Editorial Dear Readers,

11M CALCUTTA

Consulting club emn

The September'10 issue of Joka Strategist, brought out by Consulting Club, 11M Calcutta brings a gamut of interesting and insightful articles from the consulting world. Our Feb'10 issue was very well appreciated by the readers and we thank them for their valuable feedback. Our latest issue features articles from professional experts in companies such as Baring Private Equity Partners and Wipro Technologies. Also, the CEO of Zenesys Consulting shares his views on Online Consulting with the editorial team. We also have some of the best articles from the student community at 11M Calcutta, along with articles from the leading business schools in India like Indian School of Business (ISB) and Management Development Institute (MDI).

Our cover story deals with the pertinent issue of rising social networking among the youth today. It explores the rise of social networking websites compared to the traditional email usage and how the trend of emailing has started to diminish in the world today.

In the magazine, an industry expert offers his views on the impact of the Direct Taxes Code Bill on the IT and ITES sectors in India. Another of the articles emphasizes on the need of sustained innovation for long term viability of businesses and presents a framework for an organization to create, promote and sustain an innovative ecosystem. We also take a deep look at Green Investments and the trends in shifting towards cleaner technologies. In addition to this, pharmaceutical industry in India has been analyzed, with an insight into the strategies being implemented by the leading players to face the upcoming challenges in this industry. Also, key recommendations that can be used as guidelines by NGOs in designing their organizational structure have been covered in another article.

This edition brings a complex Crossword involving some of the major terms used in consulting jargon, which promises to be a treat for all the crossword enthusiasts and those looking forward to a career in consulting. We also bring the latest edition of Consultoon, a light take on today's consulting practices.

We would love to hear back from you, your suggestions and feedback on this issue of J oka Strategist. Please feel free to write to us at consults@email.iimcal.ac.in. Happy Reading!

Abishek Chopra

Editor-in-Chief, Joka Strategist

EDITORIAL TEAM

President Sumit Singla

Editor in Chief Abishek Chopra

Advisory Editor Pankaj Chatrath

Cartoonist

Designers

Monalisa Majumdar

Arindham Biswas Chaithanya Padi

About

Joka Strategist Joka Strategist is the magazine

published by Consulting Gub of Indian Institute of Management

Calcutta once every four months.

September 2010

Con nts 123 458 159 4.89 127

147 127 786

159 489

2 7~

Green Investment

6 Cover Story: Social Media Vs. Email Debate about social networks replacing email services

11 Impact of DTC on ITjITes Analysis of Direct Taxes Code and its impact on IT/ITes firms

18 Green Investment Shift to Cleaner Technologies for safer environment as well as cost efficiency

24 Organization Structure & HR Policy Key recommendations to NGOs for designing their orga­nizational structure & HR policies

34 Indian Phramaceutical Industry Status and preview of major players in the domestic pharma market

38 Strategic Framework for Sustained Innovation Guidelines for new entities with aim to develop innova­tion as their core competence

43 Interview with CEO Founder of ZENeSYS, Saibal Sen talks about potential of Online Consulting and its affect on the industry

48 Consultoon

49 Crossword-Consulting Terminologies

Author

Tauqueer Ali Consultant with Business Advisory Services, Wipro Technologies

Abstract

The debate about social networks replacing

email services has been going on for several

years. New research and a deeper look at the

history of social networks reveal that email

services are indeed losing ground. In this

article, the author looks at various emerging

trends and shares his point of view about the

future of email services in a world dominated by

social networks.

Can social networks replace email?

There‟s a lot of debate going on about how

and when social networks will replace

emails. On one hand, the proponents of the

idea claim that we should look at teenagers

(who are shunning emails in favour of

social networks) to see what future has in

store for us, whereas on the other hand, the

staunch supporters of email services refuse

to believe that something as important as

emails could be replaced with something

else.

Apparently, the odds seem to be in favour

of social networks taking over a very large

share of email services. However, the

reasons put forward by many evangelists of

the idea are diluted by subtle sales pitches

and tend to miss the bigger picture. For

instance, Sheryl Sandberg, the COO of

Facebook, says that what teenagers do

today becomes norm for the rest of us

tomorrow. This is not entirely true and

Sheryl was severely criticized for making

such a far-fetched contention based on

unwarranted assumptions.

Interestingly, a simple answer to the debate

can be found in the history of social

networks. Clay Shirky in his prophetic book

"Here Comes Everybody" mentions that the

origin of the entire social computing

phenomenon can be traced back to the day

when email services started including a

seemingly insignificant feature called

"Reply All". In fact, all social computing can

be crudely viewed as a super "Reply All"

feature on your email account. And since,

email is the genesis of social computing, it's

probably logical to expect that better and

more evolved email services (social

Social Media vs. e-Mail

COVER STORY

6

networks) will eventually replace

traditional email services.

Widespread usage of social web has created

a new breed of customers; they are

demanding radical levels of transparency in

both private and public sector firms. It‟s

easy to see that traditional email services

were never designed for such levels of

openness and thus, will slowly but

inevitably give way to open social

networks. More and more private firms are

engaging customers on open social

channels, not only for creating buzz but

also for customer services. Companies are

realizing that delivering customer services

on an open channel creates radical levels of

accountability among employees and

enhances trust among customers. Public

sector agencies are not too far behind

either. For instance, government agencies in

the US (as mandated by open and

transparent government directive) have

already started open communications with

citizens; a large chunk of government

communications (G2G, G2C and C2C) that

traditionally happened on emails is being

ported to open social networks.

Over the years, many market research firms

and independent analysts have published

reports that provide ample evidence to

prove that social networks are indeed

replacing emails. For instance, Gartner's

social software prediction for this year says

- "By 2014, social networking services will

replace e-mail as the primary vehicle for

interpersonal communications for 20

percent of business users."

Figure 1

The adoption of social media tools in

company intranets have been shown to

decrease email and telephone

communications by a sizable extent, as

much as 30% or more. This suggests that

social tools offer real benefits that can‟t be

achieved by telephone and email

communication. In fact, our habitual usage

of email for collaboration could be quite a

hindrance to our productivity (Figure 1). As

organizations learn to use social tools for

collaborative pursuits, the usage of emails

for such purposes is bound to take a back

seat.

According to a study done in 2005, almost

half of Web-using teenagers prefer to chat

with friends via instant messaging rather

than e-mail. Another research by Morgan

Stanley and comSource (Figure 2)

found that the number of social networking

users surpassed email users in September

2009 whereas overall social networking

COVER STORY

7

usage surpassed email usage way back in

November 2007; Facebook has replaced

email as the most popular way to stay in

touch with friends online.

Figure 2

Unsurprisingly, college students rarely use

email and when they do it‟s to

communicate with teachers, parents and

others who may be less connected to them

in social networks. It‟s pretty clear that we

are slowly starving email, demoting it to a

shorter and short list of appropriate uses.

Eventually, it will fall off the edge, like fax

is now that we can scan and send

attachments more easily than using

dedicated fax machines.

Lastly, going back to the “Reply All”

analogy; if something is good enough to be

shared with several people by clicking

"Reply All" button; it's probably good

enough to be shared with a larger audience

as well. Using emails to share such things is

tantamount to burying them and rendering

them useless for future. Perhaps the right

place for such things is a wiki or a blog

where they can be preserved as

organizational social capital.

Besides the obvious reasons such as

simplicity and utility, the unprecedented

success of email can be largely attributed to

its open, decentralized and interoperable

standard. Social networks could be

considered as a viable alternative to email

only if their evolution follows a similar

path of open, standard and interoperable

standard.

In conclusion, it‟d be foolish to believe that

email services will cease to exist any time

soon; they are extremely useful for

asynchronous, private one-to-one

interactions. However, with radical levels

of transparency being demanded by people

and the imperative to store social capital for

posterity, the usage of email as a key

communication channel will certainly be

questioned in time to come.

References:

Gartner‟s Five Social Software

Predictions for 2010 and Beyond -

http://bit.ly/alpH2e

The Death of E-Mail (Slate Magazine) -

http://bit.ly/lC5ye

Email Sharing‟s Not Dead Yet

(Mashable) - http://bit.ly/1Fi75d

The End Of Email - Celebrating The

Imminent Death (SocialMediaToday) -

http://bit.ly/dbHVtE

COVER STORY

8

COVER STORY

About the Author:

Tauqueer Ali is a consultant with Business

Advisory Services, Wipro Technologies. He

has over nine years of experience in IT

services industry and has worked on

projects across Banking, Pharmaceutical

and Retail domains. He‟s an IIM Calcutta

alumnus (PGPEX 3rd Batch) and can be

reached at tali62@gmail.com. Tauqueer is

passionate about interactive digital

marketing and eCommerce; he currently

maintains two blogs on related topics –

http://digimantic.blogspot.com/ and

http://experienceweb.wordpress.com.

