People ask the difference between leader and boss... The leader works in the open, the boss in the covert. The leader leads and the boss drives" -Theodore Roosevelt ,24 Oct 1910.
The final test of a leader is that he leaves behind him in other men the conviction and the will to carry on ... The genius of a good leader is to leave behind him a situation which common sense, without the grace of genius, can deal with successfully" -Walter Lippman
The leader is one driven by vision, who plans better, persists when others have faded out and who is immortal in the history of that entity-Padma Srinivasan.
Leaders and Leadership have been defined, time and again, in different contexts and theories based on the leaders who have succeeded in that era. But all leaders have been known for their visions. The vision leads them to success and the leader continues his plan on and on. The Corporate strategies, redefined and rewritten, are to bring about the competitive leadership, differentiation in the business space and focus on the vision and mission. The organization of Microsoft is where it is now because of Bill Gate’s vision; Infosys technologies is a success story because of a simple visionary man named Narayan Murthy. It is the thought seed that has germinated, nurtured by vision, shaped by the leading hand.
The ideology of David Gleicher1 maintained that organizational change dynamics follows the change equation of D x V x F> R ,
where D- dissatisfaction, V-vision, F-first steps and R- resistance to change. But Carol Verret, in her article states that following are the idealistic expectations form a leading leader.
They are
§ Develop market IQ
§ Know the enemy
§ Agonizing Reappraisal § Positioning rates
§ Partnering.
In a growing globalized environment, converting challenges to opportunities then into wealth creation require a fine blend of strategic integration of resources and competencies. The competitive environment has brought about paradigm shifts in the comprehensive conceptual framework of organizational goals, systems, processes, skills and lookouts. It is no longer enabled to rest on the previous functional setup and design waiting for things to happen. Here the leader plays a significant part diagnosing the gaps, intervene if variances occur and reinforce the vision and mission-the essence of organizational set up.
Finally, to conclude the visionary leadership requirements to align with the global trends can be SEVEN 2,
CONCEPTUALIZE GOALS
VISUALISE GLOBALLYv ACT LOCALLY
ACCEPT REGIONAL DIFFERENCESv SPEED UP RESETS
BE INNOVATIVE
STAY FIT & TRIM
Thus as Organizations expand and venture into wider global markets, the executive and managerial workforce must have technical competence, international expertise and a global perspective. In short, they must be prepared to become global leaders, equipped to meet the demands of global organizations.
Source: http://akottolli.spaces.live.com/
Friday, January 18, 2008
5 Level Leadership
There are five levels of leadership:
LEVEL 1: HIGHLY CAPABLE INDIVIDUAL
Makes productive contributions through talent, knowledge, skills, and good work habits
Here the focus is more on the individual’s capability which he has acquired/developed in his lifetime. They have the job specific knowledge and guide others into achieving the goal through their expertise.
LEVEL 2: CONTRIBUTING TEAM MEMBER
Contributes to the achievement of group objectives; works effectively with others in a group setting.
They are good as a team player. They are aware of the group objectives and contribute towards achieving those goals.
LEVEL 3: COMPETENT MANAGER
Organizes people and resources toward the effective and efficient pursuit of predetermined objectives
LEVEL 4: EFFECTIVE LEADER
Catalyzes commitment to and vigorous pursuit of a clear and compelling vision; stimulates the group to high performance standards.
LEVEL 5: LEVEL 5 EXECUTIVE
Builds enduring greatness through a paradoxical combination of personal humility plus professional will.
The highest of all these categories is the level 5 leadership. It combines Humility with Strong will power. These leaders are generally cool, shy and confident in nature, but very strong in their will power. They don’t look for adulation, either personally or publicly. They attribute all the success to the team mates and are very forward in taking responsibility for anything that has gone wrong. Many a time, they assign good results to their luck or to chance factor, rather than taking the full credit to themselves.
They are equally gifted with the power to charge the atmosphere with their contagious enthusiasm. They work tirelessly to create something out of nothing.
LEVEL 1: HIGHLY CAPABLE INDIVIDUAL
Makes productive contributions through talent, knowledge, skills, and good work habits
Here the focus is more on the individual’s capability which he has acquired/developed in his lifetime. They have the job specific knowledge and guide others into achieving the goal through their expertise.
LEVEL 2: CONTRIBUTING TEAM MEMBER
Contributes to the achievement of group objectives; works effectively with others in a group setting.
They are good as a team player. They are aware of the group objectives and contribute towards achieving those goals.
LEVEL 3: COMPETENT MANAGER
Organizes people and resources toward the effective and efficient pursuit of predetermined objectives
LEVEL 4: EFFECTIVE LEADER
Catalyzes commitment to and vigorous pursuit of a clear and compelling vision; stimulates the group to high performance standards.
LEVEL 5: LEVEL 5 EXECUTIVE
Builds enduring greatness through a paradoxical combination of personal humility plus professional will.
The highest of all these categories is the level 5 leadership. It combines Humility with Strong will power. These leaders are generally cool, shy and confident in nature, but very strong in their will power. They don’t look for adulation, either personally or publicly. They attribute all the success to the team mates and are very forward in taking responsibility for anything that has gone wrong. Many a time, they assign good results to their luck or to chance factor, rather than taking the full credit to themselves.
