Wednesday, September 27, 2017

Factories of the Future: A Dialogue with experts

The Advanced Remanufacturing and Technology Centre (ARTC), a research institute under the Agency for Science, Technology and Research (A*STAR) in Singapore invited me to facilitate a panel discussion during their inaugural Future of Manufacturing Summit. The panelists were Dr. Masahiko Mori from DMG Mori, Dr. Koji Tanaka from IHI, Dr. Hamid Mughal from Rolls-Royce, Mr. Amos Leong from the Univac Group and Dr. Michael Eder from Voestalpine.

I had the honor of interacting with these thought-leaders and solicit their views on the 4th Industrial Revolution and how the advanced manufacturing scene would play out in the coming decade. I am sharing some of my observations from this discussion. 

We are on the cusp of a technology evolution with unprecedented magnitude. The digital evolution goes by many names – some call it the 4th Industrial Revolution or Industry 4.0; others term it Cyber-physical systems or Industrial Internet of Things. But if there is only one thing everyone agrees on, it is that we are heralding the next era of global growth and innovation.  Augmented by the exponential advancements in computing power, sensors, an explosion of data and network connectivity - this disruptive tsunami is sweeping through almost every industry across the world. 

Many industries and countries have already embarked on the “Smart Industry” or “Smart Nation” journey, and manufacturing is no exception. Aided by the advent of additive manufacturing like 3D printing technology, various technology leaders and think tanks are offering up different strategies on cloud infrastructure, frameworks or turnkey solutions to accelerate the adoption of Industrial Internet of Things for smart factories. While technology is fueling this revolution, a successful transformation is still dependent on a complex ecosystem of human capital, management and governance.

Smart manufacturing harnesses data, artificial intelligence and human innovation to accurately predict and execute every aspect of the business. What lessons can we learn from this emerging trend?

Those are some of the questions I put forth to the panelists during the forum. As the dialogue continues with each panelist offering their opinions and forward looking vision, overarching themes clearly emerged.

Impact on Human Capital
Factories of the future are often labelled with the negative connotation of eliminating jobs or replacing blue-collar roles with technology. Successful transformation to the next generation shop floor requires collaboration between humans and robots. Human capital should be viewed as the principal resource as they possess the moral acumen and decision-making ethics that artificial intelligence at this stage will not be able to replicate.

We will see a structural shift jobs, as demand surges for new roles such as data scientists, R&D engineers, simulation experts etc. But at the same time, we also expect to see the lines blurring between blue and white collar employees as operators upscale and equip themselves with the knowledge and capability to operate complex machines, synthesize commands or feedback to the cloud while working in tandem with robots.

Need for Organizational Alignment
We all acknowledged that the C-suite and technologists may not always keep at the same pace. After all, executives are responsible for managing the company’s operational and capital expenditures prudently in order to deliver a profitable business. Technologists on the other hand, are largely concerned with the acceleration of value chain optimization through digitalization as quickly as possible. 

Gaining management support and organizational alignment is of paramount importance should we want to implement a smart manufacturing initiative successfully. Converting traditional manufacturing processes to a smart factory infrastructure can be costly. The executives need to balance between the impact of investments in new technologies on the bottom lines in the short/medium term and the return on investment in the long run while looking after the interests of the company, employees and shareholders.

During the discussion, all the panelists - who are respected technologists and business leaders in key leadership positions offered the same word of caution: that one must carefully balance the decisions made due to short term constraints with the long term viability of the business in mind. Company leadership must have the right mix of technology investment with business acuity. 

Clarity on Data Ownership
Smart factories are built on the premise of transparency and open information flow within the supply chain to identify gaps, forecast demands and optimize efficiency. Manufacturing processes generate massive amount of data every day with sensors, wireless connectivity and data processing tools, yet organizations are always resistant to data sharing within their supply chains because of data ownership concerns.
There are huge benefits to reap from data sharing: combining different data streams can derive additional information-driven intelligence to use for analysis and projections. Organizations should overcome their reticence and work with their supply chain stakeholders to design collaborative structures that supports transparency and openness while setting guardrails in place to prevent contention. 
An organization that takes time to design a deliberate roadmap that fuses artificial intelligence, data management, suppliers/partners and governance into its ecosystem will thrive well into the 21st century. As the advanced manufacturing landscape is still evolving rapidly, I see opportunities for the technology leaders to take the lead in public-private partnerships with academia and national agencies to accelerate adoption of the Smart Manufacturing initiatives worldwide. When done the right way, this can lead to global growth, jobs creations and improved quality of life for the world community. The caveat is that academic institutions need to start reviewing and redesigning their current curriculum now, to future-proof our next generation workforce in this increasingly digitalized world.

