. It felt that, in a multi-company, multi-business group such as the Tatas, an excessive focus on procedures and tools, instead of results, would be self-defeating. Says Daboo: "Selection of tools and techniques, usually, depends on factors such as business types, the employee's capabilities and responsibilities, and the market environment."

The focus in the TBEM is on process-orientation throughout. The belief is that with the installation, modification, or improvement of critical processes, companies would eliminate any wastage in the system that does not add value, thereby improving profits, marketshare, and shareholder value. Gopalakrishnan, however, clarifies: "The TBEM, by itself, is the not the magic wand by which all our problems will be solved. But the model will, certainly, put our house in order."

How the company wishes to do so is left entirely to the organisation. Indian Hotels chose Gemba Kaizen--improvement at the workplace--and the company is mapping out the key processes in each of its luxury hotels, like the check-in and check-out process, meal experience, to message-handling. It has realised that there were at least 5 steps in each of these processes which were redundant. Says H.N. Srinivas, 45, Vice-President (Total Quality Management), Indian Hotels, about the importance of process-orientation: "Today, if 2 of my employees at the front-desk change, the guest is able to spot something is amiss instantly."

Post this exercise, big and small results are already flowing in. At the President in Mumbai, setting the tea-tray earlier took 10 minutes with 79 steps. This was brought down to 5 minutes with 9 steps. At the Taj Coramandel, Chennai, the re-organisation of the stores has released 1,000 sq. ft of prime real estate. Besides, inventory was reduced by 30 per cent, which is saving the hotel Rs 15 lakh every year. The hotel is also investing in front-end infotech systems to ensure that the information about a customer that is entered in one place is seamlessly replicated throughout the organisation.

Krishna Kumar is not sparing himself either. To fulfil the first criterion of leadership, he put his performance under the microscope. For the first time ever, last year, he put himself up for a 360-degree appraisal. He was evaluated not only by his colleagues, but also by competitors and government officials. Says Krishna Kumar thoughtfully: "In Tata Tea, I had the luxury of time, and so was more tolerant of people. I'll have to work on that here."

Titan Industries decided to move towards World Class Manufacturing from Day One--in 1986--before the TBEM became a change mantra for the Tatas. The major thrust areas under that were not 1, but 5: Just-In-Time Manufacturing, Total Productive Maintenance, Total Quality Control, Total Employee Involvement, and Housekeeping. Titan identified departmental and Individual Key Result Areas (KRAs), trained 50 internal change agents, and had a 3-day intensive workshop on the Change Management Process. When it applied for the JRD QV Award for the first time in 1996-97, it came second, a position it holds till date.

Therefore, for Titan, the results are already a reality. The lead time in its watch-assembly plant has dropped from 17 to 10 days. Its throughput time for the step motor function has dropped from 25 days to 23 minutes. There have also been improvements in watch repair times: 95 per cent in 7 days to 95 per cent in 4 days. And a voice recording system to log in customer complaints has been introduced. On the leadership front, a formal evaluation of the leadership system are being put in place like peer reviews and 360-degree appraisals.

Nothing is taken for granted till it is penned and checked by an external examiner. The examiners, accredited by TQMS, perform systematic and ad-hoc examinations. The examiners are certified through a workshop and an exam, and perform usual functions in group companies. For instance, Manab Bose, Director (Human Resources), is a certified examiner. And a company the size of Titan has 15.

An examiner could arbitrarily pick up anyone in a company and question the person about his function. The scoring system is based on approach, deployment, and results. Approach refers to how the organisation addresses the requirement, how consistently it is applied, and whether it shows any evidence of innovation. Deployment examines whether the approach is adequately used in all the work units. And business results check whether the benchmarks and goals set were met.

Internal assessment is equally important. "It is no use putting in an application every year and recording, perhaps, an improvement of 20-40 odd points. What we are aiming at is a quantum improvement in our systems and processes towards performance excellence, which will automatically be reflected in the score. Self-assessment is, therefore, of utmost importance to us," says Kidwai.

