The hands-off strategist

THINK TANK: IMD, Lausanne President, Peter Lorange

Peter Lorange

Peter Lorange wishes all Indian names were as easy as Goa. He is fond of chicken biryani, but cannot pronounce the name of the dish. And he's in love with Thiruvananthapuram, but can't pronounce it properly.

Not that the president and Nestlé professor at the International Institute for Management Development (popularly known as IMD), Lausanne, is an Indophile.

Lurching in the back of a car as it careens through Mumbai traffic, Lorange says that of late, he's becoming more Swiss than Norwegian.

After 11 years with the Switzerland-based business school, that's probably understandable. IMD is one of the world's leading business schools; for the past 50 years, it's been known for its leadership programmes and the international orientation of its curriculum.

In India to network with his institute's alumni and meet company heads, Lorange talks about IMD as the highest-performing business school in terms of both customer (student) acceptance and financial parameters.

"If this school was listed on the stock exchange, it would have a high market value," he claims.

Lorange received his doctorate from the Harvard Business School, taught at the MIT Sloan School of Management and has been affiliated with the Wharton Business School as a director.

But for all his years behind the lectern, he's clearly not a professor who believes in just preaching. For the past 15 years, he's been putting the theory of the B-school into practice at a shipping company he owns.

"Running a company gives you a perspective of other things. It gives you a chance to be more respectful of business and businessmen when it comes to teaching," he says.

But why did he choose the shipping business? "Shipping requires key strategic decisions in ordering, selling, financing or chartering out a vessel. As an owner you need not be involved with the day-to-day operations. It's one of those few businesses that you can combine with being the CEO of a business school," he says.

The hands-off approach to management is something Lorange advocates not only for owner-run organisations; Lorange is convinced that even multinationals need not send executives from their headquarters to run operations around the globe.

"You need inspirational leadership, not the command-and-control based on hierarchy. The more you lead that way, the more you will be respected," he says.

Lorange lists some of the other concerns currently facing business strategists. The first one is to find opportunities that are not obvious to everybody else. The next is to understand how to take that strength and duplicate it across the globe so that the business becomes an international business entity. "That's very, very difficult," he says.

The professor has a word of advice for doing business in the present "extremely competitive" conditions. "Companies should not look at setbacks as disastrous. They should take it as learning opportunities and modify themselves to come up with innovative business solutions with speed and determination," says Lorange.

"If you have people to demonstrate that they have a track record of treating setbacks as learning opportunities and reacting quickly and that they deal with risk in a flexible manner, it is even better," he adds.

Lorange is obviously a great believer in people power; in fact, he prefers to link strategy closely with the human resources function.

According to him, companies do not need a chief strategic officer (CSO). "The CSO should be the human resource head. Strategy and high-level HR are merging," Lorange declares.

He elaborates: "Strategy has gone through circles. Some years ago we had strategic planning. We extrapolated what demand and supply would be. There was a planning gap where companies would build more capacities to meet.

But ultimately, that became mechanical and things never worked out quite that way." This was followed by competitive strategy where companies tried to understand if they were specialists or had the most efficient cost-driven operation, how they performed in relation to competition and so on.

"Today it's much more an issue of what you call HR-based strategic thinking," he says. Lorange adds that strategy is more an issue of being at the right place at the right time with the right team. Having the right competency is becoming a critical part of the right strategy, he says.

The professor, who firmly believes that the "only option for Indian business is to go global and develop strengths that are globally viable", says that a balanced strategy approach must be followed by companies.

"If you have a lot of short-term strategies that lead to outstanding profits, you will not be able to sustain your market value unless you also have a long-term strategy to grow sales," says Lorange.

As the car ride with Lorange through the Mumbai traffic comes to a halt, he comments that he prefers "working a lot".

But skiing and playing "a lot of tennis" are passions that remain. He's a fan of tennis ace Roger Federer because he's a wonderful and stylish player. And, of course, Federer is Swiss too.