NPTEL

COURSE ON ENTREPRENEURSHIP
Perspectives of Business Strategy and Economic Development

WEEK 10 – LECTURES 46, 47, 48, 49 and 50

Course Modules 12, 13 and 13A

Entrepreneurial Culture, Thermodynamics

and
Human Resources Strategy

Prof. C Bhaktavatsala Rao, Ph.D.

Ajit Singhvi Chair Professor

Department of Management Studies

Indian Institute of Technology Madras
 NPTEL

COURSE ON ENTREPRENEURSHIP
Perspectives of Business Strategy and Economic Development

WEEK 10 – LECTURE 46
Course Module 12 (Part)

National Entrepreneurial Culture

Part 1

Prof. C Bhaktavatsala Rao, Ph.D.

Ajit Singhvi Chair Professor

Department of Management Studies

Indian Institute of Technology Madras
Need for all Initiatives to Work Together
Comprehensive and equitable socio-economic development is enabled by diversified entrepreneurial
initiatives in the country.

Lack of formal education, or even

India is known for its individual
illiteracy, has not prevented people
craftsmanship and rural artisanship
from becoming great sculptors,
at one level, and for educated
sportspersons or small
workforce at another level.
businesspersons in India.

4 Components of
the Enigma

People who are not formally In fact, Indian economy is

educated but are otherwise well dominated by informal sector.
versed in arts and literature have set
up and managed entities dedicated Yet, India feels as a nation that it is
for music, dance, and drama. not entrepreneurial.

Lakhs of graduates, and their families, aspiring for stable private sector or public sector jobs with
assured income and lifetime employment.
Education and Entrepreneurship
For long, formal educational accomplishments and formal entrepreneurial aspirations tended to be
inversely correlated; only now, a positive association is getting developed

A strong credo of hard

Educated and hardworking
work and passion for
human resource base
growth

Willing to embrace new

technology, as
One of the most youthful
demonstrated by
demographics, globally
smartphones and farm
implements

Where then does lie India’s paradox of high education and low entrepreneurship?
Reasons for the Paradox
The paradox owes its roots to the formal-informal cultural dichotomy as well as other filters such as
big-small and urban-rural. The cultural mis-anchors that drive down entrepreneurship are as below.

Culturally, in the Indian

psyche, ‘Small
subservient to the Big’?

Informal needs Reluctance to

to be dovetailed make informal
to the formal more modern

Education preparing
students more for
degrees and formal jobs

Approaches are needed to ignite the entrepreneurial spirit as a cultural phenomenon with
widespread positive impact for India
 National Culture and National Entrepreneurship
Just as national culture is composed of many components, entrepreneurship is also a
multidimensional construct. A typical delineation of national culture, to the extent of interpreting its
influence on entrepreneurship, is as below.

Pay for
Performance

Work for
Risk Avoidance
Security

Culture
Influencing
Entrepreneurship

Normative Family
Compliance Bonding

Social
Collectivism

Creative and diligent approaches are needed to develop a homogenous national entrepreneurial culture
Multiple Hypotheses are possible on Culture and Entrepreneurship
At a broad level, it may be hypothesised, for example sake, that:

Lack of education and lack of jobs positively influence self-employment

Institute entrepreneurial ecosystem positively influences formal entrepreneurship

Family factors correlate strongly with employment-entrepreneurship choices

Gender equality positively influences female entrepreneurship

Humanism positively influences social entrepreneurship

A risk and failure tolerant society positively influences entrepreneurship

Entrepreneurship positively influences employment

Developed economies and emerging economies may throw up different results for the hypotheses.
Research on the nexus between culture and entrepreneurship is required in the Indian context.
The Canvas of Risk
While the rewards of entrepreneurship are seen through peer comparisons and overestimated, the
risks are never understood in full, and much worse, often underestimated

The danger zone for any

Could prove to be a
enterprise, more so for a
booby trap
Unrecognised start-up
Risk

Ramifications
of Risk

Recognised
Risk Ideal situation for Helps investigate for
effective risk mitigation unknown risks

Known Risk Unknown Risk

The ability to perceptively identify and address risks is a key anchor in choppy entrepreneurial waters
Financial and Business Risks
Risks are more than just financial although all non-financial risks also have an ultimate financial
impact. Financial surplus enhances risk tolerance and vice versa, but is insufficient in itself

Risk tolerance Risk Confidence

Financial Surplus

Facets of
Risk

Financial Deficit

Risk Evaluation Risk Casualness

Known Risk Unknown Risk

An entrepreneur must mitigate the risks by developing a unique proposition for his venture in terms of
product or service innovation and / or cost arbitrage relative to a competitor or a larger organisation
Entrepreneurial Risks and Mitigation Strategies

Risk Type Risk Mitigation

Losing steady job Plan out a forward looking funding strategy,

Losing regular pay linked to business model
Financial Risks
Sacrificing personal and family savings Reserve 10 to 20% for emergency
Incurring personal debts management

Rigorous ideation, prototyping, testing and

Betting on a central idea validation
Business Risks Being insensitive to changes Timely course correction
Taking too long to develop Agile execution
Have Plan B product

Work with the most competent and reliable

Reliance on co-founders and employees
Organisational Risks people
Belief in investors and partners
Align expectations; incentivise outcomes

Risk-averse family and social environment Network with entrepreneurial stakeholders

Behavioural Risks
Amplification due to environmental risks Course-correct based on environmental risks

10
Factors Impacting the Risk-Reward Profiles
From adventure sport (say, mountaineering and scuba diving) to intellectual pursuit (say, academic
research to medical treatment), and from dietary patterns (say, carbs vs. fats) and exercise routines
(say, aerobic vs. anaerobic), risks accompany rewards in all human endeavours

Risks and
Innovative Competitive Rewards of
Performance

Overall Risk and

Reward Profile

Risks and
Investment Rewards of
Lead Time
Ability Capacity
Building

Broader industrial development requires a holistic understanding of risk-reward profile of the start-up
endeavour and commensurate passion-competence profile of the founding and operating teams
National Culture Enabled Entrepreneurial Business Growth in Industrial History

A study of industrial history points out that each and every global corporation has had its roots in entrepreneurial
activity; from Henry Ford’s Ford Motor founded in 1903 in the US to Tata’s Tata Steel founded in 1907 in India

•Spread effect
•Nascent •Supported Expansion and
First Venture Next Venture •Broader
•Growth •More decisive Diversification
entrepreneurship

While such initiatives by established firms lack the main ingredient of a typical entrepreneurial activity
viz., personal risk-taking of a promoter, such growth initiatives do involve risks on other multiple
dimensions, and contribute in an equal measure to accelerated industrial and economic development
Four Ways to Embed Entrepreneurship in National Culture

Educational and experiential domains offer great opportunities to embed entrepreneurship, be it through work or
leadership or by learning. Corporate Social Responsibility (CSR) will also help embed entrepreneurship.

