My Journey As A Consultant - 12

 Early Engagements and Insights Gained

“So, out of 100 tenders for which you quoted last year, how many became orders?”

“About 10, sir.”

“H-m-m. So, ten percent strike rate. And how much money did your company make on these orders?”

“None. We made a loss. And one of the main reasons was we missed the delivery deadline of six weeks by several months and incurred cost increases and penalties!”

“I see. So, in place of winning ten percent of the orders we quote for, shall we aim for HUNDRED percent? And let’s ensure we deliver ALL orders in, say, THREE weeks…”

When we started working on our first assignment at Hyderabad Batteries, and subsequently with other early clients, we were honestly not prepared for the kind of insights we got of the nature of problems faced by the client organisation and the types of solutions that emerged post implementation of Business Process Reengineering (BPR) concepts as adopted from the book by Hammer and Champy (referred to in the previous post). In order to ensure a proper framework, we literally followed the guidelines given in the book on how to go about implementing a BPR exercise. We formed cross-functional teams (CFT), set up Steering Committees (SC) consisting of senior managers, and identified a main sponsor at the top management level who, along with the SC, would be responsible for implementing the redesign recommendations made by the CFT and ensuring that the new processes were sustained as a way of life in future.

The first project we took up in the Power Systems Group was what we called the Order Fulfilment Process. Before we identified the name for this process, there was no recognition of this set of activities as a process in the company. The whole process was fragmented around various departments which were working in their respective silos, like any traditional company. The CFT we created had a member from each of these individual functions and they had a good working knowledge of the day-to-day operations. All of them agreed that, when they quoted for a tender, they always provided for a 60 percent gross margin; in practice, however, they were losing money on every order they executed. As usual, each member put the blame on the other functions for not doing their job properly, as is typical in most organisations.

So we asked the team to track a sample of 20 orders at random, starting from getting the tender document till the final payment was received, post the guarantee period. We also got them to collect various statistics of the number of tenders they participated in, etc., to get a feel for how effective they were in getting orders against the number of quotations. The team was shocked to find that, in a typical year, they had quoted for nearly 100 tenders with a strike rate of less than 10 percent. When we asked why this was so, the sales team member said they were not sure which order would  come their way, so they simply quoted against all enquiries. This, despite the fact that each tender called for a unique system design, with dozens of components to be put together. With such a large number of quotations to be prepared, every tender ended up involving making last-minute guesses by the sales team and the estimation team to meet the tender deadline. As a result, in every case where, luckily, they actually got an order, there was a lot of to-and-fro between the design and manufacturing teams, along with the purchase executives, and they usually had to approach the customer for several amendments to the order. 

Though the sales team usually quoted 16 weeks as the delivery period, nearly 12 weeks would pass before the order was clear in all respects and available for purchase and manufacturing to execute. Invariably, this resulted in  the actual order getting executed after anywhere between 24 to 32 weeks, leading to penalty clauses and cost escalations and wiping out the entire assumed margins. So while, in the beginning, everyone was blaming manufacturing for the delay and the cost increase, the realisation dawned on the CFT that the problem started with how the tenders were handled in the first place. 

We therefore asked the team to first set goals which looked impossible and crazy at the present moment. We pushed them to agree that the strike rate should be 100 percent and all deliveries should be done within 4 weeks. Having read the book together, they realised that, unless such “unrealistic” goals were set, no meaningful  reengineered process could result. 

The details of the reengineered process they came up with is a textbook example today, we even presented a paper based on it in a Manufacturing Excellence Conference later and half the audience responded saying they have similar problems in their own organisation. I am not going into the details of the redesign here. However, it is important to mention here that the 80-20 principle, along with aligning the supply chain right through from the customer requirement to the vendor before an offer was made, was the most important dimension of the reengineered process. The existing departments were disbanded and new teams focused around customer clusters were created around this supply chain. Very soon, the strike rate started improving to 80-plus percent and deliveries were getting made within 2 to 4 weeks from the acceptance of the order. The teams also noticed that, without adding more manpower or manufacturing facilities, they were able to handle three times more orders than before, and the volume of business started increasing steadily. 

I happened to meet the marketing manager of the company a couple of years later at Bombay airport and I asked him how things were at the company. He said that he was on his way to Kuwait to participate in an international tender for the Power Systems Group. He made a pointed comment that earlier he was always chasing the manufacturing for orders to be executed on time, and now the manufacturing team was chasing him to get more orders, as they had more capacity than they earlier estimated.

This was a very satisfying experience indeed. The Power Systems Group, which was struggling to make a profit on a  turnover of ₹15 crore long ago, is today doing several hundreds of crores of business and driving the growth of the Hyderabad  Batteries group.

The other project we undertook involved classic manufacturing improvement using concepts of SMED (Single Minute Exchange of Dies) and OTED (One Touch Exchange of Dies) in their battery manufacturing unit. Here the problem was that the manufacture of all batteries involved, as the first step, making the cells of the battery using a die press followed by a sintering process. Once the cells are made, they need to be encased in metal containers which involve cutting smaller sections from a large sheet before they are formed to hold the cells. These cells are then assembled to form an appropriately rated battery. 

A major problem they faced was a mismatch between the stock of these components and the requirement for manufacturing. This in turn was because of the large batch sizes programmed for these machines; and these long runs were necessitated by the long machine time lost in changing the machine set-up from one component to another. Naturally, everyone was blaming everyone else. 

So we formed two teams, one for the die press area and another for the sheet cutting. The first team consisted of engineers who were working as supervisors at the press section and the other team consisted of the workers manning the cutting machine with the supervisor as one of the team members. 

For the die press, we asked for data on the setup change method and how much time it took to make the change. My associate, Raghav Rao, who had good experience in this area, used a video camera to record the actual process, to show to the team what was the real value-adding time and how many activities they were performing which were not adding value but incurring a lot of time to complete the change. The current method involved a very complicated process which eventually took nearly 8 to 9 hours to change the set-up for different dimensions of the cells. Using the SMED principles, we challenged the team to come up with design changes in the machine set-up, to bring the whole process down to less than 10 minutes. Obviously, everyone balked at the idea and said it was crazy. Even the supplier of the machine from abroad has not done it. We said this was all  the more reason they should do it! 

