Leap years ahead

Mr. Aditya Birla was an ardent advocate of professional management, which he equated with ‘good management’. To him, it was the key driver of ‘progress, prosperity and economic health’. At a function organised by the Madras Management Association to confer upon Mr. Birla, ‘The Business Leadership Award for 1990’, he voiced his views, lacing them with his experiences of Indian management and the present business environment. This speech will be long remembered, for Mr. Aditya Birla's management wisdom had a prophetic ring.

In the management of corporations there are a gamut of activities that have to be taken care of and I would like to touch briefly on those aspects which are important. To start with, I think the most important lesson in management that I have learnt from my grandfather is that major investments should be made in the selection, training and building up of people. He also taught me to repose full trust and confidence in people. Your men will be as loyal to you as you are to them.

He taught me that ordinary people can give extraordinary results, given an opportunity. You have to train people by delegating authority to them. When you delegate, people will make mistakes, but it is through the making of these mistakes that you build up people. You must have the forbearance, fortitude, patience and large heart to bear the losses in the training of people. Opportunity must be given to people to perform. Don't hesitate in giving away authority. When I came back from USA, my father gave to me an industrial mill, all by myself, with no help from the Group. He had the vision and the guts to delegate responsibility. I must have made innumerable mistakes, but the training was worth all the mistakes I made.

Leadership

Good leadership is one of the very important factors for success. Gone are the days, when the boss was automatically the leader, and the cardinal rules while dealing with the boss were: Rule No. 1 - The Boss is always right and Rule No. 2- If the Boss is wrong, refer to Rule No. 1!

I have found times without number when good leadership has made all the difference. Loss making units have been turned into profit spinners by a mere change of leadership.

I have tried to analyse what goes into the making of a good leader. Why do some men become good leaders? Here again, there are several qualities and several routes to attain excellence in leadership. Some people attain leadership through financial management, some through good management of labour and good human relations. Again, some attain leadership through marketing — Lee Iaccoca is a fine example. Some go through the route of administrative controls and some through quality controls and some through quality control and technical management of production. Like the Chairman of Honda.

So there are several routes that people take to leadership, but there is one thing common in all these, and that is, hard work and commitment. There is no substitute for hard work and commitment. When talking of commitment, I am reminded of the story of a shop owner, who, on his deathbed, enquired about the whereabouts of his wife and three sons. When he was assured that all four were at his bedside, he yelled in alarm, 'Then who the hell is minding the shop?' This is commitment for you!

Good leadership can make all the difference between success and failure. With you I share one thought. Sometimes in adversities, when all efforts are made and you don't find results, one loses heart and, in such times, the famous verse from the Bhagvad Gita: 'Thy business is with the action only, never with its fruits', has given me great solace. Then again when times are uncertain, gloom looms large. I recall the doha (verse) from the Ramayana, 'Gain or loss, life or death, credit or discredit, they are all in the hands of God'. This doha gives me equanimity and strength in times of distress. I hope you as leaders will also derive strength from this thought.

Innovation

From men and leaders, I now come to an exciting subject — innovation. This is both challenging and rewarding and essential for excellence in management. I have learnt that a corporation has to face new challenges all the time. We have to keep changing strategies, goals, and our approach to meet the changing scenario constantly. For instance, environment and ecology were unknown words till a decade back. Today, they are encompassing. A new factor has been thrown in. Similarly, constantly to face up to these challenges, one has to innovate to survive and excel.

I must stress however, that innovation also faces impediments from the inertia of status quo, which inhibits people from making innovations. Yet, corporations need to break status quo all the time. Established norms and methods of doing business must be questioned if we want to progress. Innovation is questioning and challenging the existing for something better, more exciting and more rewarding.

Productivity: Men

Let us now talk about productivity. Constant efforts have to be put in for improving productivity of men and machines, all the time. We have to improve on our existing systems, however good they maybe. The norms that are excellent today will become outdated tomorrow. What seems unachievable today, becomes a matter of fact tomorrow and the day after, becomes obsolete. A corporation cannot remain static. It cannot maintain its position. It either improves or deteriorates. Therefore, if you do not constantly strive to remain a step ahead of competition, by improving productivity all the time, you will be left behind.

The world is fast changing. It is a dynamic, ruthless and constantly changing environment. Those who innovate, those who constantly strive for higher productivity, will survive and prosper. Those who do not will fade into oblivion. Don't forget that there is also tremendous fulfilment and job satisfaction if you achieve something.

If you are successful in your efforts, the corporate world is full of dreams, full of joy and pleasure. But if you do not keep progressing, industry can be a nightmare. You have to strive constantly for survival and progress. My grandfather used to say: 'Industry is a jealous mistress! She requires constant wooing.'

Productivity: Machines

In productivity of machines, I have found that there is always room for improvement. What is lacking is the will, the vision and the commitment to exploit the machines to get the best out of them. We build most of the times our own mental barriers, which are the most difficult to overcome, than the actual problem of increasing productivity.