At the Helm At Work

Utilise corporate power and standing to Empower scientists, engineers and
invest in entrepreneurial companies; to professionals in organizations to think
set up incubators and accelerators and act innovatively, and for innovation

Embedding
Entrepreneurship
Culturally

Through CSR In Curriculum

Corporations to invest in social start-ups Entrepreneurship should be a part of
and incubators as their contribution to curriculum from a young age - ‘campus
Corporate Social Responsibility (CSR) companies’ spur entrepreneurship

An individual, as a student, employee, leader and/or administrator can contribute to embedment of

entrepreneurship in national culture
 NPTEL

COURSE ON ENTREPRENEURSHIP
Perspectives of Business Strategy and Economic Development

WEEK 10 – LECTURE 47
Course Module 12 (Part 2)

National Entrepreneurial Culture

Part 2

Prof. C Bhaktavatsala Rao, Ph.D.

Ajit Singhvi Chair Professor

Department of Management Studies

Indian Institute of Technology Madras
Embedding Entrepreneurship in Curriculum
The Indian education and social systems are typically geared towards secured jobs, particularly in large
organisations. Educational streams are pursued based on potential employment opportunities, regardless of the
aptitude and flair of the students. Four structural reforms are required.

Indian curriculum, from the early

There must be a project work every
schooling days and all through
year in partial fulfilment of the study
collegiate and higher education, should
requirements as an important avenue
incorporate entrepreneurship as a core
for entrepreneurial development
subject

Embedding
Entrepreneurship
Educationally

Students should work on establishing

National missions should be declared
pilot scale industrial or business
cooperation and collaboration between
projects based on co-guidance from the
multiple educational institutions and
academic institutions and business
industrial undertakings
enterprises

The seeding of entrepreneurship in human mind happens with an objective and unbiased appreciation of
creating something new innovatively, and the associated risks and rewards.
Hypotheses of Education and Entrepreneurship
Certain hypotheses of education and entrepreneurship throw light on the structural reforms needed in the
educational space.

Higher school enrolment coupled with skill education leads to higher self-
employment

Increased higher education coupled with innovation based

experimentation leads to higher formal entrepreneurship

Increased technical and managerial competencies at student level leads

to more avenues of formal entrepreneurship

Increased formal entrepreneurship triggers more self-employment rather

than countering it

Paradoxically, in literature, employment is considered to compete with entrepreneurship. We need to

move from unemployment acting as negative motivation for entrepreneurship to both employment and
entrepreneurship growing in tandem.
Indian Institutes of Entrepreneurship?
If Indian Institutes of Technology and Indian Institutes of Information Technology ushered in structural
transformation in national technological competence, Indian Institutes of Entrepreneurship too could make similar
contributions in the entrepreneurship domain

Entrepreneurship •Two-year post-

Development graduate diplomas
Institute of India, in
entrepreneurship
Ahmedabad (EDII)

Incubation and
Business •To directly develop Mentoring
entrepreneurship
Entrepreneurship Support

•To develop
Development financing and Field Exposure
Studies livelihood
opportunities

A broader and deeper impact would be felt through integration of entrepreneurship in mainstream
education of all major educational institutions. Institutions like EDII could serve as nodal hubs and expert
institutions supporting such broader curriculum thrust in other institutions
Entrepreneurship Works in Established Companies too
There are two principal ways in which entrepreneurship gets embedded in work culture of established companies

The challenge even for Employee

a corporate executive entrepreneurs create
is one of identifying a Entrepreneurial Employee transformative
new domain based on Employees help Entrepreneurship products and
one’s own experience, enterprises helps employees processes which may
expertise, risk-taking discover new utilise their skills not meet the
ability, and niches, create and aptitudes to immediate business
new products, discover new
communication skills. and expand products which requirements. By
Entrepreneurial product-market may or may not incubating such ideas
executives can help scope of the be related to the while in service and
companies expand business business later spinning off into
and diversify their independent
businesses, reaching enterprises, they
higher career heights enrich work culture
in the process. with entrepreneurship

Organisations that supplement entrepreneurial employee base with employee entrepreneurship as a process
institutionalise entrepreneurship in work culture
Entrepreneurship at Work has certain Nuances
Entrepreneurship at work does, however, require an appropriate organisational eco-system

Entrepreneurially Bureaucratically
vibrant pedestrian
organisations seek organisations are
innovation and rigid and
create empowering pedestrian, and are
processes, and are comfortable with
growth oriented the routine

Again, it is an organisation-wide culture that pervades all organisational layers and covers all employees
Characteristics of Entrepreneurially Vibrant Organisations
Entrepreneurially vibrant organisations have certain unique characteristics

Leaders and managers in entrepreneurial organisations tend to encourage scientists, technologists,

and other professionals take risks in setting up new projects or venturing into new domains

There exists palpable latitude in such organisations towards forgiving genuine mistakes or
accepting unanticipated outcomes.

This objectivity nurtures the ability of people to undertake risky but potentially rewarding
projects

Such organisations balance the rigidity of structure and process with the flexibility of innovation and
creativity.

Entrepreneurial Entrepreneurship Mentors and Employee

Culture Structures Investors Entrepreneurship
Entrepreneurship at the Helm – A Paradox
An entrepreneur at the helm may not always be best suited to promote the continued long term entrepreneurial
growth of the corporation that he or she helped to conceptualise and grow, which is a paradox!

Perception: An organisation which has an entrepreneur-founder at the helm as the Chief Executive Officer (CEO) would be the most
entrepreneurial, always exploring new avenues
They take strategic decisions (for example, on integration,
Reality: Several entrepreneurial organisations as they grow larger
diversification, divestiture, and acquisition) in a structured
tend to become deliberative, if not bureaucratic
manner within the defined industry boundary

The entrepreneur who is also the CEO in such organisations gets bound by accountability to his shareholders and investors

Finds it difficult to take radical business and investment …..especially if they are unrelated to the current business, in an
decisions…. entrepreneurial manner

Getting stuck as an entrepreneur at the helm of a large corporation with multiple constraints and restraints

Possibly not the best way to replicate, in broader domains and ….what the same entrepreneur could achieve in a much narrower
with greater resources….. domain and with a much smaller resource base.

Decide when to Choose the right

cease helming the
large entrepreneurial
firm
Embark on a new
entrepreneurially Either as a founder
entrepreneurial
driven professional or as an investor
journey
leader
Leader Transformations and Transitions for Entrepreneurial Culture
An entrepreneur at the helm may not always be best suited to promote the continued long term entrepreneurial
growth of the corporation that he or she helped to conceptualise and grow, which is a paradox!