9

COVER STORY

Author

Nitin Gupta Member of Fund administration, Portfolio Value addition and Transacting team at Baring Private Equity Partners

Abstract

In an attempt to simplify the direct tax

provisions, the Government released the Direct

Taxes Code Bill, 2009 („DTC‟) in August 2009

for public comments. The provisions of the

DTC, especially those relating to Minimum

Alternate Tax („MAT‟) on gross assets,

withdrawal of tax holiday to SEZ units, etc. met

with vociferous protests from various

stakeholders. Several representations were

made, based on which, the Government

identified some major issues and recently

released the Revised Discussion Paper („DP‟) on

DTC. An analysis of the proposals in the DTC

read with the revised DP that are likely to

impact the Information Technology („IT‟) /

Information Technology Enabled Services

(„ITES‟) sectors is set out below.

KEY PROPOSALS AND THEIR IMPACT

Tax holiday to SEZ units and SEZ

developers

Current situation:

Under the existing provisions of the

Income-tax Act, 1961 („the Act‟), tax holiday

is available to IT/ITES units operating from

Software Technology Parks („STP‟), Export

Oriented Units („EOUs‟) and Special

Economic Zones („SEZ‟). While the tax

holiday in respect of the STP and EOU

units has a sunset clause of 31 March 2011,

SEZ units can avail of the tax exemption for

15 years (which may extend beyond 31

A Study on the impact of DTC

on IT/ITES industry in India

DTC

11

March 2011) subject to fulfilment of certain

conditions. Further, even SEZ developers

are eligible to claim tax exemption in

respect of their profits for a period of 10

years.

DTC Proposals:

The DTC proposals sought to end the

profit-linked incentive regime. Whilst the

DTC provided for grandfathering of tax

holiday available to SEZ developers for the

unexpired period, conspicuous by its

absence was the grandfathering of tax

holiday for “existing” SEZ units. However,

the revised DP now provides for

grandfathering of tax holiday for existing

SEZ units for the unexpired period.

Nonetheless, as a matter of policy it has

been decided that no further profit linked

incentives are to be provided to newly

established SEZ units post enactment of

DTC.

Comments:

IT/ITES sector has been a key driver to

India‟s economic growth trajectory. The tax

incentives offered to companies operating

in this sector provided them with an edge

in today‟s fiercely competitive market. As

such, withdrawal of these tax incentives to

new SEZ units under the DTC would prove

counterproductive The SEZ policy laid

down by the Government along with the

tax incentives offered to developers as well

as unit holders has largely contributed to

the success of SEZs in India. In such a

scenario, absence of profit-linked

deductions to new SEZ units would be a

retrograde step for the development of

SEZs in India, given that most of the SEZ

unit holders in SEZ notified zones are

IT/ITES companies. India continues to be a

major attraction as global outsourcing

destination. Tax incentives to IT/ITES

companies have been a major driver for

this. Withdrawal of tax incentives will

impinge on the competitive edge of India‟s

IT/ITES sector. Accordingly, the

Government should be requested to

continue with the incentives for SEZ

especially in the IT/ITES space.

Minimum Alternate Tax (MAT)

Current situation:

In light of the tax holiday available to the

IT/ITES sector, MAT is a key provision

impacting the sector. Currently, MAT is

applicable at the rate of 18% of the book-

profits computed after making specified

adjustments to the net profit of the

company. Further, the companies are

allowed to carry forward the MAT credit

(which is the excess of MAT tax paid over

the tax computed in accordance with

normal corporate tax provisions) to future

years. Presently, MAT provisions are not

applicable to SEZ units and SEZ

developers.

DTC Proposals:

Under DTC, read with the recent DP, MAT

is to be paid with reference to the book

profits of the company. However, no

specific rate and computation methodology

has been proposed.

DTC

12

Comments:

Given that the DTC intends to do away

with most exemptions, the industry lobbied

hard for a complete roll back of the MAT

provisions since there would not be any

substantial timing or permanent differences

between taxable income and book profits

on account of lack of tax exemptions.

Whilst MAT continues to be retained in the

DTC, one may seek solace in the fact that

the revised DP has reinstated it as a tax on

book profits as against the earlier proposal

of draconian levy of MAT based on the

gross assets of the company. Whilst this is a

welcome change, there are several other

issues concerning MAT that remain to be

addressed viz. grandfathering of existing

MAT credit and eligibility to avail MAT

credit in future years. As was provided

under the Act, SEZ units and SEZ

developers should not be made liable to

MAT.

Test of Residency

Current Situation:

Under the provisions of the Act, a company

is resident in India in any previous year, if

the control and management of its affairs is

situated „wholly‟ in India.

DTC Proposals:

Under DTC, it is proposed to shift the test

of residence of a company from „control

and management‟ to „place of effective

management‟ in line with International

practice. Accordingly, a company

incorporated outside India will be resident

in India, if its „place of effective

management‟ is situated in India.

Place of effective management of the

company would mean:

Place where the board of directors or its

executive directors make their decisions

In cases where the board of directors

routinely approve the commercial and

strategic decisions made by the

executive directors or officers of the

company, the place where such

executive directors or officers of the

company perform their functions.

Comments:

Although the concept of „place of effective

management‟ proposed under DTC is in

line with international practice, it is

important that this provision is

administered in a fair and pragmatic

manner. The new residency definition

could impact businesses where key

decisions are taken by Indian

management/executives and merely

adopted by the board overseas. Typically,

this would be the case in multinational

groups having management structures

where the global/regional CEOs, CFOs are

based in India.

Treaty Override

Current Situation:

Under the Act, the provisions of the tax

treaties prevail over the domestic law to the

extent they are more beneficial to the

taxpayer.

DTC

13

DTC Proposals:

The initial draft of the DTC provided that in

the case of a conflict between the provisions

of a treaty and the provisions of the Code,

the one that is later in point of time shall

prevail. This led to apprehensions whether

the proposal would lead to treaty override

and render the existing treaties otiose. The

DP seeks to restore the beneficial treatment

between the Act and the Tax Treaty except

in specified cases-

where GAAR is invoked or

when CFC provisions are invoked or

when Branch Profits Tax is levied

Comments:

The specific draft provisions of DTC are

still awaited and would need a careful

examination to evaluate their impact on

cross-border transactions.

Controlled Foreign Corporation

(CFC) Provisions

Current Situation:

Under the Act, there are no CFC provisions.

DTC Proposals:

The introduction of the CFC provisions has

come as a major surprise for India Inc. The

CFC provisions have been brought in as an

anti-avoidance measure. Under this,

passive income earned by a foreign

company controlled directly or indirectly

by a resident in India, and where such

income is not distributed to the

shareholders, resulting in deferral of taxes

shall be deemed to have been distributed to

the shareholders in India.

Comments:

CFC provisions are likely to bring

additional complexity in the tax legislation

and could significantly impact Indian

companies having outbound investment

structures. Specifically, CFC provisions

could create cash flow problems for Indian

companies since they would be subject to

tax without corresponding receipt of actual

dividends. This would necessitate a review

of the existing overseas investment

structure.

Exempt-Exempt-Taxable (EET) vs.

Exempt-Exempt-Exempt (EEE)

Regime for Saving Schemes

Current Situation:

Under the Act, long-term saving schemes

like Government Provident Fund (GPF),

Recognized Provident Fund (RPF), Public

Provident Fund (PPF), Life Insurance etc.

are covered under the EEE method,

wherein the contributions,

accumulations/accretions thereto and the

withdrawals are exempt from tax.

DTC Proposals:

EEE method of taxation is to continue for

specified Provident Funds and for the

Pension scheme administered by Pension

Fund Regulatory and Development

Authority. Investments in approved pure

life insurance products and annuity

schemes will also be covered under EEE

DTC

14

method. It has also been clarified that

investments made before the

commencement of the DTC in instruments

which enjoy EEE method under the existing

Act, would continue to enjoy EEE method

for the full duration of the instruments.

Potential Implications / Key Issues:

The continuation of EEE regime is a

welcome step as it will provide a tax free

lump sum amount to individuals to meet

their post-retirement financial requirements

and would provide a significant benefit to

the people driven IT/ITES space.

Transfer Pricing

Current Situation:

Currently, there are no provisions under

the Act in respect of Advance Pricing

Arrangement („APA‟).

DTC Proposals:

It is proposed to introduce APA for upfront

determination of pricing methodology of an

international transaction.

Comments:

Whilst the scheme specifying the procedure

of APA has not yet been released, one hope

that the same will find place in the final

draft and shall be in line with the

international practice.

