February 2004

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

R Gopalakrishnan
In all forms of organisations, managers face issues and seek solutions. In the earlier part of one's professional career, one is dealing with known issues and known solutions. All training methods help professionals to migrate to handle higher responsibilities, the highest being when one is dealing with unknown issues having unknown solutions. Therefore, top leadership by nature is risky. It is this syndrome that causes people to read books, learn from others' experiences and try to emulate success formulae. This too is not easy.

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
The early history of the compass is less clear than the history of maps. Historians2 believe that Mediterranean and Chinese navigators possibly used the magnetic compass to guide their ships in around 1100 AD. Until the 14th century, shipping trade in Europe stayed close to the shore because it was dangerous to stray too far from the coast and its landmarks. The ships were also light and crude, scarcely different from the ones that plied during the Roman times and Middle Ages. For centuries, mariners refused to rely too much on the compass. However, by the start of the 15th century, a begrudging respect grew for the compass and innovations were made very rapidly.

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?
Leadership is about change, and change can be technical or adaptive3. When organisations face problems for which solutions are known, i.e. maps are available, then the bosses set out to do the work and they do so by applying available current know-how, e.g. structuring an acquisition or merger. This kind of leadership is somewhat safe.

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
The compass was used in the early days of shipping through a four step process, i.e. sensing - thinking - doing - correcting. Since there are no simple ways for organisational leaders to avoid the risks of leadership, these four steps suggest a good way for them too to use.

  • Sensing
    The homing pigeon is unique in that it has a sense of direction (compass) as well as a sense of location (map). Jonathan Hagstrum, a researcher at the US Geological Survey, has postulated how. Pigeons can hear very low frequency sound, called infrasounds. When the ocean waves bang against one another, infrasounds are generated. Infrasounds travel thousands of miles from their sources, so the pigeon always has a sense of where the ocean is. These infrasounds also reflect from the local terrain like mountains and cliffs, so the bird gets an excellent acoustic picture of its surroundings. This is what makes the pigeon's compass and map sense so unique.

    On Sunday, 29th June 1997, a great race was held to celebrate the centenary of the Royal Pigeon Racing Association. More than 60,000 homing pigeons were released at 6:30 a.m. from Nantes, France flying to lofts all over Southern England. They should have arrived at their lofts by early afternoon. They didn't. A few thousand out of the 60,000 straggled in over the next few days. In pigeon racing terms, this was a disaster. What happened? Hagstrum found that at about 11 a.m. when the pigeons were crossing the Channel, a Concorde airliner was flying along the Channel. A supersonic airliner generates a shock wave down towards the earth, almost one hundred miles wide. Most of the birds must have been caught in this shock wave. This prevented them from listening to the infrasounds which guided them, thus they lost their bearing and their way.

    The most important requirement for a leader is not to get caught in a shock wave that prevents him from sensing. Jamil Mahuad had been a very successful mayor of Quito province and probably therefore he was elected president of his country, Ecuador. Eager to show quick results, he became very focused on providing a short-term remedy for the mounting problems of his countrymen. Later he himself admitted, "I have lost my connection with the people." On the other hand, when Lee Kuan Yew first became prime minister of Singapore, he took precious time from his daily schedule to learn Mandarin, the language of his constituents.

  • Thinking
    Thinking about the context, thinking networks by not only finding allies but keeping close to those opposed to the new ideas are all part of a success plan. For many years, as a competitor from Unilever, I had been an admirer of P&G. I was quite surprised to see the departure of Durk Jager who took over in 1999 from his legendary predecessor, also known as the Prince of Darkness. Durk Jager was a man of considerable vision who saw the need to modernise the tradition-bound consumer goods giant. Jager planned a complete organisational overhaul, a cultural revolution. He moved before he was able to get the rest of the company behind his innovative plan for change, before he could form networks with allies. It does not matter whether his plan was good or not, he never managed to communicate the urgency and superiority of his new vision for the company. He did not survive the turmoil he unleashed, in large part because he did not think networks and allies.

    To survive and succeed in exercising leadership, you must also work as closely with opponents as you do with supporters. In fact, opponents deserve more of your attention not only as a tactic of strategy and survival but also sometimes as a matter of compassion. Consider how our national leaders deal with the disinvestment issues. By its very nature, there will be conflict and heat, so the leader needs to create a holding environment within which people can tackle tough, divisive questions without flying apart.

    The late Rajiv Gandhi lost the 1989 election, partly because he was seen widely as westernised and elitist. In fact, it was Mrs Gandhi who really launched economic reform in 1980, rejuvenated in 1985 by Rajiv and abandoned by him in 1987. In 1991, Narasimha Rao faced pressure from the reformers for a Big Bang approach. Very boringly, he chose the middle path, which he articulated at the Tirupati Session of the Congress party. By not decrying Nehruvian economics, by projecting his policies as a continuity with the past, by being seen to learn from Asian experience rather than Western experience, Narasimha Rao created networks with his allies as well as ways to track his opponents.

