"Perfection of means and confusion of ends, seem to characterize our age"
Thursday, April 19, 2007
Friday, March 23, 2007
Published in: Indian Express
Force is not a Multiplier
Article by: Honourable Member of Parliament Shri. B J Panda
Wednesday, March 21, 2007
Organizing for successful change management: Why change?
The most successful transformations of business performance occur when executives mobilize and sustain energy within their organizations and communicate their objectives clearly and creatively.
Executives further improve their chances for success if they significantly raise employee expectations, actively change people's behavior, and engage the attention of individuals at all levels of the organization, from top management to the front line.
The change-management process emerge as a coordinated program, in companies or business units, that typically involves fundamental changes to the organization's strategy, structures, operating systems, capabilities, and culture.
Transformations come in various shapes. Cost cutting, not surprisingly, is a consistent theme. Company's main objective is moving from good performance to great performance, observing that their company's transformation as a result of a restructuring: merging, splitting up, or divesting a part of the organization.
Executives mobilize and sustain energy, they strongly emphasize the impact of clear, comprehensive, and compelling communication. Again, the top performers are markedly more enthusiastic about some of the factors that underpin these themes:
1. Setting of clear goals as a part of the program.
2.Company integrate the goals of the transformation program into processes such as budgeting, performance management, and recruiting.
3. That successes were acknowledged regularly and publicly with the most successful transformations reckon that the company was conspicuously more effective than the others at raising expectations about future performance, addressing short-term performance, engaging people at all levels of the organization, including a clear and coordinated program design, and making the change visible—through, say, new IT tools or physical surroundings. These results reinforce the conviction that confronting these challenges significantly increases the odds for successful change.
Ref:**July 2006, Web Exclusive - The Mckinsey Quarterly
Thursday, March 15, 2007
Monday, March 5, 2007
Dr.Matthias Rath - Cancer Foundation
The foundation’s money is used to support
Research is based on Dr. Rath’s scientific discoveries, and it has led to the development of innovative solutions for various aspects of health. Research in heart disease focuses on optimizing blood vessel function as the main cause of coronary heart problems. Their multi-targeted approach to cancer, with its focus on the natural control of metastasis, has been shown to be the most effective way to curb the development and progression of this disease.
As you support Dr. Rath's goals and work, please play your part in bringing to a conclusion as soon as possible this conflict between doing ‘business with disease’ and freeing people to be healthy - in the interest of millions of people throughout the world.
Do your bit by drawing people’s attention to this internet page!
Abstract Reference: http://www.dr-rath.com/us/about_us.html
Labels: dr-rath foundation.
Wednesday, February 7, 2007
Tuesday, February 6, 2007
CN Tower : A beauty not to be missed. The serene water reminds me:
"Give a man a fish; You feed him for a day. Teach a man how to fish; You feed him for a lifetime"
A leadership skill not be missed.
Labels: CN Tower.
Thursday, February 1, 2007
Tuesday, January 30, 2007
Sunday, January 28, 2007
Someone I know; brilliance that lasts and lasts........ duracell power packed lady!
Photo courtesy: http://flickr.com/photos/viswaprath/372179908/
Labels: Duracell - Power packed
Sunday, January 21, 2007
A 21st-century company should put as much effort into developing its talented employees as it puts into recruiting them.
Savvy companies understand the competitive value of talented people and spend considerable time identifying and recruiting high-caliber individuals wherever they can be found. The trouble is that too many companies pay too little attention to allocating their internal talent resources effectively. Few companies use talented people in a competitively advantageous way—by
In a modern, networked, and
As global markets become more dynamic and competitive, companies will need to deploy talent even more flexibly across broader swaths of the organization. Since management must develop and execute value-creating initiatives so quickly, talent is becoming more critical to corporate performance, specific needs for talent are more unpredictable, and companies must develop talent more rapidly than ever.
Research demonstrates that companies with enlightened talent-management policies have higher returns on sales, investments, assets, and equity. But most large companies aren't set up to allocate talent easily across the traditional organizational silos that stand as their most prominent structural feature. By offering and transacting job rotations and arranging development opportunities for talented workers, managers may foster talent management within particular corporate silos. But this approach fails when, as now happens more and more often, a company seeks to achieve talent synergies across the breadth of its operations.
Fortunately, some of the largest and most talent-driven companies are beginning to shatter the old orthodoxies. By developing internal talent market-places, these companies are giving managers the best opportunity to mobilize the talent they need for success while giving the most talented people better opportunities to utilize and develop that talent. Like knowledge markets, talent markets become strong by leveraging individual self-interest to drive enterprise-wide collaboration rather than by relying on top-down mandates to rotate jobs. The goal isn't simply to clear the market but to help a company get its work done more effectively and to increase the value and allegiance of talented workers by expanding their company-specific knowledge. Many of these companies also find that allocating talent effectively can make an enormous difference to important outcomes, such as
Self-directed, talented people benefit considerably from such a market: the more talented they are, the greater the demand for their services and the better their opportunities will be.
Highly talented people are less likely to be blocked by less talented bosses taking credit for their work. Better opportunities also ensure that job experiences challenge these employees, who in the process develop more quickly. Broadening their exposure to the organization also helps them to develop a more extensive network of contacts to share reputations and information. Such self-directed and talented people are the very ones an enterprise is most at risk of losing, since they are the most likely to be actively testing external talent markets to find more attractive opportunities.
At the same time, senior people who are pursuing important opportunities will have a
But the real beneficiary is the company, which wins by getting far better matches between its job opportunities and its most talented people and by gaining far greater transparency into shortages and excess supplies of talent.