They are equally gifted with the power to charge the atmosphere with their contagious enthusiasm. They work tirelessly to create something out of nothing.
Good to Great
- That is what makes death so hard-insatisfied curiosity
- You can accomplish anything in life, provided that you do not mind who gets the credit.
- There are going to be times when you can't wait for somebody. Now you are either on the bus or off the bus.
- There is no worse mistake in public leadership than to hold ou false hopes soon to be swep away--Churchill
- Know thyself
- Freedom is only part of the story and half the truth...That is why I recommended that the Statue of Liberty on the East Coast be supplanted by a Statue of Responsibility on the West Coast.
- Most men would rather die, than think. Many do.
Tata’s Nano bomb
Tata group has once gain shown that it is a responsible corporate citizen and has maintained the heritage that is has received from its predecessors. Mr Ratan Tata’s desire to produce a people’s car was ignited when he once saw a complete family riding on a scooter, male head driving the vehicle, wife sitting behind with a kid and another kid in the front. He felt the need to provide a safer and convenient mode of transportation to the people. He discussed this issue with many and initially everybody scoffed at him, saying that it would be impossible to build such low cost car on a long term sustainable basis. He remained determined and now we have in front of us what he once dreamed.
People’s response to the new car is tremendous. Everybody is excited about the new car. The positive reviews are just pouring in. Moreover, many other major players have gone back to their board room to develop strategies to capture this newly created marketing segment.
In India, people’s disposable income is rising. So a big segment of the population is now aspiring for a better life and bigger cars. But still a huge chunk of the population is still in the lower middle segment, which rides on two wheelers. Nano car targets that segment. But if one goes to the people’s psychological level, possession of car has also to do with one’s social status, apart from the convenience. I have seen many people in North India demanding a car in marriage, not because their prime concern is safety and convenience, but because they want to show to other people in the same community and social hierarchy that they are superior to others. My concern with the Nano car is how this issue is going to be addressed. When everybody will be having the same kind of car or in other words, when everybody can afford the car, then where is the psychological advantage of possessing a car. Moreover, anybody possessing the Nano car will be considered as not belonging to the upper class. So the real market for this car actually that population which really can’t afford to have car. And this segment is a huge untapped segment residing in Tier 2 and Tier 3 cities.
Many a people have raised concern about the increased pollution level with the roll out of the new car. First of all I would say that everybody has a right to own a car. If pollution is really a national concern then everybody should be equally responsible in addressing this menace. We can’t deny a person from owning a car simply because he belongs to lower middle class segment. What we need to do is to improve our infrastructure and develop clean technologies. Tata Nano assures us this is going to happen. The emission level due to the car will be lower as compared to two-wheelers.
Tata Nano represents not just the physical structure or the body of the car; it represents the embodiment of somebody’s vision and aspiration of a millions of prospectus users.
People’s response to the new car is tremendous. Everybody is excited about the new car. The positive reviews are just pouring in. Moreover, many other major players have gone back to their board room to develop strategies to capture this newly created marketing segment.
In India, people’s disposable income is rising. So a big segment of the population is now aspiring for a better life and bigger cars. But still a huge chunk of the population is still in the lower middle segment, which rides on two wheelers. Nano car targets that segment. But if one goes to the people’s psychological level, possession of car has also to do with one’s social status, apart from the convenience. I have seen many people in North India demanding a car in marriage, not because their prime concern is safety and convenience, but because they want to show to other people in the same community and social hierarchy that they are superior to others. My concern with the Nano car is how this issue is going to be addressed. When everybody will be having the same kind of car or in other words, when everybody can afford the car, then where is the psychological advantage of possessing a car. Moreover, anybody possessing the Nano car will be considered as not belonging to the upper class. So the real market for this car actually that population which really can’t afford to have car. And this segment is a huge untapped segment residing in Tier 2 and Tier 3 cities.
Many a people have raised concern about the increased pollution level with the roll out of the new car. First of all I would say that everybody has a right to own a car. If pollution is really a national concern then everybody should be equally responsible in addressing this menace. We can’t deny a person from owning a car simply because he belongs to lower middle class segment. What we need to do is to improve our infrastructure and develop clean technologies. Tata Nano assures us this is going to happen. The emission level due to the car will be lower as compared to two-wheelers.
Tata Nano represents not just the physical structure or the body of the car; it represents the embodiment of somebody’s vision and aspiration of a millions of prospectus users.
Private Placement
It is the raising of capital via private rather than public placement. The number of parties is small. Parties involved are generally pension funds, mutual funds, large banks and insurance companies. No need to make explicit financial disclosures to the parties involved. Securities issued could be equities or debt or hybrid kind. Private placements are generally exempted from public registration.
Tuesday, January 8, 2008
ITC’s e-chaupal initiative
This was launched in 2000 by the International Business Division (IBD) of ITC. Currently it reaches out to more than 3.5 million farmers in over 31,000 villages through 5200 kiosks.
ITC entered the soy industry in the 1990’s. It soon realized the need for greater presence to understand the product dynamics in better way.
Production channels prior to E-chaupal
The Agricultural Products Marketing Act legislated the creation of mandis wherein the producers would bring in their crops for sale to the traders. Mandi trading is conducted by commission agents called adatiyas (who buy and sell produce). They belong to the Agarwal and Jain community. They for a close knit economic community.