Leased Assets

Current Situation:

In the absence of any specific provision

under the Act, there is a lack of clarity

surrounding the treatment of assets

obtained on finance lease by IT/ITES

entities. In certain cases, companies are

facing litigation from revenue authorities

on the question of whether they are eligible

to claim depreciation on such assets.

DTC Proposals:

Under DTC, the lessee would be treated as

the owner of assets obtained on finance

lease and therefore, eligible to claim

depreciation on the same.

Comments:

This is an important provision for the

companies in IT/ ITES space and it will

help to end the long drawn litigation

regarding „ownership‟ of such assets &

depreciation eligibility with the Revenue

authorities.

General Anti Avoidance Rule

(‘GAAR’)

Current Situation:

Under the Act, there are limited specific

anti-abuse provisions.

DTC Proposals:

The DTC proposed a GAAR. Under GAAR,

Revenue Authorities have sweeping

powers to, inter alia, disregard, combine or

re-characterize any part or whole of a

transaction/arrangement if the

transaction/arrangement was considered to

be an „impermissible avoidance

arrangement‟ For the above purpose,

DTC

15

„impermissible avoidance arrangement‟

means an arrangement, the main purpose

of which is to obtain tax benefit and, inter

alia, which lacks commercial substance or

which results in the abuse of the provisions

of the DTC. The DP provides that every

arrangement for tax mitigation would not

be classified as an „impermissible avoidance

arrangement‟. Further, an arrangement

would also have to satisfy any one of the

following conditions to qualify as an

„impermissible avoidance arrangement‟:

It is not at arm‟s length

It represents misuse or abuse of the

provisions of the DTC

It lacks commercial substance

It is carried out in a manner not

normally employed for bona fide

business purposes.

The DP also provides for safeguards for

preventing abuse of GAAR:

The Central Board of Direct Taxes

(CBDT) will issue guidelines to provide

for the circumstances under which

GAAR may be invoked

A threshold limit of the tax avoided

would be provided for invoking GAAR

The forum of Dispute Resolution Panel

(DRP) would be available where GAAR

provisions are invoked.

Comments:

The guidelines to be issued by CBDT would

need careful examination to assess the

scope and impact of these provisions.

Further, whether reference to the DRP

against GAAR invocation is an appropriate

remedy, remains to be seen. It is also an

open question whether GAAR can be

invoked for transactions undertaken prior

to the enactment of DTC. A suitable

clarification may be provided for this

purpose.

Concluding Remarks:

While there were several other

representations to the Central Government

on the DTC, the DP only addresses above

major issues. I hope that the representations

find place in the revised draft of the DTC.

While the overall aim of DTC is to achieve

certainty of tax impact and simplicity in tax

administration, it could pose significant

challenges to the IT / ITES industry.

Specifically, DTC could have a significant

impact on the effective tax rate of these

companies, coupled with introduction of

complex provisions such as the CFC. Before

finalizing this important piece of

legislation, the revised DTC Bill is likely to

be placed before the Steering Committee

and I would be delighted to receive your

inputs and suggestions for making

representations for IT/ITES sector before

such Steering Committee.

About the Author:

Nitin Gupta is a member of Fund

administration, Portfolio Value addition

and Transacting team at Baring Private

Equity Partners. He is qualified chartered &

cost accountant and also holds a Bachelors

degree in commerce from Hansraj College,

Delhi University and can be reached at

nitin.gupta@bpepindia.com

DTC

16

Author

Raghav Nanda 2nd yr PGPM MDI Gurgaon

Abstract

Knowing exactly what has been going around

the world no one is unaware of the fact that the

need to shift to clean technologies is stronger

than ever. Global warming and dilapidating

environmental conditions are not the only

reason for adapting cleaner technologies, with

the advanced technology clean energy

technologies are becoming cost efficient and

cheaper than their respective counterparts. The

so-called dream of low carbon economies needs

huge support not only in terms of money and

investment but also in terms of supporting

policy frameworks from government

Green Investment

GREEN INVESTMENT GREEN INVESTMENT

18

What is green investment?

Investment in any business involved in

operations that helps in improving the

environment.

The present conditions present huge

investment opportunities for investors

especially PE/Venture funds provided they

understand the scale and nature of such

opportunities. This concept has already

been discussed at various global platforms

which prove that various global „powerful‟

bodies are working out ways to prevent the

climate. Recent Copenhagen meet could be

considered as one such example.

Road to clean energy technologies

We know the importance of fossil fuels

which have always been the major source

of energy and definitely will be the major

source in the near future. But the need for

renewable cost efficient energy resources

was always there and due to the improved

technologies and innovations it is now

possible for us to aim for clean energy

sectors.

Major sectors that can help us in creating a

low carbon economy are-

Onshore Wind

Offshore Wind

Solar Photovoltaic

Solar Thermal Electricity Generation

Municipal Solid Waste-to-Energy

Sugar-based Ethanol

Cellulosic and Next Generation Bio-

fuels

Geothermal Power

The Need and Scale of Investment

Some believe that the progress in this field

has started while some still firmly believe

that we are yet to take the first step.

Whatever the case may be all of them

believe that the need of investment is going

to increase year by year as it is going to be

the decisive factor for the growth of low

carbon economies. No-one really knows the

exact amount of investment needed to take

forward this concept. According to the 2008

estimate of the International Energy

Agency‟s World Energy Outlook (WEO) an

investment of US$550 billion needs to be

there in renewable energy on a yearly basis

if we are to limit concentrations to 450ppm

CO2.

GREEN INVESTMENT

19

While an increase in spending for global

energy infrastructure has been found but

the recent financial crisis has not left the

upcoming sector unaffected. Total

investment volume of clean energy in 2008

has been found to be less then what it was

in 2007. Though investment has reduced

marginally we are still far away in terms of

the attention this sector demands. The

credit to the sustained investment goes to

the venture capitalists and the private

equity investments which have taken

cleaner technologies as a challenge not only

to save planet but also to grow.

The recent economic downturn has shown

the importance of government and its

policy framework to the whole world and

the role they can play in supporting and

encouraging green investment can also not

be questioned. The fate of the companies

going for clean technologies also depends

on the support and facilitation they receive

from government of their respective

countries. It is time that governments and

other regulatory bodies understand the

need of the hour and support the process of

green investment without any loopholes.

The major challenge for the policy makers

is not only to maintain the momentum of

clean energy industry in this unfortunate

time of crisis but also to encourage

investment in future. We need to

understand the importance of every penny

we invest for a clean future. In this world of

innovation and continuous improvement

clean technologies are no exception, rather

than just using new technologies we should

build and develop technologies that could

be sustained in future. With the increase in

awareness and usage of clean energy

resources there soon will be period when

everyone will be trying to develop green

technologies and only those who will have

the potential of developing sustainable and

cost efficient technologies will be the

winners. The increasing awareness on this

issue and the response shown by various

global bodies, promises huge growth for

this industry.

It is important not only for developing

nations to include this industry in their

growth stories but also for others to lead

the way taking advantage of their being

already developed. Copenhagen summit

was one such opportunity to unite for the

cause. After eight draft texts and all-day

talks between 115 world leaders goals were

dropped and targets were lowered. This

failure of Copenhagen summit shows there

is still a need for leaders to understand the

urgent need for „rebuilding‟ environment

rather than to fight for their own interest

without considering the interest of billions

of people they represent.

India and green investment

India too has a great responsibility to

support green investment as it is one of the

few economies which were not hit badly by

financial crisis and is in position to

start/sustain green investments. With a

budget focused on fiscal consolidation,

inclusive growth and improving

investment environment India has already

started implementing its plan for fast

recovery.

GREEN INVESTMENT

20

We have already realized the impacts of

global warming and have taken initial steps

towards it. India has set a goal for slowing

the growth of its greenhouse gas emissions

planning to rein in its “carbon intensity” -

the amount of carbon dioxide (CO2) emitted

per unit of economic output -- by between

20 and 25 percent by 2020, from 2005 levels.

Out of India‟s total energy capacity of

150,000 MWs renewable energy accounts

for only 8 percent which not only shows the

need for investment but also a the

unrealized growth opportunities. The

Indian government aims to double the

green power generation and to take the

figure to 25,000 MWs in a period of four

years

India has already proposed a small tax on

production of coal to raise millions of

dollars for a National Clean Energy Fund

that could help the world's fourth biggest

polluter to shift to a low-carbon economy.

In last September India laid out new tariff

rules for electricity from renewable energy

sources, which promises to provide about

19 percent pre-tax return on any investment

made for renewable energy plants for an

initial period of at least 10 years. According

to Indian power officials, due to this very

step the benefits to be realized only from

thermal power plants, which actually

account for almost 60 percent of our total

generation, comes out to be 18.4 percent.

