My Journey As A Consultant - 20

 Organisation Culture Transformation In A Fertiliser Company

Till now most of my change management work that I had narrated earlier involved specific processes and part of the organisation around those processes. In this case of Mangalore Chemicals and Fertilizer Ltd, I got an opportunity to work in a company wide change management using concepts adopted from Japanese management techniques. In the process I also learnt new tools which can be used to facilitate organisational transformation.

I had mentioned K S Madhavan when he, as MD of Tecumseh, had hired us to work at their Ballabgarh Unit. Shortly after we ended our assignment, he retired from the company and decided to start a consulting practice under his own name, KS Madhavan and Associates (KSMA) and invited us to join him as his associates. Shortly after that, he informed us that Mangalore Chemicals and Fertilisers (MCF) had approached him to help them in implementing his approach which  brought about a major cultural change in Tecumseh’s Hyderabad unit after he took over as its MD. He told us that when he presented the Tecumseh success story  in a CII-sponsored seminar, the then MD of MCF, MR D P Mehta, who attended the seminar approached him after hearing his presentation, and sought his help. This was around the middle of 2000 when we were involved with ITCBPL.

KSMA put together a team of five consultants, including me, to work on this assignment.. This was the only assignment I did under the banner of KSMA and it was a great learning experience. One of Madhavan’s strengths was his mastery of Japanese management concepts and Edward De Bono's ideas of Six Thinking Hats and approach to creativity. He had used it in his work life to successfully turn around problem units and one of his major strengths was getting workers to participate actively in organisation transformation. He had in the past used these concepts as a manager where he had worked and this was the first time he had to use the same approach but in the role of a consultant. Since the canvas for this project was large, he wanted to have a team of consultants to assist him. 

To understand what we did, a background about MCF is in order. MCF was a unit of the government of Karnataka which was taken over by Mr Vijay Mallya in the early 1990s. It was till then a loss-making unit but after Mallya’s take-over it started turning the corner. Around 2000, the then MD realised that, in order for MCF to fully turn around, they had to go for radical organisation transformation. So when we started our interaction before giving a proposal, Madhavan had insisted that KSMA have to visit the plant and interact with its people across the organisation and also see for ourselves the state of affairs. MCF agreed and arranged for us to visit the unit over 2 days. During our discussions with a crosssection of personnel, and observations we made when we moved around the plant, we noticed  major issues emerging:

1. The plant was badly maintained and the general housekeeping all over the factory was very poor.

2. All the employees worked in functional silos and they had a high level of interpersonal conflicts and distrust.

3. They had large amounts of materials lying around everywhere in the factory and every department had many storage shelves overflowing with old files and materials stored and they were even indenting for additional space for storing.

4. Finally, the workers and labour unions had adversarial relations with the management and, due to various historical reasons, they were exploiting the weak management which had run the organisation before Mallya took over, and they continued the same even after that.

Based on this appraisal, KSMA proposed a four-pronged intervention. 

1. To streamline the use of space and materials and also get everyone involved in managing it, the Japanese tool of 5S was to be practiced by everyone from top management to the bottom-most workers.

2. To ensure that the plant ran without breakdowns and with most optimum efficiency, Total Productive Maintenance (TPM) was  proposed as the second intervention.

3. To involve everyone across the organisation and to build trust and team-work culture, CFTs would be formed to address various problems which KSMA called as KRAs (Key Result Areas). This was designed more like a Kaizen exercise practised by Japanese management principles.

4. To involve the workers and get them to participate, Mr Madhavan introduced an innovative approach by getting one of the union leaders from Tecumseh, who had benefited from his approach, to work as a consultant in our team to interact with the workers and get them to come on board for this exercise.

Mr Madhavan and I led the KRAs, Rajan Mahendra, who was one of the other consultants, led the TPM exercise with support from one more consultant and Col Subramanian, who had worked with Mr Madhavan in Tecumseh to implement 5S, led the 5S project with help from the union leader to educate and implement the same with active worker participation. 

After conducting the initial round of workshops educating the top management right down to first-line engineers on the concepts and approaches of the above interventions, we got down to the actual work. 5S was taken up as a major initial project involving everyone across the company and, within a month of launching it, the results started showing in terms of organised space and release of unused shelf space and materials. Over the next 6 months, we estimated that they had recovered scrap which could be sold, and useful materials lying unaccounted for in the books,  worth a total of Rs 60 lakhs!!!. This by itself was more than the total fee KSMA was charging them for the complete assignment spread over 2 years!! 

