The principles or transformation - I

THE QUALITY CONUNDRUM

How Indian Industry is managing quality?

In my column on May 15("Get the outside in, inside out"), I had briefly outlined the eight principles for transforming an organisation outlined by Shoji Shiba and Dave Walden. In the next few articles, I will discuss these principles in detail to provide a sense of how they can be applied in an organisation. The first two principles are about identifying the need for transformation and are, therefore, dealt together in this article.

Principle One defined by Shiba and Walden states that a visionary leader must do on-site observation leading to personal perception of changes in societal values from an outsider's point of view. It essentially requires the visionary leader to view things differently, basically from the point of view of an outsider.

Moreover, the leader needs to build a personal perception by conducting on-site observation. He, therefore, needs to put himself in the shoes of a third person and sense a change in the societal environment to capture new opportunities.

This principle enables the leader to identify the need for transformation of the organisation. The personal perception leads to developing a strong belief in the need for transformation, which forms the foundation of the success of the organisation change. In the early 1990s, I myself followed it for the transformation of Sona Koyo. The industry landscape was changing and if we had not perceived these symptoms of change, we would have perished.

Having perceived these symptoms of change by sitting on the periphery of the organisation and viewing it as an outsider, I was able to identify the weak signals in the society that would impact the organisation and our business. We then decided to join the first SME Cluster that had been launched by the Confederation of Indian Industry.

I have repeatedly used the first principle to obtain product ideas. For instance, the company has developed what we see as a new breakthrough product based on the crisis that we perceived from the signals received from the continuous oil price hike.

The first principle requires the leader to perceive the invisible societal change and then identify what the business transformational needs are. He must further develop a philosophy about how the business should be transformed. This belief and philosophy have to be strong in the mind of the leader and he must have the conviction not to give up in the face of resistance to transformation.

The ability to perceive change requires a deep and skilled perception of what is happening in the industry and in the world at large. The symptoms of technological, economic, social or cultural change can be at times weak and, therefore, difficult to perceive.

At other times, it may be difficult to decide whether it is really a signal of impending change or "noise". These perception skills can be developed using the power of images, since data speaks of the past and can be misleading.

The societal and economic change taking place in India has many weak signals of business opportunities, especially for products that serve the unmet needs of the bottom of the pyramid. I am sure that Ratan Tata, when he decided to work on his Rs 1 lakh car, must have sensed these weak signals. Today, while the car is still under development, the market projects a demand of millions of units.

In order to differentiate between the noise and the signals, the leader needs to be able to see the invisible and the unknown. In any given situation what can be seen is the visible, which is normally the effect. The cause of a given situation could often be invisible.

However, what is most difficult to comprehend is the unknown, which lies further beneath the layer of the invisible and will normally enable the leader to recognise the symptoms for change.

While some are able to perceive the unknown with out the use of tools, others need analytical tools to help them. Shiba's Language Processing methodology is one such tool that visionary leaders can use to build their personal perception of a situation through on site observation.

The cardinal rule for the leader to remember is that there is no substitute for on-site observation and proposing changes based on the need for transformation which might arise based on the analysis of the data gathered through on-site observation. I personally conduct on-site visits to rural India to be able to sense the weak signals and determine what could be the unmet needs of the bottom of the pyramid and these needs could be served through a sustainable business model.

Having perceived the signals for change and putting in motion some symbolic change process, the visionary leader is likely to encounter resistance to change. But the leader's determination must come into play here and he/she must never give up. This is Principle Two by Shiba and Walden in their book Breakthrough Management.

"Even though there is resistance, never give up ; squeeze the resistance between outside-in pressure in combination with top down inside instruction." (This principle has been explained in great detail in the article "Change and resistance").

The belief and vision of the leader needs to be so strong that the he never gives up. This is the only way forward for an organisation to launch the process of transformation.

In my next article, I'll discuss the next three principles by Shiba and Walden. These are essential for initiating the transformation process.

Dr Surinder Kapur is chairman, CII Mission for Manufacturing Innovation, and chairman and managing director, Sona Koyo Steering Systems