Farmers bring their produce o the mandi in carts and more often than not, they arrive to the mandi in the night to avoid queue. When the mandi opens in the morning they bring their cart to the open area to display their produce.
The produce is inspected by sight. No test is conducted to check for oil content. No grading of the produce and the only instrument used is the moisture content meter.
Once the potential buyers have inspected the produce, auction is conducted by a mandi employee where commission agents place the bids. It is oral auction and the result of the six month of the farmer’s hard work is decided in just 30 seconds. For the commission agent, this is a routine job, there are loads of cart waiting to be auctioned.
The produce is then taken to the weighing area, either in the mandi complex itself or in the commission agent’s home nearby. In the latter case, the produce is packed in sacks and then weighed manually at the commission agent’s place. The farmer goes to the agent’s office to collect the cash. The agent pays the mandi fee to the mandi. The produce is then loaded on the buyer’s vehicle and then goes to the processing plant.
Limitations of the mandi system
1. Farmers have no idea of the price trend, hence no idea of optimal selling time.
2. Auctioning mechanism is not the best mechanism of the actual price discovery. Moreover, by the time the price is discovered thru auctioning, it’s too late for the farmer to go to the other mandi to sell his produce.
3. Farmers have to wait overnight for the mandi to open next day, adding to the overall cost.
4. Most crops are displayed in the open, hence negatively impacted by the weather conditions. the quality check are very crude. No incentive to the farmers to improve he product quality.
5. Farmers have to bear the cost of bagging and weighing, done by mandi laborers—part of whose compensation is the spilled produce. Hence they have no incentive to reduce the wastage thru spillage.
6. Under-weighing of the produce thru the use of faulty weighing machines.
7. Farmer is not paid upfront for his sale. He has to come to commission agent’s office several times to collect his money.
ITC’s initiatives
The Agricultural Produce Marketing Act prohibits procurement outside the mandi. ITC convinced the government that its model of business would within the spirit of the Act.
Under the business model, the company appoints a Sanchalak to manage one e-chaupal. The sanchalak is generally a person from the same village community who can read and write, has the risk taking ability, and lot of zeal with entrepreneurial spirit. He gets training from the nearest ITC centre on basic computer literacy, using e-chaupal portal and a few basic business funda.
One e chaupal is meant to serve around ten villages in a five km radius.
Another secondary but important role is played by samyojak, who provides logistic support.
E-chaupal supply chain
Pricing
The previous day mandi price is used to determine the benchmark fair price at the e-chaupal. The commission agents at the mandi feed this data into the e-chaupal portal which is then communicated to the sanchalak via portal.
Inspection and grading
To initiate a sale, a farmer brings his produce to the sanchalak who then conducts a quality check and makes appropriate deductions (if any) from the benchmark price and gives a conditional price to the farmer. If the farmer accepts the quote and wants to sell his produce to ITC, then the sanchalak gives him a note capturing his name, village name, quantity and quality of the produce, and the conditional price offered.
Weighing and payment
The farmer takes his produce along with the note from the sanchalak to the nearest ITC’s procurement hub where the produce is again tested in the laboratory against the sanchalak’s assessment. The produce is weighed on a electronic machine, first with the produce and then without it.
Hub logistics
The farmer is paid for his produce at the cash counter immediately and he is also reimbursed his transportation cost. All stages of procurement is duly documented and he is given all the receipts.
ITC entered the soy industry in the 1990’s. It soon realized the need for greater presence to understand the product dynamics in better way.
Production channels prior to E-chaupal
The Agricultural Products Marketing Act legislated the creation of mandis wherein the producers would bring in their crops for sale to the traders. Mandi trading is conducted by commission agents called adatiyas (who buy and sell produce). They belong to the Agarwal and Jain community. They for a close knit economic community.
Farmers bring their produce o the mandi in carts and more often than not, they arrive to the mandi in the night to avoid queue. When the mandi opens in the morning they bring their cart to the open area to display their produce.
The produce is inspected by sight. No test is conducted to check for oil content. No grading of the produce and the only instrument used is the moisture content meter.
Once the potential buyers have inspected the produce, auction is conducted by a mandi employee where commission agents place the bids. It is oral auction and the result of the six month of the farmer’s hard work is decided in just 30 seconds. For the commission agent, this is a routine job, there are loads of cart waiting to be auctioned.
The produce is then taken to the weighing area, either in the mandi complex itself or in the commission agent’s home nearby. In the latter case, the produce is packed in sacks and then weighed manually at the commission agent’s place. The farmer goes to the agent’s office to collect the cash. The agent pays the mandi fee to the mandi. The produce is then loaded on the buyer’s vehicle and then goes to the processing plant.
Limitations of the mandi system
1. Farmers have no idea of the price trend, hence no idea of optimal selling time.
2. Auctioning mechanism is not the best mechanism of the actual price discovery. Moreover, by the time the price is discovered thru auctioning, it’s too late for the farmer to go to the other mandi to sell his produce.
3. Farmers have to wait overnight for the mandi to open next day, adding to the overall cost.
4. Most crops are displayed in the open, hence negatively impacted by the weather conditions. the quality check are very crude. No incentive to the farmers to improve he product quality.
5. Farmers have to bear the cost of bagging and weighing, done by mandi laborers—part of whose compensation is the spilled produce. Hence they have no incentive to reduce the wastage thru spillage.
