My Journey As A Consultant - 17

 Reengineering Before Internet Days

When we started working to implement Business Process Reengineering in our client organisations, we had to manage with available technology; the internet was a far cry away from being a norm as it is today. Also, many of the tech solutions like smart phones were unheard of and mobile phones were just getting launched and were very expensive to use. The nearest device to affordable wireless communication technology was the Pager, which allowed short messages to be sent between two parties. The only technologies of interconnected desktop computers available were WAN and LAN, but they required wired networks to be established everywhere, which had practical feasibility issues where  two locations were far apart. 

The Department of Telecommunications (DOT) was the only agency capable of providing VPN service, and this was prohibitively expensive for many organisations to consider for networking across various distant locations. MRP softwares was available but could be affordable only for very large organisations; ERP was just being introduced and there was a wide choice of ERP suites available from various vendors. Many of these vendors were promoting their products with a selling proposition that if an organisation installed their software, the processes would be reengineered without need to go for a formal BPR exercise. And, as was bound to happen, many of these packages ended up becoming expensive solutions since, in the absence of a prior BPR exercise, many organisations ended up tweaking these softwares to align with their current manual processes and hence a seamless software process got broken in implementation. 

When we started working in such organisations where they had already implemented MRP or ERP before we entered, we had to prepare the organisation to reverse many of the customisations which they had already paid for!!! 

Apart from that, many organisations had invested in computerisation which involved simply dumping all the current manual way of working into a computerised way of working; hence they had usually a paper trail coexisting with the computer data trail. And, in the absence of networking and process focus, the same data were getting entered in different locations using the paper trail. Despite such limitations as seen from today’s perspective, we could come up with some original solutions in many of our early assignments prior to  the advent of the internet. I share here the examples of interesting ideas which got implemented in those days.

In the first assignment at Hyderabad Batteries, when the team analysed data of past quotations, they found that 80% of the tenders were coming from 4 or 5 major customers who had standardised their system requirements around certain specifications. The team therefore came up with an idea that, for such tenders, there was no need to design the solution from scratch, and a checklist of standard specifications could be incorporated in the software they had developed for making the quotation. One of the team members, Mr. Narayana, was from the accounts department and he had no idea of the technical aspects of the product the company was offering. One of the team members suggested that we had to make the process for making an offer “Narayana Proof”, which implied that the accountant should be able to prepare a quotation based on the checklist!! This also enabled standardising the Bill Of Materials (BOM) for procurement and manufacture without wasting time, once the order was confirmed for these 80% cases. The technical persons needed to play a role only in the remaining 20% cases where the customer requirements deviated from the standard list. 

In the next assignment at the Apollo Diagnostic Centre, apart from the issue of standardised report delivery using the 80-20 rule, we had a major logistics problem to address. Since ground floor space was in demand for consultants to see their patients, the sample collection room was on the ground floor and the testing lab was located on the second floor exactly above the sample collection room. Since the samples had to be taken 2 floors up, the house keeping person would wait for several samples to be accumulated before carrying them two floors up the stairs. This caused a major part of the delay to begin with. When the report was finally prepared in the lab on the second floor, the same house keeping person had to bring it back down to be delivered at the reception on the ground floor. So he would similarly wait for all the reports for the day to be ready before bringing them down all together, which caused another major delay. 

The team observed that both the sample collection room and the lab had windows located below one another on the two floors, and wondered if this could in some way be used to speed up sample delivery to the lab. So Raghav and an enterprising friend of his installed an eight-inch plastic tube between the windows and designed an electric lift to carry the samples from the ground floor to the second floor within this chute as soon as the sample was taken. This minimised the long delay between sample collection and lab analysis. The rest of the process could be completed seamlessly in the targeted 30 minutes using computers. This was another out-of-the-box solution that the BPR team could come up with while working on BPR. 

In the case of Glaxo, compulsions of a proposed VRS forced the team to look at the option of using third party contractors for some of the activities done by their own employees, and also empowering the field managers to take administrative decisions on a day-to-day basis while using the computerised process for these actions to do random statistical audits to check misuse. In the absence of networking between far away locations, the data was moved from these locations to the head office by courier every day, or every few days, by floppy disk or other media available to the central computer centre for processing and updating. 

In the case of the Nagarjuna Steels assignment, we were faced with a major challenge regarding daily cash purchases for urgent or low-value items. The factory was located at Patancheru, 30 km away from the nearest market at Secunderabad. The present system was that, every day, one of the purchase executives would come all the way to the factory to report for duty and, with the list of cash purchases given to him, would come all the 30 km back to the city to buy and go back 30 km again after all purchases were made. Sometimes, some of the items would not be available during his visit and he had to make another trip the next day for the same item. This involved a lot of waste of time in commuting. And when we computed the cost of buying the cash purchase items, in many cases it was several times more than the actual value of the item. 