•Ensures continuity in •Becomes even more

the entrepreneurially attached to the
charged up start-up, enterprise emotionally
with continued passion and physically, with
to drive growth but not little propensity to
necessarily profitable bring in new thought
Continue to
Be an lead
Entrepreneurial strategically
Leader? and
operationally

Remain only as
Become a an investor and
Professional provide
Leader? strategic
counsel
•Enables profitable •Secures the ability to
growth, with little fund and establish new
ability to establish new entrepreneurial
start-ups ventures

Professionally Entrepreneurially
oriented oriented Change with Change sans
entrepreneurial professionally continuity? continuity?
leader? leader?
Entrepreneurship as Corporate Social Responsibility (CSR)
To provide a sustainable fillip to the entrepreneurial movement in the country, corporations need to take up
development of entrepreneurs as a corporate social responsibility (CSR). While outsourcing of activities or parts of
value chain could be self-evident, alignment with CSR could entail creation of novel approaches

Additive Manufacturing

Eliminate
scrap Anti-VOC, transfer
Mentor/support the indigent efficiencies
Eliminate
Support
paint shop
Different society Social start-ups
pollution
industries require
provide different
Example of
innovation with
opportunities Automobile social purpose
Industry
Design Improve
safe bus worker
bodies health Ergonomic aids
Accident-proof construction
Reduce
auto
emissions
Battery charging stations

Business Collective Individual

Corporate Social
Economic Entrepreneurial Entrepreneurial
Responsibility
Responsibility Responsibility Responsibility
Culture to Support Society
CSR needs to be beyond financial contribution – it could go as far as adoption of neighbourhoods

Township for employees Hospitals and schools

Tata/PSU
Model

Water and sanitation

In short, city administration
services

The level of corporate social responsibility displayed by public sector steel and engineering companies and private
sector Tata Group in India were enlightened models of CSR, decades ahead of today’s CSR legislation
National Culture
National culture has an influence on national entrepreneurship. A healthy and happy society is a
productive and progressive society.

Literacy

Food

Housing

Health

Formal and informal entrepreneurship together have a higher synergistic potential to expand national
wealth, including higher savings, higher investments, and tax collections for public good.
Women Entrepreneurship
Whatever is discussed on entrepreneurship applies equally to women in entrepreneurship. Still, an
additional discussion on women in entrepreneurship is warranted

A developed country like the USA, can easily boast of having a relatively greater presence of women who are
entrepreneurs

Women run around 11 million businesses in the US, representing 36 Yet, it has not been an easy going path for women start-ups even the
percent of total businesses advanced countries

There are studies and researches which indicate that women-led start-ups find it difficult to get funding

Researchers from the University of California, San Diego have stated that …which influences a clear bias in favour of funding start-ups led by male
men make 90 % of venture capital community… entrepreneurs

This has been happening despite firms founded by women, with male investors or female investors doing on par with
or better than male founded and male invested firms.
Gender diversity seems to be a greater issue in formal entrepreneurship Interestingly, US has a dedicated business body - US Women’s Chamber
than in formal employment, even in advanced countries of Commerce

In India, women dominate agricultural and many other areas of self-employment but consistency is
an issue. Role in formal employment is meagre.
Women Entrepreneurship – GES 2017 Inauguration
India, as an emerging country, does not have many women in entrepreneurial roles.

In addition, India being a traditionally patriarchal society certain cultural moors are tilted against women
entrepreneurship

A major shift in attitude is required for building a new A new emphasis on the enhanced role of women in
national entrepreneurial culture in India start-up and entrepreneurial ecosystem of the nation

According to a Nasscom report, women comprise only 11 percent in a base of 5000 start-ups in India

The number of women entrepreneurs who received …only 3 percent of women-run start-ups are funded,
venture capital funding is even smaller … according to Saha Fund

Even in IITM Research Park which is considered the hotbed of start-up innovation in India, women entrepreneurship
is nascent

Only 22 out of a total of 252 entrepreneurs are …and, only four women-led start-ups received external
women,… funds

In India, women dominate agricultural and many other areas of self-employment but consistency is
an issue. Role in formal employment is meagre.
Women Entrepreneurship
Against this background, it is encouraging that India hosted the Global Entrepreneurship Summit of
2017 (GES) focusing on women entrepreneurship

The Summit which was held in

Hyderabad, Telangana on November
28, 29 and 30 was inaugurated by
India’s Prime Minister Narendra Modi.

The theme of the Summit was

“Women First, Prosperity for All”, and
focused on supporting women
entrepreneurship and fostering
economic growth globally.

The delegation from the US was led by

Ivanka Trump, who is the daughter of
US president Donald Trump, and also
advisor to the President
GES, actively supported by the Government
of India and the Government of Telangana
gave immense visibility to the theme of
women entrepreneurship in this context.

The number of women participating in the Summit was massive, they made up 52.5 percent of the
entrepreneurs, investors and ecosystem supporters attending the event.
Some Key Statements at GES 2017
Global Entrepreneurship Summit of 2017 (GES) had many global leaders speaking on the importance
of women entrepreneurship in particular, and entrepreneurship in general

Narendra Modi, India’s Prime Minister said: The theme “Women First, Prosperity for All” makes this
edition of GES stand out. We believe women empowerment is crucial to our development. More than
sixty percent of workers in our agriculture and allied sectors are women. Amongst many examples of
women’s empowerment in India, he said, “our milk co-operatives in Gujarat and the Shri Mahila Griha
Udyog Lijjat Papad, are examples of highly successful and globally acclaimed women-led co-operative
movements. The power to think differently and ahead of the times for the betterment of mankind is
what sets entrepreneurs apart. I see that power in India's young generation today. I see 800 million
potential entrepreneurs who can work towards making the world a better place”.

Ivanka, Advisor to US President, said, among other things, "It is a proven study that 90 cents of a
dollar spent by what a woman earns goes back to families and communities, which eventually gives
back to society”. Eventually, we will be doing more good to the community and society at large with
an increase in the number of women in Entrepreneurship. In developing countries, 70 percent of
women-owned smaller enterprises were being denied access to capital, leading to a near USD 300
billion credit deficit for them. Estimates are that closing the gender entrepreneurship gap can
contribute to global GDP by 2 percent.”

The gender diversity in start-ups will be beneficial for the whole world. Specifically, a McKinsey study
says that India is expected to gain an addition of USD 700 billion to its GDP by a greater focus on
women entrepreneurship, and closing the gender gap.
From Self-employment to Entrepreneurship for Women
India leads the world in terms of having 40 percent of the banking employee base as females. She
also pointed out that India has as many as 100 million female members in self-help groups.

Encouraging as these However, as more

historical trends are, women become
some of these have formally educated in a
been a result of the broader spectrum of
prevailing socio- studies, and as
economic structure, economic and
and employment industrial sectors
biases. The become formal there is
benchmarks would be a need for another
women in higher women-oriented
echelons of entrepreneurial
organisations, boards, revolution in India.
and entrepreneurial
firms.