India also offers subsidized loans to all the

companies which are in the business of

building alternative energy power plants

and provides tax breaks and tariff subsidies

to encourage development of the renewable

industry.

Some of the examples of green investment

in India could be easily recollected from

past. A PE firm UTI Ventures had invested

around $8 million in Pesco Beam

Environmental Solutions, a firm involved in

waste-oil recycling and alternate energy

systems, Also IDFC Private Equity had

invested Rs. 35 crore in Ahmedabad-based

Doshion, a water management firm a

couple of years back. This shows that the

concept of green investment has already

been taken up by India long time back the

only challenge lien in sustaining the growth

of this sector and to encourage it. Similarly

another Venture capital funding of Rs 10

crore had been given by Sequoia capital to

Tribi Embedded Technologies .Nexus India

Capital invested Rs. 12 crores in Suminter

India Organics (exporters of organically

grown agro produce). Apart from these

investments from PE firms and venture

capitalists banks have also shown great

amount of interest in this field. Canara

GREEN INVESTMENT

21

Bank had invested Rs. 4.5 crores in Natura

Fibretech. Another major bank ICICI Bank

invested Rs.5 crore in HMX Sumaya

(environmentally-friendly HVAC

solutions). Also as a part of its plan,

Siemens has already allocated Rs 5bn to

build wind turbines for the energy-hungry

market, the first of which should be ready

by 2012. There is a great need of

appreciating the efforts put in by such

companies towards this new beginning so

as to tell them that world cares about those

who care about the world.

As we all know India is one of the world's

top producers of wind energy, and also

generates solar energy and power from

biomass, it is capable of doing what world

expects it to do. Seeing the potential that

India has it has been estimated that India

will attract a whopping $21bn worth of

investment that would be focused on

enhancing activities supporting energy

generation from renewable resources.

Let’s go GREEN

Considering the fact that the world has

been hit by the worst economic crisis ever

we must strengthen the fundamentals of

economy so as to take the required path

towards recovery and sustainable growth

which in turn is the major factor that affects

green investment. We need to understand

that waiting for recovery and not taking

required actions will make things worse.

The coming few years are going to be

critical as it requires collaborative efforts

from government, investors and other

global regulatory bodies to start the

transition towards a much greener world.

Need is there and has already been felt it is

just the support that is required.

References:

The Green Investing- a Report published

by the World Economic Forum., January

2009

About the Author:

Raghav Nanda is a 2nd year PGPM student

at MDI, Gurgaon. He holds a Bachelors

degree in Computer Science and

Engineering from Panjab University,

Chandigarh and can be reached at

pg09raghav_n@mdi.ac.in

22

GREEN INVESTMENT

Author

Pratyush Sinha Nitin Soni 2nd yr PGDM students IIM Calcutta

Abstract

This paper summarizes key recommendations

that can be used as guidelines by NGOs in

designing their organizational structure and

HR policy for their staff. Three broad areas of

HR policy recruitment, appraisal and salary

structure have been addressed in this report. It

suggests that efforts should be made at the

recruitment itself to hire right candidates. Also,

teachers‟ performance should be appraised using

contributions from his individual performance

& students‟ performance. Finally it suggests a

score card to appraise teachers. This paper also

outlines recommendations on how to improve

communication between the top management &

the staff.

Figure 1 An NGO run at Sundarban district

On April 1st 2010 Indian government

passed a historic law making education a

fundamental right of every child. Under

this law children in the 6-14 age groups are

entitled to Right of Children to Free and

Compulsory Education. Though the

intention of the government and policy

maker cannot be doubted the fact remains

that 1/3rd of Indian population is still

illiterate. It is anybody‟s guess that just

passing an act will not change the scenario

overnight. What this needs is an active

participation of the entire community in

this national endeavour. In this context, the

contribution of NGOs and social

organization would be noteworthy. Last

few years have seen a spurt of growth in

NGOs and social organizations who have

taken up the challenge of providing

education to the under privileged. Some of

Organizational Structure & HR

Policy for Education Sector NGOs

in India

24

ORG. STRUCTURE & HR POLICY

the notable NGOs who are working in the

field of education are CRY (Child Rights

and You), GiveIndia, Literacy India,

Pratham & Prerna are some of the well-

known NGOs who are working in the

education and related field. There are,

however, multitudes of NGOs and social

organizations which work on a smaller

scale and lack resources & managerial

expertise and despite of their strong

commitment towards the cause, fail to

create desired impact.

The authors of this paper worked on a

consulting project with an NGO working in

Sunderban area in West Bengal. The

recommendations were widely appreciated

and at the time of writing this report, 80%

of the recommendations have been

implemented by the NGO. Though the

NGP had very dedicated and well-qualified

top ions management but faced following

challenges:

Hiring right candidates for teaching

job: Candidates should not only view

his/her with NGO as another job but

should also be motivated & guided by

the ideals of the NGO.

No appraisal system in place: Whether

to use a fixed/variable or no appraisal

system.

If appraisal is to be used, how to link it

to student‟s & school performance.

Lack of communication between the

top management and the staff

This article is organized as follows. First we

outline the recruitment process. Next, we

lay out the criterion for appraising the

teaching staff. We then propose a salary

structure which is designed to encourage

motivated employees and at the same time

is simple enough to implement. We

conclude by illustrating the steps involved

in implementing this policy. We also

illustrate how the implementation of this

HR policy leads to improved

communication between the NGO

management & the teaching staff.

Recruitment Process

An EGO should decide on eligibility

criterion and accordingly invite applicants

for recruitment process. Recruitment is to

be done based on a written test, demo class

and interview. Shortage of qualified

candidates doesn‟t permit that these three

processes be treated as three distinct

elimination rounds. All three processes are

to be treated holistically and a decision to

reject or hire should be made at the end of

all these processes. A recruitment panel

should be constituted to oversee the

recruitment process. Panel should consist of

High School Teachers in relevant subjects

and one representative from the NGO (this

is the current practice as well). Recruitment

process can be completed in one day or it

may be spread over a few days if required.

However it is recommended to conduct

demo class and interview on the same day

to utilize the availability of the panel.

ORG. STRUCTURE & HR POLICY

25

Written Test:

Written test can be used as a measure of

candidate‟s motivation for joining the NGO

his or her fluency of thought and

communication skill. In written test, an

applicant should be asked to answer

questions which demonstrate his/her

motivation for joining the NGO. Applicants

may be allowed to answer in Bangla or

compulsorily in English when applying for

teaching in English. A maximum word

limit of 500 words (typically one page of an

A4 sheet) can be specified. Some sample

questions are as follows: a) Why do you

want to join the NGO? b) How can you

contribute in achieving the goals of the NGO?

c) What do you like about teaching at the

NGO? Candidates are not expected to know

in and out about the NGO but a minimum

awareness of local activities of the NGO is

expected.

Demo Class:

Demo classes could be a better way to

judge a candidate for teaching positions.

Candidate should be informed a priori

about demo class so that he or she can

prepare topics accordingly. Panels can

judge candidates on following parameters -

subject knowledge, communication skill,

interaction with students and suitability for

teaching job.

Interview:

Following the written test and demo class,

an interview should be conducted. Purpose

of the interview is to know more about the

candidate and his personal motivations for

joining the NGO. It is helpful to know if the

candidate is sole earner of his family or if

he has any alternate source of employment.

The panel should also inform the candidate

about the NGO‟s mission and its activities.

This may ideally be done before the start of

the interview.

After the recruitment process is over, a

consensus decision should be made by the

panel to hire or reject the candidate. Panel

may give its decision on the very same day.

However the NGO must intimate its

decision to a candidate within 7 days from

the day of the interview. Rejection message

(verbal or oral) should be carefully

communicated so as not to discourage the

candidate from applying in future.

Appraisal

In past, appraisal process has met with little

success and the NGO had to revert to

uniform pay. Appraisals were done

primarily based on the feedback from local

community. It lacked transparency and

teachers getting lower raises were not given

sufficient explanation for their poor rating.

An appraisal system for teachers can still

work if objectivity, justification and

feedback system is built into the appraisal.

Teachers are to be appraised based on their

individual performance as well as students‟

performance. Appraisals should be

conducted on a half-yearly basis by a

suitably appointed the NGO‟s

representative.

ORG. STRUCTURE & HR POLICY

26

Measure of Teacher’s Individual

Performance:

Before the start of each session (typically 6

months session), teachers are required to

submit their teaching plans for the courses

they would be teaching to the respective

classes. During the course of teaching they

are required to maintain a teaching diary

and self-record their teaching activities on a

weekly basis. This teaching diary can be

used as performance measuring tool where

teachers can be evaluated based on the

quality of their teaching plan and the rigor

with which they follow their plans. Since

teaching diary is self-maintained, appraiser

should at his level best try to verify the

veracity of the record in the teaching diary.

