IndiaThe New Ethos of Corporate Leadership

Presentation of Findings

Agenda

Overview: Where did we start from? Project Scope and Process

Research Methodology

Empirical Findings Competency Models International Comparisons Sector Analysis Scenario Analysis Motive, Styles and Climate

Where we started from...

Adaptation Coordination Output External Environment

• World-at-risk

• Geo-political dynamics

• Globalization

• Political Imbalance

• Poverty

• Infrastructure

• Health

• Literacy

• Environment

• Fiscal Deficit

• Performance Standards

Revenue,Profit,

StockholderValue

Products&

Services

BusinessStrategy

OrganizationalStructure/

Job Design

OrganizationalClimate

Policies,Procedures,LeadershipBehavior

People/Competencies

• Focus on Core Business

• Consolidation

• Technology-Enablement

• Customer focus

• It-enabled services

• “Bottom-of-pyramid”

• Cost--competition

• “World-Class”

• Process re-engineering

• Matrix relations

• “Atomisation”

• Decentralisation

Who’s going to create the conditions for

success?

India’s Vision

A Developed India by 2020, or even earlier, is not a dream. It need not even be a mere vision in the minds of many Indians. It

is a mission we can all take up - and succeed.

President APJ Abdul Kalam

What are the Challenges India faces?

India’s Challenges

Economic/ Industrial:

• Globalisation

• Fiscal Deficit

• Performance Standards

• Productivity

• Infrastructure

• Labour Laws

Political/ Government:

• Conflicting interests/ Instability

• Bureaucracy

• Corruption

• Slow pace of reforms

• Regional Imbalances

Social/ Environmental:

• Healthcare

• Education

• Population

• Pollution

International

• Geo-political tension

• Cross-border terrorism

India’s Competitive Advantages and Disadvantages According to World Competitiveness Report 2001...

Competitive Advantages

Large availability of scientists and engineers,

Strong potential for “Catch-up” growth,

Easy access to credit,

Low exchange rate premium,

Strong IT training and education,

Local availability of information technology services, and government success in ICT promotion,

Quality of management schools

Competitive Disadvantages

Lack of access to foreign capital markets,

High average tariff rate,

Stringent hiring and firing practices

High government deficit,

Extensive distortive government subsidies

Permits and time taken to start a firm,

Large-scale irregular payments in tax collection and government procurement

The strategies India must adopt to realise its Vision according to Centre for International Development at Harvard...

Economic Growth

Reducing Fiscal Budget: Disinvestments in public sector Closing down loss making public

sector units Reducing subsidies Reducing the size of bureaucracy Reducing infrastructure expenditure

by State

Further opening up economy for trade and FDIs

Reducing tariff Reforms in labour and exit policies

Commercialise infrastructure sector

Improving infrastructure in coastal areas and Gangetic Valley

Human Development

Healthcare: Increase spending to 3% to GNP Create awareness Political will and private sector

support Improve grass-root level services Leverage IT

Education: Increase to 5% to GNP Follow Best Practices and

incentivize stakeholders Political will and private sector

support Improve grass-root level education Leverage IT

Research Methodology

Project Scope and Process

Step 1.

Research and Planning

Step 2.

Instrumentation

Step 3.

Data Collection

Step 4.

Coding and Concept Formation

Step 5.

Validation

Objective

• To fine tune the project plan and communication strategy

Objective

• To administer instruments to the sample of CEOs which provide an in-depth understanding of their motives, values, emotional intelligence, leadership styles and the climate they create at the work place

Objective

• To collect rich behavioural data from multiple sources, including the CEOs, government, other industry leaders, media, academicians, etc.

Objective

• To analyse and code the data collected using our Generic Dictionary and Global Data Base

• To develop the competency model and dictionary which characterises outstanding leadership in India

Objective

• To collect data and validate the competency model

This is where we are today...

Research and PlanningClear Sampling Criteria were identified...

For BEIs and Industry Panels: Cross Industry Cross Ownership Patterns Consistent Financial Performance Evidence of Social Contribution No Evidence of “Controversy”

For Media and Academic Panel: Thought Leadership Reputation

Research and PlanningDetailed Economic Analysis was carried out:

Performance of both public and private sector organizations analysed over the past 3 years using: Annual Turnover Profit After Tax Earnings per Share

Sources: Business Journals and Newspapers

Research and PlanningThe following public sector organizations were identified...

