The travails of a public sector chief

My stints with three public sector organizations, spanning almost a decade have made me experienced enough if not exactly wiser. Reinforced I am definitely with the thought that PSU’s have an inherent strength that other commercial organizations devoid of governmental backing apparently lack, yet the thought that if left free and with an absolute clarity of goal and purpose, conquering the skies would indeed be a child’s play always lurks at the back of the mind.

Very early forties is a fairly young age to be a public sector chief but that is what I was when asked to take over the reins of the mammoth tourism conglomerate, the Indian Tourism Development Corporation. Faced with a loss making entity on one hand and a system hell bent on getting rid of commercial entities from its fold, the job on hand was definitely not an easy one. Yet gaping mouths is what we encountered when the entire team rose as a goliath to rid the entity of its loss making traits. The spectacular growth, almost impossible to achieve even in the best of the private sectors left almost everyone speechless. And then I paid the price.

Then came the three stints with the tourism major of the wonderful state of Madhya Pradesh. While the state rose over all others in its successful quest for being the numero uno, the rapid turnaround of the commercial properties, and there were many, surprised almost everyone including myself. The ferocity with which the men (and women) of the state tourism development corporation shrugged off the cloak of ignominy and inefficiency made even the private sector speechless. Ofcourse the proactive support of the entire state machinery made the job easier, yet the fact remains that what really happened was our dipping into the inner strengths of the public sector that was almost given up as an also ran.

And now the third and the most challenging, the national carrier that also appears keen to shrug away its cloak of years of rot and neglect. It is now also certain that this entity would soon surge ahead of all its competitors in the not so distant future.

Towards the end of all my postings, I am often asked to put in place systems that would last forever and in the process enable the organization to keep its head above water perpetually and one always remains at pains to explain that such a system is not yet born, nor it shall ever for leadership is a role that can never be substituted by systems or inanimate objects. Yet the expectation of utopia remains.

Yet some stability can be brought about in the functioning of the public sector undertakings only if the dragnet of vigilance, audit and complex processes in the garb of transparency are loosened. The fear of committing a mistake and then getting mauled by the machinery is what keeps most of the public sector mandarins away from the path of decision making and even bringing clarity in their desires. And if decisions are not made in a commercial organization, or if safe play is always resorted to, the outcome can be easily fathomed by even a grocery shop owner.

Why performance or the end result alone should not be a criterion to judge an organization or its mandarins is what amazes me. Why even petty decisions or acts are microscopically examined without a speck of a concern for the overall performance is beyond comprehension especially for those whose primary concern remains overall growth and results. And finally why should one’s actions be subject to examination by someone who may be less competent, less honest and less committed really foxes me.

While beginning my career, the professor of finance at the staff college professed the canons of financial propriety, the foremost of which was – spend government money as if it is your own. And since then I have been wondering why a tender process has to be initiated for purchasing a sofa for the office whereas one simply makes the best buy off the shelf for a requirement at home.

As long as our focus remains on the process coupled with a thought process that everyone is dishonest unless proven otherwise, we shall remain where we are and shall keep on cursing all public organizations. The focus has to firmly shift to delivery if we do not desire to perish. Mere utterance of words “Perform or Perish” will never be enough.

Organizational Excellence

Inaugural Address

Delivered by Ashwani Lohani at ISM, Dhanbad on 6^th December 2013

Really a pleasure and an honor to be with all of you here for the national seminar on organizational excellence with emphasis on ethics. An honor because the Indian School of Mines is a great institution and a pleasure mainly for two reasons – the first - it is an enlightening experience to be addressing a big gathering of budding youngsters and the second – it was at a god forsaken place called Patratu in the Dhanbad division that I got the first field level administrative posting in my railway career. Oh what an experience it was – I was 29 and Patratu was the biggest hub of activity on the eastern railway and a place always on the edge. It was here that I realized the tremendous, almost overpowering role of the human resource in running organizations. It was here that I learnt that “Men” is by far the most important of the 3M’s that one talks about in management.

And so ladies and gentleman, I am indeed happy and honored to be here today.

