An Early Opportunity to Work With Large Corporate
Right from the beginning when my association with Raghav Rao started, we were exploring possibilities for getting an opportunity to work with very large corporates in India, both Indian and MNC. We were making a list of all large corporates operating from Hyderabad which in our opinion could be approached for major change management and organizational transformation assignments using Business Process Reengineering. Many industry associations were organising workshops and seminars on the post-liberalisation challenges faced by many Industries across sectors and the buzz was on various ways to deal with them. Reengineering was talked about as a possible way out, but most of the case studies touted by large MNC consultants shared their experience with US and European companies where computers were used extensively and dedicated networks were available to individual organisations at high costs. The situation was not the same in India but some organisations were engaged in downsizing and resource optimisation exercises using Total Quality Management programmes which were popular across many large corporates. Still, the challenges posed by radical changes post-liberalisation were not getting addressed effectively and we felt this was the right time to approach large corporates using our unique business proposition that we as consultants are here not to advise and give a report but to work with the organisation to help adopt and implement the new concepts. We also were hearing and reading many reports of large corporates engaging the Big Five MNC consultants; but after spending several crores of rupees on their fees, nothing had changed on the ground.
As we were engaged with Hyderabad Batteries, Apollo Hospitals and Nagarjuna Finance assignments, Raghav one day mentioned that his close friend and classmate from IIM Ahmedabad, V Thyagarajan (Thyagi, as he liked to be called) had taken over as the MD of Glaxo India a year earlier and he had been in close touch with Raghav after he started on his own. In fact, he also mentioned that Thyagi had helped him get entry into a diamond export group, and he had been doing a lot of work with them particularly in the diamond polishing side of the business which was the backbone of this industry in India. I realised immediately that since Thyagi was a well-wisher of Raghav and working for an MNC where they had been exposed to concepts of what reengineering and change management are would be open to the idea of exploring how they could use boutique consultants like us for implementation of these concepts. Initially, we had our doubts whether a large corporate MNC would even look at two unknown consultants with no experience of having worked with large corporates; however, we decided we had nothing to lose in broaching this subject with Thyagi since he was Raghav’s good friend. After a few days, Raghav mentioned that Thyagi was visiting Hyderabad on a transit stopover enroute to another city and he had half a day of free time and had agreed to meet us. I was very thrilled and said we have only one chance; if Thyagi could be convinced that our approach would work with Glaxo, then we could get a chance to discuss with his other senior colleagues who needed to come on board before we even got a chance to give a proposal.
At the appointed time, we met Thyagi in the lobby of a five-star hotel where he had checked in as a transit passenger and shared with him the work we had done till then and now we were keen to work with large corporates like Glaxo where the possibilities for such work would be significantly huge. He was particularly impressed with our focus on implementation and shared their recent experience with a Big Five consultant where, after spending several lakhs of rupees, they had not yet implemented any of their recommendation since, as he put it, there was no ownership within the organisation to implement the proposals as it was felt by many that these were the consultant’s ideas and they would not work for them. After about 2 hours of discussions on various aspects of their business and our approach and knowledge of the subject, he said he would discuss with his senior colleagues when he got back, and set up a meeting with them where we would have to convince them to come on board. We knew that, unlike owner-managed companies, with large corporations the decision making process involves consensus-building among key senior members of management and all of them had to come on board before any MD could take a decision. In the case of Glaxo, they had a Joint MD who was in charge of the change management programme which they had already initiated; they were in fact using a modified version of TQM with the help of another consultant who had specialised in TQM. So the first meeting had to be with the Joint MD and for that,when it was fixed, we would have to make a visit to Bombay for a day. We agreed and said we would wait for his call. This was towards the end of 1994, and, true to his word, after a month or so we got a call from Thyagi asking us to come to Bombay on a particular day in the following week by 12 noon for a meeting at their corporate head office located at Worli.
I had never owned a suit in my life till then. I was one of those maverick characters who believed that, as a consultant, wearing a suit would be intimidating to the people with whom we have to work. In India, barring top management people in very large corporations, wearing a suit is not common practice and with small and medium companies it was not required even when you met the owner-managers who were casually dressed. But Raghav said he had worked in large corporations and it was necessary that we wear proper suits for this first important meeting with the MD and Joint MD of Glaxo. For the sake of business, I took Raghav with me immediately to a nearby Raymond’s showroom and bought an all-purpose jacket which could be worn with any colour of trousers and the decision was taken in five minutes flat. Fortunately, I didn't have to go hunting for new shoes or ties since I had them and occasionally used them for formal events.
On the appointed time and day, we took the morning flight from Hyderabad to Bombay and reached the Worli headquarters of Glaxo. At the security, they had information about our visit so they quickly escorted us to the MD’s office. At 12 noon we were ushered into the MD’s room where both Thyagi and his Joint MD, Homi Khusrokhan were waiting for us. After preliminary introductions, Tyagi said they had booked a table for lunch at a nearby fancy restaurant so that we could discuss undisturbed over lunch. So we moved to the restaurant and, after taking our place at the reserved table, we started the discussion. Since Homi was the man in charge of this initiative, Thyagi left it to him to take the discussion lead so that he could get convinced about our competence to work for them. But we soon realised that Thyagi had already briefed Homi about us and our background and the meeting went on very smoothly.