  • Doing
    Many leaders are excellent thinkers. They develop the correct visions, often grand ones. They go public with their thoughts or even launch their initiatives in the hope that somebody will dot the I's and cross the T's. Then too late, they notice a gap between what they want to achieve and the ability of their organisation to achieve it. Strategies often fail because they are not executed well, not because they are bad strategies5.

    Richard Thoman was CFO at IBM, a protégé of Louis Gerstner. He was a highly respected strategist. Xerox hired him in 1997 as COO to usher in change. As COO, he launched numerous cost-cutting initiatives, and laid the groundwork for a new strategy. Two years later, the board elevated him as CEO and he was one of the most thoughtful people to head a major American company. At his first annual meeting as CEO, Rick Thoman told his shareholders that Xerox was poised on the threshold of another period of great success. The stock prices shot up to new highs.

    One year later, Rick Thoman was fired by Chairman, Paul Allaire. What went wrong? Thoman had launched two major initiatives both of which were necessary and important. One related to consolidating the 100 administration centres of the company, and the other related to re-organising the 30,000 strong sales force. Xerox's clubby culture had not quite taken to an outsider and so he was too aloof to connect with the people who had to execute the changes. So, the organisation failed to execute Rick Thoman's vision and promises, morale dropped, cash flow from operations went negative and the stock price plunged.

    While strategy thinking has been recognised and taught as a discipline, strategy execution has not. Top management knows deep down that something is missing when commitments consistently fail to get delivered. They search and struggle for answers, benchmarking competitors, rationalising the differences and looking for answers in the organisational processes, culture and structure. In the name of delegation and trust of subordinates, they fail to do persistent and constructive probing, e.g. Where will the increased sales come from? What will competitors do? What if the economy takes a turn? And so on.

    Apart from the lack of execution discipline, another enemy of "doing" is the misjudgement of how to pace the work. In 1994, President Clinton recommended sweeping healthcare reforms that involved radical changes in the financing and delivery of healthcare services. To generate that magnitude of change, Clinton needed a process of education, explanation and persuasion that would have taken years with small experiments all along the way. However, Clinton believed that his election in 1992 gave him the mandate and he pressed ahead with his proposals. There was great opposition, his own popularity crumbled and the media wrote stories wondering whether he was still relevant!

  • Correcting
    When a leader has sensed, thought and done a few things, signals for corrective actions and improvements emerge. Those have to be picked up, internalised and actioned. This requires the leader to engage his top team in collective learning. A good way to illustrate this is through an example from nature:

    In the Britain of the early 1900s, milk bottles supplied to homes were without any caps. Two garden birds, the blue jay and the robin, had both perfected the art of sipping cream from the bottle. After the World War II, tin foil caps on bottles were introduced. The blue jays soon learnt to peck the caps open and continued to sip the cream while the robins could not. On researching the success of one species, zoologist Alan Wilson found that blue jays moved in flocks of 14 or 15 birds. The parents stayed with their young ones till they were old enough to take care of themselves. Hence, the learning by one bird was quickly and efficiently shared among the entire flock. On the other hand, the robin was a loner. The male robin defended his territory rather fiercely and was antagonistic to other birds of the species if they came too close. Hence, sharing between robins was non-existent. His conclusion was that innovation, social propagation and mobility allowed blue jays to enjoy the cream and grow healthy.

Conclusion
I would like to conclude by expressing optimism about the future of our country and her people — not because it is a nice way to conclude but because in our own uniquely Indian way, we are facing up to the emerging leadership challenges. In our bouts of despair, we forget how much we have changed in 15 years — no need to shop anymore for the family on foreign trips, multiple choices of cars, deep penetration of communication and media with more to go. Surplus food and foreign exchange were not conceivable to us just 10 years ago. As Saint Tiruvalluvar wrote in the Kural several centuries ago:

If those who think to achieve,
Have a firm and focused mind,
They will realize what they thought of,
And even as they have thought of.

"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."

References

  1. The Failed Mahabharata by A. D. Moddie
  2. Ruling the Waves by Debora L. Spar
  3. Leadership on the Line by Heifetz and Linsky
  4. Geeks and Geezers by Bennis and Thomas
  5. Execution by Bossidy and Charan

Keynote address by R Gopalakrishnan at the Eight Annual Chief Financial Officers' Roundtable organised by IMA India in Jaipur on, February 15, 2004.

More Speakers' Forum articles:

Making India Inc angry: R Gopalakrishnan dissects the challenge of making India the manufacturer to the world from the managerial viewpoint
Disruption and uncertainty: Knowing it is there but not knowing what it is: R Gopalakrishnan, executive director, Tata Sons, breaks down the concept of change in relation to today's business scenario
Getting started on business ethics: Best practices in corporate governance can only emerge when informed by an established set of business principles and a defined approach towards organisational behaviour, says management consultant Anil Chopra