Sunday, January 29, 2012

Expalin meaning and rationale of privatisation.

Privatization is a process by which the government transfers the productive activity from the public sector to the private sector.

According to the supporters of privatization, the rationale for privatization and disinvestment is as follows:

1.      Improvement in efficiency and performance. :
The private sector introduces the ‘profit oriented’ decision making process in the working of the enterprise leading to improved efficiency and performance.

2.      Fixing responsibility is easier.
While personnel in the public enterprises cannot be held responsible (or accountable) for any lapse, the areas of responsibility in the private sector are clearly defined. This makes it possible to take people to task in the private sector units for any blunders committed by them whereas in public sector units.

3.      Private units are subject to capital market discipline.
Private sector firms are subject to capital market disciplines and scrutiny by financial experts. In fact, the ability to raise funds in the capital market is crucially dependent on performance. Not so in the case of public enterprises.
Bimal Jalan

4.      Political interference is unavoidable in public enterprises.
According to noted economist and former Governor of RBI, Bimal Jalan, political interference is unavoidable in public corporation and is a major cause of decline in operational efficiency.

5.      Succession Planning.
Many public sector enterprises remain ‘headless’ for long periods of time. This causes confusion and delay in decision making as nobody I sure how the new incumbent will act (or react) on the policy decision being undertaken.

6.      Response time in the case of private sector is less.
In a quick changing business environment it often becomes necessary to take spot decisions without having to worry too much about not having consulted others. In fact, delayed decision making is often equivalent to making no decision at all. Time is almost totally absent as no one is willing to disturb the status quo.

7.      Remedial measures are taken early in private sector.
Private sector firms are more subject to liquidation, threat of takeover, and loss of assets for owners than public sector enterprises. When owners stand to lose control over assets, there is greater likelihood of remedial measures being taken earlier.

8.      Political considerations make improvement in efficiency difficult in public enterprises.
According to Bimal Jalan, efforts to improve managerial efficiency in public enterprises by administrative measures are generally short lived and unsustainable as, sooner or later, political considerations take precedence over economic or commercial considerations. This has happened in many countries including Italy, France, Korea, India and Pakistan.
Populist Policies
Fuse the Bulbs 

Populist announcement before the elections  like free electricity to farmers and deprived sections of society. Waiving off of the outstanding loans and penalties under political pressure  harm the efficiencies of the electricity companies and PSU banks.

9.      Privatization leads to better service to customers.
The very survival of private sector enterprises depends on customer satisfaction since only such satisfaction can ensure more widespread and repeat buying. As against this, so the argument goes, caring for the customer is generally not a priority with public sector enterprise.

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Saturday, January 28, 2012

Case Study : Entrepreneurship in Action - Girish Paranjpe

Intrapreneurship is the act of behaving like an entrepreneur, except within a larger organization. In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur, to mean "A person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation".
Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship.
The competencies in any professional can be grouped into three categories. Each professional has some combination of these. The degree of this permutation decides the level of success of the entrepreneur or Intrapreneur. Managerial and Administrator  skill succeed the person in its executive job, but the success at the topmost position needs seven qualities grouped under the entrepreneurship.
A.  Entrepreneurship :
1.    Initiative
2.    Sees and acts on opportunities
3.    Persistence
4.    Information Seeking
5.    Concern for high quality of work
6.    Commitment to work on track
7.    Efficiency orientation
B.  Manager :
1.    Systematic Planning
2.    Problem Solving
3.    Self Confidence   
C.  Administrator
1.    Assertiveness
2.    Persuasion
3.      Use of influence strategy  
Here , we try to evaluate these parameters  on Girish  Paranjpe who  has reached to the highest level of employed hierarchy.   He was  Joint CEO at  diversified conglomerate WIPRO Technologies  from  April 2008 till Jan 2011.
Wipro Technologies was established in 1980 as a subsidiary of Wipro (Western India Products) Limited listed on the New York Stock Exchange. Wipro was initially set up as a vegetable oil manufacturer in 1945 in Amalner, Maharashtra, producing sunflower Vanaspati oil and soaps. At that time, the company was called Western India Vegetable Products Limited (later abbreviated down to Wipro).

