copyright iimg@2005 1 by dr madhav mehra president world council for corporate governance leading...
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BYDR MADHAV MEHRAPRESIDENT WORLD COUNCIL FOR CORPORATE GOVERNANCE
LEADING CORPORATE TRANSFORMATIONS
World Council for Corporate Governance
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To SECURE the
company against
financial & non-
financial Risks
Why Independent Directors?
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• Social Risk
• Economic Risk
• Climate Change Risk
• Unforeseeable Risk
• Reputational Risk
• Ethical Risk
What is SECURE
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• Citi Bank
• Infosys
• Merryl Lynch
• Vedanta
• Ansals
What is commonamong them?
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“Whatever made you
successful in the past
won't in the future.”
- Lew PlattChairman and CEO Hewlett-Packard
LEADING TRANSFORMATIONS
World Council for Corporate Governance
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“It's the end of
the World as
we know it.”
--- Peter Georgescu, Chairman and CEO,Young & Rubicam
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“If you are not
bloodying your nose
in today's warp speed
economy, you are not
walking fast enough?”
CONSTANT CHAOS
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CHANGE , TUMULT & CHAOSThere are no excellent companies. IBM is declared dead in 1979, best of the best in 1982, dead again in 1986, buried in 1992, resuscitated in 1995
People Express was the model “new look” firm, but flops twenty-four months later
Apple Macintosh which held 14% of the PC market in eighties goes down to 3%, is revived 10 years later when Steven Jobs returns and doubles its stock value
Our competitive situation is dire. The time for 10 % staff cuts and 20% quality is past
Violent and accelerating change, viewed by losers as a problem, will become the grist of the opportunistic winner’s mill.
Loving change, tumult and chaos are prerequisite for survival
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WHAT HAS CHANGED
• GLOBALISATION
• FALL OF THE MIGHTY
• GROWTH ECONOMIES
• INFORMATION REVOLUTION
• ORGANISATION
• WORK PLACE
• SOCIAL MOBILITY
• KNOWLEDGE WORKER
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WHAT HAS CHANGED
• TELECOMMUTING
• OUTSOURCING
• MICRO ENTERPRISES
• INTERNET
• CUSTOMISATION
• ENVIRONMENT
• Cultural Diversity
• Radically New Technologies World Council
for Corporate Governance
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• Unexpected Competition• Fragmentation of
Traditional Markets• Failure of traditional
supply lines • Collapse of Key revenue
sources • Aggressive Government,
Social pressure • Death of distance • Value Shift
WHAT HAS CHANGED
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Death of the Distance
“Carrying a call from
London to New York costs
virtually the same as
carrying it from one house to
the next. The death of
distance will
probably be the single-most
important economic force
shaping society in the first
half of this century.”
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VALUE SHIFT
From tangibles to intangibles
From capital to knowledge
From objects to relationships
From parts to the whole
From domination to partnership
From structures to processes
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VALUE SHIFT
World Council for Corporate Governance
From individualism to integrationFrom short termism to long termismFrom growth to sustainabilityFrom confrontation to collaborationFrom shareholders to stakeholdersFrom single bottom line to triple bottomline
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DIRECTING IN A CHAOTIC WORLD
• QUALITY IS NOT ENOUGH
• CONSUMER WANTS BEST IN WORLD PRODUCTS
• CHAOS IS NORMAL
• ACCEPT IT AS A NATURAL PART OF LIVING
• THE MANAGER WHO SAYS HE IS WAITING FOR THINGS TO GET BACK TO NORMAL HAS MISSED THE BUS
• THE ONLY THING IN PERFECT STATE OF EQUILIBRIUM IS A DEAD BODY.
• THE ISSUE IS NOT RETURNING TO THE OLD SYSTEM BUT INVENTING A NEW ONE.
• LEARN FROM CHAOS. WATCH THE FLOW & LEARN TO HARNESS IT.
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DIRECTING IN A CHAOTIC WORLD
Contd....
• NEVER OPPOSE FORCE WITH FORCE.
• COOPERATE IN ORDER TO COMPETE
• THERE IS NO SUCH THING AS FAILURE - ONLY FEEDBACK.
• WHATEVER HAPPENS, HAPPENS TO SERVE US.
• WHENEVER IT STARTS IS THE RIGHT TIME.
• WHOEVER COMES IS THE RIGHT PEOPLE.
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DIRECTING IN A CHAOTIC WORLD
Contd....
• A MILITARY FORCE HAS NO
CONSTANT FORMATION,
WATER HAS NO CONSTANT
SHAPE: THE ABILITY TO
GAIN VICTORY BY
CHANGING AND ADAPTING
ACCORDING TO THE
OPPONENT IS CALLED
GENIUS
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BECOME A DIRECTOR NOT MANAGER
Manager
Manageswithin paradigms
Thermometer
A copy
Maintains
Controls
Asks how and when
Watches the bottom line
Imitates
Does things right
Director
Leads between paradigms
Thermostat
An original
Develops
Inspires
Asks what and why
Watches the horizon
Originates
Does right things
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“But I Am Not a Born Leader!”