Teaching diary can also be used by the

NGO management or the appraiser to give

appropriate feedback to the teachers on

their overall teaching plan and its

implementation.

Kind of teaching tools and methodology

used by teachers also serve as an indicator

of his teaching abilities. For example a

language teacher can conduct class debates

or poem recitation. A science teacher can

demonstrate low cost experiments to

generate interests among students. Few

examples include, making electricity from a

lemon (or potato) and demonstrating

presence of iodine in salt (iodized salt

changes its colour to purple in presence of

rice and lemon juice). The NGO officials

can also educate teachers about such low

cost teaching aids (for more information

refer to the book “Low-cost, No-cost

Teaching Aids” authored by Mary Anne

Dasgupta and published by National Book

Trust, India.)

An attendance book for teachers should

also be maintained to record his or her

availability.

Feedback from students, parents and local

community must also be factored in when

appraising a teacher.

Measure of Students’ Performance:

We realize that there are many challenges

when including student‟s performance as a

measure of teacher‟s performance.

However, teachers can be evaluated on the

basis of marks obtained by students and on

the basis of their turnovers. Ideally, a

comparison of average total marks of the

students of regular school and that of

students coached by the NGO School will

serve as a better indicator of the

effectiveness of the NGO‟s teachers. For

want of the data and simplicity, average

total marks obtained by the students at the

NGO Schools can be used to measure the

effectiveness of teacher‟s performance.

Drop out of an individual student can be

attributed to many reasons other than a

teacher‟s performance in the class. But a

collective turnover of say more than 10%

students does reflect poorly on the quality

of teaching at the school. Thus student‟s

turnover must be reflected in teachers‟

appraisal. It is hoped that including this

parameter in the appraisal will motivate

teachers to retain existing students and also

bring in new students.

ORG. STRUCTURE & HR POLICY

27

Overall Rating Score:

We devise a scale based rating system to

appraise teachers. At the end of appraisal

exercise, each teacher is awarded an overall

rating (OR) scores between 0 and 10, 0

being the worst and 10 being the best. The

score is to be awarded to a teacher on the

basis of his or her individual performance

and on the basis of students‟ performance.

Note that the component of the score that

comes from students‟ performance will be

same for all teachers at a given school. This

is done to avoid any disparity among

teachers of different grades and subjects. It

is also hoped that this will ensure collective

responsibility of teachers in ensuring better

overall performance.

In computing the overall score equal

weights should be given to individual

performance of teachers and overall

performance of students. Please look at the

appendix for a sample scale for measuring

teacher‟s individual performance.

A formal description of the computation of

overall rating is as follows:

1. Score to judge individual performance

of teacher – Score „a‟

Parameters to be judged are as follows.

Quality of half yearly teaching plan

submitted by teacher – A score of 10

indicates a well drafted teaching plan

and a score of 0 is awarded for failing

to submit any teaching plan.

Adherence to teaching plan as

demonstrated by self-recorded teaching

diary & use of teaching tools & teaching

methodologies: A score of 10 is

awarded for following teaching plans

and using teaching tools and teaching

methodologies. A score of 0 is awarded

for not maintaining any teaching diary.

Feedback from students: NGO

representative should assess feedback

from students. A teacher who receives

excellent feedback from students

should be awarded with a score of 10.

Feedback from parents & local

community: the NGO representative

should assess feedback from parents &

local community. A teacher who

receives excellent feedback from

parents & local community should be

awarded with a score of 10.

Teacher‟s attendance: Teachers with

100% attendance are awarded a score of

10. Attendance can be scaled

appropriately to reflect a number

between 0 and 10.

Appraiser can award a score between 0 and

10 for each of the criterion listed above and

compute an average score for the

individual performance of a teacher (see

appendix).

2. Score to judge students‟ performance at

school– Score „b‟

Parameters to be judged are as follows:

Average marks obtained by students at

the school: Score awarded to a teacher

is directly related to the average marks

ORG. STRUCTURE & HR POLICY

28

obtained by the students at the school:

The score is computed as

p = (Average Mark/Maximum Marks) *

10

Number of failed students: Score

awarded to teacher is negatively related

to the number of failed students.

Failure of more than 10% of students

attract negative penalty.

q = 10 – percentage of students who fail

Net change in the number of students

enrolled at the school: Score awarded to

a teacher depends on the net change in

the number of students enrolled at the

school. A score of 10 is awarded if there

is no or positive change in the number

of students enrolled at the school. A

score of 5 is awarded if 0% to 10% of

students leave school. A score of 0 is

awarded to teachers if more than 10%

of the students leave school.

r = 10

if net change in the number of students

is >= 0

r = 5

if net of 0 to 10% of students leave

school

r = 0

if more than 10% of students leave

school

Score „b‟ can then be computed as, b = (1/3)

(p + q + r)

Weighted overall rating can now be

calculated based on the following formula:

Overall Rating (OR) = (a + b)/2, rounded to

single decimal point.

Find below a sample for the calculation of

overall rating.

Let a teacher obtained following score on

the following parameters:

i) Quality of half yearly teaching plan

submitted by teacher = 7

ii) Adherence to teaching plan as

demonstrated by self-recorded teaching

diary & use of teaching tools & teaching

methodologies = 7

iii) Feedback from students = 8

iv) Feedback from parents & community =

8

v) Teacher‟s attendance – 90% translates

into a score = 9

Score a = (1/4) (7 + 7 + 8 + 8 + 9) = 7.8

Let average score of students is 65/100, 5 %

students fail & net change in number of

students = 0 %

Score p = (65/100) X 10 = 6.5

Score q = 10 – 5 = 5

Score r = 10

Thus score b = (1/3) (p + q + r) = (1/3)(6.5 +

5 + 10) = 7.17

Overall Rating = (7.8 + 7.17) / 2 = 7.485 ≈

7.5

In order to keep the appraisal process

transparent, appraiser should share the

details of overall rating computation with

the teachers.

ORG. STRUCTURE & HR POLICY

30

ORG. STRUCTURE & HR POLICY

29

Non-Monetary Awards:

„Best Teacher Award‟ can be awarded to

deserving teachers based on the overall

rating score as calculated above. Teacher

can felicitated during Gram Panchayat

meeting by the Sarpanch, BDO (Block

Development Officer) or any other such

official. The NGO may also circulate an

organization level half yearly newsletter

among its staffs (teaching and other staffs)

which may include a section highlighting

the achievements of its star teacher, star

school or any special initiatives undertaken

by a teacher at a run school. The newsletter

can also be displayed at the notice board of

the NGO‟s offices.

Salary Structure

Total monthly salary = Basic Pay + Variable

Pay

Basic pay has to be determined by the NGO

management. Care should be taken to keep

the salary competitive when compared to

NREGA (Mahatma Gandhi National Rural

Employment Guarantee Act). Currently

under NREGA an individual can claim an

employment of up to 100 days at a

minimum daily wage of Rs. 100.

Total variable pay component has to be

decided by the NGO management. At the

end of the appraisal all teachers are to be

grouped into two categories- performer or

non-performer. A teacher who is awarded a

score of 5 or more is a performer and a

teacher who is awarded a score less than 5

is non-performer. A performer should get

twice the variable component of that of the

non-performer. Thus for example if

teachers with overall rating (OR) less than

5 get Rs. 50, teachers with overall rating of

greater than equal to 5 must get Rs. 100 as

variable pay.

Action Plan& Recommendation:

Action plan for implementing the report

consists of two stages. In the first stage, the

NGO management should review the

report and communicate its

recommendations across the organization.

Management will need to effectively

communicate the benefits of preparing half-

yearly teaching plan and maintaining

teaching diary to existing teachers.

Teachers need to be told that these

measures have not been put in place as a

check but rather the purpose is to help

them become better teachers.

The management should then put

appropriate organizational structure to

effectively implement the

recommendations. It should appoint an

official who should be responsible for

reviewing teaching plans, ensuring that

appraisals are done and for preparing

news-letters. He should also keep updating

himself on low cost teaching aids and

should communicate the same to teachers.

A mechanism to record attendance of

students and teachers should also be put in

place if none exists already.

We recommend that data on student‟s

performance and teacher‟s appraisal should

ORG. STRUCTURE & HR POLICY

31

ORG. STRUCTURE & HR POLICY

be centrally maintained at an NGO. Such

data can provide the NGO management

with a powerful snapshot of the

effectiveness of their organization in terms

of students and teachers performance. As

these data help the management, much the

same way, a news-letter from management

to teaching staff will help teachers know

more about the NGO and its activities. The

NGO should also help teachers by training

them about low cost teaching aids that can

be used for effective teaching.

