Archives for posts with tag: Hitachi

Trawling through the Internet, I came across a report on McKinsey Insights that spoke about the gender diversity still gaining ground in Latin America as well as our advancing society. I wondered whether it is a good idea to have a good women boss around or some incompetent person with his qualification being simply male. Am I turning metrosexual raising this question? No, not really – just trying to convey a point, as growing up in all boys’ school in Delhi, relationships with girls and women were an aspiration in my all-male cohort.

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In that school we had women teachers, and mine were excellent. Later I had male teachers and they too were excellent. That Indian school was rather hierarchical – teachers gave orders and students obeyed, and certainly submitted homework or else… I think that early training to follow women as well as men made me rather open to learning from, taking orders from and reporting to women, just as comfortably as to men. I have never visited Latin America and cannot comment on their situation, but I suspect early exposure to some kind of gender diversity in positions of power could help overcome resistance to taking orders from women.

Women As Managers:

I have had women teachers and have worked under a woman manager only once. My personal experience is that they can be very good managers. Additionally, they are just as susceptible to bias as any other human, just as managers of either gender may be susceptible to bias based on other factors, such as race, sports group, club membership etc. My own feeling is that a good manager minimizes biases in favour of good management, and therefore a logical extension is that since women can be good managers, they can work with unbiased attitudes to the extent human. Similarly, in a biased environment, such as an otherwise all-male environment women are just as likely to succeed as  I suppose any other biased situation.

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Do Management Rules Differ Based On Gender?

Most of my work experience since the late eighties has been in or with Japan-owned companies. In my early days in Japan, women recruits from the same university as a male counterpart were assigned very different nature of tasks, and it bothered me. Gradually over the last 25 years I have seen this gender discrimination reduce, but fellow male Japanese workers who are in their forties still speak openly about gender-based roles.

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In Hitachi however, I notice that younger managers in their twenties are less discriminatory in their mindset about gender based assignment allocation. So, I think these things take time. Certainly Hitachi benefits by accessing a greater proportion of a declining Japanese population for their managerial cadre. I think in Hitachi’s case the Human Resources Department made conscious efforts to promote gender equality to opportunity. Such forward looking HR Departments can help others improve over time. The Indian situation is better than Japan’s with visible role models, for example in finance industry, heading leading banks such as State Bank of India, ICICI Bank or Axis Bank. If these banks found it prudent to place the best person for the job at their help, surely others should too!

I think the gradually increasing visibility of women in positions of senior management is successful in propelling more in the same direction. The snowball effect is encouraging. It is even more encouraging that in the realm of business this has been entirely based on merit, rather than reservation. Perhaps development programs across the world that rely on reservation need to be reconsidered in the light of this success case. Something to study about!

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The last few days saw onions touch a price of INR 80/kg, which actually brought tears to the eyes of commoners and added enough oniony spice to the jokes spreading on all social media platforms. The most common of all commodities went out of bounds for the common man against the backdrop of a sudden plunge last month by the India Rupee (INR) to the US Dollar (USD) to about INR 69 per USD. Here, our old friend Japan became a Good Samaritan and decided to more than triple the existing bilateral currency swap agreement to USD 50 billion.

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The intent of the entire proposal was to bring stability to financial markets, and it seems somewhat successful in contributing towards the same.  India was in need, and Japan came to its rescue like a good friend. The next important task though is to tackle the underlying causes for the rupee depreciation and one of them is the current account deficit. The Economist stated in one its articles on August 24, 2013 that “the longer-term solution to the balance-of-payments problem may be to ramp up India’s manufacturing sector, and thus its industrial exports. But that will take a big improvement in the business climate, not just a cheap currency. Despite the rupee’s 27% tumble in the past three years there is scant sign of global manufacturers shifting production to India.”

The Government of India desires to increase the share of manufacturing in GDP from the current 15% to 25% by 2022. However, we have certain well recognized factors that are limiting manufacturing, viz; infrastructure, excessive bureaucracy, high cost of capital, land and labor, which are pushing even our local businessmen to go abroad rather than strengthen a manufacturing base at home.