I am no management expert as is often misunderstood. In my career spanning over 33 years I have never been nominated even for a single training session in a management institute and therefore I regard all of you from the department of management studies as far ahead of me in so far as management techniques and strategies are concerned. My only plus is the varied experience that I acquired during various postings in the railways – open line, headquarters, production units and the National Rail Museum, in the Govt of India as Director Tourism, as a public sector honcho at the infamous ITDC and later at MPSTDC along with my role in the state government of Madhya Pradesh handling all governmental functions in the department of Tourism. This variety in postings gave me an insight into and experience of the grand mess that in other words is known as a government department or undertaking. The two public sectors that came my way imparted a rare experience of handling loss making commercial entities about which I can confess I knew nothing about till then.

It is my varied experience and that indeed is all I have that therefore forms the basis of  my talks and any impression that conveys eulogizing of any kind needs to be taken in the right spirit. This is my humble request to this august gathering in all humility.

The subject of today is organizational excellence yet what really is excellence in organizations all about, I often wonder?

Perhaps it is all about achieving the optimum blend of profitability, productivity, operating ratio, work culture, employee and customer satisfaction, ethical values, environment and corporate social responsibility. Or maybe much more, as I said earlier I am not an expert on this subject. Please bear with me therefore if at times you feel that my blabbering is not making any real sense. Yet if I am asked to lay a finger on the one single indices that can be a pointer towards organizational excellence, it has to be the operating ratio of the organization.

My first visit overseas was an eye opener. It brought me down to earth and that did me a lot of good in ensuing years. I would therefore like to relate two or perhaps three incidences that really had my head reeling and made me appreciate that there are no rich and poor nations but only productive and unproductive nations. My second visit overseas mainly to the land of the rising sun and then England also opened my eyes wide and fully awake.

By then I was almost convinced that the road to prosperity goes via deliverance. What is needed in our country is a quantum jump in deliverance – cutting across sectors and states. Since then the hindu rate of growth has failed to impress me for that would keep the nation relatively at the same place almost forever. Why cant’ we aspire for growth rates in excess of twenty five percent per annum especially in the case of commercial organizations, I have since wondered. Perhaps therein lies the difference between capabilities of managers and leaders.

We need to cultivate leaders rather than merely focusing on imparting managerial skills. One definition of leadership is that it is the art of achieving many times more than what the science of management says is possible. This is one singular trait the trail blazing results of which have been amply witnessed in the cases of Gandhi from India, Lee Kuon Yew of Singapore and Mahathir Mohammad of Malaysia to name a few.  

Leadership is the issue, nothing else is. It is a lot about believing in yourself even when none believe in you. It is also about being more committed to speaking the truth than seeking the approval of others. Besides it encompasses all core managerial and human values.

Now let us look at success.

We all aspire to be successful, yet what is success all about?

It is important not to measure personal success and sense of well being through material possessions. Success is not about what you create for yourself, it is what you leave behind that defines success.

Success is your ability to rise above your discomfort, whatever may be your current state. You can, if you want, raise your consciousness above your immediate surroundings. 

Success is about Vision. It is the ability to rise above the immediacy of pain. It is about imagination. It is about sensitivity to small people. It is about building inclusion. It is about connectedness to a larger world existence. It is about personal tenacity. It is about giving back more to life than you take out of it. It is about creating extra-ordinary success with ordinary lives.

If wealth gave happiness and satisfaction then Mukesh Ambani should be the happiest person in the country and if power and position gave that, then our prime minister should, yet that is not the case. There is something else within us that is the true  fountainhead of happiness and satisfaction. The sooner in life we understand this simple philosophy, the better it is.

At Patratu I started appreciating the real value of the human resource. The combined strength of over a thousand men working in unison delivered much more that what even the best of my predecessors ever expected of the team. That the men in return expected neither enhanced wages or promotions or rewards but genuineness on the part of management was a realization that dawned on me at Patratu and continued during my next stint at the Diesel Locomotive Works at Varanasi. That unions are an essential part of any enterprise with a substantial workforce, yet they merely thrive on the incompetency or non genuineness of primarily the apex management was also a deep realization.