Without going into the technical details of this project, with some probing and questioning on the current method, and forcing the young engineers to think outside the box, Raghav got them to come up with a new design for the dies which made it possible to reduce the set-up time from 9 hours to 30 minutes. We said we had agreed it should be less than10 minutes, so they had to work on improving this further to reduce the time. Once they realised that they were able to reduce the time to 30 minutes, which had looked impossible to begin with, now the young team took it up as a challenge and came up with a new design which achieved the set-up change in 9 minutes. 

In the second case, where the sheet metal needed to be cut to different sizes, the set-up time was taking anywhere between 30 minutes to one hour for different dimensions of length required. It also involved some waste due to trial and error during the set-up. Instead of telling them to think of a new design, we took the workers’ team to a marble vendor where, using a similar machine, a young boy was cutting different lengths of marble using a back stopper, and changeover from one length to another took less than 1 minute. One look at that, and all the workers unanimously said they could do the same in their factory and implemented a solution which achieved OTED at the sheet cutting section.

Having completed our engagements at Hyderabad Batteries group, we noted down what lessons we had learnt from these projects. One of the most important lessons was that the apparent problem seen by everyone was not the real problem, but only a symptom of something more deep-rooted in the organisation. And when we apply new concepts of Reengineering and Intelligent Manufacturing and get the people in the organisation to work on adopting them, the real solutions come, which now becomes owned by them and implementation happens.

In the next post, I shall share our journey further into other organisations, how we first got management buy-in and then worked on a pilot project to demonstrate how these ideas could be adopted in any organisation.

My journey as Consultant - 11

 Aligning Insights from Books with Personal Experience

For ten years, as I worked with small- and medium-sized businesses, I observed a major aspect of difference in running such businesses from what we had been taught in business schools and technology institutions. Our education system has evolved over time to impart knowledge in compartments, with a focus on getting specialisation to fill the needs of the modern industrial world, where large organisations are run based  on such specialisation. My training was no different. However, when I  started working with small- and medium-sized businesses, the boundaries of such specialisations were invisible and most of the operations were integrated as a whole, while the business was managed by an entrepreneur. Everyone working had to know something about every aspect of running the business, and roles were highly interchangeable when the need arose. 

This was partly because most of these businesses were an extension of the personality and background of the promoters and partly also due to  lack of resources to afford specialists to be part of running the businesses. Even if by chance a specialist did join, he would be totally out of place in that environment. If there was a need for such specialists to address specific issues, they had to be hired as consultants and not as full-time  employees. 

I started calling this the holistic approach to managing a business and shared this insight with other professionals who were working for large consultancy organisations, where each of them was part of a specialist group addressing a large corporate problem using their specialisation. One such interaction with Dr Ramdas Ramakrishnan, who was working for TCS at that time, led him to invite me to share my views with a group of consultants based in the Hyderabad office of TCS. I am introducing him here because Dr Ramdas became part of my change management efforts in later years through a breakthrough technology about which I will share more information in later posts.

So, while reading the book Reengineering the Corporation by Hammer and Champy, I started feeling that I had already experienced the major lessons from the book during my work with small and medium businesses, particularly since I was also involved in helping small businesses in adopting the emerging personal computers. Although this facilitated sharing of data between different aspects of the business which were computerised, it was important to ensure they would continue their small business approach. And, while ensuring growth, it was imperative not to add complexity in the day-to-day management, which was common with large organisations before information technology evolved. 

The thrust of the  book was how, with information technology as a key enabler, large organisations could be managed like small businesses by focusing on the processes and their outcomes, rather than on the individual functions. The book was responsible for making fundamental changes in management thinking across the world, along with a few other books like Theory of Constraints by Eliyahu Goldratt and Lean Thinking by Daniel Jones and James Womack. Before that, Total Quality Management (TQM) based on Japanese management practices was the rage of management thinkers and practitioners; suddenly, a new lexicon of management evolved based on ideas of organisation transformation and change management. I got immersed in absorbing these concepts by reading most of these books and also plotting ways to help organisations adopt these ideas. 

This was when Dr Prasad, while asking me to help implement reengineering in his organisation, also directed me to focus on teaching his people to adopt these concepts, rather than doing a study and producing a report, since he was sure the latter approach would not work. He used the words “Don't give them fish, teach them how to fish”. And, in the book too, Hammer and Champy had outlined a methodology for implementing the ideas of reengineering using the people from the organisation to reengineer the corporation. 

Backed with my self-confidence, along with a clarity of approach, I finalised a contract with Dr Prasad for taking up the first engagement in the power system group which was having problems. The methodology I followed was unique. I got a cross-functional team assembled and told them that, instead of giving them a lecture on the concepts, I would like all of them to read the book together as a team, so that we could discuss the ideas from the book for better understanding. This, I told them, would be invaluable when the need arose later to adopt them in their business context. Many of these youngsters had stopped reading any books after their college days once they started working and hence, to make it comfortable, I got the team members to read a portion of the book in front of the others in rotation till we completed the full reading. In between, we stopped where needed for me to clarify some points raised by the team members. During these discussions, I realised that part  of the assignment involved going into the manufacturing aspects of the business and I had not much exposure in that area since I had worked mostly in marketing, and I felt another person who had a good background in manufacturing could help me add value to the assignment playing, like me, the role of a consultant.

I had met Raghav Rao socially through my association with a Rotary Club where he had recently joined as a member. He was a mechanical engineer with an MBA from IIM Ahmedabad, five years senior to me, and with corporate experience as a CEO. He had just started his own consultancy with a focus on adopting good manufacturing practices based on Japanese ideas and a passion for working hands-on solving his clients’ problems. While discussing with him about my work, and exchanging notes on what he was doing, I realised that he could be a perfect associate, provided two things fell into place: one, he must be excited enough to join me and, second, if he agreed, Dr Prasad should be open to the idea of my bringing one more consultant to support me, and doubling the agreed fee. 

For the first part, I gave Raghav a copy of the Hammer & Champy book and asked him to read it; if he found it exciting, I would approach Dr Prasad along with him to give my fresh proposal to engage both of us together. After reading the book, Raghav agreed to my proposal and we met Dr Prasad after I had briefed him about Raghav and why I wanted him to work with me. 