The company logo still contains a sunflower to reflect their original business. During the 1970s and 1980s, the company shifted its focus and began to look into business opportunities in the IT and computing industry, which was at nascent stages in India at that time. Wipro marketed the first indigenous homemade PC from India in 1985.

By 2000, Wipro Technologies emerged as the largest publicly listed software exporter in India and the first software services provider to be assessed at SEI Level 5 in the world. Wipro Limited is ranked #25 in the list of top companies of India in Fortune India 500 list in 2011. As of 2012, Wipro is the second largest IT services company by turnover in India and employs more than 136,734 people worldwide as of December 2011.

It provides outsourced research and development, infrastructure outsourcing, business process outsourcing (BPO) and business consulting services. The company operates in three segments: IT Services, IT Products, Consumer Care and Lighting. It is 9th most valuable brand in India according to an annual survey conducted by Brand Finance and The Economic Times in 2010.  
Girish Paranjpe  -  Early Life :
Girish Parnjpe

  • He  did his schooling from prestigious 125 year old  Daly College  of Indore.  
  • B.Com from Sydhenam College, Bombay University  
  • He is also a Fellow Member of the Institute of Chartered Accountants of India and the Institute of Cost and Works Accountants of India.  
  • Joined Wipro in 1990 and worked under fire brand CEO Vivek Paul before taking the top seat.  
Career at  Wipro Technologies :

  • He started his career at Wipro  as a trainee. Steadily, he rose through the ranks including handling treasury at one point.  
  • He has headed the finance function in virtually all of Wipro's businesses.  
  •  In August 2000, he moved to a business role to head Wipro's fledgling BFSI (Financial Services) practice.  
  • He served as a Director of Wipro Technologies, Ltd. ., since April 18, 2008 till January,2011.  He was a Member of Wipro's Corporate Executive Council.  
  •  He was appointed as the Jt. CEO of Wipro’s IT services in 2008. He shared the position of CEO along with Mr. Suresh Vaswani  
  • Paranjpe ‘s  direct responsibilities included the following business units:
®     Financial Services, Communication, Media, Telecom and Technology vertical.

  • He was also directly responsible for driving Consulting, Business Technology Services, Product Engineering Solutions and other functions under him were Global Delivery, CTO and CIO office & Operations. 
  • He held a broad range of leadership positions in critical portfolios across the Wipro Corporation during his tenure of 21 years. 
  • After leaving Wipro he joined Bloom Energy Corporation, a US firm based at  California, as Managing Director  in July 2011.  
Prem Azimji :
Making Ground for the Sons
®    CEOs like Girish Paranjpe work as an Intrapreneur to create wealth for the stake holders mainly – Entrepreneur (e.g. Premji Azim)

  1. Initiative :  
Taking actions to expand the business into new areas, products or services.

He was always forward looking. Building solutions for future in advance was his plus point.  He created team for future. He has also taken the initiative to implement innovative training programs like Insurance 101, 201 and Finance 101, 201 to educate more than 2000 people within the Finance Solutions Domain. 

  1. Seeing and Acting on Opportunities :   
After completing the graduation in Commerce,  he saw an opportunity in finance and accountancy so took up for Chartered Accountancy and Cost Accountancy which in those was considered to be a tough course compared to the management degree.

After ICWA  preferred to join Wipro sensing the advantage in the diversification move of the company to emerging field of IT.  Five years later around 1995, India saw its first IT boom which benefitted  Wipro and Paranjpe both.
  1. Persistence  :    
Taking suitable actions in the face of a significant obstacle.

At NASSCOM India Leadership Forum 2009 Wipro  Jt. CEO said, “Get closer to the customer- Really close Drive Transformation  and to do so Strengthen your organisation Become fit!!! Invest for your future.  Communicate internally within organization - What should be our approach.”

To differentiate, Wipro gave cost transformation solution to its customers and planned to do a lot more transformation in addition to costs, delivery transformation, business model transformation and so on and so forth.        
  1. Concern for High Quality of Work :
 Doing things that meet or beat existing standards of excellence is desired in the competition world of IT and ITes services.  During 2010  one of the core competency area – Telecom for Wipro was passing through rough weather. Telecom for Wipro has two wings —service providers and equipment vendors. Wipro picked up and did well in the equipment vendor area, which is more difficult.

