Organisations which have been around for many years develop competencies in specific areas over a period of time. They, however, start stagnating when they become complacent with their past achievements; allow bureaucracy to creep in to the extent that they lose internal and external customer responsiveness; become excessively focused on showing top line growth while compromising on profitability and not aligning to their core competencies. They lose the agility to spot in advance emerging market, technology and business trends and take leadership positions, and thus lose the ability to ensure continuous sustainable growth.
This is often detected only after one or more factors have set in deeply in the organisation, and course correction becomes extremely difficult. People get used to the prevailing way of doing things; any proposal to change is met with passive or active resistance at different levels.
Managing change in such a situation is about changing established mindsets. It demands constant, clear and inspiring communication through various channels for everyone to achieve their true potential. It needs to be backed up with organisational structures and focus, and process-related changes. The end result should achieve a framework of great ability with great agility to enable continuous sustainable growth.
We embarked on such a change initiative in CMC post acquisition by the Tata group, terming it C-Change – Ability to Agility. We have experienced the initial intended results, though it is still very much work in progress.
One of the pioneering technology companies in India, CMC is remembered for its contribution to computerisation of passenger reservation as well as freight management systems of the Indian Railways, which have been hailed as among the largest — and most successful — IT projects globally. Equally notable were CMC’s IT solutions for ports, its fingerprint matching and tracking programmes for law enforcement, its contribution to power and other utilities through Supervisory Control And Data Acquisition (SCADA) solutions, its satellite-based vehicle tracking applications and its contribution to the Bombay Stock Exchange and Central Depository Services (CDSL) in the capital markets, among others.
Soon after the visionary founding team led by Dr PP Gupta retired in the early 1990s, the technology missionary spirit of the company dissipated. This led to loss in top-notch talent. Opportunities were lost and financials became poor in comparison to competitors. Proactive customer engagement was replaced by complacency. Innovation and R&D were replaced by low-margin trading of hardware. The brand lost its hard-won edge and deteriorated in value.
When the government woke up to the woes that had set in at the pioneering company and decided to re-energise it through strategic sale to the private sector in 2001, the Tata group, which had a healthy respect for CMC’s early technology accomplishments, came forward to nurse it back to health and growth. CMC became a 51 percent subsidiary of Tata Consultancy Services (TCS) in 2001.
CMC 2.0 was all about re-energising, transforming and turning the organisation around from a situation of uncertainty and volatility to a position of consistency in revenues, profitability, and focus aligned with its core competencies. It called for a major change in the mindset of the people, transforming their outlook from a government-centric mindset to a global mindset capable of asserting itself as a value accelerator to the parent TCS, and also setting the framework to have global aspirations worthy of its potential in the global markets. The last ten years have been a complex journey and today we can say with confidence that we have progressed quite a bit in that direction with the support of the governing board of directors, particularly S Ramadorai, chairman, CMC; the TCS management team; and by market synergies enabled by being part of the Tata group.
Personally it has been a great challenge and a learning opportunity for me. On a personal aside, when I graduated from IIT Bombay in 1981, I had an offer from TCS as well as CMC and I chose TCS. Twenty years later I got the opportunity to become part of CMC as well!
We had quite a few challenges to overcome. The financials were weak with operating margins of around 4.3 percent. The US subsidiary had become dysfunctional and almost all revenues accrued from the government sector in the Indian market. These were the external manifestations of a deflated mindset and approach and the resultant neglect at various levels within the organisation.
However our due diligence had shown that there were plus points too in terms of strength in the Indian market, a valued brand identity, especially in the government sector, and a culture of innovation. What was missing was strong employee engagement and connect.
This meant there was none of the needed unrelenting focus on the right business mix in line with core competencies of the organisation and sustainable profitability considerations, and failure to say ‘no’ to value-eroding businesses — which shored the top line but eroded the bottom line. There was no appreciation of current competition and gaps in customer-centric orientation and agilities. There was no process-based delivery excellence ensuring consistency, rigorous quality management systems and world-class processes. There was poor recognition of the need for development of replicable solutions based on R&D assets that were in keeping with emerging technology trends, in order to move to the higher end of profitability through systems engineering and integration and development of asset-based verticals.
We summed up the task ahead in the slogan, ‘C-Change - Ability to Agility’, and started evangelising in order to galvanise the organisation into action.
As is the case in any serious change in organisational culture, it was not easy or quick. Despite many strategy sessions of senior management and some infusion of new blood at senior levels, it was an uphill task to get alignment in the organisation with our strategic goals; it was difficult to change entrenched practices and habits. At times it was felt that the change process was too slow. One colleague compared it to an oil super tanker turning — a painfully slow process. One had to be firm with the cynics and encourage those with fire in their bellies. Moreover, one had to accomplish all this with the highest ethical and people-centred standards of TCS and the Tata group.
Within a decade after the TCS takeover of CMC, the company’s margins had grown from 4.3 percent to just a little below 20 percent at the end of FY2010-11.
CMC’s adoption of the Tata Business Excellence Model has helped in setting up processes related to business excellence and quality. The company achieved level 5 in CMMI assessment and level 3 in PCMMI in 2011. Revenues from the subsidiary in the US have jumped during the period to over $100 million with increasing acceleration. The share price had moved from Rs236.45 on March 31, 2001, to Rs2079.55 on March 31, 2011.
A transformed CMC with an energised employee base, inspired aspirations, agile and enthused management team, global operations and an increasingly global mindset has come into being.
The time is now ripe to take the company to the next level.
Far from resting on our laurels, all of us at CMC are now getting set for the next phase of the company’s growth: CMC 3.0 — ‘Customer Centric Change’. The goal is to achieve the next level of agility in customer centricity and thereby carve a niche for CMC among the best of global systems engineering and integration companies, leveraging the parentage and synergies of TCS and the Tata group. The whole organisation, which today is made up of 10,000 CMCites, is gearing up to it.
Being part of change management and C-Change has been a very humbling and educative experience. The learning continues.