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Times of India 15-07-2010 The B-Team In 2003, Anand Mahindra made elite groups of young managers, and told

them to express themselves as if they were running the company. Shadow boards are now part and parcel of the group, report Lijee Philip & Kala Vijayraghavan. IN JANUARY, WHEN MAHINDRA & Mahindra (M&M ) drove into the commercial vehicles segment with the launch of two Navistar trucks, it was a moment of great satisfaction for 41-year-old Satish Karandikar. Six years ago, in 2004, it was a group of seven young M&M managers, under his stewardship, that first tossed the idea of diversifying into commercial vehicles to the company brass. Since many of our utility vehicle buyers also purchased commercial vehicles, we could ride on our good name to make them buy something more from us," says Mr. Karandikar, who was 34 then. But first the greenhorns had to make the M&M management committee buy the idea. That was made easy because the brass was willing to hear them out. Not in a casual or ambivalent way, but in a serious and structured way. Anand Mahindra, vice-chairman and managing director, Mahindra Group, wanted to "hear the voice of the young". So, in 2003, he added a new circle in the organisation structure of Mahindra companies to give young managers a voice at the highest levels of decision-making. 'Shadow boards', it was called. Seven promising young managers, all below the age of 35, were hand-picked in each Mahindra company/division and were asked to think of themselves as another management committee. They were asked to choose three to four subjects, anything at all, deliberate on them for two years and make recommendations. Those recommendations might be implemented, junked or filed away, but the assurance was given that the senior management would take them all up. Some of the recommendations made by the Mahindra shadow boards have found their way into the groups business: the diversification into commercial vehicles, a round the-clock helpline, a more personal approach to distributing increments, even a leap into a bold acquisition. Many of the young managers who have spent time on shadow boards have seen their careers fasttracked. Back in 2004, Mr. Karandikar was the brand head for a utility vehicle, Bolero. Today, he heads product development and marketing for the groups international business. Harish Chavan, 40, heads M&Ms tractor division in China. Anirudhha Haldar, 34, is currently the chief marketing officer at Mahindra Holidays. Says Prince Augustine, EVP-human capital, automotive and farm equipment sectors: There are at least 15 others in the 31-45 bracket who graduated out of shadow boards and are currently occupying key positions. At the $7.1-billion group, shadow boards are delivering the outcomes Mr. Mahindra had hoped for when he asked the group to embrace this management concept. Says Mr. Mahindra: They provide a fresh source of ideas from the front line of the businesses, they foster a feeling of participation in important decision-making, and they provide top management with a periscope into the fresh and young talent in the group. YEARS AGO, UNILEVER AND General Electric introduced the concept of shadow boards, but they found it

difficult to sustain it, as their senior managements didnt get involved. At the Mahindra group, the senior management especially chairman Keshub Mahindra and Anand Mahindra threw its weight behind the concept, and got the senior management involved. The Mahindra group has sustained the concept for eight years; currently, 11 companies or divisions of the group have shadow boards. Says Rajeev Dubey, head of HR, M&M: Shadow boards evolved as part of a large talent-management process. It gives young people the liberty to engage with problems and aids lateral thinking. Adds Ramesh Iyer, managing director, Mahindra Finance: Often, top managements think they know it all. Shadow boards expose them to a young team that innovate and think differently. Its not the popular view in India Inc. Not too many other Indian companies have engaged with the concept of shadow boards. Says Harsh Mariwala, chairman, Marico: Shadow boards may have its uses at times, but we never felt the need to set one up. Sometimes, they have engaged only to disengage, like the Adi Godrej group. Between 2000 and 2009, the Adi Godrej group had a young executive board (YEB). Says Adi Godrej, chairman, Godrej group: It operated like a shadow board and worked closely with the group management committee. Interestingly, Nadir B Godrej, managing director of Godrej Industries, is on the M&M board, and the two groups are believed to have exchanged ideas on shadow boards. The Godrej YEB consisted of 11 talented employees, all below 30, chosen across functions and from various group companies. Members were rotated every two years. The YEB was responsible for changing the maternity-leave policy and introducing flextime options. However, last year, in its final act, the YEB recommended it be disbanded and reformed to reflect the groups new youthful and consumercentric identity. This is expected to happen this financial year. At the other extreme is Rahul Bajaj, the voluble chairman of Bajaj Auto. Having shadow boards is pointless, as there is no governance involved and it is more advisory in nature, he says. Mr. Bajaj, instead, suggests putting young talent on actual boards (See box: The Alternate View). Extending Mr. Bajajs thought, Harish Bijoor, CEO, Harish Bijoor Consults, a consulting firm, adds: Maybe, a single board that has 30% younger A-listers from the organisation. IT'S HOW YOU DO IT, SAYS MR. Mahindra. You cant do this unless the top leadership commits their time to interact with the shadow boards, he says. Adds Arun Wakhlu, executive chairman of Pune-based Pragati Leadership Institute, which focuses on leadership development and organisational transformation: Shadow boards need complimentary teams with senior board members to act as mentors and filter ideas. At the outset, the Mahindra group roped in senior managers to act as mentors to the shadow boards. Typically, the pool of mentors for a shadow board comprises the companys MD and the functional heads. So, for instance, Ramesh Iyer, managing director, Mahindra Finance, will mentor a shadow board of the company. In addition, the shadow board can also access, say, the HR or finance heads on matters concerning their respective areas. Mentors are advised to keep a distance. Says Mr. Augustine: The idea is to not get too involved with them. At the same time, they should not feel they dont have anyone to take care of them. The big challenge for mentors is to bring the shadow board members on the same page. When some people are better than others, the ability to converge is difficult, says Mr. Augustine.