As Eric Hoffer, the great American philosopher, said, 'In a time of change, it is the learners who inherit the future. The learned find themselves equipped to live only in a world that no longer exists.'

We must have an open mind; we must be open to new ideas, to new perspectives and to new technology and should not create our own mental barriers and limitations.

It was thought that the four-minute mile record could not be broken. It was. There is nothing which cannot be achieved, provided you have an open mind, the will, the devotion, determination, enthusiasm and vision to achieve the seemingly impossible.

Talking of open-mindedness, the Rig Veda says: 'Let noble thoughts come to us from all over the universe'.

Quality

Quality is extremely important in the competitive environment of a shrinking world. Myopic managers not conscious of quality will lose in a world without frontiers.

If you are quality conscious, you actually cut down on your cost of production and marketing. The notion that to maintain your quality, your costs go up is totally wrong. The natural question that arises is, how do your costs go down if your emphasis is on quality?

The answer is:

• the wear and tear of your machines comes down
• machine productivity improves
• you save on costs of maintenance
• you achieve higher productivity of labour
• you get a better realisation for your product
• there are no claims from customers
• selling to the best customers whose credit rating is good, results in reduction of bad debts

All in all, the cost savings are incalculable because of quality. Therefore, I would strongly advocate that any and every enterprise must keep quality as its foremost goal. We have done so, and we have benefited from this. Dr. J.M. Juran voices similar views, packaged differently. He says, 'While quality costs, poor quality costs more'.

Project Management

For any enterprise, the foundation should be solid. For this, when putting up projects, three very important areas need to be fully taken care of: firstly, to adopt the best know-how that is available in the world; secondly, buy the best equipment. Do not compromise on the quality of the equipment for marginal extra costs. The cheaper machine normally turns out to be the most expensive ultimately. Thirdly, whilst putting up the plant, the minimum economic world sized plant should always be borne in mind. One should not compromise on these three basic criteria. This ensures a strong foundation.

Suggested management system

I would like to share with you the management system which I feel is effective. We follow a style, which I term as ‘participative management by consensus’. In this system, reviews and decisions are taken in groups. A group of people get together, to review the working of the company periodically. They go into the various aspects and problems and prepare action plans. In the taking of a decision, instead of one man taking a decision, it is done as a consensus decision, which emerges out of the discussions in the group.

A course of action is suggested by one of them, others pick holes in it, corrections or alternatives are explored, and when finally, a decision is reached, it is mature, balanced and well thought out. It represents the wisdom and commitment of many heads. The chances of the correctness of such a decision are far greater than if one person were to have taken it in isolation. I am reminded of Alfred Sloan, former Chairman of General Motors, who once adjourned a meeting when everybody quickly agreed with his proposal. He remarked, 'Gentlemen, I do not think you have studied the proposals in depth. Let us meet again, when I can hear some negative points about my proposal.'

Management: A science or an art?

I have often been asked whether management is a science or an art. I do not know what the textbooks say. My own perception is that at the basic roots, management is a science. If one is inducted as an accounts assistant, one doesn't have to practise an art. He has to follow a science. The science of the double entry book-keeping. But, as you climb up the ladder you move into a realm where the science gradually turns into an art, where there are no clearly defined action plans or basic theories.

There is no set method of taking a decision. Sometimes, the intuitive faculty takes precedence over the analytical mind. At the top, one of the foremost things is to deal with people. How do you deal with people? This is not a science. Each person had to be dealt with in a different manner. It is an art. You have to develop your own art of dealing with each situation. This art is something which is peculiar to each individual, and one has to develop his own trait.

Entrepreneurship

Indian industry has come of age. This has been possible because of its entrepreneurs. I have the experience of working in eight countries and I find that as far as entrepreneurship goes, we Indians are second to none — in number or in quality. This is something that India can really be proud of. However, we have to nurture this, we have to create a business environment where entrepreneurship can flourish.

Need for more Executives

One last observation: While we have no dearth of entrepreneurs, we have to develop further on managerial cadres. We have excellent managerial talent but it is not available in the numbers that is required. This is an area where we have to concentrate and work on. We have seen times without number that enterprising Indians have put up industries, yet come to grief because of lack of managerial acumen. We have to create more professional managers and we also need more executive entrepreneurs, those who combine the talent of an executive and an entrepreneur.

Entrepreneurs can dream but of what use is that dream if there is no manager or executive to convert those dreams into reality. We need both. We need the vision of the entrepreneurs as well as the good management of the executives. I am reminded of Shri Krishna and Arjuna. 'Wherever there is Krishna, the Yogeshwar, the thinker, the visionary and Arjuna, the archer, the executor, there you have happiness, victory and prosperity.'

Entrepreneurs are born. Executives are made.