I will like to give thanks to the following panelists and esteemed thought-leaders for sharing their visions and insights:

·       Dr. Koji Tanaka – Deputy Corporate R&D Head, IHI

Wednesday, July 21, 2010

I roamed the countryside searching for answers to things I did not understand.

Long ago I had read a quote from Leonardo da Vinci "I Roamed the countryside searching for answers to things I did not understand" Leonardo's quote has been at the back of my mind for the last many years. I can't be sure of what he meant but this is how I interpret it in today's context.

Successful organizations and leaders get caught up in their own success and often attempt to make templates or standardize on a few "success models". The end result of a successful endeavour becomes the focal point and the steps along the way get forgotten, rewritten or trivialized to meet the needs of the standardization. In the attempt to standardize "success models" we short-circuit the learning process, hence often depriving organizations and it's leaders the lessons of old fashioned experience.

The French developer Ferdinand de Lesseps comes to mind. He successfully developed the Suez Canal but clearly underestimated the challenges in designing and building the Panama Canal. He underestimated the requirements in design, topography and finally the power of Malaria ridden insects which ended the first attempt at building the Panama Canal in utter failure because he assumed that the success at Suez would automatically translate to success in Panama.

In today's context of a global economy with companies expanding past national boundaries, it is tempting to bucket successful processes or initiatives. We tend to bucket emerging economies together, developed economies together and so on, mostly because it is elegant to do it this way, but the danger is that the important differences are lost and assumptions of things that work in say Brazil would work in India could well be wrong.

To understand the international nature of business it is important to have an international executive team, and an international board. Many companies have figured out the former, but the latter of having international boards is still uncommon. Commonly used management catch phrases like "be close to your customer", "design globally for local needs" sound great in a presentation but often translate into driving agendas that do not add to the core competency of the organization.

Government initiatives also at times fall into the same category. In 2006 I was in a meeting with the development agency in one of the countries in south East Asia as an industry observer. The discussion was about transforming the region into a sustainable innovation and technology centre. The discussions were good and predictable. The actions however were far from good. An example was that the local government decided to give tremendous tax subsidies to multi national companies to set up manufacturing plants and insisted on some percentage of people employed should be of certain educational background (the hope was to increase technological capability in the region). The problem is that this particular region has a surplus of under utilized manufacturing plants and a shortage of factory operators. Instead of giving incentives to start technology centres and incentives to use the existing under utilized capacity in the region they went about creating further capacity and fuelled further importation of labour. The companies got their tax incentives that lasted 5 years and now are looking for more to stay. The region did not develop any core technology capability, and they have even more factories running below capacity!

Roaming the country side is about understanding local competencies and needs genuinely and not necessarily looking for buckets to place them in. You can start by understanding the core competencies of your organization, identify what additional competencies need to be developed and invest in furthering these capabilities. The answers should be directed at developing your business competencies in areas that add maximum value to your customer, employees, and investors.

In 2007, during a conversation with a young CEO of a Technology Company in Singapore with an annual revenue of about 35M:- he talked about the factors that were limiting his growth and about his expansion plans that would help him grow. Almost all the factors centred on engineering talent, time to market issues and the limitations in his sales and marketing channels. However his expansion plans were primarily about increasing his manufacturing capabilities. The end result of his plan would in effect increase his employee strength from 100 to 225 employees. At the time in 2007 they had a 5 member executive management team, 60 product development engineers, 12 operations and finance employees, 8 Sales and Marketing, and 15 people in manufacturing responsible for outsourcing and quality control. His expansion plan would entail a new manufacturing set up that would increase his employee count to 225, and revenue of about 100M. Of the 225 people; 105 would be responsible for manufacturing, 20 for operations and finance, and he would have 75 engineers and 20 people in Sales and Marketing. I told him that to me it sounded like his main inhibitors to growth, and his expansion plan did not match up. Because in his initial problem statement he did not see any issues with the production capability or capacity of his external contract manufacturers, but he had issues with timely product development, product strategy, and the channel. Three years later and after implementation of his plan, the company has a revenue of 35M, a manufacturing plant that is under utilized and is about to be closed down!