References:

NREGA

http://nrega.nic.in/

http://en.wikipedia.org/wiki/National_Rural_Employment_Guarantee_Act

Low Cost Teaching Aids for Rural Schools in India

http://knol.google.com/k/low-cost-teaching-aids-for-rural-schools-in-india#

Prathamhttp://www.pratham.org/

Prernahttp://www.prerna.net/

NGO India – Partnership System http://ngo.india.gov.in/default.php?

Literacy Indiawww.literacyindia.org

Indian NGOshttp://indianngos.com/

Right to Education, Wikipediahttp://en.wikipedia.org/wiki/Right_to_education

Give India http://www.giveindia.org/

CRY http://www.cry.org/

About the Authors:

Pratyush Sinha is an MBA student at IIM

Calcutta. He did his B.Tech from IIT

Kharagpur and MS from University of

Illinois Urbana Champaign. He is very

passionate about helping the community

and prior to joining INCA (Initiative for

Community Action) club at IIMC, he was

active member of Asha, UIUC chapter.

Nitin Soni is an MBA student at IIM

Calcutta and has been an Area Coordinator

for CSR initiatives undertaken by Tata

Consultancy Services across North India.

At IIM Calcutta he is an overall coordinator

for INCA (Initiative for Community

Action), the IIM-C club offering

consultancy services to not-for-profit

organizations.

31

ORG. STRUCTURE & HR POLICY

ORG. STRUCTURE & HR POLICY

32

Author

Sandeep Yadav 2nd yr PGDM student IIM Calcutta

Abstract

This article talks about the current status of

Indian pharmaceutical industry, a preview of

major players in the domestic pharma market. It

analyzes various challenges currently facing the

industry and strategies being adopted to

overcome those challenges particularly in the

Indian context.

Indian pharmaceutical industry is a success

story providing employment for millions

and ensuring that life-saving and essential

drugs are available at an affordable price

for largely middle class population of the

sub-continent. Pharma market in India is

valued at around INR 45,000 crores and it is

estimated to be growing at a rate of

approximately 10 percent annually with

astonishing growth rates in some

specialized segments for instance Oncology

(CAGR of ~25%)

It is a highly fragmented industry with

more than 20,000 registered units. 70

percent of the sales are accounted for by top

250 companies. It faces severe price

competition and government price control.

The pharmaceutical industry in India meets

around 70% of the country's demand for

bulk drugs, drug intermediates,

pharmaceutical formulations, chemicals,

tablets, capsules, orals and injectables.

There are about 250 large units and about

8000 Small Scale Units, which form the core

of the Indian pharmaceutical industry

(including 5 Central Public Sector Units).

These units produce the complete range of

pharmaceutical formulations, i.e. medicines

ready for consumption by patients and

about 350 bulk drugs, i.e., chemicals having

therapeutic value and used for production

of pharmaceutical formulations.

Following the de-licensing of the

pharmaceutical industry, industrial

licensing for most of the drugs and

pharmaceutical products has been done

Pharmaceutical Industry in India

PHARMA INDUSTRY

34

away with. Manufacturers are free to

produce any drug duly approved by the

Drug Control Authority. Technologically

strong and totally self-reliant, the

pharmaceutical industry in India has low

costs of production, low R&D costs,

innovative scientific manpower, strength of

national laboratories and an increasing

balance of trade. The Pharmaceutical

Industry, with its rich scientific talents and

research capabilities, supported by

Intellectual Property Protection regime is

well set to take on the international market.

Majority of the innovator drugs are

launched by the MNCs which have huge

R&D budgets. In their endeavor for

launching blockbuster drugs in India, the

domestic pharma companies are looking for

alliances with MNCs through strategic

collaboration or acquisition.

Top 10 pharma companies in India in terms

of revenues generated

1. Ranbaxy Laboratories Ltd.

2. Dr. Reddy‟s Laboratories

3. Cipla

4. Sun Pharma Industries

5. Lupin Labs

6. Aurobindo Pharma

7. GSK India

8. Cadila Pharmaceuticals Ltd.

9. Aventis Pharma

10. Ipca Laboratories Ltd.

** Abbott-Piramal is the biggest drug maker

now after the $ 3.72 billion acquisition of

generic business of Piramal by the US based

giant

Major challenges being faced by

pharmaceutical companies:

Severe competition: The presence of

hundreds of players in the market, low

margins, and restricted capital for

investment in R&D has resulted in a

price war.

Unsustainable cost-earnings

differential: Worldwide, R&D costs

have increased more than the growth of

the industry resulting in a cost-earnings

differential that cannot be sustained

indefinitely.

Delays in drug approval: Getting

approval from DCGI in India for a drug

approved outside takes a long time

Increasing competition from emerging

markets: Companies in China, Israel

and Korea have arrived on the

international scene. In fact, India‟s

pharma exports to US took a severe hit

recently in 2009 because of that.

Centralized WHO-GMP (Good

Manufacturing Practices) certification:

This proposal, if accepted will hit

Indian exporters as DCGI lacks

infrastructure for speedy disposal of

applications. The certificate is needed

by the manufacturers for exporting

their drugs outside and it has to be

renewed every 2 years

Way Ahead:

Synergies in pipeline: Collaborations

to synergize the pipelines rather than

random acquisitions will be more

PHARMA INDUSTRY

35

Way Ahead:

Synergies in pipeline: Collaborations to synergize the pipelines rather than random acquisitions will be more successful in narrowing down the cost-earnings differential

Research & Development: Indian pharma companies should start investing in R & D now and not rely only on the generics business. This will need collaboration with MNCs and government support for the biotechnological companies in India

More efficient drug controller: Better infrastructure, minimal lobbying and professional approach is needed

Stop infiltration of Chinese and Taiwanese drugs: Illegal or ill-monitored flooding of Indian markets with Chinese drugs will do no good for us and for our patients as there is no quality certification of these drug manufacturers

Brand building: Domestic pharma companies, in spite of their exemplary work on cutting down on production costs, have an image of plagiarists and master copiers vis-à-vis MNCs which are known for bringing innovator drugs in the market. So, domestic pharma companies need to work to change that misconception.

References:

Richard Gerster, Pharmaceutical-drug-manufacturers encyclopedia: “Indian Pharmaceutical Industry”

Cremer, Losch and Schrader, Mckinsey Quarterly, April 2009: “Maximizing efficiency in Pharma operations”

Henske and Biesen, Business week, July 2009: “Mega mergers can’t cure the pharmaceutical industry”

Laws of Drugs and Cosmetics, DGHS official site, MOHFW, Govt. of India

About the Author:

Sandeep Yadav is a 2nd year post-graduate student at Indian Institute of Management, Calcutta. He holds an M.B.B.S. degree from B.J. Medical College, Ahmedabad. He interned in GlaxoSmithKline Pharmaceuticals Ltd. and can be reached at sandeepy2011@email.iimcal.ac.in.

PHARMA INDUSTRY

36

Author

Ankur Sharma Post Graduate Program student at Indian School of Business (ISB) “The world leaders in innovation and creativity

will also be world leaders in everything else”–

Harold R. McAlindon

Abstract

The article emphasizes on the need of sustained

innovation for long term viability of businesses

and presents a framework comprising of a set of

four basic functions for an organization to

create, promote and sustain an innovative

ecosystem. The prescribed framework can be

used as a basic set of guidelines for new entities

(within or outside an existing entity) looking

forward to develop innovation as their core

competence or as a basis for a litmus test to

evaluate the innovation sustainability quotient

of existing entities.

No rule has manifested itself with such

catastrophic outcomes as has the rule of

change. Corporate giants have fallen or

have been brought down to meager

existence for they overlooked the

innovation revolution. The past century has

also been the witness to the rise of a new

order of organic entities that dwell on the

creative juices of their sustained innovative

ecosystem. An ecosystem, that consistently

evolves to respond to the rapidly changing

technological and economic environment. It

is not a coincidence that Google continued

to grow and thrive in the worst global

imbalance in recent history.

The question of essence is whether there is

a set of operating procedures that an

organization can follow to become an

innovation power house? Well, a straight

forward answer is no! But there is a

framework that may give organizations a

head start in transforming themselves into

the next Google. The framework defines the

way organizations can transform

themselves into “innovative ecosystems”

by providing for four basic nurturing

Strategic Framework for Sustained

Innovation

PHARMA INDUSTRY

38

SUSTAINED INNOVATION

functions that create, promote and sustain

innovation. These functions working

together form the “cycle of innovation”.

Any organization needs to focus on the

following 4 functions to establish and

sustain innovation and creativity as its core

competence.

