Archives for posts with tag: McKinsey

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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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!

education-and-jobs

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.

It was interesting to read recently that Honda is planning to review its product strategies for the Indian market. Though third-placed in the Japanese car market, as a global player it is actually second to Toyota in the Japanese manufacturers rankings. However, in India Honda as a brand has been at a distant seventh, despite being here for nearly 17 years.

Even as of now, Honda is considering only a revamp of its product line-up, which does not seem enough as a survival/winning strategy in the Indian context. A recent McKinsey Quarterly reports that to succeed in the complete Indian market and not merely its niches, international companies will have to learn to do business the Indian way, rather than simply imposing global business models and practices on the local market. The scorecard suggesting techniques to win in India, gives out seven pointers that need to be taken care of. Alas, Honda as a brand has failed to live up to the scorecard.

In international business, Brand India is associated with affordable products and good global managers. According to the newspaper report, Honda is just now delving into affordable products in the form of the smaller diesel options, but what they really need to address is the “scaled down in terms of function but even more aggressively lower priced” cars. Honda requires an understanding of the needs of Indian consumers and should customize itself accordingly.

Many multinational companies have hired Indians visibly into their executive board, not only to gain goodwill among the Indian market but also have understanding of natives and the exact market pulse. They are the people who have grown up in India and have better experience about the market. In the auto industry, market leader Suzuki of Japan has Indian R C Bhargava as its Chairman. Japanese giant Toyota has hired veteran Sandeep Singh and others on their board. Deputy Managing Director Sandeep has been with Toyota for years leaving briefly for stints with Mahindra and later JCB. He has helped the company get a better insight of the market and has helped Toyota place them better in the market. Newer vehicles will have only a limited impact on Honda’s business here, until the company manages to get a grip on the consumer pulse.

My own limited experience about Honda leads me to believe they are arrogant. There are two types of foreign companies that try and win in India. The Honda-type believe that they can conquer using their global strategies and global experience by “teaching the natives”, while the others are companies that try and learn from the natives and address the needs of the natives. They get the idea that Brand India (or any market different from the highly developed countries) has to be dealt in a separate way than the global market. Again contrast with Toyota: While Honda is severing relations with the local partners it entered the market with, Toyota have retained Vikram Kirloskar as Vice Chairman even though Kirloskar group has now only about one per cent share in Toyota Kirloskar Motor. While Honda is keen to remove vestiges of its local flavor, Toyota chooses to accentuate its belonging to society. What a contrast!

Arrogant companies will not succeed in India. Adaptation to the Indian consumer’s demand for innovative, low-cost delivery systems and high value for money products is a “must”. Invading companies learn this over time – some sooner than others. Of course, some just remain unsuccessful and have good basis to complain about corruption and difficulty of doing business in India 🙂

Recently, Yamaha announced that it would make the cheapest ever bike in India for $500. This, along with other similar observations in the Indian market on the relentless pursuit for lower prices in the realm of B2B marketing, has convinced me that frugal manufacturing has now become a mainstay for the Indian market for years to come.

I was involved in such a process at Toyota as early as 1997, way before the term frugal manufacturing itself was coined by Carlos Ghosn of Nissan-Renault in 2006 on the Indian context. He was impressed by Indian engineers’ ability to innovate cost-effectively and quickly under severe resource constraints. More recently, other European companies such as Alten Group and Faurecia also announced the establishment of R&D centers in India – perhaps a confirmation of the sign of the times?

An important aspect of frugal manufacturing for India is to create good enough products that offer high value for money. Thus, it is not only about low cost but about meeting the Indian customers’ seemingly paradoxical expectations of “cheap and best”. Thus, Tata Nano could not succeed simply because of its low price. I have ridden in the car and it seems perfectly fine. However, for some reason it has failed to satisfy the desired perception level of high value for money.

Frugal engineering can be seen as a continuation of Value Analysis/ Value Engineering that became popular even at Toyota of the eighties and nineties. One important question that needs to be asked is, “Do customers value all the current features”? Even before Carlos Ghosn coined the term, I remember being involved at Toyota in such value analysis when bringing in the old Indonesian Kijang into the Indian market in 2000 christened as the Qualis. The car became the market leader in its segment because of the perceived value for money, despite its outdated design by both, international as well as domestic standards. We were well aware of the design considerations, but were also aware that the Indian consumer is also highly pragmatic, recognizing value for money.

In their HBR blog “Frugal Innovation: Lessons from Carlos Ghosn, CEO, Renault-Nissan” the authors Navi  Radjou et al rightly point out Ghosn’s effective policies of tapping partners in emerging markets and sending top management to emerging markets. In a kind of reinforcing coincidence, a recent McKinsey report titled “How MNCs Can Win in India” also emphasized the importance of top management visit to India and the need scale up via deals and partnerships. The authors of the McKinsey report Vimal Choudhary et al recommend a formula: Commit to products that have 30% less functionality and that cost 50–70% less without compromising quality.

Despite the battle at the upper end between German giants Audi, BMW, Mercedes the proverbial wisdom has it that the fortune is at the bottom of the pyramid. There is no doubt that people at the bottom of the pyramid want value for money. Hence, Frugal engineering is the new mantra in international business for making money in emerging markets.

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