Roaming the vistas of technology and business we have to assimilate knowledge and understand human nature and local culture. The current trend of capturing complex systems in finance, and business into mathematical models while ignoring essential elements of human nature including self preservation, greed, and jealousy lead to solutions that do not address the problems.

The second decade of the 21st century will be at the very least interesting. The dynamics in the economy and politics of the world are fairly volatile so as we roam the country side lets hope we get answers for things we do not understand.

Monday, February 15, 2010

Have you bought your peace today?

The US debates universal health care, China tackles official corruption, Singapore discusses affordable housing, India the Maoist insurgence; the one common thread in all these issues is that society and social contracts are changing rapidly.
All societies are class based, in some societies movement between classes is much easier, and in some it is more difficult. In some countries social classes are defined along the lines of wealth, in others based on political influence, education, race, sex, and in many cases it is a mixture of many of the above.
Most social issues are wrapped in ideological discussions, but the movement for or against change is catalysed when existing social contracts that worked for a long time, start to change rapidly. Social turmoil results when the establishment does not recognize or worse still does not acknowledge the collapse of existing social contracts that preserved the status quo all these years.
In many of the developed nations, one of the primary social contract for decades involved having a strong growing middle class that was offered relatively unfettered access to decent jobs and the ability to generate wealth for those with the ability, skills and inclination to do so. In some of these nations, that social contract between the wealthier segments (job creators like business leaders, industrialists, etc) and the rest is changing dramatically leading to increased unemployment and a diminishing middle class.
In fast developing economies, the social contract of providing opportunity for wealth creation and improvement in quality of life is threatened, by official corruption and land grab. Many societies are seeing dramatic changes in the expectations of their populations. The changes in expectations come from education, desire for wealth, exposure to a wider world and often changing social contracts between the classes.
The cynical part in me wonders if the ideological battles are real or just mechanisms to come to a "favourable" resolution. Of course "favourable "it self can be a hotly debated issue; as-in favourable for whom?
Would it just be easier to "buy peace "; i.e. in order to maintain peace, stability, and the ability to thrive, each of us will have to "buy peace" from the different classes that are at the receiving end of the changes in society. If social stability was based on a premise of a growing middle class; then maybe the cost of self preservation is to pay for some kind of health care for the masses in a stagnating economy with greater than 10% employment. The cost of preservation in a fast developing economy with tremendously polarized wealth distribution and difficulty in movement between social classes may be public subsidy for essential services/goods and strong measures against corruption. Instead of spending precious time and resources on debates, demonstrations, and the like, it may just be more pragmatic and "buy peace".

Tuesday, November 10, 2009

Thriving on chaos while driving process –Leadership in practice

I was asked to talk about leadership as it is practised in industry at the Nanyang Fellows Leadership Series at Nanyang Technology University, (NTU) Singapore on December 16th, 2009. I am choosing my blog as a venue to develop ideas for this talk on leadership. Many of the readers of this blog are distinguished leaders, and I am hoping that you will contribute with your ideas.
The initial thoughts that I am putting down are with the intention of starting what I hope will be a lively discussion. Victor Mieres helped me articulate some of these initial ideas and I would like to thank him.