Dr Prasad was always interested in improving the manufacturing practices in his organisation and was also convinced that Japanese management ideas such as Just In Time, Single Minute Exchange of Dies, One Piece Flow, etc., along with many ideas propounded by Shigeo Shingo, who was instrumental in bringing a major revolution in Toyota and other Japanese organisations, were worth adopting. Assessing Raghav’s knowledge and expertise in these systems, Dr Prasad agreed to double the agreed fee so that the two of us could work both on reengineering and improving manufacturing practices. 

Thus started an exciting association with Raghav and a roller-coaster ride of new assignments across many other medium to large corporations in which together we helped them implement change management ideas. Raghav gave Shingo’s books on Non-Stock Production for me to read and understand and help him in using the ideas from the book in our assignments. 

One unique decision we took was that we would not hire assistants to work with us. Instead, we called upon the client CEO in each assignment to spare us 5-8 bright young executives full time, who would be taught the principles that guided us and who would actually come up with the required process changes and handle the nitty-gritty of implementation. Not only did these employees know their processes (and their limitations!) the best, it was easier for the other personnel of the company to accept their proposals since they took ownership for the new ideas, and the changes were not seen as proposed by “some outside consultants”. To this end, we never made a presentation of our recommendations to the management -- it was always the reengineering team that did it.

Slowly, we developed better insights for future assignments from the current assignments to take on more challenging and complicated projects over the next 15 years. We also adopted innovative techniques to get the team members to learn to fish by taking them to observe similar situations in other, completely different, industries and how the way they worked could be adapted to their own problems. Since, in Hyderabad Batteries group, we were simultaneously working on improving manufacturing while reengineering the company, we formed multiple teams in the manufacturing areas to work on specific projects and some of the teams even involved workers on the shop floor who were actually doing the work. It was a delight to see them get astonished at how they could make their work much easier and more efficient by working smarter through intelligent process changes.  

The role of information technology in implementing reengineering was strongly emphasised in the book. But when we started this work in 1993 with Hyderabad Batteries group, or later with many other clients, unlike in the USA and some of the western countries, the use of computers and information technology was very low in most of the organisations in India. That was a major hurdle since, as part of implementation, we had to get these organisations to invest in computers and other networking technologies which were just introduced in the market and required capital budgets which they had not provided for before the teams came up with their recommendations. With organisations where the owner-manager was the deciding authority, getting such commitment was not a major problem; but, with large corporates with whom we worked later, the process of getting fresh capital budgets approved for IT was cumbersome and time-consuming, sometimes delaying implementation. 

Moreover, the IT industry itself was in its nascent stage as regards its focus on the Indian market, since IT companies were aligned to the more lucrative markets in the USA and other developed countries. So, getting affordable IT vendors to support implementation using IT was a big challenge and both Raghav and I had to use our network of alumni and other contacts to get them to come on board to develop customised solutions for our clients’ projects. 

Over the years, as the IT industry evolved and Indian companies also became more amenable to investing in IT, through recognising its importance in running modern businesses, this area of implementation became less of a problem. However, getting senior management to come on board to commit themselves to successfully implement these new ideas was often a challenge. They saw the reengineered processes and structures as a threat to their “fiefdoms” since, upon implementation, many of their current roles and importance would be lost and they were afraid of what was in store for them in future. And, unlike in the USA, where hire-and-fire practices were commonplace, lifetime employment was the norm in the Indian corporate world. Considerable tact, as well as the buy-in of the CEO, had therefore to be used in these large organisations in dealing with the human resource dimension of change management.

In the next post, I shall share how our journey evolved from the Hyderabad Batteries group to other organisations and how we went about getting CEOs of our prospective clients to first get excited about what our intervention could bring about, before going forward with each of them. And, additionally, how our proposition of being paid our fee progressively based on the success of our ideas, brought comfort to the CFO! In the process, I will also describe briefly what we achieved in each of these assignments, which gave us the foundation to build on for the next assignment.

My JourneyAs Consultant - 10

 Transition From Jack of All Trades To Change Management Specialist

While the Indian economy was going through major turmoil during the post-Mandal period, there were a lot of changes  taking place in the global environment too with the fall of Soviet Union as a megalithic state and the emergence of Japan as a major economic force. The liberalization and opening of the economy in early 1992 ushered in a concerted drive across the business spectrum to manage and cope with change. I was a voracious reader of management publications on Change Management. I saw that future  trends in management consulting would head in this direction and prepared myself to embark on a new journey. Two major assignments laid the foundation for a rewarding and very satisfying phase of my consulting career.  

Around this time, a lot of management literature started appearing in the form of articles in important journals and books by some management thinkers talking of organizational change and transformation as an inevitable path for survival and growth for large and other businesses. I read most of these publications and started realising that there was a need to reorient my own practice to adopt these new ideas to my client situations. Two major assignments and the clients associated with these assignments made it possible for me to focus on Change Management as the key driver for helping these clients. This started a new journey in my consulting practice while retaining the service model which I had honed with smaller clients. This also opened the doors for working with corporate clients later on. 

Another factor was that, post the economic reforms, many large and medium  businesses in India which had done well during the License Permit Raj started facing existential problems. Meanwhile, the global Big Five management consultants had become active in the Indian market, churning out reports and advisories to the industry and individual clients, and this opened the  mindset of Indian businesses to take outside help from consultants to help them deal with their situations.

In this background, I got my first breakthrough with both Apollo Hospitals and Hyderabad Batteries Group, around  the same time, in mid-1992. I had first contacted both  these clients to promote the Direct Mail and Direct Marketing services. In both cases the CEOs, after my initial meetings, got back to me with a proposal to engage me to help address their main business problems as a consultant. As I mentioned, Direct Mail advertising became the window through which consulting work was coming my way. Let me present each case separately  and  show how the move towards Change Management evolved.

