management by matrices

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The role of strategy in firms

My latest column for The Hindu Business Line explores the role of strategy in firms. Full text follows
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While there are many definitions, strategy usually refers to organisational processes involving the determination of either goals or the means to attain those goals. This entails the interplay of many factors — external factors relating to the environment and industry, as well as internal factors, such as capabilities and values. The composite insights generated from these factors lead to the creation of an organisational strategy.
While the broader contours of a strategy may remain constant for a long period of time, the specific details may undergo rapid changes. Hence, it is a going concern, just like the overall firm. Given the proximity of strategy to the principles that impact day-to-day functioning of an organisation, it is quite surprising that this discipline in its applied form is not as formal as many other disciplines, such as marketing, operations and others. This is because, while there is an academic unanimity about the importance of strategy, its protocols in applied and real contexts seem to be rather poorly defined.
It must be noted that the role of strategy is even more significant in growth firms, and, at a broader level, in growth economies like India, where opportunities may seem immense and innumerable, but choosing the right may make all the difference.
So, what are the key issues that the strategy function must strive to work on?

STRATEGY DESIGN

The starting point of the strategy design process lies in the creation of philosophical principles that guide the firm’s existence. These principles would combine two elements — the ‘human values’ and the ‘operating values’ of the firm. The former includes concepts such as integrity, creativity etc, while the latter may include marketplace values, such as low cost, high quality etc.
At the next level, the philosophical principles are put to test against the opportunities offered by the environment in which the firm operates. The next level of granularity would of course entail financial plans, people plans, projects and other activities that enable the realisation of the strategy. At each of these levels, design would not simply be an academic exercise restricted to a few, but would engage the entire firm and its stakeholders. In other words, the strategy design process is neither a top-down, nor a bottom-up activity, but rather a collaborative exercise, with centralised facilitation.

STRATEGIC DECISIONS

Strategy has an important role to play in driving the decision processes in the firm. This occurs at two levels — first, in the key decision-making processes in the firm as a whole, and second, in the creation of protocols for decision-making within components of the firm. Protocols for sub-units help create the balance between autonomy and adherence to broader strategic goals at the level of individual components of the firm.

DIAGNOSTICS

Ongoing diagnostics is another critical function that strategy must perform. A diagnostic involves a detailed analysis of well-defined business unit level or corporate strategic issues where an external and objective perspective is valuable.
As a function, strategy offers the right mix of distance and proximity from business issues and, thus, creates a space where established patterns of understanding can be challenged or looked at afresh. Routine diagnostics help ensure that both the strategy of the firm, as well as its manifestation in sub-units are constantly refined in light of the actual environment and its realities. In other words, diagnostics are the learning engine of the organisation.

SCENARIO PLANNING

Scenario planning entails visualising the impact of multiple external and internal scenarios on the strategic goals of the firm and its stakeholders (shareholders, employees, customers etc). Essentially, it’s a process of detailed de-risking of extreme possibilities, to a point that stakeholder interests are preserved in all eventualities.

INNOVATION

Given the wide range of issues accessed by the strategy function, the innovation practice of an organisation is best placed within strategy. Innovation involves a broad range of issues, including operational innovation, new business incubation and others. Innovation requires multiple perspectives to come together,both firm within the firm and outside it. The primary role that strategy needs to play here is to conceptualise such possibilities and create working prototypes. These prototypes, in turn, could be embedded into the broader organisation if found to be successful. In the absence of such a prototype ‘manufacturing’ function, most organisations choose not to prioritise innovation, since innovation and short-term goals of the organisation compete for the limited attention span of operating mangers, and the latter usually wins.

INTEGRATED REVIEW AND FACILITATION

A mature strategy function also actively reviews the firm’s performance along its strategic objectives in an integrated manner, whereby the ‘sum of the parts’ is routinely evaluated, as opposed to just the individual parts. In this manner it can play the role of ‘conscience keeper’ of the firm. The strategy function can play an ongoing facilitation role, which entails that different units of the firm operate through mutual cooperation, and in sync with the broader strategic goals of the organisation. These are just a few issues where the strategy function can play an important role within the firm. Note that academic constructs like corporate and business strategy have not been delineated in the items described above given the high degree of overlap between them in applied contexts.

