INPUTS: PRIMARY RESOURCES
A. Primary
Resources
A.I Manpower
By
far, manpower is going to be the most crucial resource in the years and decades
to come. Managements, the world-over will ASK more of its manpower.
Whether they will actually get more (higher productivity & quality of the
goods and Services) will itself depend upon:
A S K
A S K
A = Attitudes
S = Skills
K = Knowledge Of
its manpower
The
cornerstone of the corporate strategy with respect to the EMPLOYEE-ATTITUDES:
EMPLOYEE
PARTICIPATION IN MANAGEMENT
Although
we have done considerable work in this direction at Powai Works during the last
decade, this will require a lot more top management commitment in the years to come. Attitudes
need demonstration through personal examples and repeatedly. For the top
management which does not practice employee participation in decision making at
all levels as an article-of-faith, the battle of the 21st century is already
lost!
As
far as physical SKILLS and the mental KNOWLEDGE is concerned, the strategy will involve
setting-up of a
CLC
= Corporate
Learning Centre
The
next 25 years will witness a rapid obsolescence of the skills and knowledge
possessed by the employees. One time education from an ITI or a professional
college will simply not suffice. All throughout his career, an employee will
have to continuously unlearn old tricks and learn new tricks. Already major
corporations, all over the world have set up full-fledged, professionally
staffed, full-time colleges/learning centres at recurring expenses of millions
of dollars, exclusively engaged in upgrading the skills/knowledge of their
employees. Some of these corporations have made it mandatory for all of their
employees (from Chairman down to shop-floor workman) to spend ~ weeks every
year at the Learning Centre.
In
the 21st century life-long training and retraining of its employees is going to be the key to
the survival and growth of a corporation. Our glorious past will be
irrelevant and there will be no short-cuts!
A.2 Finance
At a recent gathering of young entrepreneurs, Mr. S. L.
Kirloskar is reported to have advised them:
"If you wish to succeed in your business venture, do
not borrow money from the bankers. The interest burden will kill your
enterprise before it can stand on its own legs. Get a few friends to invest as
partners and let them share in the profits of the company when it makes money.
Do not work for the bankers."
Now even Shantanu knows that a large, modern-day
enterprise cannot manage without borrowing funds from the bankers -
nevertheless his words are not without substance. The bigger the interest
burdens the more susceptible does an enterprise become to the ups and downs of
business-cycle. This will be all-the-more true when we talk of selling our goods
and services abroad where the interest-rates are often 50% to 30% of those prevailing in India!
So the Name-of the game is going to be:
1. As far as possible use our own internally generated funds;
2. When these are insufficient, borrow from the public in the form of equity;
3. If
you must borrow from the bankers, borrow from the cheapest source. Different sources of finance/strategies to
optimise financing cost for diversification could be:
a) An Indian banker (there is now a
possibility to get a 1 interest rate advantage as compared to other' Indian
companies - if we enjoy a higher credit rating)
b) A foreign banker ( it is gradually
becoming easier to borrow directly
from foreign bankers)
c) Foreign Govt owned/assisted Development Banks such as:
c) Foreign Govt owned/assisted Development Banks such as:
-
KFW of FRG
-
DANIDA of Denmark
-
CDC (Commonwealth Development Corp)
-
French Indian Protocol Credit
-
Official Development Assistance
(ODA)
of Japan, besides
- IFC, IBRD, ADB, etc.
- IFC, IBRD, ADB, etc.
Some
of these institutions are even willing to invest in the equity of a new venture
in India (in lieu of or in addition to long-term loans at lower interest
rates). This could be one more reason for floating joint venture companies with
overseas partners.
d) Get
foreign collaborator to invest in the equity of j joint venture companies (new
diversification ventures) to the tune of 40 of the equity.
e)
Tap NRI funds
f) Set
up joint venture projects in Gulf where project costs and interest rates are low
(e.g. suggested Sponge Iron project in Jebel Ali Free Trade Zone- - or Muscat
where production cost per ton of sponge iron could be as low as Rs 1200 per ton
as against over Rs 2400 per ton in India!)
g)Over
the years offer as much of equity to employees as legally permitted. As far as
new j joint ventures are concerned, this should be implemented from the
inception stage itself no matter how small a venture. Besides
slightly lowering the interest burden of the project, the "ownership
concept" will inject an element of dedication and commitment amongst the
employees, improving the chances of the success of the venture.
h) Wherever
possible, collect interest free deposits from dealers/distributors of our
products.
i) Working
capital management especially customer outstanding, will have to be innovative,
incorporating devices such as electronic funds transfer from dealers I bank-accounts. We would also need
to linkup in a private network, all the computers of L&T
allover India. This would enable us to have instantaneous, on-line access to
customer outstanding and collections data.
We
should encourage all our dealers to install computers which could be linked to
our own private computer network, as and when desired. Such a network would
streamline monthly indents and dispatches.
A.3 Information
From
the 19th, to the 20th to the 21st century, we are progressing from the first to
the third industrial revolution.
The
next century is going to witness " The Information Revolution" - and the the time to prepare for it is NOW.
In his memorable book, "FORT AMITY", Sir
Queeler wrote,
"Time,
like an ever-flowing stream, sweeps all its sons away."
