Transforming a leading, successful organisation is an uphill task, especially when a corporate is known for its pioneering efforts and proven business model. There are corporate case studies of successful business transformation, but the initiative in most cases is triggered by an event of great magnitude, as in the case of Apple Computer and, more recently, IBM. The task of transforming a corporation in order to meet a stated vision requires transparency, a willingness to change and a determination not to lose sight of the short term over the long term. These traits will enable Tata Consultancy Services (TCS) to transform itself to be in the top 10 by 2010.
Where conventional wisdom decrees, "If it ain't broke, don't fix it," TCS decided to willingly transform itself in its desire to excel and lead. It was this initiative that acted as the catalyst in the nearly year-old transformation exercise. The complexity of the exercise owed itself to the sheer growth of TCS in recent years in terms of employee strength, geographical spread and cultural diversity. So what does transformation really mean? S Ramadorai, CEO, says, "Transformation, in my opinion, is a way of life. One needs to be proactive and prepared for the emerging trends of the future."
Mr Ramadorai emphasises the need to be responsive to internal and external factors. He says, "The change in mindset instills an ability to learn to live with change. This, coupled with powered decision-making and an ownership-based approach, is aimed at ensuring
that transformation is a continuous process." The changes on the customer front, caused by global competitive pressures, are throwing up a whole host of new opportunities and challenges for the company to act upon. In turn, these developments are forcing the company to take a close look at the organisational structure, practices and decision-making process. Says PS Vishwanathan, VP, transformation, "It is only now that people are settling in the IP (industry practice), SP (service practice) and geography matrix. We are already making adjustments."
However, changing organisational structures is the greater challenge TCS has to face up to. Mr Vishwanathan says, "We have always led; we have never been No 2. We take so much for granted. Success itself can be your biggest enemy. Yesterday's formula for success won't hold today. Implementing any change is going to be difficult." TCS is the first Indian IT company to designate a chief transformation officer (CTO), and one of only eight IT companies in the world to have such a designation.
The top management soon realised that the process of creating a new corporate reality required a clear understanding of the direction that the company would take. In order to propel itself into the big league, TCS would have to look within itself. The future reality map drawn out by the senior management had to be clear enough to convey the message that change was inevitable for survival. "The other aspect," says S Padmanabhan, VP, HR & OD "is the 'company learning programme'. We need to ensure that employees gain certain attributes. These attributes include communication and negotiation skills, and how to deal with a customer in a very competitive environment."
Today, TCS is a billion-dollar company in terms of revenue. It is managed by nearly 25,000 people and has operations in 55 countries. The organisational structure has to continuously mutate and evolve to remain relevant. It has to transform itself to meet employee aspirations and ensure customer delight. Says Mr Vishwanathan, "There was a recognition within TCS that there was a need for transformation. You need to know where you are going. Only then will the mission, vision and values hold." The company launched a matrix organisation structure a year ago, but had to change it due to changes on the external front.
To make a corporate transformation exercise successful, the leaders should find out the cause of the current state of affairs. The first step in the process is to question existing practices and processes. People don't resist change; they resist being changed in the process. Since it is difficult to get an insider to objectively carry out the process of challenging existing habits, TCS roped in an outsider to bring a fresh perspective to the change programme. The role of this person was to act as a facilitator and change agent.
Involvement of everyone
Communicating the vision and progress of the transformation programme to all the employees is the key to success. Since the change programme is expected to change the way employees work and view the future, TCS addressed some key concerns: the compulsion behind the change (why change?), the timing of the exercise (why now?), the expected results (what it means and where it will take the company?), and the significance (what does it mean to every employee?).
Inspiring thousands of people and making them experience a new corporate lifestyle requires a well-cascaded communication strategy. The transformation programme touches all parts and functions within the organisation. Every functional and operational team was involved in the programme. This induced them to look upon the transformation programme as their own initiative, instead of something that had been thrust upon them. The programme has received a huge boost from the involvement of the entire organisation and the leadership of the CTO and CEO. Making the employees experience the final effect of transformation, even before the conclusion of the transformation process, is crucial to the success of the transformation.
The corporate transformation model of TCS encompasses strategic planning, change management and alignment with project management to create business value. To make any exercise successful, it is necessary to have a performance measurement system (PMS) in place. Towards this objective, TCS introduced the economic value added (EVA) concept across the organisation.
The framework aligns corporate values with the performance of the constituent business units and the individuals who comprise these. The measurement is objective and creates transparency in operations.
Intending to transform itself into a data-driven organisation, TCS decided to implement the balanced scorecard (BS) system simultaneously. A balanced scorecard, with integrated performance measures or key performance indicators, helps companies like TCS track and evaluate their progress in achieving goals. It helps to align the functional targets and goals with the organisational objectives. It integrates the corporate vision with internal business processes, learning, financial measures and reaching out to the customer.
Having put an objective PMS in place, TCS worked on reengineering some of the practices followed by certain functions. "Finance is no longer seen as just an accounting function. It plays a proactive role in management information systems by advising on pricing, project profitability and advance signals to projects suggesting corrective course," says S Mahalingam, chief financial officer.
The company adapted activity-based costing to look at costs that are deeper at the activity level, and to help benchmark and replicate the price estimation process better. TCS also began moving people with expertise in finance, treasury and consultancy to work in the finance team on deputation. This approach has helped finance to obtain fresh perspectives and implement some of the best practices.
