Business Today
Mr. Kumar Mangalam Birla
16 January 2005

Businesses today are being buffeted by major gale force winds — globalisation, liberalisation and technology among them. The end result is constant churn, competition and change. In such a hostile environment, incremental change will not suffice; organisations have to radically transform themselves, not once or twice, but continuously and many times over. At the broadest level, the topmost task is that of positioning an organisation along a permanent transformational track. As Alvin Toffler said: "The illiterates of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn". Let me now enumerate what I believe are some of the key challenges facing organisations and leadership today.

People count. You can have the most forward-looking vision and strategy, but unless you have a passionate and committed team to execute it, you cannot translate your vision into reality. It is important to muster the emotional and intellectual equity of the people, and to gain their trust and commitment to the vision. Leadership is all about plugging in to the minds and hearts of people. It is about rallying them around to a compelling and exciting vision of the future. It is about upping the quality of imagination of the organisation. It is about encouraging a spirit of intellectual ferment and constructive dissent so that people are not bound by the status quo, and mavericks are given space and free play. It is about building the highest levels of empathy, without compromising on fairness and running a popularity contest. So, the first lesson is that the process of change is perhaps 90 per cent about leadership and only 10 per cent about managing.

In transformation, heterogeneity helps. Our experience has been that a heterogeneous mix of people, though very difficult to lead, helps in the process of change. You need the fast bowlers, the spinners and the good wicket keepers just as much as the pinch hitters to become a winning team. It has been our experience that altering the genetic coding, albeit carefully, can be a productive exercise that can significantly improve the quality of constructive dissent and the quality of decision-making, particularly in a period of rapid change. Bringing in people from outside cultures, people with different skill sets and a different pair of eyes, can be useful. The caveat is that the diversity cannot negate the need for the organisation to stay rooted to its core values.

While on the subject of heterogeneity, leaders should focus on all people, and not just on the high-fliers. Placing due focus on the top talent is, of course, necessary. But I do believe that it is equally important to focus on that bulk of the organisation who are somewhat dismissively referred to, in management jargon, as 'the stayers'. These are people who make the day-to-day, month-to-month, quarter-to-quarter things happen. Their role in the process of change is critical. Just as 70 per cent of the human body is made up of water, so also 70 per cent of any organisation is made up of people who follow the rules and who keep it moving ahead at a steady pace. You cannot have everyone setting the rules. We need people who follow the rules, people who may not contribute in a significant way intellectually but who are happy to implement the rules diligently. Ignoring this segment of people in a process of change, I believe, can lead — to use the analogy of the human body again — to organisational dehydration. For sustaining the transformation, you need to engage and recognise this quiet majority. So, we owe it to this mass to keep them motivated, to recognise their contribution, which very often gets overshadowed by the performance of the 'stars'.

Globalisation puts a premium on how well an organisation can build a bridge between different cultures and geographies. People have to integrate with cultures that are foreign to it and practices that they have been unexposed to. Our efforts in this area have been directed at building not an "Indian manager who works internationally", but a "global manager who happens to be Indian". For organisations that are competing globally, this mindset needs to be fostered in every business, team and individual through a conscious and structured process.

It is also critical to showcase success. We have created a platform called the Aditya Birla Awards where team achievements across the organisation are recognised every year. The genesis of these awards is that each one of us needs something to be inspired by, more so when we are being stretched in all directions in the process of metamorphosis. Showcasing success does that for you. It inspires, it motivates, it has a ripple impact that cannot be accounted for numerically but has hugely positive and qualitative returns. Importantly, it has been our belief that whilst the individual stars, the sterling performers, are important, it is the creating of star teams across the organisation that is most critical. Individual stars, who cannot become a part of star teams, are of little value. In fact, they can be disruptive instead of being productive. So, showcasing success and applauding it is critical. It creates a "surround sound" effect of optimism that says "we can do it", an ambience of an organisation in celebration, and the impact of this can be quite astounding. In the long term, awards present an innovative way of documenting and collating best practices that may have slipped away, unnoticed.

Whilst doing all this, it's as vital to keep a pulse on the state of the organisation, which calls for continuous tracking of the organisational climate. We have relied heavily on the organisational health study methodology, for us a barometer of the "happiness at work index" in the group. The survey feedback has been more honest and brutal than we had imagined — which is the way we want it to be. Year after year, teams have worked with exactitude, attacking the specific problems of each unit in a way that involves people from across the organisation. Tracking organisational health has become an institutionalised process for us and has paid immense dividends.

The challenge is one of building a value-creation mindset. Organisations need to create conditions that are conducive to continuous learning. Given that the half-life of knowledge in every discipline is shrinking, no one can afford to drop the quest for learning at the gates of graduation. As important as formal learning are tacit knowledge and experience. This type of knowledge is rarely available in codified form and it cannot be acquired through formal education or training. Rather, it requires a continuous cycle of discovery, dissemination and the emergence of shared understandings. Successful firms place great priority on developing "learning capacity" within the organisation — so that the learning that resides within an individual or group or pocket is proactively transferred to other parts of the organisation. This calls for inter-disciplinary learning and the breaking down of barriers between departments, businesses and functions.

Second, large organisations need to learn much from the way entrepreneurs work. Although the institutionalised systems, and formal checks and balances do serve an organisation well, at times they do stifle, slow things down, work to reject new ideas, or simply lose out on vital opportunities. Organisational longevity requires that there be some level of ferment and internal challenge, some level of constant boil. Most organisations reject ideas that threaten to destabilise the status quo. Eccentrics, mavericks and out-of-the-box thinkers find themselves isolated. We have to charge the environment in which we work with an entrepreneurial spirit, and infuse our organisation with the passion to excel, the passion to stretch, and the passion that translates into strong emotional bonding with the organisation, and its goals and objectives.