The purpose of business — creative expansion

My recent column for The Hindu Business Line - The purpose of business - creative expansion
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Why do businesses exist? Understanding the true purpose of business may help design the strategy of a firm on multiple dimensions. In this article, an attempt is made to present one possible approach that is universal and independent of the type of organisation or any other contextual factors. Business can be viewed to exist for the purpose of creative expansion. This is true from the perspective of multiple stakeholders.
Successful firms manage to align their activities towards the purpose of creative expansion from the perspective of all stakeholders. Firms which take a more limited view of their purpose may end up being less sustainable over the long run even if they manage to do well in the short run. Essentially, there are four key perspectives/ stakeholders to consider in assessing whether the core purpose of creative expansion is being fulfilled.

FINANCIAL

From a financial perspective, shareholders invest in a business to obtain a return on their capital that exceeds other avenues of investment in the market. This can only be achieved if the capital is put to creative uses that yield a high return. Thus, the financial imperative of business is the creative expansion of capital. Creative expansion of capital can be achieved in multiple ways — from being the first mover in a new market segment to following innovative, differentiating practices even within an existing market.

PEOPLE

It could be argued that people join organisations to achieve creative expansion on two fronts — first, in their skills through the kind of work they take up, and secondly, in their non-work lives, by earning an income that can in turn afford expansion on other fronts. The dimension of creative expansion is often ignored in the design of job roles, at least for the vast majority of workers.

CUSTOMERS AND SOCIETY

What do customers and society at large expect from business? Fundamentally speaking, great businesses help in the development and delivery of great products and services that enable customers (and through customers, society) to creatively expand. For instance, a great financial product can help a customer worry less about the financial wellbeing of his family, and thus enjoy greater freedom to expand to his potential. A great smart phone can help its user to efficiently handle various tasks that, in turn, enables his expansion as a person through higher productivity.

IMPLICATIONS

Is ‘creative expansion' the master key to business? If indeed it is, the implications are many. Investors would view every business from a holistic perspective beyond just short-term top line and bottom line. Within the firm, innovation would no longer remain a side project with a hobbyist quality to it, but would become a core principle percolating into the activities of every member in the firm. The customer, and through the customer, society at large, would assume a central position in product and service design. In short, every sphere of activity of the firm would be tested against its realisation of creative expansion from all perspectives — financial, people, customer and society.
Another major implication of taking a creative expansion based view of business is that it removes the necessity of adding a layer of social contribution that is commonly termed as corporate social responsibility.
Aligning organisational activities towards the central core purpose of creative expansion requires an appetite for delayed gratification, i.e. doing what is right for the long-term versus chasing short-term goals. However, it may be empirically noted that the leading corporations of each generation (the likes of Google and Apple in this generation) indeed manage to become engines of creative expansion for all their stakeholders. Hence, the goal is certainly within the realm of possibility, and may well be the key to the long-term relevance of a firm.
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Enlighted Doership

My latest column for The Hindu Business Line: Enlightened Doer-ship
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The presence of individual rewards in organisations presents an interesting problem. The ‘worker' in such a system is constantly drawn by two impulses, often at odds with each other — the first is the impulse to perform his duties effectively, and the second is to match his efforts towards the individual rewards on offer. This often leads to individual behaviours that are counter-productive to the larger goals and merely serve the short-term needs of individual rewards.
However, in reality all organisational accomplishment is possible only with the accomplishment of the collective, not an individual alone. Thus, an alternative view could be taken of the entire purpose of rewards, and the way to deliver them given the collective nature of organisational achievement. In this article, one such alternative approach is described.