6. Under-weighing of the produce thru the use of faulty weighing machines.
7. Farmer is not paid upfront for his sale. He has to come to commission agent’s office several times to collect his money.
ITC’s initiatives
The Agricultural Produce Marketing Act prohibits procurement outside the mandi. ITC convinced the government that its model of business would within the spirit of the Act.
Under the business model, the company appoints a Sanchalak to manage one e-chaupal. The sanchalak is generally a person from the same village community who can read and write, has the risk taking ability, and lot of zeal with entrepreneurial spirit. He gets training from the nearest ITC centre on basic computer literacy, using e-chaupal portal and a few basic business funda.
One e chaupal is meant to serve around ten villages in a five km radius.
Another secondary but important role is played by samyojak, who provides logistic support.
E-chaupal supply chain
Pricing
The previous day mandi price is used to determine the benchmark fair price at the e-chaupal. The commission agents at the mandi feed this data into the e-chaupal portal which is then communicated to the sanchalak via portal.
Inspection and grading
To initiate a sale, a farmer brings his produce to the sanchalak who then conducts a quality check and makes appropriate deductions (if any) from the benchmark price and gives a conditional price to the farmer. If the farmer accepts the quote and wants to sell his produce to ITC, then the sanchalak gives him a note capturing his name, village name, quantity and quality of the produce, and the conditional price offered.
Weighing and payment
The farmer takes his produce along with the note from the sanchalak to the nearest ITC’s procurement hub where the produce is again tested in the laboratory against the sanchalak’s assessment. The produce is weighed on a electronic machine, first with the produce and then without it.
Hub logistics
The farmer is paid for his produce at the cash counter immediately and he is also reimbursed his transportation cost. All stages of procurement is duly documented and he is given all the receipts.
Tobin Tax
This tax was proposed by Mr. James Tobin of Yale University. He received Noble Prize in economics in 1981. Tobin tax is levied only on speculative foreign currency exchange transactions to deter speculation on currency fluctuations. The tax rate is very low (less tan 0.5%). It will not have any effect on long term longer term investments.
Approximately US $ 1 trillion worth of currency is traded every day in unregulated financial markets. Out of this, only 5% of the transactions are related to trade and other real economic transactions. The rest 95% is simply speculative in nature, betting on the exchange rate fluctuations and international interest rate differentials. This speculation is very dangerous for the national budgets, economic planning and allocation of resources.
Apart from deterring the speculative currency trade which harms national economic policies, the tax will generate billions of dollars in revenue by way of tax collection. Part of the revenue would go to the international funds while remaining to the national governments.
Benefits:
1. Reduction in the exchange rate volatility
2. More power to the national governments in determining fiscal and monetary policies
3. Revenue generation
Problems in implementation:
1. Need to forge an agreement among national governments on levying a uniform tax rate
2. Need to develop a mechanism on revenue sharing
Approximately US $ 1 trillion worth of currency is traded every day in unregulated financial markets. Out of this, only 5% of the transactions are related to trade and other real economic transactions. The rest 95% is simply speculative in nature, betting on the exchange rate fluctuations and international interest rate differentials. This speculation is very dangerous for the national budgets, economic planning and allocation of resources.
Apart from deterring the speculative currency trade which harms national economic policies, the tax will generate billions of dollars in revenue by way of tax collection. Part of the revenue would go to the international funds while remaining to the national governments.
Benefits:
1. Reduction in the exchange rate volatility
2. More power to the national governments in determining fiscal and monetary policies
3. Revenue generation
Problems in implementation:
1. Need to forge an agreement among national governments on levying a uniform tax rate
2. Need to develop a mechanism on revenue sharing
Warrants
Warrant is a derivative security that gives the holder the right to purchase securities (usually equities) from the issuer at a specific price within a specific time frame. These are generally issued along with new debt issues as a “sweetener” to entice investors ot allow the issuers to pay less interest rate or dividends.
Warrants are tradable and their price fluctuates as per the fluctuation of the underlying stock.
Say, a company issues new share at $50 and at the same time gives shareholders warrants entitling them to buy shares at $100 anytime until 5 Jan, 200X.
The warrant holder will exercise the option of converting the warrant into share only when the share price exceeds $100. Below $100, the warrant is ‘out of the money’ and it is worthless.
Warrants are tradable and their price fluctuates as per the fluctuation of the underlying stock.
Say, a company issues new share at $50 and at the same time gives shareholders warrants entitling them to buy shares at $100 anytime until 5 Jan, 200X.
The warrant holder will exercise the option of converting the warrant into share only when the share price exceeds $100. Below $100, the warrant is ‘out of the money’ and it is worthless.
Tata Business Excellence Model
In the pioneering work ‘In Search of Excellence’, first time focused was shifted towards achieving organizational excellence and making an organization ‘world-class’.
All the developments in management science, such as TQM, BPR, ISO 9000, SPC, benchmarking focused on only aspect of business. There was a need to develop the systems to improve overall organizational performance.
First came the European Foundation for Quality Management (EFQM) and then Malcolm Baldrige National Quality Award (MBNQ) in 1987 in US for quality management and quality achievement.
