How can PowerWare blend the contrasting cultures of its e-biz venture Netronix and traditional business into a seamless organisation? Raman Madhok of Jisco, Paresh Vaish of McKinsey, and K.V. Nori of TCS discuss.

By R. Chandrasekhar

Sunil Khurana, 35, Managing Director, PowerWare Ltd, was on his routine early morning rounds of the company's shopfloor, when Vinayak Pandey, Chief Security Officer, pulled up on his side.

''We have a problem, sir,'' Pandey said. ''It is the boys at Netronix,'' he said, trying to keep pace with both Khurana and Manu Patel, v-p (Manufacturing), who was accompanying the MD. ''They are indisciplined. They are punching their attendance cards at all odd hours. They walk in and out of the factory as they please. It is a breakdown of discipline. It has generated resentment among the regulars.''

''There we go again,'' said Khurana, winking at Patel. ''Pandey, why don't you come for the executive committee meeting scheduled in half-hour? We'll catch up.''

Them and us. Khurana could see the divide. Ever since it was set up as an e-commerce venture within the premises of Powerhouse in June, 2000, Netronix had opened up battlefronts within. The venture per se had made eminent business sense. PowerWare was a major player in the Indian electrical industry with the third-largest marketshare in its flagship product of transformers. Employing around 400 workmen at a sprawling industrial estate in Pune, it had a turnover of Rs 100 crore.

Having built up domain expertise, setting up Netronix.com as an industry portal was a logical next step for PowerWare. The site's objective was to provide a database of manufacturers, products, product specifications, dealers, India-specific research reports, and country reports.

''We have several exciting plans for Netronix,'' said Khurana, opening the meeting later at his office. ''As part of generating revenue streams for the portal, we are working on three areas. All electrical manufacturers and dealers will be invited to open their online shops at our portal for a fee. We will also be billing them between 0.5 and 1 per cent of the value of each transaction as our commission. And once we become a full-fledged b2b exchange, we will have regular auctions for disposal of surplus inventories that will also bring in fee-income.''

''But the major source of revenue,'' said Hiranmay Kelkar, V-P (Marketing), ''comes from becoming an Application Service Provider to small and medium enterprises (SMEs) in the electrical industry. We can put up a software package on our portal that would enable thousands of SMEs to use it as a selling medium for either a license fee or a transaction fee payable to Netronix. We are looking at a B2B potential in excess of Rs 10,000 crore per annum that should translate into a Rs 100-crore portal income.''

''That is equivalent to the turnover of our brick-and-mortar business at PowerWare,'' said Vinod Roy, V-P (Finance), excitedly. "Given the fact that our capital investment in Netronix was Rs 15 crore and the recurring annual investments will be about Rs 10 crore, the returns are quite impressive.''

''That should normally charge up the entire organisation,'' said Aditya Sinha, V-P (HRD). ''But there are schisms. Of course, there are reasons. The traditional business at PowerWare is not technology-intensive. The pace is slow and relaxed. Business relationships have been long-term. There is no need for customer focus because a bulk of our revenues come from state electricity boards. Contrast this with the situation at Netronix, which has only 20 employees. True, except for five, they were drafted from PowerWare. But they are young, all in their late 20s. Because we update the site every four hours, they work 24/7. They have flexitime. When we signed them on, we doubled their salaries straightaway. We have also promised them ESOPs in future.''

''It might help if we physically moved Netronix out of the premises of PowerWare,'' suggested Pandey. Sinha was quick to point out that it will only be a cosmetic change. ''We must retain it within PowerWare,'' chipped in Khurana who, as the concurrent CEO of Netronix, saw it as his personal responsibility to ensure company-wide integration. ''I have been witness to the contrasts in the operating environment of the two businesses. Unlike our parent business where processes are governed by precision and detail, the new business has no rules to go by. Frankly, it is a crazy scene. But the guys there are committed. The point is: how do we blend the inherent merits of both businesses to build a seamless organisation?''

''I think the issue is more basic,'' said Neil Richards, who had been part of the HRD division of PowerWare before being asked to head the operations at Netronix. ''There is a growing feeling among senior employees at PowerWare that they are subsidising a loss-making business. After all, Netronix is bleeding. And it will be at least another three-to-five years before the haemorrhage stops. And they are all miffed at the attention that the 'nerds', as they call us, attract wherever we go. The fancy packages we get, the paper money we will encash... a lot of myths are being floated. In fact, one of the plant supervisors asked me in the canteen only this morning: ''When will you start making some money for a change? Our bonus this year will go down because of the losses you guys are making at Netronix. Can't blame him, though.''

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