During the team discussions, the member from purchase pointed out that there was a vendor for small engineering and store items who visited the factory every day, took orders for these items and delivered them the next day and collected his payment once a month. So why not offer this vendor the increased business of making all the cash purchases? This would free the purchase executive to more useful work at the factory. So, once the purchase team member discussed this proposal with the vendor, the new process was recommended to the management which cleared it forthwith. In the process, we introduced a category of vendor called “buyer” in the reengineered process!

When we were working with Bakelite Hylam on the second assignment involving field sales operations at Delhi as the pilot project, we had the most interesting ideas coming from the team. Delhi had a sales office located in Defence Colony area in the middle of the city. It was headed by a Branch Manager and he had a team of field sales personnel for different business divisions. They had close to 20 field people along with a few office staff to provide administrative and clerical support and a receptionist-cum-telephone operator. 

All the employees had to report to the office at 9.30 am every day, and, based on their sales call routine or responding to urgent calls from customers, they would move into the market and had to come back by evening to submit the call reports before going home. Sometimes they would be delayed in reaching the office in the evening, in which case they would inform the office and submit the call report the next morning. The interesting finding was that the receptionist-cum-telephone operator was fielding many of the customer calls on her own, with all the correct information needed, in the absence of the concerned field salespersons, and she would inform them when they came back to office about the call for any follow up. The team realised that the current way of working involved a lot of waste of time in commuting between home, office and field work. The call rates were hence low. Moreover, as the number of staff increased, the office space was getting cramped and they had proposed to move to a larger place, which was awaiting approval. 

During the discussion, the team observed that many a time the same geography was getting covered by different sales persons representing the various divisions, and in some cases the same customer was met by more than one salesperson representing different divisions. Many felt that this waste of time and resources should be eliminated in the reengineered process. Someone asked why the sales people should report to the office every day; why couldn’t they go to the field directly from home and inform the office by phone for any urgent follow up from the back end based on their customer needs? This way they could meet more customers per day. Another member suggested that when the office needed to contact the field person, they could send a message by pager to him and he could call back the office from the nearest public phone. In this process, the role of the telephone operator-cum-receptionist became very important and she became part of the sales team. In fact, the team came up with a reengineered process where each field person would cover all customers in his geography and all divisions closest to his home, and all of them would only come to the office every Saturday for a meeting with the sales manager to review operations for the last week and plan for the next week. Suddenly, the need for additional office space vanished and, as the call rates improved, the sales performance also improved significantly in the next 3 months. The management immediately asked the marketing chief to implement the same pilot model across all other territories.

As we can see from the above cases, remarkable process reengineering can be done even without significant IT enablement, provided the focus is on the outcome. Later, when IT technology had evolved considerably, we carried these experiences with us when we moved on to other organisations, giving us greater leeway to come up with more innovative solutions.

My Journey As A Consultant - 16

Organisational Dynamics and Change Management

We (to client company CEO): As discussed last week, we are here to discuss our engagement for the next phase of our BPR intervention.

Client CEO: And I would be delighted to finalise this. Problem is, my Chairman has just sacked me!

As we were engrossed with the Glaxo assignment, we did not focus on getting a new assignment till we felt we had reached a stage where we could talk about the results from the implementation of BPR there. However, whenever we met any corporate honcho whom we knew, during our flights in and out of Bombay and at the airports, we never failed to talk about the exciting work we were doing as BPR consultants, particularly about our focus on implementation. 

One of the Glaxo directors in charge of manufacturing invited us to participate in a two-day seminar on change management organised by the Organisation of Pharmaceutical Producers of India and present a talk on our experience with BPR in the pharma industry. This led to a couple of enquiries from some pharma companies. One of them was Pfizer India. 

The VP Manufacturing of Pfizer met us after our talk, gave us his card and said he was a good friend of the Glaxo manufacturing head who had referred us. He was clearly impressed with our experience,  and said his organisation would get in touch with us soon. We were naturally thrilled, and said we looked forward to it. Sure enough, towards the middle of 1996, as we were completing our engagement with Glaxo, we got a call from the HR department of Pfizer India asking us to come to Bombay for a meeting with senior managers of the company to discuss BPR, and they said they would arrange for our stay and pay for our travel expenses. 

On the appointed day, we met with the senior managers among whom the finance director was showing a lot of interest in our work. After a series of meetings with various managers, we were asked to meet the management committee which had to make a  decision. During the meeting with the MC, I noticed that the CEO was quite hands-off on this subject and told the remaining members who represented each of the key functions to take a call. I realised that this was not a good sign since, in our view, without the commitment of top management at the CEO level, no BPR  could happen. Very soon, we also noticed that they were not sure why and where they needed to take the first project and there was a kind of passing the buck around going on right in our presence. Finally, they decided that they would take it up in the marketing area and the marketing chief clearly seemed not quite pleased with it. They even finalised a date and arranged for us to organise an educational workshop for a cross-section of their managers before starting the assignment. However, one day before we were to leave for the assignment, we got a call from the HR head saying that they had decided to postpone this project to a future date and they would get in touch with us later. 