Leadership in practice:

Thriving on Chaos while driving process and leading from the middle are the top themes that come to my mind when I think of leadership.
I chose the words thriving on chaos to reinforce the importance for leaders to have a high tolerance of ambiguity and uncertainty. In organizations that are marked by entrepreneurship and innovation, leaders not only need to be flexible, but also must enjoy the challenge of facing the unexpected. At the same time there must be appropriate levels of development of processes, so that the organization is scalable and that every issue does not become an exception to a process. Leadership of this nature is probably not suitable for all organizations. Large transactional organizations or functional process centric functional groups are perhaps successful because of leaders who enjoy institutionalizing processes and discouraging "thriving on chaos". Does this mean that leadership is subjective, depending on the operating environment? My view is that there are some common elements of leadership, and there are many aspects that are based on the operating environment and goals of the leadership.
In an organization which is innovative and entrepreneurial, trust is of essence. The trust of the organization in its leader and the ability of the leader to trust members of his or her team is critical. This is a time consuming process, since trust is earned, and I have not found a way to short circuit this aspect of developing a well performing team. Leadership in practice also of course involves the ability of the leader to attract extremely competent people, because trust with out competence will take you nowhere.
In addition to competence and trust the leaders should be able to motivate the people in their organizations and have the ability to have genuine relationships with members of their team.
An aspect of leadership that is not talked about too much, but what I consider essential for long-term sustainable growth is the ability of leaders to grow a "secure team" ; that is a team in which members respect others and do not feel threatened when other members do well. A team in which members are secure enough to innovate and not fear failure. Growing a "secure team" is probably one of the most difficult aspects of leadership.
The Nanyang fellows are young but experienced managers from industry and government whose organizations have chosen to send them to NTU with the hope that they will grow to lead large organizations in time. So I wanted to spend some time on leading from the middle.
Leading from the middle involves commitment, competence and entrepreneurship. Often I hear people complain about their management, the environment in their organizations, their customers ….. A leader emerges from the middle by taking ownership and being proactive, and taking up the "cause" of change or success. But again this is not enough to sustain an organization. It is then important to be able to groom a next level of leadership by coaching and then delegating decision making and authority. Once again the concept of atomization of the organization helps both in testing the leadership and grooming new leaders.
A few of my colleagues and friends mentioned that using "thriving on chaos " is too strong; maybe "managing chaos" would be more apt. But I continue to think "thriving on chaos " is essential since it highlights the fact that businesses and organizations change rapidly and often unpredictably, so we have to enjoy this change in order to lead a successful team and at the same time be able to drive appropriate processes required for running a good operation.
I hope to hear your thoughts and arguments so that we can all learn and for a selfish reason that I can put together a useful presentation.

Wednesday, October 7, 2009

Re-emergence of the iron rice bowl will kill innovation

Recently, at a meeting on promoting youth entrepreneurship in SE Asia, I made a comment that the "re-emergence of the iron rice bowl will kill innovation and entrepreneurship". A person from the government civil services asked me if the recent economic crisis taught me nothing. I answered that the economic crisis taught me a lot, especially that there are a lot of people who claim to be economic or financial experts with very little understanding of the economy or finance. Just like the meeting he and I were in, where all the talk about promoting entrepreneurship was done by a group of civil servants who are often the embodiment of the iron rice bowl.

I will not pretend that I enjoy the tumultuous economic times we are in, neither would I want to loose my livelihood at a moments notice, but I am of the opinion that in order to enjoy progress in technology, to enjoy the ability to generate value, wealth and uplift large segments of impoverished society, we can not depend on government hand-outs. We will need to innovate, generate private sector employment and encourage entrepreneurs.
Increasingly young educated college graduates are looking for employment in the government or government linked companies/research labs. In an informal poll with graduating students in Singapore, US, and the UK, the top preference for jobs were government jobs where basically one could never be laid off. Having smart, educated people looking for the safe bet is not going to help progress. Unfortunately many of the schemes used to encourage young entrepreneurs are conceived by the very people who abhor risk and want the safe bet. So how effective are those programs going to be?
Too much risk taking caused many of the problems that exploded on us in the last 12 months. Now nurturing a generation of "rice bowler" could swing the pendulum too much the other way, rendering young professionals unsuitable for employment in the private sector. In effect many of the policies being adopted are leading to diminishing competitiveness of local populations, thereby increasing the need to look for talent elsewhere.

Monday, September 7, 2009

Graduation address at the Monash University Convocation – Sep 2009

I was invited to give the graduation address at the Graduation Ceremony at Monash in Kuala Lumpur. Monash is the largest University in Australia and has a campus in KL, Malaysia. The address was to graduates from the different disciplines including engineering, medicine, arts etc. I used ideas from my blog and really enjoyed delivering the address. Below is the transcript.

