Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts

Thursday, November 01, 2012

Turning Strategic Intent into Real Results

Q. Can a CEO put HR on frontline of the business?
A. Where the executive has the capability and experience to do so this would be quite possible. With strong leadership skills and a good understanding of what drives the business an executive can leverage the talents and abilities of the people they lead. I have seen HR managers placed in such roles to broaden their experience and perspectives who have done an outstanding job, leading them to more strategic roles as a result. There are HR executives who have become successful CEOs and Ann Sherry, CEO Carnival Australia, is one such example.

Q. According to you, what steps is the HR taking to meet CEO’s expectations and business’ real- time needs?
A. Every area of contribution of HR can become a significant contribution. Some examples are:
• Management of turnover issues reducing the cost, creating positive retention, enhancing the talent pool and the effectiveness of performance. • Transforming the leadership culture to lead new initiatives.
• Employee relations and development programmes to engage them in changing their skills to be able to move in direction of the organisation.
• CSR programmes that are integral to developing a sound direction for the organisation and the society.
• Programmes that enhance quality of working life and increase levels of engagement and retention.
• Evaluation of culture for M&As and transformation programmes to prevent failure from untested assumptions.
• Succession planning initiatives to have a strong pool of candidates leading to natural progressive transitions of leaders. Click here to read full interview...

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Tuesday, September 04, 2012

The Battle for Survival!

All lost some, some lost all. Everybody evolved (Hopefully). Change in the air now, with new strategies being adopted by retailers to enable them to better manage the dynamics of this business. But can this misery-inspired ingenuity help organised indian retail produce the numbers that have eluded it so far

The changing contours of the Indian retail industry during and post the slowdown draw interesting parallels with the entire build up to the Commonwealth Games, 2010. Of course, this is ignoring the fact that we are talking about an industry here and not an event. But the fact is that the retail sector has also had its fair share of heartbreaks, controversies, working capital and cash flow problems; and obviously lessons galore. And just like all the ‘misses’ and ‘mis-hits’ at the Commonwealth Games will continue to torment India as a nation for some time to come, the retail sector also continues to face the scars of the slowdown even after we have seen six odd months of revival now.

Rising rentals, store rationalization, working capital management and cost optimisation (rather minimization) are top of mind issues for players of the industry that contributes 12% of India’s GDP. And in the process of coping with such issues post-slowdown, we are evincing a gradual shift from core-focus areas and erstwhile core competencies. And this portends the emergence of a new picture on the Indian retail landscape.

For instance, till the first quarter of FY 2010-11, Spencer from the stable of RPG had shut down 100 stores, which even meant moving away from cities like Delhi, which were unprofitable. Rationalisation of capital expenditure by focusing on core geographic areas that offered low rent premises started becoming – and will continue to be – the short-term focus of Spencer. In conjunction, almost all retailers are frequently changing their strategies to keep their show on – some flailing around attempting to pin the donkey blindfolded, some strategically. But will the mixture of these strategies help organised retail become the next boom industry, which it was slated to be for so long? To that effect, B&E met up with CEOs and leaders within India’s retail industry and in this cover story, provides a quick commentary on the current state of retail affairs. Store rationalisation through adequate working capital management and cost optimisation has been a hitherto hidden penchant, which departmental stores like Spencers, Shoppers Stop (from the Rahejas), Westside and several of their ilk have developed. And to optimize costs, a lesson learned during slowdown is to reduce inventory costs by liquidating slow moving goods (through discounts, et al). According to the KPMG report, ‘Indian Retail: Time to Change Lanes,’ slowing sales were resulting in lower inventory turnovers and increasing working capital requirements. The report also shows that till 2009, sales grew by mere 8% (34% in 2007) and this prevailed till July 2010. This tantamount to the fact that the organized retail penetration, which is currently at 5%, may be able to reach only around 10.4% by 2012 (against the earlier expectation of 16%).

