Speeches
LEADING CORPORATE TRANSFORMATIONS
IN THE NEXT MILLENNIUM
Dr
Madhav Mehra
Distance is dead. Long live the screen.
The marriage of prodigious computing power with telecommunications
is altering our world hour by hour and making all of us rapidly
deteriorating assets. From living in Marshall McLuhan's global
village we have been transported to the Burra Bazar of Calcutta
where our every movement and each nuance is causing ripples
that effect everyone else. Change- economic, social or political
- has been the biggest threat to business. But today it provides
the only grist to business's mill. Ignored or unanticipated
it can be devastating. But tapped properly it can offer the
greatest opportunity and act as the most powerful engine for
growth even to the most fledgling business. The greatest challenge
for transformational leaders lies in anticipating and adapting
to change, using it to spark innovation and generating creative
ideas to exploit change.
For the past decade or so, companies have
been excessively focussing on tools and techniques to manage
the supply side i.e. from manufacturing to distribution. They
have practised Quality Circles, Quality Management, TQM, BPR,
Japanese Management and the lot. All this has resulted in significant
increases in productivity, but now the law of diminishing returns
has set in. As the nineties draw to a close, one thing is becoming
certain that their competitive strength will not come from
what others are doing but what they can do differently. Business
transformations in the 21st century shall not be through quality
but innovation and innovation alone. The wealth in the 21st
century will flow directly from innovation not optimisation.
In the words of Kevin Kelly, Editor of "Wired" it
will not be gained by perfecting the known but by imperfectly
seizing the unknown.
Quality is no longer conformance to requirement.
Nor does it provide the competitive edge it used to. Quality
today is simply the price of entering the market. ISO 9000
has become irrelevant as thousands after thousands of companies
are getting certified. The market is re-echoing the jibe of
Richard Buetow, Director, Corporate Quality of Motorola: "With
ISO 9000 you can still have terrible processes and products.
You can certify a manufacturer that makes jackets from concrete,
as long as these jackets are made according to the documented
procedures and the company provides next of kin with instructions
how to complain about defects." Doing it right first time
also won't do. In fact nothing of substance was ever done right
first time. In the words of Barry Gibbons, former CEO of Burger
King, says "Even when we did it right first time, it was
still pretty ordinary."
With information so widespread and customers'
expectations rising relentlessly, the competitive advantage
cannot be gained by providing the same thing, howsoever, consistent
it may be. We are facing every day an explosion of new competitors
supplying high quality new products. This has made customers
fiercely demanding. Distributors are flexing their growing
muscles, margins are shrinking, and products and services becoming
obsolete. The do not want perfection of the same thing. They
want products and services that they cannot even imagine let
alone specify; but once you provide them they think they have
wanted them all the time. They want products that are best
in the world and service that enlivens the senses, instils
well being, fulfils even the unexpected and unanticipated wishes.
According to James Brian Quinn, a Professor Emeritus of Management
at the Amos Tuck School of Business Administration at Dartmouth, "we
give up competitiveness to the extent any service task is not
equal to best in world standards."
In the words of Andy Grove, Chairman and
CEO of Intel "we need to create waves of lust for our
products." The only way for survival in tomorrow's market
place is through an empowering vision of not only becoming
the best of the best but "the only ones who do things
what we do."
The only sustainable competitive advantage
in the coming decade shall come from out-innovating competition.
Companies will have to reinvent the industry in which they
operate. Only those companies will survive which can respond
to change faster and deliver bottom line improvements faster
and better than anyone. They will have to envision markets
that do not exist and have the ability to stake them out ahead
of the competition.
In the new millennium we are going to explore
a vast space of possibilities. We will discover how genetics
can remake medicine, how biotech will change our world, how
interactive technology will change the very idea of University
and so on. New economic life forms, virtual organizations,
global consortia, net based consumers, digitalisation and deregulation
are profoundly reshaping the market place. In this scenario
unless you reinvent your company, you have no chance. Much
of the new wealth will be created by the newcomers by bypassing
the rules of the industry they work and thereby radically changing
the basis of competition.
Despite our devotion to Quality and belief
in Kaizen that bit improvements every day matter we have reached
the end of incrementalism and the traditional tools and concepts
of quality are bringing increasingly diminishing returns. According
to Nicholas Negroponte, highly respected head of MIT's Media
Lab "incrementalism is innovation's enemy no 1".
