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book review

July 5, 2004

Book Review

“Managing Radical Changes” by Sumantra Ghoshal, Gita Piramal and Christopher Bartlett.
Published by Penguin India in the Year 2000.
Cost: Rs. 495 (Hardbound Edition), 344 pages.

About The Authors:

Sumantra Ghoshal holds the Robert.P.Bauman chair in Strategic Leadership at the London Business School and is the co-author of “Managing Across Borders: The Transnational Solution”.

Gita Piramal is the author of Best – selling books: “Business Maharajas” and “Business Legends”.

Christopher.A.Bartlett is a Daewoo Professor of Business Administration at the Harvard Business School.

Though Bartlett has not directly contributed to the contents of the books, however Ghoshal felt that whatever he has conceived to be the contents of the books, it has come from mixed understanding of Bartlett’s and Ghoshal. Therefore, Ghoshal and Piramal added Bartlett’s name as a co-author of the book

General Overview:

This book again comes as a clincher from the master: Sumantra Ghoshal. This is a very comprehensively written book with lucid words and is laced with real life examples from Indian companies like Reliance, Infosys, Wipro, HLL, etc. and exemplary countries around the world like GE, 3M, and ABB etc. However the relevancy of this book increases as it is written in the Indian context.
This book primarily deals with a disease, which has gripped almost all the Indian corporate managers & managers around the world. This disease which authors term as “Satisfactory Underperformance”, is a state in which Managers, though they achieve profits, forego their competitive edge which has brought them into this profit seeking position, due to complacency or a false belief that as they are successful, they are doing the right thing for the organization, whatever may be they are doing. Also, organizations, which are, not doing well, get contended with the status quo and believe that they are doing nothing wrong, and will supply innumerable examples to support it!

Authors put this book as not a ‘self help’ or ‘how to…’ book that you come across on airports, but it is about teaching of managers by managers!

Chapter-Wise Summary:

This Book is divided into 4 parts and 14 chapters. Let’s take a brief look at each chapter.

PART 1: THE CHALLENGE OF RADICAL PERFORMANCE IMPROVEMENT

Chapter 1 “Radical performance improvement is possible.”

In this chapter, authors actually lay the foundation of the book. The authors introduce the concept of “Satisfactory Underperformance (SUP)” by taking the example of a real company and fictitiously they call it “semco”. Through this example they define SUP as seven-step process, which is a journey of a company from being successful to falling into crisis.
Authors then provide a little solace when they say that radical performance improvement is possible! They say that not having a charismatic leader, shrinking of industry, industries unattractiveness does not become a bar into achieving a radical change.

Even successful companies can improve radically…

Chapter 2 “Learning to cook Sweet and Sour”

Radical improvement can be achieved by learning to cook “Sweet” and “Sour”. This is not supposed be a chef competition! What authors are implying here is that to change, a company must learn to take hard stands (cooking “Sour”) such as restructuring of organization and cutting down on size (exactly what Bharat oxygen company did and succeeded!). Also, learning to cook “Sweet” (at which GE is a master!) is what managers like to do, which is growth and expansion, hiring new people, building competencies etc…

By taking a example of Bajaj Auto Ltd., authors provide a example where a Indian company was able to learn both of the arts, and due to implementation of which, after huge lay-offs, restructuring, expansions, it emerged as a winner in the market!

In the end, virtuous and vicious spiral of growth is explained.

Chapter 3 “Into the valley of death”

According to authors, the journey of a company towards transformation passes through valley of death. That is, if transformational change not managed properly, or the leader who is leading who is leading the company into the transition is not efficient, company may cease to exist!

Citing an example of Subash Chandra’s Zee Telefilms, authors discuss the no. of key people who left the organization during the transformation which the company went through in the 1990’s. But it was the leadership of Vijay Jindal and Subash Chandra that helped company celebrate success through its market capitalization in 1998 hitting 390000 Crore, with a net profit of 61.1 Crores!
It s the leader that authors believe that sees the company through the denial, resistance, exploration and commitment: four phases of transformation to achieve radical performance…
PART 2: SHAPING AND MANAGING THE FUTURE

Chapter 4 “The Three stages of Competition”

This chapter starts of with the famous incident of reliance petrochemicals becoming no. 1 by taking over from IPCL to emphasize the fact that to become competitive, Indian companies will need to think about strategy and competition at three different levels.

Authors talk about three different competitions namely competition for markets, competition for competencies and competition for dreams. The competition for markets is explained through the reliance’s example of snatching the market away from his competitors. Competencies are again explained by the analysis of reliance’s financial engine. And lastly, from the journey of reliance to fame, the dream concept is elucidated.

Chapter 5 “Aligning for Growth”

According to authors “For managing sustainable growth, companies need to create alignment among three key elements: value creation logic, its organizing principles and its people processes”.

The value creation logic is explained through innovative model of 3M and Rohinton Aga’s “Thermax”. The organizing principle takes the example of HDFC bank, which chose rightly among the three choices: Autonomy vs. Synergy, Control vs. Initiative and Leadership vs. Culture. People’s processes are concerned about HR strategies of companies with example of reliance, Infosys and HLL.