Following these, Tata introduced TBEM model in1994 and gives JRDQV award for business excellence. Tata group companies are expected to attain and maintain a minimum standard vis-à-vis this model to
One of the purposes to Tata Brand Equity and Brand Promotion agreement is to enhance the Tata brand equity by achieving world class levels of performance. The TBEM model provides that common framework.
TBEM comprises eleven core value concepts for quality excellence. These are: Visionary leadership, organizational and personal learning, agility, valuing employees and partners, managing for innovation, customer drive excellence, focus on future, management by fact, focus on results and creating value, social responsibility and citizenship and system perspective.
There are seven chapters in the TBEM assessment with a potential of 1000 points. These are:
Leadership (125 pints): It emphasizes how senior leaders address values and performance expectations etc.
Strategic planning (85 points): It examines hoe organizational strategic planning is done and implemented.
Customer and market focus (85 points): How the company keeps track of customers’ expectations and preferences and builds customer relationship.
Measurement, Analysis and Knowledge Management (85 points):
Human Resource Focus (85 points)
Process measurement (85 points): Customer focused design, product and service delivery and supplier and partnering process
Business Results (450 points): Tracks organizational performance in key business areas
JRDQV award is given to a Tata Group Company when the TBEM assessment score is 600 points out of a potential of 1000 points. So far only Tata Steel and TCS have received the JRDQV award.
The performance of any unit/division in TBEM scores are classified as given below :
876 – 1000: World Class Leader
751 - 875: Benchmark Leader
651 - 750: Industry Leader
551 - 650: Emerging Industry Leader
451 - 550: Good Performance
351 - 450: Early Improvements
251 - 350: Early Results
0 - 250: Early Development
The process owner of TBEM is Tata Quality Management Services.
Any of the Tata group company signing BEBP agreement needs to score 220 points within 2 years of signing the Tata Brand Equity scheme and adopting the TBEM model followed by 400 points in three years and 600 points in four-year period duration.
All the developments in management science, such as TQM, BPR, ISO 9000, SPC, benchmarking focused on only aspect of business. There was a need to develop the systems to improve overall organizational performance.
First came the European Foundation for Quality Management (EFQM) and then Malcolm Baldrige National Quality Award (MBNQ) in 1987 in US for quality management and quality achievement.
Following these, Tata introduced TBEM model in1994 and gives JRDQV award for business excellence. Tata group companies are expected to attain and maintain a minimum standard vis-à-vis this model to
One of the purposes to Tata Brand Equity and Brand Promotion agreement is to enhance the Tata brand equity by achieving world class levels of performance. The TBEM model provides that common framework.
TBEM comprises eleven core value concepts for quality excellence. These are: Visionary leadership, organizational and personal learning, agility, valuing employees and partners, managing for innovation, customer drive excellence, focus on future, management by fact, focus on results and creating value, social responsibility and citizenship and system perspective.
There are seven chapters in the TBEM assessment with a potential of 1000 points. These are:
Leadership (125 pints): It emphasizes how senior leaders address values and performance expectations etc.
Strategic planning (85 points): It examines hoe organizational strategic planning is done and implemented.
Customer and market focus (85 points): How the company keeps track of customers’ expectations and preferences and builds customer relationship.
Measurement, Analysis and Knowledge Management (85 points):
Human Resource Focus (85 points)
Process measurement (85 points): Customer focused design, product and service delivery and supplier and partnering process
Business Results (450 points): Tracks organizational performance in key business areas
JRDQV award is given to a Tata Group Company when the TBEM assessment score is 600 points out of a potential of 1000 points. So far only Tata Steel and TCS have received the JRDQV award.
The performance of any unit/division in TBEM scores are classified as given below :
876 – 1000: World Class Leader
751 - 875: Benchmark Leader
651 - 750: Industry Leader
551 - 650: Emerging Industry Leader
451 - 550: Good Performance
351 - 450: Early Improvements
251 - 350: Early Results
0 - 250: Early Development
The process owner of TBEM is Tata Quality Management Services.
Any of the Tata group company signing BEBP agreement needs to score 220 points within 2 years of signing the Tata Brand Equity scheme and adopting the TBEM model followed by 400 points in three years and 600 points in four-year period duration.
The Toyota Way
The Toyota Way
The 14 Principles of the Toyota Way is a management philosophy used by the Toyota corporation that includes the Toyota Production System.
The 14 Principles
The 14 principles of The Toyota Way are organized in four sections:
1) Long-Term Philosophy,
2) The Right Process Will Produce the Right Results,
3) Add Value to the Organization by Developing Your People, and
4) Continuously Solving Root Problems Drives Organizational Learning. The principles are set out and briefly described below:
Section I — Long-Term Philosophy
Principle 1
Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
Section II — The Right Process Will Produce the Right Results
Principle 2
Create a continuous process flow to bring problems to the surface.
The 14 Principles of the Toyota Way is a management philosophy used by the Toyota corporation that includes the Toyota Production System.
The 14 Principles
The 14 principles of The Toyota Way are organized in four sections:
1) Long-Term Philosophy,
2) The Right Process Will Produce the Right Results,
3) Add Value to the Organization by Developing Your People, and
4) Continuously Solving Root Problems Drives Organizational Learning. The principles are set out and briefly described below:
Section I — Long-Term Philosophy
Principle 1
Base your management decisions on a long-term philosophy, even at the expense of short-term financial goals.