Structural mechanisms to achieve the transformation in women entrepreneurship are necessary

From Self-employment to Entrepreneurship for Women
During the GES 2017 discussions, Ivanka Trump touched upon the low role of women in STEM related
education and employment in the United States

Boeing has In India too, the While the

unveiled Boeing in USA only 24 % of percentage of initiative is not
Horizon X Indian
women represent women in STEM gender-specific,
computer fields is low, Amazon has
Innovation professionals variously placed at
Challenge for around 15 percent launched
start-ups in 9 Amazon Saheli
fields in the to train young
aerospace female
Given the high Increase in the
domain for share of women in number of women entrepreneurs in
competing to India’s financial in STEM education rural areas for
sector, their move positively supporting
receive into venture capital correlates with
incubation and online trading
sector should be women
funding support logical entrepreneurship and e-
Commerce

Nirmala Sitharaman, India’s first woman defence minister has stated that the Government of India
would provide opportunities in the defence sector to aspirant entrepreneurs.
T-Hub
The initiative of the Chief Minister of Telangana, K Chandrasekhara Rao to create a world-class
incubator for start-ups called T-hub in Hyderabad has received praise for its concept and execution

T- Hub strives to be an
entrepreneurship ecosystem which
provides a common ground for
various start-ups and investors to
network, communicate, share and
make deals
Government of Telangana also set
up an exclusive incubation centre
for start-ups set up by women
entrepreneurs

One-fourth of the mandated

We-Hub will have a Rs 15 crore fund
procurement from small and
to meet the investment needs of
medium enterprises will be allotted
these start-ups
for women-led enterprises

In further reinforcement, NITI Aayog Chief Executive Officer Amitabh Kant said that the Aayog will
support We-Hub under the Atal Innovation Mission.NITI Aayog will also create a special women’s cell
to ensure enhanced funding for the women entrepreneurs. Women in India should take complete
advantage of such opportunities and grow their firms.
Women Entrepreneurship Potential
India’ educational system which has good record in, and even higher scope for, gender diversity can
logically lead to diversity in entrepreneurship

With a good quantitative gender parity in higher education…

Even if a small percentage of the educated human resource the employment and development triggers for the Indian
base opts to establish its own entrepreneurial ventures economy would be immense

This, however, requires significant systemic and mind-set changes...

Ingraining self-reliance and entrepreneurship as an early Development of an industrial and economic system that
family and educational ethic encourages entrepreneurship both at work and outside work

Which should be an integral facet of national entrepreneurial culture

A highly literate India shall be…. a highly entrepreneurial India

Women are unqualified leaders in homemaking in India; they are no less adept in enterprise building
and national development
 NPTEL

COURSE ON ENTREPRENEURSHIP
Perspectives of Business Strategy and Economic Development

WEEK 10 – LECTURE 48
Course Module 13 (Part)

Entrepreneurial Thermodynamics
Part 1

Prof. C Bhaktavatsala Rao, Ph.D.

Ajit Singhvi Chair Professor

Department of Management Studies

Indian Institute of Technology Madras
The Logic of Entrepreneurial Thermodynamics
Passion is energy. Entrepreneurial passion is at the core of start-up energy. Energy in scientific terms
follows thermodynamics. So does entrepreneurship.

Entrepreneurship is seen largely as an organisational or behavioural phenomenon. However…

…the challenges and paradoxes of sustainable entrepreneurship… …can be better understood in a thermodynamic perspective...

All things in the observable universe are affected by, and obey, the laws of thermodynamics.
Entrepreneurial energy of a start-up is like the fundamental heat
Entrepreneurial systems are no exception.
of a heat engine

The laws of thermodynamics apply remarkably to systems analysis of entrepreneurship

The temperature, pressure, and chemical potential of a heat Likewise, the energy, passion, and competencies of an
system dictate the thermodynamic behaviour of a heat engine entrepreneurial system dictate its behaviour

Thermodynamics offers interesting analogies to interpret the relationship between passion and energy
Passion and Energy
Passion and energy are the two sides of the entrepreneurial coin. Passion is the intangible that sustains an
entrepreneur through successes and failures; energy is the tangible that makes the entrepreneur drive ahead.

Creativity Enthusiasm

Loyalty Commitment Confidence Speed

Passion Energy
Sustains… Drives…

Growth Dedication Competition Motivation

Survival Inspiration

Webster’s dictionary defines passion as “an intense, driving or overmastering feeling of conviction” or “a strong desire for or devotion to some
activity or concept”. It defines energy as “a dynamic quality” or “a vigorous exertion of power”.

The fusion of passion and energy is what makes entrepreneurs dynamic and distinctive
Entropy in the Entrepreneurial Systems
Entropy is a thermodynamic property that is a measure of the energy not available for useful work in a
thermodynamic process such as in energy conversion devices, engines, or machines

Convertible Energy
Such devices can only be
driven by convertible energy,
and have a theoretical
maximum efficiency when
converting energy to work.
Energy Accumulation and Dissipation
During this work, entropy
accumulates in the system but
has to be removed by
dissipation in the form of
waste heat.
Entrepreneurial Entropy
Many entrepreneurial
systems, as they evolve, are
affected by the entropy
caused by the lag that typically
exists between the passionate
fast-forward of the
entrepreneur and the
conservative status quo of his
leadership and managerial
team.

Even entrepreneurial organisations will have entropy, a fact which most founders fail to recognise
Four Laws of Thermodynamics
In technical literature related to thermodynamics, four laws exist as below:

The zeroth law states that if two thermodynamic systems are each in thermal
equilibrium with a third, then they are in thermal equilibrium with each other

The first law of thermodynamics, which is a version of the law of conservation

of energy, states that the total energy of an isolated system is constant

The second law states that the total entropy of an isolated thermal system can
only increase over time

The third law states that the entropy of a perfect crystal at absolute zero is zero (a
theoretical condition which can be approached but cannot be attained)

For entrepreneurial organisations in competitive and energetic mode, the four laws of
thermodynamics can be applied with a liberal imaginary slant. Of the four, the first and second laws
of thermodynamics can be even better interpreted.
Zeroth Law of Thermodynamics
The zeroth law speaks of the principle of thermal equilibrium between bodies. If two bodies are each
in thermal equilibrium with a third body, then they are also in equilibrium with each other.

Thermal equilibrium means that…

when two bodies are brought into contact with each other and separated by a
barrier that is permeable to heat, there will be no transfer of heat from one to the
other. This says in essence that the three bodies are all the same temperature.

Heat is of the same kind..

What is most important is that the zeroth Law establishes that temperature is a
fundamental and measurable property of matter.

Relevance to entrepreneurial systems

From an entrepreneurial perspective, energy, passion and intellect are the factors
of heat or temperature that drive the heat engine called the ‘start-up firm’.

The zeroth law is applicable to an entrepreneurial organisation in that the co-founders amongst
themselves, and each with the employees should be in an equilibrium of intellect, energy and
passion. The following figure illustrates.
Zeroth Law of Thermodynamics – An Entrepreneurial Perspective

Founder / Co-founder

B C

Co-founder Co-founder

In an ideal entrepreneurial organisation, the co-founders reach an equilibrium of intellect, passion and energy

40
The First Law of Thermodynamics
The postulate that an entrepreneur is one who creates something out of nothing, apparently challenges
the first law of thermodynamics, as an expression of the principle of conservation of energy.

The first law expresses that energy can be transformed, i.e. changed from one
form to another, but can neither be created nor be destroyed. The change in the
internal energy of the system is equal to the amount of heat supplied to the
system, minus the amount of work performed by the system on its surroundings.

