Lessons from Application of Principles of Management @ NITIE, Mumbai

What the Principles of Organisation and Management course at NITIE was all about and my learnings from the course. You can also watch it here.

Entrepreneur vs Employee

Art vs. Maths

Entrepreneurship is like art. You are never sure whether it will yield the result that you have been looking for. The ending may turn out to be quite different than the way you had planned it.

Job is like Math. First, you concentrate on getting the right education, then look out for the job that enhances your professional experience. Then you work towards getting promotions till you reach the peak of career in terms of satisfaction and capability.The path is logical, traveled many times and  like a simple math equation, parameters are few.

Certainty of pay check vs. none

Entrepreneurship is not really for people who cannot survive without pay check. The entrepreneur makes nothing for months, sometimes for years. He/She toils for what interest her than what pays immediately.

Jobs pay immediately. Within one month of taking a job, one starts getting salary in the account. It is usually fixed and certain.

Incremental vs. explosive

Entrepreneurship is difficult. But it can lead to explosive growth if worked through with patience. The explosive growth can make you rich and famous. Think Zuckerberg, Bill Gates, Steve Jobs and many others.

Jobs are logical increments over time. You start at the junior level and move on to become a senior. A few gets into higher levels. Salary increases consistently with every rise in position.

Creation vs. continuation

Entrepreneurship is about ideas, creation and developing something new, It is about solving problems in a unique way. It is about thinking out of the box. It is about targeting opportunities.

Job is often about continuation of same work and doing it in much better way. Creativity may be useful but is not necessary for survival. You need to do work on time. Organizations appreciate creativity but nurturing that it is not the priority.

Direct vs Indirect job creation

Entrepreneurs find and exploit opportunities that create thousands of jobs. They look for improvements and then utilize them to start companies that bring in more jobs.

People holding jobs indirectly create job. They take loans, buy houses ,cars. This keeps money in circulation. Businesses invest to fulfill needs of job holders often creating jobs in the process.

Wealth creation vs. being rich

Wealth is different from richness. Wealth is when you have assets that generate income for you. Rich is when you get a fat salary to spend.Entrepreneurs generate wealth in long term. They may be rich but they are more wealthy than rich.

Risk

Entrepreneurship is risky. You could lose all your money. You have to plan and move ahead.

Jobs have relatively low risks unless you are working in risky, hazardous job. Even if you lose your job, you will not lose a lot of money and often you will get similar job,maybe at lesser salary but still.

So which is better?

No one can answer but only you. It all depends on your drive, your capacity to take risk, the goals of your life. These are just a few pointers that help you decide.

Theory X and Y Managers

Our professor Dr.Mandi introduced us to an interesting concept of “Theory X and Theory Y”. Though I had heard about it before, its true essence is understood only now in context to management. 

The theories were created and developed by Douglas McGregor. They describe two different attitudes towards employee motivation.

Theory X managers think that the employees are inherently lazy. They dislike their work. They need to be controlled and coerced to work.

Theory Y management has strong faith in its employees. The management thinks that the employees are self-motivated and enjoy their work.

Both these approaches are two extremes and as human beings, we would be somewhere in between. However the intention is to be closer to Theory Y in real life.

Suppose a manager finds an employee wiling his time in a work station. Instead of reprimanding the person, the manager needs to act as a guardian and have strong conviction that the employee is productive. The manager needs to stand by such employees and believe that they are better than the way they have been acting.



Surprised! 

I asked my professor if the manager has to act dumb and ignore the obvious. 

My professor explained that the manager doesn’t ignore but believes. 

In spite of having the full knowledge about the undesirable behaviour of its employees the management needs to treat them as family.


The idea is to build a congenial and trustworthy environment by acting in that way. As an example, consider a scenario in which you were spotted by your father doing something unwanted, but instead of scolding he ignored and went about being proud of his child. Such an instance shames the person into doing what is right. Theory Y is thus desirable as it intends to change the employees’ outlook into being productive.