IOC

ONGC

SBI

BPC

BHEL

GAIL

NALCO

Neyvelli Lignite

Container Corporation

RCF

Hindustan Newsprint

SAIL

Power Grid

HAL

BEL

NTPC

NHPC

RITES

Indian Airlines

AAI

Corporation Bank

Shipping Corporation

MTNL

Scooters India

Infosys Technologies

Wipro

Tata Sons

Reliance Industries

AV Birla Group

Bajaj Auto

Bharti Telecom

ICICI

Mahindra & Mahindra

Dr Reddy’s Lab

Jet Airways

L&T

HDFC

HLL

Hero Honda

TELCO

Swaraj Mazda

Titan

ITC

BSES

Britannia

Ranbaxy

Mpshasis/ BFL Software

Research and PlanningThe following private sector organizations were identified...

Research and PlanningMore Industry Luminaries were identified..

Gurucharan Das (Richardson & Hindustan / P&G)

Vaghul Narayan

S.M. Dutta

Kurien Varghese (Amul)

Sam Pitroda

P.M. Sinha

Captain Nair

Dr Nair (Ex HAL)

Rajendra Singh (Ex NTPC)

Mr Wadhawan (Ex PESB Chairman)

Research and PlanningMembers from Media and Academics were identified for their unbiased perspectives...

Business Today (R Sukumar, Dy Editor, Delhi)

Business World (Indrajit Gupta, Sr Associate Editor, Mumbai)

Business India (Nazneen Karmali, Consulting Editor)

Business Standard (Dr Haseeb Drabu, National Editor)

CNBC (Govind Ethiraj)

Economic Times

Financial Express

PN Khandwalla (IIM)

Madhukar Shukla (XLRI)

Prof. A.H. Kalro (IIMK)

Research and PlanningSelection Criteria for BEIs were identified...

For BEIs Atleast 1 year on the job Track record

Data CollectionFinally 16 CEOs from Private Sector participated...

21st Century Batteries (Mr Chandra Mohan)

Punjab Tractors (Mr. Yash Mahajan)

Hindustan Levers (Mr Keki Dadiseth)

Hindustan Levers (Mr M.S. Banga)

Harvard Business School (Mr V. Kasturi Rangan)

IBM (Mr Ravi Marwaha)

ICI (Mr Aditya Narayan)

TISCO (Dr J.J. Irani)

Titan (Mr Xerxes Desai)

Mphasis (Mr. Jerry Rao)

Infosys (Mr N.R. Narayan Murthy)

ICICI (Mr K.V. Kamath)

Telco (Mr Ravi Kant)

HDFC (Mr Deepak Parekh)

ITC (Mr Y.C. Deveshwar)

L&T (Mr. A.M. Naik)

IOC (Mr M.A. Pathan)

NTPC (Mr. C.P. Jain)

Corporation Bank (Mr. K. Cherian Varghese)

Shipping Corporation of India (Mr. P.K. Srivastava)

BHEL (Mr K.G. Ramachandran)

Power Grid Corporation (Mr. R.P. Singh)

Bharat Electronics Limited (Dr. V.K. Koshy)

IPCL (Mr Ramanathan)

GAIL (Mr C.R. Prasad)

Hindustan Paper Corporation Limited (Mr Raji Philip)

BPCL (Mr U. Sundararajan)

ONGC (Mr. B.C. Bora)

National Hydroelectric Power Corporation (Mr. Y. Prasad)

AAI (Mr. D.V. Gupta)

Scooters India Limted (Dr. A. Sahay)

Rashtriya Chemicals and Fertilizers (Mr. D.K. Varma)

Data CollectionFinally 16 CEOs from Public Sector participated...

Data CollectionData was collected from 4 other sources were conducted...

From the Media: Mr Indrajit Gupta (Business

World) Mr. Govind Ethiraj (CNBC) Ms Sudeshna Sen (Economic

Times) Mr R. Sukumar (Business Today)

From the Academics: Dr Pankaj Ghemawat (Harvard

Business School) Dr. P.N. Khandwalla (Ex IIMA) Dr A.H. Kalro (IIMK) Dr Madhukar Shukla (XLRI)

From the Government: Dr Raja Ramanna (MP, Rajya

Sabha) Mr T.K.A Nair (Chairman PESB) Mr A.C. Wadhawan (Ex PESB) Mr Buch (PESB) Mr R.S.S.L.N Bhaskaradu

(PESB)

From the Industry: Mr P.M. Sinha (Ex Pepsi) Mr M.B. Lal (HPCL) Mr M.S. Ramachandran (IOC) Mr Subir Raha (ONGC) Dr Kanan (IOC) Mr Subodh Bhargava (Ex CII,

Eicher)

Instrumentation DataPSE, MSI and OCS were administered on-line...

