Only few organizations managed to become multinationals and still very few of them could become fortune 100. In India 98% of the industries belong to micro, small and medium enterprise category (MSME) which by definition is less than 10 crores capital investment. I was curious to understand the root causes which made these achievements possible only by few enterprises. All enterprises are founded by an entrepreneur who made a difference from the salaried clause and demonstrated his leadership. Presumably, the entrepreneur had a vision to make a difference in founding an organization. Then why they lost their steam on the way?
I had several opportunities to discuss with the first generation entrepreneurs to know the reason why they did not expand their organization beyond a point. Invariably, the answer was “My children are not interested in taking over my business and no one is there to inherit the institution I passionately founded and hence I have stopped my efforts to expand”. The other reason given is “Already I am overstretched beyond my elastic limits working 24 by 7 and where is the band width to take more?”
If we take a look at corporate, there are plenty of king elephants which had 10 years order book at one time and enjoyed highest customer satisfaction, although their quality and delivery was pathetic. May be in a protected economy, where the customer has limited choice, the true health of the organization is not known to the management. These elephants had their natural death although took long time to die. In spite of poor response to customer needs, few of the corporate survive the onslaught of globalization due to the brand identity created over centuries.
If we examine the key ingredients of successful organizations you will find they are overwhelmingly common sense; very obvious but difficult to practice. Lets us look at each one of them:
In a ship, the captain is the most relaxed person, but highly paid. He is a non-doer and doer at the same time. He is the cause for everything that will happen in the ship and the buck stops with him as he is accountable for everything going well or otherwise. There is an individual behind all great institutions whose character shadows in every brick. His ideologies and vision shapes up the institution and become the DNA of the organization. Be it a Sam Walton of Wall mart or Bill Hewlett & David Packard of HP, their ideologies became the core principles of the Organization. “Respect the individual” is the core value of HP and “Imagination & Wholesomeness” is the ideology of Disneyland which emanates from the strong principle cantered leadership of the founders.
I happened to work for the famous south Indian business house “TVS” founded by Shri. T.V. Sundaram Iyengar hailing from a Brahmin community. He founded a bicycle shop against the custom of Brahmins as they are not supposed to get into business on those days. He had an ideology “Customer is the King” and all processes and people of the organization should align with this one single motive. When TVS was running a town bus in the city of Madurai, the driver and conductor demonstrated this ideology through their behaviour and processes. Even after TVS discontinued bus services, people in Madurai used to say “We can adjust our watch by seeing the TVS bus”. This compliment from general public praises the punctuality of the buses ran on those days. This is the result of people alignment and shared vision across the organization which a leader achieves by his presence and walking the talk. TVS today is several thousand crores turnover business house still known for its Quality Focus; the founder lives in every DNA of the institution.
We have seen the foundation of any successful institution starts with the Core ideologies which is the result of principle cantered leadership. Hence there is an element of an organization which is constant such as the core ideologies and another which is changing with respect to time such as its vision – where it wants to reach & strategies which will be the means to achieve its vision. One of the hardest parts of any organization is visualizing the future and passionately pursuing it through clear strategies with the alignment of every one. The organization need to create a management system to achieve this as their people are quite comfortable with the status quo. The strategy changes the process and people over the period of time in alignment with the core ideologies of the institution. The ability of the organization is to keep an eye on the changing environment and manage change internally. Hence Change management is the next capability the Fortune 500 companies could do better.
The core ideologies, vision and strategies can be given life only by the people in the organization. Ironically, people want prosperity without realizing that it is a result of improvement coming through CHANGE! While people wants prosperity but RESIST changes! They wish to have the result opposing the MEANS! Hence alignment of the people attitude and competency is the next big challenge these organizations tackled well.
The next big hurdle for achieving the vision of any organization is the “Processes”. Many organizations are people dependant and hence influenced by the attitude and competency of the people. The successful organizations have shifted from people dependency to process dependency. A simple example is Mc Donald and similar franchisee managed businesses. One cannot fry finger chips any way he/she likes as the process is standardized and the system does not allow individuals work their ways. The “repeatable excellence” is possible only through de-skilling and standardization of processes. The changing aspect of the organization is the processes which have to continuously evolve over the period of time aiming the customer needs.
The next most important aspect of the successful organization is self assessment on a periodic manner. These successful organizations believe in the stakeholder’s satisfaction as the very purpose of its existence. The stakeholders could be customers, employees, investors, suppliers and dealers / business associates. Unless otherwise there are performance metrics, organization may not come to know how it is performing. Often, organizations review financial metrics which are lag indicators and can show its health only after it has deteriorated. Intelligent organizations measure means more than the results. Adopting Key Performance Index – KPI is one of the characteristics of the successful organization. Managing an organization without KPI is like driving a car without a dashboard! The vehicle may come to a halt without any indication.
6. CONTINUOUS IMPROVEMENT:
Accepting the status quo is acceptable for the mineral, plant and animal kingdom as they have no faculty to challenge them. Human species has the potential to challenge status quo and evolve. Accepting the status quo and living with mediocre results is a sin human being should not commit. The automobile and aircraft are the example for achieving perfection closer to zero defects. Today motor cars are produced with 2 parts per million defects which is a result of continuous improvements over the period of last 10 decades. Hence the most successful companies have built a management system to involve people to challenge the defects and continuously improve processes.
7. RESULT FOCUS:
We have looked at the enablers of any successful organization so far. This takes care of the “Process Focus” ie P- Criteria. The last aspect of any successful organization is “Result Focus” ie R-Criteria. Many organization over emphasizes profits and gets lost in driving its core values. Although profit is an important aspect of any business model, focusing only on “profits first” philosophy will drive people to achieve the bottom line by any means. The most successful organizations kept their larger purpose in mind and profit became the reality by default. However it is not only taking care of the means, but also having an eye on the end is important. This is emphasised by Stephen Covey in his second habit, “Begin with the end in mind” and what Mahatma Gandhi said “Take care of the means and the end will take care of itself”.
In summary, the successful institutions are built around the strong ideology coupled with a desire to grow without violating the principles of a larger purpose than earning profit. The key elements are:
· Purpose (larger than profits)
· Vision (end in mind)
· Strategy (mean to progress)
· People (alignment & engagement)
· Process (means to meet customer expectations)
· Measurements (Performance indicators)
· Continuous improvements (change to suit environment).
Wish you happy reading.