Mentors help sharpen good ideas or weed out the bad ones. More often than not, the ideas are good, but the mentors find more appropriate ways for the company to take them on. For instance, the idea for the group to enter retail came from a shadow board, but the company chose a small-store format (Mom & Me, for infants). The mentors at M&M say that at least 50% of the ideas coming from shadow boards are based on what the Mahindra business is planning. Shadow boards have made a case for, among other things, Mahindra Finance increasing its exposure to second-hand vehicle financing as it was a natural business extension, the Mahindras diversifying into healthcare as people saw it as a brand they could trust, making Mahindra Holidays a $1-billion company by market capitalisation by 2015. Says Mr. Iyer: Initially, I found the members asked innocent questions, but these innocent questions are always the beginning of a big idea. Shadow boards discuss both hard and soft ideas. Some of these get taken up, most of them dont. Even when they have not found expression, they have become a part of the collective thought of the Mahindra group. They swirl or rest in the minds of the people that matter in the group. Sometimes, they are revived in the most unexpected of ways to deliver a handsome payback. Anand Mahindra remembers a shadow board presentation in 2006, where it took on the identity of a competitor. It simulated a strategy session of the competitor to show how it would be detrimental for M&M to lose out on acquiring a third rival. Their analysis played a key role in influencing our top management to forge a winning bid for an acquisition that has proven to be hugely successful, says Mr. Mahindra, possibly alluding to its takeover of the Satyam Computer. In October 2009, Mahindra even put in place a shadow board at Mahindra Satyam (the renamed entity).This forum brought stability in the company, says S Swaminathan, chairman of the current shadow board at Mahindra Satyam. It also gave an insight into the transformation process and brought out the voice of the employees. The group even tried a super shadow board for the entire group in the early years, but that failed due to a lack of interest from the senior managers. The shadow boards, meanwhile, are thriving, benefiting company and managers alike. THE FIRST SHADOW BOARD IN the Mahindra group, in 2003, had a tenure of two years. Now, Mahindra shadow boards are reconstituted every year, with 50% of the members being replaced. This adds dynamism and brings in fresh ideas, says Uday Phadke, a shadow-board mentor on corporate finance, IT, legal, HR and secretarial issues. Mentors are not involved in the annual reshuffle. The members, after getting a fresh set of nominations, decide who the chairman and the secretary will be, says Mr. Augustine. On an average, 50% of shadow board members have been 30-35 years, 25% below 35 years and 25% above 35 years. In the very first shadow board, recalls Mr. Iyer, enthusiasm levels were phenomenally high. Most of the members thought they had a new status, he says. Mr. Haldar of Mahindra Holidays, who has been part of two shadow boards (in 2004 and in 2007), says the meetings bring out the competitive streak in people. The I-know-more-than-you know approach is what sends sparks flying at these meetings, he chuckles.

Thats not such a bad thing, says Mr. Iyer. When competition is high in the shadow board, it builds confidence and communication ability, develops self-motivation skills and raises enthusiasm levels, he says. Most often, the members are not concerned if their idea wins. The very fact that the idea finds favor at the top management is what sustains the program. Young managers who have been on shadow boards say the experience has shaped their business outlook and managerial style. Says Mr. Karandikar: I learned to work with people from different functions and with different mindsets. Mr. Karandikar also appreciated the understanding of corporate strategy. Without giving out strategic information, we shared information with cross-functional groups, he says. Kaushalya Sreenivasan has been a part of the auto sector shadow board since 2009.Just 29, shes the regional head for north, automotive, M&M. She says being on shadow boards has honed her communication and presentation skills. Each year, at the annual Blue Chip Group conference of the group, each shadow board presents its best idea to senior managers. My defining moment came when I made a presentation to 450 senior managers, says Ms Sreenivasan. Adds Charandeep Singh, manager, marketing & strategy, Mahindra Finance: It improves confidence levels. Members face challenges, notably balancing this new responsibility with their work. Says Mr. Phadke: They often find it difficult to spare time for these meetings. Sometimes, they feel the need to opt out, more so since it is not linked to their performance appraisal. For those who stay on, the paybacks can be big. For shadow-board members, the line of sight is much high, says Mr. Phadke. If they are reasonably good, they get picked up faster. Across the Mahindra group, there is proof of that.