However, the manufacturing head who had referred us in the first place called us privately to confirm that they had no real consensus on the project, and it would not materialise. This was our first encounter with organisational dynamics and change management!!

We were also talking to a few large companies in and around Hyderabad, and we got invited to participate in a couple of workshops organised by educational institutions and professional bodies. I also presented a paper based on the Glaxo experience in these symposiums, and IIM Bangalore, my alma mater, invited me to present a case study based on the Glaxo experience of BPR to their PGP students. However, we were not getting any new assignments till the end of 1996, which was surprising as well as frustrating. The heady feeling post the Glaxo engagement started mellowing to the realisation that we had no fallback to get new work when we were busy with current work and we needed to address this in future. So we persisted with our contacts and, towards the beginning of 1997, we got a break with Nagarjuna Steels, which was part of the Nagarjuna Group in Hyderabad, and the reference came through the CEO of Nagarjuna Finance who had earlier engaged us. 

While working with Glaxo we realised that  the bills payment process is a subset of the procurement process and, if a major BPR exercise was undertaken in the procurement process, it would have a significant impact on the company. We therefore convinced the CEO of Nagarjuna Steels to engage us to reengineer their procurement process. We soon finalised a contract on similar lines to Glaxo, wherein we were to spend two days a week at their factory located at Patancheru about 30 km outside Hyderabad.

This project was going well and we were able to recommend, with the help of CFT, some innovative ideas for simplifying the procurement process. As and when the management approved a set of proposals, it was taken up for implementation without waiting for complete recommendations covering all the areas. This was also giving credibility to the power of BPR to change the organisation and there was full cooperation from everyone including all the key vendors who had to come on board post BPR. 

But suddenly everything went out of the window, as they say, when one morning, six months after the start of our engagement, the CEO informed us that Nagarjuna Steels had been taken over by another steel company called Pennar Steels, and the new management told us that, since they had to focus on the merger issues, they had no time for this project and decided to terminate our contract. Not surprisingly, the new management also refused to pay the balance amount due to us for the work already done and implemented! We finally managed to use our contacts with some key people in the city from our IIT and IIM network who knew the senior management of Pennar and convinced them to settle our dues suitably. 

Two lessons were learnt from this. When dealing with corporates, too long an engagement is not a good idea and we should focus on quick results to get our money fast. And, second, it is important to build on our network of contacts to both get assignments and, if necessary, help in getting the final payments which became an issue with some assignments later on.

Raghav Rao had been the CEO of Shriram Refrigeration in Hyderabad before he started out on his own. One day, towards the end of 1997, he was making a presentation on our BPR experiences at a CII-sponsored programme when the current CEO of the same company, now known as Tecumseh Products of India, expressed his interest in discussing how we could help him, since he had been engaged in major change management initiatives ever since Tecumseh took over Shriram Refrigeration along with the compressor division of Whirlpool at Faridabad. In addition, they were putting up a new project at nearby Ballabgarh to manufacture compressors for refrigerators on a very large scale. During our meeting with him in Hyderabad, he  wanted us to work with the team at Faridabad and Ballabgarh first and finalised an assignment for us to work 2 days a week there. 

As we started working, we noticed that  the CEO, who had been recruited after Tecumseh took over, was working on one side and his other VPs, who came from the original Shriram Refrigeration background, were pulling in a different direction. At the same time, some expatriate managers from Tecumseh USA were assigned to help in setting up the new plant and they were pulling in one more direction. I particularly noticed that, while they were somewhat agreeable to working with Raghav, since he was their old boss, I never got their acceptance! Moreover, they also did not agree to our standard approach to implement BPR but instead made us address some of their current manufacturing problems at Ballabgarh. 

During the course of our work, we identified some issues which showed the local management in very poor light, and this led to a backlash from them in the form of finding fault with us and our capability to work in their unit!!! However, the CEO, who was based at Hyderabad, was quite pleased with our work and appreciated the fact that he was made aware of issues which were otherwise being hidden from him by the local management team. We realised that we were really getting caught up in major corporate dynamics working in the background, and we completed our first contracted period, collected our payments, and did not seek any further work from them. Soon, we got news from the company that the CEO had been replaced by the VP who was based out of their Faridabad unit, and the CEO was continued as an adviser without executive responsibility!! Thus went another assignment without much value contribution despite our sincere efforts, just because of organisational dynamics.

I was focusing since 1996 on getting work from another major company based out of Hyderabad, Bakelite Hylam. I had met the previous MD a couple of times before he was replaced  with a new MD in the year1997. Anand Mundkur was an IIM Calcutta alum from one of the early batches and I got to meet him through one of his business school classmates who was known to me closely. He liked the idea of using BPR in Bakelite Hylam as he had just taken over as MD and found many of the problems he was facing were linked to work practices which were decades old. Also, Bakelite Hylam, which was a pioneer in the decorative laminates business in India and had built the brand name “Hylam” as synonymous to laminates, was  losing market share (and losing money!) to much smaller companies which had mushroomed across the country due to the differential excise policy benefiting small units over large companies at that time, as well as the relatively low technology involved in laminates manufacture. Anand wanted us to work in the area of improving the entire supply chain from procurement of materials to manufacturing to market, where the focus would be to respond quickly to demand at the retail end. 

