The Fittest don’t Survive

IN THE PRESENT SCENARIO IT’S NOT THE FITTEST THAT SURVIVE. INSTEAD THAT GLORY IS RESERVED FOR THE “ADAPTABLE”. IF YOU ADAPT, YOU CAN ‘FIT’ IN ANY ENVIRONMENT & SURVIVE

“GO ON BE A TIGER” proclaimed the tagline of Accenture - said to be the largest consulting firm in the world with more than 1,86,000 employees and branches in 52 countries, with 96 of the Fortune Global 100 companies as its clients. The advertising campaign was seen as a perfect fit between the celebrity (Woods) and the client (Accenture). Tiger Woods was known world over for his strength, mastery, discipline and relentless focus on winning – much similar to Accenture and its business performance. This was 2003. Last month the tagline took on a whole new meaning when the world came to know about Tiger Woods’ frolic with porn stars. On the night of 13th December 2009, Accenture become the first company to drop Tiger Woods from its multi million dollar endorsement deal. For a company that for years had built its whole advertising campaign around this one man – the move was a strong indicator of how Wood’s popularity had sunk.

Tiger Woods surely knows what it feels like to hit rock-bottom. From being a cynosure of all eyes, the perfect celebrity endorser has become a toxic taboo subject overnight. So has Woods outlived his utility for the brands which he endorses? Moreover, is it time to rethink the celebrity endorsement industry as a whole? Well, the correct answers to these questions are still not clear. What is clearly emerging however is the impermanence of it all. Someone whom the media (and the rest of the world) called the epitome of success was labeled a “loser” in a jiffy. Herein lies the secret of real success. As Winston Churchill once said “success in not final, failure is not fatal, it is the courage to continue that counts.” The world will be watching Woods and how he continues after his fall.

FALL – YOU WILL
The road to success is long and difficult, but if you are determined to succeed and if every part of your being longs for that, then there is no one who can stop you from succeeding. If you have the courage to follow your heart and know what you truly want to become, everything else becomes secondary and every step you take will bring you closer to success. However, with success come great responsibilities and with success also comes undisputed failure. A truly successful company or individual is one who knows how to manage his success and failures equally well. There is no law of nature that states that the most powerful will inevitably remain at the top. Almost everybody faces a fall. But then success is what Nelson Mandela said: “The greatest glory in living lies not in never falling, but in rising every time we fall.” It is true for individuals, for corporations and even for kingdoms and empires.

Look at some of the greatest companies. Apart from their ‘greatness’ as a common denominator, they also have one more thing in common – each one of them have taken at least one tremendous fall at some point in time, but found a way to recover. Be it IBM, Disney, Boeing or Xerox, each of them have stumbled but have refused to give up. Each crisis has only taught them some new lessons in leadership.

The reason for fall may be different for different companies. As Leo Tolstoy very rightly quoted in his book Anna Karenina: “All happy families are alike, each unhappy family is unhappy in its own way.” Merck, for example, faltered because it became obsessed with growth. It grew so fast that it was not able to find the right people to sustain this sudden spurt in growth. Much like the Roman empire, which once seemed invincible and indestructible under Julius Caesar. But according to some historians, it was the empire’s rapid growth that caused its eventual demise. Its colossal size made it near impossible to manage and protect.

IBM fell in 1980’s when its top leaders refused to accept that times were changing and new companies and products were slowly edging it out. Scott Paper thought it was the best in making paper towels and no one could touch it. Companies like P&G and Kimberly Clark came out with products that attacked Scott Paper and still the company refused to acknowledge that things were going wrong. The result: from being the most successful and commanding company in paper-based consumer products, the company went into total oblivion. It didn’t take its competitors seriously.