A successful entrepreneur draws more than

To that extent, a true entrepreneur challenges
proportionate output from lean inputs, whether
the first law of thermodynamics. Drawing
meagre financial resources, insufficient talent
lessons from this, however, entrepreneurship in
pool, indifferent regulatory policies or
India would fly even higher if:
inadequate market perception

(iii) regulatory agencies

(i) financing options for (iv) customers
(ii) talented people opt provide fast-track single
entrepreneurial firms encourage indigenous
enthusiastically to window support to
are expanded entrepreneurial product
support entrepreneurs, start-ups and expansion
substantially, and service offerings.
projects,

These are also sources of additional energy for the Indian entrepreneurial system which must be
leveraged
Thermodynamic Nature of Entrepreneurship
No two entrepreneur systems can be alike. This is because no firm, much less an entrepreneurial system,
is insulated from the external ecosystem (as in a thermodynamic adiabatic process).

• Between two specified states of a closed system the net work done is the same regardless of the nature
of the closed system and the details of the process.
Adiabatic • Entrepreneurs who refuse to be insulated and introverted and, in contrast, excel in interacting with the
eco system as well as in influencing to achieve positive outcomes achieve superior results
Processes

• Successful entrepreneurs need to be seen, felt, and experienced by various stakeholders to reinforce
faith in entrepreneurial capabilities
• The stakeholder spectrum is wide: from employees to investors, from domestic associates to
Experience international partners, and from local governments to central government

• Entrepreneurs have to be sensitive to external ecosystems to manage their expectations in a non-

adiabatic fashion
• Sensitivity means being without loss of energy from their systems, and expectations of gains from
Sensitivity others

The analogy between a thermal entity and an entrepreneurial entity is interpreted through the first
law of thermodynamics. The following figure illustrates further.
First Law of Thermodynamics – An Analogy between a Thermal Entity and an
Entrepreneurial Entity

Competitive
Pressures in
the Start-up

Work done on

+W
the system

Support U
added by Energy and Passion Unutilised
Stakeholders +Q of the Start-up -Q energy of the
to the Start- (Internal energy contained Start-up
up in the system)
Heat added to Heat given off
the system by the system

-W
Work done
by the
system

Product or
Service
rendered by
the Start-up

Thermodynamics energy inputs and outputs are interpreted in terms of

entrepreneurial energy inputs to, and outputs of, Start-ups

43
 NPTEL

COURSE ON ENTREPRENEURSHIP
Perspectives of Business Strategy and Economic Development

WEEK 10 – LECTURE 49
Course Module 13 (Part)

Entrepreneurial Thermodynamics
Part 2

Prof. C Bhaktavatsala Rao, Ph.D.

Ajit Singhvi Chair Professor

Department of Management Studies

Indian Institute of Technology Madras
The Second Law of Thermodynamics
Systems of entrepreneurial energy calibrate with the second law of thermodynamics (also known as the
law of increased entropy) as well. It is an expression of the tendency that over time, differences in
temperature, pressure, and chemical potential equilibrate in an isolated physical system.

• The law deduces the principle of the increase of entropy and explains the
Thermodynamic phenomenon of irreversibility in nature.

equilibrium • Postulates the loss of matter and energy gradually over time. Usable
energy of a power system is used for productivity, growth, and repair.

• Usable energy is converted into unusable energy. Thus, usable energy is

Energy when in irretrievably lost in the form of unusable energy

operation • The greater the unusable energy the greater would be the inefficiency of
the system.

• As a measure of unusable energy within a closed or isolated system (even,

Entropy in the universe as the ultimate example)

thermodynamics • As usable energy decreases and unusable energy increases, "entropy"

increases

Entropy is also a gauge of randomness or chaos within a closed system. When usable energy is
irretrievably lost, disorganisation, randomness, and chaos increase.
Efficiency of the Entrepreneurial Engine
The second law of thermodynamics has several lessons for entrepreneurial organisations

Just as no heat engine is one hundred percent efficient, no entrepreneurial engine is totally efficient

Smart and practical entrepreneurs work towards minimising the heat loss
Entrepreneurs should not expect their organisational energy levels to
rather than expect the organisations to outperform their own energy
match their individual entrepreneurial energy levels
levels

The second law implies that heat can never move from a colder body to a hotter body. So is it in entrepreneurial
organisations;

organisational teams would sap the energy of an entrepreneur unless the The need to supplement energy and passion will be felt by entrepreneurial
teams themselves are made up of high energy, entrepreneurial members. organisations sooner or later

The need to look beyond the founder’s capabilities and build a high performance team, preferably also an
entrepreneurial one too, is evident

…depends on the retention of high energy levels in the organisational

long term sustainability of entrepreneurial organisations…
teams

Perfection has correlation with passion from an entrepreneurial perspective. The following figure
illustrates.
Second Law of Thermodynamics – Relevance to Entrepreneurial Organisations

Hot Reservoir Hot Reservoir

QH QH

W
W

QC

Cold Reservoir

All real heat engines lose some heat to the
environment
All entrepreneurial companies, given the
resource limitations, must try to conserve heat
loss to the environment
Extracting heat QH and using it all to do work
W would constitute a perfect heat engine,
forbidden by the Second Law
High energy-high passion entrepreneurial
companies try to be as perfect heat engines as
possible

47
Passion and Perfection
In the case of an entrepreneur or a professional, passion not only drives energy but also reflects in
obsessive perfection. Steve Jobs personifies the proposition.

iPhone, more an
experience than
a product

Optimal
Operational integration of
excellence hardware and
software

Steve Jobs
Leading at
Apple
Obsessive about
Connect with design and
customers manufacturing
perfection

Committed to
seamless and
smooth
performance

When founders and entrepreneurs create experiences out of passion they become embedded in organisational
DNA. Starbucks passion was not selling coffee though it certainly considered coffee to be the core product. Its
passion was more of creating an experience through “a third place between work and home”.
The Third Law of Thermodynamics
The third law of thermodynamics, though much less known relative to the first and second laws, is only
for an ideal world where no one needs anything.

The third law of thermodynamics states that the entropy of a heat system attains zero when the
system reaches the absolute zero temperature (Kelvin temperature of minus 273 degrees C.)

It means that as the temperature of a system approaches absolute zero, its entropy
approaches a constant (for pure perfect crystals, this constant is zero)

A pure perfect crystal is one in which every molecule is identical, and the molecular
alignment is perfectly even throughout the substance

For non-pure crystals, or those with less-than perfect alignment, there will be some energy
associated with the imperfections, so the entropy cannot become zero

The Figure that follows connects the third law of thermodynamics and the entrepreneurial system
follows
The Third Law of Thermodynamics and the Entrepreneurial System

An entrepreneurial
organisation in churn based
on energy and passion
An organisation in freeze

Increasing Temperature

The entropy of a pure crystalline substance at absolute zero is zero

50
A Reverse Analogy
Drawing a reverse analogy, if an entrepreneurial organisation becomes a pure perfect crystal
organisation, it moves into a state of freeze. And, a pure perfect crystal organisation is an impossibility.

provide the required operating

conditions in which each employee is ensure that the energy is used to
in a state of doing work with the minimise entropy and maximise work
same energy and talent level as the done.
founder-entrepreneur

The founder-
entrepreneur needs
to…

ensure high energy levels within their

organisations to the best extent Otherwise, high entrepreneurial
possible, providing opportunities of energy individuals would migrate to
empowerment and business building establish their own ventures
to such members

Maintenance of high energy and high opportunity in the organisation is a key responsibility of the
founder-entrepreneur.
Minimising Entropy and Maximising Energy Usage

The laws of thermodynamics are absolute physical laws - everything in the observable universe is subject
to these laws. Like time or gravity, nothing in the universe is exempt from these laws. Human and
corporate entrepreneurial systems are no exception.

look beyond themselves

channel entrepreneurial
The law of The Law of and model their
thermodynamics
organisations around
Thermal Equilibrium Energy Conservation towards sustainability of
the core concept of
entrepreneurial energy.
entrepreneurial energy

The Four Laws of Founders

Thermodynamics need to…

institutionalise optimise entrepreneurial

The Law of The Law of entrepreneurial energy energy through a
Energy Loss Zero Entropy through structure and combination of the
talent three approaches

Development of a proper balance between passion and dispassion is a philosophical science

Passion – Dispassion Balance
Passion drives entrepreneurs not to be distracted by setbacks or negative feedback.