Apollo Hospitals had started their Hyderabad Unit around mid-1988 after their major success in Chennai as the first corporate hospital in the country. Unlike the Chennai Hospital, which was located in the heart of the city, the Hyderabad unit was located in the then outskirts area of Jubilee Hills, which was just developing as an upmarket residential neighbourhood. In order to ensure that they got good references from local doctors, they had even made many local doctors shareholders in the Hyderabad unit. At the same time, they also promoted the hospital as an important referral hospital for speciality areas like heart, neuro and many other critical areas by having these specialist doctors as consultants. In order to fund the hospital project, they also had taken a large term loan from ICICI Bank at that time, for building the infrastructure. 

However, during the four years between mid-1988 and mid-1992, they started incurring losses and ICICI Bank had even appointed an outside professional from the hospitality industry as Managing Director over the family members who were otherwise running the hospital along with some key doctors who were associated with the hospitals. The CEO of the Hyderabad unit was Ms Sangeetha Reddy, who was managing most of the administrative functions except the medical services. I had contacted the marketing manager of the hospital for promoting the direct mail advertising services. However he had heard about  my consulting work from a common friend and decided to introduce me to the CEO after briefing her about my background. During the discussion I noticed that Ms Reddy was focusing on my consulting work and taking me towards a possible engagement to address their problems. After listening to their side of the issues, I suggested that to get a full picture of the problem it would be appropriate to conduct an attitude survey of the employees across all categories as also a customer survey as to how they perceive the hospital as outsiders. She decided on the spot to let me first conduct the employee attitude study and based on that report she agreed to take up the next study of a customer survey. 

Without going into the details of the methodology and other aspects of how such a study is done, I will just say that I covered practically all cross-sections of employees in an open-ended discussion. A corporate  hospital is run like a five star hotel, with most of the departments associated with running such an establishment, along with medical services forming the core area. I interviewed even a cross-section of the doctors, apart from other medical technical staff. 

Finally, when I submitted my findings to the top management, it came as a big shock, as the perception of the employees about the hospital working was completely in variance with the top management view. They immediately asked me to  take up the customer survey for which I suggested that we take the help of a specialist organisation in consumer market research. I had networked with one such organisation based out of Hyderabad and on my recommendation they were engaged under my supervision to conduct the customer survey. 

Their findings corroborated, from the customer viewpoint, what the employees views were which had been revealed during the attitude survey. Based on both these studies, I recommended a course of corrective actions both from internal management as also engaging with the customers. Within the next one year, the impact of these was positive and I earned the respect of the management to get back to them later with my proposal for Change Management after one year. I will discuss this later.

Let me now talk about the Hyderabad Batteries Group. Hyderabad Batteries was started by Dr A J Prasad sometime in the year 1977 as a small business to make batteries for industrial and military grade applications and subsequently moved into manufacture of power systems using their own batteries as an important component, with plants located in multiple areas around Hyderabad. I had approached them to promote direct mail advertising services, when I met Dr Prasad. During the meeting, he found out that I had worked at  ASCI as a marketing faculty where he also had worked long ago in the same department before starting his business. And he noticed that my primary focus was on consulting, while I was also engaged in marketing services in industrial products and direct marketing services. After getting to know more about my past work, he said he would get back to me soon. I was not sure if he was thinking of marketing services or consulting as a possible basis of engagement. However, after a month I got a call from his office asking if I would join him for a dinner meeting the next day.  As I was hungry for work apart from the prospect of a good dinner, I said yes and met him at his home first for an initial round of discussions when he also introduced me to one of his company directors who had come down to attend the board meeting earlier in the day. Afterwards, we moved to a nearby restaurant for dinner, where he asked me if I could do an attitude survey like I had done for Apollo Hospitals. Since he had mentioned the multiple units located in different corners of Hyderabad, I suggested I would take one unit at a time and submit my findings, before doing the others. He agreed, but insisted I must give him the first report within 15 days and the next one within the next 15 days. I told him point blank that the number of days  depended on how many people I needed to cover in each unit and I could plan my work only after I had spent a few days initially to understand their operations and the total number of people involved. He therefore agreed to let me come back to him when I finished my study within a reasonable time.

I presented my findings of the first unit in 20 days, and of the second unit in another 25 days. As usual, the survey results showed a picture which was different from the management perspective and compelled Dr. Prasad to take some serious actions. The two units had different business models. The original business was to manufacture only batteries of different types and supply them directly to end customers. The second unit was based on a technical collaboration with a Swedish company to produce special grade batteries along with battery-based power backup systems. So he assigned me to work on the second unit to restructure the organisation to make it more efficient and profitable. I was clear that restructuring would not ensure profitability, but it could definitely improve efficiency and so I would work on it. In the process, I formed a cross-functional team consisting of 5 youngsters from different functions, designed the data collection formats  and got them to get information on the current structure and job descriptions. 

To everyone's surprise, their work revealed that they had multiple levels with, at every level, the current job descriptions for the employees showing the same work being done by multiple persons. From the front line supervisor to Vice President, in each function employees claimed they were doing the same job, except that the higher level was claiming to supervise the lower level. The classic command-and-control model had evolved with time as the organization grew in size. So the team agreed with my suggestion that we needed to delayer the organisation and flatten the structure and make the higher levels add value beyond mere supervision.

Accordingly, we finalised a new structure and corresponding job descriptions consisting of only four levels: the top  management, middle management, first line supervisors and workers. The job descriptions focused on providing value-adding roles for middle management and top management while the real work was formed by the workers with guidance from supervisors. The final report was given to Dr Prasad after 60 days as per the contract. He liked the idea so much that he immediately ordered that my recommendations be implemented. While doing so, he handed me a book, Reengineering the Corporation by Hammer and Champy, which was a best-seller in the management category at that time and said that, after reading the book, I should next work on a project to implement the concepts of reengineering in his organisation. He also said that  the first project for that would be in the  power supply systems group which he had started about 7 years back and which was not making profits despite good potential. He said either I help him turn around that unit using the concepts of reengineering, or he would have to close it down.

Here I have to mention that Dr Prasad had a Ph.D. from MIT and had a sharp mind. He employed good professionals and gave them a free hand to run the business. He never got involved in the day-to-day operational details and only demanded results from his heads of divisions. He also took hard decisions very quickly and did not hesitate to act on them despite the fact that they were not palatable to many of the employees. Somehow, after my initial work, he started engaging me in regular work in his organisation as a consultant, assigning various small projects so that I was available on a regular basis for them. So when he asked me to take up this challenge of implementing reengineering, just based on reading the book, I immediately said yes. 

