Authors: Suhas Mehra and Beloo Mehra. Published in the August 2016 issue of Sraddha, Vol. 8 (1), pp. 106-120.
CONTINUED FROM PART 2
The internal dynamics between an organisation and its members play a very critical role in an organisation’s success, and this is particularly true for the new organisations trying to formulate themselves around what they see as their core idea. Arthur Stinchcombe[i] has concluded that the failure of new organisations is often due to three internal factors—the team’s inability to develop working relationships, individuals’ incapacity to discover and fit in their new roles, and the failure to split financial rewards among themselves. Kaplan and his team studied sixty-seven internal investigation memos from 11 venture capitalists and reported that internal weakness accounted for 61% of the failure of the start-ups, and leads the list of the causes of failure.[ii]
In the beginning stages when a start-up is in more fluid form, its search for its raison d’etre may happen in fluid and somewhat crude ways, impacting its ability to create an organisational structure around that core. Only with passage of time as it organises itself more coherently and concretely around that deeper core, it becomes capable to give a reason for its individual workers to work together. In the absence of such an effective outer cohesive structure built around the deeper, inner core, a start-up may fail. This would mean that the odds are heavily stacked up against the start-up to succeed. But when they do succeed they generally end up revolutionising the industry. So there must be something very positive built into their DNA to succeed. We will touch upon this aspect later in this article. But first, we need to explore how a collective’s self-discovery process may begin.
From Vagueness towards Objectivity
The initial steps of such a self-discovery process are objective in nature.
“…its first definite self-consciousness is objective much more than subjective… This objectiveness comes out very strongly in the ordinary emotional conception… its most outward and material aspect…”[iii]
This is true at both the individual and collective levels. A simple example will help us understand this. At a conference or workshop or any such activity where strangers meet for collective learning the collective-sense is very loose and vague in the beginning. We find the individuals staying more into themselves keeping aloof. Often right at the beginning the attendees are generally informed about the basic physical aspects of the venue, like the location of the drinking water, washrooms, food arrangements etc. During the introductory session, we find people sharing about themselves where they primarily focus on more objective markers of their identity such as academic and professional qualifications. The actual event opens with a statement of the goals, schedule, and other such objective aspects.
We see the similar thing happening at most organisations, where at first the objective stages of self-discovery express themselves through their association with the outer physical aspects, such as the campus, building, company’s financials, its products and services, its logo etc. Such associations are a move away from a loose and vague sense of oneself toward building an emotional connection with the organisation, based on more or less objective elements.
“When it does succeed in getting out of the stage of vaguely conscious self- formation, its first definite self-consciousness is objective much more than subjective…This objectiveness comes out very strongly in the ordinary emotional conception of the nation which centres round its geographical, its most outward and material aspect.”[iv]
One of the most important physical indicators of a business organisation’s performance is its financial parameters, which in a very primal way forms a bond that connects its various constituents—employees, shareholders and customers. An annual or quarterly report of the company performance almost always begins with the reporting of its financial health. For instance, take a look at the opening paragraph of Microsoft’s 2012 annual report:
“Last year was a big year – we delivered strong results, launched fantastic new products and services, and positioned Microsoft for an incredible future.
For fiscal year 2012, revenue grew to a record $73.7 billion. We also maintained strong cost discipline resulting in cash flow from operations of $31.6 billion, an increase of 17 percent from the prior year. In addition, we returned $10.7 billion to shareholders through stock buybacks and dividends.”[v]
In its 2015 letter to the shareholders, we notice something different. Contrary to the norm of presenting the financials at the very beginning, the new Microsoft CEO presented his vision for motivating, inspiring and empowering every person and in organisation to achieve more:
“We as a company stand for deeply understanding the needs of customers, translating that understanding into products that people love and ultimately into the success our customers have with our products. It’s that last part that is our key motivation. The entire Microsoft team is inspired to bring their best ideas and efforts every day to build products people love, and to advance our mission to empower every person and every organisation on the planet to achieve more.” [vi]
Such an opening statement suggests a move toward a greater subjective dimension of the company’s vision and focus. In fact such a trend has been seen for quite a while now. Statistical Analysis Software (SAS) Institute is a world leader in intelligence software services. So great is the influence of SAS that of “Fortune’s largest 100 companies, 98 are SAS customers.”[vii] Jim Goodnight (CEO and co-founder of SAS) believes that, “Innovation is the key to success in this business, and creativity fuels innovation…Creativity is especially important to SAS because software is a product of the mind. Ninety-five percent of my assets drive out the gate every evening. It’s my job to maintain a work environment that keeps those people coming back every morning.”[viii]
A strong employee-orientation is the key to SAS’ success as well as customer satisfaction. This subjective dimension to a company’s focus is different from the usual ‘customer-first’ approach, which is being suggested in the statement quoted earlier from Microsoft report. To give another instance from SAS’ focus on its employees’ sense of well-being, here is something from Freiberg’s book:
“Goodnight’s gutsy coddle-the-employee policy takes many forms. You’re expected to work only 35 hours a week. Your sick days are unlimited and can be used to care for ailing family members. Company specialists can arrange expert help for your aging parents. Your benefits are extended to domestic partners. If you work at headquarters, you can take your preschool kids to one of the two on-site and two off-site Montessori-based childcare centres for $300 a month, meals included.”[ix]
SAS isn’t the only one. We find another example from Hal Rosenbluth, who in his book “The Customer Comes Second: Put Your People First and Watch ’em Kick Butt [x]” shared the secret of success of his company, Rosenbluth International. For him it is simple – concentrate on employees first and customers second. This idea, he says, has worked for him for more than two decades and has helped transform his company from a small family business into a global industry leader grossing over $6 billion.