• With each hurdle passionate entrepreneurs become more zealous and dogged about
their missions
Being • In this process, entrepreneurs could lose sight of changing realities of business or even
Passionate more simply the product or service gaps.

• Being dispassionate enables entrepreneurs to step back and undertake course

corrections
Being • Passion is driven by creativity and intuition while dispassion is driven by intelligent
Dispassionate analytics and informed decision making

• Passion, for example, is the key to ensuring success in science based start-ups such as
drug discovery and development start-ups, more so in newer biologics fields.
• Dispassion helps the scientist-founder to calibrate resources, results, and timeliness
Balance without dysfunction.

A successful entrepreneur should have the ability to balance passion and dispassion astutely.
Scaling and Scoping - the Pathway to Growth
Any enterprise emerges and grows on only two fundamental dimensions: product (service included) and
market (geography or customer segment included). Depending on the product range and market spread,
enterprises get positioned in terms of scale and scope.

• Technology
Enablers • Talent

• Scalability
Objectives • Sustainability

• Professionalism
Essentials • Entrepreneurship

Professionalism and Entrepreneurship should not be in substitution of each other; rather, they should
be synergistic to each other
Passion and Mission
Many entrepreneurial ventures are based on disrupting the existing industries or simply creating new
ones. Successful entrepreneurs become passionate about their missions.

The mission could be to disrupt an industry or

solve a problem personally experienced. Uber WhatsApp and Redbus are solutions to the
and AirBnB are examples of disruption having problems the founders faced, communication
disrupted established taxi transport and and bus ticketing respectively..
vacation lodging practices, respectively

Passion and Mission

Some others are motivated to leave a legacy
that makes the world a better place to live.
Andela is a three year old start-up that trains
engineers in Kenya and Nigeria and places them
in remote jobs for international companies. Its
goal is to create a community of technology
founders in Africa.
There are other start-ups which do mobile
based micro-lending and donations for indigent
people in underdeveloped regions. Khan
Academy is an academic website that offers
free educational materials with a personalised
dashboard for students of all ages to learn at
their pace.

Passion and mission are crucial drivers of multiple entrepreneurial achievements

Perspectives on Entrepreneurial Effort
Entrepreneurial effort should be viewed independent of scale and scope (which are drivers of growth) on
one hand, and technology and organisation (which are differentiators of growth) on the other hand.
There is a need to redefine the enterprise hierarchy to identify where and how different generations and
types of entrepreneurial effort fit best.

Unicorns Medium, Large

Start-ups Small

Small Businesses Micro

Self-employment Nano

The energy and passion to seed and grow must be an essential characteristic of all firms, small or
large, ensuring that the growth of ‘large’ is not at the expense of ‘small’, and vice versa.
Entrepreneurial Thermodynamics, A Wrap-up
We have considered a few theoretical, abstract, and philosophical approaches to entrepreneurship from
an engineering and thermodynamic perspective. Each start-up is a unique and differentiated activity,
even if it chooses to compete in the product-market segment frequented by others.

An entrepreneur can and

A start-up is a like a heat engine Ensuring
should never lose sight of the
that is driven by Thermal
fact that his creation is both a
entrepreneurial energy, Equilibrium
consumer and provider of
passion, and intellect
energy. Maximising
Energy
Unique Conservation
Characteristics
Minimising
Energy
The role of founders and co- Loss
A start-up must always be in an founders in this seemingly
energy creating and waste intangible and invisible task is Aiming
minimisation mode. as critical as building a tangible zero
value chain, physical or digital. entropy

Start-ups and entrepreneurial firms need to excel in being what they are, and ought to be – not only
innovative, daring, and problem-solving but also passionate, energetic, and enthusiastic.
 NPTEL

COURSE ON ENTREPRENEURSHIP
Perspectives of Business Strategy and Economic Development

WEEK 10 – LECTURE 50
Course Module 13A

Human Resources Strategy

Prof. C Bhaktavatsala Rao, Ph.D.

Ajit Singhvi Chair Professor

Department of Management Studies

Indian Institute of Technology Madras
Human Resources Strategy
Human Resources Strategy of a firm is the set of activities comprising
recruitment, induction, deployment, development, motivation and
compensation of people in the organisation such that the organisation
achieves its strategic and operational goals.

Human Resources Management (HRM) also involves design of organisation

structure, roles, responsibilities and accountabilities for employees. To ensure
equity, HRM is usually executed through a set of policies and procedures.

While as a function HRM has its unique identity and areas of operation, it also
needs to be an integral part of management and leadership at all levels. In
fact, HRM is the shared responsibility of the HRM specialist and the line or
staff manager.

HRM practices vary across nations (for example, between USA and Japan or
India and China), and also industries (for example, manufacturing or retail and
infrastructure or service).
Human Resources Function Needs to be a Business Partner
Four key HRM functions play a major role in aligning the organisation and people with its business goals and strategies

Driven by the talent needs of the Continuous skill development of

current and emerging businesses employees to ensure that the firm is
of the company competitive

Recruitment and Learning and

Induction Development

Four Pillars
of HRM

Performance and
Organisation Design
Compensation

Structures that precede business Total rewards for an employee,

growth, balancing divisional comprising fixed, variable and long
flexibility with corporate integration term pay, based on performance

Organisation design aligned to the business strategy is a key aspect of enabling effective employee contribution
Organisation Design is the First Step for a Proactive HRM Function
Recruitment requires identification of the right talent for fulfilling organizational goals and inducting into the team

How integrated or What are our goals and

What is our business? diversified is our strategies, business-
business? wise?

What kind of
What would be the right
What are the key people organisation structure
roles and
competencies required? will meet the business
responsibilities?
requirements the best?

How do we detail the

What are the potential
roles in terms of How do I search and
sources of required
essential and desirable induct the right talent?
talent?
competencies?