ENLIGHTENED ‘DOER'-SHIP

The idea of enlightened doer-ship is based on two key ideas. The first idea is that the work is the primary reward in itself for the individual performing it.
In the absence of any individual reward other than the quality of work itself, one can expect people to focus purely on their creative energies being fully expressed through their work, and drop all other extraneous distractions.
The second feature of enlightened ‘doer'-ship is that results are measured purely on the basis of the achievement of the larger objective, and not individual contribution. This would ensure that detrimental behaviours such as credit seeking, unhealthy competition, and impression management would be eliminated. Success is defined purely at the level of a team, or a larger commune and not at the level of an individual. This ensures that all the horses drawing the cart, as it were, are doing so in the same direction and either everyone is rewarded or no one.
Enlightened ‘doer'-ship may at first sight seem to be an idealised state, where people believe the work itself is the reward, and constantly look at the larger organisational goal as a measure of performance. However, a deeper analysis will reveal that these are the two primary forces that lead to individual satisfaction.
The concept of monetary and non-monetary rewards for work is really a construct that admits that these two forces do not exist in the organisation.
And the reason why they don't exist is that the ‘design' of work and its rewards in complex, hierarchical systems places more importance on design simplicity, and management of egos than ideal solutions based on individual fulfilment.

DESIGNING A SYSTEM TOWARDS ENLIGHTENED DOER-SHIP

While enlightened doer-ship may appear to be a feature of an ideal society or organisation, there are ways to create a system based on this principle. Four key drivers can enable this change.
The first is the effective design of roles and the mapping of roles to the right people. Here, the first step is to ensure that each role is essentially one complete creative unit of the larger picture. The second step is to map the ‘meta' creative actions underlying that piece of work, with the capabilities of the person selected for the role. Achieving this first step also has another benefit — namely, a reduction in free riding on the part of individuals, given that all notions of rewards and success are linked to team performance (not individual performance). Once the right person is doing the right role, that is in synch with that person's creative impulse, the tendency to free ride would be minimal.
The second element of designing an enlightened doer-ship system would be a flat, functional hierarchy. Hierarchy, as applied today, has essentially become a form of reward. Superfluous levels are created in many organisations for no purpose other than to act as a reward to keep people motivated in the short term. The hierarchy in an enlightened doer-ship system would be essentially functional and contextual, and ‘permanent' levels would be created only where unavoidable. This means that the role of a leader in a group could potentially be played by different people in different contexts or assignments.
The third element is to ensure that all variable rewards are linked to performance at the level of the team or commune. Among other benefits, this will also ensure that all stakeholders are working towards the accomplishment of organisational goals first, followed by individual glory.
The fourth element is, of course, a receptive culture that values the entire concept. This may be the biggest challenge, and the transition period may be painful for an established organisation, given the degree of “unlearning” of past habits that would be required. For a start-up with a clean slate as it were, creating such a system would be relatively easier.

CONCLUSION

Enlightened doer-ship as described above is not intended to disregard talent or individual flair. All it does is dissociate talent and individual flair from the reward process. In other words, unless the larger goal is accomplished, no one in the collective is rewarded. And the individual is constantly rewarded for his individual flair on a day-to-day basis through his own work content. The path towards achieving this ‘enlightened' goal is a difficult one, and one that is made more complex given the scale of modern organisations, but is a path that must be taken, from the perspective of individual and organisational purpose fulfilment.
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Building an Organizational Grammar

My latest column for The Hindu Business Line - Building an Organizational Grammar
Full text follows
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The full potential of a language can be explored once a grammar systematises key patterns. The user can focus more on creating and communicating ideas and less on creating the structural means to do so.
Similarly, a formal grammar for organisations would enable them to focus greater energies on manifesting their purpose, without constantly reinventing the basic building blocks for doing so.
In this article an attempt is made to understand some of the conceptual units that could make up such a grammar.

Competencies and purpose

The first building block of the organisation is a collection of competencies or areas of expertise. This translates into an overarching purpose (or purposes) for the organisation. Purpose, as such, is an insight-driven discovery, but the insight is usually built upon the bedrock of manifest and un-manifest competencies.
Additionally, purpose is usually an overarching theme that may be able to successfully capture multiple dimensions of the competencies contained within the organisation. The glue that unites competencies with purpose is a shared vision.
The physical manifestation of competencies and purpose could take two forms. Firstly, it clearly influences the areas in which the firm will choose to operate in. Secondly, and, more importantly, it manifests in the choice of leaders who need to be fully aligned with both the competencies and purpose of the firm.