Stating a desire to produce work of high quality and making all  efforts to ensure the quality of  products or services could only give consistent results.

  • During his helm, Wipro’s BFSI division experienced one of the strongest growth rates- at 45% annualized between FY04 and FY09. 
  • In comparison, BSFI revenues of its top-tier peers increased at a CAGR of 33% during this period.  
  1. Commitment to Work on Track  :  
On the eve after his resignation from Wipro, Paranjpe said in an interview to Mint, for the last 24 years every day, he has been busy thinking about what to do for Wipro tomorrow.
“Now I will have to start thinking about what to do for myself.”

During his stay with Wipro he must have made several personal sacrifices to complete a job because that was the highest priority. The rare quality of leader is not in taking credits but in accepting full responsibility for failures, if any. After the Q3 results in 2010-11  where it was below market expectation  and losing business  to Nasdaq-listed Cognizant Technologies, he gave no excuse. “We  could have done better, but failed this time.”, was his comment.

  1. Systematic Planning :
Developing and using logical, step-by-step plans to reach goals.

Unprecedented economic situation put forward many obstacles in front of Wipro.  A different Customer behaviour IT Industry has to adapt – to the customer and to the new reality. Recessions do not last. Resilient companies do Which companies survive will depend on how they are managed now. This whole needed systematic planning.
To  pass through the rough patch Wipro had to Deliver more for less !!!  and creative solutions to business organizations were required  to generate business demand.

  1. Problem Solving : 
         The tenure of Paranjpe as CEO was full of turmoil across the IT industry. US recession had started in 2007  and it was spreading to Europe.  Satyam fraud raised the doubts over the ethical approach of entire Indian corporate world.  Here in India, Karnataka government imposed penalty for alleged tax evasion, the infamous SHELL case also surfaced.

When all things are going wrong the CEOs are required to identify the  root-cause of the problem or objectives and develop  strategy  in  the light of objectives, resources and constraints keeping  alternatives, wherever necessary.

 During such a turbulent period not only he sailed through the allegations neat and clean, but also kept the organisation on the growth trail without causing conflict. Under him operating profits increased by 20 percent to $1B. Considering the crisis it was a phenomenal achievement.

Assertiveness  :

Soon after he took over as CEO in Jan 2009, the World Bank disclosed that apart from Satyam Computer Services Ltd, it had barred Wipro Ltd and Megasoft Ltd from doing any work for it for “providing improper benefits to bank staff.”

He dared to confront problems and issues with the world bank directly. Speaking politely but firmly he put forward the facts that  the alleged “improper benefits” were not any form of illegal inducement and were in keeping with US law.

“When Wipro listed its ADR (American depository receipt) on the NYSE in 2000, we allotted shares to several people including (some employees) of prospective clients as advised by our managers to the issues Morgan Stanley and Credit Suisse,” Paranjpe said. “This was not barred under the SEC (Securities and Exchange Commission, the US stock market regulator) regulations and this is standard practice in the US.”

  1. Persuasion :
Paranjpe was known for his consensus building ability among Wipro Management. It was his ability to share and persuade that he did not find is strange to share the position of CEO with  Mr. Suresh Vaswani

To Knowledge@ Wharton in Miami during June’08  he said, “The best decision emerges when there are some counter views, when there's some amount of debate. Then, the right call gets taken. And what I've seen over the last three or four weeks that we've worked together, it's not that we're on the same page on everything, but finally the decision we have taken is the right decision. So, I think that is clearly, clearly bearing out.”

  1. Use of Influence Strategies :
            To grow globally needs use of  a variety of strategies to influence others successfully.
Developing professional or business contacts are required  with influential people  to get own things done. He had the network in place.

He represented Wipro and the IT Industry in various public forums including the Prime Minister's Task Force on Information Technology, the NASSCOM, and at leading global business schools.

Other  Posts :

Does money only motivates?

Case study Level 5 Leadership.