In order to focus on the real problems for both TPM and KRA,  KSMA arranged for a structured exercise and collected a large number of symptoms being touted as problems by everyone. These were grouped into various categories of focused problem statements which became the basis for forming cross-functional teams. We created 12 teams working on various TPM projects across the plants and 20 teams working on the KRAs across the organisation. In the case of TPM, the teams mostly consisted of technical members along with procurement and finance, whereas, in the case of KRA-based problems, other departments were also involved. 

While the 5S exercise moved fast and started showing results quickly, the other two interventions took some time to take off. One of them was that, while we spent 3 days a week at the plant guiding the teams on the steps to be followed, they were supposed to work in their respective teams at least 2 hours per day on this project. We found that this did not always happen due to everyday crises or other priorities. Over time, however,  we managed to get over this hump and moved on. At the same time, a major labour problem was brewing and we had to intervene in this area also, based on Madhavan’s vast experience in that area and our own insights of ground reality gathered by then of the real issues and how to handle them differently from what they were used to. 

The net result was that some of the problems got addressed quickly while some had to wait for the labour trouble to be resolved before progress could be made. But something more interesting started happening, which was the original intention of this assignment. Culture Change. We noticed that, due to working as a team on various problems, the departmental and functional barriers started coming down. We found the team members sharing anecdotes about  how they started addressing routine day-to-day problems differently than before. 

For example, they had a culture called  “AAVI”, short for Avoid All Verbal Instructions. As a result, memos floated around without the actual problem getting addressed. Now the AAVI disappeared since the same people were working together in various CFTs and started addressing such issues quickly across functions. 

Similarly, we started getting feedback on many other previously divisive issues getting sorted out quickly. But while this was happening at the lower level, there were still walls between the senior management personnel who were not directly involved in any of the teams. So we came up with a couple of problem areas which had to be addressed by forming teams only among the senior management personnel and that took care of breaking the walls between them.

I was involved in the project between August 2000 for about a year. I believe we achieved one basic goal of this assignment: to bring about culture change and permanent improvements in many of the problem areas. The company also started performing better over a period and eventually MCF was taken over from the UB group by Zuari Fertilisers and Chemicals Ltd, an Adventz group company. From my personal point of view, I learnt a lot of new ideas and concepts from Madhavan on change management and the tools that can be adopted to deal with it, which I could use in my subsequent work with other clients. I also got to know Rajan Mahendra, who was 20 years younger than me, and we started working together in many subsequent assignments with very interesting results. I will share those in my future posts.

My Journey As a Consultant - 19

 Managing Change in a large Paperboard Mill

Pradeep Dhobale, MD of ITC Bhadrachalam Paperboards Ltd.: “I have a big challenge here. Every department and function has achieved its performance bonus. But the company as a whole has not achieved the financial goals. This is a big paradox. I want you guys to address this problem and help us achieve the corporate goals while achieving functional goals.”

Raghav and I had been interacting with ITC Bhadrachalam Paperboards Ltd (IBPL) since 1996 when we were  working with Glaxo. We had met one of their senior commercial managers on a flight between Bombay and Hyderabad. He was sharing his experience of attending a workshop on BPR recently and was wondering how he could implement those ideas in his function. We shared our experience with Glaxo and emphasised that BPR had to be implemented across all functions of the organization for it to work. 

He was sufficiently impressed with us to invite us to meet his boss, the VP Commercial, to discuss our approach. He in turn arranged for us to have a lunch meeting with his MD, Mr M P Malliwal at that  time, which led to our being invited to conduct a half-day workshop for 55 senior managers of IBPL  on BPR. This was around the end of 1996. Shortly after this, the company got busy with a major Rs. 600 crore project to upgrade their paperboard technology and told us they would get back later once this new project was established. 

Around this time, we were also introduced to Mr Pradeep Dhobale, who was heading the manufacturing operations at the factory in Bhadrachalam. During our meeting, I found out he was from IIT Bombay, a couple of batches junior to me, and we warmed up to our relationship quite well. We thought that this postponement may not lead to an early assignment and parked ITC Bhadrachalam at the back of our mind to be approached later. In the meanwhile, through our first contact in this company, we heard that Mr. Malliwal had retired and Pradeep Dhobale had taken over as the MD.

Towards the end of 1999, we got a call from Pradeep saying that they had invited many consultants like Price WaterHouse, Ernst and Young, KPMG, etc. for a presentation on Change Management to the top management of their company and he wanted us also to make a presentation of our approach and experience. We told him that we were not in the league of the big names he mentioned and, unlike them, we worked with the organisation team to implement BPR and not to give a report. How could we be compared with them? His response: “Look, we have decided to invite you both, so you have no choice but to make a presentation before we can decide on whom to engage.” So we agreed, as we had nothing to lose and everything to be gained, pitted against the Big Five global consultants!!!

