The leadership challenge: direction and destination
R Gopalakrishnan, executive director, Tata Sons, explains the need for and importance of direction in today's business leader
As Nobel Prize winner Douglas North postulated, to succeed, a country must have good policies and good institutions. It is not too difficult for one country to emulate the policies of another but it is far more difficult to emulate institutions because institutions include not just the laws, regulations and their enforcement but also their social norms and belief systems.
I came across an interesting viewpoint from AD Moddie1.He argues that a central, bureaucratic state spread over most of India existed for only five centuries out of the 25 centuries of national history — Maurya, Gupta, Mughal, British and, of course, the post independence state. Therefore, for most of history, India has been a loose confederation of regional states held together by culture and trade. During these 20 centuries of loose confederation, there was no central service, revenue system, foreign policy or standing army. Therefore, over a long period, leaders have learned to tolerate ambiguity, which is non-destructive but not constructive.
In India, we are collectively engaged in an extremely complex task of modernisation and deregulation, the outcome of which is uncertain as well as ambiguous. Each day's news assails common folks with self-doubt about whether the country is headed the right way with the right leadership. In the past centuries, one could make poetic virtue of this ambiguity and uncertainty as did John Keats, who wrote to his brothers, George and Tom, in 1817 about "the virtues of negative capability when a man is capable of being in uncertainties, mysteries, doubts without any irritable quest after fact and reason."
The challenge of future leadership is to understand the root causes of ambiguity, establish the high leverage nodes, and act to influence the behaviour of the system. In a climate of uncertainty, leaders look for maps of how to get from one place to a target destination. Psychologist Karl Weick has pointed out that maps can help in known worlds which have been charted before. Where the world has not been charted, the compass is required, he argues, because amid uncertainty, it gives you a general sense of direction. One needs to rely on one's instinct to move ahead. To appreciate better the metaphor of map and compass in organisational leadership, I would like to briefly delve into the actual world of the map and compass.
The map and the compass
Maps on the other hand are much older. The oldest existing map appears on a clay tablet made in Babylonia around 2500 BC. Claudius Ptolemy gave shape to the subject in 150 AD when he brought together his eight volumes entitled 'Geography'. European cartography advanced in the 14th century because of two developments: first, the translation of Ptolemy's work into Latin and second, the invention of the printing press, which facilitated duplication of maps.
Thus, from the 14th century onwards, advances in shipbuilding, innovations in the compass and advances in cartography all converged to lead to the great adventures in exploring and conquering new lands across the oceans. This changed the world permanently over the next several centuries.
It is instructive to conjure the difference in compass-led versus map-led managerial leadership experiences by referring to the usage of maps and compasses in the field of navigation. There could be no map without charting the course. The course could not be charted without straying far from the shore. The shore could not be strayed from without a good compass. As it has been written, the sailor felt that he was left in a vast and indistinguishable space with no way of knowing where he was or how to return home. Over a hundred years ago, C Raymond Beazley wrote about 14th century oceangoing: "…dragons and demons preyed upon the unwary and whirlpools destroyed any adventurer." Of such challenge is the task of modern leadership. It is dangerous and risky. Leaders need a better compass to navigate this ocean of uncertainty.
Why is the course uncharted?
However, organisations also face large issues for which there is no ready solution. The solutions have to be discovered through adjustments and experiments, e.g. consummating an acquisition or merger through the people in the organisations. In this situation, adaptive change is required which means the grassroots people with the problem have to do the work by learning new ways. This type of leadership is risky; change appears dangerous to people because they confront loss or challenge to lifelong beliefs. The leadership challenge is to disturb people, but only at a rate they can absorb. Think of the leadership challenges at the national level posed by the piloting of reform in the power sector or disinvestment. It is dangerous because the leader risks being marginalised, diverted or attacked, evidence of which is visible everyday. This happens at the corporate level too. Jamsetji was criticised when the Tatas bought a sick textile mill at Bombay in 1886. It took him eight years to pitchfork this unit into the top bracket of India's textile mills.
After Dorab Tata hugely expanded the Jamshedpur steel capacity in 1916, prices collapsed and the steel company was in danger of closing down. It took a pledge of his personal wealth and some providence to rescue the fledgling company. More recently, when Ratan Tata proposed the payment of subscription by Tata companies to shares of Tata Sons and to a Tata Brand Equity Fund, there was huge public criticism. Eight years later, the financial and brand benefits to the wide body of shareholders are visible all around.
And so the areas of criticism continue — the launch of Indica, the entry into telecom and, for sure, others to come in the future!
Some commentators define good leadership by studying unsuccessful leaders4. Coriolanus, the Roman general, was a great warrior, a man with a strong moral sense but an utter inability to reach out to the people of Rome and engage them in his vision. His mother encouraged her son repeatedly, but Coriolanus just could not connect with his people because he was somehow convinced that doing so would compromise his integrity. Shakespeare opens his tragedy play, Coriolanus, with the Romans on the street being addressed by a citizen, "First, you know Coriolanus is chief enemy to the people. Let us kill him, and we'll have corn at our own price. We are accounted poor citizens, the patricians good… the leanness that afflicts us, the object of our misery, is as an inventory to particularise their abundance… the gods know that I speak this in hunger for bread, not in thirst for revenge…" There are several modern day versions of Coriolanus.
Doug Invester lasted 28 months as CEO of Coca-Cola after the legendary Roberto Goizueta. He was seen poorly for his insensitivity to ethnic minorities, his inadequate response to adulterated coke in Europe and several other failures of adaptive capability. Eckard Pfeiffer of Compaq was fired for surrounding himself with yes-men and ignoring those who would speak truths to him, thus isolating himself from employees and customers. As Aldous Huxley observed, "Experience is not what happens to a man. It is what a man does with what happens to him." To the extent one can validly isolate one single quality that determines success, it is adaptive capacity, i.e. that ability to understand context and the capacity to struggle in the experiences encountered, but not get stuck in them or get defined by them.
Sensing - Thinking - Doing - Correcting
If those who think to achieve,
"While it is imperative to learn to live with and, in fact, manage change for success – the bedrock of a lot of business lies in its approach to - ethics and integrity. This will form the basis of the session being led by Mr PM Sinha early tomorrow morning."
Keynote address by R Gopalakrishnan at the Eight Annual Chief Financial Officers' Roundtable organised by IMA India in Jaipur on, February 15, 2004.
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