That’s something Kalanithi Maran, India’s undisputed leader of regional broadcasting never overlooked. “I don’t take competition lightly,” he said. When everyone (including Zee Network) rejected his proposal of starting a regional channel, the man believed in himself and went on to start SUN TV Networks. Today, his collections of 20 satellite channels and 46 FM radio stations have helped him dethrone Zee and become India’s most valuable listed media company with a market capitalisation of $3 billion. If Zee wants to hold on to the top place, it needs to be careful not to go the route IBM traveled in the 80’s. IBM needed a great leader like Louis Gerstner Jr. to pull the sinking company back into form and his book ‘Who says Elephants can’t Dance’ showed how when everyone suggested he break up the giant, the man slowly infused life back into it and showed the world that even elephants are manageable!

THE DINO BLUNDER
An old adage goes that it’s all about the survival of the fittest. But when you look at dinosaurs, the adage is proved wrong. Fittest means in ‘best physical shape’ which is what the dinos were in. But as in business, so in nature it’s not the strongest of the species that survives, nor the most intelligent, but one that is most adaptable to change. Survival is a choice, an option. You decide to adapt, you survive. Madonna, adapted and changed and today she still tops the charts. Big B changed from the ‘angry young man’ to PAA and just look at the man today.

If corporates want to survive, they need to change too. They need to adapt with changing times and not make the same blunder that the dinos made. An interesting study by Aries De Geus reveals that average Fortune 500 corporations survive for less than 50 years, while special corporations like Nokia survived for centuries. The difference was in the attitude, in the way they looked at success. For these hardy survivors the sole purpose of an organisation was not just to make money, but make a difference to the world they were living in; not to look after Wall Street, but after their people; not to just help their employees make money, but to make a ‘life’. This was how they defined success and every time they failed these are the thoughts that brought them back from the brink and helped them survive not just for a few years, but centuries. These corporations were ‘living organisations’.

So as we ready for the New Year, let us make a choice. Let’s redefine what corporates are meant to do, let’s redefine leadership and in the process, let’s build ‘living organisations’ that would not perish with one fall but would rise again and again and again. After all, we do know that survival is a choice and it is not always the fittest that survive...

WAKE-UP WAL-MART!

KNOWLEDGE ABOUT CULTURAL NUANCES AND ETIQUETTES GOES A LONG WAY IN ENSURING THE SUCCESS OF YOUR BUSINESS ON FOREIGN SHORES AND IN AVOIDING SURE-SHOT FAILURE.

Women don’t wear pants in Japan! Now before your imagination runs riot, let me tell you this is one of the guidelines prescribed to many female business travellers to Japan. As per Google, “Japanese business etiquette” is one of the most searched for Japan business related keywords. According to these guidelines, Japanese men do not relate easily to women with authority in business and that can cause problems while doing business. The Japanese culture encourages women to wear long skirt suits to work. Most Japanese companies prefer that their female employees not wear high-heeled shoes as Japanese men are not very tall, and towering over them might offend some.

While “Going Dutch” is a culture common to Netherlands and accepted in many other cultures, the Turks don’t believe in “Going Dutch” at all, and a suggestion to that effect may not be appreciated much.

The head is considered a sacred place and nobody in Singapore appreciates it if you fondly pat a child on his head. In India, it’s a way of showing affection – not there.

Each country comes with its unique cultural nuances, and as a business traveller, it’s of utmost importance that one remains sensitive to these seemingly small irrelevant details. They will help you strengthen your bonds with your foreign partner and help you do business better. Though it might not in any way affect your balance sheets but it helps to understand your counterpart better when you know that sitting cross-legged in Singapore may be considered offensive, or that Germans consider a weak handshake as a signal that you are insecure and not convinced of your abilities, or that in Israel (due to years of fighting) men prefer to sit with their legs slightly apart and upper body leaning forward (akin to a position where they are ready to get up at a moment’s notice), or that in Switzerland, before starting a conversation, it’s important to shake hands with everyone – including children. While Arabs consider it a show of trust and solidarity when they put their arms around you and hold your hand with both their hands, doing the same in Germany could be one of the biggest etiquette blunders one could make. Germans avoid physical contact and placing your hand on someone’s’ shoulder could make you appear too authoritative and not appreciated. Knowledge about the etiquettes of other cultures is becoming very vital as it could as well be a deciding factor in whether you succeed in that country or not.