To
this, I would only add that, the 21st century will most certainly wipe-out all
those who will choose to remain un-informed or mis-informed! And I am purposely
using the word "choose", because we also have a choice to remain
fully informed and up-to-date about matters that affect our survival and
growth.
That's
right!
The
choice is ours.
And
the price to pay is not prohibitive.
The
21st century is going to be full of upheavals and changes -
the
changes in the way we
- Compile business-intelligence
Perceive customer-needs
- Scout for technologies
- Pursue the markets
- Follow-up with the Govt agencies
Select distribution channels Conduct R&D
- Finance Projects
- Apply novel manufacturing
processes Train human resources
- Motivate employees
- satisfy clients
- Advertise our products &
services organize our resources
- optimise the inputs
an
unprecedented change in the entire manner of managing our enterprise.
Just
one forecast should suffice to illustrate the point I am making.
By
the end of the 21st century, I foresee total elimination of wires and cables
within residential and commercial complexes. I foresee all low-powered
home-appliances/office-equipment to draw their energy requirement directly
from an electrically charged field pervading each building, with the help
of a micro-processor controlled device built into each appliance/equipment,
whether it is an ordinary light bulb or an expensive super-computer.
No wires, no plugs, no sockets!
The
demise of a whole industry and the birth of a new one!
Some
of the GET's who joined us a few months back could still be around when this
happens!
One
of the prime catalysts for such an 'upheaval', could be the non-stop
developments in the information technology that we all have been witnessing
during the last 1-2 decades. Take the segment of storage technology in
computers. The earliest computers stored their data on bulky reels of magnetic
tapes. Today we have erasable optical disk drives that put information on them
and get it off again.
An
optical drive that can put a full gigabyte of data - one billion bytes, the
equivalent of 500,000 typewritten pages or 2800 floppy disks on a single optical
disk only 5.1/4 inches in dia, the same size as most floppies.
An
optical disk, the size of a CD can store the entire text of the Encyclopedia
Britannica !
The
new magneto-optical storage technology would eventually replace its old
counterparts - making them obsolete. Unless our Group XI considers itself to be
in the business of "Information Technology" (and not in the business
of manufacturing floppy disk drives) , it would soon find that a competitor has
quietly and hurriedly introduced into the market (through screwdriver
technology?) a compact disk drive and made our floppy disk drives obsolete
overnight.
How
apt is Theodore Levitt when he says: "If you do not make your
product obsolete yourself, somebody else would do it!"
Needless
to say, we would need to broaden the "nomenclature" of our business
from a particular product to the satisfaction of its entire range of needs -
which could open up immense alternative possibilities.
Levitt's immortal essay on "The Marketing
Myopia" was never more valid than today!
So,
the question will be
- Our ability to
"foresee"/"anticipate"
- Our ability to "make things
happen"
or,
as someone has said,
- Our
ability to "build castles in the air, even as we are busy laying the
foundations upon which the castles will rest".
And
that foundation will be our Information Technology.
Not
just a computerised data-bank,
- on anything and everything
- concerning all facets/functions of
enterprise that has happened/is happening now/or likely to happen soon or in
distant future
- here in India and world-wide
but
much more than that.
Expert-systems
(cumulative, conjectural wisdom, providing options-for-actions) manipulating
the databank.
At
the most mundane level, this expert-system will print-out a booklet of
"Standing orders" to be followed for a new factory being set up in
J&K, drawing upon:
-
Existing
standing orders at all factories of L&T
- Relevant Industrial Relation
legislation of J&K
- Special status of J&K in the
state of India
- IDR Act
- Products to be manufactured
- Employment strength, etc. ,
At a much more complex level, the expert-system will tell an R&D engineer whether the material and the shape of the component which he is manipulating on the computer screen (CAD Computer Aided Design) will lend itself to optimum cost-effective manufacturing processes available in-house (CAM - Computer Aided Manufacturing), or tell an advertising executive that -
At a much more complex level, the expert-system will tell an R&D engineer whether the material and the shape of the component which he is manipulating on the computer screen (CAD Computer Aided Design) will lend itself to optimum cost-effective manufacturing processes available in-house (CAM - Computer Aided Manufacturing), or tell an advertising executive that -
-
given the population distribution
-
readership profile
-
recall rate, etc.
Whether
the media-plan for the new product will succeed or flop !
In
the 21st century, this is the way others will manage their businesses, based on :
-
Expert-system driven
-
Computerised data-banks
-
Connected to International Data Networks
-
Providing instant consultation
- with
far-flung locations
-
Through satellite-linkages offering conference facilities
In
fact, a number of highly successful Japanese, European and American companies
are already managing their far-flung businesses through such an
integrated information network.
In
India, ONGC has a primitive network and TELCO is not far behind. Much of our
own current success depends upon some of our past "Pioneering"
efforts. Even if we cannot be the FIRST, in India, we can certainly be amongst
the FOREMOST.
Such
a network, may cost us around Rs 10 crores initially and thereafter perhaps Rs
2 crores annually (for updating and maintenance) .
This
is a relatively small price today for a successful entry into the 21st century.
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