Section II — The Right Process Will Produce the Right Results
Principle 2
Create a continuous process flow to bring problems to the surface.
Work processes are redesigned to eliminate waste through the process of continuous improvement — kaizen. The eight types of muda are:
Overproduction
Waiting
Unnecessary transport
Overprocessing
Excess inventory
Unnecessary movement
Defects
Unused employee creativity
Principle 3
Use "pull" systems to avoid overproduction.
A method where a process signals its predecessor that more material is needed. The pull system produces only the required material after the subsequent operation signals a need for it. This process is necessary to reduce overproduction.
Principle 4
Level out the workload. (Work like the tortoise, not the hare).
This helps achieve the goal of minimizing waste (muda), not overburdening people or the equipment (muri), and not creating uneven production levels (mura).
Principle 5
Build a culture of stopping to fix problems, to get quality right the first time.
Principle 6
Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.
Principle 7
Use visual control so no problems are hidden.
Included in this principle is the 5S Program - steps that are used to make all work spaces efficient and productive, help people share work stations, reduce time looking for needed tools and improve the work environment.
Sort: Sort out unneeded items
Straighten: Have a place for everything
Shine: Keep the area clean
Standardize: Create rules and standard operating procedures
Sustain: Maintain the system and continue to improve it
Principle 8
Use only reliable, thoroughly tested technology that serves your people and processes.
Technology is pulled by manufacturing, not pushed to manufacturing.
Section III — Add Value to the Organization by Developing Your People
Principle 9
Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
Without constant attention, the principles will fade. The principles have to be engrained, it must be the way one thinks. Employees must be educated and trained: they have to maintain a learning organization.
Principle 10
Develop exceptional people and teams who follow your company's philosophy.
Teams should consist of 4-5 people and numerous management tiers. Success is based on the team, not the individual.
Principle 11
Respect your extended network of partners and suppliers by challenging them and helping them improve.
Toyota treats suppliers much like they treat their employees, challenging them to do better and helping them to achieve it. Toyota provides cross functional teams to help suppliers discover and fix problems so that they can become a stronger, better supplier.
Section IV: Continuously Solving Root Problems Drives Organizational Learning
Principle 12
Go and see for yourself to thoroughly understand the situation (Genchi Genbutsu).
Toyota managers are expected to "go-and-see" operations. Without experiencing the situation firsthand, managers will not have an understanding of how it can be improved. Furthermore, managers use Tadashi Yamashima's (President, Toyota Technical Center (TCC)) ten management principles as a guideline:
Always keep the final target in mind.
Clearly assign tasks to yourself and others.
Think and speak on verified, proven information and data.
Take full advantage of the wisdom and experiences of others to send, gather or discuss information.
Share information with others in a timely fashion.
Always report, inform and consult in a timely manner.
Analyze and understand shortcomings in your capabilities in a measurable way.
Relentlessly strive to conduct kaizen activities.
Think "outside the box," or beyond common sense and standard rules.
Always be mindful of protecting your safety and health.
Principle 13
Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly
The following are decision parameters:
Find what is really going on (go-and-see) to test
Determine the underlying cause
Consider a broad range of alternatives
Build consensus on the resolution
Use efficient communication tools
Principle 14
Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen).
The process of becoming a learning organization involves criticizing every aspect of what one does. The general problem solving technique to determine the root cause of a problem includes:
Initial problem perception
Clarify the problem
Locate area/point of cause
Investigate root cause (5 whys)
Countermeasure
Evaluate
Standardize
It is really overwhelming to see how Totoya has revolutionised the way production takes place at the shop floor. Though a bit methodological, this kind of system helps in the long way in improving things. This kind of managerial systems, when placed in system, always actas a guideline for the managers and it is easy to imbed the philosphy in the new-comers. Though many of Indian firms might be following any or some of these methods, they do it in bit and pieces and that too without putting any system in place. Only Toyota has placed such an exhaustive system of managerial control in place.
This is possible only when the top mangement is committed to improving things down the line. They are focussed on the financial numbers. That's why there is the need for balanced scorecard kind of performance measurement system wherein one gets to see the impact all functions on the balance sheet.
Balanced Scorecard
Developed by Robert Kaplan and David Norton
What you measure is what you get. Traditionally, more focus has been given on financial measures. But now companies are looking for a balanced presentation of financial and operational measures.
The balanced scorecard allows managers to look at business from four perspectives:
Customer perspective: How do customers see us? Customers’ concerns are generally around lead time, quality (defect level), performance and service (adding value to the customer), and cost. Companies should articulate goals for these four parameters and then translate these goals into specific measures. For example:
Internal Business Perspective: What must we excel at? Excellent customer satisfaction is driven by the internal business processes, decisions and actions occurring throughout the organization. Hence the need to monitor critical internal operations. Examples of internal factors affecting customer satisfaction: cycle time, quality, employee skills and productivity, technical capability.
Innovation and Learning perspective: Can we continue to improve and create value? The customer based and internal processes perspectives are important for the current competitive successes. The company needs to develop measures to as to face the future intense global competition through continuous improvement to their existing products and processes and the ability to introduce entirely new products with expanded capabilities.
Financial Perspective: How do we look to shareholders? It measures whether company’s strategy, implementation and execution are contributing to the bottom line improvement. It includes profitability, growth and shareholder value.