Definitive functions

Assistive functions

Promotion functions

Corrective functions

Definitive functions: This set of functions

sow the seeds for growth of an ecosystem

that is essential for fostering creativity in an

organization. These functions involve

building the necessary thought,

environment, human and infrastructural

capital necessary for defining a creative

landscape. The first and foremost definitive

function is creation of a thought leadership

that understands and encourages new ideas

and ways of thinking. The success of Apple,

3M, Google and the likes is attributed to the

thought leadership of their promoters. But

more important than the people is the

essence that needs to percolate through the

organization and be reflected in its strategic

decision making. It involves redefining the

mission and the vision of an organization to

imbibe these values in the entire value

chain thus creating an environment where

innovation is a law of nature. For achieving

this aim, an existing organization may have

to break free from cognitive and action

inertia, forces that hinder organizational

changes by voluntarily or involuntarily

resisting change in thought and actions. In

terms of building the human capital,

organizations must ensure that only the

best, the most fertile and creative brains are

hired. As we would see later, this also acts

as promotion function as it facilitates peer

competition and provides a reputational

incentive, both of which are essential for

encouraging innovation. The final

definitive function for an organization is to

build the necessary infrastructural capital

by providing for communication and

collaboration tools that promote increased

interaction amongst employees from

different teams, projects and geographies.

Tools that help them know about the areas

of interest of their peers and developments

in other sectors that they may be interested

in.

Assistive functions: These functions assist

the potential innovators in an organization

to shape their ideas into realities. Broadly,

we can classify these functions into

organizational support and technical

support. With regard to organizational

support, an organization may need to

relook its policies and procedures that may

be choking the innovation potential of its

employees. First and foremost, for any

attempt at encouraging innovation and

creativity to work, the basic input that

organizations need to provide to its

employees is time. All other efforts at

improving the innovation quotient of an

organization would fail if the employees

are not provided exclusive time when they

can pursue their creativity. Secondly,

organizations need to provide a level of

autonomy to their employees empowering

SUSTAINED INNOVATION

39

them to choose new and innovative means

to achieve the desired ends. These desired

ends may very well be the regular assigned

work of an employee. This would assist the

creative acumen of the employees by

bringing innovation even in their daily

work and thus create a platform for more

radical inventions. Organizations may also

want to simplify or bring in altogether new

set of processes for identification and

approvals for new research initiatives or

may just want to make such processes more

frequent, something that goes beyond the

customary annual or bi annual ideation

events. Another dimension in assistance

would be to raise the level of interaction of

its employees with the customer or end

user. This function has far reaching

consequences and potential for making

path breaking advances. By bringing its

employees closer to its customers,

organizations help in providing first hand

interaction which helps the employees

better understand the actual needs of the

customers which may not only lead to

better and more innovative solutions but

may also help the organization position

itself as a customer need driven

organization. It will also help them respond

better to preference changes over time.

Finally, assisting the innovator in providing

him/her with the required technical

infrastructure, knowledge tools and

training etc is one of the most important

assisting functions.

Promotion functions: Motivation and

encouragement are key functions in the

cycle of innovation. Innovators are free

thinkers, rarely motivated by monetary

SUSTAINED INNOVATION

40

gains alone. More often than not, their

satisfaction lies in accomplishment and in

distinction. They derive their utility from

the repute they carry and the reverence

they command from their peers. As such, it

is of utmost importance that an

organization acts as a promoter of

innovation and creativity. It calls not only

for economic incentives but also for

reputational incentives that an organization

needs to provide to encourage excellence in

innovation. Distinctions and honours need

to be established to reward outstanding

innovators. To take it a step further, the

system of hierarchical progression can itself

be skill based which will ensure a tradition

of excellence and will help sustain the

innovative ecosystem in the long run.

Corrective functions: These functions relate

to time bound re-evaluation and correction

of the innovative ecosystem. They may

involve some tweaking here and there and

from time to time, based on a well

established system of assessment. They

may involve change in team composition or

size overtime or may involve a change in

policy or procedure in line with changed

circumstances. What is of essence is that

there should be in place, a system of

evaluation to check whether an

organization‟s innovative ecosystem is

aligned with its vision and whether it is still

consistent with the macro environment

which it‟s a part of.

The framework provides a set of guidelines

and measurement points for organizations

to evaluate their progress on the path to

sustained innovation. To take it a step

further, metrics can be developed to

measure the performance of organizations

in providing for the given four set of

functions. Based on the relative importance

of each of the functions, such empirical

treatment may require a weighted system

of evaluation.

What is of essence is that sooner or later,

organizations will need to look inside,

evaluate their innovation quotient and take

concrete steps to develop a system of

sustained innovation or risk obsolesce to

the mighty power of change.

About the Author:

Ankur Sharma is a student of class of 2011

of the post graduate program at the Indian

School of Business. He holds a Bachelors

degree in Computer Science Engineering

from National Institute of Technology,

Kurukshetra and has worked for four years

in the financial services sector. He can be

reached at

Ankur_Sharma2011@pgp.isb.edu

SUSTAINED INNOVATION

41

Mr. Saibal Sen talks about the potential of

online consulting and how it is shaping

the industry. He also gives tips for

budding consultants who aspire to rise in

this business.

1. What ZENeSYS is all about? What

motivated you to leave your job in one of

the Top notch consulting companies and

start this firm?

As with most would-be-entrepreneurs, it‟s

a desire to create something of your own.

Working in big corporations means

following rules that are already set. There is

little room for strategic creativity. Although

I was working for a top-notch consulting

firm, I had no say in shaping the firm‟s

corporate strategy.

ZENeSYS is about tapping into the creative

energies of young professionals for an

online consulting learning and delivery

platform.

I believe that the desire to learn is a better

motivator than the desire to earn. Based on

this fact, ZENeSYS has created a consulting

skills teaching methodology using

successive levels of accomplishments. The

first level is learning, the second is applying

and the third is delivering live consulting

projects.

If you look at the training industry, you

will note that it is a commodity business.

Creating a top notch consulting training

business in the conventional mode is almost

impossible. This is because good quality

instructors need to be top-notch consultants

– who can earn more in consulting than in

teaching. So it‟s a catch-22 situation. We

have solved this problem by subsidizing

our training costs with live project

revenues.

Scope of Online Consulting:

An interview with ZENeSYS’s CEO

Saibal Sen

INTERVIEW with CEO

43

Another cost saving solution is all our

learning, applying and live consulting is

done online. When I first started, our online

model was uncertain but now in the last 18

months we have solidly proven our model

with satisfied participants and happy

consulting engagement clients.

2. What led you to move towards

online consulting?

Online is the future. I am not saying all

consulting will go online but a new market

exists now in online consulting. The main

drivers for online consulting are:

Need for lower cost, faster turnaround insights for strategic decision making

Overload of information (someone needs to make sense of it)

Harnessing the talent pool in India for global delivery

Our vision is simple though it might be a

bit far-fetched today. We want to be like as

someone once said to us – “A Cloud

Consulting Solution”. When folks need

information – they Google. When someone

needs answers and insights, they should

come to ZENeSYS. The ultimate goal is to

have clients come to our website, fill out a

form, pay by credit card and get solutions

to their problems in 10 days max.

3. How has been your journey so far?

How strong is your competition in the

domain of online consulting?

It‟s back to the old world economy where

businesses need to grow organically.

Chances of getting funding are near zero

for a business like ZENeSYS since we are

not able to show returns of 10x magnitude.

This means that the ride is slow and

economically challenging. However, it has

been very rewarding in terms of satisfaction

levels. Our social network community is

now 350+ strong with 80+ of them already

certified. All our past consultants and social

network members on zenesys.ning.com are

highly engaged and are assets for future

growth. Everyone who undergoes training

and certification with us is required to join

our social network and is welcome to stay

engaged as a part of the community.

We are so much of a blue-ocean company

that while there is virtually no competition,

explaining what we do is a challenge.

Everyone likes to understand a new

business in terms of something that they

can directly compare with. For ZENeSYS,

we cannot really say “We are like XYZ.”

The best way to explain ZENeSYS business

model is “Online consulting services

through a team of our own certified

consultants”. 20% of our revenue comes

from online training and 80% from online

consulting to clients.

Our main competition is internal training in

consulting organizations. We are still trying

to break into the corporate training market.

We got very close to striking a deal with

one of the largest consulting organization

for their new hire training but lost to an

internal unit. Another major India based

consulting organization just bought 4 seats

INTERVIEW with CEO

44

in our next training batch. While this is a

small number, we think this is a great

beginning for cracking the corporate

market.