Here again our old friend Japan is quite keen to address our infrastructure issues, where it’s Ministry of Economy Trade and Infrastructure (METI) has adopted infrastructure systems exports as a thrust area with the help of Hitachi, Toshiba and Mitsubishi, which are leading world class machinery manufacturers. The capital hurdle could also be resolved provided an acceptable Public Private Partnership policy is brought in. the Japanese banks are looking for promising projects to finance.

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I believe, India’s excessive bureaucracy and the labor issue are quite interlinked but the point is that the centuries old caste system has ingrained a preference for thinking rather than doing. Those who can, “think”, prefer not to get their hands dirty with implementation because their belief lies in the fact that getting hands dirty is for the lower castes.

Thus, the brainiest of engineers eschew production and manufacturing related work, preferring jobs in finance, consulting or even software development – work that can be done from comfortable environs. Those who can’t – get stuck in labor but because there is no pride in being at the bottom of society, the labor is just not willing. The Japan International Cooperation Agency is trying to bring in pride to India’s manufacturing and is supporting a leading management program at India’s premier Indian Institute of Management Calcutta called VLFM (Visionary Leaders for Manufacturing).

Alas, Japan cannot yet offer solutions to our land ownership and transfer complexities that perplex even the longest serving businesses such as the Tatas. Neither do they have a solution to our British inherited legacy of excessive bureaucracy. The politician and the bureaucrats – the two pillars of government need to address these. Centuries old problems cannot be swapped in a jiffy; hopefully they won’t take a century to resolve.

The Schumpeter column in the recent Economist, “Mammon’s new monarchs” describes the emerging world consumer as king. It seems that Western companies are interested in knowing how to appeal to emerging world consumerism and compete with home-grown domestic rivals. Consultants from Boston Consulting Group (BCG) advise companies to jump in early. I agree that going in early can be useful, but according to my observations, this is not essential nor a panacea.

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Consider the automobiles industry – Honda started early in India, in 1998. Toyota started shortly afterwards in 2000. Their early start has certainly helped. Honda’s City and Toyota’s Innova enjoy stable market leadership in their respective segments. Though many thought Renault-Nissan to be a late entrant to India (over a decade later than Honda), given that automobile ownership is still at the lower tail of the S-curve, it still has potential to emerge a winner. Renault is already doing well with its Duster shining in the market this year.  The same applies with Volkswagen, which really kicked off with the Polo in 2010. So, coming in later, even a decade later can be okay. On the other hand, in the absence of quality offerings, coming in early is not a cure-all as Fiat has failed to learn in repeat attempts at conquering the market.

Similarly, in the appliances arena, Hitachi that started early in the upper end high quality air conditioner segment, continues to enjoy aspiration status. Panasonic that is just starting its big bang could yet do well. LG may have made early inroads, but eventually quality shall become the priority of the consumer. Already, at the “non-frugal” end LG finds it difficult to attract the well-to-do. Experience with air conditioners also demonstrates that starting early is fine, but quality is perhaps more important.

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My own feeling is that when deciding market entry into emerging Asian economies, companies shall do well to concentrate on two things. Firstly, they need to get the price point right and match local tastes, while matching the quality expectations. This is where Hyundai succeeded with Santro. The second point is to focus on a core competency. So, for example, Daimler Benz did well to first start with its Mercedes E-class, a core competency yet economically right for India. It’s A-class is only now being contemplated, over a decade later (the price point is no doubt more suitable, but not what Daimler is more commonly associated with).

Many people try to bring out a single point solution, such as “start early”. This pithy advice can result in disasters as the Fiat experience in India demonstrates. Instead, international business strategy needs to concentrate on what sells (the buyer’s desires), and what can be sold (the seller’s competency), which are perhaps more important to conquer the Asian consumer.

Earlier today, I had a chance to meet with a senior manager of a leading human resources consulting firm. During our course of discussion, we spoke about how training for my staff went by. Thereafter, once again I read the McKinsey’s recent report Education to Employment: Designing a System that Works.  The epiphany for me is that foreign companies that succeed in India shall be the ones that engage with the best Indian education institutions. Why epiphany? It should be so axiomatically obvious. It is to me now, but obviously, it is not to a vast majority of people. That is why I have chosen to write about this now.