  
Logically, either theory is not completely encompassing. In theory X, active employees would suffer while in theory Y there would be free riders. The difference is that Theory X under tight control by management would create a depressed culture while Theory Y would lead to an open and sanguine atmosphere. 


And common sense tells us happy people are more productive!

AkzoNobel

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people. Sales in 2010 were EUR 14.6 billion. Following the acquisition of ICI, the company has restructured in 2 January 2008, and rebranded itself in 25 April of the same year. It is Global Fortune 500 company

Headquarters - Amsterdam, Netherlands

Origin

AkzoNobel has a long history of mergers and divestments. Parts of the current company can be traced back to 17th century companies. The milestone mergers and divestments are the formation of AKZO in 1969, the merger with Nobel Industries in 1994 forming Akzo Nobel, and the divestment of its pharmaceutical business and the merger with ICI in 2007/2008 resulting in current day AkzoNobel.

Milestones

ü  1871
KemaNobel is established in Sweden. More than a hundred years later, in 1984, KemaNobel will merge with Bofors to form Nobel Industries, which will in turn be acquired by Akzo in 1994.

ü  1895
Alfred Nobel (the man behind the Nobel Prize) founds Elektrokemiska Aktiebolaget – known as Eka – in Bengtsfors, Sweden. Its aim is to make chlorine and alkali. Today Eka Chemicals is AkzoNobel's Pulp & Paper Chemicals business.

ü  1918
Koninklijke Nederlandse Zoutindustrie (KZO) kick-starts the Dutch salt industry in response to salt shortages during World War I.

ü  1923
Saal van Zwanenberg establishes Organon to produce insulin from the pancreases of animals.

ü  1968
UK man-made fiber company Courtaulds acquires International Paints.

ü  1969
Algemeene Kunstzijde Unie NV (AKU) merges with Koninklijke Zwanenberg Organon (KZO) to form AKZO.

ü  1994
Akzo and Nobel Industries merge to form AkzoNobel.

ü  1998
AkzoNobel acquires UK company Courtaulds. Their products include high-tech industrial coatings and man-made fibers such as Courtelle and Tencel.

ü  2007
AkzoNobel sells Organon BioSciences NV to Schering-Plough Corporation.

ü  2008
AkzoNobel acquires Imperial Chemical Industries PLC (ICI).

AkzoNobel is the world’s largest Coating supplier

Geographic Spread

Global Brands & Products

AkzoNobel is the global leader in decorative paints and the largest manufacturer of performance coatings. They also make a huge number of specialty chemicals that find their way into hundreds of everyday products. Many of their products are household names, used and trusted by their customers to brighten, protect and preserve their homes, buildings, offices and factories.

AkzoNobel Key Facts

Organisation Structure

Observations

Strengths

Ø  AkzoNobel is the largest global paints and coatings company and a major producer of specialty chemicals

Ø  With operations in 80 countries and having human capital of around 55,000 this Netherlands’ paint major is in Global Fortune 500 and one of the leaders in Dow Jones Sustainability Indexes.  

Ø  The world's best-selling paint: powder coatings, wood coatings, coil coatings, marine protective coatings, aerospace coatings.

Ø  Wide variety of products ranging from paints to industrial chemicals to organic chemicals provides them scope of diversification compared to other conventional paint companies.

Ø  Continuous R&Ds with international facilities and minds coming together has helped them stay at par with competitors.

Weakness

Ø  In decorative paints Industry Customer tastes and perceptions change very fast and products may become obsolete with change in trends, hence production planning and inventory problem.

Ø  Large working capital required.

Opportunity

Ø  Capitalizing on emerging Asian Markets is critical.

Ø  With more advertising like Asian paints, Nerolac and Berger Paints they can create more brand awareness for their lesser known products.

Ø  Being an international company and financially strong company they can use their muscle power to enter potential markets in a strong way.