Slowly with the passage of time it dawned on me that whether it is a parchun ki dukaan, towering corporate or a nation, it is the top guy who really matters and everything else is merely a symptom. Yet how wrong most of us really are in almost always attempting to tackle symptoms? Thankfully our family doctors are not like us – they rightfully attack the disease!  

Tackling the 3 M’s in a defined time frame to achieve the desired objective is at the core of the philosophy of management. Yet in the complex maze of organizations that we live in, we invariably fail to appreciate that the “will” to achieve is at a much higher plane than the how’s and the why’s. The regular engagement in the How’s and Why’s therefore amazes me no end. There are examples galore of the tremendous success achieved by nations and organizations inspired merely by the sheer will power of the leader. The meteoric rise of Germany in the thirties and then again after total demolition in the second world war is a vivid example of the power of the will power. I often wonder what would have happened if we Indians were left in the lurch in 1945 as the Germans were –we would still be begging the developed world, the world bank and the IMF for dole. What we would have done with the dole is another matter. National catastrophe’s like cyclones, earthquakes and what Uttarakhand recently went through have started emerging as occasions for the rulers to make hay while the sun shines. Unfortunate yet true! How deep is the abyss still I wonder?

A few days back one of my younger colleagues asked me how to differentiate between a good and a bad posting. My reply was that a posting conventionally regarded as good by the masses is bad and vica versa, provided of course rollicking in power and money is not the aim and making a difference is. After all who ever said that USA has potential or Germany has potential? It is India that is still accumulating potential in almost every sphere of activities. Potential is indeed a dirty word and generally postings regarded as bad possess tons of untapped potential.

Tackling the tourism major, the India Tourism Development Corporation and that too during the era when the nation was going through the motions of selling the family silver was an interesting assignment. Beleaguered on all sides – heavily loss making and corrupt organization, my not belonging to the elite service of the nation, the adhoc appointment and the disinvestment ministry excited about the selloff to follow, even paying the salaries to staff was by no means a cakewalk. And then 9/11 came as the icing on the cake! Yet Hotel Ashok, the flagship and the conscience keeper of the corporation posted the biggest ever hotel turnaround of those times – its turnover grew by almost 60% in the year when the hotel industry worldwide plummeted. This turnaround that gave jitters to the powers that be was mainly fuelled by two components – the decision to turnaround taken by the apex management and the absolute commitment of the staff in ensuring the success of the effort that followed.

Firm adherence to ethics, value systems and genuine concern for the employees is what really differentiates excellent firms from the routine. Clamping down on corrupt practices, imbibing value systems and providing genuine leadership to the men therefore has to be the fundamental focus area of the top guy. That this is far more important than merely chasing production or revenues is not yet apparent to many of the corporates especially those from the sarkari sector! 

In the rotten sarkari domain often most of us are at a loss to decide from where to start, and therefore there are umpteen sad stories of merely confining ourselves to planning and power point presentations that paint a rosy future yet fail to impress. Grandiose future emerging from dingy rooms occupied by demoralized employees is just not acceptable. And therefore in all my postings I literally begin with a cleaning up drive starting with the seat of power to be followed by other offices, units and workplaces. I really cannot visualize a bubbly enterprise in the absence of smart offices, units and workplaces. The men have to start feeling the change and that is what started happening at the dingy headquarters of Madhya Pradesh Tourism in 2004 and continued to happen for the next five years.

The organization turned around in the very first year and the turnover rose so fast that the profits at the end of five years were almost double of the turnover at the beginning. Meanwhile rapid strides in infrastructural development, innovative and bold promotional campaigns and making things easy for the private sector to make an entry propelled the state to the fore front of tourism in the country – an achievement celebrated by a number of recognitions in the form of national awards given by the federal government.

While managerial excellence played a major role, the almost vertical growth was made possible by inculcating ethical values, rooting out corruption and genuine concern for the men of the corporation. 