Many of these practices had been initiated long before the transformation exercise began. These practices, including BS, EVA and the Tata Business Excellence Model, lent a sense of clarity and purpose to the transformation.
With most of the internal process-related initiatives getting increasingly clear, TCS's next step was to project and market the competence and value of its offerings to an international audience, thus setting the stage for its foray into consulting. The challenge was to do it globally. "Globalisation means three things to us: the ability to deliver globally, the ability to integrate multinational employees into TCS, and localising delivery to our global customers," says Mr Padmanabhan.
The people factor
An organisation is known by the processes it keeps; it is valued by the people it retains. This is especially true for a knowledge-intensive organisation like TCS. The senior management needs to harness and align the capabilities and ambitions of every individual in a single, unified direction. Says Mr Padmanabhan, "The first step is to identify people with potential. They might be within or outside TCS."
What Mr Padmanabhan is driving at is the need to tap talent from a wide range of expertise, rather than focus merely on certain skill sets. The challenge lies in harmonising diverse skills to meet the vision and mission. Adds Mr Padmanabhan, "There are a lot of in-house programmes. The programme extends to the senior management too. In this industry, we have no choice but to constantly upgrade our skills."
TCS has also linked up with the Tata Management Training Centre (TMTC) and other management institutes to chalk out a comprehensive leadership programme. It is now planning to set up assessment centres. Mr Padmanabhan says, "The assessment centres will take a close look at critical roles and functions within TCS." For instance, project management is a crucial and critical function that requires close attention. To convey its project management skills and empower its project managers with an extra edge, TCS is planning to link up with a project management institute in the US. "We are planning to sponsor people to go through the project management programme," he adds.
The same initiatives have to extend on the quality front too. Mr Padmanabhan says, "We have quality certification, but we are also looking at certifying a project manager. There are various advantages to this: It goes very well with our customers, adds to the skills of employees and motivates them."
The first such assessment centre will become operational later this year. The company is planning to set up an assessment centre for project managers and another for people with sales roles.
Ever since transformation became a conscious exercise at TCS, the senior management has invested a lot of time and effort in conducting grievance analysis to know what people expect. Mr Vishwanathan says, "We conduct a number of informal town-hall meetings where people from different divisions and practices come together. The basic message that comes out is three-fold: employees should feel that they are cared for, that the company respects employee capabilities and abilities, and that every employee has a career option."
What queers the pitch is that TCS is no longer restricted to any geography. TCS employees are spread across 55 countries and represent various nationalities and ethnicities, leading to different work cultures and expectations. Mr Padmanabhan says, "Over the last few years, we have been acquiring clients in countries apart from the US and UK. When we acquire customers in other countries, our value proposition has to be delivered locally. To do this, we need to have local marketing people who can connect with our customers."
The ability to think global and deliver local requires the senior management to adopt a flexible approach and structure that optimises skills across the enterprise. Says Mr Ramadorai, "As the CEO, one needs to set an example and drive these changes." He stresses the ability of senior managers to collaborate on a project, rather than merely form specific project teams. To draw a corollary, the organisational hierarchy needs to model itself along the lines of a fishnet, rather than limit itself to classical pyramidical or flat structures. A fishnet model presents an opportunity to intermesh diverse skills and people in a meaningful grid, without grossly affecting the overall structure of the enterprise.
What does transformation mean?
Any transformation exercise has to have a clearly measurable and tangible goal. Transformation for the sake of transformation will be counter-productive. Mr Vishwanathan says, "Sometimes people think it is an impossible task to be in the top 10 by 2010. It might sound like a political slogan, but, to put things in perspective, ten years ago we had revenues of Rs253 crore and 4,000 employees. This increased to Rs550 crore and 6,900 people about five years ago. Today, we are a billion-dollar company."
To cut a long story short, an organisation is about structure, systems, processes and people. And that is TCS's biggest asset.
|What does transformation mean for you personally and as a CEO?|
Transformation, in my opinion, is a way of life. One needs to be proactive and prepared for the emerging trends of the future. Transformation is multi-faceted. It goes beyond organisational transformation. It involves transformation of the individual at one end and society at the other. As a CEO, the responsibilities must be understood within and in all the above contexts.
What changes have you had to carry out personally as a CEO and at the organisational level?
At the level of the organisation several changes have been initiated. These include:
Empowerment of people
Building excellence throughout the organisation
Open and transparent communication
Compensation system based on EVA
Digitisation of TCS
Setting up a performance management system
Creation of the position of a chief transformation officer
As the CEO, one needs to set an example and drive these changes.
TCS is the first company in India to have an officially designated transformation officer. Why did you feel the need for this?
Transforming from a centralised to a distributed, empowered organisation required a lot of thinking on our part and involved mindset changes among employees. The top management needed to fuel this effort and communicate the key messages effectively and efficiently. I felt the need for a senior person with a suitable mindset for this challenging role.
How do you make transformation a continuous process? Is it proactive or reactive?
This has to be very clearly proactive. The change in mindset instills an ability to learn to live with change. This, along with empowered decision-making and an ownership-based approach, is aimed at ensuring that transformation is a continuous process.
In your view who should be the transformation champion?
Definitely the CEO has to take the initiative and run with it. The processes have to percolate across the entire organisation.
Is the transformation officer more of a facilitator or a catalyst for change?
The transformation officer is a facilitator who acts as the change agent. This person needs to ensure that the change is smooth and that it becomes a matter of discipline and habit. The transformation officer also needs to be an excellent communicator.