This was the first assignment of this kind for us and the whole CFT was very kicked to work with us in coming up with great recommendations with our guidance. After the redesign was presented  to the Management Committee, we noticed the play of organisational dynamics in the MC meeting. Most of the members of the MC were old-timers in the company, while Anand was seen as an outsider; we noticed, along with Anand, a reluctance on the part of the old-timers to accept this change. Implementing the CFT’s recommendations meant that the manufacturing department, which had always held sway over other departments in the company, would have to work as per the needs of the market, thus lowering their perception of power in the company hierarchy. During the course of this meeting, after some heated discussions, the VP Manufacturing resigned and the CEO had to take the hard decision of not only accepting this but also stating to the rest that he was going ahead with the implementation and those who were not coming on board were welcome to leave too!!

The implementation involved some work practices that required workmen to come on board too. So we actually ended up spending time addressing the workmen in small groups in all the three shifts, pointing out the advantages of the new approach to the company and hence to them personally. After a few hiccups, we managed to get the new process rolling, though we could see some internal efforts to slow the progress by finding faults using old yardsticks of work. 

Finally, we managed to get everyone on board and started implementing the new supply chain model based on pull, as against the old model of producing to forecast and using sales push to sell whatever stocks were generated, often giving away large discounts for cash generation. The improved results started showing up in the form of reduction in inventory across the factory, while the sales started increasing. At this point, Anand realised that the field sales operations would also have to be substantially altered, to align with the new way of working. He therefore assigned us to make this happen in the most difficult territory of Delhi and North India. 

With the help of a CFT that we created at the Delhi sales office, we came up with a novel approach to field sales management. The distribution channels were increased extensively and, combined with the new supply chain management system, showed a three-fold increase in sales in the next three months, with the same manpower! The company was very pleased and decided to roll out this new method across the country.

Once this was done, we thought we had done a great job when a third assignment was given to us to reengineer one of their major industrial products called Resins, used for bonding applications, for which this company was well known.

We did not realise that, while we were showing great results, there was trouble brewing for both the CEO and us in the background. Bakelite Hylam was part of the GP Goenka group and, when we started work, one of the Unit Heads had come over and met us. He wanted us to maintain parallel communication with him directly, which we had point blank refused to do at that time, since our engagement was done by Anand. During the meetings over implementation, some of the senior managers who were old-timers even accused us of disturbing their comfort zones in their current roles, which were changing post BPR. The net result was that they were carrying tales against both the CEO and us to the group management at their head office in Calcutta. 

Not surprisingly, one fine day, Anand Mundkur found he was replaced by another person and when we landed up on our routine visit that day there were two CEOs in the same office and we were told that there was a change in the top management and our services were no longer required!!! Later on, this new CEO was also replaced by a third one and, by the time he could complete six months on the job, Bakelite Hylam was going downhill very fast and was sold to a new group which  eventually closed down the company and sold the real estate assets to some builders and moved on.

After three such consecutive experiences, which we considered failures despite the improvements we had created, we were a little unsettled, and felt that we should be more careful in starting work in future with any corporate, till we were sure such experiences would not get repeated. But the need to make a living out of this profession does not give you the luxury of picking and choosing, and we hoped things would improve, as times were changing, and the compulsion to implement BPR would force companies to take such change management initiatives more seriously. 

And that is what happened subsequently, when we got work from some very enlightened CEOs and their companies.

 

My Journey As A Consultant - 15

 Managing Change in a Large Corporate

Glaxo Jt. MD: We want you to ensure all bills are ready for payment by their P.O. due date (usually ranging from 30-45 days) and the number of employees in the Bills Payment department, which has come down from 20 to 12 after the VRS, should have a token 10% reduction.

We: Sorry, your targets are not acceptable to us.

Glaxo Jt. MD: ???

We: Firstly, we will target that ALL bills should be ready for payment within 7 days, irrespective of when they are due to be paid. And, second, we will eliminate the need for a bills payment department!

Glaxo Jt. MD: !!!

 

Glaxo was our first experience working for a large MNC corporate assignment. The first thing that caught our attention was the size. We were used to smaller organizations in Hyderabad, where the number of employees was not more than 300 to 400. But here we were dealing with an organisation with more than 5,000 employees and multiple divisions located in various locations across the country. Glaxo India was also an old company, established in India before Independence, and was part of large MNC having global operations headquartered in England. While the Indian operations had considerable autonomy, certain operational norms had to be aligned with global norms. This was more so in matters of managing finance and operating systems. 