8 CEOs responded to the PSEs

9 CEOs responded to MSI and OCS

23 direct subordinated gave feedback to the CEOs

Coding and Concept Formation

The BEIs were coded against 22+ global competencies by accredited coders in Asia-Pacific

Global thought leaders have been approached to provide insights in data analysis:

Dr Nitin Nohria (Harvard Business School) Dr Rakesh Khurana (Harvard Business School) Dr Richard Hackman (Harvard University) Jim Collins (Author of “Built to Last” and “Good to Great”) Dr David Winter (University of Michigan)

A global team of Hay consultants from Asia, US, UK and Pacific UK are involved in concept formation, led by Signe Spencer (Author of “Competence at Work”)

Senior Leaders from the McClelland Centre including Dr Mary Fontaine and Dr Jim Burruss are adding insights to Concept Formation

Validation

The competency model is to be calibrated after another round of one-one interviews, BEIs

The model will be validated in an expert panel

The final model is likely to be communicated in February

The Ethos of Corporate Leadership in India

Findings from an Empirical Study into the Profile of Indian CEO Competencies

Indian CEO Competency Model

What are the personal characteristics of CEOs that distinguish superior performance in India?

MANAGING ENVIRONMENT

BUSINESS EXCELLENCE

INNER STRENGTH

ENERGIZING THE TEAM

Indian CEO Competency Model…is made up of 4 key clusters

MANAGING ENVIRONMENTNetworkingOrganizational AwarenessStakeholder Influence

BUSINESS EXCELLENCEAdaptive ThinkingEntrepreneurial DrivePassion for Action

INNER STRENGTHTranscending SelfExecutive Maturity

ENERGIZING THE TEAMTeam LeadershipDriving ChangeEmpowering Others

Indian CEO Competency Model…and 11 competencies

Cluster: Inner Strength

Transcending Self: Courageous dedication to the super-ordinate goals: doing what is right and what will make India great (level 2)

Executive Maturity: Emotional wisdom to respond to others and embody the aspirations of the organisation (level 2)

Cluster: Inner StrengthIllustration: Transcending Self

Level 1: Belief

• Inspires action by focussing on how organisation strategies contribute towards the larger well being of the nation or the welfare of the common public.

• Inspires action by focussing on how organisation strategies contribute towards making India a great country.

Level 2: Ethics

• The individual is ethical in his / her behaviour. Promotes similar behaviour in colleagues.

• Acts with fairness, showing favor to no one.

Cluster: Inner Strength Illustration: Transcending Self (Cont’d)

Level 3: Dedication

• Acts from his / her conviction even if it leads to an uncomfortable situation.

• Persists in working according to his/her conviction, against obstacles, discouragement from others, and other difficulties.

• Is willing to spend considerable resources on projects of public good – for their own sake (beyond what is required or mandated).

Level 4: Courage

• Shows the courage to do the “right” thing even in face of enormous undue external pressures / influence.

• Is willing to stake his / her career or even life in doing the “right” thing. Trusts that

Cluster: Business Excellence

Adaptive Thinking: Strategic insight into business, adapting methods and technology to the Indian situation and to address unmet needs (with a special focus on the Bottom of the Pyramid) (level 3)

Entrepreneurial Drive: Unleash the spirit of entrepreneurial and competitiveness to find new horizons of growth (level 3)

Passion for Action: Foresight plus fierce and unrelenting passion to take action now, to improve the future (level 3)

Cluster: Business Excellence Illustration: Adaptive Thinking

Level 1: Understands the business

Has a complete understanding of how the business operates and makes money or delivers value to its stakeholders. Can describe this in simple terms to others.

Uses own understanding of the business to pinpoint priorities and actions needed to ensure efficient and profitable operation.

Level 2: Understands the environment in which the business operates

• Formulates plans and approaches to maximise and leverage opportunities for the business, taking into consideration how best to meet customer needs and position the business against competitors in the sector.

Indian CEOs focus on how to leverage the most advantage from markets they serve by, for example, meeting the unexpressed or unmet needs of customers or end-users

Most, this involves focusing on how to harness the economic potential of selling to the “the bottom of the consumer pyramid” in India.

Cluster: Business Excellence Illustration: Adaptive Thinking (Cont’d)

Level 3: Shows commercial dexterity

Uses innovative ideas or approaches to ensure business plans and strategies are profitable and viable in India.

If one method (manufacturing technique, source of capital, business practice….) does not work well here, finds or adapts another

For example, sources world class business practices and technology from any corner of the globe and identifies how to modify and successfully apply these to the prevailing conditions in India (e.g. social, political, environmental).