Recruitment, as is evidenced by the above, requires business-driven planning for talent in a holistic manner
The War for Talent
Professor Michael Porter’s Five Forces Theory has relevance for planning the talent strategy of a firm

Porter’s Five Forces Model

Threat of New
Knowledge

Competitive Bargaining Power of

Bargaining Power of
Rivalry in Candidates
Service Providers
Talent Pool

Threat of Competitors

The Five Forces Talent Model is applicable for all industry structures, from monopolistic to fragmented
62
Business Strategy Determines the Type of Talent Required
Depending on the need and rivalry for talent, each firm has to devise its specific talent strategies

•Technologically advanced •Ability to be incrementally

•Ever inventive innovative and creative
•Willing to experiment and •Ability to handle vast
even fail, only to succeed scope and variety
later • Management for
operational versatility

Innovation Differentiation

Cost
Niche
Leadership

• Ability to handle high •Specialisation in certain

volumes at low costs characteristics
•Operational excellence •Excellence in a few but
•Focus on efficiency and critical parameters
productivity •Ability to create brand
value

The talent strategies need to be aligned to the business and technology strategies of the firm.
63
The Recruitment Engine

Search Methodology
Education and

Internal
Talent Pool Experience

Aptitude and
Values

Internal Role Definitions

Selection and
Induction
Business Organisation
Agencies External Structure Structure

64
Organisation Structures Need to Evolve Periodically
Organisation structure needs to evolve ahead of the execution of business strategy and business structure

Business Business Business Organisation Business

Goals Strategy Structure Structure Results

Firms typically require different business strategies and structures as well as enabling organisation
structures at different points of time.
Different Types of Organisation Structures – Functional Organisation
Functional organisation structure is the most common form of organisation structure, even globally.

Top Management MD

Function Function Function

Functional Management 1 2 3

Product Divisions Product 1 Product 2 Product 1 Product 2 Product 1 Product 2

In a functional organization, different

functions undertake activities of Functional Problems of
different regions and businesses; it is specialisation coordination
left to the functions to be equitable Easiest form of Problems of
to all regions/businesses and also organisation equity among
coordinate with each other to fulfill different
business goals businesses
 Different Types of Organisation Structures – Geographic Organisation
Geographic organisation structure works when operational responsibility can be devolved on the regions.

Top Management MD

Regional Management Region 1 Region 2 Region 3

Function Function Function Function Function Function

Functional Specialisations 1 2 1 2 1 2

In a geographic organisation, Regional Problems of

different regions are responsible specialisation coordination
for their own P&L, managing Usually driven by Problems of equity
their businesses through two core functions; among different
regionalised products and sales & marketing products/businesses
functions and operations Duplication of costs
Different Types of Organisation Structures – SBU Organisation
Organisations can be organized in terms of Strategic Business Units (SBUs), usually around products

Top Management MD

SBU Management SBU 1 SBU 2 SBU 3

Function Function Function Function Function Function

Functional Specialisations 1 2 1 2 1 2

In an SBU organization, different

Business Problems of shared
SBUs are responsible for their specialisation services
own P&L, managing their
Usually driven by Resource allocation
businesses as if they were product line-ups with amongst different
autonomous companies with homogenous product SBUs
product and regional spread and market Conflicts of cross-
characteristics subsidisation
Different Types of Organisation Structures – Matrix Organisation
Organisations can be organised in terms of a matrix of head office functions and regions/products

Top Management MD

Function Function Function

Global Management 1 2 3

Function Function Function Function Function Function

Functional Specialisations 1 2 1 2 1 2

In a matrix organisation, the global One Firm concept Sub-optimisation of

organisation organised functionally or regional opportunities
Aligned to global
SBU-wise exercises control and and talent
strategy and
coordination with regional subsidiaries on execution Typically deliberative
a ‘function to function’ or ‘SBU to SBU’ and slow to respond
Global resource
basis. Regional executives tend to have deployment to local opportunities
dual reporting to regions and global. and challenges
 Matrix Organisation is a Microcosm of a Global organisation
Global organisations are best organised in terms of a matrix of head office functions and regions/products

Parent Company

Regional Subsidiary
Global Function 1 Regional Function
1

Global Function 2 Regional Function

2

Global Function 3 Regional Function

3
Regional Function
Global Function 4
4

In a global matrix organization,

Global uniformity and Inability to detect
different subsidiaries are
resource deployment subsidiary
responsible for their operations opportunities and
under legal jurisdictions, but Economies of scale
and scope risks
manage themselves as if part of one
global firm; they operate as guided With proper guidance, Constraints on
global optimisation subsidiary business
companies under parent company growth
policies and strategies.
Structure and Process as an Influencer of Organisational Agility

Type A Organization Type B Organization

(Process follows structure) (Process overwrites structure)

Type C Organization
(Linking Pin Organization)
71
Typical Evolution of Organisations
Organisation Functional Regional Strategic Global Matrix
Type Business
Unit (SBU)

Product When domain When customer and When P&L A combination of all
Organisation expertise dominates factor location responsibility drives
(Companies go out dominates
to customers)

Service When domain When prompt When P&L A combination of all

Organisation expertise dominates. turnaround for large responsibility drives
(Customers reach When user experience customer bases is
into companies) needs to be validated. required

Growth
Mode Start-up Ramp-up Diversification Globalisation
Different Types of Organisation Structures – Timely Evolution
Each organisation structure solves certain issues and provides certain solutions but also brings in its
wake certain other problems. Many times organisational structures have to be reshaped with time

• Functional organisation
Start-up Phase • Compact and cohesive

Linear Growth • Functional organisation

Phase • Supported by regional/product organisations

Diversified • Product organisation, Regional organisation or

Growth Phase • SBU organisation

Multinational Matrix organisation structure with regional

legal entity operation reporting to parent
Growth Phase global functions

While it is recognised that encouraging P&L responsibility to product, SBU or subsidiary levels is an
optimal way to empower growth and develop leadership, not many organisations succeed in that
Relative Emphasis on Fayol’s 14 Principles Among Diverse Organisations

Manufacturing R&D Marketing Start-up

S. No. Fayol’s Principles
Organisations Organisations Organisations Organisations

1 Division of Work H M M M

2 Authority and Responsibility H M M M

3 Discipline H M M M

4 Unity of Command H M M M

5 Unity of Direction H M M H

6 Subordination of Individual interest H M M H

7 Remuneration of Personnel M H M L

8 Centralisation H M L M

9 Scalar Chain H H M M

10 Order H L M M

11 Equity H M M M

12 Stability of Tenure H H M M

13 Initiative M H H H

14 Espirit deCorps H H H H

Note: In terms of applicability: H – High; M – Medium; L- Low Start-up organisations tend to combine the characteristics of
innovative and creative organisations such as R&D and Marketing
which need to be customer-centric
74
 Learning and Development
Learning and Development are mutually reinforcing aspects of individual and organizational development

Intrinsic Inputs and Applications

LEARNING

• Receptive
Makes one knowledgeable Makes one impactful
• Perceptive
Requires focussed mind-set Requires broader personality
• Mega Trends
outlook
• Big Data

DEVELOPMENT

Extrinsic Inputs and Applications

Learning and Development has to be based on both internal and external inputs and opportunities
75
The Brain Science
Neuroscience needs to understand how to build the talent DNA of a firm depending on industrial and strategic context

Different
industries
Corpus Callosum
(Connector to the left and
right sides of brain)
Cerebrum
(Basic abilities)
Require
different skills
Thalamus
(Consciousness)