Being an old company, they also had legacy systems coexisting with modern practices. Glaxo India was already using Cobol-based computerised accounting systems and they were in the process of upgrading their IT infrastructure at the time we started our work. They had a full-fledged computer department with programmers well versed in legacy system programming, and they had computerised most of the financial management and accounting systems, which produced reams of paper reports as required by various departments. 

Recently, they had started implementing an MRP package called MFG PRO to align their reporting systems to the requirements of their global headquarters, and when we started our work we found that they had multiple platforms of IT systems which were stand-alone and required link programming everytime data needed to be moved between the systems. 

By and large, Glaxo had IT systems which had computerised the manual way of working, while the paperwork based on traditional functional silos was still the backbone of operational control. Hence, they had a large number of clerical and supporting staff in back-end functions performing work the way they were designed several decades ago. In all these, financial control was the key to their operations and hence, like any traditional organisation at that time, there was no focus on processes. Though they had been exposed to concepts of TQM recently, adopting the process mode of working was still a far cry away when we entered the scene. 

Another aspect of such an old organisation was the strong sense of power the functional heads felt over their subordinates, with the concept of command and control being deep-rooted. Hence, some of these managers resented it when one of their key subordinates was pulled out from their control to work as a CFT member in our project and they used to pester these individuals for not focusing on their day-to-day work. However, since we had direct access to the MD and Joint MD, we used this to address such pin-pricks so that our team members could work unfettered. 

After our first meeting over 3 days with all the VPs, the management gave us a formal appointment letter clearly spelling out goals for the project. We felt these goals were not aggressive enough and we suggested that we would work for more challenging targets -- goals which should look impossible to achieve. 

The first project was taken up at their oldest plant at Worli in their pharma division and the goal set was to ensure that all bills were processed and ready for payment by their due date (based on the payment terms of the order) and the bills payment department, which already had a reduced strength from 20 to 12 after their VRS,  should have a further token 10% reduction. Of course, these goals were influenced by the Ford Motor case that we had used as a reference. Our reaction is stated at the beginning of this post!

Since we were dealing with a large organisation we had to bring people across different functions and levels on the same page and had proposed 4 levels of workshops, one each for Top Management consisting of all Directors and VPs, next for all GMs and DGMs, next all middle managers and finally the front line executives covering all the functions, since bill payments affected everyone. This was spread over the first two days followed by one session with the trainers who were supposed to educate the rest of the organisation. We had also suggested that we would spend 2 days a week every week till the redesign was finalised and accepted, and subsequently visit regularly to follow up on implementation of the pilot project. During the two-day visit, the CFT would work full time with us and they had to make suitable administrative support for the team to work under our guidance for the rest of the week too, since they had to collect data from various departments and specialists. 

We were provided accommodation at the company’s guest house in a block of premium flats at Malabar Hills where, in the neighbouring apartment, the MD himself resided, and we had the advantage of occasionally interacting with him in the evenings, briefing him on the progress and also addressing issues of getting some critical information. We also had a caretaker-cum-cook,Sundaram, who had worked there for long years and made sure we were at home away from home. 

Every Wednesday and Thursday of every week, we were at their Worli plant working with the CFT and, over the next three months, the bills payment process redesign was finalised and presented to the management. Without going into the details of the case, it is necessary to state that, while the situation at Glaxo was no different from the Ford Motor company case or any other reengineering case being reported at that time, the main difference was that the purchase orders released by Glaxo at that time had some vague terms for payment clauses like payable as applicable for taxes and duties which used to cause major back and forth movement of bills between the accounts payable and the purchase department, requiring amendments to be issued and delaying the payments. Also, since the departments were located in different adjacent buildings or different floors in the same building, the paper trail had to move across these buildings, for which the administrative department had to provide what was popularly called “Dak” (Postal) service internally. 

When the team presented their findings, there was, as expected, complete disagreement from the heads of various departments to let go of their power to control. While the top management was totally in agreement with the recommendations, we needed the buy-in from the operating departments before the implementation could happen. I remember Raghav had to intervene passionately with his observations that the current practices required heroic responses from all the employees and still no one was satisfied. What was proposed would make everyone comfortable and the control aspect would be addressed more effectively using IT systems, since now we were proposing IT as an operational tool rather than an information tool. 

Around this time,  Mr M H Nayak was brought in as the head of the commercial department, and, fortunately, was completely convinced that the proposed system would be far better than what they were currently following. So he took a stand that he would take personal responsibility for implementation and report the results of a pilot involving major bill payments to large suppliers, using the pilot to emphasise the usefulness of the proposed system for the rest of the bill payments. 

