LEADERSHIP PERSPECTIVE ON Need FOR Excellence IN BUSINESS TODAY (PART-II)

We continue with the second part of the CII session. Business excellence is a collection of best practices which work for an organisation and decide how should things operate. At a recently concluded session by CII at Hotel Hyatt Pune, industry leaders throw light on the importance of business excellence, how leadership is crucial for achieving business excellence. Panellists for the session were: Alakesh Roy, Vice Chairman, CII Pune Zonal Council & Managing Director, Zamil Steel India & General Director, Zamil Steel Vietnam (Moderator); Kaushik Merchant, Head Business Excellence, Raychem RPG Pvt Ltd; Brig. MKK Iyer SM (Retd.) Vice President–Defence, Bharat Forge Ltd; Rajnikant Behera, Co-Convenor, Forum on Operational Excellence, Executive Director, RSB Transmissions (I) Ltd and Keshab Sen, CEO President, MLR Auto Ltd. Corporate Citizen brings you the enlightening discussion

Alakesh Roy: We live in a changing world where nothing is certain. Today, you see anyone might be thinking of innovating the product and entering the number one position. We talked about result orientation, performance index and all those things but ultimately, it is the perception that matters. To create a perception we need to have excellence. I think, Kaushik has rightly pointed out that it is for the leadership position to think ahead. So, whether your product excellence will lead you to leadership excellence may be, may be not. Not every company will have the same kind of solution for each and every problem, for example, what is rightly being pointed out that, we feel we are lagging behind but at the organisational level, even a simple hand sensor, maybe considered as an innovation, which will boost the company towards better prospects.

"Leadership talks about performance. Leadership should set goals, create an environment, and create some kind of a mechanism"

- Keshab Sen

Keshab Sen: I am going to talk about two things. Let me start with the first thing. What can be a better time to organise a seminar or a conclave on business excellence. Look, what is happening today. People are worried that the economy is falling. Some people are just waiting for things to get better and there are some courageous leaders. I am not going to name them who said it’s never ongoing and surprisingly, the true leaders out here, Mr Roy and Mr Bapat, they clearly said, they did not blame the culprit, they did not blame the economy.

I will elaborate what I am talking. It was not a surprise that the BS4 regulation was to be announced. The environment agencies told in October 2015-2016 that you are going to face the BS4. The industry was mainly using grandfather clause; we were selling BS2 and we would sell BS3. Let’s manufacture beforehand. But the Supreme Court on 29th of July said, nothing doing, from the first of April you can’t do this. The industry ended up with this huge amount of inventory. Until now, we have not learnt. Axle load was being changed. It came as a surprise with this new axle load where we can carry more load. So, what has happened? When the truck can carry more, what happens to the capacity? The octroi tax was removed. Twenty five to 30% excess capacity was available. You add these two, octroi and axle load, and you end up with excess capacity available in the market. Imagine, all over the country 40,000 trucks were standing at octroi posts. And once the GST came in, octroi went off. These 40,000 trucks became available. I am not blaming anybody. I am only trying to point out what Mr Roy pointed out. Were the leaders not aware of this? Were the leaders not knowing that BS4 is coming? Were they not aware of GST? This is the point what the business synopsis is all about.

I spent 30 years in Tata Motors and then in a startup for five years. In Tata Motors, I worked in all the functions. In both the sectors, I really understood one thing that business excellence is something, which we all do but we don’t really understand. To simplify things, typically for the students out here, business excellence is nothing. We keep talking about business processes but if you go back home and Google something from Malcolm Walbridge Framework/Guidelines, which Tata has adapted in TVM and other frameworks. If you will see the frameworks, you’ll understand something more. So, even Malcolm Walbridge and other world famous frameworks are there, my appeal to CII is this, probably they already do it; make these frameworks popular. Why? Because we all are obsessed with a few things. You have seminars on processes, you have seminars on HR, you will have seminars on information technology. But how many seminars are there on leadership and strategy? So, let me jargonise it a little.

You may or may not know this but the framework starts from leadership. There are six chapters. The first chapter is leadership, the second is strategy, the third is customer focus, and the fourth is information analysis or knowledge management industry 4.0. Fifth is HR and the sixth is the processes. Now all six put together they finally produce results. That is chapter seven. It is not that I mugged up this for this lecture, but it has gone in my blood. Why? Because no result can come without proper leadership and proper strategies and that is 100 per cent true.

You just saw the wonderful presentation by Brigadier Iyer about Kalyani and Bharat Forge. What was it about? In addition, why did they decide to go for defence? Just think about it, just as a simple case of leadership and strategy. Then comes the customer focus, understanding the customer, what are they doing. Somebody highlighted the iPad and iPhone. Do you know that in 1988, an award for nanotechnology was given. It was Steve Jobs’ leadership or vision. He understood that I have to get this patent for this nanotechnology. The rest is history. He had the command over this technology. He had the command over the suppliers. At least for five years, he ruled the world. The iPod came later and then they diversified to the iPhone etc. So, it is a leadership function, which we should understand very clearly and that drives the organisation, and I am glad to tell you that if you look at this framework, leadership is not only about lectures, it talks about setting up roles. Kaushik would agree, Kaushik is an expert in this Framework. Leadership clearly talks about Vision and Mission. Leadership talks about performance. Leadership should set goals, create an environment, create some kind of a mechanism.