The actual assessment work starts only in April, 2000, with external assessments, and winds up in July, 2000--well in time for JRD's birth anniversary. Once the weaknesses are identified, the examiners help the organisation set an action plan with time-tables to fix it. For instance, Tata Tea scored initially on a scale of 1,000. One of the Opportunities For Improvement (OFIs) that needed to be addressed was Evaluating Quality Complaints on a quarterly basis.

There is a Complaint Management System in which each complaint is recorded against a docket number. Within 24 hours, the marketing department has to let the quality group know the nature of the complaint and, within 48 hours, the quality group has to get back to the marketing department. The complaint has to be closed within 10 days, with details of the steps to be taken, and after attending to all the issues pertaining to it.

As an extension of the same initiative, Tata Tea has come up with an innovative way of inviting complaints by printing a special message in all the packs of its mainline brands. Consumers are encouraged to write to the Head (Corporate Quality) in case they are not satisfied with any aspect of the product, be it taste, flavour, or even packaging. This year, so far, the marketing department has addressed 250 complaints.

The challenge of the model lies not only in its implementation, but also in achieving a balance. Organisations like Titan thrive on creativity, and Desai hopes that the model will allow his organisation to achieve a blend of liquid and rigid processes. Says Desai: "Creativity is not a command performance. You can't have an organised, systematic process roll-out of creativity. The model, sometimes, tends to underplay the great induction leaps that organisations might take to achieve excellence."

It is equally important to keep the momentum going in organisations where the model is well-entrenched. Explains Dwarkanath of Titan: "It's the incremental and continuous improvements which get tougher and tougher." There is also some way that the model will have to allow for measuring delta improvements. In its original form, the model calls for an annual evaluation. But the entire process of writing out the application and putting up with the external assessment process is a huge strain on the organisation, particularly since it comes at the end of the financial year. Says Daboo: "We are making changes to measure incremental improvements." How well the Group deals with these issues is what will determine its fate in this bid for excellence.

Make no mistake: what Tata has unleashed in the convention-ridden, lethargy-prone Group is nothing short of cataclysmic change. The real objective of the TBEM, therefore, is not to stage a beauty-contest for signs of quality awareness, but to force each of the companies to take a good look at themselves--products, processes, and people--and embark on a voyage of transformation. Ultimately, the actual scores that are obtained by the companies will not be important, but the changes that the pursuit of those scores has brought about will leave a lasting impression on the way the Tata Group's companies manage their businesses.

Sure, following the TBEM is no guarantor of a successful business strategy. Nor will a company generate record sales and profits simply by scoring highly on each of the parameters. Those are goals that must be met through other means. But, crucially, Tata wants the sense of competition created by the TBEM tournament to catalyse a chain-reaction ending in a managerial mindset for competing. His objective, in fact, is to get his companies to understand that change must be directed towards the goal of beating others.

If even half the companies--and their CEOs--in the Tata Group can, indeed, use the TBEM as a launch-pad to set themselves off on a trajectory of continuous improvement in a competitive business environment, Tata will have achieved excellent results from his model for excellence.

The imperatives of restructuring an industrial empire
The Tata Group has traditionally been run without much interferemce from Tata Sons or its chairman. But if Chairman Ratan Tata is to see his dream of changing the Group by 2002 come true, things will have to change-and fast-at Bombay House.

At 63, when most CEOs contemplate retirement, Ratan Naval Tata routinely logs 10-12-hour days. Most of his workday is spent in meetings of the Group Executive Office (GEO)--the new power centre in the Bombay House headquarters. Apart from old Tata hands like N.A. Soonawala and Ishaat Hussain, the GEO includes new inductees like former Leverite R. Gopalakrishnan, ex-GE executive Manab Bose, and former I-Sec CEO Kishore Chaukhar. Headed by Tata, the GEO was formed last year to review the sprawling Group's loose federation-like structure and its vastly diversified portfolio of products and services. Tata also spends a great deal of his time at meetings of the Group's Business Review Committees (BRCs)--top-level panels which help act as a bridge between each group company and the apex of the Tata empire, Tata Sons. As of now, there are 12 brcs, but, soon, as every major group company embraces the concept, there could be more.