A major problem was that the Thane factory had its own computer system, and the data from there was not compatible with the head office system. The stores' incoming quality and material acceptance reports were therefore sent to the commercial department on paper printouts, and entered again into the head office system. We therefore had to work with the computer teams of internal programmers, and the MFG PRO implementation team from outside, to develop the necessary link programmes to connect up the disjointed functions to make a seamless process from placing a good and complete purchase order, through receipt and acceptance at the Thane factory stores, to bill payment. The IT team took another few months to complete their work and M H Nayak took charge of the implementation, starting with all the old purchase orders and rectifying them to conform to the new norms, and releasing fresh purchase orders. 

After six months, Nayak called for a meeting of top management and presented his report on implementation. When they had started the project, they had on average 600 high-value bills pending every month, which were overdue by more than 1 to 2 months. At the end of the first month of the project implementation, they had brought it down to less than 200. At the end of 3 months, they had brought it down to less than 50. And, by the 6th month, they had brought it down to three and these too were delayed due to problems from the vendor end. 

The most important announcement Nayak made was that they were making all payments now in 3 to 4 days from the date of receiving the bill and he was able to demand discounts from all vendors for payments made ahead of the contracted due date. And the whole bill payment processing operation was being done by just two people, one from the commercial and one from the accounts, who had to arrange the cheque which was also now getting printed by the system. 

There was a stunned silence for a few seconds and then the joint MD started clapping and the rest of the audience joined in. Once all the commotion subsided, the Joint MD announced that he felt that the consultants and the CFT needed to get together for one more team meeting -- but this three-day meeting would be held in a luxury resort in Goa, along with their wives!  Of course, no serious work was done on this trip which made up for all the hard work put in by Naik and the CFT! 

A spin-off of the project was the accounts team-member reporting that, earlier, most of the accounts personnel used to sit late every day. Now the pharma division accounts staff were going home early and the other divisions had started demanding the same system be implemented in their division too!!

While we were working on the implementation of the reengineered bills payment process, we were given one more assignment by Glaxo. They were planning to close down their branch offices located in all the major metro cities and give VRS to nearly 250 people working in these offices at the end of the year 1995. These field offices were supporting the nearly 1,300 medical representatives working in the field all over the country, apart from managing the inventories of products sold in those markets. The company had already taken a decision to appoint C&F (Carrying and Forwarding) agents for handling the inventories from factory to market to release expensive real estate in these metro cities. 

The whole plan was supposed to be done secretly and announced and implemented within a very short time at the end of the year. 

Since the Glaxo top management had, by then, assessed the power of BPR that we brought to the first assignment, we were asked to help them use concepts of BPR to achieve this major restructuring smoothly and effectively within the short time available.  

This time we proposed that, in order to develop an effective plan within the shortest time, as well as to maintain secrecy while getting the redesign finalised, the consultants and the new CFT which was proposed should stay together in a hotel for 10 days, so that they could focus on the task without any of the routine work distractions. This was agreed to, and we had the unique experience of working 12-14 hour days, first training the CFT, which included marketing persons from outside Bombay, in the BPR principles and then getting down to really radical restructuring of the existing, cumbersome processes involved. We were empowered to request the presence at the hotel of even the senior-most managers for discussion whenever we felt it necessary.  

The field offices had to deal with many administrative functions while giving logistics support to the medical representatives and field sales managers. This included both material support and financial support, apart from keeping records of personal information. Since the field offices were to be closed, we had to come up with a solution which combined a centralised cell consisting of 20 people at the head office providing these services along  with outsourcing third party services to handle both logistics and money-related services. We even co-opted an MNC bank to provide money transfer services directly into the accounts of all the field representatives while speeding up the process of field management by empowering the field managers to take local decisions using BPR principles. 

On December 31 evening, the VRS was completed and on January 1st morning the new system came into operation. As could be expected, there was considerable chaos across the head office where the sales managers, who had already been briefed about the changes, were getting besieged with field issues and were rushing to the central BPR cell to address their individual problems on priority. I must give full credit to the top management of Glaxo, that they stood firmly by the decision to implement the new system and informed everyone to bear with all interim problems they may face till the new system settled down. It took about a month and, by that time, the field personnel noticed that they were getting their services faster than before and the accounts settlement was happening in the same month. The management had earlier given 3 months’ imprest as advance to field personnel to deal with delays in account settlements, and they were now able to manage with just 1 month’s advance, reducing the working capital requirements. Even salary payments were getting credited directly on the due date and the field reps started expressing their happiness with the new system.

We were involved with Glaxo for close to 15 months, starting May 1995 till August 1996. During this period, we completed two assignments. We had a bonus clause in our payment terms. Glaxo not only paid us the bonus but also gave us an additional bonus of a holiday retreat at Goa with our spouses along with the CFT team!

My Journey As A Consultant - 14

 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.

My Journey As A Consultant - 13

 Adapting Available IT Technology In Early Assignments

“How long does a customer have to wait to get the blood report of her child so that her doctor can start treatment?” we asked the team at the medical diagnostic centre.

“8-12 hours; very often till the next day.”

“So, since the customer needs a fast result, let’s target to complete this in 25-30 minutes”.