For competition in online consulting there

is guru.com and elance.com. However,

ZENeSYS is different because we use our

own certified consultants. The others use

freelancers which means clients have to

deal directly with the freelancers. In

contrast, at ZENeSYS, we take

responsibility of quality and overall project

management. We are the single point of

contact. In the last 18 months, we have

delivered dozens of projects and every

single client is willing to be a reference.

4. For the benefit of our readers please

briefly describe the nature of

ongoing/completed projects?

Our live projects tend to be in market

studies, recommendation on market

strategies and analytics for strategic

growth.

In training and certification programs, we

simulate a live project on topics of current

interest. One of the most notable projects

delivered to date was “Funding for

Startups” which was uploaded on

Slideshare.com and immediately received

more than 2,000 views and 150 downloads.

To ensure quality, we generally only use

certified consultants for our live projects.

We occasionally allow live projects with a

real client in our certification program. Last

year we did two. One was on study of theft

in open format retail stores in US and

another was researching the size and

prevention methods for counterfeit drugs in

the worldwide Pharmaceutical markets.

This year again we did two more. First one

was in business development for a

Technology Consulting firm in the US and

another was for a go-to-market strategy for

an online Placement Portal in UK.

Our most recent live project will be on

analyzing Private Equity funds. To do this

we will be partnering with a leading

financial industry analytics firm and co-

branding the quarterly reports.

5. If you have to pick one project out of

all that have been taken up by ZENeSYS,

which one would you pick as the most

exciting?

I would say this would be the project that

was done along with the interns from IIM-

C this summer. A PE firm recently bought

an online medical directory firm and hired

ZENeSYS to analyze the competition. The

objective was to identify the best practices

and opportunity areas in the online medical

directory services.

The project was so successful that we

created our own methodology for

“Competitive Landscape Analysis” on the

basis of learning‟s from thatproject. We are

now selling this as a standard service. A

team of interns from SPJMR recently used

the methodology for a client in Digital

INTERVIEW with CEO

45

Signage. Another leading market research

firm in Boston is reselling our methodology

under their own brand name.

6. What is the future plan of ZENeSYS

especially in context of its Indian

operations

The training side of ZENeSYS business is

very much geared for developing the

Indian professional. In this sense our

program is very unique. We feel that we

have developed an appropriate pedagogy

to unlock the creative potential despite the

rote education system in India. Almost all

books on consulting tend to talk about what

is consulting rather than how to deliver

consulting. Our training program fills in

that void.

The consulting side of the business is

currently focused on serving US and

European clients. Consulting in India is

only recently getting accepted. Till just a

year ago, hiring a consultant was shunned

because by implication it meant that the

client was unable to do his/her job. This is

changing now. In the last one-month alone

we received three referrals from our

network of certified consultants for India

based projects.

The first one is on valuation of a

partnership equity component in a Joint

Venture between a Chinese manufacturer

and an Indian reseller. The second one is

on creating a go-to-market strategy for

selling backpacks in the organized retail

sector. The third one is on market study for

prescription eyewear franchising market

sizing.

So in a nutshell, we see overall operations

of ZENeSYS shift from the US to India in a

big way by the beginning of next year.

Possible options are to franchise our model

with hybrid online/onsite training and

research centres.

7. What will be your piece of advice for

students who intend to make a career in

consulting, especially for students who do

not have any prior work experience in this

field?

I would offer three tips. First one is to

understand that consulting requires a lot of

dedication and hard work. There will be

times in a project when things seem

impossible. Too much data, too little data,

client is unresponsive, deadlines are

unrealistic, cannot find a solution etc. You

have to hold on to your self-belief and take

the bull by the horns. The answers will

always come to you soon enough.

The second piece of advice is improving

your communications skills. Whether you

are a research associate, a consultant, or

partner, communications skills are

paramount. This applies to both verbal and

written. Join debating societies, get

involved in live projects or participate in

competitions that require communications

skills.

46

INTERVIEW with CEO

The third is taking the time out and

working on consulting projects while at

campus. I know the schedules are packed

and it‟s hard to take the time out but think

of it this way. Your B-School degree is more

or less assured but your ability to get

placement of your choice is not. When you

work on live projects and live through the

experience of deadlines, demonstrating

your creativity and ability to communicate,

you will develop that self-assurance

necessary to do well in interviews.

Aside from these tips, do go though some

of the articles I have written on a popular

forum called Pagalguy.com. These articles

cover topics such as how consultants need

to think differently as compared to

engineers, career options in consulting, and

how to crack into consulting industry.

Search for ZENeSYS on

www.pagalguy.com and you will find them

all.

About Saibal Sen

Saibal has more than 20 years of consulting

experience from Americas, Europe, and

Asia Pacific. He started out his consulting

career as Management Consultant at

Arthur D. Little, Cambridge USA.

After leaving A.D. Little, he worked in

various senior management roles such as

Director of Business Development in

Motorola and VP at two Boston area start-

ups.

He founded his first consulting firm

KUBER Consulting in 1995. Recently in

2007, he founded ZENeSYS which is a

pioneering business model in online

consulting and training.

He has Bachelors in EE from VNIT, India

and a Masters in Management from the

London School of Economics.

47

INTERVIEW with CEO

Monalisa Majumdar 2nd year PGDM student, IIM Calcutta

CONSULTOON

48

Sujata Rathi 2nd year PGDM student, IIM Calcutta

Yashashvi Takallapalli 1styear PGDCM student, IIM Calcutta

49

CROSSWORD CONSULTING TERMINOLIGIES

Think you can step into the shoes of a top shot consultant? Let us put your consulting

jargon to the test.

Try solving the crossword below full of terms and slangs often used in the world of

consulting. The answers are on the next page with the consulting jargons explained. These

will help those who are serious about consulting as a career. So put your thinking caps on

and enjoy our crossword!

50

CROSSWORD CONSULTING TERMINOLIGIES

Hard Stop – A strict deadline; Used to

indicate that after the time indicated, the

listeners are on their own, because the

person stating that they have a hard stop

sure isn‟t going to be around to help after

then

Key – critical, essential, required,

important, central; The key analysis is

generally the linchpin; used as a noun as

well as an adjective, and with such

frequency that its significance has been

diluted, since everything is now „key‟

Case – The project or assignment one is

working on

On the beach – A consultant with no

dedicated or chargeable project

Elevator Pitch – The ability to communicate

an idea to someone in a minute or lesser.

The elevator test represents a hypothetical

situation where you are sharing the

elevator with a VIP and need to give them a

quick summary/presentation during the

ride. Specially applicable when you are

communicating with partners

Value-Add – Simply put, it means that

value is being added

WWW – What Went Well

Storyboard – All decks are expected to

have a story or flow. The storyboard refers

to the rough slides created on paper to

outline the story

Steep Learning – To be able to learn fast

and start contributing to the project early

Buy-in – Taking the client and its various

divisions into confidence about the

proposed solution

Buckets – Modules or categories; Bucketing

refers to breaking a problem into various

modules or categories

Deck – The Power-point slides being

prepared for presentation to the clients

Helicopter view – A very preliminary,

high-level look at a problem without going

into the details

Deep Dive – An in-depth analysis of a

particular problem

Boil the ocean – Trying to do a whole lot of

unnecessary things

Take the lead on – A clever phrase used by

managers when they want to delegate some

unwanted work to a junior. Examples of

usage - “Hey, Why don‟t you take the lead

on putting together this module?”

MECE – Mutually Exclusive Collectively

Exhaustive – Putting all issues into

individual buckets where no two buckets

have overlapping issues

EBI – Even Better If

POTA – Pulled Out of Thin Air – When

there is no basis for assuming the value of a

CROSSWORD CONSULTING TERMINOLIGIES

51

parameter. The value of the parameter has

been pulled out of thin air. Synonyms are

WAG (Wild Ass Guess) and SWAG (Some

Wild Ass Guess)

So What – You‟ve done all the fundoo

analysis. So What? The so-what of an

analysis is basically about distilling out the

implications your analysis has for the client

CROSSWORD CONSULTING TERMINOLIGIES

52

Joka Strategist is an in-house publication of the Consulting Club, 11M Calcutta and features articles by thought leaders from the industry as well as the academia. The primary aim of this magazine is to develop a long term interest and considerable following in the consulting field. It also aspires to highlight consulting as a career option in the industry by drawing out various experiences from experts.

The Consulting Club at 11M Calcutta is a unique student initiative that collaborates with both tHe corporate world and the academia from the consulting sector to provide a platform for students who want to pursue their interest in management consultancy. The club organizes a diverse portfolio of activities throughout the year, including industry consulting projects and consulting focused industry interaction for the stu­dents. Some of the more popular activities include consulting related competitions, release of consulting

publications and information sessions about careers/ com anies in the consulting world.

Consulting Club 11M Calcutta http:j /www.iimc-consultingclub.com