What however took me by surprise was the tremendous positive response of the railway staff in the Delhi division of Indian Railways. Infrastructural development works that normally take decades to show were completed in a record time and at such low costs that even the CAG profusely complimented the renovation works at New Delhi station in its audit report of the CWG games. Here again a transparent environment, genuine concern for the men, quick decision making and regular emphasis on value systems played a major role. 

All great performances appear smooth, be it Geet Sethi playing billiards or Sachin Tendulkar scoring centuries and all bad performances give an impression of tremendous activity. The test is that if an organization and its constituents appear to be at peace with themselves it is almost always certain that the organization is on the road to achieving excellence. 

Leaders clearly differentiate between remaining busy and delivering. They also quickly separate the grain from the chaff. 

Finally I would like to conclude by saying that achieving organizational excellence is simple though it often appears impossible. It only requires the will, commitment, genuineness and integrity on the part of the management. Once the decision to achieve excellence is taken, the next step is merely to put our life and soul in achieving the objective. 

Thank you everyone for being patient. 

Thank you for this honor once again.

State firms fail because of inept management

(This article was published in the HT of 17/10/2013)

On October 10, civil aviation minister Ajit Singh told a private TV channel that the national carrier - Air India will have to make itself  “profitable or a subsequent government will have to explore at privatising.” The statement created a flutter reminiscent of the era of disinvestment when the hospitality sector giant India Tourism Development Corporation (ITDC) and many others were sold off.

As the head of ITDC, I was often amused at the irrationality of the excuses trotted out for justifying the sale of the family silver — governments should not be in the business of running hotels, the company facing huge loss and the government needs money — were the three major excuses trotted out, but without substance. The counter-arguments were: if the government can’t run even hotels profitably then can it run the nation, give us time and the company will be as profitable as those in the private sector; and if the aim is to maximise sale proceeds why not sell through an open auction and why attempt restricting post-sale operations.

Major properties were palmed off at prices that would not fetch even a decent house in the outskirts of Delhi. Unfortunately, the tremendous enthusiasm over selling the family silver overshadowed the need for sanity.

The theory that governments should not be running businesses and, therefore, get rid of them is inherently faulty. Running a business enterprise requires sound commercial sense. That is why private enterprises burn the midnight oil while selecting their chief executives. Had the same diligence been applied while choosing CEOs for State firms, the story of even the national carrier could have been different. With the might of the State behind it, the public sector has an inherent advantage over the private sector. Unfortunately, this advantage is now being frittered away.

Also, the latent strength of the Indian public sector enterprises lies untapped even after 66 years of Independence. It defies common business sense why many of these commercial enterprises set up with public funds and backed by the State perform so badly.

The reason lies in inept apex management as often the criterion for appointments lack merit. That the kinds of ownership and technicalities are mere peripheral issues and what matters is the commitment, zeal and integrity of the person in charge of these enterprises.

Air India and ITDC are textbook examples of inherently profitable business enterprises brought to the mat by inept managements.  Contrary to public opinion, blaming political masters or the external environment for the ills of a company merely diverts attention and shrouds the real causes. The fact remains that the ‘companies act’ and the ‘memorandum of articles’ sufficiently empower the chief executives to ward off any hostile threats to the efficient working of the enterprise, yet in many cases the chief executives lack leadership traits besides showing undue eagerness to succumb.

Any commercial enterprise, be it the local paan shop or a multinational corporation, is only as good as its leader, or in other words the officer who heads it.

Unfortunately, most of the senior officers only look upwards and display extreme keenness to be identified as the blue-eyed boys of the powers that be. They achieve that goal but in the process the company they head often lose out.

Public Sector can Excel!

The public sector enterprises have miles to go and they can provided...............

That ITDC the only central public sector enterprise in the hospitality sector is deeply in reds is a news that saddens yet reflects the state of the nation. On a lighter note one feels that a lot of effort must have gone in over the years to achieve this distinction considering that the hospitality business is inherently and also highly profitable. The reasons for the debacle indicated in the news item are simply unacceptable.  