In 1993-94, when we started on our journey to help organisations implement Business Process Reengineering, one major limitation was the low level of technology-adoption by most of the organisations that we had to work with at that time. The few that had PC desktops used them as typewriters/word processors for the correspondence of senior managers, and to store data and documents as a backup, along with conventional paper files for the same. Hence the paperwork was always the first activity before the same material was entered into the PCs. Each PC was a standalone entity  used in different departments and hence the same data was re-entered from one PC to another using paper documents as reference. Occasionally floppy diskettes were used to copy and transfer the data from one PC to another. But this wasn't considered adequate and reverification would be done using the paper trails which were the basis of conventional working. 

The Local Area Network (LAN) was just being introduced in the market and hence we were able to suggest using this technology to connect the multitude of the PCs, so that data moved seamlessly across the organisation within the same premises. Dial-up modems were available; using them and File Transfer Protocols we organised movement of files and data across different locations. The Internet was just being talked about and it was not available across the country nor was it cheap where BSNL had introduced it. DOS was still the operating system commonly used and PC ATs with Windows were just being introduced. Mobile phones were yet to enter the market and when they did they were too costly to use. But pagers were available at quite a reasonable cost and in some cases we used them to help communicate between the office and field staff. As the technology evolved in both PCs and Mobile phones, and the Internet became affordable and ubiquitous in later years, we were able to help organisations adopt these technologies to implement BPR.

Between Raghav, my associate, and myself we adopted the dial-up modem and PCs to share important documents and created a virtual office between us. We also agreed that, depending on who has the  primary contact with the prospective client, the proposal would be made by him and the other would join as a principal associate. And we were maintaining zero overhead operations between us, working from our home office, fashionably called SOHO (Small Office Home Office) in those days. We started using our own example to show how work simplification is the essence of BPR and why it could easily be adopted in an organisation to improve business performance without adding additional resources in terms of manpower and office space. The only investment needed was IT hardware and the corresponding software. And both were undergoing phenomenal changes very fast and hence we had to keep in mind what was coming in the future while helping the organisations to come up with redesign ideas. 

In this background, I will proceed to share the story of how we got prospective clients interested in our proposal. By 1994, the paperback version of the book, Reengineering the Corporation, by Hammer and Champy was available in the local book stores. We bought a copy of the book before meeting a prospective client. We made it a point only to approach the CEO or MD of a company as our first point of contact, since we believed only a motivated person at the top could spearhead the kind of massive change initiative called for in BPR. This is where our personal contacts and network helped in setting up such first meetings with them. We also knew  that if the top man was not sold on the idea on our first meeting we would not get another opportunity. So we decided to  use the book as a sales tool. 

After a brief introduction about what we had done with our early clients and the kind of results obtained, we presented the book to the CEO and requested him to read the book first. And we told him that if he was charged up after reading the book we would meet him again to discuss the way forward. Practically every one of them contacted us 48 hours later saying that they could not put down the book once they started reading it, and saw possibilities from the book for their organisation to adopt. In the meanwhile, they also ordered additional copies of the book and shared it with their senior executives so that they also came on board before calling us for a discussion on the way forward. We found that, in many cases, we were hired even before we discussed pricing and other terms of a contract!!

Since we were based in Hyderabad, we decided to focus on this market. We contacted some prospects where we had done some work before. In my case, I had worked with Apollo Hospitals and Nagarjuna Finance earlier and we called on them both while our assignment with Hyderabad Batteries was still going on. The MD of Nagarjuna Finance, a leading NBFC at that time, was so charged up after reading the book that he called us immediately for an assignment to streamline their deposit mobilisation process. While  the ideas for reengineering got finalised quickly by the team, they got caught up with problems of IT implementation. The investment in hardware was not an issue, but the software had to be developed afresh and the IT chief was very kicked with the prospect of doing a pioneering job and said his team would work on it themselves without any outside help. However, they were struggling to come up with the software fast enough, since there was a constant churn of software people at the working level and we believe the competence level of the chief was also not enough to address the issues. 

One fine day, the IT head quit his post and migrated to Australia and the company simply abandoned the project instead of looking for outside help. This was the first assignment where we realised that we must have a good external IT vendor to back BPR projects. 

However, the Apollo Hospital case was a major success story. Since I had known the MD, Sangita Reddy, from my previous work, we could easily get to meet her, and she was very excited to hear about how BPR could be adopted. In the Hammer and Champy book, there was a case study of implementing BPR in a hospital in the USA, and we also managed to get hold of many other such examples which were available. After reading the book, she called us to make a presentation to the top management team consisting of the Chief Medical Officer, Medical Director and herself, who were the key decision makers. It was a post-lunch presentation and we were quite disappointed when we noticed both the CMO and Medical Director, being older men, dozing off occasionally, and we thought we had blown an opportunity. 

As we expected, when we met Sangita Reddy a few days later, she said the BPR exercise had been discussed with other senior staff too, and they felt that the disruption that such an intervention would cause to patient care was too severe to go forward, however excited she herself was.