I am obsessed with something, which I want to know in particular, have you heard of PDCA? (plan–do–check–act). Let me simplify, all over the world, we have so many thoughts and so many slogans but why all of them are not seen in action? ADEI provides the answer - Approach, Deployment, Evaluation, Integration. If you have an approach and if you don’t deploy, there is no point in making a slogan or manifesto, which would not see the light of the day. If you have the approach you will deploy it. If you have deployed, you are going to evaluate it and once you evaluate, you should integrate. I would like to add a few things. Noble framework only adds leadership as a strategic part of it, like processes about which we all know. You are a leader, you also need to strategise. You also need to innovate and the next is the strategy part of it. There are many companies, there are many examples of companies which strategised continuously.

As Mr Roy was telling earlier, this is the time to re-think. It is the right time to use your strategy and leadership to face the current situation, which is volatile, which is uncertain. Now you have the tools available. Artificial Intelligence is available, IoT is available and this is the time for industry 4.0.

You will understand excellence better. Because excellence is always known as a collection of best practices. So, when you get the Framework, you understand what best practices are to be deployed in which area, be it strategy or customer and then knowledge. The second part is that, when you have this kind of a Framework, you should be very clear that how to implement it.

Alakesh: We are deliberating leadership and strategy in isolation. He (Keshab) has probably interpreted that, and there is a new strategy and leadership which will make the world move forward in the near future. We cannot have the same set of strategy set for today and tomorrow. As I see it, I don’t think we can have a strategy for even two years. I think even companies also decide that we can have an annual operating plan because things change so suddenly and so abruptly. And then see trade war between the US and China. How will a common person know how it affects him/her?

Recently, I was in attending a council meeting. One of the leading economists from Singapore was talking that we tend to believe that India is doing badly or India is doing well. Overall, in the macroeconomic perspective, it is the world trade, in which India is also falling behind. We might be three or four percentage points above the world average. May be the world is moving at GDP of 3% and we have a 6% GDP. But we cannot expect that India will be at 12% and world will be minus. It has never happened in the past. It will never happen in the future also.

I will tell you a simple example. If you look at the chess as a game, there are 64 squares and if we talk about the grand masters, they know each and every move and they count their moves. Still there is a winner. So how do you win a game? Today, if you go by AI or any other algorithms-how many is eight plus eight, it is 16, you can easily memorise that and still there is only one winner in the end. What I feel is that strategy is never one thing. I would like to give another example. Sunil Gavaskar had once said that there are many cricketers with immense talent but there is one factor called as temperament. If talent and temperament do not go together, probably you will never be successful. Probably that is why strategy and leadership are coming. So, he gave one more example. He compared Ajinkya Rahane and Rahul Dravid and he said probably Rahane knows more shots; there are a number of shots that have to be played when the ball comes but he cannot play those shots as he does not know which shot to play at what point in time. But Rahul Dravid knows exactly how and which shot he wants to play when the ball is delivered. So, he is not being diverted by the choices available to him. This is also another aspect of learning. Another example, Virender Sehwag and Kapil Dev, the two of my favourite batsmen. They know that the ball is there to hit, excellent hand eye coordination, and they will hit it. These are strategies also, we can’t say Virender Sehwag has a wrong strategy or Rahane has a wrong strategy; or Rahul Dravid has a wrong strategy, never.

"How do you stay competitive at this price sensitive market? In manufacturing, we always say that by only selling you can’t make profit. You can make more profit by producing it efficiently”

- Rajnikant Behra

Rajnikant Behra: The topic is leadership perspective on need of excellence in business. It is a generic term but how to understand what business excellence is. Even if we do not understand business excellence; many organisations might not have a specific function called business excellence. That does not mean they are not excelling in business. Yet they are. It is also important to understand the perspective on why you need business excellence. That is why when we have Frameworks, it helps us a lot in terms of channelising and understanding. Whatever we are doing in an organisation or business, ultimately, the objective is that all the stakeholders should be happy, the investors should be happy, the employees should be happy in the products or process or whatever they are working on they should feel proud about the organisation and their society. All these factors are there, excellence in business is about how do we understand all these factors in the business and how do we prioritise these factors because as an organisation you can’t do everything. Whoever tries to do everything will not be able to do anything. It is very important to understand that even if you adopt a model or practice, what is your organisation’s strategy for future and in that, whatever capabilities that you want to build in that is when you adopt the model and within the model then you focus on what you should prioritise on. And then step by step excel in those areas in business.