Convocation address: Monash Class of 2009

Good evening to the esteemed guests here. Most importantly; good beginnings to the graduating class of 2009.

When I was asked to talk on this occasion, I was wondering what I could possibly say that would be relevant to a new generation of professionals. So here is my attempt at sharing some of my thoughts and a few things that I have learnt.

The theme of my address is: You can make anything happen, and while doing so you enjoy the journey. Often people focus only on the goal, and loose an entire life time trying to achieve their goals and then realize that they missed a life time of enjoying the journey.

Your goals could be about wealth creation but in order for your generation to succeed in tackling the tremendous problems that you have inherited; your pursuits should include adding true value to society.

At this juncture as you move into an important phase of your life, you are inheriting not only great technological progress, great improvements in infrastructure, medicine and telecommunications; but also war, fundamentalism, economic crisis, and to top this all an accelerating change in climate. Many of these problems that you are left to tackle are fuelled by excess consumption and excess greed

As a young graduate you are blessed with naiveté – what I hope is intelligent naïveté. What I mean by this is that you are willing to do what many people think is impossible. You should question every prevalent assumption, understand issues from a historical context, be willing to be outrageous in your approach to solving problems, and most importantly be willing to learn from your successes and failures.

As you learn and progress, make sure that you do not throw away the ladder that you got there. What this means is that you continue the process of sharing your knowledge so that more people can progress by learning from your success and failures.

Another aspect that took me a while to learn and that I would like to share with you is that there is a big difference between determination and stubbornness. Working really hard on a bad idea does not make the idea any better. You must be wiling to learn from your experiences, and make changes in your approach based on pragmatism and ideology. Note I say pragmatism and ideology and not pragmatism versus ideology.

In times of crisis like in today's economy, there will be continuous demands for change. Many of these demands will be justified. Many will not.

As you grow into positions that require you to provide direction to your organization, take a little time and understand the history of your organization; the agenda of the current actors including your own agenda. This will help you make good decisions and to some extent differentiate between determination and stubbornness.

The gift of education that you have been fortunate to receive comes with responsibility.

One of the most important responsibilities is that of having the courage to dissent. As you see practices that are against the core values of human decency, you have to dissent.

Another lesson I have learnt is that most of us are smarter than we think and greedier than we like to admit. A great cause for the economic crisis we see today is due to this. We innovated to create financial tools that made money; and then money beyond belief. Forgetting when to say enough,we succumbed to greed. So the lesson from this is that if something sounds too good to be true – then it probably is not true.

On a final topic I'd like to spend a little time on talking about the economic crisis.


Many of you are graduating in a probably the most difficult economical times seen in few decades. . But I would like to emphasize that with crisis comes opportunity.

Financial engineering and unsustainable borrowing by enterprises and individuals fuelled growth in the last decade. Along with the credit crisis the conditions also led to commercialization of technologies that are extremely beneficial.

This helped us commercialize wireless technologies that make our every day life better. Semiconductor technology used in consumer electronic devices has improved exponentially and has contributed to advances in health sciences, transport, telecommunication etc.

So what are the opportunities in this crisis? Here are some thoughts.

  • From a financial perspective; add value to your customer. If you are a bank – be a bank, if you are a financial advisor, understand the financial instruments you are selling, if you are involved in synthesizing new financial instruments, then understand the math behind it and be transparent.


  • From a technology perspective, there are a number of problems facing humanity that need to be solved, and can create wealth in the process of solving. For example ;
  1. Over 2Billion people do not have decent roofs over their heads. Just in urban areas alone there are 500M poorly housed people. Yes low cost housing can be a profitable business!
  2. Businesses that help reduce the environmental impact of our lifestyles – Technologies like Cisco TelePresence On-Stage Holographic Video Conferencing can really make a difference, and be profitable.
  3. Robotic or autonomous systems to help the increasing elderly populations. Or sensor based technologies that help monitoring the elderly. A great example is the ishoe that could help the elderly from falling.

The list is long but the point here really is that there is a lot of wealth to be generated in business that also generates value to the customers in ways that can fundamentally improve ones quality of life. The biggest opportunity in the current crises is to focus your enterprise on value creation.