Contextually
applied at firm
level

Ignore the superficial

Cerebellum
(Fine motor
function) Hypothalamus Normal, But, special
(Behavior trigger)
common skills skills may be

Dwell into the deep

may be upregulated in
Pituitary Gland downregulated the same
(Hormone trigger)
Spinal Cord in some people people
(Transmission of
nerve signals)
Brain Stem
(Main motor and sensory
nervous system)

Learning and development programmes can be effective when they match institutional requirements and individual
competencies, to create intellectually virtuous and competitively agile organisations.
Neuroscience as an Optimiser
Reflection on one’s neuro-scientific aspects of thinking and functioning helps one attain leadership mastery

Left Brain Right Brain

Functionalities Functionalities
Logical Intuitive

Analytical Thoughtful

Objective Subjective
The Ideal Combination
Logical and intuitive
Analytical and thoughtful
Objective and subjective

Leadership optimisation involves two leader-personalities,

one, predominantly left brained and the other
predominantly right brained, jointly sharing one role
collaboratively to bring about a winning fusion of top-
notch leadership performance

Analytics and Intuition and Superior

Experience Instinct Performance
Relating Brain and Mind to Skill Requirements
Skill requirements vary dramatically based on organizational hierarchy; ie., the role in leadership that one plays

Transformational skills of
Senior Management judgement, creativity, planning
and problem solving

Middle Management Conceptual, analytical and

relational skills

Basic Management
Basic technical and
compliance skills

Recruitment, as is evidenced by the above, requires business-driven planning for talent in a holistic manner
A Framework of Five Core Skills

Reducing Complex
to Simple

Conceptual
Skills
Logical and
Integrative and Data Based
Immersive

Holistic Analytical
Skills Skills
An
Alchemy
of Skills

Creative Technical
Skills Skills

Imaginative and Developmental and

Beyond the Obvious. Constructive
A Framework of Five Core Skills

Combined Skills

Hard Skills Hard skills and

Soft Skills
supplement and
reinforce each
Soft Skills Usually technical & scientific
other

Highly domain-specific

Usually personality driven Prone to obsolescence

Highly individual- specific Need continuous fortification

An alchemy
Conditioned by ecosystem Related to core areas of design, that is
manufacturing and marketing formidable
Influenced by core values
Experiential
Easy to Lose,
Difficult to
Difficult to Acquire
Acquire,
Hard to Lose
Passion and Individual Behavior

Goals and
Results

Purpose and Competency and

Focus Competitiveness

Passion
Logic and Aptitude and
Perspective Attitude

Sensitivity and Introspection

Sensibility and Reflection

81
A Framework of Four Leadership Essentials

EDUCATION EXPERIENCE
Inculcates a learning Builds versatility and
mindset resilience

Core
Leadership
Personality

INTUITION
INSTINCT
Provides a unique
Calibrates risk and reward
differentiation

82
A Fulfilling Leadership Journey

Leadership
Transformational
Management Role

Differentiating
Executive Role

Foundational
Role

Intended Result
Neither ‘Bonsai Managers’ Nor ‘Banyan Leaders’

83
 Seen as the only way to achieve
Performance never benchmarked with internal benchmarking
external competencies and performance
During the year changes Annual in cadence
affect the relevance of the
goal-result process
Relatively standard, across
hierarchy
Appraised employees
judging only by rating
and financials
Against pre-set annual
goals
Superiors not trained
or reluctant to give
honest feedback
Implemented as a HR
exercise
Due to financial implications,
force-fit of ratings Used as a rating tool for
salary increases and
promotions
Subject to ‘recent’, ‘halo’ and
‘bias’ effects Also as a feedback tool on
training and development
needs
All appraisals done in one
go annually (usually bunched Review by direct supervisor
towards the end of performance and additional reviews by
year) his boss(rarely done)

Typical Characteristics of Traditional Employee Performance Appraisal

Force-fit of Bell Curve of Performance

Acceptable
Mid Range

Low and
S Very Low
K High and
Performa
I Very High
nce
L Performance
L
S

At Entry, Everyone is a Topper On Job

People forced into extremities

Reasons for move from Topper to Toppled

• Improper role-talent fit
• Poor leadership, including poor job definition
• Poor peer and subordinate relationships
• Factors beyond control
• Force-fitting of performance artificially
Challenges and Opportunities in Performance Management

Customer
Centricity

Operational
Accountability
Excellence

Appraiser and
Appraiser must be a
appraised must be
mentor rather than a
domain-savvy and
reviewer
business-savvy

Employee
Integrity The company must
integrate
Appraiser and Empowerment
appraised should
performance
find quality time
appraisals with
for appraisal
cultural anchors

Appraiser and
appraised must
have internal and
external
benchmarks of
performance
Environmental Quality
Protection Excellence

Safety
Four Executive Typologies Diversified
Seafarers Explorers
Experience

Specialised
A Start-up or entrepreneurial executive tends Experience
to be a mix of all the four executive typologies Mountaineers Miners

Specialised Education Diversified Education

Executive Type Career Subject Result

Diligence Passion Focus
Orientation Knowledge Orientation

The High on Hard

High, Mono Singular,
Successful High Skills High High
Task Goal Driven
Mountaineer

The
High, Multi Adaptive to
Successful High Diverse High High
Task Opportunities
Miner

Pushes the
The Excels in
Hard and soft envelope in all
Successful High Uncharted High High
skills navigable
Seafarer Territories
routes

The Lateral Excels in

Open to all
Successful High Thinking Uncertain High High
possibilities
Explorer Skills Areas
Friendship and Business
Friendship Vs Business

Factor Personal Friendship Business Association

Reliable, durable complex human Contractual, time-calibrated practical

Nature
emotion relationship

Fulfill each other’s need without Fulfill joint needs with shared
Primary Characteristics
expectations expectations

Expression Silent but experienced Vocal and codified

Driver Human chemistry Business rapport

Philosophy Caring, sacrificing, sensitive Supportive, transactional, practical

Expectation No returns Needs returns

Friendship in Business

Makes business Creates

Provides
Enables start-up and operations Launchpad for
complementary
revolution lean and mega
skills
efficient businesses
The Ten Essentials for Self-actualisation

Self-
awareness

Self-
Self-respect
appraisal

Self- Self-
motivation confidence

Self-
actualisation;
elusive, but
achievable

Self- Self-control
improvement

Self- Self-
expression development

Self-
discipline

89
The Journey of Self-actualisation

Actualise
Self-
actualisation
and
Leverage actualisation of
the team,
Leveraging society, and
competencies to nation
achieve
Aspire aspirations

Setting higher
aspirations

Convert
Conversion into
broader competencies
Discover
Self-discovery of one’s
abilities

An Iterative Journey

90
Start-ups and Digital HR
Start-ups have a great opportunity in digital development of human resources function in firms/industries

Virtual
Recruitment
using AI

Wellness and Virtual

Productivity Reality for
Wearables L&D

Digital HR

Facial
Digital Team
Recognition
Collaboration
Tools

Digital
Employee
Engagement

Digitisation would help remove bias, improve engagement, and enhance productivity in HRM but
firms would still need the human touch for organisations to truly excel and stay competitive. 91
Thank you!

92