This started my journey into the world of  becoming a specialist in change management initially using Business Process Reengineering (BPR) and later adding other new concepts like Lean Management and Theory of Constraints and adapting them to the individual organisational situations. My focus in all these assignments was to help the organisations implement these concepts and derive benefits from implementing them, rather than give a report and collect my fees like many large consultants were doing at that time. In fact, in many organisations, we came across such consultant reports resting inside the table drawers of top management and, when asked, many of the employees used to say that they were consultants’ ideas, they could not be implemented in their organisation. The classic resistance to change. 

We devised a model in which we insisted that the organisation take ownership for the change management project by forming a cross-functional team both at the senior management levels and operating levels with the CEO acting as the Champion, spearheading the project, while we acted as guide and catalyst for the operating teams to come up with ideas using these concepts. When the team submitted their recommendations, the senior management team, on accepting the ideas, would have to take responsibility for implementing the changes, and we linked our progressive payments to various stages of implementation. 

In the next post onwards, I shall discuss the individual engagements in brief as well as the results we obtained over the next 16 years, at which time I had to decide to hang up my consulting boots due to health reasons. During this period, I also had the benefit of interesting associates who joined me in this journey, making valuable contributions to these assignments. These assignments also gave me enough material to present interesting papers in seminars, and to write case studies to be taught in some prestigious management schools.

My Journey As Consultant - 9

Overcoming Adverse Market Conditions

 There are times when unfavorable external conditions lead to setbacks.  I faced this during the recession that followed acceptance of the Mandal Commission report by the Government of India in 1990, which resulted in political and social turmoil and, in turn, to an adverse impact on business activities across the country. I was pushed back so strongly that I ran out of money and had to even think of selling my car to generate cash. My wife's  modest income was just enough to cover the house rent and a little of the basic monthly household expenses. In those trying times, I took decisions that not only helped me tide over the situation but set me up for rewarding growth once the economic turnaround took place and liberalisation ushered in a new era of economic growth. Here briefly is my journey in those rather difficult days. 

Business conditions in Hyderabad were no exception to the recessionary conditions that gripped the country and suddenly I found that many of my regular clients were facing financial problems and were unable to either pay me or commit to new assignments. During this period, my consulting cash flows came down dramatically and I had to dip into the savings created from my marketing agency business to run the day-to-day expenses of my home. 

In the process, I was open to the idea of doing any legitimate business activity that  could bring some cash into the kitty. Since I had a marketing background, most of the ideas that came my way involved helping businesses to get orders leading to some commission income, but in the depressed market environment that was proving impossible. 

Around this time, I came across an advertisement from Datamatics Direct that they were looking for Marketing Franchisees in major cities including Hyderabad. Datamatics Direct was a direct mail advertising service provider promoted by Datamatics Corporation, known for their pioneering computer services in the mainframe era and an established player as a Registrar for shares. They had appointed Dilip Thakore, the founding Editor of Business India and an author, as CEO and he was looking for individuals who were self-employed with good professional background for this role. He promptly responded to my application and met me in Hyderabad and decided to appoint me as their franchisee for Hyderabad and the rest of Andhra Pradesh. 

Datamatics started this business based on two considerations. They had a huge database of investors and, with their strong background in computerisation, could prepare mailing lists which could be used for targeted direct mail campaigns. At that time, the concept was totally new, and part of the franchisee’s role was to educate prospective clients, both marketing executives and ad agencies, on how to use this medium of direct mail advertising effectively. 

It was an exciting prospect. In marketing, there is a concept called loss leader. Certain products and services are deliberately marketed at a loss, to help sell other products which give profit. For me, marketing direct mail services was my loss leader. I realised early that, unlike Mumbai, Delhi and Chennai, Hyderabad was not known for large corporates spending much on advertising. The earnings from this business were consequently not large but it gave me the opportunity to interact with large corporate clients and ad agencies in Hyderabad. During these interactions I found that I could also promote my consultancy services as an add-on value, which would help me market my consulting business when the economy turned around. And this approach really worked, as I got introduced to many large corporates in Hyderabad who engaged me for their direct mail campaigns using Datamatics Address Lists and later became my clients for my consulting business when the economy was opened up after 1991. Some of them include Gati, Apollo Hospitals, ITW Signode, Hyderabad Batteries Group, etc., and I shall discuss the specific assignments from these companies in my future posts. But it is important to note that having worked with Datamatics gave me a reference point later when I saw opportunities for consulting while the  corporate segment was reeling under global competition. 

During this period, I also got some unusual assignments from some of the contacts I made while promoting direct mail advertising. One of my friends, who was running a cinema theatre in the heart of the city but had closed it down, wanted to offer part of the space available in that theatre complex to promote building materials as a permanent display centre. He engaged me to help identify the prospective building materials manufacturers across the country and persuade them to take space for display as per a display plan we had designed. While the idea was novel at that point of time and many companies showed interest in the idea, when it came to making firm commitments they did not come forward to walk the talk. After a few months of running around, we decided to drop the plans as we realised that the idea was probably ahead of its time.

Another engagement was to do head-hunting for the newly-formed agri products division of ITC Agro which had plans to go into the seeds business in a big way. I was introduced to this group by the local head of a national ad agency which was handling their account. ITC engaged me to go to the heartland of the seeds business, at that time based out of Aurangabad and Jalna, identify professionals working in the many seeds manufacturing and marketing companies there, and get them a list of of such professionals who were open to the idea of working for a multinational company, without naming ITC. This was a real challenge; I had to concoct a story about a Dutch multinational who was interested in setting up shop in India to get some of these executives interested in a change in their career so that I could finally give ITC a list. 

Another assignment was organising an exhibition for the Hyderabad Automobile and Components Dealers Association. This body was doing it for the first time and they needed someone who could guide them. I was introduced to their president and secretary who, after discussions with me, decided to engage me for this assignment. The concept of organising exhibitions and fairs was popular in big cities like Mumbai and Chennai but for Hyderabad this was new at that time. Even for me, this was a totally new experience but, having worked earlier on the building materials display centre concept, I had established some contacts with people who could supply materials and set up stalls for such exhibitions, and the association itself took the responsibility of getting their members to participate in taking stall space for the two-day fair. A nice learning experience!

