Aligning for Growth

7/30/2019 Aligning for Growth

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Aligning for Growth


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To manage sustainable growth, a

company needs to create an

effective alignment among three

key elements:

its value creation logicits organization principles

its people processes


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Much as an attractive and durable buildings must

be built on a harmonious and stable structure,

similarly in thinking about growth , attentionmust be paid to each of these three attributes

that collectively lead to a self-reinforcing growth

model.

Design of any part must take into careful

considerations the effect on the whole.Failure to understand the interdependent nature

of these different elements in a company will

jeopardize its efforts to grow.


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Value creation logic : What is distinct or unique

about the way in which we create value?

Value creation is all about utility and functionality

and refers, therefore to those the company

serves, rather than those who own it.

Successful companies can create value in many

different ways-


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3M- creates value through continuous innovation, maintaining

profitability and growth by developing and introducing new

products.

Lincoln Electriccreates value through operational excellence, withhighly disciplined operational processes typically backed by high

quality and high-efficiency plants and infrastructure.

McKinseycreates value by building close relationships with

customers, providing tailor made solutions that uniquely meet

individual customer needs


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Bajaj Auto- Till late 1980s Bajaj Auto has historically prospered

by following a dramatically different value- creation logic. In an

environment that restricted both competition and its owncapacity to grow, Rahul Bajaj, basically focused the company on

one core product- first the Vespa and then, after the

termination of its partnership with Piaggio-the Chetak- and

standardized and refined the operational processes to becomethe lowest cost two- wheeler producer in the world.

Thermax has used its origin in small boilers to expand around

both the inlet and the outlet sides of that product.


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Organizational Principles: At the general level, each

organization represents a set of choices around a few

key parameters.

1. Autonomy vs. synergy.

2. Control vs. initiative

3. Leadership vs. Culture


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People Processes:

In a world in which human and intellectual capital are

increasing replacing financial and physical capital as

the key scarce resource, companies have recognised

the need to fundamentally rethink their policies for

attracting, developing and retaining the best talent.

Reliance Industries Limited: Its approach to people is

the diversity and variety they seek. What Reliance

values and looks for are the capacities for

entrepreneurship, risk-taking and the will to win- hall

marks of the Reliance culture etched indelibly by

Dhirubhai Ambani into the psyche of the company.


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Hindustan Unilever develops managers through a uniform , highly

structured and very high quality process into a common mould ofprofessionally competent, highly competitive, yet loyal and

decent executives who have high ethical standards and are the

envy of all competitors.

Unlike Reliance, Hindustan Unilever values professionalism more

than entrepreneurship and both seeks and creates uniformity

more than diversity, but like Reliance , it goes to extreme lengths

to attract the very best talent at the input stage.


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Combining Alignment with Evolution :Seeing what had happened to Bajaj Auto in the

late 1990s , there is need for both alignment and

evolution; for both fit and flexibility.

To successfully grow, a company must align its

strategy, organization and people processes. But

the alignment must not be so strong to preventchange.

Documents

Aligning for Growth