Incrementalism deters innovation by polishing yesterday's apple.
The chasm of change that the business is facing today is deepening
everyday. There is no way you can leap over it in 2 bounds,
let alone 22.
All this requires a new paradigm in working
with people. To do things that you alone can do best requires
a high degree of innovativeness. Innovation means junking conventional
wisdom, destroying old advantages, violating established norms,
reengineering business practices, shutting down businesses
and behaving in counter intuitive and indeed unpredictable
ways. Innovation is not something that you can order like breakfast
at Hilton. It has to be fostered and nurtured in the company.
It requires a culture where failure is treated not only as
a feedback but a badge of honour. Good tries are rewarded as
much as successes. It is an anti-thesis of "Doing it right
first time". It encourages mistakes, experimentation and
prototyping. These demands trust in the ability of your people
and instilling in them a sense of ownership. Unless everyone
in the company feels he has a stake in it, the spirit of innovation
can not be unleashed. Involving everyone in a company-wide
systemic innovation needs new leadership skills.
Brian Quinn has spent decades studying innovation.
His conclusion is that the process of managing innovation is "controlled
chaos". At the heart of this process, Quinn found, successful
managers make use of the power of vision. Innovative management
- whether technical or not - project clear long-term visions
for their organisations that go beyond simple economic measures.
As Intel's chairman, Gordon Moore, says: "We intend to
be outstandingly successful innovative company in this industry.
We intend to continue to be a leader in this revolutionary
(semiconductor) technology that is changing the way the world
is run."
Such vision, vigorously supported, is not "management
fluff." It attracts quality people to the company and
gives focus to their creative and entrepreneurial drives. Not
surprisingly, Intel has a stock market value of $62 billion
on sales of merely 16 billion. Compare it with General Motors
whose sales are $ 169 billion but stock market value merely
$ 42 billion.
Gary Hamel and C K Prahalad, in their discussion
of strategic intent in "Competing for the Future" provide
numerous examples of this process in action. When Canon was
a minor Japanese photographic equipment manufacturer, it set
apparently an absurd goal of shattering the monopoly of Xerox
in the photocopier field. Not only did Canon succeed in that
seemingly quixotic enterprise, it went on to repeat its success
by patenting and licensing breakthroughs in related areas such
as laser printer technology. A similar challenge was given
by Komatsu to Caterpillar. Komatsu was a fledgling plant manufacturer
when it took upon itself the mighty Caterpillar, world's largest
integrated manufacturer of construction plant and equipment.
Established in UK in 1985, it became 4 years later the largest
producer of plant and equipment in UK.
A vision of the future that is compelling
and inclusive enough to absorb the best efforts of committed
men and women can literally carry us to the moon. Leaders are
said to be bridges that connect people to future. Leader becomes
a forecaster and articulates a future full of excitement and
possibilities that no one is able to rest until it is achieved.
They carry others' vision in theirs and build alliances and
partnerships based on shared aspirations.
Leading corporate transformations in the
new millennium requires leaders to move away from unidimentional
thinking to paradoxical thinking and learning to balance the
competing demands. In the words of Scott Fitzgerald, "The
test of first rate intelligence is your ability to hold two
opposing views in your mind and still retain the ability to
function." The leaders have to become chaordic, able to
exploit the chaos. They need to cut costs and grow businesses,
satisfy customers and employees alike, innovate new products
and increase the share of existing ones, to serve local markets
and respond to global needs, to take on the present and the
future at the same time, to shape vision and demand action.
The leader of the future shall have to be
both a teacher and student, technologist and entrepreneur,
a team player and self-starter. He will be fully wired up using
the latest technology yet have the ability to manage by walking
around, will work in high tech and believe in high touch. For
despite its formidable power, the information technology augments
but cannot replace the human dimension and its possibilities
of achieving the unachievable. The most indispensable of all
leadership skills in transforming companies to become leading
edge innovative companies is the relentless belief in the infinite
possibilities of the human form and develop within every one
of the employees an intrinsic belief in his/her own worth and
coach him/her to become all that they can be and much more
than what they can imagine. Only then can they deliver unimagined
products and services required by the 21st century customer.
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