We quickly prepared a powerpoint presentation, sharing the insights gained by us till then, working for a few organisations mentioned in the previous posts, and ended with a strong pitch for why we would make a difference to actual implementation with our approach. And we left it at that, knowing that in a large corporation the traditional wisdom of hiring a consultant was to go for a well-known name and play safe. Who would take the risk of hiring two relatively unknown guys with only some recent experience in India, whereas the Big Five came armed with their global experience? So we went back to our work with our clients, knowing we never stood a chance here.

To our astonishment, around March 2000, Raghav got an early morning call from Pradeep asking if we wanted to work with ITC Bhadrachalam and, if so, to drop in the same day at 11AM. This blew our mind, since we had totally given up hopes of any work with the company! 

We hurried to his office and met Pradeep at the agreed time and the first sentence from him was what I have quoted above. By this time, we had also got exposed to concepts of Lean Management and Theory of Constraints and we shared our perspectives on local optima and global optima and avoiding waste and aligning processes to customer needs. So, after a brief discussion, he arranged for us to meet the commercial team to finalise a contract and soon we started a major engagement with one of the big names in the Indian corporate world! We never really learned why we were chosen above the Big Five, but clearly Pradeep had put his head on the block with his belief in us.

Unlike our previous engagements, this assignment covered the complete supply chain from customers to factory to vendors. It was a big canvas and involved very complex operations from procuring to manufacturing to supply and payment collection. The details of this case would be a good case study in change management but, due to our Non-Disclosure Agreements with all our clients, I cannot go into the details here. I can, however, share some interesting insights which became a learning experience for us too.

On the market side, the company had both a strong dealer network who supplied to smaller customers as well as large customers who bought directly from the company. But even the large customers were relatively small players whose end customers were much bigger than them. For example, IBPL supplied high-quality paperboards to converters who made them into packaging materials to be supplied to large consumer products companies like Hindustan Lever, Colgate and many others. Apart from that, they also had their own internal customer in the form of the Paper Product  Division of ITC, which was the biggest cigarette manufacturer in the country, apart from many other agro products for which paper packaging boards were used. 

Traditionally, the paper mills worked on a model in which all customers had to give advance indents of their requirements and this would form the basis for production planning, manufacture and supply. However, as competition increased, the customers found that they had to make constant changes in their business plans and they wanted the paper mills to quickly respond to their changed needs, and this could not be fitted into the advance indent approach. This caused constant friction between the sales and manufacturing teams and we could experience this when our CFT met and there was constant conflict between team members from these two functions during our early deliberations. 

While the end customers were big names for the converters, IBPL as a supplier also was a big vendor on the other side and these customers felt they were getting squeezed between two large corporates. This caused a lot of resentment towards IBPL which was not visible to any one till we took our team to meet them to get first-hand feedback from the customers, which normally gets filtered out when it comes through the traditional sales and marketing team. The most interesting finding was that even those customers whom the company thought were very happy with them had a lot of complaints. This was a major turning point in our approach to come up with a reengineered process.

When the company had expanded their capacity in the factory with a new technology plant, they had also invested in sophisticated automatic computer controlled machinery for cutting paper rolls and a huge storage facility which was totally automated to keep stocks and dispatch to customers. They found that, while they had huge stocks, the orders came for special items due to market changes which were not available in stock and needed to be produced for immediate delivery. The paper cutting facility was also causing a bottleneck due to computerised planning and someone had quietly disconnected the computer so that they could respond manually to sudden changes in the manufacturing plans. 

The most important aspect was the IT system they were using. Only five years before we started our work, the company had invested in a large IT system which was a classic computerisation of their manual way of working. When the reengineering team took a look at the system, they  found that it needed to be completely overhauled to become a system which would be aligned to the BPR recommendations.

It took us six months to finalise the redesign and get it accepted by the management. To give full credit to the  top management team, they were very open-minded to understand the issues raised by the CFT and the redesign suggestions for all their processes. In fact, they went ahead with a decision to invest in a new IT system which would enable the smooth implementation of the BPR team’s recommendations. To their credit, they took charge of the implementation without much active involvement from our side. Our association with IBPL lasted for a year before we signed off, collecting our final payment. I met Pradeep Dhobale  after a couple of years on a flight from Hyderabad to Delhi, when he told me they had implemented most of the recommendations and invited us to come visit them to have a look at the results of our work. That was indeed a very satisfying moment in my life!