Third, we have to learn to think big, and aim for making the big leap. What do I mean by this? One, compliance with basic industry standards is just today's entry-level requirement. By itself, it cannot create a world-beating achievement. What's called for — at critical times — are exponential and radical leaps too. These risks are sometimes substantial enough and amount to taking a bet on the very survival of the organisation — as when Boeing bet on a new 707 generation of passenger planes, or when IBM invested on the IBM 360, which turned out to be one of the workhorses of the computing industry. In each case, the odds were daunting, and failure of the product could have set the company back a decade.

Take another aspect. Why limit yourself to giving only what the customer wants? Why not test the limits and work on giving the customer what he wouldn't ordinarily think of having? Two decades ago, few people would have thought that ordinary computer users might want a powerful search engine. But that's what Google gave customers — something most people had no idea they wanted. However, once it was in existence, the product became virtually indispensable. The ability to take a leap of imagination is an elusive area. Yet, if one organisation doesn't do it, someone else probably will, and change the rules of the game.

In transformation, heterogeneity helps. A heterogeneous mix of people, though difficult to lead, helps in the process of change. You need fast bowlers, spinners and wicket keepers to create a winning team

Another critical issue is that of refining and redefining the notion of leadership for changing times. The conventional notion of leadership, centred on the idea of a clearly identifiable organisation, is no longer in vogue. Virtual groups that operate out of different parts of the world, some of them rarely meeting face-to-face and sometimes never in their lifetime, constitute the corporate landscape. Similarly, organisations today straddle different boundaries and extend to include business partners such as suppliers' and customers' organisations, outsourcing partners, intermediate assemblers and others.

In such a scenario, where employees become nodes in ever-shifting networks and are often far remote in distance, the challenge of leadership is heightened. But the problem goes beyond the issue of geographical spread. In such extended organisations, employees become exposed to different role models and work cultures, making it difficult to enrol them with the leaders' values and vision. To meaningfully interact with the employees, leaders of the future will need to be far better users of contemporary communication media. As a matter of fact, the phenomenal power of communication continues to redefine business and the way it is conducted.

Other than that, in the world of business today, we find an increasing number of global alliances. These are alliances not just between "two or three companies, but also often span different continents. To manage in multi-cultural environments, leaders have to possess the global skill-sets and ability that it entails. Working in multi-cultural environments goes far beyond language skills or social etiquette. A deep socio-cultural understanding of the societies and history, and the way these have interacted to shape the economy, is integral to success in alien environments. We have to attune ourselves for such multi-culturalism premised on tolerance and respect for unique cultures, which differ vastly from the ways we have learnt. This is definitely a new area of learning for us in India.

Giant organisations emanating from M&A activity hold immense business potential, but they also tend to hide inefficiencies. In the past, large organisations had to restructure themselves several times during the mid 1980s-1990s. While their search for competitiveness was driving this process, ironically, the frequency of events gave an impression that these corporations existed only to restructure themselves! Looking at other behemoths today, one is able to appreciate why these companies had to take such a course.

Fifth, today's leadership is mired in paradoxes and contradictions that one finds usually in Marxist theses. How to constantly juggle through these contradictions is a tough call. Take, for instance, while you seek to minimise risk to the organisation, you encourage entrepreneurship. You demand adherence to strict timelines for delivering results, which necessarily entail gruelling 14-hour workdays. At the same time, you invest in programmes aimed at promoting work-life balance. You stringently monitor quarter-on-quarter results and engage expensive consultants to do long-range planning and cost optimisation. You spout human resources as your biggest asset, yet engage in right-sizing and lopping of jobs, resulting in skill losses. I am sure many of you live through these and more contradictions every day. These ground realities put enormous pressure, affecting as they do the emotional tenor of the workplace. Not surprisingly, it creates a crisis of identity and confidence in the best of clear thinkers. There are other areas of contradiction. Leaders have to perform a similar balancing act in their strategic arena between customers, competition, company interest and company competencies. You cannot address issues solely from any one perspective.

Sixth, there is the issue of the leadership gap. Leadership is needed at all levels, and there just isn't enough of it to go around. So, the key leadership task is to identify and nurture talent. Leaders must make developing talent a priority at all levels of the organisation. Young and emerging leaders at the workplace must be offered multiple role-models who can mentor them and enable them to create their own distinctive form of leadership. Leadership in Indian organisations is mostly premised on functional excellence and is skewed to harnessing superior technical and managerial knowledge, to the neglect of soft skills and attitudes.

Seventh, leaders must have the ability to "mind your mind", which means quickly recognising when one is wrong and changing track accordingly. Also, far from being egocentric, they should have a great sense of humility.

Above all, there is the challenge of articulating what an organisation stands for, what its purpose is. Values are what lend the organisation its "stickiness", with which employees can identify, emotionally and intellectually. People contribute when they relate to an organisation, and they relate when they understand the organisation. People understand an organisation through its values, by experiencing the culture that the values create, and by using the systems and processes that the values define. In large organisations, such shared understanding cannot be created through the leadership of individuals alone; it requires leadership of principles, of beliefs, of conviction — these together constitute what we call the "values".

Values act as the bedrock of an organisation. Great, and lasting, businesses are never built on the quicksands of opportunism. Leadership must ensure that the values remain at the core of the way an organisation functions, and are not lost sight of or jettisoned in the drive to achieve results.

The writer is Chairman of the Aditya Birla Group