Putting employees first is gaining more and more momentum worldwide and Indian organisations have not been left behind. For example, HCL Technologies sparked a revolution in the field of IT services. Vineet Nayar, HCLT’s celebrated CEO, first defied the conventional wisdom that companies must put customers first, and then turned the hierarchical pyramid upside down by making management accountable to the employees and not the other way around. By doing so Nayar kindled the imagination of both the employees and customers and set HCLT on a journey of transformation that has made it one of the fastest-growing and profitable global IT service companies, and according to BusinessWeek, one of the twenty most influential companies in the world.[xi]
Another similar concept that has been gaining momentum for some time is Servant Leadership. For example, James H. Blanchard, chief executive officer of Synovus, likes to call himself a “servant leader.” He sees his mission as to be a provider for the employees, to give them whatever they need to thrive including inspiration, training, resources, and peace of mind. Servant leadership has delivered all sorts of benefits to Synovus’s employees, and to its bottom line. The corporation consistently ranks high on Fortune’s list of “the 100 best companies to work for in America.”[xii]
This idea of servant leadership has been a part of the Indian political thought since ages, in a different form. “The king was only the guardian, executor and servant of the Dharma, charged to see to its observance and to prevent offences, serious irregularities and breaches. He himself was bound the first to obey it and observe the rigorous rule it laid on his personal life and action and on the province, powers and duties of his regal authority and office.”[xiii] Not surprisingly, this idea was invoked very powerfully by Prime Minister Modi after his swearing-in ceremony when he referred to himself as the country’s ‘pradhan sevak’, prime servant.
Several organisations have been innovating their organisational structures building upon the core concept of employees first. A possible reason for this change could be purely economics, in the sense that satisfied employees would bring in greater performance. But a purely economic advantage will be short lived because employees may soon see through the hollowness of the ‘employee first’ policy which would make it open to failure. Also, most of the high-performing organisations in their evolutionary journey begin to realise that though the financial parameters are important they still are backward looking parameters, because they are based upon past events and subject to market oscillations.
So there has to be something deeper than the objective of greater economic performance behind this trend of greater employee orientation. Microsoft’s CEO Satya Nadella, in an email to his employees, emphasised leadership’s role in terms of facilitating continued growth and self-development of the employees:
“Leadership is about bringing out the best in people, where everyone is bringing their A game and finding deep meaning in their work… We fundamentally believe that we need a culture founded in a growth mindset. It starts with a belief that everyone can grow and develop; that potential is nurtured, not predetermined; and that anyone can change their mindset.” [xiv]
TO BE CONTINUED…
[i] Arthur Stinchcombe. 1965. Organisations and social structure. In JG March (Ed.), Handbook of Organisations: 153–193. Rand McNally: Chicago.
[ii] SN Kaplan, Stromberg P. 2004. Characteristics, contracts, and actions: Evidence from venture capitalist analyses. Journal of Finance 59: 2173–2206.
[iii] Sri Aurobindo. CWSA, Vol. 25. p 36
[v] Microsoft Corporation. 2012. Annual report. Shareholder letter. https://view.officeapps.live.com/op/view.aspx?src=http://www.microsoft.com/investor/reports/ar12/docs/2012_Annual_Report.docx
[vi] Microsoft Corporation. 2015. Annual report. Shareholder letter. https://www.microsoft.com/investor/reports/ar15/index.html#shareholder-letter
[vii] Kevin Freiberg, 2008. Guts!: Companies that Blow the Doors off Business-as-usual. The Crown Publishing Group. E-book 29.2
[ix] Kevin Freiberg, 2008. E-book 29.2
[x] Hal Rosenbluth & Diane McFerrin Peters. 2002. The Customer Comes Second: Put Your People First and Watch ’em Kick Butt. Harper Business; Revised edition.
[xi] Vineet Nayar. 2010. Employees First, Customers Second: Turning Conventional Management Upside Down. Harvard Business Review Press. E-book.
[xii] Kevin Freiberg, 2008. E-book 16.8
[xiii] Sri Aurobindo, CWSA, Vol. 20, p. 392
[xiv] Exclusive: Satya Nadella reveals Microsoft’s new mission statement, sees ‘tough choices’ ahead. GeekWire. http://www.geekwire.com/2015/exclusive-satya-nadella-reveals-microsofts-new-mission-statement-sees-more-tough-choices-ahead/