Benefits of BSC
1. It brings various seemingly disparate elements of a company’s competitive agenda on a single management report
2. It guards against the sub-optimization of goals. It forces senior managers to look all the important operational measures together, whether improvement in one area has been achieved at the expense of another.
Seven manufacturing wastes
This concept was originated in Japan (called muda) and pioneered by Toyota Production System (TPS), also called Lean Manufacturing. These wastes are
Overproduction: It means producing something which is not needed now. Overproduction leads to wastage of resources and increase in inventory. Toyota works on ‘Jus in Time’ philosophy. Overproduction is a kind of ‘Just in Case’ philosophy.
Waiting: 99% of the product’s life is wasted in waiting. And any time wasted in bottle is a waste for the whole production. Need is better design of factory layout.
Transporting: A direct addition to the cost. It is difficult to identify. Unnecessary handling of the product leads to the product damage and poor quality. Mapping product flows will help.
Inappropriate processing: Many organizations use high precision machines where simpler tools can work. Toyota uses simpler machines.
Unnecessary inventory: Direct result of overproduction and waiting.
Unnecessary and excessive motion: Related to workplace ergonomics and safety. Unnecessary bending, stretching , walking, lifting etc should be eliminated.
Defects
A newer wastage has been added recently, called “Underutilization of Manpower”.
Having worked in Tata Steel, I can see that there are controls in the plant to eliminate these wastages. Still the standards are not as high as it is in TPS. In the maintenace field, I have seen the inventory of maintenance items running into several crores in CRM only, the highest it reached was 85 crore worth of inventory. Mos of items lying there were insurance items, which were sometimes back purchased to meet unexpected breakdowns. Apart from this, there are controls for other items.
Overproduction: It means producing something which is not needed now. Overproduction leads to wastage of resources and increase in inventory. Toyota works on ‘Jus in Time’ philosophy. Overproduction is a kind of ‘Just in Case’ philosophy.
Waiting: 99% of the product’s life is wasted in waiting. And any time wasted in bottle is a waste for the whole production. Need is better design of factory layout.
Transporting: A direct addition to the cost. It is difficult to identify. Unnecessary handling of the product leads to the product damage and poor quality. Mapping product flows will help.
Inappropriate processing: Many organizations use high precision machines where simpler tools can work. Toyota uses simpler machines.
Unnecessary inventory: Direct result of overproduction and waiting.
Unnecessary and excessive motion: Related to workplace ergonomics and safety. Unnecessary bending, stretching , walking, lifting etc should be eliminated.
Defects
A newer wastage has been added recently, called “Underutilization of Manpower”.
Having worked in Tata Steel, I can see that there are controls in the plant to eliminate these wastages. Still the standards are not as high as it is in TPS. In the maintenace field, I have seen the inventory of maintenance items running into several crores in CRM only, the highest it reached was 85 crore worth of inventory. Mos of items lying there were insurance items, which were sometimes back purchased to meet unexpected breakdowns. Apart from this, there are controls for other items.
Pranshu's lovely poem
Meri dhoop ho tum,
haan wohi sardi kee narm see
gudgudane walee
haath lagao to ud jane walee
door se bhee garmaane walee
meri dhoop ho tum.
Door jo tum chali jati ho
jane kyun sab andhera sa ho jata hai.
Tumhare narm haathon ka woh ahsaas
lekin saat samundar paar bhee mere
kapkanpate haathon ko garmaa jata hai
Aisi meri dhoop ho tum.
Baadlon ke peeche kabhi jo chup jati ho.
Fir gaalon pe mere hanste hue
jo tum apnaa reshmi haath sehlaati ho
Aur shokh ho jaate hain mere dil ke yeh rang
aisi khoobsoorti unmein jagaati ho tum.
Door na mujhse tum kabhi jana
duniya ke is andhere se akele
mumkin nahi hai lad paana.
le chalna bas .. jaise har baar ek pari ki tarah
haath mera thaam ke sapno ke desh mein
le jaati ho tum.
Gudgudaate
Jagmagati
Khilkhilaati
Meri Dhoop
ho tum...........
haan wohi sardi kee narm see
gudgudane walee
haath lagao to ud jane walee
door se bhee garmaane walee
meri dhoop ho tum.
Door jo tum chali jati ho
jane kyun sab andhera sa ho jata hai.
Tumhare narm haathon ka woh ahsaas
lekin saat samundar paar bhee mere
kapkanpate haathon ko garmaa jata hai
Aisi meri dhoop ho tum.
Baadlon ke peeche kabhi jo chup jati ho.
Fir gaalon pe mere hanste hue
jo tum apnaa reshmi haath sehlaati ho
Aur shokh ho jaate hain mere dil ke yeh rang
aisi khoobsoorti unmein jagaati ho tum.
Door na mujhse tum kabhi jana
duniya ke is andhere se akele
mumkin nahi hai lad paana.
le chalna bas .. jaise har baar ek pari ki tarah
haath mera thaam ke sapno ke desh mein
le jaati ho tum.
Gudgudaate
Jagmagati
Khilkhilaati
Meri Dhoop
ho tum...........
EV and EV/EBITDA
EV is a more appropriate measure to calculate the value of a firm than mere market capitalization from the acquirer’s point of view.
