66.LEADERSHIP IN BUSINESS

66.LEADERSHIP IN BUSINESS

NOWADAYS, leadership is much discussed in business (management) schools and business circles. In these environments, the concept assumes standard features and jargon. It is like shopping in the supermarket: products neatly packed and stacked in rows, each carrying an identification tag read by a computer. All supermarkets are alike, all products are the same! Likewise, all management graduates are alike: mastering the same jargon and techniques. Or, it is like a committee trying to invent the horse. And most of them are equally ineffective!

We may apply the three fundamentals we saw previously in the business environment too:

• vision/purpose
• ability to inspire
• ability to solve problems /achieve results.

In the business environment, it is easy to define these concepts, explain the ideas and lay down the parameters for measurement/assessment of results. 

Business interests

 The business focuses mainly on its bottom line, so that all stakeholders are satisfied. Inspiration becomes motivation in the business environment. Most managers are motivated by pay, perks, career path or prospects. They don't really become leaders. They do not think beyond themselves. They do not even think of their organizations, except as they relate to themselves. It is the rare individual who thinks of his inner urges and tries to make a difference to the business, society, ultimately himself. At that stage he does not work for money or status or recognition but for self-actualisation , as Abraham Maslow termed it. Only such people can be called leaders.

Perhaps the greatest practical test of leadership in business is in the area of facing challenges and solving problems, which can surface in any area. Clever managers camouflage the real issues, doctor the accounts with the help of creative accounting professionals and manage for a time to keep the shareholders happy. But the problems do grow like pregnancy and reality catches up with creative accounting. This means utter failure of leadership.

Industry- Government  exchange in US
Company= country?

In a country like the US where  private business is supposed to predominate, there was a simple belief that the country would grow if the businesses prosper. 

There is a statement widely attributed to Alfred P.Sloan, a former , long time Chairman of General Motors that "what is good for General Motors is good for America". Actually, this is wrong attribution. Sloan was the Chairman of GM from 1937 to 1956. Charles Erwin Wilson (Engine Charles) was the head of GM in 1953 when President Eisenhower selected him as the Defence Secretary. During the Congressional hearings to confirm his appointment, it was found that he had huge stakes in the company and naturally they asked him whether he would as Defence Secretary take measures that may impact the company adversely. He said he would but added:

  "for years I thought what was good for our country was good for General Motors, and vice versa." 

This statement was wrongly reported in the press as "what is good for General Motors is good for America." Wilson tried to correct it but failed.  Now, people attribute the statement to Sloan!

Charles Wilson

One can easily see the vital difference between the two statements: the one he actually made during the hearing shows his maturity and his larger vision that the good of the country is important, it comes first.. The second statement shows him as a crooked businessman,, putting company above country, who might be expected to use his position to promote the company! Actually, GM filed for bankruptcy in 2009 ( Sloan and all 'great' leaders not withstanding), and it was the country's government  which rescued some operations, because GM was considered a national icon.

Businessmen as failed leaders

Sloan is taken as a leader among the managers and his book "My Years with General Motors" is studied as a management resource. It is true that he brought changes at General Motors  and made it profitable for a time. But recent research has shown him to be a failure, and cause of all the subsequent troubles, including its eventual declaration of bankruptcy. In particular, 4 things are held against him:

- His company helped the Nazi war machine in the 30s and 40s through their subsidiary in Germany and worldwide.

-He focused on rational management, stressing "policies, systems, structures", and not enough on "people, principles and values". Consequently, the employees and even the society at large were left out of consideration.

-Sloan is associated with the "great American scandal " of replacing the public transport system (Streetcars= Trams) with buses. He was also involved in violating many anti-trust laws but managed to escape with light penalties.

[ Incidentally, smooth, cheap and efficient  water transport on the Buckingham Canal in Madras was disrupted and made to close down by the bus lobbies ]

- His accounting systems did not help the company in assessing the true financial state.