Through example of TI cycles, Infosys, reliance and Bajaj auto Ltd., how all the three principles should be employed is explained…

Chapter 6 “Managing acquisitive expansion”

The chapter lays emphasis on growth through expansion of business through acquisitions.
How Leif Johansson, CEO, Electrolux focused on “value capture” and Laxmi Niwas Mittal’s Ispat Group’s successful tryst with acquiring “Imexsa”, is the crux of this chapter.

Authors have provided a useful “blueprint for managing acquisitions” with guidelines about how to move in the pre – merger scenario and how to react post – merger.

Chapter 7 “Diversification and Diversifact”
Diversification is achieved through enhancing of management capability, feel the authors. They go on to add that correct nature of the external environment depends not only on the nature of synergies within the portfolio, but also on the nature of the company itself and on the quality of its management.
This theory is supported by citing the case of “managing Diversity at WIPRO”, where integration at different levels like people, management processes, shared beliefs and leadership values is implemented successfully.

Chapter 8 “Going Global”

This chapter addresses the issue of Indian companies becoming global and the possible hurdles in achieving it. By taking the case of Ranbaxy, TCS and Infosys, authors present a view that other Indian companies can overcome the “liability of being Indian” and become a truly global company and at the same time build new competencies and prepare for the future…

PART 3: REVITALIZING PEOPLE, ORGANIZATION AND RELATIONSHIPS

Chapter 9 “Changing the smell of the place”

This chapter is all about changing the perception of the people towards their work & work environment in order to increase their and organizations productivity. Revitalizing people, as the authors call it, involves changes in mindsets along with inculcating qualities like learning, confidence, commitment, collaboration, initiative and persistence.
While the environment of most Indian companies is compared to weather of downtown Calcutta during July (against productivity), it should be changed to Fontainebleau weather in spring (conducive to high productivity), as the authors recommend!
Example of HDFC is given in this chapter, which is quite relevant here as H.T.Parekh, the chairman of the company, exactly incorporated what authors wanted to convey.

Chapter 10 “The Company as a university”

“Learning never ends; it’s a life time process”. This adage is the basis of this chapter. The authors believe that by creating a learning culture in the organization and prompting managers and employee to further their scope of knowledge, they can groom managers for tomorrow and company need not hire mangers laterally.
The author cites examples of Infosys, which has a campus in electronic city for managers and also, Yashua Maruta of Kao Corporation and GE’s Jack Welch who successfully implemented this philosophy.

Chapter 11 “Building an entrepreneurial organization”

To move swiftly, authors synchronize with views of Jack Welch that a large organization should behave like a small company, if it wants to grow and prosper. Decentralization and division of decision-making power is the key today.
Authors believe that if you groom entrepreneurs within the organization, it would help both: the organization and the employees. So, example of ABB is given to make this point more comprehensive. The entrepreneurship process given in this chapter helps in comprehending dynamics of the point being made!

Chapter 12 “New management roles and tasks”

A manager as faculties, a facilitator, a mentor or a coach, are the changing roles of manager is the organizations these days. Today, Companies believe in adding value to their employees and the role of a manager at the top level position is not only a strategist but a coach and a faculty also.

What happened in ABB and various programs started by Shiv Nadar’s HCL, which cultivated entrepreneurs which helped HCL grow real fast are given as examples here.

Chapter 13 “Building shared destiny relationships”

The authors in this chapter have presented a classification of relationships that a company might develop with other key partners, such as suppliers and customers etc.: Power – based relationship (which Jose Ignacio Lopez, Chairman, General Motors practiced) and Shared Destiny relationship (which Kajaria brother’s Hastings Jute Mills employed).

Authors believe that if one makes a Shared Destiny relationship with the customer, suppliers and the distributors, it can progress & succeed just like Brij Mohan Munjal’s Hero Honda, and Kajaria’s Hastings Jute Mills!


PART 4: TRANSFORMING THE CORPORATE PHILOSOPHY

Chapter 14 “A new manifesto for leadership”

In the ultimate chapter of the book, authors offer advice for leaders across Indian corporate world: “throw out the old paradigm of management and jump to new one!”
While concluding, authors believe that Indian manager should think beyond Strategy, Structure and Systems (Western Model) to Purpose, Process and People (Indian Model).

Authors believe that the reason behind success of managers like Narayna Murthy and H.T.Parekh, Azim Premji is their original ideas, as strong value system and a unique Corporate Philosophy. Leader must not imitate other successful leaders and devise his own formula of success…

And this is what the corporate world has to say about this book:

“I have rarely come across a management book that is lucid and practical in approach… [it] is a must read for all practicing managers.”
—Harsh .V. Goenka
Chairman, RPG Enterprise

“A compelling read for business managers who intend to give a global coinage to the ‘made in India’ brand…”
— Subash Chandra
Chairman, Zee Telefilms

Submitted By:
Sachin Arya

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