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.