So what happened to those figures thrown up to media by industry bodies; claiming a sunny road ahead for Indian retail? In 2008, CII claimed that till 2013, retail will attract an astonishing $25 billion investment but in reality, we haven’t seen even 50% of that. This was also echoed in the findings of McKinsey, which claimed that the Indian retail industry will grow at 25% till 2013.

In fact, sector analysts claim that the Indian retail market is still facing a slowdown. But the positive side is that it has taught players not to take the route to perdition like Subhiksha & Vishal MegaMart. “In the current context, perhaps the key lesson learned during the slowdown is to never invest too much; rather one should focus more on store rationalisation,” says Sanjay Gupta – VP-General Merchandise, Spencer’s Retail Ltd. So it is quiet logical that the group is not over investing in non-profitable areas like Delhi and Rajasthan and is consolidating its operations in virgin Tier III cities (where no retailers have entered) and core geographic areas like southern India. Players like Subhiksha, Vishal Mega-Mart & Planet Retail miserably failed to handle the liquidity crunch created by the economic meltdown due to over-investment and poor conversion ratio of investments to revenues. On the other hand, the big boys like Spencers are somehow not only learning, but also in some cases mastering the issue of liquidity crunch.

Govind Shrikhande – Customer Care Associate & MD of Shoppers Stop Ltd. admits, “During the slowdown, we have seen the increasing working capital requirements fuel growth, which resulted in liquidity pressures for many retailers and the need of the hour is working capital management.” To manage working capital, the group is managing its rental expenses by opening stores on a revenue sharing basis with mall owners and is managing store operating costs by cutting down 30% of its electricity costs through installing recyclable electronic and air-conditioning systems. Ventures like Arcilia from the group, which have not been generating footfalls, have been shut down. The result was the company, which reported a loss of `650 million in 2008-09, bounced back to record a profit of `192.1 million in the third quarter of 2009-10. Post-slowdown, retailers across the world are shutting down stores that are not generating major footfalls, rather than playing the waiting game. Changing market trends demand that the retail industry expand its reach to more customer touch points to drive them to stores in new areas. For instance, French hypermarket brand Carrefour has shut down 10 stores till July this year in its home market to reduce its reliance on sluggish footfalls. The group is now rolling out stores in new emerging consumer markets such as China and Brazil. This lesson has also been learned by luxury retailers. In the Indian market, you will see that luxury retailers like LVMH, Prada and Hugo Boss are now opening smaller stores rather than large ones. Tag Heuer (from the stable of LVMH) has recently shut shop from one of India’s two luxury malls – DLF Emporio – and is keeping its new stores comparatively smaller in size. “Emporio was not getting the required footfalls. During the slowdown, we have observed that gigantic stores work in China to impress customers; but in India, I think people are not really hooked with the size of your store,” feels Manishi Sanwal, GM – Indian Sub-continent of LVMH – Watch & Jewellery.


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Tuesday, July 24, 2012

Theory“I” talks about how Global Management concepts

Theory“I” talks about how Global Management concepts are now getting Influenced Significantly by lessons from The Indian Context, both Culturally and Professionally. With more and more Indians taking up Global Leadership roles across the World in Varied Areas of Society,polity and Industry,is The World getting Enmeshed with and finally Accepting The Indian style of Management? By Arindam Chaudhuri

Of course, there’s the opposing argument – and quite convincing for that matter – that an Indian who has lived in America for two to three decades perhaps has become completely disconnected with what is being Indian and would have completely forgotten the ‘life lessons’ which I’ve purported above. To sweep away this argument would take less than a moment. Just walk into the home of any Indian family that has spent this argumentative two to three decades in the United States, spend a few hours with this family, and you get to understand the logic of what I’m putting forth. They might be Americans in terms of their citizenry – and I have no issues with that – but the legacy of their Indianness goes much beyond simply the name, and much deeper than the religion connection that also plays a heavy card. And that’s where the Indian-style-of-management hypothesis, the Theory I of it all, comes back in one big wave.

