Corporate Dossier
The Economic Times
27 May 2005

"The genetic coding of our group stands altered," says Kumar Mangalam Birla. Corporate Dossier analyses change management at the Aditya Birla Group

The way the Aditya Birla group has transformed itself in this decade, it seems like a textbook execution of Jim Collins' ideas for transforming good organisations into great ones. Change is a gradual process, not instantaneous, argued Collins in his introductory article, 'Good to Great' in Fast Company (October 2001).

Collins wrote that much like an egg being hatched, the result of change suddenly becomes apparent after years of nurturing. Once started, though, change gathers its own momentum. The leaders of great companies should be like bus drivers; and start not with "where" but with "who". Great leaders, says Collins, get the right people on the bus, the wrong people off the bus, and the right people in the right seats.

From management textbooks to the A V Birla Group in 1995. "I don't think that I came into a situation where the company was at any point of breakdown," reminisces Birla. But looking back at the mid-90s, when the Indian industry suddenly came face-to-face with liberalisation, he says, "To a certain extent, the entire change was forced, it wasn't an evolutionary process. When the external environment changes dramatically, skill sets need to change very fast."

Today, the results are obvious to see. At one level, consolidation has taken on a new meaning as companies that had overlapping business — a legacy from the licence permit Raj — were realigned to reflect better synergies. The portfolio clean-up, the disentangling of group company cross-holdings, the acquisitions, the sell-offs and the new businesses. And a group that's twice it's original size.

But in the past 10 years, the pattern has been difficult for any outsider to discern; because for Birla the key issue then, and even now isn't what, or where, but "who".

The current management committee for the group or ABMC is completely different from what it was during Aditya Birla's time. "If I look at the choices I made while hiring senior people they were: getting people who are strongly independent, are vociferous and don't mind voicing their opinion, have a great sense of commitment and are they all extremely bright people. I think that's been a very important thing," says Birla.

"People equate change with substantial action, but he (Birla) got started with making peripheral changes which ultimately laid the foundations for more fundamental change," points out Dr. Santrupt Misra.

Simple things like instituting the Aditya Birla Awards wherein an outside jury grilled senior managers on their performance, or getting the whole team, including the boss go through the same course on manpower planning, were initially greeted with surprise. "It was as if the Gods were being questioned," recalls a senior employee.

With a younger workforce and professional talent coming in droves, the new structure has institutionalised change to a large degree. "Change is in the organisation psyche now and it doesn't create any disruptions any more. Bringing in change now is much simpler for me because the organisation is used to constant change," says Birla.

There are some who point out that the process of change could have been faster. Others say that it's unevenly spread within most companies with growth often dependent on commodity cycles. But Birla reasons, "It was a conscious decision to pace the change. And there was the fear that if I rocked the boat too hard the outcome would be worse than what it's now."