Of course, talent marketplaces also present challenges. In companies with well-established organizational silos, the cultural changes will be enormous. Here, a talent marketplace may be only part of an effort to integrate more broadly. Some companies may need separate marketplaces for different skill sets (for instance, one for project managers and one for industrial engineers). Other companies, particularly those that already view talent as corporate rather than business unit property, will find the transition to talent marketplaces much more natural for all. Making sure that the right infrastructure of brokers, standardized performance reviews, and protocols exists is no small task. But for the right companies, the benefits can easily outweigh the costs.
Given an opportunity to develop and hone skills, top talent will be more likely to stay in the company. Talented people who have a broad base of experience specific to it can grow into its future leaders.
A talent marketplace can't be built easily on the foundations of traditional, siloed organizational structures. But for large, growing, and complex companies that know talented individuals may be their most powerful competitive asset, talent markets represent the
**Ref:Lowell L. Bryan, Claudia I. Joyce, and Leigh M. Weiss; Mckinsey Quarterly,
2006 Number 2. Lowell Bryan is a director and Claudia Joyce is a principal in McKinsey's New York office, and Leigh Weiss is a consultant in the Washington, DC, office.
Labels: Making a market in talent
Tuesday, January 9, 2007
Monday, January 8, 2007
Publication in The Hindu:
THE SHASHI THAROOR COLUMN - The two sides of a debate
Online edition of India's National NewspaperSunday, Jan 07, 2007 - Please log on to the following link:
Comments to : firstname.lastname@example.org Copyright © 2007, The Hindu Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu
Wednesday, January 3, 2007
A new look at diversification:
In basic materials, only diversified companies approach an efficient portfolio’s risk–return performance, since they can exploit negative correlations among the business cycles of different commodities.
Should managers ever diversify their companies on the shareholders’ behalf? The underperformance of many conglomerates has given diversification a bad name. In any case, most investors can, if they wish, independently assemble a set of assets lying on or near what financial theorists call the "efficient frontier," which represents the highest return for a unit of risk. Nonetheless, some evidence suggests that a moderately diversified company performs at least as well as—and in some industries better than—more focused ones*. Consider the basic-materials industry: only diversified companies approach the risk–return performance of an efficient portfolio, for unlike their more focused counterparts, they can exploit negative correlations among the business cycles of different commodities. This flexibility allows such companies to pursue opportunities, even when times are bad for some of their businesses, by adjusting their investments toward more attractive projects or regions. Since many basic-materials businesses require similar skills, diversification doesn’t have to take these companies far afield.
**Ref:Michael Dalby and Timo S. Smit2004 Mckinsey Quarterly.
Labels: A new look at diversification
Tuesday, January 2, 2007
Ten trends to watch :
Those who say that business success is all about execution are wrong. The right product markets, technology, and geography are critical components of long-term economic performance. Bad industries usually trump good management, however: in sectors such as banking, telecommunications, and technology, almost two-thirds of the organic growth of listed Western companies can be attributed to being in the right markets and geographies. Companies that ride the currents succeed; those that swim against them usually struggle. Identifying these currents and developing strategies to navigate them are vital to corporate success.
What are the currents that will make the world of 2015 a very different place to do business from the world of today? Predicting short-term changes or shocks is often a fool's errand. But forecasting long-term directional change is possible by identifying trends through an analysis of deep history rather than of the shallow past. Even the Internet took more than 30 years to become an overnight phenomenon.
1. Centers of economic activity will shift profoundly, not just globally, but also regionally. As a consequence of economic liberalization, technological advances, capital market developments, and demographic shifts, the world has embarked on a massive realignment of economic activity. Although there will undoubtedly be shocks and setbacks, this realignment will persist.
2. Public-sector activities will balloon, making productivity gains essential. The unprecedented aging of populations across the developed world will call for new levels of efficiency and creativity from the public sector. Without clear productivity gains, the pension and health care burden will drive taxes to stifling proportions. Nor is the problem confined to the developed economies. Many emerging-market governments will have to decide what level of social services to provide to citizens who increasingly demand state-provided protections such as health care and retirement security. The adoption of proven private-sector approaches will likely become pervasive in the provision of social services in both the developed and the developing worlds.
3. The consumer landscape will change and expand significantly. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household income—a point when people generally begin to spend on discretionary goods. From now to 2015, the consumer's spending power in emerging economies will increase from $4 trillion to more than $9 trillion—nearly the current spending power of Western Europe.Shifts within consumer segments in developed economies will also be profound.
4. Technological connectivity will transform the way people live and interact. The technology revolution has been just that. Yet we are at the early, not mature, stage of this revolution. Individuals, public sectors, and businesses are learning how to make the best use of IT in designing processes and in developing and accessing knowledge. New developments in fields such as biotechnology, laser technology, and nanotechnology are moving well beyond the realm of products and services.
5. The battlefield for talent will shift. Ongoing shifts in labor and talent will be far more profound than the widely observed migration of jobs to low-wage countries. The shift to knowledge-intensive industries highlights the importance and scarcity of well-trained talent. The increasing integration of global labor markets, however, is opening up vast new talent sources. The 33 million university-educated young professionals in developing countries is more than double the number in developed ones. For many companies and governments, global labor and talent strategies will become as important as global sourcing and manufacturing strategies.
6. The role and behavior of big business will come under increasingly sharp scrutiny. As businesses expand their global reach, and as the economic demands on the environment intensify, the level of societal suspicion about big business is likely to increase. The tenets of current global business ideology—for example, shareholder value, free trade, intellectual-property rights, and profit repatriation—are not understood, let alone accepted, in many parts of the world. Scandals and environmental mishaps seem as inevitable as the likelihood that these incidents will be subsequently blown out of proportion, thereby fueling resentment and creating a political and regulatory backlash.
7. Demand for natural resources will grow, as will the strain on the environment. As economic growth accelerates—particularly in emerging markets—we are using natural resources at unprecedented rates. Oil demand is projected to grow by 50 percent in the next two decades, and without large new discoveries or radical innovations supply is unlikely to keep up. We are seeing similar surges in demand across a broad range of commodities. In China, for example, demand for copper, steel, and aluminum has nearly tripled in the past decade.