I also got an assignment from Coromandel Fertilisers to conduct a market survey for a new combination of fertilisers they were planning to launch in Andhra Pradesh, and a marketing audit for Dyanora Lamps based out of Chennai which had launched incandescent bulbs and tube lights in the southern market but was making no headway in a highly competitive business.

As one can see, I was willing to do any kind of assignment to earn some money during this tough period and that kept my body and soul together, with some support from my wife who could contribute from her earnings to meet the family budget. During this period, as mentioned before, my computer associate was becoming restless and decided to move to the USA and I realised that I would have to manage without a good associate in that area of expertise which was growing in importance. However, with time, I did manage to find others who had the necessary background to back me up when needed in this area.

In the next  post, I shall narrate the story of my transformation from Jack-of-all-trades to a specialised service provider in organisational change management post 1992. For that to fall into place, I will discuss two major assignments I did around 1992 which paved the way for this.

My Journey as Consultant - 8

 Interesting Experiences from Providing Consultancy as a Service

I feel immense satisfaction when I look back at a rewarding and successful career in management consulting. As an independent consultant, I sometimes had to juggle time between projects and, at other times, wait expectantly for the next project to come my way. A notable feature was the wide range of interesting projects I got from diverse industries. These projects brought out the best of my training in holistic and systemic thinking that was inculcated in me at IIM Bangalore. I was also able to leverage my networking skills that kept me in touch with a wide circle of professionals from IIT and IIM who gave me valuable insights into industries and technologies that I was new to. What gave me the greatest satisfaction, however,  was the level of value addition I brought into major projects that won the respect and approval of all stakeholders of the project. Here’s a look at some of the projects that I rate high on the satisfaction scale in the early years and my approach to these demanding but absorbing assignments. 

   

Once I became an independent consultant, it became imperative that I had to singly work on getting new assignments even while executing a contract that was in hand. When one is busy working on an assignment, there is no time to look for a new one, and when an assignment gets over it takes some time before getting a new one. Sometimes, more than one assignment used to land up at the same time and it required juggling time between both so as to meet the time deadlines, without compromising on quality. Hence I had to engage an assistant to help me with my assignment and most often I had to choose from fresh graduates from a local management school or  engineering college who were taking up the job offered by me as a learning experience before moving on. I therefore had to be prepared all the time for managing alone. I always managed that, but felt the need for an additional associate to increase bandwidth while helping to grow the business.  

The first lesson in marketing I learnt here was “never say no, I can't  do it”. Therefore I always said I would do any assignment offered to me, and started working on each engagement with an open mind to understand the basic issues and use my training and experience to come up with ideas to deal with the issues. Quite often, I also approached some knowledgeable people from the same industry to get insights before adopting their inputs to my assignments. As I mentioned earlier, I had meticulously kept in touch with my network of contacts from IIT and IIM, along with friends across the country, and these came in useful in many of these assignments. Hence, throughout my consulting career, I had the good fortune to  work across many industries and sectors and sizes of organisations, both Indian and multinational. 

There were two distinct phases in this: the early years between 1983 to 1992, and the later years between 1993 to 2009. I will share some insights from a few interesting assignments between 1987 to 1990 before the Mandal Commission report acceptance put a brake, forcing me to change my approach from 1992. I then had to reinvent myself to be relevant in the post-liberalisation period, which I will share in later posts.

Elico Private Limited: I mentioned Mr DVS Raju, founder and Managing Director of this company, in my previous posts. I was helping Elico to diversify to manufacture personal computers, mainly IBM PC clones. In those days, government policy was to encourage local manufacturers to produce these PCs using imported semi-assembled kits; later, they were to  import only critical components, and combine these with locally available components in a policy framework called Phased Manufacturing Programme. This project required some technical expertise about PCs which I arranged through my classmates from IITB based out of Bombay and Pune who were offering technical services in the field of electronics, and Elico created the necessary infrastructure based on my project report and got the government approval for making PCs in 1987. Unfortunately for Elico, by that time, the market prices for PCs crashed across India due to many small and large players creating surplus capacity. 

Around this time, Computer Maintenance Corporation (CMC), a public sector undertaking, was looking for a local manufacturer to produce some products they had designed and developed for telecom industry applications, and supply them in large numbers within a stipulated period. They had identified Elico as a possible vendor, along with a few others, and invited Elico to make techno-commercial offers. Since I was actively involved with  Elico at that time, Mr Raju asked me to handle this whole project. This required me to prepare an offer document based on the tender floated by CMC, negotiate the final order, procure all the components from across the world, get them assembled and tested as per the drawings and specifications provided by CMC using the facility created for making the PCs, and get the CMC inspection team to approve the finished product before taking delivery and getting the payments. I was indirectly playing the role of a General Manager while having a consulting contract and was, ofcourse, supported by my lone employee, who had an electronics engineering background, and the Works Manager of Elico. This was a one-of-a-kind assignment. 

During the course of this engagement, I had kept the CMC fully informed of the status of progress in our efforts to deliver on time and finally ended up delivering all the units ordered 1 month ahead of time, without any quality acceptance issue. CMC was so pleased that they gave additional orders for the same items, while inviting Elico to produce another product in the same category but with a different design. By this time, I had trained the Elico employees how to handle such business on their own without my physical presence, and I decided to move on.

Udayam: Udayam was a leading Telugu Newspaper launched by the famous Telugu film producer and director, Dasari Narayana Rao. It was a big hit as a new newspaper launched with more than 1 lakh readers right from the start, and was considered a big threat to dominant Telugu newspaper Eenadu at that time. Four years after its launch, however, it was having severe financial problems and was struggling with working capital shortage. A consortium of financial institutions and banks led by Andhra Bank had funded this project based on the reputation of the promoter as a successful film producer and also with some strong political backing. After one of our presentations to the financial institutions on another project, we got a call from Andhra Bank and AP State Financial Corporation asking us to help them conduct a diagnostic study of the Udayam newspaper, since they were not able to understand the underlying issues leading to cash losses despite the newspaper circulation increasing steadily and the advertising revenues showing healthy growth, though the number of debtors in the books was also growing. So the terms of reference were very comprehensive and  literally asked us to investigate if there was any diversion of funds. 

