India Inc has been waiting for the ‘Ache din’ and some companies seem to have given control of the ‘Ache din’ only to the government and looking at the government to deliver the growth for them!!
Yes. Definitely government can do some significant things in areas of policy and investment. But, there is a lot that individual companies can do for their own growth. Are all companies doing this? I have my doubts. I can see evidence of companies getting lost in the argument of ‘low economic growth and hence low growth of their companies’. Worse still, some companies are going down compared to earlier years!!
In the past few years, the economy of India had not been growing at a healthy pace.But, it’s been growing!! There is way too much importance given by most of the companies to the overall sentiment.
To understand clearly about the overall scenario that we are talking about, let us look at some numbers.
Indian Economy was $ 1,996 Billion in 2014.
Size of top 30 countries in the world is about $ 63,000 Billion in 2014.
The Indian Economy is still growing at about 5-6%.
The world economy is growing at about 4 %.
Now, what are the numbers that the individual companies are chasing? A mid-sized company with a turnover of say Rs 300 Crores needs about Rs 30 crores to maintain decent growth. Even a company of the size of Rs 1000 crores needs another Rs 100 crores for a decent growth. Why are these companies worried so much about the Indian Economy growth, slowdown in Europe and so on? Is it that they can grow only when the Indian Economy grows at about 8%?
I think that these excuses should not be accepted by the CEOs of Companies. They should chase growth in a single minded manner. The growth is possible for every company in their own chosen areas. They need to look at specific areas that need attention rather than get lost in the world / Indian Economy numbers!
While looking at companies who are growing and those who are not, I learnt that there are a few essentials for a company to adapt a ‘growth mind-set’ as opposed to a ‘status-quo’ mind-set. Let me discuss each one of them.
I don’t say there is no other issue other than those discussed below. But, certainly I think these are Seven important factors for every company.
For a company to go to market and seek to sell more than what it did in the past, it should have its’ back end in a good shape. I know companies who are having problems in their back end and are not resolving them decisively. The essentials for a good manufacturing set up are: a. It should be efficient enough to deliver the product to the customer faster than the competition. b. The manufacturing back end should be able to deliver what the customer wants and not what it can produce. The flexibility on the shop floor is a very important aspect. c. The Manufacturing cost should be lower than that of competition. d. The Quality has to be world class and continually improving. e. It should be able to with stand the scrutiny of the best customers across the world.
Adapting the Lean Principles is absolutely essential to achieve the above.
The companies who have done well in the last two years have done so with the help of new products. Whether it is Ford, Maruti or lesser known companies that I know of have all added new products and new customers in a continuous manner.
Every company need to enter new markets and introduce new products actively. Many of the Indian Companies have not mastered the art of entry in to new markets. Whether these new markets are within India or outside India does not make much difference. The markets outside have more complexity involved. But, even the markets within India are highly diverse. How you approach the South Indian Customers can be quite different from how you do it with North Indian Customers! Not every company has mastered the art of managing these diverse markets.
The New Product development has to be quite fast. The Products may have to be adapted to the needs of new customers or totally new products may have to be developed. Still, the Indian Companies are in the mode of ‘one size fits all’ mind-set. We have to get over this mind-set and give what Customers need.
The competition is rising in every field as we speak. More and more companies are coming in to play. International companies entering India has increased significantly. All these companies are bringing money and technology in to India. With this, the local companies will face the risk of being reduced to producing low technology products. The Indian Companies need to continually improve the technology of their products and processes. They need to move up the value chain and offer better products. I can see some good examples of Indian companies giving a tough competition to the foreign companies with new and better technology. But, it still requires a lot of focus and improvement. The development of people in the area of technology still needs a great focus. The spend of Indian Companies on developing people in the area of Technology has to improve significantly.
The Indian Companies need to be highly responsive to the needs to Customers and other stake holders!
The Customer is still not a good word in all Indian Companies. There had been a very good improvement. But, still the companies are looking at what is needed today and not willing to invest for what is needed tomorrow and the day after! We are still looking for short cuts in meeting Customer needs. The practice of ‘somehow’ meeting the customer needs is still continuing. This is resulting in a unsteady/unpredictable performance by the companies in satisfying the customers.
The Companies also need to be highly responsive to Employees. Indian Companies have seen the turnover of their senior people and staff going up in the past 5-8 years. But, still many companies are approaching this problem by recruiting continuously. Not many companies have addressed the root cause and made definitive changes in their way of working and the way they treat their employees.
This perhaps is the single biggest success factor for any company! The Company and the Senior management should be able to learn as they breath!! The market situation and the business situation in general is changing very fast. The expectations of the employees are changing, expectations of customers are changing, the technology is changing. Indian society in general is undergoing a big change. There are changes in the way we eat out, the way we shop out , the way we shop on line, the way like to work. Entrepreneurship is blossoming. India is becoming a darling of Start- ups! Something we could not have imagined a few years back! If the company cannot recognize these differences or leverage the new practices, then that company will loose out. If the top management is not able to learn from their environment and make subtle changes in the way in which the company is approaching the customer, it cannot sustain. More and more efficiency is needed in the way each function works in a company. If a Leader continues to push the company he had been pushing , then that company is bound to suffer!
We need to keep re-assessing our methods and changing to be in the game !
This seems counter intuitive. Especially in the times when the ‘Economy is not doing well’ ! But, this is absolutely needed to continuously growing. Indian Companies have a serious problem in this area too. We are comfortable in cutting costs than growing! I know many Senior Executives who continuously project the savings that they are doing in travel, people, communication etc when actually they should be investing more in this in a situation where you have to work more to get the same or more. I can see companies digging themselves deeper in to the hole with this approach.
But, what is needed is a Leadership which can take calculated risk and then over invest in to areas that will contribute to the growth of the company.
Managers feel safer to say that they are cutting costs rather than saying ‘I am over investing in to this area and I will deliver the result’. The CEOs have to recognize this reality. They have to encourage the Managers to take risk selectively and then get better results.
A tardy Economic situation may cause some problems to companies initially. But, after sometime the Company itself will be causing more harm to themselves by cutting costs everywhere!
A company that is hoping to grow at a healthy pace in any situation should have strong process within their company. This process may be based on TQM principles / 6 sigma / Balanced score card or any other principles that make sense to the company. But, it should keep modifying and strengthening the process continuously.
Companies should avoid the lure of ERPs when they do not have proper process in manual mode. They should improve the discipline of the people and put manual systems before they jump on to software!
If Indian Companies can adapt these seven essentials, there is no reason why they cannot grow in a continuous manner. It will take some time to adapt these practices and improve in to an efficient organization. But, some Indian Companies are learning this and showing that this is possible. At “The Indian manufacturing Academy” (TIMA) we have been lucky to be part of some of those success stories. We wish more companies will find their own ways and find their mojo!