Publication: The Economic Times Mumbai;Date: Dec 30, 2010;Section: Policy;Page: 13

Its all about good LEADERSHIP

Irrespective of the business environment, how a company
performs depend mostly on goals and aspirations of its
leaders
Tri di besh Mukherj ee Sumi tesh Das
IT IS amazing how dissimilar are the ways in which managers set their targets in different countries. Even the
perception of a target differs. The process of setting targets reflect company culture. There is enough evidence
now that this could also predict the future of the company. Since managers are products of a countrys culture,
and companies together have an overwhelming effect on the economy of the country, it is important to appreciate
the far-reaching effect of the managers mindsets.
Admittedly, this cannot be generalised, but consider an illustrative example. In a reasonable and reliable study
of the market, the competitors ability and other relevant parameters suggest that the target should be 100. In a
developed country such as the UK, where the bonus and other earnings may be tied up with achieving the target,
the tendency may be to set the target at 90. Managers who take a pedantic view of total quality management
(TQM) will take 100 as their target. In developing countries such as India and China, aspirational managers and
others will be encouraged to set it at 110.
All three targets will be rational in the prevailing company cultures. Achievement of 90 as target is a case of
satisfactory underperformance. A company continuing thus will get into a vicious cycle and perish in an open
market, as have many such companies in western Europe and the UK. Achievement of 100 as target could be
satisfactory and even good in an open economy with no major competitor aspiring to achieve 110. Unfortunately,
the situation in the real world is never such, as many J apanese companies have realised.
Those who have set themselves a target of 110 experience a self-imposed creative tension. They have to find a
way but they do not know how. Not just hard work but innovation and determination will be essential. Such
aspirational companies are placing themselves in the virtuous cycle that will propel them to the top of their
business space.
The satisfactory underperformance choosers, being aspiration deficient, often become extinct. Till 50 years
ago, the British automobile industry roared to the sounds of such brands as Austin, Morris and Rolls Royce. The
UK was then the largest exporter of automobiles and the second largest car producer, next only to the US. Today,
the British automobile industry is whimpering. The largest car producers in the UK are from J apan, Germany,
America and India, namely, Nissan, Toyota, Honda, BMW, GM and Tata. The fault lay not with the workers; the
British workers are still producing the cars. It is the leadership of the British companies, of the trade unions and
the government that did not display any aspiration to remain at the top. We can call this group, where leaders are
low on aspiration and are willing to give up, living fossils, should they still be living.
The prevailing state of affairs in these highly developed welfare states appears satisfactory, so much so that no
one has the urge to propose, explore new ideas or question the status quo. Such an environment cannot
encourage innovation. On the contrary, leaders in a state of satisfactory underperformance will retard, if not
preclude, any trials to develop radically innovative ideas. The last thing one can expect in such a stifling
atmosphere is innovation!
Many large technology-led companies like Microsoft, GE, Timken and Vodafone, among others, have set up
their research and development facilities for their next generation products while also trying out innovative
business delivery models in India. The ostensible reason is cost, but the aspirational attitude and mindset of the
young talents in India may have contributed to swaying the decision in Indias favour. Companies such as
Microsoft or GE are not living fossils and the steps they have taken to incorporate the high degree of aspiration of
developing countries into their business strategies may well ensure that they do not fall into this category.
12/30/2010 Its all about good LEADERSHIP
epaper.timesofindia.com//getFiles.as 1/4
Companies targeting 100 out of 100 are to be seen in the US. For instance, former world leaders that are
languishing today such as General Motors and US Steel. Sans visionary, aspirational leaders who can radically
transform things, this space is led by tired leaders.
In J apan, Sonys co-founder and president, Akio Morita, had a fight on his hands when he came up with the
idea of the Walkman. The fight was with his own executives, who could not believe that a tape player without the
recording function could succeed. Morita had vision, determination and was the boss. Today the salaried sacho
(hired-hand presidents) do not display the same pioneering spirit. They lack assertiveness, vigour, energy and
resolve and, probably, caused the downfall of the J apanese economy.
It is possible that the hired-hand presidents do not enjoy a free hand and are expected to run the company
smoothly. A pedantic understanding of the successful
J apanese management technique, TQM, can also bring in stability rather than breakthrough innovation and new
Walkmans. It is not surprising, therefore, that Sony has Sir Howard Stringer as the boss and Renault-Nissan
Carlos Ghosn. The current performance of such companies that have taken a bold decision by J apanese
standards indicates that there are ways of overcoming the tired leader syndrome.
