|
|
|
|
       
|
EVENT Managing Change In Times Of Turbulence When change is the only constant, how do you manage? Not an easy question, which is why Business Today, along with the Wharton Alumni Association of India, brought together some of the finest minds in corporate India under one roof at the Taj in Mumbai on December 3, 2001, to find some answers.
When men who account for more than a quarter of the Bombay Stock Exchange's market capitalisation speak, there is only one thing you do: listen. And when the subject pertains to the ''Challenges Of Leading Change In Turbulent Times'', you listen more closely. That's precisely what the audience of about 350 did that evening in Mumbai. On the dais was a distinguished panel comprising Anil Ambani, Managing Director of Reliance and a Wharton alumnus of 1983; M.S. Banga, Chairman, Hindustan Lever; Yogi C.
Deveshwar, Chairman of ITC; Rajat Gupta, Managing Partner, McKinsey; Patrick T. Harker, Dean, the Wharton School; K.V. Kamath, Managing Director and CEO, ICICI; Deepak Parekh, Chairman, HDFC; and Aroon Purie, Editor-in-Chief of Business Today and the Chief Executive of the India Today Group. All the speakers agreed that turbulence was here to stay. HLL's Banga, in fact, predicted its exponential growth. Dean Harker said that in such situations organisations must return to their raison d'être. ICICI's Kamath dwelt upon the difficulties of achieving managerial buy-in for change, while HDFC's Parekh urged CEOs to have a clarity of purpose and network for positive changes. ITC's Deveshwar explained why the need of the hour was transformational leadership. Here's the best of India Inc. unplugged: WHAT THEY SAID
When one thinks of turbulence, we expect it to be short-lived. I think what we are going through is pretty permanent. It is about the pace of change, and that will only grow exponentially. Now what must companies do? It is extremely difficult. First and foremost, it is crucial to be alive to this change. Companies have to bring in mechanisms that can feel the pulse of customers, suppliers, and most importantly, the technology that could potentially impact them. Second, we have to be extremely focused. We have to pick areas in which we will compete and discard the others. Less is more. It is important to make that switch. Third, it is the issue of people. If people were important yesterday and important today, by God, they will be extremely important tomorrow. Therefore, the priority should be to attract the very best talent. We are going to do it in two ways. One is through remuneration. But the important thing is to make the company an exciting and vibrant place for people to come and work. As far as organisations are concerned, we have to quickly move from hierarchical to flat and far more flexible. The best way I can describe this is to think of an amoeba. Finally, you need something to keep you straight and stable like the rudder of a ship. That is your core value. This is why we should ensure that everyone works under a framework of core values.
There are two factors at work. We are fast moving to globalisation. The second one is the anticipatory change that you can bring. Another is the aspirational change through alignment of all your participants. One core competence required among the top leaders is transformational leadership. Because it is not going to be change as usual. When you really want to transform, create a compelling vision around which you can mobilise and align people. There are two forces important here. The first is power, depending on the structure of the company. The second is to have the people in your organisation aligned around that vision. My suggestion is that we are never going to win playing the 'catch up' game. The art or science lies in identifying opportunities in causes that result in turbulence and create brand new bases for creating shareholder value. What we are looking at is how to train our people, how to create distributed leadership, and how to multiply the entrepreneurial spirit. Then you look less at threats, and more at opportunities underlying the threats. We are working towards bringing the e-infrastructure to the villages... bringing the power of good farm practices, price discovery, and also give the farmer a parallel marketing channel and align his production plan with the market requirements. We are trying to create whole new business areas for them. Finally, it is the core competence that leaders should develop, of bringing about transformational changes. It is the vitality of the company that brings it market standing, shareholder value, and profitability.
We are in many ways facing the economic equivalent of the Perfect Storm, if you have read the book. On every fact that you can think of: the capital markets crashing, the NASDAQ tumbling down by 60 per cent, and not to mention the events of 9-11. We were looking at what's happened to the leaders in the industry. Take a look at the S&P 500 and its composition. After 40 years of its inception, only 74 of the 500 remain today. And it is astonishing that only 12 of those 74 have consistently created returns that exceeded the index average. The average life of a company when S&P was formed was around 65 years. Now it is less than 10 years. So it implies that the marketplace itself forces an enormous amount of change. What Indian businesses need to do is restructure and go through the process of creative destruction.
Thinking about turbulent times and how CEOs and leaders react, let me rather than trying to be a professor, talk about Wharton and my role as CEO and how we have had to address this issue of change. As you can imagine, September 11, was a shock. Over 40 per cent of our students are born and educated outside US. And the students, quite rightly, asked, ''What happens to me?'' After September 11 company after company started asking the same question. It's at that time that they should have gone back to their core values and asked why they existed. We have to produce leaders because change is the only constant, and that is an unsettling thought for most people. As Anil said, we often yearn to tame turbulence. I don't think that's possible. Only thing to do is to train leaders who can take advantage of turbulence and change societies.
How you manage in turbulence depends on how you behaved in the good times. There is a term I call cat or clear air turbulence. They must be created even when the times are good. Complacency is tantamount to death in business. One of the biggest problems with a company that achieves instantaneous success is that it gets afflicted with the MoU or the Master of the Universe syndrome. They enter into businesses that they never should have. They hire people they never should have, and in the end lose their way. So, the moral of the story is that turbulence is good. Turbulence creates churning. Churning throws up the good and the bad. It's the job of the management to throw out the bad and retain the good. As Andy Grove of Intel said, only the paranoid survive in business, and you will be paranoid only if you are in a state of constant turbulence.
Leading change is always difficult, turbulence or not. I call it the ''challenge of change''. The change that we wanted to bring about in 1997 was to become more customer-centric and by that I meant something very simple. We were going to have relationship teams that will deal with the customers. To tell you the sort of difficulties I had; I spent an hour at every regional office explaining the change. I endorse Vindi's point that an organisation is like an amoeba. It is a living organism. It changes shape and character. You can't have it cast in stone as most of our organisations are. You have to drill it into everybody's minds that you want relationships to be articulated and those relationships should be put into play. So the structural changes are important. When you have mastered that, you can literally make the organisation to dance to your tunes.
I have not seen such a loaded topic for a long time. The telecom and roads sectors have contributed and achieved a fair amount in the turbulent times of the 90s. For instance, we have gone through the emerging markets crisis, the it bust, and a war. I think we made good progress. We had 7 per cent growth rate for three of the last 10 years. We are among the top two economies in Asia despite all the gloom and doom. We need four things to surge ahead. One, clarity of purpose; two, acceptance of reality-knowledge of what we can and can't do; three, harness knowledge; four, network and dialogue. After 10 years of reforms there is still no clarity. Why don't all the stakeholders, regulators and financiers sit down, have a dialogue, network and find out where they are going wrong? 1 | 2 |
|
Issue Contents Write to us Subscription Syndication INDIA TODAY |
INDIA TODAY PLUS | COMPUTERS TODAY | © Living Media India Ltd |
 |
 |
M.S. BANGA
Y.C. DEVESHWAR
RAJAT GUPTA
PATRICK T. HARKER
AROON PURIE
K.V. KAMATH
DEEPAK PAREKH