The world's resources are increasingly constrained. Water shortages will be the key constraint to growth in many countries. And one of our scarcest natural resources—the atmosphere—will require dramatic shifts in human behavior to keep it from being depleted further. Innovation in technology, regulation, and the use of resources will be central to creating a world that can both drive robust economic growth and sustain environmental demands.
8. New global industry structures are emerging. In response to changing market regulation and the advent of new technologies, nontraditional business models are flourishing, often coexisting in the same market and sector space.
9. Management will go from art to science. Bigger, more complex companies demand new tools to run and manage them. Indeed, improved technology and statistical-control tools have given rise to new management approaches that make even mega-institutions viable.
10. Ubiquitous access to information is changing the economics of knowledge. Knowledge is increasingly available and, at the same time, increasingly specialized. The most obvious manifestation of this trend is the rise of search engines (such as Google), which make an almost infinite amount of information available instantaneously. Access to knowledge has become almost universal. Yet the transformation is much more profound than simply broad access.New models of knowledge production, access, distribution, and ownership are emerging. We are seeing the rise of open-source approaches to knowledge development as communities, not individuals, become responsible for innovations.
Companies need to understand the implications of these trends alongside customer needs and competitive developments. Executives who align their company's strategy with these factors will be the best placed to succeed. Reflecting on these trends will be time well spent.
Reference: Ian Davis is worldwide managing director of McKinsey & Company and Elizabeth Stephenson is a consultant in McKinsey's San Francisco office. A shorter version of this article was published in the Financial Times on January 13, 2006.
Labels: Ten trends to watch
Sunday, December 17, 2006
Thursday, December 14, 2006
As customers' needs fragment, marketers must develop common, actionable segmentations and integrate segment-level goals into planning and performance-management processes. Article by - Sean R. Collins, Peter W. Dahlström, and Marc Singer.
Today's proliferating environment is dramatically increasing the importance of effective customer segment management. Market polarization is widening the gaps between the lifetime values of various segments. Frag-menting customer needs are creating opportunities for specialist competitors to go after just one segment. And proliferating distribution channels and media vehicles are helping all companies target the most valuable customers with focused service and advertising. The result is a powerful need for companies to get better at identifying and delivering distinctive value to their most attractive customer segments.
But few organizations can get their segment strategies to work. Many companies articulate detailed segmentation plans, but they rarely define and manage their segments in a way that helps the organization differentiate the value it offers specific groups of customers. What's more, the planning systems of most companies lack the roles, processes, and integrated customer metrics needed to create unique customer experiences for select segments or to respond quickly to shifts in a segment's value. Indeed, many organizations have difficulty measuring the extent of customer migration (more spending by satisfied customers or less spending by dissatisfied ones)—much less quantifying its financial impact or actively managing it through differentiated customer propositions and experiences.1 For evidence of this challenge, consider data-rich industries such as financial services, airlines, and retailing, which were among the first to identify meaningfully different segments by parsing large volumes of data. Few companies in these industries have exploited state-of-the-art customer-relationship-management (CRM) technologies to develop and deliver truly differentiated value propositions, create customer-level scorecards, or make them central to running the business. A key reason is that understanding and acting on segment- or customer-level information often requires collaboration among a number of functions that interact with customers across the organization. Facilitating and rewarding such coordination is difficult in product-, service-, and geographically oriented organizations.
In short, developing powerful segmentations—and acting on them by providing distinctive experiences to valuable customers—is much more a management and organizational challenge than one of data, technology, or analytic sophistication. Companies must measure, understand, and focus management attention on what is happening within and across segments, how what is happening there relates to aggregate business or marketing plans, what the implications are for performance management, and which organizational changes are needed to effect segment-level change. More specifically, marketers must complete three tasks:
1. Choose an actionable segmentation, meaning that segment objectives (including customer experience targets) are explicitly linked to overall business goals.
2. Build formal mechanisms within planning, measurement, and performance-management processes to manage customer segments effectively.
3. Create organizational accountability for segment results and empower segment "owners" with the authority to make or influence key decisions.
Wednesday, December 6, 2006
Tuesday, November 28, 2006
THE BALANCED SCORECARD
Why businesses need a balanced scorecard
1 The balanced scorecard was developed by US academics Robert Kaplan and David Norton in response to the shortcomings of traditional financial measures. • Traditional financial measures are one-dimensional. By definition, they only look at the financial aspects of a business. • Traditional financial measures are historical. They tell us nothing about what may happen to the business in the future. There are many examples of businesses that have achieved rising profits, as measured by historical financial results, at the same time as there were underlying problems. Eventually the problems have led to a downturn or even a business failure. • Conventional financial statements do not explain variances from the expected outturn. Why did things go wrong? There are not necessarily any clues in the figures themselves. To understand the problems, some other perspectives on the business are needed other than the purely financial. • Financial measures can be manipulated. There are several notorious examples of where preparers of financial statements have deliberately set out to mislead - Enron is simply a recent example. Even where there is no blatant intention to mislead, there is considerable subjective judgment involved in the preparation of financial statements. This also allows the preparers to manipulate the figures. Kaplan had already discussed some of these issues in a book, 'Relevance Lost', written with T Johnson in 1987. 'Relevance Lost' argued that traditional management accounting had failed to keep pace with changes in IT and new ideas about business. Kaplan and Norton based their ideas about the balanced scorecard largely on a study, 'Measuring Performance', sponsored by accountants KPMG. This study looked at how businesses measured performance in practice. They came across several examples of how businesses used measures other than purely financial ones. In one business, the quality manager had pushed the CEO to include quality metrics at the top of a weekly management meeting agenda as well as financial metrics, which had always been the first item on the agenda in the past. Since Kaplan and Norton published the first article about the Balanced Scorecard in the Harvard Business Review in 1992, the concept has become adopted widely throughout industry.