ACROSS THE SEAS
Yes, gone are the days when simply understanding your own country’s business environment well was enough to succeed. Today, if you really want to make it big, you need to stretch out, go beyond the boundaries and learn to do business in strange, foreign cultures. Ratan Tata, during his 18-year tenure as Chairman of the Tata Group, ensured that his company expanded internationally – a strategy that India’s other business houses copied and are still trying. Today, the Tatas have annual revenue of about $70 billion – that’s great, but what’s of significance is that 65% of the group’s sales are derived from outside India. If you really want to grow big, you not only need to expand but also need to have a global mind-set too.

WHEN YOU DON’T THINK GLOBAL
This company’s revenues are more than the GDP of at least 144 nations, and today, it’s the world’s second largest company – yes, you guessed it right, it’s the retailing giant Wal-Mart! It’s an organisation that’s been super successful in America. As someone once said, “If you want to reach the Christian population on Sunday, you do it from the church pulpit. If you want to reach them on Saturday, you do it in Wal-Mart.” There is hardly any American who has not shopped at least once in Wal-Mart. That’s the power and reach of this retailer.

Yet, when it comes to going global, this is one company that has committed some very costly mistakes, for it failed to understand he local culture.

In Mexico, Wal-Mart started its stores and set up huge parking lots. Little did it realise that what was considered as a “facility” had no meaning for Mexicans as most came to the outlets in buses. It entered China in 1997 and in spite of doing business in the country for more than 12 years, the company has still not made a profit – it definitely has failed to understand the Chinese market. It tried to bulldoze its American styles into the Chinese market; a move that failed as expected. Selling golf balls in a low-income country like Mexico was as wrong as selling meat, neatly packaged in Styrofoam and cellophane to Chinese customers. A country where consumers insist on live fishes in grocery stores and on killing them in front of their eyes, packaged meat was looked upon as stale food and did not sell – despite being correctly priced and being of good quality.

Wal-Mart tried to export its American consumer culture to the world. Even its ‘Everyday Low Prices’ strategy failed and did not pass muster against the cultural preferences of consumers. No wonder it beat a hasty and costly retreat from Indonesia, South Korea and Germany. It’s not always a good idea to retain your individuality and be rigid. It pays to be flexible and Wal-Mart learnt it after incurring billiondollar losses. Today, the Wal-Mart of China keeps live fishes and turtles in its stores; it stacks up on diapers in the ‘Year of the Monkey’, which is considered a lucky year to bear children. It’s slowly learning to woo the Chinese shoppers

Wal-Mart seems to have found its footing in India too. It’s realised the importance of understanding the people and their culture before trying to sell its goods. So the first thing it did was to look for a man who understood the Indian consumer to head its Indian operations. It understood first what the Indian people wanted, studied the local kirana shops, understood which paneer sells where, and also realized jhadoos where more important to Indian households than vacuum cleaners! With 50% of Wal-Mart’s assets outside USA, it was high time Wal-Mart woke up from its stupor and realised that every market is not like its American one. Under Mike Duke – the new CEO of Wal-Mart – things seem to be looking up.

You too should know how important it is to understand the different cultures. Don’t commit mistakes like Wal-Mart. As Jawaharlal Nehru said, “Culture is the widening of the mind and of the spirit.” Widen your horizons too. If you don’t want to fail, don’t do what Wal-Mart did in the various countries. You will learn all your lessons in culture through one exercise – keeping an eye on Wal-Mart goof ups. So keep watching Wal-Mart.

WHO’S NEXT?

FINDING THE RIGHT SUCCESSOR TO PASS-ON THE CEO’S BATON IS ONE OF THE MOST CRITICAL STRATEGIC DECISIONS THAT A COMPANY SHOULD TAKE... MUCH BEFORE THE CEO IS ACTUALLY READY TO ‘PASS IT ON’.