Since the 1950s, management theory and practice has been heavily influenced by the likes of Alfred Chandler, Igor Ansoff, Peter Drucker, Herzberg, Fayol et al. Their theories and those of their peers defined how CEOs and institutional leaders ran their companies and managed their people. McClelland, Skinner, Maslow while building on Elton Mayo’s work became iconic proponents and definers of human behaviour in the 1960s-80s periods. Blake and Mouton added to their celebrity quotient by inventing the Managerial Grid. Hershey and Blanchard went many steps ahead and beseeched the ‘leader’ bunch to become situational leaders – in other words, to moderate their leadership skills depending upon their followers. Giving them glittering company were Levitt, Kotler, who redefined marketing in ways nobody else could, and more contemporarily, Ries and Trout. And then Michael Porter happened to the strategy world, where cost leadership, product differentiation, competitive advantage became terms as common as the morning weather forecast for every CEO. Yes, the list is exemplary and par excellence – more because what these people said, worked.

But somehow, somewhere along the line, the Americanness of it all went completely unnoticed for many decades. There were no questions asked on whether management and leadership philosophies from other parts of the world could perhaps work better. How often has one heard of an American organisation adopting the Japanese management style to surge ahead? Perhaps never. And how often has one heard of the reverse? Probably never again. However, I do remember reading somewhere that when IBM in America was making losses while IBM in Japan was making profits, IBM-USA tried to adopt the Japanese management style to turnaround. Well, the result...increased losses!
 
Predictable? Should be. It is most likely that a style that is successful in Japan would not be as successful in US; and vice versa too. People are different, cultures are different and so is the life-style. That is the reason why Japan has developed its own management style and the US its own. If we take a deep look into the American management style, we realise that it is absolutely fine-tuned to the American culture and way of living. The people in the West grow up, mostly, with very less emotional security due to factors like high divorce rates, single parent families et al. As they grow up, they do tend to find a sense of stability in this seemingly unstable and insecure atmosphere. Thus, when they enter into their job lives and see a management culture prevalent, which is contractual in nature with the hire and fire style of management, they don’t get disturbed. In fact, this motivates them to work harder; and a typical American might metaphorically say, “We are tough guys and as long as we are good, the company keeps us, else we go out”. The bottom line is that the fine tuning between the culture at home and at job works wonders and enhances productivity & motivation.

Looking at the Japanese set of companies, one finds concepts of life time employment working wonders out there. A Japanese finds a bonded culture in his organisation, unlike the American contract culture. If we look into the Japanese lifestyle and culture, we would find the importance of bonds being very high. The Japanese have strong family ties and a strong sense of community. From such an upbringing, they feel at home when they see a bonded style of management on the job. The typical Japanese would say, “I am a Honda man (and not that I work for Honda)”, displaying the bond that he shares with his company. The point that gets highlighted again is that a management style, which flows out of your own culture and roots, would any day motivate your people much more than one which is adopted from somewhere else. I am actually attempting to disprove my Indian style of management hypothesis much before I’ve even proved it. But seriously, it doesn’t take a post doctorate to understand that nationally bound management and leadership concepts should be able to succeed only in those geographies and demographies for which they were originally intended. Therefore while America is the world’s largest economy, Japan the second largest and China racing down their necks, all three have brilliantly different management styles – and all three have similarly different cultures; therefore, the match between their cultures and management styles is perfect. Then why should an Indian style of management succeed (say in the West) where almost all others have failed on the portability parameter? The answer to that lies in the genesis of the Indian style of management.

This genesis that I am alluding to is what can be encapsulated quintessentially by the term ‘Indian culture’, with one significant facet of it being the wondrous quality of not trying to impose its own character, but in trying to modulate the character of individuals and entities around to the benefit of the larger good. If that sounded over the top, let me simplify it by the term, Theory I. 
 

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