Drucker  beyond technicalities

The great management philosopher Peter Drucker criticised the methods of Sloan at GM, though he generally appreciated the idea of how corporations related to society.. Drucker was asked to study GM and give advice, but his advice was never taken. His 1946 book,  Concept of the Corporation, is based on his study of General Motors. History has proved Drucker  right. Sloan was wrong, and the totally rational approach and accounting methods he adopted compounded the problems as time passed, leading to filing for bankruptcy in 2009. This is a classic example of how short term visions and goals of management excellence are a negation of true leadership even in business. Short term profits do not translate into long term survival! Doctor the balance sheet, nurse the sick company! Sometimes, one has to stoop to conquer!

Front cover of the first edition- given here for purely educational purpose.
Since Drucker dealt with basic issues and not mere techniques, he never goes out of date.

Incidentally, GM reacted angrily to Drucker's book. Sloan's book- also his memoir- is considered a rebuttal of Drucker's views. Like it is said a prophet is not honoured at home, Drucker's views were not taken seriously by GM. However, they were eagerly accepted and acted upon by Japan which soon surpassed the US in many fields!

from: www.blinkist.com/page19/

'Management is a human activity that must serve people both in and out of the organization'
Managers may have the talent, but they have the obligation to serve society.

Today, the top MBAs from business schools ask how much they can get, how fast they will rise. Who thinks beyond?

From Ford to Pentagon to World Bank

The business world has indeed contributed some outstanding persons to society through govt. The US govt has discovered how trained managers- and not bureaucrats- can help the govt become more efficient. Their Presidents are fortunate that they can assemble their own teams, and are not bound by fat bureaucrats that the system supplies. One such is Robert McNamara. He was Chairman of Ford- the first person outside the Ford family to occupy the position- when he was selected by President Kennedy with the offer of either Treasury or Defence Secretary. He chose defence and is the longest serving Defence Secretary in history, from 1961-68, serving under both Kennedy and Johnson, through the Cuban Missile Crisis and Vietnam War. He was one of the Whiz Kids surrounding Kennedy and contributed to the mystique of his presidency. He supported the blockade of Cuba.

McNamara with Kennedy, 1962

 He also supported the escalation in Vietnam, though later he claimed  that he had been convinced that it was fruitless exercise. However, documents now reveal that he resorted to some deception in the process, withholding vital information from President Johnson, misrepresenting facts and issuing orders on his own.The consequences were tragic and serious. He became controversial, and quit as Defence Secretary in February 1968. Then from April that year to July, 1981,he was the President of the World Bank. At Ford, as the Defence Secretary and in the World Bank, he introduced many technical changes. 

But is McNamara a leader? By no means. In 2003,when he was 87 a documentary was produced on his life, based largely on his interviews. It is titled: The Fog of War: Eleven Lessons from the life of Robert S.McNamara.

The eleven lessons explored in the documentary are:

1. Empathize with your enemy
2. Rationality will not save us
3. There's something beyond oneself
4. Maximize efficiency
5. Proportionality should be a guideline in war
6. Get the data
7. Belief and seeing are both often wrong
8. Be prepared to reexamine your reasoning
9. In order to do good, you may have to engage in evil
10. Never say never
11. You can't change human nature.

(From Wikipedia)

It can be seen from the above that McNamara is not associated with any streaks that make for real leadership.He was only a technocrat.

Business Leader in India

In the business world generally the term leader is loosely applied. The chairman or CEO of a big company is called a leader if his company makes big profits or he continues in his position for long. In that sense, we have many leaders. How many of them have thought beyond the company? 

Sir Jamsetji Tata

In the economic and industrial history of India, there is just one company- only one- which thought of the country before itself! Which thought of itself in terms of its contribution to the country and society. Which worked even if it could not declare dividends for ten years, because it was vital for the country! Which worked even when first the British govt and then our own socialist govt did not give any help or encouragement, but only created hurdles. That is the house of Tatas under JRD, with the vision of Jamsetji Tata.

Jamsetji Tata was a wealthy man,but to make more wealth for himself was not his aim. R.M.Lala captures the mood beautifully:

Jamsetji appears to have decided that business was no longer his main business. The nation was his business. Slowly within him was developing a passion...His passion was to uplift the poor of the country.