Level 4: New Strategic Insight

Modifies or redirects strategic efforts or forge a new set of strategic imperatives to ensure the organisation continues to prosper.

Redefines the organization’s business and direction, to respond effectively to the changing environment and opportunities.

Cluster: Energizing the Team

Team Leadership: Inspire and protect their team, enabling excellent team performance (level 3)

Driving Change: Lead the organization to implement and embed sustainable change (level 3)

Empowering Others: Delegates authority to allow others to act with purpose and ownership (level 3)

Cluster: Energizing the Team Illustration: Driving Change

Level 1: Planning the implementation of a change initiative Once a need for change in the organisation’s strategy or activity has been identified,

fully embraces and plans for the needed response. Thinks through the potential pit falls and required steps to follow. Identifies the required resources and key manpower to enlist in the delivery of the

change strategy.

Level 2: Articulating the change vision or the new strategy

Communicates the vision for change to the organisation. Conveys a compelling and enlightened message to the organisation that clearly

articulates the change message. Uses a variety to strategies and communication methods to get enrollment and support

of the organisation for change. Engages his her or her board and broader organisation in rising to the challenge of the

new strategy. Consistently communicates the change agenda at every opportunity. Ensures that own behavior is consistent with the change message

Cluster: Energizing the Team Illustration: Driving Change (Cont’d)

Level 3: Taking action to cement the change

Sets up internal systems and processes that support the change. May build organisational capability through training and development practices,

recruitment, , Initiates or supports the set up and inculcation of key systems (SAP, HR systems,

purchasing systems etc.) to ensure the change is implemented internally.

Level 4: Makes change public Takes calculated actions to ensure the larger community adopts or supports the

change initiative. These actions ‘burn the bridges’ so there is no going back. May use the press, ministers, or other community figures to send the message to the

broader community.

Cluster: Managing the Environment

Networking: Reaches out to an extensive network for ideas and problem-solving (level 2)

Organisational Awareness: Understand how things get decided and done in a particular organization (level 2)

Stakeholder Influence: Uses customised strategies to influence specific stakeholders (level 2)

Cluster: Managing the Environment Illustration: Networking

Level 1: Looks upward

Continuously updates and seeks help from superiors or key people in superior formations (e.g. government ministries).

Level 2: Looking outside

• Seeking out and talk with people in business closely related to their own

• Key customers• Suppliers• Business associates• Former colleagues• Colleagues far removed in the organisational hierarchy

Cluster: Managing the Environment Illustration: Networking (Cont’d)

Level 3: Going to sources that are not obvious

• Seeking out information or seeking help from persons / agencies not obviously connected with the business inside the country. These may include academics, people in other industries, people in government ministries other than the one most connected to the leader’s business.

Level 4: Going abroad

• Seeking out information or seeking help from persons / agencies not obviously connected with the business outside the country. These include embassies, foreign academics, businesses in other countries. These contacts are used to gain perspective on business practices, form alliances or joint ventures, supply materials or equipment, or to provide entrance to a distant market.

Algorithm: Formula for Success

At least 6 out of 11 competencies at or above the target level

Competencies should be spread over at least 3 or 4 clusters

The CEO must have at least one super strength with one competency at level 4

This formula will predict success in at least 75% of cases

Prevalence of Competencies

As a group, how many of the CEOs consistently show the competencies at a level where they are adding value to their organizations?

Prevalence of Indian CEO competencies

% of Outstanding CEOs at target level

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20

40

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Transcending Self Executive MaturityAdaptive Thinking Entrepreneurial DrivePassion For Action Team Leadership

Driving Change EmpoweringNetworking Organisational AwarenessStakeholder Management

Inner Strength Business Excellence Energizing The Team Manage The Environment

What do the patterns suggest?

Overall, the CEOs show clear strengths across all 4 clusters:

When leading the team, the CEOs tend to use Driving Change When managing the business, the CEOs tend to use their Entrepreneurial

Drive and Adaptive Thinking

International Comparisons

Inner Strength is unique to India

Managing the Business has a uniquely Indian content and focus (bottom of the pyramid and adapting technology)

Other clusters are comparable to CEOs in other cultures

Indian CEOs don’t use insight into individuals to “get the right person for the right job” (Potential Insight)

Sector Analysis:Are different competencies appearing or adding value in different sectors?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Private Sector Public Sector

Inner Strength Business Excellence Energizing The Team Manage The Environment

Percentage of CEOs meeting the target level

Statistically Significance Differences between Public Sector and Private Sector CEOs

Public Sector CEOs are significantly more Empowering Others than Private Sector CEOs (p=0.003)

Public Sector CEOs are Energising their Team more (p=0.07)

Public Sector CEOs demonstrate higher levels of Transcending Self (p = 0.06)

Situational Analysis:Are different competencies appearing or adding value in different situations?