Dejection! But we didn’t want to give up and kept the discussion going. And, during the conversation, we discovered that they had an offsite centre in the heart of the city where a diagnostic clinic was run with a small out-patient department where doctors were available for consultation. This was also used as a catchment centre for referring serious cases to the main hospital. The diagnostic centre was providing diagnostic services to patients referred by various city doctors located in the vicinity. Being part of Apollo Hospital, it had a high-profile image and was very much in demand for both OP consultation and diagnostic services. Seeing an opportunity here, we requested Sangita Reddy to let us explore what we could do there, since there would not be similar high-profile doctors to oppose this “disruption of their work”. 

This centre was headed by a young man who had studied hospital administration in the USA  and returned to India and was working for Apollo Hospital. Based on his background and experience, he was given independent charge of this centre. Like any other diagnostic centre, they had various departments starting from reception to cashier, sample collection and testing labs and other radiological labs like X Ray, ultrasound and cardiac care testing facilities like ECG, ECHO, TMT, etc. Patients requiring CT Scan and other more sophisticated facilities were referred to the main hospital. It was no different from any such stand-alone lab located across the city. The centre also had housekeeping staff and a few administrative personnel to provide typing and other related support.

When we first went to this location and looked around, we frankly had no clue at all about what we could change dramatically, as called for in BPR. This was a set-up like all others in the city -- indeed, in the country -- where patients arrived with prescriptions for various tests, got their samples taken by the staff, and went back home, to return a few hours later, or the next day, to collect their neatly typed-up reports, so that they could show these to their doctors and start a line of treatment. We had both gone through this process ourselves numerous times, very often for the ailments of our young children.

But we waded in, regardless, somehow knowing some inspiration would come our way...

We formed a cross-functional team (CFT) consisting of the receptionist, a sample collection technician, a technician from the labs, the typist and a housekeeper. The members of our team were some of the junior-most persons in the organisation and they were initially bewildered about being in any kind of improvement exercise. Most of the existing procedures were established by the heads of their departments who were located in the main hospital, and it was difficult for the CFT members to even see the shortcomings in the processes that had been well set for years. And when we said that they should come out with ways to dramatically improve such processes, all of them worried how any such move would be received by their bosses!

Seeing this early, and in order to soothe their nerves, we got Sangita Reddy herself to come and talk to them, assuring them that she was leading this project, that she expected great results, and no harm would come to any of them. They had never met her face-to-face before, and this meeting was a big morale-booster, so that we could take the assignment forward.

After the mandatory (for us) initial joint reading of the book by the team, we got them to collect information on their current way of working, including a lot of statistics. All data was manually entered in large ledgers -- there were no computers at this location. Despite this, we got a reasonable measure of information fairly quickly, since it was also supervised by the young manager in charge of the centre. We also got the team to track a sample number of actual patients from the moment they entered the centre till they got their final report, and record what happened in each case. 

When the team put together all this information, we encouraged them to look at the entire process from the patient’s (customer’s) view-point. How would they feel if their child was running a high temperature and they had to wait a day to get a diagnostic report and start the appropriate treatment? But the present way of working was deeply ingrained in them and they could see no options.

Then we brought out the concept of “Which steps in your process are of real value to the customer?” It didn’t take them long to list sample collection, lab analysis and report-typing as the only things the customer wanted. Once they focused on these three operations, they also soon concluded that sample collection and report-typing were each a matter of minutes. What about the lab analysis? It slowly emerged that, for perhaps 80-85% of tests, the actual testing time was also in minutes.

Thus emerged the challenging goal: In 80% of cases, customers should come in, give their samples, have a cup of coffee in the cafeteria, and go home within half an hour with their report.

I am not presenting the details of the redesign here since it involves some proprietary information; suffice it to say that they came out with a great and credible process redesign. We then told them they had to prepare and make the presentation to their management themselves -- youngsters who had never spoken before an audience before! To add to their terror, Dr. Pratap Reddy, the legendary Chairman of Apollo Group, happened to be in Hyderabad that day and invited himself to the event. 

But, despite the stuttering and nervousness of the team, their redesign ideas came through clearly. Dr Reddy, who was himself looking for revolutionary change in his fast-expanding group of hospitals, was blown away and, when he learned that a computer needed to be installed as part of the redesign process, he immediately told the team to “steal” one from anywhere in the main hospital and get on with their new process. In just a few weeks, the team could proudly proclaim their uniqueness among the dozens of diagnostic centres in the city.

The diagnostic report process being one that everyone has experienced, we made a presentation of this case a part of our initial presentation to prospective clients to make them understand the power of BPR to bring  about dramatic change.

This experience boosted our confidence to take this approach to more organisations which were much larger than the ones we had worked with till then. And that opportunity came when we got to work with Glaxo India in 1995-1996, which also catapulted us to get more work from large corporates across India. 

I will share the progress of this journey in my next post.