Friday, September 5, 2008

An eye opener to managerial dilemmas

Dr S.Narayanan, Economic Adviser to the Prime Minister addressed the students of DoMS, IIT-M under the banner of the MIST club. He has nearly four decades of public service in development administration in the state and central governments, starting in 1965. He was responsible for the implementation of economic policies of over 30 ministries including Finance, Commerce and Industry, Petroleum, Agriculture, Shipping, Road Transport and Highways, and Power.

Dr.Narayanan gave an insight into practical situations where managers are at crossroads. These problems are more complex, since the opportunity cost involved is very high. He chose an open ended format, where he cited real life instances and the decisions taken, then. He left it to the audience to take their own stand with respect to the decision.

He started out by giving the example of the recent hit book ‘Zoom’, where the author proves that perspectives change when the window of perception changes. He quoted a few examples:

  • How illiteracy was the opportunity cost for having chosen to improve tertiary education. India is a knowledge, service based economy now, thanks to the skill set of the people. But it was achieved at the cost of primary education.

  • The UTI-64 case, where the government had to intervene and pay compensation for scores of people at the cost of drought measures. But that brought about many positive trends in the economy that included people started to trust mutual funds.

  • The lack of diesel supplies in the local market even though oil exports are high in our country, due a decision taken long ago – to allow private players to export refined diesel. Now, oil export forms a major part of our GDP.

Dr.Narayanan commented that “One will always have to take ethical decisions. And the ethics line keeps getting pushed further in life.” He defined an ethical decision in a very beautiful manner – “One should be able to tell one’s mother, about the decisions taken. Because, she is a person whom we won’t lie to!" He said, "Take decisions in such a way you feel happy when you look at the mirror everyday.”

“Life is full of dilemmas. It confronts you in personal and corporate life. In a corporate setup, you are responsible for what the corporate (or government) represents. And what it achieves by the decision.”

“NRN and Tata are respected for the ethics that the corporation holds. So, choose your stand. ”
He chose to end the session there, for the audience to ponder over what sort of dilemmas responsibilities bring in, and why it is important for one to be ethical.

Thursday, September 4, 2008

Learning to Lean - Insights by lean management guru James Womack

IIT Madras had the great privilege of holding a talk by Lean management guru Dr.James P.Womack recently.Dr.James is known for his new principles of management called Lean theory. He is the founder and chairman of the Lean Enterprise Institute, a non-profit education, publishing, conference, and research organization who advance a set of ideas known as lean production and lean thinking, based on the Toyota Production System (TPS) and now being extended to an entire Lean Business System. He said that his greatest qualification was that he did not know anything. He started out with a fresh mind which was ready to be modelled and reformed. During the period 1975-1991, Dr. Womack was a full-time research scientist at MIT directing a series of comparative studies of world manufacturing practices. He visited different countries for a first-hand experience at the auto companies like Toyota, General Motors, Ford, Benz etc. His study of the auto industry resulted in a path-breaking book called “The machine that changed the world’” which looks at Toyota and the way that it transformed the earlier business models used by car companies. This was his third visit to Chennai. He had earlier visited Madras in 1971 as a student and then later again in 2002.

In his lively, anecdotal style,Mr.Womack spoke about why the Dilbert cartoon strips are a great example of employee cynicism towards management re-engineering and what every industry can learn from Toyota-the most perfect process for value creation known to him.

He mentioned about the training program at Toyota. When you’re hired as a university graduate, the company’s assumption is that you know nothing of any use. On your first day on the job you goto your desk and there’s a blank piece of A3 paper and on it your boss has written an issue facing your department in one corner. You have to go out, ask questions, and come back with answers after which you are sent out over and over again. That’s a process called A3.Just imagine your first day of your work is a blank paper. That’s their training system.

Mr. James Womack then spoke about the evolution of management theories and gave us insightful examples on how the management principles have changed over time. He spoke about how the first systematic process thinker Henry Ford transformed the car from a luxury to a product which even the farmers in America could afford. According to him Henry Ford was the first person to integrate an entire production system, under what he termed “flow production”. Ford followed the principle – “Father knows best”. He was very autocratic in his functioning and did not have any organization structure so to speak. He was very much the one-man who knew the solutions to all the problems and would manage the company solely.

American companies were becoming more dominant in the early part of twentieth century and I quote Mr. James “Americans periodically think they can become dominant, and periodically discover they can’t”.

Then Mr. James spoke about Alfred Sloan’s new style of management which was more a decentralized one where in they had offices spread right across the geography and the local management was empowered to make certain decisions. The product became more customized and it came with a tag of personal experience.

The third type of management revolves around the concept of lean management. Perpetual innovation was the key driver in this style of management which was mastered by the Toyota group. Toyota brought in more method into execution and their model was primarily based on delivering quality products.

Today the organizations are trying to work together to create value and it is important for organizations to think on the same dimensions and engage its people for achieving its targets. According to Guru James there are primarily 3 steps which any organization needs to follow – First list out what is important for the organization (list out the goals and objectives).Second, how to engage its people to work towards the goals and third is how you solve the problems.

To put it in a simpler way he suggested the 3P’s of management – Purpose, Process and People each of which are equally important for the success of the organization.

The cornerstone principle of lean is – you always start with the customer and ask what the customer really wants. It sounds like the easiest thing in the world but most companies don’t do it. Lean is about tools that create goods and services that offer precise customer value, but with less human effort, less human space, less capital and less time.

He also alluded to the Indian way of teaching at colleges as climate-controlled artificial learning and said that classroom teaching was only a part of one’s education. The real education lies in going out and observing, asking why certain things are happening and engaging in humble and intelligent dialogue with normal people.

For further information about Dr. James Womack and his Lean style of management you can refer to his website and It was a great gesture by Dr. Womack to share his invaluable experiences with us and which was appreciated by Prof.LS Ganesh of Department of Management Studies (DoMS).We were also joined by management students from MOP Vaishnav, Guru Nanak, SRM university and senior executives from ICICI, Eicher and HAL. Dr.Womack concluded the talk by emphasising the need to keep working towards lean and keep spreading it.

-Abhishek Mehra

DoMS Interface

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