Developing performance objectives 2
There are several steps in preparing a Balanced Scorecard, as follows: • Define a vision for the organisation • Develop performance objectives • Develop appropriate measures • Report using the Balanced Scorecard. The first step is to define a vision for the organisation. Such visions are more than just dreams - they are based on strategic choices about what the organisation is in business to achieve. These choices are not arbitrary - they depend on the interplay between (a) stakeholder objectives, (b) the resources available to the organisation and (c) an analysis of the market in which the organisation is operating. The vision for the organisation might typically take a form such as 'We want to be known as the top recruitment agency in the South-East for filling jobs in accounting and finance'.
The elusive art of postmerger leadership
· Businesses are much better than they used to be at capturing synergies following a merger. Yet many combinations that are deemed financially successful in the short term ultimately destroy value, damage brands, and compromise customer relationships.
· What's frequently missing is a well-defined role for the leadership team—a role that complements the technical efforts of the integration team and focuses on intangible (and often unexpected) issues.
· The key challenges for the CEO are rapidly creating a cohesive and well-functioning top team, developing an inspiring "story" to drive the communications effort, shaping a strong performance culture, actively championing the interests of external stakeholders, and balancing quick moves with wisdom gained from experience.
Labels: Postmerger Leadership
Sunday, November 26, 2006
Going from global trends to corporate strategy
· Macroeconomic, social, and business trends shape the global landscape. Anticipating their impact can help companies succeed by riding the current rather than swimming against it.
· Executives must understand the full range of subtrends behind each trend and how they interact to affect many industries—and not just the obvious ones.
· According to new research, companies that shift their portfolios to align them with favorable trends are much more likely to achieve strong growth and profits.
· Large companies must innovate to take advantage of global trends without jeopardizing the core business. They can succeed by combining their scale assets to create and amplify the value of their innovations.
Friday, November 24, 2006
With Mr. Paul Dennison, Director - Business School, University of Greenwich, London GB.
A perfect disciplanarian, tough teacher, staunch philosopher, compassionate listener, positivist and great inspirer.
Thursday, November 23, 2006
Labels: Convocation day.
Wednesday, November 22, 2006
Leadership as the starting point of strategy
Even the best strategy can fail if a corporation doesn’t have a cadre of leaders with the right capabilities at the right levels of the organization.
Tsun-yan Hsieh and Sara Yik
2005 Number 1
When it comes time to implement a strategy, many companies find themselves stymied at the point of execution. Having identified the opportunities within their reach, they watch as the results fall short of their aspirations. Too few companies recognize the reason.
Mismatched capabilities, poor asset configurations, and inadequate executioncan all play their part in undermining a company's strategic objectives. Although well-regarded corporations tend to keep these pitfalls squarely in their sights, in our experience far fewer companies recognize the leadership capacity that new strategies will require, let alone treat leadership as the starting point of strategy. This oversight condemns many such endeavors to disappointment.
What do we mean by "leadership"? Whereas good managers deliver predictable results as promised, as well as occasional incremental improvements, leaders generate breakthroughs in performance. They create something that wasn't there before by launching a new product, by entering a new market,or by more quickly attaining better operational performance at lower cost, for example. A company's leadership reaches well beyond a few good men and women at the top. It typically includes the 3 to 5 percent of employees throughout the organization who can deliver breakthroughs in performance.
Since bold strategies often require breakthroughs along a number of fronts,a company needs stronger and more dominant leadership at all levels if these strategies are to succeed. A defining M&A transaction, for example, requires leadership throughout an organization's business units and functions in order to piece together best practices and wring out synergies while striving to carry on business as usual. In addition, leaders throughout both companies must transcend the technical tasks of the merger to rally the spirits of employees and to communicate a higher purpose.
As the number of strategic dimensions and corresponding initiatives increases, so does the pressure on leadership. Not surprisingly, our work in many industries with companies of all sizes has shown that high-performers, especially those with lofty aspirations, have the most difficulty meeting their leadership needs. Of course, companies that perform poorly are also lacking in leadership capacity. The higher a company's aspirations or the more radical its shift in strategic direction, the larger the leadership gap. This rule holds true for high performers and laggards alike.
The consequences of inattention
Most CEOs will agree that leadership is important, yet few assess their leadership gap precisely. Fewer still build an engine to develop the right quantity of leaders with the right mix of capabilities, at the right time, to match opportunities.
If the number of leaders needed to achieve a strategic goal—for example, expanding current operations or developing new businesses—were set against the number of existing leaders, a company could uncover the numeric leadership gap it must address. Even if an organization has enough leaders, it may discover a shortfall in their capabilities. A company expanding internationally, for example, could find that its current leaders lacked the cultural sensitivity to operate in unfamiliar geographies. Or a corporation entering new markets could find it had too many engineers and not enough business builders.
The failure to assess leadership capacity systematically before launching strategic initiatives can leave top executives scrambling to fill gaps at the last minute—with significant consequences.
In the short term, companies that undertake new strategies without the right leaders in place are forced to burden their existing ones with additional responsibilities. As such leaders take on the new challenges, the demands from day-to-day operations invariably increase, leaving less time for other tasks. Often these leaders drop the activities with less tangible outcomes, such as staff development, for which the effects are not immediately evident. If a company stretches its existing leaders too far, their overall effectiveness takes a nosedive. From the start, this trade-off compromises strategic objectives. Companies executing strategies under these circumstances assume either that they can get by with suboptimal leadership or that achieving just part of their initial objectives will capture a corresponding percentage of the strategy's net present value. We know from experience that these assumptions can be fatally wrong: one critical misstep can jeopardize the entire investment.