But then, things move slowly in Bombay House. And the reason for that is historical. Traditionally, at the 132-year-old Tata Group, companies have been run without much interference either from Tata Sons or its Chairman. Unlike a cohesive South Korean chaebol, the Group is loosely structured, with companies enjoying a far greater degree of autonomy than in other business groups. Neither does a single business family or owner enjoy large stakes in each company. Worse, the group has 107 companies, engaged in 25 different businesses. Till 5 years ago, many of these companies, particularly the big ones like TISCO, TELCO, Tata Tea, Indian Hotels, and Tata Chemicals, were run by CEOs who enjoyed almost unlimited powers.

Although Tata took over as Chairman of Tata Sons in 1991, he could really address his major challenge of restructuring the sprawling industrial empire only in 1996. Till then, much of his time and effort were channelled into an often frustrating task of changing the way the group was managed. Frustrating, because it meant getting embroiled in intra-group politics and skirmishes with the old guard at Bombay House. It was not till 1995--4 years after Tata took charge from the late JRD Tata--that he could begin work on the main challenge. That year, Tata Sons floated a rights issue, the proceeds of which were, subsequently, used by the apex company to shore up its dwindling shareholdings in major group companies--a move that is clearly designed to increase control over the group's businesses.

The broad task that Ratan Tata had set out for himself back in 1992, when corporate India was feeling the first effects of liberalisation, was 2-pronged: first, he needed to shrink the number of companies in the group from 107 to less than 30, and the number of business in the group from 25 to just 12. But, although Tata hived off some companies quickly enough, like FMCG major TOMCO, which was merged with Hindustan Lever, it was only in 1996 that he appointed McKinsey & Co. to suggest an overhauling plan for the group.

To be sure, since 1996, the group's metamorphosis has gathered momentum. It should have happened earlier. In the 1980s, and for much of the 1990s, the Tata Group missed several opportunities. In the 1980s, it failed to maximise opportunities to grow in many of the then-sunrise sectors, like petrochemicals, synthetic textiles, and financial services. True, the Tata Group did make efforts--like co-promoting the Haldia Petrochemicals complex and setting up Tata Finance--but, unlike players like Reliance, Kotak Mahindra, or even older conglomerates like the A.V. Birla Group, it did not always end up making a success out of them. The 1990s was different, with most of the decade getting dissipated by unseemly controversies--like the acrimonious ouster of former TISCO CEO, Russi Mody, Tata Chemicals Chairman, Darbari Seth, Voltas Chairman, A.H. Tobaccowala, ACC Chairman, Nani Palkhivala, and Indian Hotels supremo, Ajit Kerkar.

Tata's pre-occupation--often unavoidable--with dealing with Bombay House's old guard, meant the group's efforts to grab the new business opportunities of the 1990s suffered. Of course, Tata achieved some success, like building a truly Indian small car. True, he also did try to capitalise on emerging opportunities, like power, telecommunications, civil aviation. and infotech, but these attempts lacked the aggression of newer players like Bharti Telecom, Infosys Technologies, or Satyam Computers.

Now, with the dawn of a New Millennium, time is running out for Tata. For one, barely 33 months from now, on December 28, 2002, he will turn 65, the age at which executive directors of the Group have to hang up their gloves. Will Tata be able to see his dream of changing the group he inherited come true in the 2000s?

The answer would depend on what he is able to do in the next couple of years. Sure, in the past 2 years, Tata's moves have been swifter: he sold cosmetics company Lakm� to Levers, Voltas' white goods division to Electrolux, TISCO's cement division to Lafarge, and paints major Goodlass Nerolac to Kansai. Still, Tata has much left to achieve. In the 2000s, the emerging opportunities are in the New Economy and Tata wants to flag off what could become the largest B2B venture in the country. In addition, he is prowling around for stakes in Internet Service Providers (ISP) as well as cellular and basic telephony operators. Will that mean that the Tata Group will do in the New Millennium what it couldn't in the last 2 decades? Much will depend on the team that Tata builds to help see his dreams come true.

By Sanjoy Narayan