Platforms, Applications and Components

Platforms form the third building block of the organisational grammar. A platform essentially represents a market facing or internal facing proposition that the firm has to offer. A firm may have one or more platforms with possibly overlapping competencies and purposes. A product or service line is one example of a platform.
A platform is, in turn, a collection of one or more ‘applications'. Applications are fully functional, meaningful units, and can be replicated easily. For instance, an e-commerce application used by a firm in one service platform to distribute its products may easily be replicated across platforms.
A component would be small, repeatable units of competencies which may be contained within multiple applications. A component in isolation may not be meaningful, but creates value when it aggregates with other components. A collection of inter-related components would usually make up an application. Of course, components, in turn, may aggregate amongst themselves to form larger components. The linguistic equivalent of a component-application-component paradigm would be a word, sentence and paragraph.
In a really well-designed organisation, it will be evident that the very competencies and purpose that form the first building block of the grammar are found even in the smallest components, applications and platforms in the firm. This is not unlike a fractal, and its feature of ‘self-similarity'.

Applications of a Grammar

A clear understanding of the grammatical elements available in an organisation can become an important guide to actually designing the structure of the firm. Often, one finds firms where components are embedded so deeply into applications and platforms that they aren't well understood outside them, leading to frequent attempts at reinventing the wheel. Organising around grammatical elements will ensure that everything that is created in the organisation finds its full expression. Knowledge management would be a critical element in a ‘grammatically structured' organisation, in order to ensure that component level expertise is consolidated centrally and redeployed as required.

The second arena in which a grammatical element based approach helps is in the identification of talent to place into those elements. While some people are component level thinkers, others may think at a platform level, and still others may excel in conceptualising visions of future states.

A third area in which a grammar-based approach helps is the effective design of conglomerates which operate in multiple spaces, while operating within its overarching purpose or competency areas. Too often one comes across cases of destructive diversification that have nothing to do with the competency-purpose-platform skills of the parent firm. 

While this is only a brief attempt at visualising what a formal grammar for firms might look like, it is not difficult to see that a clear, well-tested grammar may have a lot of applications that help organisations fully utilise their creative energy, with both market-facing ramifications (increased revenue, etc,) and internal implications such as enhanced fulfilment.

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Organizational Culture Change

Check out my latest article at The Hindu Business Line - Organizational Culture Change. Full text follows:
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The changing culture is a complex problem faced by many organisations. It's a lot like repairing the engine of a moving vehicle. While new firms have the luxury of gradually building the culture that best serves their interest, larger organisations tend to find themselves ‘stuck' with cultures that may be completely at odds with their stated vision or strategy. The big question then is whether it is possible to change culture mid-course. The answer may lie in understanding how culture is created in the first place.

Individual & organisational values

The crux of culture is values — in simple terms values expressed in the form of behaviours is what is perceived as culture. Values themselves may be of two kinds — individual and organisational.
The source of organisational values is usually the values of the founders. However, with time, as the firm transitions the values could change. This could be due to a lack of attention paid to the developing culture, particularly when meeting the demands of rapid growth. This takes the form of indiscriminate addition of individuals whose values may be at odds with the founding values. While organisational values may be documented formally, the ‘real' organisational values are informally “stored” in the minds of members of the organisation. 

Individual values may be of two kinds — expressed, and suppressed. Expressed values are those that members of an organisation choose to express in their behaviour based on their assessment of what is required in the organisation or ‘what works'. The other values possessed by an individual member may be suppressed, at least in the organisational context. It is this interplay between “stored” organisational values and individual values that develops into “culture” in the manifested form. The metaphor of an iceberg could represent this interplay. What is seen above the surface is culture, but what lies beneath is the cause — the complex, ever-evolving dynamic of organisational and individual values.

The right culture

The next question that arises is — what is the right kind of culture for a particular organisation. The simple answer to this would be — the culture in which there is no conflict between organisational and individual values, and where organisational values themselves are aligned to what the organisation seeks to achieve. It is important to recognise that the culture manifested at any time is indeed already the most appropriate culture for the current interplay between organisational and individual member values.However, this culture may happen to be completely counter-productive to the organisational goals, owing to degraded organisational values or high conflict between individual and organisational values. Any attempt to transform culture by simply manipulating the manifest dimension of culture will not succeed unless the underlying interplay of values is not addressed. 

Thus, culture transformation must address both organisational and individual values. On the organisational values front, one may first need to begin with an assessment of what the organisation's values really are. If the current state of values is a diluted version of the original intent, a fresh rediscovery or redefinition of values may need to take place in order to define an ideal state.