So friends each of you will have different goals, and different journeys. I hope you enjoy every moment of your journey. I hope you can pass a better healthier word to your next generation.

I wish you the graduating class of 2009, a great future.

Thank you





Wednesday, September 2, 2009

Pragmatism vs. Ideology --> Pragmatism and Ideology

Lord Turner, the chairman of the Financial Services Authority (FSA) in the UK last week proposed a Tax on banks to curb bonuses. My first reaction was that of derision. I immediately went online to see the details. There weren't too many details but there were a lot of derisive comments. Always mistrusting mob intelligence I began to re-evaluate my initial reaction.

In the past I would have taken a more dogmatic approach on such issues based on commonly used presumption "the market knows best". Taking the market knows best approach is actually the oldest approach in the book. It has led to a lot of innovation in the 20th century, but also a lot of human suffering in Czarist Russia, Medieval India, Africa, S. America etc... The "market knows best" with out regulation, pragmatism, and most importantly focus on development of civilization leads to serfdom in one form or the other.

So what has all this to do with curbs on pay? 2 years ago I would not have even imagined that I would even entertain the thought of accepting mechanisms to regulate compensation in any industry, because of course "the market forces decision is the best".

When we discuss curb on pay there is show of tremendous indignation from many of the well educated, free market followers (me included). But we have to ask ourselves will we have the courage to show the same indignation when we see teachers who are supposed to educate our children being paid very low wages like is happening in most countries (Singapore where I currently live is fortunately an exception to this). Would we show the same indignation when the best minds working on cutting edge technologies in the areas of medicine, renewable energy etc are paid a fraction of what they would be paid if they redirected their work to develop financial tools. Do we show indignation when we see that no amount of profit taking is "enough". Would we have self doubt if we were was paid a Million dollar bonus on a failed project or would we take the money?

The question I guess is what is enough? What amount of regulation is enough? What amount of profit taking is enough? I am inclined to think that having strong intellectual/ideological foundation mixed with a healthy dose of pragmatism is essential. Most importantly it is essential not to be irrationally attached to an ideology. May be this is the essence of creative destruction.

Tuesday, June 30, 2009

The Power of Intelligent Naiveté

Experience, education and an understanding of history bring wisdom, but an amount of intelligent naiveté is essential to critical reasoning. As I struggled to find a word that I could use to characterise the ability to question fundamental blocks of knowledge and revaluate ones understanding continuously, I choose the expression "intelligent naiveté". As I typed this into Google I saw a paper that referenced intelligent naiveté. I did not download the article since the site allowed down loads at a fee. I decided to go with my definition of this term.

I have for long time regarded capitalism as a preferred system, and until recently with some reservation considered the free market variety as the best kind. Ha-Joon Chang articulates with great impact in his book "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism" the reasons that many of us have some discomfort and reservations about free market implementation. People like Noam Chomsky and Chang have done a great job in questioning and challenging popular concepts and thoughts that the masses get indoctrinated with. This indoctrination happens at all levels of society, politics, and education and even in companies.

Many companies indoctrinate their employees in "their way". This helps drives people towards a common cause of increasing revenue, profits, adoption of their product, services, etc… But the indoctrination can become counterproductive when organizational attitude and philosophies take precedence over customer needs. It requires the naïve employee to ask the difficult questions, and to point out that the "emperor has no clothes" to ensure that the market needs and expectations are being met.

There are many areas where there is not enough naiveté and the indoctrination seems to have dulled questions. Just to name a few, the collapse of the banking sector, and the bail outs, the functioning of democracy etc.

Thursday, June 18, 2009

Working hard on a bad idea does not make it good

The difference between determination and stubbornness is a thin line that can result in either success or failure. Taking a bad idea and working it to death does not make an idea any better. Many leaders talk about the importance of perseverance, the "never say die "attitude. What many forget to mention is that if your idea is consistently not leading to the successful results you expect, then maybe it is just a bad idea.

