Manage-Wise

Creating value and wealth

This chapter looks at the process of creating values and wealth that pathfinders have followed so far. It then lays down a roadmap that individuals and teams can follow to a better future.

Creating value and wealth is the fundamental purpose of business organizations and the principal responsibility of the CEOs that head them. It is the business of business to create value-based wealth. However, when moneymaking becomes the objective, as distinct from wealth creation, we procreate corruption.

In such a corrupt ethos, the society becomes bereft of value maps to guide. Values are maps, not territories. Honesty and truthfulness are principles, which form territories. They are guidelines, which leaders have created values and wealth; and along with it built tangible, and intangible but priceless, Indian assets.

Amrita Patel has been facing a conflict of values and vision with her mentor Verghese Kurien, the architect of “white revolution”. The differences are about the direction NDDB should take in further development of milk cooperatives and the marketing of products through tie-ups, to meet the challenge posed by MNCs.

Circumstances and contexts determine the values. It is pertinent to note that Deepak Parekh said:

Visions can be wrong, hopelessly off the mark, if they are not born from strong values, strengthened, and nurtured by an analytical ability to constantly assess emerging alternatives.

(Pandit, S., 2001)

The differences between Kurien and Amrita appear to be in their perceptions about the role NDDB should play in shaping its future, and the mechanisms it requires to realize the vision. It is essential to build the social capital on certain value commitments in the face of changed ground realities. Whenever there is a conflict of values at the top, growth suffers.

There are two urgent needs in India:

• Create wealth and social capital
• Reduce corruption to negligible levels, if not totally eliminate it

Both are interdependent variables of the value set. If we create more value-based wealth, corruption will automatically go down

A matter of values

Victor Frankl (1963) identified a set of three central values: attitudinal, experiential, and creative. How we respond (attitudes) to difficult periods (experiences) in life, together with what we create, determine the values we practice in life. Adverse circumstances show one’s true mettle, one’s new reference frames, and shift in perspectives. This is what we are seeing at Anand.

Jamshed Irani wrote thirteen action guidelines for himself. The one about values I worth recapitulating: Preserve the core values of Tatas (and my own). In adding “and my own” Jamshed showed the significance of coherence in values required in a top executive to steer the organization through a mammoth disequilibrium.

Covey (1989) thinks it amounts to being responsible for one’s own first creation, to rescript oneself so that the paradigms from which one’s behavior and attitude flow are congruent with one’s deepest values and in harmony with correct principles. When Jamshed drafted his own charter, Covey had not written his book. Even if he had, in all probability, Jamshed would not have read it because there is no love lost between him and management books!

Creating wealth is an age old vocation. The world has passed through periods: Stone age, Iron age, Agricultural age, Industrial age and Technology age. It is currently in the Knowledge and Information age.

These periods have been linked to the technologies of their time. The development from steam engine to turbo jets, booster rockets to robotics and the Internet, precreated needs for advanced technical skills at each stage.

The investment patterns of merchants and entrepreneurs in factories, machinery, huge organizations, technology and scientific discoveries, underwent radical changes in these periods. Thinking on the management of enterprises, assets, manufacturing, logistics, strategies and marketing, witnessed concomitant shifts. We have now transited from hierarchical to networked organizations and from the “strategy-structure-systems” to the “purpose-people-process” model.

These periods also witness certain disequilibriums in local and global economies. In such transitions, merchant-entrepreneurs make money by taking risks in forging a new combination of assets, which create new values.

Emergence of business leaders

As markets developed a new class of business leaders emerged. They and their organizations perfected the art of exploiting the opportunities presented by chaos, and scientific inventions.

Technological, sociological and developmental dis-equilibriums, paradigm changes, natural calamities, technological complexities, conflicts and chaos, all present opportunities for creating wealth. If it was Andrew Carnegie and Bill Gates in U.S.A. in India it was Jamshetj Tata, Ghanshyamdas Birla, Dhirubhai Ambani, L.N. Mittal, Azim Premji, Brij Mohanlal Munjal, Rahul Bajaj, and Narayna Murthy, to name a few. Business is embedded in difficulties and complexities; and opportunities are in providing simple solutions. Such leaders:

Creatively built physical, financial, employee, customer, and organizational assets.

Made combinatorial and purposeful use of assets, which they traded to build social capital.

Had the foresight, risk-taking ability, and capacity for creative hard work.

Designed sturdy and realistic business models.

Assessed life cycles of assets, and trends in market, which enabled them to strategically move across the paradigmatic economic phases of growth.

Built companies, which are not just profitable, but create value.

In ‘Cracking the Value Code’, Richard E.S. Boulton (2000) provides the example of Chicago Bulls:

The long answer: it was the management of assets—although mostly intangible assets—that made the difference. It was the players and coaches, systems, and processes, leadership and values, customer and suppliers. The Bulls’ management built a portfolio of assets that created extraordinary wealth.

Excerpt from ‘The Alchemy of Leadership’ by Shrinivas Pandit. Reproduced with permission © 2009 Tata McGraw Hill Publishing Company Limited. Price: 175. Email:Vishwanath_Ghanekar@mcgraw-hill.com