On the individual values front, the first intervention should be at the ‘input' stage, where new members are inducted. If a well-defined organisational identity or value is in place, it is not difficult to identify and add individuals who are in alignment. The bigger challenge is for existing members. Here, the solution is likely to be a more gradual one. It may involve a reassessment of all levels in the hierarchy to determine the “culture” icons best suited for leadership roles in the “new world” as it were. Leadership roles are the key fulcrums upon which culture is reinforced. This is because leadership behaviours typically tend to activate the relevant values in followers (provided the followers subscribe to those values at least partially). Over time, a culture transformation process would start to work on the organisation's memory, replacing negative versions of the organisation's values that are “stored” in the minds of members with fresh versions, till the new version becomes the new normal.

Setting right a malfunctioning or poorly aligned organisational culture is undoubtedly a complex process and may require an intuitive, right-brained mindset on the part of the designers, as well as multiple iterations to arrive at the right solution.Finally, culture needs to be an integral component of organisational strategy, as it is the foundational building block upon which the organisation's purpose can be manifested into reality. 
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Selfless Leadership - An Indian Perspective

My latest article in The Hindu Business Line - Selfless Leadership - An Indian Perspective.
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Most leadership theories (with a few exceptions, of course) are variants of a ‘hero' based ideal. In other words, the leader is a heroic individual of some sort who summons his followers to accomplish great things. Additionally, there is a tendency to glorify leadership as an achievement or a sort of reward for one's performance in a specific sphere of life.This has led to a situation where society tends to confer leadership upon individuals simply because they are able to function effectively in their individual roles without evaluating whether the individual truly possesses the skill to lead others.Any system that follows such a pattern of leader selection is bound to create a society of unfulfilled ‘followers'.

An Indian definition of leadership
Is there a distinctly Indian definition of leadership? The answer to this may be found in India's cultural foundations. The central idea of the Indian philosophical tradition is the idea of selflessness. An individual begins on his path of spiritual evolution with the initial ego-centric belief that he is distinct and special in relation to others, but as he progresses further he realises that while the particularities of his existence or station in life may be distinct from others, the underlying conscious principle is the same.Krishna's demonstration of his own cosmic form (containing the entire universe within it) to Arjuna in the Gita essentially reinforces the same idea of a universal consciousness that cuts across all beings.It may be argued that an individual who is able to perceive this unique combination of specificity and universality in other human beings is the one who is best suited to lead others.In other words, an individual with a greater degree of selflessness is the ideal candidate to be a leader of other human beings.

Ideals of a selfless leader
A leader whose foundation is the idea of selflessness manifests this in many forms in his relationship with followers.
Freedom: The first ideal of such an enlightened leader would be ‘freedom'. A selfless leader would allow other individuals to operate with a high degree of freedom while providing an outline of what needs to be accomplished.How the follower navigates his way towards the outcome is entirely left to his creative faculties. This approach contradicts the traditional organisational way of getting things accomplished — fear and conformity to pre-defined safe paths.Fear and conformity-based leadership styles are essentially expressions of a control-based tendency which, in turn, stems from an inherent ego-based foundation which demands that all outcomes bear the stamp of the leader.A selfless leader, on the other hand, will demonstrate a lesser tendency to control simply due to the absence of any desire in him to stamp his individual personality on everything that his team produces.

Follower evolution centricity: A selfless leader would be constantly conscious of the specific evolutionary state of his follower, and would constantly try to raise him to higher levels of selflessness.Thus, the role of such a leader is not only to create outcomes through his team, but also to raise followers to his own state of being. In fact, all outcomes are in the distant future, and all that can be done in the present is really to ensure that people working towards those outcomes are raised to higher levels of consciousness (which is essentially the ideal of Karma Yoga).

Enlightened doer-ship: An enlightened leader would constantly reinforce the idea of enlightened doer-ship. This means that credit-seeking would be a shunned practice. This returns once again to the Vedantic ideal that the idea of a specific doer is an ego-centric idea. Ego-centric behaviour in any team pursuit rapidly diminishes the motivation and performance of other players in addition to creating a zero sum situation where people perceive that for one person to win, another has to lose. This does not mean that skilled performers are not rewarded — it only means that rewards are structured on a non-zero-sum, non-relative basis.One may even argue that skilled performance is its own reward and per se does not need any other reward to reinforce that behaviour!