Many multinational companies (MNCs) including Japanese firms complain about finding right-skilled employees. One finding from McKinsey is that employers, employees and education providers live in parallel universe, that is in complete disconnect with each other. This seems to make a lot of sense as an underlying cause to the problem of right-skilling. Some of the best hires for my previous company, Hitachi were people that we employed as interns while they were still students. This led to a convergence of expectations on all sides and the problem of right skilling so often talked about in the press was resolved. This is in harmony with what employees say abouton-the-job training (OJT) and hands-on learning being the most effective instructional techniques.  The Hitachi interns were from leading institutes like Indian Institute of Management (IIM) or Indian Institute of Technology (IIT). Excellent employees facilitate excellent organization building.

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According to the McKinsey survey, only 31% of companies actually engage regularly with education providers and youth, offering them time, skills and money. I suspect this separates the more successful from the less successful. As was pointed out, in the best-case scenario – education providers and employers actively step into each other’s worlds, and additionally they both engage potential employees, the students on an early basis. This mirrors how Hitachi achieved its excellent hiring.

Education providers in India are beginning to understand the importance of getting industry exposure for their students. While in the past professors of premium institutes like IIT used to contact me for OJT opportunities, in recent times, the lesser-known institutes are also initiating the contact. This is a good first step. It would be even more effective if education providers made practical training integral to the classroom, rather than an off-campus event. Indian companies being home-grown would not know how to go about it. However, foreign companies can. When at Hitachi, the then Chief Executive Officer (CEO)for Asia, Mr. ShunsukeOhtsu donated a set of power tools to IIT, and the use of power tools became incorporated in undergraduate practical training curriculum for the first time in India, as recently as in 2009!

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Yes, that is right but, the important thing is this that there are two sides to the equation:

  • the willing giver
  • the willing recipient

You can learn from Hitachi, or you can struggle and then learn from Hitachi. The choice is now yours.

Most of my writings to date have recommended a course of action on a general basis that challenges the status quo of International business in the current scenario. However, earlier today, when I read The Economist’s recent article on Hitachi, I was gladdened to see that President Hiroaki Nakanishi is following my prescriptions, points that I made repeatedly to my then boss Mr. Yasunori Taga, the Chief Executive for Asia (CEA).

When I had joined Hitachi India, the sub-continent subsidiary was controlled by Hitachi Asia in Singapore. Despite my strong desire to relocate to Singapore, I remember telling Mr. Taga (against my personal interest) that it would be difficult to control an emerging economy like India from a developed city-state Singapore. President Nakanishi, finally upgraded Hitachi India to a regional Head Office in 2011.

I also agree with Nakanishi’s reported goal of attracting the best talent and allowing them the freedom to move around across business units. Other MNCs would do well to adopt this strategy. I often see foreign companies preferring to do things “their original global way”.  It takes some longer than others but eventually they have to adapt to local ways. It is either adapt or accept losses.

What can be true about human talent is also true about products. International business giant McDonald’s is good at this. It adopted vegetarian menu for India right from the start, and additionally was quick to give up the mutton offerings, substituting them by the more popular chicken. It has taken longer for America’s Kentucky Fried Chicken, or more lovingly known as KFC, to abandon its “original recipe”; they now serve only “Indianized” versions: spicy chicken or fiery grill chicken. The choice is between “hot” and “very hot”.  Hitachi’s appliances business unit has its own development center outside Ahmedabad, in the rapidly industrializing state of Gujarat. GE, Denso, Bosch etc. are leading global companies that are going native and understanding India better.

As European, especially German, companies look to Asia to grow business they would do well to heed these points about local talent and local products. Remember Brand India is noted for affordable products and superior global managers. Hitachi took over 50 years to learn such important lessons for doing business in India. Fortunately for European followers, they have a visible short-cut.

