Is your boss a Luddite?

Once upon a time in England, during Industrial Revolution era, a weaver called Ned Ludd was found idling in weaving mill. For which he was whipped by owner of the mill. As a revenge, Ned Ludd broke two stocking frames in anger. Anger was more towards stocking frames than being whipped.

ludd

Industrial revolution era replaced craftsmen with machines. Only option before craftsman was either starve or become workman in factories. Workman’s job was unskilled; anyone with little training could do it. Craftsmen had acquired skills through practice and decades of knowledge management.Story of Ned Ludd inspired other workers and they started attacking factories and breaking frames. They started calling themselves Luddites.

British Parliament then was dominated by landlords and industrialists, who could not tolerate Luddites and in 1812 they passed an act- Frames Breaking Act. As per act breaking frames would result in offender getting capital punishment!

Over period of time, those who opposed progress were labelled as “Luddites”. They range from “Computerisation Luddites” like bank unions who opposed computerisation of banks to “Retail Luddites” who oppose entry of Retail MNCs in India to Industrialists who formed “Bombay Club” in 90s to oppose liberalisation of Indian economy. So Luddites may not necessarily be workers, even industrialists can be Luddites.

early luddite

Luddites always have fear of redundancy. They fear that knowledge they have gained over a period of time may become outdated due to change and they will lose source of livelihood. Their response to change is slow. What they fear most is disruptive change/innovation.

new_luddite1[1]

Charles Fine, professor at MIT, argues that each industry has its own evolutionary life cycle, which he calls as “Clock speed”- measured by the rate at which it introduces new products, processes, and organizational structures. Some industries like mining have low clock speed while other like Internet services, personal computers, and multimedia entertainment have breakneck speed.

No industry is immune to disruptive innovation. Cars replaced horse carriages, smart phones replaced computers and cameras, while within cameras digital photographs replaced chemical film rolls.

In field of HR, many industrial relations and administration managers from low clock speed industries like automobile and chemicals that get into HR function of high clock speed industries like IT and Telecom may lack agility to adjust to speed of change. Many end up becoming Luddites.They will keep opposing automation, employee diversity (for them biological clock of woman is more important than her talent), investment in training etc. They will always try to go back into their comfort zone i.e. dealing with workers, administration of canteen etc.

Analyse if your boss is a Luddite, if so, find a new one!

luddite boss

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Oligopoly, Nash Equilibrium and Disruptive Innovation

Sunita Narain, director of CSE, found that Coke and Pepsi contained high concentration of pesticide. Level that was unacceptable in western world, but acceptable in India.

As expected both Coke and Pepsi rejected the charges. They blamed underground water for high concentration of pesticides, besides it was within limits allowed by Indian laws. If Indian standards were low, they cannot help it.

pesticide

They also roped in PR consultants like Suhel Seth (by paying hefty fee) to promote their cause. Public memory is short, soon controversy died and people again started drinking Coke and Pepsi.

coke bottle

Coke and Pepsi dominate cola market not just in India, but in most parts of world. It is oligopoly, where just two players dominate the market. As in oligopoly, each is aware of the actions of the other. The decisions of one therefore influence and are influenced by the decisions of other. Their strategies are predictable and not very different from other. Situation is similar to Nash equilibrium of game theory.

coke and pepsi

Nash equilibrium is concept in game theory where the optimal outcome of a game is one where no player has an incentive to deviate from his or her chosen strategy after considering an opponent’s choice i.e. an individual can receive no incremental benefit from changing actions, assuming other player’s strategy remains constant.

Such situation is ripe for disruptive innovation

Professor Clayton Christensen of HBS, who coined the term disruptive innovation, describes it as…

“A process by which a product takes root initially at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. It allows a whole new population of consumers at the bottom of a market access to a product that was historically only accessible to consumers with a lot of money or a lot of skill.”

Characteristics of disruptive businesses can be lower gross margins, smaller target markets, and simpler products that may not appear as attractive as existing ones.

Someone has to come up with carbonated drink that will cater people who cannot afford to buy Coke and Pepsi- product that is cheaper, accessible and perhaps healthier. This product can then over a period of time displace established players like Coke and Pepsi.

Will local brand like Sosyo, which currently dominates Gujarat market, be the disruptive innovator?

sosyo

Bombay became Mumbai

In 1661, Catherine of Braganza got married to King Charles II of Britain, resulting in seven islands of Bombay being given as dowry to Britain by Portugal. For residents of koliwadas and gaothans of these seven islands life was never the same again.

490px-Catherine_of_Braganza_-_Lely_1663-65[1]

Catherine, born in 1638, was Catholic while British king was Anglican. Catholic queen was not liked by Anglican subjects besides marriage didn’t have happy ending. Queen suffered miscarriages and was unable to give heir to throne, while King was busy with his mistresses.