I was invited by a friend (lets call him Vivek) who is the founder and CEO of a medium sized technology company, to observe their director's review of his organization. Their 2008 annual revenue was about US$300M, and like many companies, Vivek's company has also been hit by the tough economic situation and expects their revenue to be around US$ 220M in 2009. Like everywhere else, people are working overtime to figure out ways to "grow" the company more than it would normally.

As they went over the various changes they were instituting in the organization, I could not but help think of the agendas of the people behind these ideas. Two things struck me as the most obvious, the CEO Vivek was more interested in the technology and products that his company made, than in the company itself. The other was that the changes were being made to the only part of the organizational structure that was consistently successful with hard to argue success metrics.

True to the current theme of "why waste a good crisis" the management team was being restructured. The product development team now needs to go 3 levels deep before people with deep technical or market expertise could be found. The distribution channels were changed to be uniformly efficient globally, but in practice hardly effective in many parts of the world.

When I asked Vivek what he expected to gain from these changes, he was honest that from the products perspective he would continue driving the strategy because his top leaders did not "get it". And from a distribution point of view the people behind the change were unwilling to commit to more than 5% growth over the current estimates. As we talked he admitted than in 15 years this was the 4th time his product team was reorganized, and the 3rd time they attempted to change the distribution model. Vivek said that finally it always reverted to the current structure. This time Vivek was determined to make it work, so he did not expect my question "why change the organization" when similar changes did not work in the past. I suggested that maybe his idea was just bad. The clarity of the situation struck me when I saw his face; often in life we mistake stubbornness for determination. May be Vivek's company will be 5th time lucky! He clearly thinks that his determination will make his new structure work better.

In times of crisis there will be continuous demands for change. Many of these demands will be justified. Many will not. If you are in a position to provide direction to your organization, take a little time and understand the history of your organization, and the agenda of the current actors including your own agenda. This will help you differentiate between stubbornness and determination.

Tuesday, May 19, 2009

The Green Shoots Brigade

Being in business, talk about green shoots in the economy provides a psychological boost in confidence. However, with trillions of dollars serving as manure for the economy, there better be some green shoots. The stock market rallies, the banks announcing profits, etc. but have the fundamentals really changed ?

Economies that have been overly reliant on some segments like finance, or primarily- for-export manufacturing, grew exponentially when the times were good, and dropped like rocks when the economy faltered. The recovery and hence the green shoots will mean different things in different regions. In India the coming to power of a strong (hopefully) progressive government, together with a fairly large domestic consumption and infrastructure spending could lead to strong green sprouts that can sustain growth. However, the opportunity will be lost if factional politics rules the roost. In Europe, talk of green shoots is still too early. In the US it is hard to differentiate great government (Barack) salesmanship from the facts. The details of return to profitability of banks are still murky. For example Goldman Sachs announces positive results, but then you notice it had shifted its reporting calendar to exclude December 2008 results. Now banks are lining up to repay TARP funding, but under circumstances that are still not very clear. JP Morgan wants to repay $25B of TARP funding, yet in April announced continued and potentially large losses in its credit card and home equity business. China with a large cash reserve and a strong political will to keep its population employed is also showing some signs of the shoots being sustainable. South East Asia with a mix of countries in various stages of development is a curious mix. Thailand is more involved in factional or feudal politics than on tackling bread and butter issues. Malaysia has announced a viable plan, even though it is mired in political infighting, Singapore is trying to continue to focus on areas of the economy that can provide employment and continue the Singapore story of social and political stability. The risk however to SE Asia is that to varying degrees most of the countries are overly dependent on exports. Additionally, some of the differentiators that countries in SE Asia possessed in the past are now easily eliminated with the excess capacity of factories and manpower in China, and with changes in taxation structures in the US. So a turn around in China and India will not necessarily spill over quickly to SE Asia.

The next 18-24 months will continue to be a roller coaster, hopefully with dampened amplitude in the oscillations. In the mean time the adventurous will have many highs and lows in the market, and a majority of the folks will have to concentrate on growing their business by providing products and services of true value to the customer. From a policy perspective, sustained growth should now take precedence over short term growth that is overly dependent on a couple of sectors. Diversification of business and industries will again become popular for a while. In the mean time the green shoots brigade will shout, the markets will fluctuate, the brave will make or lose a lot of money and the rest will continue to be confused!