It is indeed sad that the latent strength of the temples of modern India, the Indian public sector enterprises lies untapped even after over sixty years of existence as a free nation. It defies common business sense that many of these commercial enterprises set up with public funds and backed by the state are underperforming yet many of them continue to do so. The reason lies in inept management as generally the apex level positions are filled not based on performance or leadership traits but on other criterion or considerations. That the shades of ownership and mere technicalities are not issues that matter and what really matters is the commitment, zeal and integrity of the top guy is a fundamental premise that needs widespread acceptance.

Air India and ITDC are text book examples of profitable business enterprises being bled to death by inept managements. Despite the general public opinion being to the contrary, blaming political masters or the external environment for the ills of the company merely diverts attention and shrouds the real causes. The fact remains that the companies act and the memorandum of articles of the enterprise sufficiently empower the chief executives to ward of any hostile threats to the efficient working of the enterprise, yet in many cases the chief executives either fail to lead or else succumb to pressures and attractions. 

My stint as the head honcho of the Delhi division, the largest division of the mighty railway system of the country firmly reinforced my belief in the goodness and the immense utility of men at large. It also reinforced my belief that the primary problem of the nation is neither the politicos, nor the unions; it is the bureaucracy that with passage of time has evolved into a self seeking organism. The bureaucratic clan indeed has to take the major blame for the pitiable condition the nation and organizations like the ITDC and Air India find themselves in.

My two stints as a public sector honcho, namely the short-lived stint at the India Tourism Development Corporation and later at the Madhya Pradesh State Tourism Development Corporation reinforced my belief that CEO positions in public sectors are primarily leadership positions. Any CEO who does not appreciate this basic premise is bound to fall flat on the face and that is what has been happening regularly in the Indian public sector scenario. Giving a short shrift to this premise while making selections for apex positions ensures a mediocre future existence for the enterprise, a situation not healthy for the economy.

My stint at the India Tourism Development Corporation coincided with the aggressiveness that was then being displayed in the disinvestment of the public sector and also the 9/11 incident which affected tourism worldwide. The combined synergy of both the events made the revival an almost impossible exercise, yet the unprecedented turnaround that the company witnessed in 2002-3 was the result of a massive team effort, a team effort that even the junior-most of the employees identified himself with. Doubts over the ability of the public sector to perform at par or even better than the private were also successfully laid to rest.

The iconic success of the Madhya Pradesh Tourism in finding its place in the big league of Indian tourism and also the unprecedented financial turnaround of the state tourism corporation was fuelled by the same employees of the once beleaguered corporation who were earlier being blamed for the mess that the state tourism corporation was in. Posting over 30% growth year on year by a state public sector undertaking that had already hit the bottom and was being actively considered for a sell-off again proved that a turnaround is possible provided the top guy has employee focus and is committed to the growth of the company.

Any commercial enterprise, be it the local pan ki dukaan or a towering corporation is only as good as its leader, or in other words its top guy. The top guy has to have leadership qualities and by his words and deeds, should be able to command the unquestioned loyalty of his men. Everything else is secondary, yet unfortunately most of the top guys only look upwards and display extreme keenness to be identified as the blue eyed boys of the powers that be. Blue eyed boys they become, but they lose the company and that is what has happened with most of the commercial enterprises that have gone downhill or are performing below par.

The top guys also have to be able to distinguish between the “effort to deliver” and the “decision to deliver”. While the effort part is good and appreciable, the decision part is almost mandatory. Unless the company led by its top guy decides to deliver, the effort will almost always never bear fruit. It is also sad that generally, the top management gets busy in the “how” and remains busy in the same while the corporation continues its downhill slide. That the “will” to improve is far more vital than the “how’s” and “why’s” needs appreciation.

And lastly, any commercial enterprise that works in a competitive environment, howsoever profitable the sector may be, has to have its foundations firmly in the ground, grouted in value systems that are universally accepted as good and also good practices. Stamping down corruption and other vices should therefore remain the principal focus of the chief executive who should lay this issue on the table and lead by personal example.