It is easy to dismiss strong leadership as the product of auspicious genes or luck; but throwing up our hands and making excuses is a cop-out:
“Developing into an upper level executive is a lot like developing a top-flight professional athlete .... It may seem that certain star athletes burst onto the scene out of nowwhere [but] a closer study of their background and training usually shows years of perspiration and hard work.”
-Donald Selbert, former J.C. Penney Chairman
“Biographies of great leaders sometimes read as if they had entered the world with an extraordinary genetic endowment. ... Don’t believe it!”-Warren Bennis and Burt Nanus (after completing their study of ninety top leaders in various fields)
“I don’t think anyone is a born leader. A person who aspires to a high managerial position can develop the necessary skills if he or she is ambitious and dedicated enough.”
-Buck Rodgers, Retired Vice-President, Marketing, IBM
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“Peak performers are made, not born .... Every one of the peak performers we studied confirms that the gap can be spanned. People can learn how to be peak performers .... Pavarotti was an average singer in the boys’ choir when he was a teenager. The only reason they let him stay was because his father ran it .... He studied and practiced and trained.”
-Charles Garfield (after a nineteen-year study of 450 outstanding individuals)
Education specialist Benjamin Bloom of the University of Chicago spent four years studying highly successful athletes, artists, and scholars. He found that none had been child prodigies. Each had spent more than fifteen years perfecting his or her craft.
“But I Am Not a Born Leader!
…Contd
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Communication Is Central to Leadership
The best ideas or plans fail if not communicated properly. It’s not enough to know what’s to be done. A leader at any level of the organization must be able to mobilize others to action.
Communication skills are far more important in this cyber age than at any age preceding it. As today’s market is global, so today’s leaders must be able to communicate globally
John Kennedy had these skills. Jimmy Carter, on the other hand , is thought to have lacked them. Kennedy modeled his communication skills on those of Winston Churchill, a man he revered. Kennedy once said of the English statesman:
“Churchill had the unique ability to send the English language into battle. He had the ability by words, phrases, stories, sentences and paragraphs to give hope to the weary, to give tenacity to those that seemingly had lost all hope. Words are powerful.”
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“The Tao of Team Leadership”
A good group is better than a spectacular group. When leaders become supertars, the teacher outshines the teaching.
The leader who tries to control the group through force does not understand group process. Force will cost you the support of the group .... Every law creates an outlaw.
The wise leader settles for good work and then lets others have the floor. The leader does not take all the credit for what happens and has no need for fame.
Learn to lead in a nourishing manner.
Learn to lead without being possessive.
Learn to be helpful without taking the credit.
Learn to lead without coercion.”
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3 types of change
•Developmental
•Transitional
•Transformational
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LEADING TRANSFORMATION
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1. Imposing Context
2. Conviction
3. Critical mass
4. Knowledge Based
5. Outsourcing
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LEADING CHANGE
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6. Flat Structure
7. Decentralised
8. Moving Bits & Bytes
9. Systemic Innovation
10.Everyone a Business Person
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Creating Urge for Achieving Superlative
Performance
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•Meaning – Vision
•Control – Empowerment
•Feedback - Reinforcement
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WHAT IS VISION
Reason for being
Basis for strategic intent
Beyond economic measures
Picture of the preferred future
Igniting sparks that energises
Skyhooks
Self-fulfilling prophecy
Organisational alignment
Ultimate team builder World Council
for Corporate Governance
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HOW LEADERS USE VISION
Organisational alignment
Mental image that connects present to future
Magnetic intensity
Shared meaning
Metaphors and models
Instill belief in employees
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What Makes Transformation
Different
1. Comprehensive2. Whole Organisation3. Integrated Set of solutions4. Change is pervasive5. Challenges the purpose6. Combination of strategies7. Dramatic Change
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8 STEPS TO CORPORATE TRANSFORMATIONS
• ESTABLISH A SENSE OF URGENCY
• FORMING A POWERFUL GUIDING COALITION
• CREATING A VISION
• EMPOWERING OTHERS TO ACT ON THE VISION
• COMMUNICATING THE VISION
• PLANNING FOR AND CREATING SHORT TERM WINS
• CONSOLIDATING IMPROVEMENTS, PRODUCING STILL MORE CHANGE
• INSTITUTIONALIZING NEW APPROACHES- John P. Kotter
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11 Commandments of Implementing
Transformations
• Shared Vision
• Sponsors & Agents
• Time & Money
• People as Solutions – Not Problems
• The Loyal Opposition
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11 CommandmentsContd.