Method, Step 1

Group Events from Behavioral Event Interviews: Building up existing business (Horizon 1) Turnaround Start-up a new business operation (Horizon 2) Lobbying

Method, Step 2

Within each group of stories, we sorted by the outcome: clear, strong (quantitative) success partial success little or no success

Method, Step 3

Within each group, we looked for patterns contrasting the more successful with the less successful stories baseline (shared by most stories) added value (appears more in the most successful stories) counterproductive (appears in less successful stories

only)

Building Organisational Capability / Capacity (Horizon 1)

Baseline: Networking (level

2) and Adaptive Thinking (level 2-3)

Counter-Productive:

When less successful at this task, leaders tend be more self driven (Entrepreneurial Drive and Passion for Action)

(p=0.15)

Added Value: More

Energizing the Team competencies, esp. Empowering Others (level 3) and Driving Change (level 3) (p= 0.04)

Turnaround

Baseline: Lots of

competencies in all the stories, at quite high levels

Transcending Self (generally as ‘making India great’, sometimes with personal courage) and/or Executive Maturity

Passion for Action and/or Entrepreneurial Drive

Driving Change level 3

Empowering Others (various levels)

Counter-Productive:

Lack of Adaptive Thinking (didn’t adapt methods to the situation) and Lack of Networking (until the operation was already in trouble).

Added Value: Adaptive

Thinking level 4 (not just focusing on fixing the problems, but finding a new strategy for the present and the future)

Launches and Start-Up (Horizon2)

Baseline: Entrepreneurial

Drive, Adaptive

Thinking, Either

Transcending Self or Executive Maturity.

Counter-Productive:

Lack of Adaptive Thinking (didn’t adapt methods to the situation) and Lack of Networking (until the operation was already in trouble).

Added Value: Energizing the

Team cluster (Driving Change/Team Leadership and Empowering Others)

p=0.02

Lobbying for changes

This task is frustrating and difficult for such growth-oriented leaders, even when they are successful. It does not seem to come naturally to many of them.

Baseline: Organizational

Awareness 2+ and Stakeholder Influence 2+ are used by most leaders in lobbying

In successful stories, leaders tended to use somewhat more sophisticated and strategic influence methods (p=0.08)

Counter-Productive:

Adaptive Thinking does not help, and was demonstrated only by those who were unsuccessful

Added Value: When they

were successful, leaders used more Executive Maturity (to manage the stress) and Transcending Self (appealing to the greater good of India) (p=0.01)

Looking for Capital

“Lobbying” does not apply to looking for capital investments. For capital investments: Do use Adaptive Thinking (make a strong business case) Use Stakeholder Influence methods

Competencies in Situations

Building the Organization Turnarounds Start-Up Lobbying

INNER STRENGTHTranscending the Self at least at least adds Executive Maturity one of these one of these valueBUSINESS EXCELLENCEAdaptive Thinking level 2-3 LEVEL 4 level 3 DON'T DOPassion for Action less here one of theseEntrepreneurial Drive less hereENERGISING THE TEAMTeam LeadershipDriving Change level 3 level 3 as much as Empowering Others level 3 various levels possibleMANAGING THE ENVIRONMENTNetworking level 2Organizational Awareness higher levelsStakeholder Influence higher levelsbaseline/ shared counterproductiveadds value

Findings: Motives of Indian CEOs Intrinsic drivers of Achievement and Personal Excellence are prevalent amongst Indian CEOs

Motive Profiles of Select Indian CEOs (n=8) against Global Leadership Profiles

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Achievement Affiliation Power

_ International

_ India

Findings: Leadership StylesIndian CEOs have a balanced portfolio of styles, with Pace-Setting style being dominant

Leadership Styles Findings

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Findings: ClimateIndian CEOs create world-class organizational climate in their work-unit

Organizational Climate Findings

94 98 97 94 9590

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66

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Summary

Indians are strong against International Benchmarks

Indians are very growth focused

Indians are unique: inner strength adaptive thinking

Vulnerability: Using insight into individuals to deploy manpower optimally

Final Thoughts

We have identified the DNA of Excellent Corporate Indian Leadership

We have a template for leadership in different kinds of situations

Moving forward India has a model of leadership that will drive economic growth