Threats

Ø  European markets are in bad shape; growth opportunities very limited.

Ø  Local competitors who offer few products at lesser price

Ø  Government rules and regulations regarding the quality of products and manufacturing facilities as Environment policies are given more emphasis.

Ø  Raw material scarcity, volatility in prices

LE04: Three Monks

"Coming together is a beginning.
Keeping together is progress.
Working together is success. "

           ~ Henry Ford

Teachings from Zen are usually short and delightful. This short movie is a beautiful adaptation of a Chinese proverb: one monk will shoulder two buckets of water; two monks will share the load, but add a third and no one will want to fetch water. I found it inspiring and really worth to ponder about.  Although it does not contain any dialogues but it still imparts some important lessons in management. It can be watched here.

Method 1: One monk fetches the water

The monk fetches the water faithfully and regularly every day. As his needs are limited he doesn’t mind carrying two buckets with a stick on his shoulders.

Method 2: Two monks fetch the water

When the second monk moves in then the first monk thinks of distributing his work. Initially they both fight over how to carry water but later on they find a solution. They find a pole and jointly fetch a single bucket of water every day. Although they work as a team but it seems as if they are not satisfied with each other.

Method 3: Three monks working as team to fetch out water

When the third monk moves in, both monks try to delegate entire work to the newcomer. Infact, third monk fetches the water once but he consumes all by himself. After arguing with each other constantly over whose turn it is to fetch the water, nobody goes to fetch the water. No water gets fetched even after they all are thirsty. 

Lessons Learnt

Continuous Improvement

Method 1 and Method 2 are the examples of using old techniques but continuous improvements over time. It leads to better efficiency and process improvement.

Productivity

Method 2 brings us to an old debate Individual Vs Team Productivity. As per productivity analysis method 2 is more productive than method 1. To make it clearer, here is a table illustrating the productivity statistics in either case. Assuming 1 Man uses 1 unit of energy to lift 1 bucket. 

Event	Output (No. of buckets)	Input(Worker Energy units)	Productivity = Output/Input
1 Man – 2 buckets	2	2	1
2 Men – 1 bucket	1	0.5	2

Innovation

Transition from method 2 to method 3 is innovation.  When the monastery is on fire they realise that it is better to think in terms of team goals rather than individualistic goals. The monk at the bottom fills the buckets, the middle monk works on pulley system and the third monk at the top douses the fire with water in the bucket. This shows difficult situation inspires ingenious solutions. 

Responsibility

This story teaches a gentle, humorous lesson about responsibility. Three monks allow personal pride to interfere with the performance of daily tasks, each believing that the other two should be the ones to go downhill to fetch water. When a fire breaks out, however, they understand how silly they’ve been and work together to save the temple.

Work for each other, no selfishness

The great Russian writer, Fyodor Dostoyevsky, once wrote "I say let the world go to hell, but I should always have my tea." The story of the three monks teaches us that everyone is capable of being selfish, but doing so diminishes our ability to cooperate with one another. People must rise among themselves and see the group as whole. People must be deliberative in their collective decision making.

Pursuit of Excellence

Increase in excellence directly leads to the increase in effective productivity. Excellence can be defined as the product of efficiency and effectiveness. Moving from method 2 to method 3 is the increase in excellence. In the story there is no dearth of talent as all three monks are equally capable, but still as a team they struggle.

Conclusion

The moral of the story, sane group can make bad group decisions if the group dynamics is bad.

LE03 Valley Crossing Activity

Dr. Mandi is back, and this time with a complete new activity for our class. The latest activity is Valley Crossing. The activity shows the importance of working as a team for the overall success. Each member has different role but there is no differentiation.

Valley Crossing??? What exactly it is?

 Problem Statement:

Task given to a group of three people is to cross over from left side of the valley to the right side of the valley by taking the support of the pole as shown in the cartoon. Direct jumping and attempts are considered fatal and not welcomed at all.