• Competent Training
• Powerful Coaching
• More time & More Money
• The Critical Mass
• Renovation of Hard Systems
• Conservation of Change
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Moving From Balance Sheets to Knowledge Capital
Traditional
1. Physical assets
2. Turnover
3. Number of staff
4. Market share
5. Investment
6. Raw material7. Return on capital
Knowledge Based
1. Quality of staff
2. Ability to Learn
3. Number of new ideas
4. Closeness to customers
5. Staff development
6. Recruitment 7. Value added per person World Council
for Corporate Governance
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Seven Kinds of Intelligence
• Logical - Mathematical Intelligence ("logic smart")
• Linguistic Intelligence ("word smart")
• Spatial Intelligence ("picture smart")
• Musical Intelligence ("music smart")
• Kinesthetic Intelligence ("people smart")
• Interpersonal Intelligence ("people smart")
• Interpersonal Intelligence ("self smart")
- Thomas Armstrong
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“For the past decade and a half , companies in every industry
have obsessively devoted themselves to managing the supply side of their business, from manufacturing through
distribution and pricing . . . .
But the vast opportunities that present themselves from the
chaos in the upcoming century shall come from a focus on the
top line.”
---Peter Georgescu,Chairman and CEO, Young & Rubicam
Profiting From Top Line
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“All growth will come from intellectually based
SERVICES.”—
“All value chain elements are . . . SERVICES.”
—“All services can be
OUTSOURCED.”—
“We give up competitiveness to the extent that ANY service task
is not equal to Best-in-World standard.”
—James Brian Quinn
Contd.
Profiting From Top Line(Contd>)
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Providing service is a challenge
Many companies have talked about excellent service but few have defined what they mean by it ....
Respond to the customer in a caring manner at all times.
Actively listen to customers.
Demonstrate empathy by putting yourselves in their place and thoroughly understand their situation.
Project a professional image.
Maintain a professional office appearance
and personal manner.
Contd.
6
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Contd.
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Dress so that our customers feel confident in dealing with you
Build customer relationships.
Put customers first and show genuine interest in satisfying their ongoing needs.
Develop expert product knowledge.
Be able to deliver the product which best meets the customers needs.
Conduct all business in an honest and ethical manner.
Act within the intent and spirit of the law and company policies at all times.”
Providing service is a challenge
6
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World Council for Corporate Governance
• Think Inc• Think client• Visit every client• Turn every job into a
project• Put together a Current
Projects List• Conduct a weekly
Current Project Review• Score, quantitatively,
every project on excitement, urgency and transformation potential
• Think portfolio quality• Do whatever it makes
BEST IN WORLD SERVICE
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• Transfer your skills to clients• Include the client on every
project team• Insist that clients evaluate
“your” people and “their” people on each project
• Bring in outsiders• Think marketing• Think research and
development• Turn your Current Projects
List into a research-and-development test ground
• Devote a large share of the gross revenues to knowledge development
• Establish clear, tough incentives for contributing and sharing knowledge
BEST IN WORLD SERVICE
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BEST IN WORLD SERVICE
World Council for Corporate Governance
• Train in project creation
• Train in problem solving
• Train in implementation
• Train in client relations and client development
• Challenge ! Challenge ! Challenge !
• Train ! Train ! Train !
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TEN COMMANDMENTS OF LEADING TRANSFORMATIONS
World Council for Corporate Governance
•All Advantage is Temporary
•Strategy is Diverse
•Grow your people
•Reinvent
•Go for the difference & not perfection
•Leveraging 5Ds
•Tyranny of either/or
•Execution is the goal
•Disruptive innovation
•PROACTIVATE
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OPPORTUNITY KNOCKS
• ENERGY REVOLUTION
• SECURITY & SAFETY
• CLEAN INDUSTRIES
• BIO TECH
• CLEAN FOOD
• HEALTH /FITNESS /NUTRITION
• LONGEVITY /LIFE EXTENSION CENTRES
• HERBAL THERAPIES
• HOME IMPROVEMENT
• WATER SUPPLY
• USE OF INTERNET
• WOMEN ARE OPPORTUINTY NO. 1
• ENVIRONMENT
• CLIMATE CHANGE World Council
for Corporate Governance
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WOMEN POWER
Percentage of Choices to buy a product that are made or decisively influenced by women:
Home Furnishings 94%
Holidays 92%
Homes 91%
Bank Accounts (choice of New) 89%
Medical Insurance 88%
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ICEBERG OF INTANGIBLES
In 1996 Coca Cola Revenues $1 Billion stock market value $115b
Microsoft $6 billion $ 71b
INTEL 16 billion $ 62b
DISNEY 19 billion $ 42b
ORACLE 3 billion $ 22b
FORD 137 billion $ 43b
GM 169 billion $ 42b
HARLEY 1 billion $ 4b
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Value in the 21st century lies
in building brandDirector’s
basic role is to SECURE that brand
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World Council for Corporate Governance