From RSB’s perspective, I would like to point out one of the practices in business excellence. We had adopted is a TQM Journey. Many of you all know, and people who might have known that TQM is something which is a quality journey but it is integrated in businesses and not about product quality. So, it is about how to use the TPM tool to excel in business and integrate your strategies or products and your capabilities internally and reach out to the objective that you set in your strategies. In fact, we started the journey in 2003 and that is the time when I had joined the business and when they started there, I was working on the shop floor cleaning machines, that’s how the journey started. In fact, in the organisation, in the manufacturing plant, those days, there were so much of inventories, if you see the state of the plant that we were working on, you may not be able to see the walls because all over the place there are machines or some parts. Due to the available inventory it looked very cluttered. After we started this journey, within probably three to five months, we could see a much cleaner plant.

We started from the basics that is called the 5S, I am not going to get into the details of that. First, you would like to keep your house clean-you clean the organisation, and you clean your manufacturing plants. Wherever you are working, it may not be a manufacturing plant, it may be an office. You can also apply that in your office. If you are more organised, the way you think changes and it happens, it is a very small thing but we don’t realise that if things are organised then our thought process also become more organised. Today the economy is down but hopefully it will come up. Many a times, you are under stress but when we take an approach we apply TPM. We started applying all these basic tools first, where we started about this basic 5S strategy. Slowly then we moved on to the larger goals within the organisation and that is where we embarked on the Deming Prize journey. It recognises individuals for their contributions to the field of Total Quality Management and businesses that have successfully implemented TQM. There are consultants in Japan. We associated with them and then the consultants came in and with them, we worked on the TQM. So, I would say from 2003 to 2007, we were more or less practicing the basic concepts. Beyond that then we started practicing TQM at an overall organisational level but we then we focused on the auto vertical. We have two verticals, Automotive and CMI.

When we focused on Auto, we started getting the larger business. It took us around 4-5 years to work in that journey and in 2013 we got the Deming Prize. It is not about the award but the process it takes you through during that journey is important. When you have a strategy in place, it has to get integrated with all the functions. Otherwise, whatever strategy you embark upon you may not achieve. So, one is, you might have a direction, it might be there on the paper or on the Excel Sheet but that is not what we want, we want it to get converted to real business objectives. How do you do that? TQM journey enabled us to do that. It is not about machine or productivity only; it definitely helps a lot in that. It is about the business excellence, it is about how you are linking your strategies. It may be your product strategy, it may be your HR strategy, it maybe your IT strategy or it may be your supply chain strategy. All key strategies, all key functions, which are there in your organisation have to be linked. This concept is called X-Matrix, which links all the strategies in the plant or in the company. We have 10 plants in India but as a company, we have one. When we have strategies, we have plants, and we have various other products. We are making propeller shafts, gearbox, gears and machining components. We also have construction components. There are various products. Since we are in automobile industry, our journey has helped not only in improving our product quality or processes. For example, manufacturing industry, as we have already discussed we are not manufacturing everywhere-India is a price sensitive country. How do you stay competitive at this price sensitive market? In manufacturing, we always say that by only selling you can’t make profit. You can make more profit by producing it efficiently. That is where the entire cost is stuck in your supply chain. It is stuck in the inventory, it is stuck in the overheads and it is stuck in your product design. Now, when our Chairman started the business in 1975, that time it used to supply very small components. Tata Motors has been one of the key customers; Mr Sen has been associated with us since then since 90s, so he knows. But to see the journey, we started with very low-tech components. But finally, we have today graduated towards complete design products. So, we have fully built assemblies of axels. We have propeller shafts now. We used to make propeller shaft components earlier. Today, we supply a full system. So then how did we graduate from component level to a system level? That is where this journey has really helped us. If you want to get in a market then you also must understand the technology that goes behind it. This is about the customer. Now when you produce, you also have to have a good process strategy. The product technology, the process technology, market everything when we drop a strategy through a TQM process, it covers everything and we have three years plan. Beyond that, it is very difficult to plan. We have a larger plan definitely. But we will talk in TQM language then we have the minimum from the larger five-year, 10-year strategy, you have to drop a three-year strategy and in that you have to link all these aspects of product, technology, people, IT strategy. But when we embark on this journey, we can’t take all the strategies and implement and excel everywhere. So, we prioritise from the product to operations and today we have this topic. Today, we are talking about the IT-related data-driven world as well. We are now working with lot of IoTs. Through TQM, we have understood that there is a framework, if you work through that framework then you can excel in business and get onto the next level. So that is the leadership, so that is our perspective as a leader. If you follow this framework it will help you to excel in business.

We have heard the four eminent speakers and I think people have talked about business excellence, leadership perspective, strategy. Mr Sen was very vocal about it. To sum it up, if I had my views on this, I think what will lead the leadership perspective is the need for next practices rather than the best practices. Whether I am relevant today is the most important thing and whether I will be relevant for tomorrow will be the most important thing.