I came across an article on the website of Times of India, “What’s on the to-do list of expat CEOs in India”, which discussed the Dos and Don’ts of expatriate CEOs in the Indian market. The article made an interesting read and also initiated an argument between my Indian self and my global self on the abilities of Indian managers in the global scenario and the need of an expat CEO, especially considering the recent Adidas/ Reebok fracas. Being a part of the current international business environment, it really intrigued my Indian self to the extent of questioning my Global self on these stances taken by MNCs driving on the road to success in the Indian market.

The conversation begins:

Indian Ashok: Does the Indian market really require an expat head?

Global Ashok: India as a huge market base comes with its own pros and cons. It is a part of the new growing world and a marketing strategy that has worked with others countries, might not work here. Every company/MNC planning to enter the Indian realms has to come up with a marketing strategy and road map exclusive for this country. Hiring an expat CEO or an Indian manager is a part of the same.

Indian Ashok: Is Maruti’s decision as an evolved company, to replace its Indian MD with a senior Japanese professional representative of a newer marketing strategy?

Global Ashok: Maruti/MUL replaced its Indian MD, Jagdish Khattar, by Japanese Shinzo Nakanishi. The step, it seems, was initiated to ensure that the company has a better leverage at its Japanese Head Office. Khattar played his role to establish the trust factor in the Indian audiences/customers and replacing him with a Japanese member was required for that cross-border coordination. In a masterstroke, Maruti brought back R C Bhargava as Chairman to retain communication with the Indian interface. Maruti is a perfect example of a company evolving leadership strategy as it matures in the marketplace.

Indian Ashok: In that case, why when there are companies with two or more heads representing the same section – one of them always seems to be an expatriate?

Global Ashok: Depending on the stage of its evolution and based on the strategy to meet business targets, a company might want to hire an expat Manager with more global experience and try to groom their local team to adapt to that corporate DNA. Many Japanese companies in India, from Toyota to Honda to Hitachi, have an expat head because the Indian managers have still not developed that global corporate DNA. However, some Japanese companies like the logistics leader Nittsu decided as a matter of strategy to hire an Indian to lead the company. Senior Japanese were appointed as segundos to ensure that the local flavour remained in harmony with the global.An expat head may well be removed when the MNC gets more comfortable and evolved in the new market.

When business was not moving fast enough due to Head Office resistance, GE brought in a senior person from USA and stationed him in India. The head was entrusted with the agenda of influencing Head Office business units to enter the market.

The above examples demonstrate that bringing an expat is purely dependent on what the company needs to do to grow in the market.

Indian Ashok: Do you really believe there is a trust factor involved in hiring expatriates for any company entering a new market (especially Indian market)?

Global Ashok: Keeping expat heads does also bring in the trust factor. Any company might want to start their work with people they already know and whose abilities they have seen over a period of time. Each company comes with a unique work culture and expat heads seem to be well aware of that. An expat CEO might align the subsidiary company in a better way to its parent.

Indian Ashok: Does keeping an international head bring in the idea of a better watch or supervision for the parent HQ?

Global Ashok: Yes, that’s another good aspect of keeping expat heads – it offers better supervision. An expat head might give out a signal of the subsidiary company to be under close supervision of its parent. There would be regular sharing of reports in a way that the parent would have a better understanding of the overall scenario. Of course this is not necessary, as the Nittsu example reveals.

Indian Ashok: Okay, I understand now that “Leadership is not about nationality but about business targets”. It is more about the company, its strategy and growth plans rather than an individual leader or their nationality. Hiring an expat CEO or an Indian head can only be decided as per the requirements of an organization and their level of evolution. And, now I think I can sleep with a clear mind.

Recently, Toyota sponsored a pan India golf tournament. Assocham, one of the Indian industry bodies also has an annual Japan-India corporate golf competition. Many leading newspapers and business magazines also get involved. Apparently, Golf seems to be the lubricant of international business.

We normally associate Japan with sushi but the uber corporate Japan can be better associated with golf. At least in India, it seems to be the only recreation that most Japanese enjoy.

