aligning for growth
TRANSCRIPT
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Aligning for Growth
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To manage sustainable growth, a
company needs to create an
effective alignment among three
key elements:
its value creation logicits organization principles
its people processes
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Much as an attractive and durable buildings must
be built on a harmonious and stable structure,
similarly in thinking about growth , attentionmust be paid to each of these three attributes
that collectively lead to a self-reinforcing growth
model.
Design of any part must take into careful
considerations the effect on the whole.Failure to understand the interdependent nature
of these different elements in a company will
jeopardize its efforts to grow.
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Value creation logic : What is distinct or unique
about the way in which we create value?
Value creation is all about utility and functionality
and refers, therefore to those the company
serves, rather than those who own it.
Successful companies can create value in many
different ways-
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3M- creates value through continuous innovation, maintaining
profitability and growth by developing and introducing new
products.
Lincoln Electriccreates value through operational excellence, withhighly disciplined operational processes typically backed by high
quality and high-efficiency plants and infrastructure.
McKinseycreates value by building close relationships with
customers, providing tailor made solutions that uniquely meet
individual customer needs
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Bajaj Auto- Till late 1980s Bajaj Auto has historically prospered
by following a dramatically different value- creation logic. In an
environment that restricted both competition and its owncapacity to grow, Rahul Bajaj, basically focused the company on
one core product- first the Vespa and then, after the
termination of its partnership with Piaggio-the Chetak- and
standardized and refined the operational processes to becomethe lowest cost two- wheeler producer in the world.
Thermax has used its origin in small boilers to expand around
both the inlet and the outlet sides of that product.
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Organizational Principles: At the general level, each
organization represents a set of choices around a few
key parameters.
1. Autonomy vs. synergy.
2. Control vs. initiative
3. Leadership vs. Culture
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People Processes:
In a world in which human and intellectual capital are
increasing replacing financial and physical capital as
the key scarce resource, companies have recognised
the need to fundamentally rethink their policies for
attracting, developing and retaining the best talent.
Reliance Industries Limited: Its approach to people is
the diversity and variety they seek. What Reliance
values and looks for are the capacities for
entrepreneurship, risk-taking and the will to win- hall
marks of the Reliance culture etched indelibly by
Dhirubhai Ambani into the psyche of the company.
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Hindustan Unilever develops managers through a uniform , highly
structured and very high quality process into a common mould ofprofessionally competent, highly competitive, yet loyal and
decent executives who have high ethical standards and are the
envy of all competitors.
Unlike Reliance, Hindustan Unilever values professionalism more
than entrepreneurship and both seeks and creates uniformity
more than diversity, but like Reliance , it goes to extreme lengths
to attract the very best talent at the input stage.
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Combining Alignment with Evolution :Seeing what had happened to Bajaj Auto in the
late 1990s , there is need for both alignment and
evolution; for both fit and flexibility.
To successfully grow, a company must align its
strategy, organization and people processes. But
the alignment must not be so strong to preventchange.