He’s finally back in business (thank God for that!). Fortune magazine has named him ‘CEO of the Decade’ this month. He is the perfect choice and there can be no one better, for this man has single handedly redefined mobile communication (with the iPhone), made the geeky PC hip-n-happening (with the Mac- Book) and brought back Apple from the brink. Steve Jobs is a man whose products inspire a religious devotion in users – and he is worshipped by many around the world. But this is where the problem lies. Early this year when Steve Jobs took a leave of absence from his company to get a liver transplant, Apple’s stock slid to an all time low. It’s said that when Jobs sneezes, Apple catches a cold. If a company is all about a great personality and a not a great product there’s going to be a big problem of survival

Till recently, Apple was synonymous with Jobs. Not so much now and thankfully so. Without Jobs at the helm, Apple surprised Wall Street with its Q2 profits which showed the world that – yes Steve had shown the way, but the company was in safe hands without him too (under Tim Cook). Steve was back in September and got a standing ovation from the audience, not so much for the new iTunes software and new line of iPod Nano music player with video cameras, but for being the greatest icon of corporate world. Yes, the wizard is positively back but has ensured that Apple is definitely not just about its founder’s charisma, but about computers and others things – in which they are the best. Tim Cook seems to be the right choice for successor and Apple is apparently in safe hands.

When the man at the helm of affairs is a living legend and one of the richest persons in the world, finding the right successor gets a bit difficult. However, when you are a smart investor like Warren Buffett, you don’t just have one but four potential successors to choose from. For more than four decades, the man has been nurturing his firm Berkshire Hathaway, making it America’s sixth-largest company by market value. Choosing the next Buffett is as important for Berkshire as it is for America. Buffett at 77 is aware that the one question hanging on everyone’s mind is – who’s next? He knows and understands the sentiments and jokes that he has built Berkshire so that it could be run by a cardboard cutout or the bust of Benjamin Franklin. When a company is performing well, who its successor is going to be, becomes all the more important. And with Warren’s good planning, everyone’s optimistic that whoever the successor – Ajit Jain, David Skoll, Joseph Brandon or Tony Nicely – America’s most famous investor, the so-called Oracle of Omaha, will find the right guy as his successor.

GREAT IS NOT ENOUGH
When Jack Welch became General Electric’s CEO in 1981, the company was worth $14 billion and when he retired 20 year later, GE’s value had touched $500 billion. This was fabulous, but true success lies in the ultimate test: once the leader is gone, does the company continue to flourish? The most important job a CEO does is not just keep the balance sheets looking good, but finding the next man who can take the company forward. Jack Welch says, the most important business decision he took was selecting his successor. At GE, CEOs have the ‘airplane’ question that help them identify the next man. Imagine you are flying in one of the company planes and the plane crashes. Who would be the next chairman of GE? This simple question helped GE identify Jeff Immelt as successor for its top job. As Jim Collins discovered while writing his book ‘Good to Great’ – it’s getting the right people in the right job which is more important than strategy. Getting the right person for the most important post in the organization (that of the CEO) seems to be a leader’s most important task.

Back in the 1970s, American car giant Chrysler was losing money and faced bankruptcy. Its new CEO Lee Iacocca convinced the government to provide a $1.5 billion bail out loan. Soon this maverick turned around the company and made it profitable. Not just that, he returned the government loan seven years early. This grand-old-dad of business became America’s favourite straight talking leadership guru. His famous slogan “If you can find a better car, buy it” became a super hit. This business rock star retired from Chrysler in 1993. Today, Chrysler is bankrupt again. In May, President Obama announced a plan for Chrysler to file for bankruptcy - this time there was no knight in shining armour to save the company. Iacocca did a great job but sadly it was not enough to save the company.