Godrej growth strategy in Asia and Africa's Markets

Explain the meaning of Globalization and list its characteristics.

Globalization means different things to different people. According to Deepak Nayyar, “It (globalization) can be defined, simply, as the expansion of economic activities across political boundaries of nation States. More importantly perhaps, it refers to a process of deepening economic integration, increasing economic openness and growing economic interdependence between countries in the world economy.

“The important characteristics of globalization are as follows:

(i)  Rapid growth in international financial transactions;

(ii)  Fast growth in trade, especially among multinational corporations (MNCs);

(iii)    Surge in foreign direct investment, largely contributed by MNCs;

(iv)       The emergence of global markets; and

(v) The diffusion of technologies and ideas trough rapid extension of a globalize transportation and communication system.

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Sunday, January 22, 2012

Does Money only Motivates?

On one of the HR site I came across the following  joke :
One day, three consultants, one from Wipro, one from Infosys and one from TCS, went out for a walk.

"Why don't we prove who is the best among ourselves?" 

Why not, said the other two.

The Infosian said "Let's have a test. Whoever makes this monkey laugh, works for the best firm".

Being a pure logical strategist, the person from TCS tried to make the monkey Laugh by telling jokes. The monkey stayed still.

As a more practical consultant, the Wipro guy tried to make funny gestures... No good, the monkey stayed put...

Now, comes the Infosian. Being the practical guy he was always trained to be, he whispered something into the monkey's ear, and it burst out laughing at him..

The other two were astonished. So the Wipro guy said "OK, let's take another test. Let's make this monkey cry!!"

So there they went again, applying the same methods as before. The TCS guy narrated sad stories, the Wipro guy made sad gestures, and they failed again...

Then, the Infosian again whispered something into the monkey's ear and oh! It started crying, patting the Infosian's shoulder!

The other two just could not believe their eyes! So the tcs guy said "OK, you've won twice. If you can win just this one, we will bow to you. Let's make this monkey run".

And he barked at the monkey and ordered him to run. Of course, it stayed where it was.. The Wipro guy, true to his type, pushed and prodded the monkey- still No go. comes Infosian, again, and whispers into the monkey's ear. The Monkey just takes off! It runs and runs as fast as it can

The other two surrendered.

They Said: "OK, we give up.

You're the best among us, and you work for the Best firm of the three. But please, please tell us your secret," they begged him.

"Well", said the Infosian , "The first time I made it laugh, I told I work for Infosys . The next time, I told the monkey how much I get paid it started crying.

And then I told that I was here for recruitment !!!

Above joke definitely must have been posted by some Infosian, past or present. However, it remains a truth that money alone can not be the motivating factor. The very first question every professional should ask to himself or herself, “Will I be proud of working here?”

Networth of a human being has many non monetary factors as well.  The environment, appreciation at work place are the other factors. But, the most appealing is does your organization stand behind you, when you are in need?  Many HR managers forget this giving excuses citing company policies. This is a point which differentiates a leader from others.
Best Corporate Leader

Ratan Tata got more appreciation for his support to Taj staff after terrorist attack than the liberal bonuses he distributes every year. According to a professor of HRM, “All is good about Birla group, but most of the employees there have a dissatisfaction as many of the group companies do not  have uniform norms. Closeness to “Babu” is must to get any favour.”

Create Team & Trust it
Till the year 2000 Wipro was leader, but soon it lagged behind and Infosys took over. Wipro Chairman Azim Premji  has reshuffled his management team many times in last one decade and changed his CEO three times. This all has  helped him to slip to the fourth position only, New born, Cognizant Technologies could also challenge the once leader.

The teams are developed with trust  and setting the right examples. According to a survey more than 80% Indian companies do not have clear HR policies. The HRM is side tracked and the unprofessional CEOs   move along with their team from one company to other with sole motive, sited in above joke, the money. Can they cultivate a healthy culture in the company?

If Indian corporate has to face the challenge of tomorrow, it needs to move away from the unprofessionalism. Let only human quality prevail. Greed for money is in the roots of corruption. Tata and Infosys have developed a comparatively more ethical business environment. Other entrepreneurs need to follow that before dreaming to imitate their success. 

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