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CASE GAME The Case Of E-enabling Will wiring up Total destabilise the power equations within? A. Krishnamurti of Shoppers' Stop, P. Jha of Walchand, & G. Shermon of hrfolks.com discuss. By R. Chandrasekhar
It was nice talking to you after almost a year. I am amazed at the kind of things that the internet is making possible. And you-to tell you the truth I never visualised you as a hotshot e-consultant when we were at Wharton-have done well to advice that I e-enable my diversified conglomerate Total Industries. But there are certain issues involved in doing so. I am taking the liberty of writing you a rather long e-mail. Hope it's not too inconvenient. The issue of e-commerce came up at our executive meeting today. The discussion focused on the groundwork we should do before embarking upon what is undoubtedly a dramatic new initiative for a traditional company like ours. I, as the CEO of Total, think that we have been quite responsive in the past. Total has been in business since 1927. It was in 1940, when my grandfather set up the maiden manufacturing facility, that the organisation first felt the need to change. The trading mind-set-of looking for profit in every single deal-had to give way to a longer-term view of business. That must have been difficult for Total's managers then. But as the company added on new, and unrelated, businesses in subsequent years, adaptability became a natural part of life at Total. One indication of how we have measured up to the imperatives of change is the way in which each of our four business divisions-consumer durables, switchgears, batteries, and soaps & oils-has grown over the years. Today, we are leaders in switchgears and refrigerators. We are a dominant player in CTVs and batteries. And we have just turned around our legacy business of soaps & oils. Clearly, this would not have been possible if we were not quick to react to changes. The discussion at the meeting turned to how the internet is changing business paradigms everywhere. I feel that the pace at which business has changed over the past three years is faster than that at which it did over the last 30 years. I asked my senior colleagues whether we were geared up to meet the challenge at Total. ''The impact of the internet is no doubt overwhelming,'' said Srikant Suresh, who heads our consumer durables division, ''but we have no reason to worry too much. Total is fundamentally a brick-and-mortar company. And will remain so.'' The basis of his contention was two-fold: We have an extensive infrastructure in terms of physical assets, manufacturing facilities, and dealer network in all our divisions. And the range of our products, the value-creation processes, the delivery mechanisms, and the business transactions are all such that we still have to rely on the conventional business model. ''Our main area of concern should be: How can we supplement our existing model with the tools of the new economy?'' said Suresh. ''How do we use the internet's inherent advantages like speed, for example, to become more competitive? That is the central issue.'' Manoj Kohli, who heads our switchgears division, said that Total should put up its own website. I agree with him. Doing so would give us an entry into the exalted precincts of cyberspace. It would also enhance our visibility. But I was also wary of the impact. I have seen several corporate websites. They have simply not exploited the power of the medium to their advantage. ''Our website should be different,'' I said. ''It should have a focus. We should identify the target audience. We should update the site on a regular basis. In fact, many websites are pathetically behind times in this task, leading to user dissatisfaction. And as a value-added service, we should provide links for people to access additional information. Finally, we should track our visitors on a regular basis as part of building long-term relationships with them.'' Kohli, then, added that we should take the next logical step. Wire up Total. ''Let us do it internally to start with,'' he said, ''and then bring all our leading suppliers and dealers into the orbit. That would set the stage for e-commerce." I recall that it was in 1980 that Total went in for automation of monthly accounting statements. That was the first step towards dispensing with maintenance tasks of manual nature. The data processing was, in fact, outsourced to a programming outfit. Five years ago, we installed mini-computers in some key functional areas like finance, purchase, marketing, and manufacturing. Although an extension of our existing information systems, it was meant to enable us to monitor various performance parameters with greater frequency. We have not progressed beyond that stage. ''The system we have in place today merely serves our current business needs. But in no way does it give us a unique edge. A bulk of our internal reporting system is still manual,'' said Guneen Roy who heads our soaps & oils division. He suggested that we should provide PCs to each of our 125 managers and link up all the desktops through a local area network. This would ensure faster spread of information through e-mail. It would also facilitate quick decisions. And that would give us the competitive edge. It was at this stage that Vinod Rao, who heads our corporate HRD, struck a note of caution. He said we should not merely latch on to the electronic bandwagon unless we were on sure ground on several fronts. ''Look at companies like IBM, Digital, and Wang-the three industry leaders in e-mail. They use their own products and are fully wired. But why are they in financial trouble? Technology by itself is not enough. In fact, technology does not necessarily make a company more responsive, flexible, and productive. What you need is the right culture, where it becomes a productivity tool.'' ''I think Rao has a point,'' chipped in Ratika Sahai, who heads our batteries division. ''There is perhaps a risk in introducing e-mail in Total where the business culture is by no means contemporary. We are still, by and large, a command and control company. Our internal communications move along hierarchical lines. Unless the corporate ambience is ready for new technology, productivity gains are likely to be elusive.'' ''Let us not give the new technology more importance than it deserves,'' said Suresh. ''After all, e-mail is no more than an alternative means of communication. It only accelerates communication. It does not solve problems. It is not an efficiency tool.'' But I got the gist of Rao's point view. An organisation where the channels of communication are already free and open will become better with e-mail because information will flow faster. An organisation where people are younger and without hang-ups will communicate better through e-mail. But it will only create dysfunctionality in an organisation like Total where, notwithstanding some of the recent change initiatives like TQM, a bulk of employees still carry the baggage of the past. Far from making our business more effective, it can make it less effective than before. However, I wanted Rao to elaborate. It was at this stage that he brought in Ranjan Khosla into the meeting. An it expert, Khosla has been heading his own start-up involved in providing technology solutions. ''One of the immediate things that the introduction of e-mail does in an organisation is to tilt the balance of power. And the organisations which feel unsettled by the tilt are those that have been rigid and rule-bound in the past. The real risk in such companies is that e-mail creates its own space where managers have so much immediate access to information that they want to micro-manage everything. Rather than being used as a tool for co-ordinating activities, it can degenerate into a means to centralise control of an organisation thus diluting individual initiative. ''Most often,'' continued Khosla, ''it puts power firmly in the hands of the corporate center-which is contrary to the best principles of corporate governance. Are you honestly in favour of free sharing of information across various levels at Total?'' I was not sure if that was really the case. But I was a little surprised when Guneen Roy, who heads our soaps & oils division, said that one must ensure that the senior management at Total will not use the improved communication to gain greater control. ''We should not use the e-mail as a mechanism to over-see, check on the progress, and intrude in the day-to-day working of regular employees. If that happens, we would be focusing more on internal issues than on customers.'' Khosla agreed. ''That is where the importance of groundwork lies,'' he said. I asked him to suggest how Total should go about it. ''Educate everyone about the fact that e-mail is much more than a faster way of sending memos,'' he said. ''Tell them that it is an integral part of building a responsive and flexible organisation that reacts quickly to market conditions. It eliminates a lot of organisational politics. And you need to be much more clearer and direct merely because the mechanism for distribution of information is so efficient. It helps if you were to train everyone on some basics like wording the messages. You should create a drill.'' Alok, how do you think Total should begin its foray into e-commerce? Is wiring up the organisation a precursor to the whole initiative? How can the system be used to ensure a flatter and more informal organisational structure at Total? Reply in detail. . |
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Dear Alok,