In the longer term, a persistent leadership gap will be responsible for an inexorable decline in the number and quality of leaders. Companies create a vicious cycle in which good leaders become overextended or are moved haphazardly and thus have less time to develop younger talent. The day will come when they hand over the reins to a less experienced, ill-prepared group of successors. Left unchecked, this cycle can ultimately put the company's core operations and strategic growth at risk.
Given the severe consequences of a leadership gap—the best-planned strategy is no more than wishful thinking if it can't be translated from concept to reality—why do so many companies discover their leadership shortfall only when executing their strategies? This question raises another, more fundamental one regarding strategy and leadership: which is the chicken and which is the egg? Companies have taken a number of useful approaches to this puzzle.
One successful US conglomerate with global operations routinely holds discussions that integrate both strategy and leadership. Any consideration of a strategic initiative invariably includes the question, "Who exactly will get this done?" If the company does not have a sufficient number of the right leaders, the plan does not proceed.
Another approach is to weigh a corporation's strategic options against its ability to launch new businesses, new approaches, and other forms of breakthrough performance—in other words, its leadership. Consider, for example, the global-expansion strategy for a successful resource company. The effort included identifying the leadership required to drive breakthrough performance over five years in areas such as running and expanding existing businesses, developing new ones, renovating corporate processes such as risk management, and providing overall change leadership. The company then gauged its leadership gap by comparing these requirements with the qualities of its current leadership bench. It made a number of strategic decisions to determine, among other things, which path was best for realizing the strategy, whether to revise its aspirations, and whether to develop leaders internally or hire them from outside.
A third approach is to plan the path toward a predetermined strategic goal by taking into account the quantity, timing, and mix of leaders that the various alternatives require. Companies using this framework may rule out some possibilities if developing the requisite depth of leadership is unrealistic in the time frame dictated by the marketplace. A leading food company in Asia, for example, aspired to become the dominant regional player. With five strong national brands, it had at least three clear options for how to achieve that goal: take a cautious approach by launching one brand as a pilot in each overseas market before introducing other brands; focus on China by building a beachhead with one brand in a single city, then sequentially rolling that brand out region by region within China; or, finally, acquire a player in one regional Chinese market, thus gaining outlets and local expertise, and use this opening to roll out all five brands to more markets in China over time.
While many factors, including the company's appetite for risk, weigh on these decisions, in this case each option had distinct leadership requirements. The first, for example, would initially require at least five to ten well-rounded leaders—entrepreneurs capable of establishing local networks, operating under unfamiliar conditions, and managing all five brands. The second option called for a business builder who was deeply familiar with the beachhead city to direct a team of four to six emerging leaders who could spearhead the subsequent expansion. A business-development leader would also be helpful in seeking an alliance partner to speed up the company's pace and bolster its confidence during the regional expansion. The third possibility, by contrast, would immediately require an expert to structure, valuate, and negotiate deals and, in the medium term, a few executives capable of operating in each of the regional Chinese markets. After the company critically reviewed its current and potential leaders, it made the decision to adopt the third of those options.
Thinking about leadership up front can affect the direction, the path, and the actual outcome of a strategy
These three cases illustrate how thinking about leadership up front can affect a strategy's direction, path, and outcome. But can a company bring leadership considerations into its strategic discussions even earlier, before it chooses a general direction? To do so, the company must think rigorously about its current leadership pool—the types of leaders and their mix of capabilities—and lay out the strategy accordingly. If a manufacturer's strong suit is leaders with superb marketing capabilities, for example, a market-driven strategy would be implied and might include selling another manufacturer's products. Taken to this level, leadership becomes the true starting point for strategy.
Filling the gap
A clear picture of the leadership gap can help guide strategic thinking, but to retain as many options as possible, companies must also consider ways to fill that gap. To reduce the risk of strategic failure, they need to direct their approach to leadership with three time horizons in mind.
Long term: Position
Companies need to position themselves today to meet their strategic objectives during the next three to five years. In an 18-month period, for example, a South Korean consumer goods company successfully expanded its core business into Japan, where it diversified into noncore sectors such as low-cost lodging. It achieved such deep penetration of this notoriously closed and mature market so quickly by building its leadership bench in advance. At least five years before the initiative's launch, the company began hiring managers and sending them to Japan—through exchanges with friendly Japanese partners—thereby creating a cadre of South Korean leaders trained to operate in Japan.
In many of Asia's key growth markets, local leaders with a global perspective are highly sought after and often unavailable at almost any price. Returning nationals, typically trained in Europe or the United States, may be another option, but many companies have found these prospects to be expensive and lacking in the tacit knowledge needed to operate successfully in the cultures of many corporations—and the industries they compete in. A company must hire and groom potential leaders as much as a decade or more ahead of market need and then help them build the internal networks necessary for long-term success.
To cite another example, for decades a US financial-services giant systematically hired the best global talent, regardless of the market, and rotated these leaders through every critical aspect of its operations. This investment in human assets paid off handsomely. In most of the new economies the company enters, it enjoys an almost unparalleled ability to field full-service teams with strong leaders in the vanguard. Competitors, by contrast, are forced to expand more selectively or to offer expensive packages to lure top talent.
Medium term: Cultivate
Companies must also begin cultivating leaders for specific roles one to two years down the road. This effort requires recognizing the skills, behavior, and mind-set that leaders must possess to be prepared for future roles. Many executives spend years building their technical skills and industry knowledge but rarely develop expertise in areas such as managing stakeholders and building networks. In a prominent resources company, for example, top executives identified potential successors for key leadership positions. It highlighted the measures needed to bring each one up to speed, including counseling, training, and new assignments, by considering individual profiles (strengths and weaknesses, past experience, and skills) as well as the key success factors for upcoming leadership positions (industry or functional expertise, personal or change-management skills, and local knowledge).