Originally, they had planned for spending an hour over lunch to discuss this subject but, as we started sharing our experiences and case studies that we had read up from published sources, we noticed that both Thyagi and Homi got more interested in knowing specific areas of problems on which they were seized with and the case studies were very similar to the situation they were facing. So they suggested that we continue the discussion in their office post lunch so that they get more insights from us before going further.
We moved back to the MD’s office and they shared with us a major problem they were working on involving bill payments. They had put together a top management team of 5 VPs from commercial, manufacturing, finance, human resources and computers to address this problem using the TQM approach they had recently learnt. They had recently sold one of their consumer products divisions and sitting on a pile of cash. But they could never pay any of their vendors on time. Most payments were delayed far beyond the due date, by several months in many cases, despite having 60 days credit, and some of the large vendors who were contract manufacturers used to call up the directors in the middle of the night expressing their difficulties in getting their payments affecting their cash flows.
They felt that, as a large MNC, it was bad for their image and on an urgent basis they had taken up this project on priority.
Hammer and Champy in their book give 3 cases in the introduction of the book to show how BPR makes a dramatic difference for an organisation. One of the cases is of Ford Motor Company which was exactly similar to the situation faced by Glaxo at that time. I opened the book which I was always carrying with me and showed them that case and asked them to just read it saying it would take only a few minutes of their time. Both of them, after reading aloud said that this was exactly their situation and we said in that case we can help them with our approach of focusing on implementation. I also gave them a copy of the book as we normally did with our prospective clients and they immediately asked their secretaries to make copies of the Ford Motor Company's case study to be sent to the 5 VPs. They also told us that they were busy with one major project for the next 2 months and would call us after that so that we could take the idea forward.
Both Raghav and I were quite elated that we had sold the idea to both the MD and Joint MD but we knew that we still needed to get the 5 VPs on board. So we requested them to circulate additional copies of the book to all the VPs and discuss among themselves on adopting BPR after every one of them was on the same wavelength. We knew that all of them would read the book in one sitting and get excited about adopting BPR in their organisation. That would make it easy for us to finalise an engagement plan when we met next after two months.
Exactly after 2 months, we got a call from the Joint MD’s office saying that we should plan to spend three days in Bombay the following week when they had scheduled for us to meet all the VPs and work on an engagement plan and finalise the contract. They also said that they had made arrangements for our stay at their Guest House at Malabar Hills and they would reimburse all the travel expenses for the visit.
So we were soon in Bombay, visiting the Glaxo headquarters, and when we reached the Joint MD’s office his secretary gave us a schedule of our meetings that they had set up with individual VPs on that day and next day. She also said that the Joint MD would meet us after we finished our meetings next day evening to get our feedback and how we would like to go forward. We started sensing that they had already decided to hire us and these meetings were only a formality to make sure that the VPs got to know us the way the MD and Joint MD understood us, so that the actual project would move smoothly.
This got confirmed when one of the VPs mentioned that they had decided to engage us and he should discuss the issues of the bill payment project he is working on. We were both totally floored. Here was an MNC which had decided to hire us and seriously engage their senior management time to discuss with us on a project, and we had not even signed a contract. We realised that a big responsibility was coming our way and we should now think through the nature of the contract literally while we were engaged in our discussions.
One of the major issues was what should be our fees. And how long this project would take, since the implementation part of it depended on what came out of the redesign. We had no clue what it should be in both cases. Also we were used to relatively small companies in Hyderabad whose capacity to pay was not large, unlike Galxo being an MNC used to dealing with high cost consultants. While discussing with the VPs we got an inkling that they felt this project would take at least 6 to12 months to complete assuming we spent 2 days a week with their CFTs working with us. We also realised that they were used to paying a substantial amount per day for consultants like us which was at least 3 to 4 times what we could think of getting in Hyderabad.
So after finishing the round of meetings with the VPs, when we met the joint MD with an outline of our approach to the project, he surprised us with the amount of fees they had in mind which was much larger than what we were thinking of asking and for once we realised that it was very important that even in corporate contracts value pricing would work. Let the client discover your value contribution expected and offer you the price based on it. He also mentioned that he would like to pay 25% of the total fees as a bonus after successful implementation. This became our model for all our subsequent assignments with other corporate clients we got, post the Glaxo assignment.
He asked us to send a detailed proposal of our engagement plan with payment schedule so that the formal contract could be finalised and a kickoff date fixed for us to start work.
We got one more assignment from Glaxo while we were implementing the redesign of the bill payment process, involving a major organisation restructuring of their branch and field operations, post a planned Voluntary Retirement Scheme by the end of the year.
In the next post, I will discuss the details of both the projects in Glaxo that we dealt with. We even published the bill payment process reengineering in a professional journal and I made it into a case study for classroom discussions at IIM Bangalore, my Alma Mater.
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