Finally, those targeting 110. Over the last two decades of economic liberalisation, several Indian companies
have lost their dominant market position to cheap imports. In some, the leadership resolved to face the challenge;
questioned the unquestionable; benchmarked its products and processes with the competition; brought about
significant direct improvement in its manufacturing; and successfully competed with the competition. These
successful companies did not have time for new equipment or trained workforce. Thrown into the competitive
vortex, they ratcheted up the innovative spirit of their employees to beat the competition using the same
wherewithal.
Consider, for instance, the transformation of Tata Steel. Chairman Ratan Tata encouraged innovation by setting
apparently impossible targets and provided moral and psychological support that motivated team Tata Steel to
reach the target. This was a self-imposed situation prompted by a liberalising India. The living fossils woke up,
questioned the unquestionable and responded to the challenge and propelled India into a high-growth territory.
This was followed with the investment in the latest technologies, by both incumbent and new entrepreneurs,
making the growth path secure for many years. Once again, leadership made the difference. There were some
leaders who could not figure out how the competition supplied at unbelievably low prices to India and waited for the
inevitable to happen. Business leaders in India will do themselves and the nation a disservice by scaling down
their ambition to suit the environment. The environment, actually, demands that they be very ambitious.
There are, however, situations in which gifted and spirited business leaders struggle to make a dent because of
an unsupportive environment. Policies, mired in patronage and corruption, do not support the entrepreneurial spirit
of such leaders. L N Mittal, the largest steelmaker in the world, who built his empire from scratch, faces delays in
executing greenfield plants in India. The Tata group had an excellent proposals to manufacture steel in
Bangladesh. These could not fructify in the unsupportive ambience. These desert sprinters, as we may call them,
will look for more suitable tracks to sprint. West Bengal is a classic example creating an environment that
persuades home-grown entrepreneurs like Mittals and J indals to move away. Herculean efforts will be needed to
bring them back again. The responsibility of providing the nourishing climate rests squarely on the political and
intellectual leadership.
Often it is the leadership of an individual or of a team that sets the aspirational level in a company and drives
the innovative streak. Edison adopted a needs-first approach to innovation. His quest for a sustainable arc of light
took around 20,000 meticulously recorded experiments and produced an arc that lasted 40 hours. This innovation
made the entire gas-lamp and wickers industry extinct. Henry Fords Model T was born of a business model
innovation of building cars for the American masses using a production line process. Kiichiro Toyodas J ust In
Time concept was prompted by an aspiration to make quality cars in J apan. This concept revolutionised quality.
Ratan Tata, as Edison, Ford and Toyoda, inspired teams to success. Their countries provided the business
environment for them to flourish.
Such companies as GE, Toyota, Caterpillar, Komatsu, Volkswagen and Bharat Forge embody manufacturing
excellence that their leader, or a succession of leaders, nurtured. Here entrepreneurship flourished in an extremely
competitive ambience. These are radiant companies, gifted with aspirational leaders that thrive in a competitive
market ideal for entrepreneurs.
Entrepreneurs are the spark of an enterprise; their aspiration provides the driving force to prosperity. Many such
enterprises together make a country prosperous. India has many such ambitious entrepreneurs whose ventures
need to draw its nutrients from society at large: a nourishing ambience provided by the government, political
12/30/2010 Its all about good LEADERSHIP
epaper.timesofindia.com//getFiles.as 2/4
leaders and union leadership.
An enterprise in a supportive business atmosphere, led by an aspirational leader, becomes radiant. A radiant
company in the absence of these pillars may become a living fossil. Success will elude proven entrepreneurs in a
barren business ambience; they will be better off in a more nourishing atmosphere. A radiant enterprise may also
lose its radiance in the absence of youthful vigour and aspiration; it will do well by an inclusive strategy involving
aspirational youth from any geography.
Entrepreneurship and nourishing business environment together create the winning platform.
T Mukherj ee i s former deputy managi ng
di rector (steel ), Tata Steel , and S Das i s chi ef
(gl obal research programmes), Tata Steel
12/30/2010 Its all about good LEADERSHIP
epaper.timesofindia.com//getFiles.as 3/4
12/30/2010 Its all about good LEADERSHIP
epaper.timesofindia.com//getFiles.as 4/4