Another company informed appointees of their next assignment six months ahead of time and then enrolled them in self-directed preparatory programs. All of the leaders wrote a personal-development contract related to the challenges of the new role and created a list of learning opportunities and developmental activities that would prepare them for their new responsibilities. These tasks could include, for instance, seeking advice from veterans or drawing up a plan for the first 100 days in the new role. The company also provided four categories of learning modules: "lead self," for self-awareness, skill mastery, and developmental planning; "lead others," for getting the best performance from colleagues in specific settings; "lead context," for understanding and identifying trends in the competitive environment; and "lead change," for aligning key stakeholders, steering the organization to breakthroughs, and challenging conventional approaches and thinking.
Short term: Match
Job experiences and stretch assignments are the primary development vehicles for leaders. Opportunities to achieve performance breakthroughs are critical not just for reaching a company's performance goals but also for developing its best people. Unfortunately, corporations that are particularly risk-averse often match their people to opportunities by looking at track records and job experiences, which they see as indicators of future performance. But such an approach is unlikely to succeed, since the experience and skills needed for earlier successes are not necessarily precursors for those required to achieve performance breakthroughs in subsequent opportunities.
A better approach is to use corporate-performance objectives and personal-development goals to match current and potential leaders with opportunities. This multifaceted approach uncovers a better fit between the individual and the opportunity. For this process to be successful, top managers need to acquire a holistic understanding of each individual, including professional abilities, such as leadership qualities, track record, and potential, as well as key personal traits, such as style and preferences, character and motivation, and current attitudes and mind-set. Companies can assess these qualities through information—objective and subjective—from superiors, peers, mentors, and other sources.
To help leaders develop throughout any of these three time horizons, a company must first accurately identify who its leaders are and then convince them of an opportunity's potential. Companies often underestimate this challenge. Top managers typically assume they know which of their best people are willing and able to take on new challenges, but the reality is often very different. At one multinational corporation with an ambitious growth agenda, the CEO asked the 20 members of his management committee for written nominations to fill leadership positions for 30 initiatives. Most committee members couldn't confidently name more than five to ten candidates, and large overlaps existed among the members' lists. Each had nominated the "usual suspects"—managers who were well known in the executive suites. If the company pursued all 30 initiatives simultaneously, it would overload these candidates while denying other potential leaders the chance to develop and shine. Corporations must instead look out along the three time horizons we have described to build a more systematic leadership engine.
Strategy will not succeed in a void, and leadership often makes the difference between merely reaching for great opportunities and actually realizing their potential. Top managers must assess their company's leadership gap and find ways to close it over the short, medium, and long term. Better still, they should integrate leadership with strategy development and thoughtfully match their portfolio of leaders with opportunities.
About the Authors
Tsun-yan Hsieh is a director and Sara Yik is a consultant in McKinsey's Singapore office.
Tuesday, November 21, 2006
Standing from Left - Women In Management:
Missing in the photograph:
Sola Sewjee - She was busy looking after her baby boy in Conference Hall 070, Queen Anne Building.
Photo Courtsey: Kishan
Missing you all; the good times, competing times, team work & lighter moods.
Labels: MBA Girls.
Monday, November 20, 2006
Measuring performance in services Services are more difficult to measure and monitor than manufacturing processes are, but executives can rein in variance and boost productivity—if they implement rigorous metrics.
Eric Harmon, Scott C. Hensel, and Timothy E. Lukes
2006 Number 1Faced with stiffening competition, increasingly demanding customers, high labor costs, and, in some markets, slowing growth, service businesses around the world are trying to boost their productivity. But whereas manufacturing businesses can raise it by monitoring and reducing waste and variance in their relatively homogeneous production and distribution processes, service businesses find that improving performance is trickier: their customers, activities, and deals vary too widely. Moreover, services are highly customizable, and people—the basic unit of productivity in services—bring unpredictable differences in experience, skills, and motivation to the job.
Such seemingly uncontrollable factors cause many executives to accept a high level of variance—and a great deal of waste and inefficiency—in service costs. Executives may be hiring more staff than they need to support the widest degree of variance and also forgoing opportunities to write and price service contracts more effectively and to deliver services more productively.
As with any task or operation, to improve the productivity of services, you must apply the lessons of experience. Consequently, measuring and monitoring performance (and its variance) is a fundamental prerequisite for identifying efficiencies and best practices and for spreading them throughout the organization. Although some variance in services is inescapable, much of what executives consider unmanageable can be controlled if companies properly account for differences in the size and type of customers they serve and in the service agreements they reach with those customers and then define and collect data uniformly across different service environments. To do so, it is necessary to bear in mind a few essential principles of service measurement.
• First, service companies need to compare themselves against their own performance rather than against poorly defined external measures. Using external benchmarks only compounds the difficulties that service companies face in getting comparable measurements from different parts of the organization.
• Service companies must look deeper than their financial costs in order to discover and monitor the root causes of those expenses. This point may seem self-evident, yet many companies fail to understand these causes fully.
• Finally, service companies must set up broad cost-measurement systems to report and compare all expenses across the functional silos common to service delivery organizations. The goal is to improve the service companies' grasp of the cross-functional trade-offs that must be made to rein in total costs.
None of these principles is easy to implement. Top executives are likely to face resistance from managers and frontline personnel who insist that services are inherently random and that service situations are unique. Managers who have grown used to the protection that lax measurement affords may be reluctant to view their operations through a more powerful lens. But only by adopting these principles and implementing rigorous measurement systems throughout the organization can service executives begin to identify reducible variance and take the first steps toward bringing down costs and improving the pricing and delivery of services.