EV= Market capitalization + Debt at market value+ Minority interest at market value+ Preferred equity at market value- cash and cash equivalents
It includes the cost of debt which the acquirer will ultimately have to pay out.
EV/EBIDTA metric is used measure the number of years it would take to payback the investment.
Advantages of this metric:
It is useful for transactional comparisons because it ignores the distorting effect of the individual countries’ taxation policies
It takes into account the debt of the acquired company, hence a better metric. Hence a low value of this ratio indicates a better candidate for takeover.
It is unaffected by the capital structure of the company. For example, if a company issues shares and uses the money to pay off its debt. Its EPS will fall and PE will be higher (i.e. shares will look more expensive). But the EV/EBITDA will remain unchanged.
It remains unaffected by the depreciation and amortization, which are non-cash items.
Note: Generally this ratio is higher for high growth industries and low for low growth industries.
EV= Market capitalization + Debt at market value+ Minority interest at market value+ Preferred equity at market value- cash and cash equivalents
It includes the cost of debt which the acquirer will ultimately have to pay out.
EV/EBIDTA metric is used measure the number of years it would take to payback the investment.
Advantages of this metric:
It is useful for transactional comparisons because it ignores the distorting effect of the individual countries’ taxation policies
It takes into account the debt of the acquired company, hence a better metric. Hence a low value of this ratio indicates a better candidate for takeover.
It is unaffected by the capital structure of the company. For example, if a company issues shares and uses the money to pay off its debt. Its EPS will fall and PE will be higher (i.e. shares will look more expensive). But the EV/EBITDA will remain unchanged.
It remains unaffected by the depreciation and amortization, which are non-cash items.
Note: Generally this ratio is higher for high growth industries and low for low growth industries.
22 immutable laws of branding
Branding is the creation of the perception in the mind of the prospect that there is no other product in the market quite like your product.
This is an excerpt from the book of the same name written by the famous marketing strategist, Al Ries. These laws are
The Law of Contraction: A brand becomes stronger when you narrow your focus. For example Howard Schultz of Starbucks focused on one category and dominated the coffee market.
The Law of Expansion: The power of the brand is inversely proportional to its scope. Focus should be on the long term on building the brand rather than milking the brand for the short term growth. For example, when Amex tried to introduce many new cards every year, the market share fell significantly.
The Law of Publicity: The birth of a brand is achieved with publicity not advertising. The best way to publicity is by being first. E.g. CNN being the first cable news network, Compaq being the first portable personal computer.
The Law of Advertising: Once born, a brand needs advertising to stay healthy. This is important to maintain the leadership position once achieved.
The Law of the Word: A brand should try to own a word in the customer’s mind. E.g. ‘prestige’ for Mercedes and ‘safety’ for Volvo.
The Law of Quality: Quality alone is not important for success of the brand. Quality, or the perception of quality, resides in the mind of the customers. So there is the need to build this perception.
The Law of Credentials: The claim to authenticity is the most important credential. It is maintained by the leadership position.
The Law of the Category: A leading brand should promote the category, not the brand.
The Law of the Name: In the long run, a brand is nothing but the name. In the short run, the product features and attributes are important but in the long run, only the name remains.
The Law of Extensions: The easiest way to destroy a brand is to put its name on everything.
The Law of Fellowship: In order to build a category, a brand should welcome other brands. The competition between Coke and Pepsi created more demand for cola. Hence one should tolerate healthy competition. It brings more customers.
The Law of the Generic: One of the fastest routes to failure is giving the brand a generic name.
The Law of the Company: Brands are brands. Companies are companies. There is a difference.
The Law of Subbrands: What brands build, subbrands destroy.
The Law of Sibling: There is a time and place to launch a second brand. One should resist launching a second brand until and unless the first brand has got itself totally established.
The Law of Color: A brand should use a color opposite to that of competitor’s.
The Law of Borders: There are no barriers to global branding. A brand should know no borders.
The Law of Change: Brands can be changed but only infrequently and very carefully.
The Law of Consistency: A brand is not built overnight. Success is measured in decades, not years.
The Law of Mortality: No brand lives forever. The best solution is often the euthanasia.
The Law of Singularity: The most important aspect of a brand is its single-mindedness.
The Law of Shape: The logo should be designed to fit both the eyes. The words should be easily legible.
McKenzie 7S framework
The organization is not just the structure; rather it is made up of seven elements, shown above. These are divided into two types: Hard and Soft. Elements in green are hard; they are easy to identify and feasible. They can be found in strategy elements, corporate plans, organizational structures and other documentations. The soft elements are hard to describe. They are sort of intangible. Hence it is more difficult to plan or influence these elements.Effective organizations achieve a fit between all these seven elements. If one element changes then this will affect all the others. For example, a change in HR-systems like internal career plans and management training will have an impact on organizational culture (management style) and thus will affect structures, processes, and finally characteristic competences of the organization.
In any change process in an organization, more focus is given on hard S’s and often soft S’s are ignored. This is not a good strategy. It is difficult to build new structures and strategies upon inappropriate cultures and values. Many M&A fail because of the clash of culture, value and style.
Hence 7S model is an effective tool in initiating change process in the organization. One should look at the current status of these seven elements in the organization and compare with the ideal state. Then make and plan and implement them.
Let us describe these elements one by one:
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