Few years before Catherine was born, in India, a Maratha noble Shahji Bhosle and his wife Jijabai gave birth to son who was named Shivaji. Jijabai wanted Shivaji to establish his own kingdom, not serve Mughals and Deccan Sultans as other Maratha Sardars and Shahji did. Shivaji faced Mughals, Deccan Sultans, Siddis and Portuguese to establish his kingdom.

jijabai

Time when Catherine was getting married to King Charles, Shivaji was getting ready to face grand Mughal army under maternal uncle of Mughal Emperor Aurangzeb- Shiasta Khan. Shaista Khan’s sister Arjumad Bano Begam was married to Shah Jahan. Death of his queen pained Shah Jahan so much that he constructed a domed marble mausoleum for her called Taj Mahal.

Shaista Khan was defeated and Marathas under Shivaji were now a formidable force in Deccan. Maratha nationalism was at its peak. After death of Shivaji, the Maratha Kingdom expanded to become Maratha Empire. But all these events didn’t have much impact on Bombay and its residents which still remained under British rule. Island was immune to developments on mainland.

By 1819 the Maratha Empire declined, and in same year a child was born in royal family of Britain. The girl was named Victoria, who later became queen of Britain. In 1876, the then Prime Minister of Britain Benjamin Disraeli passed Royal Titles Act in parliament and Queen Victoria became Empress of India. The inhabitants of koliwadas and gaothans, now a predominantly Marathi speaking Catholic community declared themselves as loyal subjects of Queen and called themselves East Indians.

Victoria_Disraeli_cartoon[1]

Under British rule island of Bombay became one of the major cities of India and went on to become capital of Bombay Presidency. A grand railway station, garden and technical institute in city were named after queen. The city attracted talent from all over India.

But year 1960 was different, after 1960, the island could no longer remain immune to mainland. There was demand to split Bombay State into two states of Maharashtra and Gujarat and each wanted Bombay to be part of their state. Then chief minister of Bombay State Morarji Desai, who believed in observing celibacy and practiced urine therapy, was opposed to splitting of Bombay. One day urine therapy went wrong, and he ordered police to fire on crowd demanding state of Maharashtra with Bombay as its capital. 105 people were killed in this firing. On 1st May 1960, state of Maharashtra was formed, with Bombay as its capital.

A cartoonist called Bal Thackeray who worked in Free Press Journal was observing all this. He decided to quit Free Press Journal and start his own cartoon magazine called “Marmik”, later he also formed political party which he named after Shivaji called “Shiv Sena”. Shiv Sena soon became a formidable political force in Bombay and later in other cities of Maharashtra. The residents of koliwadas and gaothans were getting ignored; their land encroached by outsiders.

VT

Anything Anglican was anathema to Shiv Sena. They decided to restore Marathi pride. Jijamata and Shivaji Maharaj were to replace Victoria. Bombay became Mumbai (as it was called by Maharashtrians and Gujarthis), Victoria Terminus became Chhatrapati Shivaji Terminus, Queens Garden became Jijamata Udyan and Victoria Jubilee Technical Institute became Veermata Jijabai Technical Institute.

Had Catherine married some Catholic King, history of seven islands and its inhabitants would have been different.

Ratan Tata and NELCO Crucible – The untold story.

Newspaper headlines were screaming-“Cyrus Mistry takes over from Ratan Tata”.

Srinivas Iyer was reading newspaper sitting in balcony of his 1BHK flat in Dombivali. What irritated him was in every article, any mention about tenure of Ratan Tata as chairman of NELCO did not go beyond single sentence- as if chairmanship of NELCO was an insignificant event… or worse an unfortunate event in life of Ratan Tata.

How could people forget that NELCO was the crucible from which a visionary, tougher and yet humane Ratan Tata emerged.

rnt

He mind travelled into past. Year was 1980.

At Bombay House, Ratan Tata, chairman of NELCO was having meeting with Diego Fernandez and his protégés- Zal Engineer and Kanchan Mahashur. Industrial relations at NELCO were anything but cordial.

During same time at Chakala, employees were getting down from company bus to enter NELCO Factory. Among them were Srinivas Iyer, Anjali Aras and Chitamani Chitnis.

Srinivas Iyer, a fresh commerce graduate from Siddarth College, had joined NELCO in Time Office & Payroll Department.

Anjali Aras had completed her graduation, having failed to get job in Bombay Municipal Corporation; she managed to get job in accounts department of NELCO with help of Chintamani Chitnis, who happened to be her father’s friend. Like Chitnis, her father too was a union leader.

Chintamani Chitnis was worker in consumer products department, department headed by works manager Diego Fernandez. He was also active member of Shiv Sena affiliated union. He and his coterie were known for their rowdy behaviour. Personnel and Administration Department was their favourite target, esp. Saxena, who headed P & A Department.