Why variance is difficult to measure
Executives who launch variance-measurement programs in a service business are often surprised at the level of difference they discover among similar sites and groups within their own organization, let alone when they compare one company with another. In general, a company's metrics are not uniform across its business units, so that, for example, one group in a call center may regard all calls on a given issue as a single case, while another logs every call separately. A top executive with a background in consumer goods (where items are similar and thus comparable) assumed control of a service business and was shocked to find that the variance of key metrics among similar sites ranged from a factor of 2 to 30. Site managers explained this vast range by asserting that every site was different—and, according to their metrics, they were right.
Services are different
To make meaningful comparisons, companies have to identify the sources of difference in their businesses and devise metrics that compare these businesses meaningfully. The considerations that show up frequently include the most obvious differences among jobs and groups, such as regional variations in labor costs, local geographies and difficulties in reaching accounts, the workload mix (for example, repairs versus installation), and differences in the use of capital (whether equipment is owned or leased by the company or owned by the customer). Several other major issues come into play as well.
Service-level agreements. The more types of services a business offers, the more variability it can expect in its agreements. The metrics for a help desk that provides customer support for 5,000 users in a 9-to-5 office are very different from those for a help desk that supports logistics in a round-the-clock industrial environment. Even when offerings are similar, variance can be introduced locally through the way contracts are interpreted. In one IT-outsourcing company, two desktop support accounts with service-level agreements that specified an eight-hour response time had very different cost metrics. When asked why, the manager of the poorly performing account said that, despite the contract's limits, "If we don't answer within the hour, our client goes ballistic." The written service-level agreement had been trumped by an unwritten one that was costing real money.
Environment, equipment, and infrastructure. Each customer's environment has unique aspects that are difficult to measure. A logistics provider will see huge differences between managing a big, automated warehouse and a small, simple one. Field services that support industrial systems must contend with many generations of equipment and upgrades at customer sites. Some clients have their own on-site staff to support service, while others may be difficult even to reach. Given the range of possibilities, it's usually not very helpful simply to measure the average cost of a service call.
Work volume. Size is a major reason for the wide variance among accounts and business units. Interestingly, managers of both small and large accounts claim that size makes their particular metrics worse. Both have a point: large accounts should benefit from scale, but in general they are also more complex, and that drives costs back up. Volume needs to be considered, but only in tandem with other patterns (including scale benefits and the breadth of work) that help explain costs.
The data problem
Underlying all of these problems is an inability to identify what must be measured and how to normalize data across different environments. Even when companies know what to measure, they struggle to achieve accuracy. Data are rarely defined or collected uniformly across an organization's environments. A service call involving the installation of two elevators, for example, could be measured as a single installation in one part of a company and as two in another.
Contributing to this ambiguity is the fact that data collection is usually driven by the requirements of financial cost reporting, which often fails to shed light on ways of boosting performance. Accountants for an IT services company may need to know the cost of each server, for instance, but an executive looking to reduce variance would also need to know the number of service incidents by server type and the time spent on each incident. Variance in demand drivers is also important: did the number of calls to a help desk rise because more users bought a product, for example, or because it changed? Financial metrics might fail to detect this important distinction.
Principles of service measurement
Many executives don't understand how to measure and manage what appear to be unique activities, and they confuse correctable performance variance with irreducible environmental variance. Embracing three principles that identify variance and allow for meaningful comparisons can help executives overcome these difficulties.
Use internal benchmarks
While a company must know what its peers are achieving, it's a mistake to measure its performance against the competition: these benchmarks are typically just samples of data with little explanation behind them. Companies that use external benchmarks are often frustrated to find themselves off by a factor of five to ten, positively or negatively.
Using external benchmarks compounds the internal difficulties that service companies face in normalizing activities and the data that define them. Consider a measure such as costs per unit of information processed: some companies include allocated costs, such as corporate overhead and salaries; others don't.
Internal benchmarks deliver more detailed metrics, allowing a company to find its own best practices and to see where and how they are achieved. It can then have access to all relevant information to assess differences among business units and accounts. In defining internal benchmarks, for example, a company can determine which costs are included or how asset costs are allocated—details that get lost in external benchmarking. A company can see what's really possible within the organization by using its own benchmarks.
A cost tree with detailed metrics is an important tool to help companies define internal benchmarks (exhibit below). External metrics might deliver numbers on the top level of the tree, but only by developing internal trees for each service line can a company begin to understand its true cost drivers. A tree allows a manager to compare the performance of different accounts against similar metrics and also to calculate which improvements will have the most impact on the top-level figure. Once a team has gathered cost data throughout the tree, for example, it could target opportunities to cut costs and calculate which efforts would have the most impact on the bottom line. Creating cost trees can also help companies write better service agreements that exclude unprofitable activities or generate more revenue where service costs warrant it.
Measure cost drivers
Even after service companies begin to define and capture the detail that lies beneath the top level of the cost tree, they still need to discover the underlying cause of each expense. Measuring only the cost of repair calls, for instance, probably wouldn't reveal whether they all stem from a single poorly built product, which could be improved or sourced differently for less than the cost of the repairs, or from factors such as variability in the performance of repair teams. Better measurements look at cost drivers, such as cost per employee (a resource metric), incidents per employee per day (a productivity metric), or—in a product-based service business—the number of incidents per product (a volume metric).
Of course, companies must also omit allocated costs, which can confuse the issue. A business unit's support infrastructure, for example, could include human resources, physical plant, and product engineering, all of which must be considered from a financial point of view. But such costs do little to determine productivity and are something of an obstruction when companies try to spot variance and waste. Once these obstacles are removed, managers can stop trying to cut costs that may be beyond their control and instead address the drivers they can improve. Before measuring the financial costs, it's often helpful to measure the items and events that drive costs, such as people, machines, incidents, service calls, and change orders.
