My views on “Leadership Development Practices & its impact on business results” in Indigenous Enterprises

My views on “Leadership Development Practices & its impact on business results” in Indigenous Enterprises    - Ajay Tanwar, Sohna, December - 29, 2011

 

 

There was the time in Indian Automobile sector when Indian Industrialists were dependents on OEM MNCs to manufacture the vehicles in India but if we look at current scenario, Most of the Indian OEMs who have started manufacturing their vehicles in joint venture or collaboration with foreign partners long back are now becoming independent manufacturers. We can take examples of HERO MOTOCORP, BAJAJ AUTO, SWARAJ, TVS, and ESCORTS etc. Now they are manufacturing the vehicles independently & having a big market share.

We can also observe the same kind of independencies in other sectors like telecom, IT and FMCG. In IT sector HCL, TCS, Satyam & Wipro are the names. Bharti- Airtel, Tata-Teleservices, Idea Cellular are the independent Indigenous brands in telecom sector. Dabur India, Cavinkare, ITC, DS Group, MDH etc are Indian FMCG manufacturers creating a tough competition to foreign companies like HUL, Colgate Palmolive, Nestle, Coty Incorporation (Adidas). Similarly there few Desi Fashion brands like Woodland, Ruf N Tuf, Duke, Arvind Mill, Mufti etc are slowly snatching market share from their foreign competitors like Van Heusen, Reebok, Adidas & Polo etc. In totality, we can say that; these Indian enterprises are totally set to compete their foreign competitors in Domestic as well as in International market arena.

But Indian auto component & parts manufacturing industry is still looking for foreign collaborations / joint ventures. What are those reasons which motivating industrialists from this sector for such alliances? And what are the steps required to take immediately so that auto component & parts manufacturing industry can also stood up on its own feet independently.  This is the only sector where we noticed foreign companies speedily entering into partnerships & joint ventures with local manufacturers’. For example Munjal Showa, Sanden Vikas, HSCI, are going to be very competitive with auto - component manufacturing multinational companies.

Indian auto component & parts manufacturing enterprise have to re-look in to their internal system /set-up & find out the reasons as to why they are unable to grab maximum market share independently without any foreign alliance?

Following are the factors which always effects business related decisions:-

1.      Financial

2.      Human Resource

3.      Technical

4.      Marketing &

5.      Leadership

Let’s analyze above factors one by one to conclude & identify genuine & solid reasons behind dependence on foreign collaborations.

Ø  If we consider financial capacity of Indian Entrepreneurs, we find that; financial reasons seem not to be valid because Indian entrepreneurs cannot be doubted for their capital investment capacities. They are more capable than their foreign competitors to invest enough capital and they also backed by various government & non government national/international financial institutions in India.

Ø  Availability of Human resource also cannot be a valid reason behind increase in foreign alliance as human resource is easily available everywhere in India on comparative much cheaper rates than in other parts of the world. World knows that; Indian talent is in high demand everywhere.

Ø  Technical reason seams valid up to some extent as Indian entrepreneurs do not take R&D initiatives much seriously. That’s why foreigners always get advantage of new technology invented by them. Indian Companies are slow in Innovation & Creativity initiatives. This is somewhat related to our culture as we the Indians, feel hesitate in taking risk & implementation of new ideas & we can say that; cultural issues are totally related to people or human.

Ø  Marketing of products could be a reason as Indian Companies have no strong & effective international marketing strategy, that’s why they look for international partners to make their products easily reachable to the international customers and rarely think of developing their own Marketing Managers & Business Leaders to be independent & effective in expanding the business without taking help of foreign alliances.

Ø  Yes, business leadership is also a valid & important reasons as most of Indian Auto-Component manufacturers in India just look at the cheaper human capital and most of the time they compromise with skills & competencies even at the leadership positions also and overlook the fact that; there’s a correlation between Leadership practices and Business results. They rarely think of hiring the talent from IITs or IIMs or from other premier institutions. They rarely think of sending their leaders (Plant Heads/GMs/Managers/Executives) for the leadership development programs offered by premiere institutes because high cost is involved in it. Not been allotted adequate budgets & liberty to take independent decisions therefore Training & Development department is not functioning much effectively in such organizations. In some cases it has also been observed that business related mostly decisions are being taken by promoters, owners without even consulting with their second line business leaders.

Considering above analysis, we understand the main reason for Indian entrepreneurs to enter into joint venture with International players is lack of risk taking ability, lack of technical & leadership development culture.

Fortune magazine recently released its global list of “top companies for leaders” and fortunately five out of 25 top companies are headquartered in India. These companies are HUL, ICICI, Aditya Birla, Bharti & Wipro.

Also a study on “top companies for leaders” has been conducted by strategic HR & leadership advisory firms Aon Hewitt and RBL group to examine how these organizationspractices and business results.  What is common to all the companies that build their leaders:-

Ø  They all have a deep alignment of business strategy and the people strategy. PepsiCo creates 10-year growth plan for individuals who are thought to have leadership potentials.

Ø  They all have a deep faith in grooming talent from within. Every Single CEO of P&G started at the entry level in P&G itself.

Ø  If someone is two-thirds ready, Wipro will take a chance on an internal candidate before looking outside.        

Ø  They are giving their leaders experience to deal with changing socio-economic global landscape for example at Wipro employees learn how to deal with ambiguity with their leaders. Wipro chairman Azim Premji personally mentors 25-30 leaders at various levels.

Apart from above one factor that is “the role of existing leaders (CEOs & Presidents/VPs) in leadership development process” also needs to be analyzed. Whether these top level leaders are playing a role of conductor in organization’s talent & leadership transformation process or just playing as a role of insulator and creating hurdles for potential leaders so that they themselves can remain always in power & importance? If we look at mid size Indian companies, in many cases HODs instead of grooming the newcomers start acting as a competitor. This attitude of existing leaders is dangerous for any organization. The role of Existing Leaders (HODs) is to add values like we mix Mobile Oil in petrol. Top leaders needs to groom the talent available at their down the lines so that, the potential leaders can also be groomed as real leaders to cater to the organization’s future need, but unfortunately we see some existing leaders acting like an insulator between source of leadership development & potential leaders. According to Jeffery immelt (Chairman, CEO-GE), “Chief executives of highly successful companies devote 40% of their time to leadership development”. They take a view of talent that goes beyond the boundaries of the corporations. Successful Indian companies tend to stress their leadership role in society, which explains why rising leaders at HUL & Wipro devote significant resources to building hospitals and schools in Indian Communities. Aditya Birla honours employees who teach villagers skills like composting and pump repair.

Following India’s growing openness, the arrival of new and existing models, easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers all have stirred the demand for vehicle and a strong growth of the Indian Automobile Industry.

And to cater to this tremendous demand and to reap maximum profit, Indian entrepreneurs have to increase their independency and this independence can be achieved through LEADERSHIP DEVELOPMENT INTERNALLY by ensuring that; EXISTING LEADERS should play a ROLE OF TRANSFORMER and not as an INSULATOR.