In conclusion, it must be pointed out that a selfless leadership based organisation does not completely shun individualism. In fact, it celebrates individualism in a different manner — through the freedom it offers to its members to creatively express themselves towards the accomplishment of outcomes.All it does though is to check individualism that is expressed in the desire to possess greater control and power.

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Organizations as fulfilment engines

My latest piece for The Hindu Business Line - Organizations as fulfilment engines
Full text follows:

What is the true purpose of an organisation? Is it merely the creation of wealth, or must there be a higher purpose to it? The East may have some answers to this question.Indian culture, as a result of its philosophical foundations in Vedic traditions, has never eschewed wealth. However, it has repeatedly stressed that the real purpose of life is a higher fulfilment whose end goal is self-realisation.Thus, material wealth of any form cannot become the end of any enterprise or human life. It may certainly be one of the outcomes, but is not the central purpose.Our institutions in all spheres - be it business, education or Government - seem to be losing sight of the higher purpose of their existence and have increasingly started viewing themselves as a means to an end. What then could be the higher purpose that an institution must seek to address itself to?

While there could be many ways of looking at this issue, one possible answer is that the reason for the existence of any institution is to provide an arena for fulfilment for its end-users (customers) and constituents (employees and other stakeholders).What might such a fulfilment-centred organisation look like across these two dimensions of external and internal stakeholders?

CUSTOMER FULFILMENT
The big question here is - which customer purpose is this organisation trying to fulfil? Unfortunately, the industrial era mindset is one of viewing customers as being no more than `wallets' waiting to be tapped. This is not to suggest that such firms are unethical - they are only responding to shareholder and investor expectations by behaving in a manner that only focuses on financial goals.Additionally, given the complexity of large organisations and the degrees of separation between the producers and end-consumers, it is no surprise that organisations view customers as abstractions.

The post-industrial world needs to view customers and their needs in the light of purpose fulfilment. Every customer is essentially seeking fulfilment of some sort through the consumption of goods and services. This fulfilment could be at a basic level of survival, or at the highest level of self-actualisation.

What if a business organisation were to align itself to this hierarchy of needs and claim as its mission the goal of raising the customer to higher levels of fulfilment? This may mean the creation of increasingly sophisticated products for which there may not be a market at the moment. The exact opposite of this is seen in many privately- owned electronic news media outlets. In the interest of `what sells', these outlets cater to the lowest in their `customers' instead of raising the bar to challenge their customers to evolve. They need to realise that producers of goods and services have a moral responsibility towards customers. In fact, this is a far higher form of corporate social responsibility than the contribution of a share of profits towards social causes.

THE INTERNAL PERSPECTIVE
Within the organisation two axes of fulfilment must be clearly defined - the first is the fulfilment of customers through the work done by a worker, and second is the fulfilment of the worker himself, and the two reinforce each other. However, as pointed out earlier, the distance from the actual customer, and the abstract way in which tasks are parcelled out means that the average worker no longer feels connected to the customer's purpose or even his own purpose.The way out of this alienation is to erase the boundaries between the firm and its customers, and allow customers to `infiltrate' with their views and allow these to actively influence corporate strategy.

The second dimension i.e. the worker's own fulfilment. This involves a systemic reevaluation of how careers are viewed from the traditional give-and-take transactional model to a fulfilment-oriented model. In the latter model, a service mindset (seva) will be very important. Seva, in the Vedic/ karma yoga context, is a work offered without any anticipation of reward, because the work itself is the reward in that it offers an opportunity to expand oneself from one's narrow selfish ego, towards a greater humanity.While this may seem like lofty idealism, it is easy to see its practical function. Activities performed without anticipation or anxiety for future rewards must necessarily bring greater focus to the work at hand, and hence, a greater quality in the outcome, as well as greater fulfilment.

In conclusion, India is well placed due to its unique cultural and historical context to bring alive the vision of fulfilment-centric organisations. The question then is whether we will choose to replicate the path taken by the West and its attendant pitfalls, or will we at some point integrate the best of the East with the West.

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