When I was younger, I never imagined that I would play golf one day. My college’s golf course was used more for late night walks discussing philosophy rather than the actual game. Later, when I joined Toyota, my father-in-law encouraged me to join golf, but it did not seem like an alluring thought back then. I assumed it to be an old man’s sport. However, after some years, my boss in Hitachi managed to convince me that I ought to play the game for business reasons.

Initially, golf turned out to be tougher than I had imagined. Connecting ball to stick is not as easy as when seen on TV. A friend of mine, Pankaj, got me out on the golf course and from then on there was no looking back.

In Delhi’s concrete jungle, the manicured greens at Qutab are a refreshing feast for the eyes. I competing against myself brought out the old sportsman in me, trying to do better than before. A double bogey is good, a bogey is satisfying, a par is something to talk about and with a birdie – the caddies get a treat! Eagles on the course are just as rare as they are in Delhi’s skies.

Going out with customers creates a healthy bonding. Strictly speaking, I haven’t concluded any deals on the course, but spending so much time on the course and thereafter on the 19th hole does enhance friendship.  I do find it more enjoyable working with friends.

In addition to the joy of natural beauty and socializing, I also find the kilometres walked to be a good exercise. Depending on post-golf action the calorie count may eventually be neutralized, but whenever I resist the temptation it does work in my favour.  It reduces my fat, it increases my stamina and it improves my concentration. Though, I have a long way to go in terms of score improvement, I convince myself that with every extra shot I hit I get extra exercise!

I’ll be back on the Golf course from mid-June, I promise.

Asian strategy for many businesses is pillared around Japan, the cash cow, China, the star and India, the next rising star. These are three huge continent sized markets –either in geographical or economic size. As a result, successful Asian teams need powerful central leadership, high decentralization and strong awareness of the field.

First, let’s talk about decentralization. Located in Asia, Japanese multinational companies are quickest to understand that Asia has several distinct markets. Leaders like Toyota have long had a separate China Department. Last year, Hitachi too delinked India into a separate regional Head Office, at par with its American or European Head Office.

When I looked after Toyota’s India project based out of Japan, I realised that Japanese have poor understanding of Indian business methods and the Indians too felt the same frustration. Coordination between Japanese and Indian teams became an important subtext of my job.  In terms of ease of doing business, in global rankings Singapore places in the top 10, Japan in the top 20, but alas India with its unhygienic conditions, pot holed roads and poor infrastructure doesn’t figure even in the first 100. Indian managers are therefore toughened to deal with adversity and are more likely to succeed in globally than the Japanese. It would seem that the Chinese would lie somewhere in between. This was confirmed recently when I asked Chinese visitors to an exhibition in India. They were shocked by India’s backwardness, just as Indian businessmen are surprised by China’s advanced infrastructure when they visit there.

For international business, fortunately common Asian values such as the hierarchical nature of society persist. This is where strong leadership becomes important. Fortunately for Toyota, its Head Office in Japan had a lot of know-how on global best practices, because they know what has been successful where. For example, in the area of just-in-time logistics I could explain to team members of South Africa, based on hands on experiencein Australia, Oman and Poland. Team members in other geographies, from China to Thailand to India could look up to Nagoya for advice on problem solving.

Adding strength to know-how, awareness of the field is imperative to team leadership. Hitachi’s Asia Head Office could not serve India sufficiently because of its inability to understand the field. Managers from cosmopolitan Singapore resisted visiting India with its heat, dust, poverty and disease. The same problem exists with other companies. An Australian manager working based in Singapore for the regional Head Office of a European company told me, “Ashok, it is difficult for me to travel in India. My customers visit me at my hotel. I cannot handle India beyond the local Hyatt, Hilton or Sheraton.” The same manager had problems with the raw fish of Japan. China was not yet a major market, fortunately. Another Englishman stationed in Singapore told me, “I can’t imagine living in India”.  I have seen only failure in all cases of armchair management of India, China and Japan from cosmopolitan comforts of Singapore and Hong Kong. I repeat, failure.

Successful team management in Asia requires a solid grasp of business fundamentals that establishes authority, and secondly a strong stomach to go out and get hands dirty in the field. 

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