Some Given Conditions:

Person can’t cross over directly by jumping hence width must be greater than one footstep. At the same time the width must not exceed two footsteps otherwise it won’t be possible to cross with 3 member team.

 Solution: 

 Following are the 9 steps to cross the bridge:

A. Safe - Both the legs of the person have full support

B. Half Risky – One leg in the air and the other leg has support

C. Full risky - Both the legs are in the air without any support

LESSONS LEARNT

Communication

While crossing valley each member communicates with a predetermined signal. There is always interdependence among team members. Proper communication is required to eliminate confusion. Similarly in an organisation effective communication channels help in timely completion of projects and thereby increasing efficiency and quality.

Trust

Very first thing is to cultivate trust in the team.  If there is no professional trust among group members, team will never perform at par.Addressing issues directly and by sharing relevant information helps to develop trust among team members.

Coordination

Co-ordination means to integrate all the activities of an organisation. It is done for achieving the goals of the organisation. There must be proper co-ordination throughout the organisation. It encourages team spirit, gives proper direction, facilitates motivation and helps in making optimum utilization of resources.

In the end one can say that teamwork can be likened to two compounds, almost essential to modern life. It's the glue which keeps a team together, a bond which promotes strength, unity, reliability and support.

LE02: Management lessons from Khan Academy

Introduction

The Khan Academy is a non-profit educational organization, created in 2006 by Bangladeshi American educator Salman Khan, a graduate of MIT and Harvard Business School.  Khan quit his job in finance as a hedge fund analyst at Connective Capital Management in 2009 to work on his mission of "providing a high quality education to anyone, anywhere". This led to the birth of www.khanacademy.org

What it is all about? Its Mission and Vision

Vision: Khan’s vision is to provide "tens of thousands of videos in pretty much every subject" and to create "the world's first free, world-class virtual school where anyone can learn anything."

Mission: To provide a high quality education to anyone, anywhere.

The website provides a free online collection of more than 3200 micro lectures via video tutorial on mathematics, history, healthcare and medicine, finance, physics, chemistry, biology, astronomy, economics, cosmology, organic chemistry, microeconomics, microeconomics and computer science.

How is it changing the rules of Education?

1      Low Teacher Student Ratio: The biggest problem in primary education sector in India is very low teacher to student ratio 30:1. With increase in internet penetration across geographical boundaries of India Khanacademy.org can provide free informative lectures at home. The short-term goal is to help the average student become proficient in subjects with which he or she has trouble.

2    Rote Learning:  Also some students are not able to all learn at the same rate, thus either holding back the faster ones or leaving behind those that need more help. But now kids can learn online at school  replacing teachers’ rote lectures

3    Challenge for classroom teachers:  This is a new challenge for classroom teachers. They need to develop students as thinkers.  Now, the site’s video tutorials are sequenced, so students can move through increasing levels of competency on the path to mastery. This is how video games work, but until now, it’s not how schools traditionally have operated.

 Business Revenue Model

The project is funded by donations. Khan Academy is a not-for-profit organization with significant backing from the Bill & Melinda Gates Foundation and Google. Several people have made US$10,000 contributions; Ann and John Doerr gave $100,000; total revenue is about $150,000 in donations. Additionally, it also earned $2,000 a month from ads on the Web site in 2010, until Khan Academy ceased to accept advertising. 

In 2010, Google announced it would give the Khan Academy $2 million for creating more courses and for translating the core library into the world’s most widely spoken languages, as part of their Project 10100.

Khan Academy has eclipsed MIT's Open Courseware (OCW) in terms of videos viewed—its YouTube channel has over 150 million total views, compared to MIT's 38 million. It also has twice as many subscribers, at more than 320,000.

Theory Y

Khanacademy believes in theory Y. If a student is provided with ample learning opportunities then sky is the limit for him/her.