A wrong successor can ruin even a great empire. History is proof that incapable kings and emperors have ruined everything their predecessors built. The extremely capable and intelligent Akbar, the greatest of Mughal emperors, was able to conquer and control all of northern and parts of central India. When he died, the empire extended from Afghanistan to the Bay of Bengal and southward to the Northern Deccan. But just making a grand empire was not enough. A series of weak successors and everything Akbar created was ruined when Aurangzeb took over the throne. Sometimes just keeping it all in the family may not prove to be a good idea.

HOMEGROWN OR NOT?
Who to choose as your successor may prove to be a tough question to answer. Succession planning needs to be done intelligently. It’s a slow process and a difficult one too. Nine years before his anticipated retirement, Welch said, “Choosing my successor is the most important decision I’ll make from now on. It occupies considerable amount of thought almost every day.” That’s what we call ‘visionary leaders’. And it’s these leaders who choose their successor from within the organization. ‘Home grown CEOs’ is the key word to successful succession planning. In the 1900s, Colgate and P&G were at par with each other, but by the 1940’s, Colgate had fallen to less than half the size of P&G. The reason? Poor succession planning. If you need to depend on some outsider to take your company forward it may be a wrong choice. All great CEOs have started their careers within the organization – no wonder they understand it the best. Jack Welch joined GE in 1960 as a junior engineer; Mike Eskew, the erstwhile CEO of UPS, the world’s largest package delivery company, started his career in 1972 in UPS as an industrial engineering manager. Under him, UPS saw unprecedented growth with revenues growing by nearly 57%. Not just that, its international package revenues more than doubled and its supply chain and freight revenues quadrupled. Contrast this to Carly Fiorina who joined Hewlett-Packard in 1999 as its CEO, becoming the first woman to lead a Fortune 20 company. Her decision to merge Compaq with HP led to her downfall and in 2005 she was forced out of HP. Dynamic, articulate and powerful, Fiorina had seemed the ideal choice. The media loved her and she adorned the covers of most business magazines. Yet, these may not be the right criteria for choosing a true leader. As Ram Charan states in his book ‘Execution’, most people assume that a great leader is one with vision, is articulate and can inspire. They forget the most important question: How good is this person at getting things done in the right manner? Do they set adrenaline pumping goals and energize the whole team to achieve these goals? Do others enjoy working with him? If the answer to the above questions is ‘Yes’ then you have found your man. Most of the time he/ she will be a person who started his career in your organization.

CREATING THE CULTURE
A successful business is one that not only has great management and an excellent business model, but also a great culture to hold the two together. To keep the culture one needs highly able managers who understand the company values and its business models. At Berkshire Hathaway, each of Buffett’s hand-picked successors are trained to run the business just the way he would. Many companies fail to do this and then need to rush back to their founders to be able to survive. Howard Schultz was brought back to help Starbucks survive the slowdown. Toyota is looking up to Akio Toyoda, the 53 year old grandson of the company’s founder, to help the company recover. For the first time in 14 years, Toyota is turning to its roots for leadership to help it tackle its worst crisis. Our country looked up to Sonia Gandhi to help the country and provide it the right leadership. Let that not happen to you.

Some of the world’s most admired companies are now being headed by new CEOs or are on the look out for new leaders. Ratan Tata too is looking for his successor and he has two years to find the right man. The fate of India’s most respected business will rest on those hands. P&G is replacing its longtime CEO A.G.Laffley with the 29-year-old company veteran Robert Mcdonald; Wal mart has a new CEO Mike Duke who replaced Lee Scott – a man who spent 30 years in the company. Next year, Douglas R. Oberhelman would look after Caterpillar and Bank of America too will have a new head in place. All these companies feature in Fortune’s list of most admired companies. Would they continue to remain so is what we need to see. If the successors are chosen carefully, these companies would continue to prosper. So if you want to build a great company, invest in a great successor. Just doing a great job is not enough. You need to ask yourself daily: Who’s next?