When I met the officials of both the banks and the Udayam newspaper in the introduction meeting, I realised that this was going to be a very complex engagement requiring going into many aspects of newspaper and magazine publication and the business models which dictated the survival of such units. I asked for 60 days’ time and a large fee to cover our costs and, if needed, outstation travel costs to be borne by the client. They agreed to all our terms but insisted that the report should be available within 60 days, as they had to take some major decisions regarding continued support to the newspaper group. 

Whenever I have undertaken any diagnostic study, I have initially spent time talking to the key operating personnel about how the business is done and the issues they are facing in the day-to-day operations. Then I have gone through their financials for the past years, upto five years if needed, to see the evolution of the financial problems as available from the P&L and Balance Sheet. While in many businesses there will be some margin over variable costs, to my surprise the sale cover price of the newspaper and the magazines did not cover even the cost of the paper on which they were printed. During discussions with both internal executives and other industry veterans whom I had spoken with, using my contacts, I also realised that this industry runs on advertising revenues to cover all costs and generate profits in the long run. However, in the initial years, the promoters need deep pockets to  invest in increasing circulation, which in turn only increases the operating losses, before the advertising revenues start pouring in based on circulation figures and other demographic data of the reach. 

There was another aspect of types of advertising revenues that accrue. All casual advertisers had to pay the charges in full as advance to book advertising space, while large regular advertisers who went through advertising agencies got credit facility, with the ad agency guaranteeing payment, if they were the accredited agency. 

In the case of Udayam, they had a third kind of advertiser who booked full page ads directly with the newspaper, when they needed. They were all film producers known to Mr. Dasari Narayana Rao and if the film was successful they paid the money immediately; if the film failed, however, that payment would never come. In the course of understanding this, I had to visit various cities and meet  these film producers who all promised to pay their debts once their next film succeeded. 

Udayam was really faced with a double whammy. Its increased circulation was increasing its operating losses and its bad debts in the books were only making matters worse. So I asked for and got a meeting scheduled with Dasari Narayana Rao and questioned him on his understanding of the economics of running this business. During the meeting he said honestly that he never understood this business like he did the film business, but felt that running a successful newspaper would give him better political leverage. 

After I gave him my analysis of the issues faced by him, he asked me what he should do and I advised him that he should sell out before he lost even more. On the 60th day, I  submitted my report and, in the meeting with the consortium that followed after they read the report, they asked the same question: should they continue supporting the current management? I told them clearly that they should look for a new investor with deep pockets who could fund this venture without borrowing from the banks. After a year, a large liquor group bought over the Udayam newspaper along with all the other publications and, after struggling to keep it running for a few years, closed it down.

Digiana Television: Shortly after I finished the Udayam study, Canara Bank, which was one of the consortium banks, approached us for conducting a stock audit of  Digiana Television, which was already closed and was under Central Bureau of Investigation (CBI) scrutiny for fraud. Thinking it was a small assignment, we quoted a modest fee and started work. Soon I noticed that we had to do a lot of work in sorting out the stocks in the stores, since the promoters had deliberately mixed up all the stocks to confuse the banks. This process required more work to be done and I kept pointing out to the bank officials that we had not provided for this work in our fees and they should get it done from the promoter before we could complete the work. The lower level officials kept assuring us that they would recommend additional payments once the work was done, since they would then have a clearer picture of the extra work done by us, and asked us to complete the audit. In the meanwhile, the CBI officials called us and said that, since there was a criminal investigation going on, we should do a thorough job so that our report could be produced as evidence in the Court for proving the fraud. In good faith, we completed the work, which took a much longer time than we had planned for, and gave our report showing the difference between our assessment and the stock statement issued by the promoter. 

Shortly after that, both the bank and CBI officials called me and suggested that our names would be given to the Court to act as receivers in the bank's recovery proceedings. I politely rejected their suggestions, saying this was not our expertise, but asked them what happened to our request for additional payments. They asked me to meet the Regional Manager, saying only he could take the decision. Typical of a public sector bank, the Regional Manager said that, once a contract had been given, the bank could not give any additional payments for whatever reasons after the work was completed. After a few months, there was a news report about a fire in the godowns of Digiana Television where we had done the stock audit, and the report said the cause of the fire was a short circuit. And, after a few more months, the bank manager approached us again saying they needed additional help in dealing with the same company based on our stock audit. This time I told him politely that we were very busy and asked him to find another consultant.

The above three cases are illustrative of the kind of exciting work of various kinds one gets to do as a consultant, and ended up widening my knowledge and horizons and confidence to take more challenges in the future. However, by the middle of 1990, all this excitement came to an abrupt halt due to the worsening Indian economy and the Mandal Commission report reactions across the country. 

In the next post, I shall narrate how I waded through these tough times.

My Journey As Consultant - 7

A Major Crisis and the Decision to Go Alone

 Four years into my consultancy career, in end-1986, I took the hard decision to leave the private limited company I had formed with two associates and set off on my own. I had no money in my bank since all the billings had been done in the name of the company, and I was only drawing a nominal salary which did not give any room for savings. To take care of my immediate cash needs, I borrowed some money from my brother in Chennai and landed back in Hyderabad with hope in my heart and confidence in myself to tide over this situation. 

It is tempting to form a partnership with fellow consultants as it increases reach and offers higher potential for securing contracts, besides drawing upon varied skill sets. But partnerships work well only when all partners pull their weight equally in growing the business. Many other subtle success factors also come into play. I would always urge caution before you enter into a business partnership. 

Between  September 1983 and end-1986, our billing was growing annually at more than 100 percent a year. Our turnover grew from ₹35,000 for the period September 1983 to March 1984; the next year, we ended with close to ₹1.86 lakhs; the third year we ended with ₹4 lakhs, and by March 1986 we had touched ₹8 lakhs. These numbers were very high in relation to the earning potential in those times of a salaried job.  But  year after year, we were not making any profit on our operations and posting an operating loss. This led to our inability to increase our own salaries as directors and I was noticing that our overheads of operations had grown proportionately. The most disturbing fact, however, was that all the billings during this period came from only Hyderabad, where I was active, and Bangalore where our Bangalore associate was active. Chennai was consistently drawing a blank year after year.

