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STRATEGIC LEADERSHIP

LEARNING JOURNAL-01
Submitted to:

Prof: Sunil Maheshwari

Submitted by:
Mohit Kotwal-PGDM(E)-024
STRATEGIC LEADESHIP Prof: Sunil Maheshwari

Learning From:Ek ruka Hua Faisla


Consensus vs. democracy:

Consensus Democracy
 When stakes are high .  Mundane things
 Decisions is more  By majority vote
informed

Decisions can change while forming consensus, but longer the time to
change decision more is the pain.
Politics of Decision making:
 Sub group formation and collusion can take place.
 Rigid positions and barrier of positioning .They can be overcome
with bringing more information which is authentic and reliable.
Mindfulness:
Leadership demands one to have mindfulness. When one is emotionally
charged one cannot be rational. Mindfulness requires person to be calm and
emotionally balanced.
How to build consensus ?
Six hats thinking of Debono:
When we are trying to bring a consensus building in a difficult situation,
after the agenda paper is furnished, Debono’s six hat thinking can be
employed. The six different hats and their interpretations are as follows:
 White Hat (Hat of information):It is like a blank piece of paper
where all possible information can be noted down. Then data can be
grouped into clusters for further comprehension. Subsequently these data
clusters can be analyzed using some framework. Then the problem has to
be properly written down and has to be clearly articulated to rest of the
team members. Excel plays an important role in this step.

 Red Hat (Hat of feelings):Its analogy is heart.The difference between


data and feelings is that, a data has a source whereas a feeling can be
generated based on one’s personality. Venting out of feeling will result
in making a person more logical. The next step is to take cognition of the

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STRATEGIC LEADESHIP Prof: Sunil Maheshwari

feelings and revisit the problem and make necessary amendments if


required. Based on the collection of the problems, a problem statement is
arrived.

 Green Hat (Hat of creativity): Its analogy is grass. All the team
members should write down at least five solution to the problem. Then
ideas needs to be clubbed to form broad idea pattern.

 Yellow Hat (Hat of new hope):Its analogy is rising sun. All the team
members should write down at least 5 ideas of hope with logic. Then to
ask them which idea is a good idea and to ask them to speak about it.

 Black Hat (Hat of caution and warning): Its analogy is court room.
Everyone is given opportunity to talk about where things can go wrong.
They have to furnish at least 5 cautions.

Green
Hat 1 Accept Intended
Yellow idea
→ → → Solution →
Hat at a Drop
Black time
Hat Modify Unintended
Yellow and Black hat provides a comprehensive view and respond to
unintended problems in either ways. And advance towards positive
outcomes and curtail negative outcomes.

 Blue Hat (Hat of facilitator):Its analogy is sky. People tend to violet


the various norms required for each of the above hats. Blue hat acts as a
facilitator and does not allow violations of norms. The blue hat holder
can be different in different sessions. As long as person wears blue hat,
he cannot take other hats.
When choices are made through this process, they tend to be 5-6 times
better than regular choices

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STRATEGIC LEADESHIP Prof: Sunil Maheshwari

Learning From: Mangalore Chemicals and Fertilisers Ltd

In Mangalore Chemicals and Fertilizers Ltd. Case, the main issue is


dilemma of Mr. Mehta whether to accept or decline the offer of MD given
by the chairman of the company. He thought of consulting his wife who
happens to be an IIMA alumni:
The typical questions a wife will ask once a husband consult her regarding
the above dilemma are: 1) quantum and steady flow of income? 2) Work life
balance? 3) Probability of getting job if turnaround does not happen.
The typical questions an MBA will ask are: 1) Balance Sheet 2) Top
management 3) Cash Flow 4) Plant Performance 5) Labour relations 6)
Suppliers 7) Marketing8) Margin and profitability.
 When Net worth is negative, no chance of credit from FIs or equity.
 Workers respect a leader if he is credible in terms of performance and
performance of Organisation is sound.
 Focussing away from non core areas can affect performance of
Organisation. Under Mr. Narialwala MCPL started marketing imported
urea which took away energy of organisation.
 When Organisation fails, often they are headed by powerful people.
Powerful CMD need a strong board to question and rein them.
 Creative accounting can make an organisation perennially sick.
Creative accounting is used to show profit, when actually organisations
are in bad shape. Political appointees who don’t have long term
association with organisation use this while running a organisation.
 For Vijay Mallya, MCPL was a gold mine because:
1) Perennial Demand 2) Very profitable merger due to MCPL being loss
making and losses were attributable to internal reasons. 3) Dynamics
of Fertilizer Industry under RPS system.
 RPS System:The price has two components, smaller one borne by the
farmer and the bigger one borne by the government. The price is
calculated based on the below mentioned formulae.

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STRATEGIC LEADESHIP Prof: Sunil Maheshwari

 RPS= VC + (FC+12% ROCE)/80% Capacity


Capacity
Utilization
(%) Result
<80 LOSS
80 BREAK EVEN
90 16-18% PROFIT
100 24% PROFIT
110 30% PROFIT
120 40% PROFIT

 In high Fixed cost model, the profit increases many times with
incremental capacity utilization.
 In high Variable cost model, profit and capacity utilization is almost
proportional.
Steps taken by Mr. Mehta for MCPL turnaround are as follows:
a) Recruitment of retired executives as top management as they are high
in capability but low in monetary aspirations and career.
b) Money was raised in the form of credit from the suppliers of DAP raw
material. Companies normally prefer profit over cash, but during crisis
cash is preferred over profit. MCPL was no different.
 Capacity utilization was increased by increasing pressure of Ammonia,
which although a dangerous operation but was executed with utmost
caution.
 Unions are analogous to monkeys. Monkeys attack people who either
carry banana or who show violence to the monkeys. Similarly, Union
creates trouble only when they sense company is carrying huge profit or
is taking actions against employees.
 The managers played a trick against the union by deliberately instigating
strike and then converting their top political supports towards their side
by showing company’s issues. Strikes have implications for both
managers and unions. The key is to ensure who blinks first. It became
tough for the union for sustaining the strike for long and they conceded.
 The managers capitalized the opportunity by enforcing strict frisking
norms against workers and unions, barring them from carrying any
crackers for displaying false notion of victory to the fellow workers,
posting the non-cooperating workers in undesirable location to make
their morale down to prevent further such strikes in future.

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