Measure deep and broad
When service companies try to measure only their selected costs—rather than taking a comprehensive approach—they are often surprised to see that their teams hit every budget target while still losing money. That's because services are fungible, and it's easy to measure the wrong things or to shift costs, intentionally or not, to unmeasured areas.
Consider the case of a cable company that was trying to reduce the resolution times of its help desk and service calls. After setting goals, managers saw resolution times shrink, but total service costs were rising. In this case, help desk representatives, eager to meet their goals, spent less time trying to resolve problems remotely. After asking only a few questions, these employees referred cases to field service reps, who were happy to have a series of fast and easy calls to boost their own metrics. Unfortunately, the number of field service calls, which are far more expensive than help desk calls, rose dramatically. To resolve this problem, management combined call centers and field services into a single cost tree and monitored the percentage of calls passed from the one to the other, as well as the time spent on each type of call. Managers then encouraged the call center reps to spend more time trying to resolve difficult calls before passing them along to field services, thereby increasing the average call time but helping to reduce total costs. Thus a critical purpose of any cost tree is to yield insights about how better (or worse) performance in one area of the tree might affect another.
Setting up measurement systems
With these principles in mind, executives can begin to define their metrics, collect data, and implement processes that will drive their efforts forward.
Build the tree and choose your metrics
Cost trees should be detailed enough to spot efficiency problems and broad enough to be comparable across operating units. Once companies have identified the allocated costs and cost drivers, they can begin to build the cost tree. Broad input from the field (line managers, engineers, field and service reps) is vital, along with input from senior executives, who are generally better able to focus on the total costs required to deliver a service to customers. In this way, the tree captures all the costs of (and details on) the most important cost drivers. The tree should also be constructed to compare key metrics across a range of environments—for example, all call centers, whether they operate 24 hours a day or 9.
As the data arrive, management will want to monitor the top level of the tree as well as the key metrics below. In most cases, we find, three to five metrics monitor 80 percent of the variance in costs.
Collect with care
Without clearly defined metrics and knowledgeable people to support the gathering of data throughout the organization, companies can spend too much time cleaning up messy data. Training and improved processes can alleviate this problem.
Managers should review the data collection rules and templates with the people who develop them—usually employees from different regions or accounts. Even with new procedures in place, however, there will be much room for interpretation. It's therefore helpful to show not only how data should be collected and entered but also how users occasionally misinterpreted these processes in the past—an approach that sheds light on gray areas the rules might not address. Guidelines for identifying problems early on can save time later. It's also important to establish boundaries beyond which suspect metrics should be investigated. One service company, whose teams handled from two to five service calls a day, wondered why one of its teams was reporting an average of only a single call. It found a good reason: the account belonged to a prison system, where security procedures made each visit a daylong affair.
Reviewing data collection in the early stages of implementation can help to ensure that procedures are followed. Equally, sharing reports with regional and account leaders gives them an early view of their standing and can help identify unusual patterns in the data.
Managers accustomed to tracking costs in accordance with accounting needs will have to understand these new metrics and make them consistent throughout all levels of the organization. Periodic reviews, whose frequency should be based on the availability and shelf life of data, are essential for individuals and work groups. Visible interest from senior management—such as sending an executive vice president to attend a regional metrics review—promotes a strong message to everyone that a company is intent on identifying variance and improving service performance. Compensation should be tied to these metrics.
What's measured can be managed
For tools managers can use to price and manage service contracts, see "How to make after-sales services pay off."
Once executives have learned to measure the variance inherent in service companies, they can begin to manage processes to eliminate waste, to improve the delivery of services, to price services more accurately, and to write better contracts. Although a company can do many things to control the variance of its service delivery, most of them fall into three main areas: managing demand, standardizing environments, and applying appropriate resources to tasks.
Managing demand offers the biggest potential for improvement. Cost trees help managers identify the sources of demand for services—sources that might include faulty products, poorly performing service units, or any number of other causes. Some fixes must be made within the organization (better training, better products, automated-response systems); others depend on shaping the behavior of customers (for instance, by offering tools and guidance to help them resolve problems themselves).
Standardizing operating environments requires the most discipline, since salespeople are strongly tempted to sell as much customization as a client wants. Standardization can yield enormous results: in addition to raising productivity, it helps the workforce become more flexible because people can transfer with less retraining. Where possible, companies should standardize not only service product lines and tasks but also the work environments of employees and the equipment they use to deliver services. Scripted routines help eliminate errors and allow employees to emulate high performers. Furthermore, clearly defined programs limit overdelivery, a common problem in service companies.
What's more, identifying cost variances can help companies allocate their human resources more effectively. In general, it's more productive to handle problems with the least expensive resources that can resolve them: calling in experts or sending out field technicians increases costs and slows response times—and therefore makes customers less satisfied. Metrics on costs per call or device demonstrate the benefits of using less expensive labor, thus encouraging companies to keep requests upstream and to place first responders (often a call center) in less costly regions to further increase savings and productivity.
Finally, companies that have a better picture of where costs are incurred can price services more accurately to avoid losing revenue on unprofitable activities. They can write better contracts that take into account cost drivers hitherto written off as inescapable variance.
As services become an ever larger part of the global economy, managers are rightly looking for ways to improve productivity and efficiency. Services may be more difficult to measure and standardize than the manufacture of products, but executives should not abandon hope. Adopting the principles set forth in this article will help companies improve the delivery, pricing, and sales and marketing of services.
About the Authors
Eric Harmon is an associate principal in McKinsey's Dallas office, Scott Hensel is an associate principal in the Stamford office, and Tim Lukes is a consultant in the Miami office.
The authors would like to thank Byron Auguste, Ken Davis, Travis Fagan, Ozan Gursel, and Greg Neubecker for their contributions to this article.
Labels: Measuring Performance - Mckinsey
Labels: Mexican Chillies.
Wednesday, November 8, 2006
Labels: Team Work.