On 16th of May 2014, India, for the first time in her history elected a full strength right wing Government. The country had seen for the first time since 1984 seen a single party majority in the Parliament and the leader, Narendra Modi was the Prime Minister elect. Modi had earlier governed the state of Gujarat for 12 years and sold his resume to the public, who hungrily lapped it up. The narrative was more or less on the lines of – “I will deliver”. The incumbent Government at that time came up with its counter narration of – “Us, not I”. I want to approach this political choice from a management point of view. I shall not pass my judgments on the subject at hand but would try to flesh out details of each of these approaches.
What does “I will deliver” mean? It means a more power concentrated in the hands of the executive headed by the Prime Minister. In the management paradigm, think of it as a chief executive officer (CEO) who is running the show on his own without taking the board into confidence. There are several organizations that run on this approach and most of them are family owned firms where the powers of owner/ managing director and chief executive are all invested into one person who is calling the shots. While these organizations seem efficient and we all know who is in charge, there could be several pitfalls for these organizations. Firstly, there is not discussion or dissent. The board of directors is only present to rubber stamp the decisions made by the CEO or it will be replaced for a more pliable board. This means there is no debate / discussion about various project proposals at hand and the whims and fancies of an individual rides roughshod over the majority if need be. Consequently, there could be several bad investments made which could have been avoided had proper analysis been done. The board is shortchanging the investor to whom they have a fiduciary responsibility and doing what is best for an individual not necessarily what is best for the organization.
Secondly, in these organizations, there is hardly any proper delegation of work. This means there is no proper ownership of responsibility. While the board takes the decisions collectively, since it is merely doing the bidding of the CEO, it would not be aware of project details or benefits. This makes up a board which is unable to do simple application of mind. This also means, there is absolutely no second rung of leadership developed who could step in during emergency measures and the whole organization is sort of dependent on one individual. Such organizations run fairly well initially but then they become top heavy and stop attracting good talent then slowly degenerate.
The opposite can be said about the other approach. In organizations that have a strong board, the CEO is answerable to the board and is often different from managing director. Project proposals are discussed in the board room thread bare and the CEO has to make revenue projections for the company to help the board vote on these projects and often the best project is implemented. I am not suggesting that CEO would not have her/his favorite, am saying each project is picked on merit rather than whims. Decision making in such organization are comparatively slow and office politics is often high. This makes the CEOs job that much difficult because apart from having a steady hand on the control, she/he has to keep the board in good humor to have a well-oiled decision making body. The CEO cannot afford to have disgruntled board members driving wedges in the spokes of the wheel. These organizations have a strong base and are often more comfortably placed to handle emergency measures.
CEO in an organized company does proper delegation of work because she/he has so many other issues to handle which include people management as well. Consequently, these organizations develop a strong leadership base and each section of the company has a vice president who steers her/ his section. There is a healthy competition within the organization to outperform each other and contribute more to the organization. These organizations grow and diversify easily as they are very organic. The job of the CEO is difficult, sometimes unfairly so but it also ensures only the very best survive. These organizations are not dependent on individual brilliance or stupidity but on a proper system that fixes accountability.
On May 16 2014, India chose the former and chucked the latter because she was yearning for a strong hand to direct her into the future. Will the pulls of politics make the executive to loosen his hold and steer into the direction of flow or will he weather the storm and risk losing the board which looks pretty unhappy within the first 100 days. Time will tell.
So long…..
What does “I will deliver” mean? It means a more power concentrated in the hands of the executive headed by the Prime Minister. In the management paradigm, think of it as a chief executive officer (CEO) who is running the show on his own without taking the board into confidence. There are several organizations that run on this approach and most of them are family owned firms where the powers of owner/ managing director and chief executive are all invested into one person who is calling the shots. While these organizations seem efficient and we all know who is in charge, there could be several pitfalls for these organizations. Firstly, there is not discussion or dissent. The board of directors is only present to rubber stamp the decisions made by the CEO or it will be replaced for a more pliable board. This means there is no debate / discussion about various project proposals at hand and the whims and fancies of an individual rides roughshod over the majority if need be. Consequently, there could be several bad investments made which could have been avoided had proper analysis been done. The board is shortchanging the investor to whom they have a fiduciary responsibility and doing what is best for an individual not necessarily what is best for the organization.
Secondly, in these organizations, there is hardly any proper delegation of work. This means there is no proper ownership of responsibility. While the board takes the decisions collectively, since it is merely doing the bidding of the CEO, it would not be aware of project details or benefits. This makes up a board which is unable to do simple application of mind. This also means, there is absolutely no second rung of leadership developed who could step in during emergency measures and the whole organization is sort of dependent on one individual. Such organizations run fairly well initially but then they become top heavy and stop attracting good talent then slowly degenerate.
The opposite can be said about the other approach. In organizations that have a strong board, the CEO is answerable to the board and is often different from managing director. Project proposals are discussed in the board room thread bare and the CEO has to make revenue projections for the company to help the board vote on these projects and often the best project is implemented. I am not suggesting that CEO would not have her/his favorite, am saying each project is picked on merit rather than whims. Decision making in such organization are comparatively slow and office politics is often high. This makes the CEOs job that much difficult because apart from having a steady hand on the control, she/he has to keep the board in good humor to have a well-oiled decision making body. The CEO cannot afford to have disgruntled board members driving wedges in the spokes of the wheel. These organizations have a strong base and are often more comfortably placed to handle emergency measures.
CEO in an organized company does proper delegation of work because she/he has so many other issues to handle which include people management as well. Consequently, these organizations develop a strong leadership base and each section of the company has a vice president who steers her/ his section. There is a healthy competition within the organization to outperform each other and contribute more to the organization. These organizations grow and diversify easily as they are very organic. The job of the CEO is difficult, sometimes unfairly so but it also ensures only the very best survive. These organizations are not dependent on individual brilliance or stupidity but on a proper system that fixes accountability.
On May 16 2014, India chose the former and chucked the latter because she was yearning for a strong hand to direct her into the future. Will the pulls of politics make the executive to loosen his hold and steer into the direction of flow or will he weather the storm and risk losing the board which looks pretty unhappy within the first 100 days. Time will tell.
So long…..
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