None of them was known to Ratan Tata, nor was he aware of impact they would make in days to come.

It was month of June, month which brings with it everything you hate about Mumbai- heavy rains, waterlogged streets, flies, diseases, mud and dirt etc.

NELCO had practice of paying monthly salary advance upto Rs.100 to workers, provided they applied for it before 20th of the month. Advanced was paid on 20th of month at payroll office.
It was 20th of June, Iyer and Kersi Mehta from payroll were disbursing the amount. Chitamani Chitnis needed money to pay for his sister’s medical expenses. Being union leader he never bothered to fill form. Last month payroll department had made exceptions to meet his demands. But this time Iyer gathered courage and refused to pay as he did not put the requisition for advance before 20th, the closing date. Chitnis did not like it at all. He started hurling abuses, jumped on table infront of Iyer and threatened them. Mehta stayed calm, he asked Chitnis to step down and leave payroll department.

It was era of militant unionism. Negotiating/Confronting with union leader like Datta Samant was badge of honour for Industrial Relations manager-something he invariably mentioned in his CV and job interview.
Chitnis felt insulted, as militant union leader he was not going to tolerate insult from stooges of management. He wanted to teach them a lesson. He gathered other workers and they managed to get empty drums and spanners. They started beating drums with spanners and started shouting slogans against management.

Three days later, Chitnis was still in foul mood. He left his one room tenement to leave for factory. He lived in Goregaokar Chawl at Girgaon-area known for chawls, textile mills and militant unionism. He took local for Andheri, in local he met a co-worker Harpal Yadav, who told him that he came to know from reliable source, that Saxena was planning to conduct domestic enquiry against him. He had asked his assistant to collect necessary information from Iyer and Anjali to prepare charge sheet against him. Chitnis had poor attendance record- high absenteeism and habitual late coming. He had submitted highly inflated local travel bills to accounts department.

After having breakfast at canteen with his coterie, he started thinking about what to do next. Workers had again restored to slogan shouting, beating of empty drums with spanners, etc. He wanted to do something different. He suddenly remembered Kalya.

Kalya was sleeping peacefully under shade of banyan tree; He should not have been in NELCO in first place, as he was not an employee- neither on rolls nor on contract. But thanks to security guard Suresh Shetty, a father figure to him, he could not only sneak inside factory but also enjoy sumptuous breakfast and lunch from its canteen. He was rudely woken up by Chitnis with a kick, before he could comprehend what was happening, one worker put a card board around his neck and another worker started writing something on card board. They started dragging reluctant Kalya towards shop floor of consumer products division. They lifted him and threw him in the trolley started pushing the trolley around shop floor, shouting slogans and hitting empty drums with spanners. Shetty didn’t have courage to stop them.

A gentleman was watching all this from first floor of Industrial systems division and saying something to manager standing next to him. Kalya could not hear what he was saying due to thick glass partition, but obviously he was not pleased with what was going on, esp. the way they were treating Kalya.

Kalya could neither read what they had written nor understand what they were shouting. Had Kalya been human he would have known that workers had written “Diego” on card board. Diaego Fernandez was Works Manager for CPD, while gentleman was Ratan Tata, chairman of NELCO. Like Shetty he too was a dog lover.

dog

Rakesh Malviya has joined NELCO few days back as junior officer in P & A department. He had found a good mentor in Saxsena, GM- Personnel and Admin. Saxena had given him a very important task of preparing charge sheet and hold domestic inquiry against Chitnis. He decided to meet Anjali over lunch to discuss about inflated bills submitted by Chitnis. Iyer had already submitted attendance record to Rakesh for charge sheet.

Chitnis did not like canteen food; he banged the plate in plate collection area. While he was leaving, he saw Rakesh having lunch with Anjali Aras. This irritated Chitnis further; he went to their table and started slapping Rakesh. Anjali ran away from canteen.

Slapping incident was the last straw. Ratan Tata called meeting of all senior managers and told them that he wanted to declare lockout, indiscipline was something that he could not tolerate. He then asked Saxena to communicate Labour Commissioner about lockout.

Saxena prepared necessary papers and asked Iyer to go to Bombay House to get them signed by Ratan Tata. That day it was raining heavily and Fort area was almost waist deep in water. Iyer somehow made it and reached Ratan Tata’s office in Bombay House. Ratan Tata came out of his office to meet him. Seeing pitiable condition of Iyer, he asked his secretary Sheila Shastri to get coffee for Iyer. Iyer’s respect for Chairman went up. Chairman cared so much for a junior employee like him.

bhouse

Lockout was declared and went on for nearly 7 months. Later, better sense prevailed. Feelers were sent to Ratan Tata for compromise. He agreed to re-start factory and take workers back (except 4 who were dismissed for indiscipline). Chitnis was happy, as he managed to save his skin. Last 7 months were tough for him- financially and emotionally. NELCO kind of job with decent salary, light workload, highly subsidised breakfast and lunch, free transport etc. was difficult to find elsewhere.