In a letter written to Lord Reay in 1896, Sir Jamsetji wrote:

Being blessed by the mercy of Providence with more than a fair share of the world's goods and persuaded that I owe much of my success in life to an unusual combination of favourable circumstances, I have felt it incumbent on myself to provide a continuous atmosphere of such circumstances for my less fortunate countrymen...

[See: For the Love of India: The Life and Times of Jamsetji Tata, by R.M.Lala. page.92-93. Penguin, 2006.]

Sir J.N.Tata met Lord George Hamilton, Secretary of State for India in London and told him of his desire to see steel industry take root in India under Indian management. He told him that 

'when he first thought of establishing a steel industry two decades earlier, he was young and ambitious. He would have undertaken the task for his own sake. Now he was sixty, and more than blessed with all he needed for himself. If, at this stage, he undertook a project as major as this, it would be for the sake of India.'

Sir Dorab Tata, Jamsetji's son, said later about his father's interest in the hydroelectric project:

The acquisition of wealth was only a secondary object in life: it was always subordinate to the constant desire in his heart to improve the industrial and intellectual condition of the people of this country.

As R.M. Lala remarks:  "Jamsetji's conduct shows that in his later years he did not ask 'What enterprise is the most profitable?' but 'What does the nation need?'.

[ See: Beyond the Last Blue Mountain: A Life of J.R.D.Tata by R.M. Lala. Penguin, 1993. pages 43, 70 and 197.]

If any one wants to know what is vision in leadership, it is this.

 And the inspiration provided by Jamsetji is so powerful that it propelled the house of Tatas through all the subsequent years. It is showing results through all the enterprises the Tatas run, largely as trustees of national wealth.

J.R.D.Tata: Real  Bharat Ratna

The man who best exemplified this spirit in our times is J.R.D.Tata. He was the head of the Tata house for over half a century taking over when he was not fully thirty five. He saw the British imperialism ( which he detested); he witnessed the freedom movement ( with which he sympathised); he witnessed the dawn of freedom (in which he rejoiced); he experienced how senseless the Free Indian govt was towards national enterprises, and how brutal its taxation (which he suffered); he experienced how two supposedly  great PMs - Nehru and his daughter Indira, who between them ruled India for 34 years- laboured under leftist slogans without understanding- and without even trying to understand how private enterprises really worked, and formulated policies based on prejudices (which in vain he tried to correct);  he received rough treatment  from Morarji Desai both in Bombay and as PM (which he took in his stride); he experienced the contumely and arrogance of native bureaucrats who even out did the imperial hordes (about which he could do nothing) ; he withstood bullying and maltreatment; he stomached insults without retaliation. Through all this , he was motivated by only one factor: his love of India and his obligation as chairman of Tatas towards the country and its people.

In the so called socialist era with its system of permits-quotas-licences-contacts-contracts etc, many businessmen cultivated the ministers, MPs, wretched bureaucrats by funding  (bribing) them generously just for survival. The very netas who shouted Socialism by day gleefully spent the ill gotten wealth by night. Tatas stood alone. But they too had to support the Congress Party: a party which talked of socialism had no sense of shame in seeking money from the capitalists! [It was really like paying protection money to local goondas.]They lost insurance business. They lost the airlines which they had created and built up. They did not get licences for new projects or permits for expansion. They came very near to losing even the steel business to nationalisation. If they persisted through all this, it was because of J.R.D.'s commitment to the nation and its people, irrespective of what the government did.

Every businessman talks of shareholders. Some talk of employees. A few think of the society at large. Very few think of the country as a whole. Tatas alone think of all these all the time!

If in the world of Indian business, I can think of any one as the true Leader, it is J.R.D.Tata. No other industrialist  in India is even worthy of being mentioned in the same breath. There may have been brilliant CEOs engineers, managers, professionals.Surely, there have been good businessmen and companies. But there has been no other Leader.

Indeed, it is doubtful if any other nation has seen the likes of Sir Jamsetji and J.R.D.Tatas! They are India's own jewels.