Another fact was that I was getting work from local clients who were already in business and looking for help in solving their problems, whereas in Bangalore the associate was focusing only on getting market surveys and project reports type of work for new units or expansion and/or diversification of existing businesses. There was therefore no convergence of business activities between the three cities and each one was running like an independent operation. 

When it came to Chennai, we found that our associate was not bringing in any business to our company. And his overhead costs, including his salary, were totally funded by Hyderabad and Bangalore operations. Initially, we attributed this to starting troubles, since Chennai was a different kind of market. However, when this continued, my Bangalore associate and I started questioning this at our quarterly board meetings, but we never got any satisfactory answers. At the same time, we noticed that our associate was simultaneously involved in trying to do other businesses locally which were unrelated to the management consulting work of our company. 

Eventually, the first shot was fired by the Bangalore associate in a board meeting that we held in the first quarter of 1986-87 at Bangalore, instead of Chennai where we normally used to hold such meetings earlier. Even before this meeting, in private conversation with me, the Bangalore associate had begun to question the relevance of the Chennai operations, along with the competence of the Chennai associate to be part of our business. 

I realised that this situation could not go on for long and decided to join the issue at this board meeting. Both of us gave an ultimatum to the Chennai associate that if we did not see any progress in getting new business in Chennai and he did not contribute to meet  the overhead of Chennai from local operations, we would have no alternative but to part ways. He made some vague promises and I realised that nothing much would come from there. The Bangalore associate also felt the same and conveyed this privately to me. We agreed to  wait for the next board meeting before making any change.

We had our next board meeting in the beginning of November 1986 and, as expected, Chennai had nothing to show while both Hyderabad and Bangalore showed increased business over the previous year’s levels. In a heated board meeting, I took the decision to quit the company as director right away, while, for some personal reasons, the Bangalore associate waited for another quarter before doing so.

So this was the point where I was forced to borrow some money from my brother and return to Hyderabad to start afresh.

However, the positive factor was that all the clients of the company in Hyderabad were essentially my own clients and I felt that they would be open to the idea of transferring the existing assignments from the company to me personally. I immediately called up each client where I had an active engagement going on and told them about the development. All of them agreed to transfer the assignments and make direct payments to me. For this purpose, I created a new proprietary firm in the name of Shika Management Services, where the name Shika was coined from the first few letters of names of my daughter, Shilpa, and my son, Karthik. I started billing my existing clients in this firm's name and, within a month, started getting healthy cash flows in my business account which made me financially comfortable. Needless to say, these amounts were several-fold higher than the meagre salary I was drawing. I had one employee working for the company in Hyderabad who also decided to come along with me since he realised that without me in the Hyderabad office he would not get paid, as all the clients had moved to my firm. In a short time, I was also able to pay back the money I had borrowed from my brother and move on.

On hearing about my quitting the previous company and starting on my own, two parallel developments took place  which improved my financial freedom. Mr GVS Murthy, who had been aware of what was coming and was trying his best to prevent us from splitting, realised that the decision I had taken was inevitable and came up with a proposal. He had several contacts in the AP state government circles and, since he had worked in AP Scooters as marketing head, they were  suggesting to him to start a consultancy-cum-marketing organisation to help small businesses. 

Since he was busy with his other work, he suggested that I join his business as an independent associate on a revenue-sharing arrangement where I would get 85% of the billing and he would retain 15% to cover the cost of maintaining his office. He also arranged to fund the operational costs upfront, and have these adjusted against the revenues every year to arrive at the sharing formula. He also offered to use his contacts to get new business which I could execute. 

True to his word, very soon he took me around and arranged for promotion of our business idea among the government and financial institutions who gave us quite a few interesting assignments with substantial billings. While I was maintaining my identity as Shika Management Services, the customers he got were billed in his firm's name and I realised that, though this arrangement was financially rewarding, I was not comfortable with losing my identity with my clients. In the long run, it would work against my self-interest. I therefore told him that, while I appreciated his good intentions and timely help, I would like to focus on promoting my firm directly and decided to part ways from that arrangement. He too felt that, since this business was not his primary focus, it was in my best interest to go ahead as I planned and continued  to be my guru and mentor.

I also realised during this time that the revenue generation from small businesses was not adequate to build a good capital base for the future. I was wondering if I could take up marketing, in Hyderabad, the products of firms located in other cities as a marketing associate when another friend approached me with an interesting proposal.

He was working for a large company selling high-end machine tools imported from Western Europe to large public sector projects coming up in Hyderabad. Since he had the necessary contacts, he had been approached by a few companies offering other capital equipment to the same clients and they were looking for a marketing associate to be appointed to do liaison and market intelligence work for them on a commission basis. He suggested that he could get the agency arrangements worked out where I would be the main partner directly working with the company and the clients, and he would be available in the background, with his wife as a partner to share the  gains from the business with me equally. 

So I promoted another firm called Shika Marketing Services as a partnership firm and signed up our first agency contract with this company. Very soon, large tenders were floated by very large public sector companies setting up new  projects and expanding existing capacities, where my principal’s offer was found to be technically and financially competitive. We bagged a good number of contracts between 1987 and 1994 and I generated good income for myself parallelly from this business while consulting was going on at its own pace. I used to tell every one that consulting was my bread and butter while marketing was my cream. 

At the same time, however, I noticed that I commanded more respect as a management consultant than as the owner of a marketing agency. This was always bugging me till 1994 when suddenly the Indian economy was undergoing major transformation and I started getting work from large corporates with high-yield consulting assignments. At the same time, the new projects business for capital equipment dried up in Hyderabad and  I decided to wind up Shika Marketing Services and concentrated full-time on my consulting business through Shika Management Services which grew in leaps and bounds from 1994 till 2009 when I decided to hang up my boots.

In the next post I shall share some cases of interesting work done between 1987 to 1990 when as mentioned before the Mandal commission report acceptance almost destroyed my consulting practice and I had to survive on the money made and saved from the marketing services business till reforms announced in 1992 turned the tide in favour of consulting again. But this also required that I had to learn new concepts and understand continuously the developments in Information technology to be relevant as a management consultant.