At the same time Ratan Tata decided to act tough. The workers and union leaders stopped paying membership fee to existing union and shifted membership to Mumbai Labour Union. Thus existing union became defunct and its place was taken by Mumbai Labour Union, which was headed by Sharad Rao. Ratan Tata started new factory at faraway place called Vashi and shifted 113 workers to new factory, among them were Chitnis and his coterie. Much to his chagrin, Iyer became defacto head of industrial relations in this new factory. Message was clear- indiscipline will no longer be tolerated.

This event was a crucible that changed Ratan Tata. Unfortunately significance of NELCO lockout has never been recognised. Decade later, Ratan Tata succeeded legendry JRD Tata.

ratan JRD

In her book “Business Maharajas” Gita Piramal, mentions about this episode and says-” NELCO stiffened Tata’s spine”.Same book also quotes Ratan Tata– “I learned a lot; I don’t think I would have learned as much the hard way as I did at NELCO. I am grateful to powers to be that they gave me NELCO…”

This event helped him later to handle strike at TELCO by Rajan Nair.

In an article written in Business India in December 1981, Ratan Tata said …

“For three years from 1972 to 1975 Nelco made a profit and wiped out some of its past losses, then in 1975, the Emergency came and consumer goods demand just disappeared, not just for Nelco, but for everybody. This was followed by an industrial relations problem since 1977. So, while demand improved, there was no production. Finally we confronted the unions and, following a strike, we imposed a lockout for seven months. Now that the lockout has been lifted we hope to improve production by 50 percent over the past year …”

The article further says…

“His ( Ratan Tata) claims appear to be valid, for Nelco’s prospects have certainly looked up. And, certainly, handling a company that has been in difficulty can provide more worthwhile experience than being in charge of a smoothly running company.”

Post lockout NELCO did well in areas of consumer products, telecommunications, drives and automation etc. Most successful product was NELCO “Blue Diamond” TV. Blue Diamond made significant impact and soon had market share of 20%.

In 90s, Ratan Tata could foresee that entry of Korean and Japanese consumer product companies in India will change all the existing equations. NELCO with its aging workforce could not face competition and there was no future for NELCO TVs. He decided to discontinue TV production, when it was at the height of its success. He called Zal Engineer, who was heading CPD, and told him about his decision and he also told Engineer to design a generous VRS for workers.

Engineer was shocked, like him others too felt that by stopping TV production, they were killing cash cow. Nobody had even heard of Korean companies like Samsung and LG. How could they even dream of displacing strong brand like Blue Diamond, Philips etc.?

But future developments proved that Ratan Tata was right.NELCO crucible had produced a leader who was visionary, tough yet humane.

Csikszentmihalyi, Flow and Tenure Creep

Martin Seligman and Mihaly Csikszentmihalyi are two psychologists who popularised the concept of positive psychology. Martin Seligman has done lot of work on learned helplessness and learned optimism.
But today I am going to focus on work of Mihaly Csikszentmihalyi. First, let us start with right pronunciation of his name- it is – Me High Cheeks sent me high 🙂

csikszentmihalyi[1]

Mihaly did lot of work on concept of “Flow”. This concept is very popular in psychology and is also used in other fields.

On X axis you plot the skill level of a person (this can come from leadership/functional competencies) and on Y axis you plot the challenge level of job (will come from job evaluation exercise). It is only when two match that a person reaches what is called as flow zone i.e. person is fully immersed in what he is doing; he is what HR folks call “fully engaged”. Mihaly calls him autotelic person.

flow-channel[1]

If a skill level is higher than challenge level, then a person will experience boredom. He needs more challenging job.

If on the other hand challenge level is higher than skill level, then a person will experience anxiety. He needs to improve his skill levels to meet the challenge level of job.

Over a period of time, person has to improve both his skill and challenge level to reach higher level of flow (zone A4). If he remains in A1 zone for long time, he will experience apathy.

While working on operational excellence project at one of my earlier organisation. McKinsey, our consultants, came up with concept of “Tenure Creep”.Tenure creep is an interesting phenomenon, when a person reaches “flow” (normally in late 30s or early 40s), he is reluctant to change, i.e. he is comfortable at lower level of flow, and refused to move to higher level. He let goes many opportunities to take more challenging assignment, as he is not ready to leave his comfort zone.

cartoon overpaid[1]

Soon tenure creeps in resulting in his skill levels becoming stagnant, but for those skills his cost to company goes up year after year due to annual increments. Person becomes a “high cost resource”; a substitute with same skill sets is available in market at lower cost. This person becomes ideal candidate for “pink slip” during recession.

HR[1]