The public sector always attracts criticism on grounds of non-performance due to sarkari ownership. Yet with sound commercial sense, the ownership pattern can turn out to be the biggest strength of the company provided the CEO has leadership traits. He is the pivot and he is the one who can take the company forward or sink it. The buck like in any commercial organization stops at the chief executive even in a public sector undertaking. 

Turnarounds!

The turnaround of Hotel Palash in Bhopal can be called spectacular even by the most conservative estimates. The hotel that did a turnover of only Rs seventy five lakhs in 2002-3 touched almost Rs seven crores in 2009-10, a jump of almost ten times in seven years. This turnaround brought back memories of Hotel Ashok in New Delhi that despite posting its lowest ever turnover of thirty six crores in 2002-3 turned around and posted a fifty eight crores turnover in the subsequent year, despite 9/11 being a party stopper for almost everyone in the tourism sector.

The same was true of the corporation, the Madhya Pradesh State Tourism Development Corporation rose from the ashes to become the leader of the tourism sector in the country. A loss making entity, first wiped all its losses and then emerged to become a successful business enterprise. The state, beautiful though it always had been, also emerged from behind the shadows and came to be regarded in the same league as the established states of Rajasthan and Kerala in so far as tourism is concerned.

The Madhya Pradesh stint reinforced in me the belief that nothing is impossible to achieve. That India can, with a lot of effort of-course, discard the "developing" stamp and enter the "developed" league is a thought that engages the mind every now and then. That the question is not of shortage of funds, but inadequate application of traits like will power, commitment and integrity is also a thought that cannot be discarded.

People often criticize the public sector on grounds of non-performance and cite sarkari ownership as the root cause. Being witness to many public sector turnarounds and my actual participation in two, has led me to believe that the shades of ownership are not relevant, what is relevant though is the CEO of the enterprise. He can take it forward or sink it, irrespective of the share holding pattern of the company.

Random musings

I often wonder why the present sarkari systems in the country lay more emphasis on loyalty to an individual than on loyalty to the organization or the nation. My tenure in MP was unique in that, the government - bureaucracy and politicians alike, appreciated the latter and therefore results flowed out in rapid succession. I wish other sarkari setups also appreciate and also inclucate in employees feeling of loyalty to the nation through the organization they are working for. But the wish is bound to remain a wish, that I am pretty certain of.
Our systems, sarkari ones have a trademark. They are characterized by sloppiness. And that is pretty much evident in the environment they radiate. And then everything else becomes a symptom. It becomes pretty difficult for someone not in love with the organization to differentiate between a disease and its symptom and so one keeps on running around a tree ad-infinitum without reaching or even having a hope of reaching the goal post.
But it keeps everyone busy. Busy like hell and it leads to a false sense of satisfaction, a satisfaction that is as temporary as it is fragile of having delivered. True satisfaction is different, but very few, perhaps the lucky ones like me are able to relish it.
HR is the issue, always talked about and flogged but rarely handled properly. And why not? Human relations and behaviour are the most simple as well as most complicated amongst all issues. Simple because everyone knows how he as an individual would like to be handled by the system as well as others and that the others are also individuals like him. Complex because despite knowing the same, people generally do not apply the same yardstick and measures while handling or dealing with others.
Enough for today.

Leaving Bhopal

I have never felt so sad in my life as I have been feeling these days. The mere thought that I shall be leaving Bhopal on the 22nd of December is enough to make me feel a deep sense of sadness. But there is also a sense of satisfaction. Satisfaction that one gets when the work has been well done. Yes the stint in MPSTDC has been the most satisfying period of my life. I do not think that I could have done better.
Almost all my farewells have been heavily emotional affairs. Both me and my staff cry, togethor. I doubt if this is going to be any different.
Madhya Pradesh is a great state. Beautifully lansdscaped, innumerable tourist destinations, excellent climate, good crime and law and order situation and above all, simple people. Even the politicians are simple, no comparison at all to their brethren in other states. A starking example is the Chief Minister of the state. A simple and honest man, deeply committed to the development of the state. I am going to miss him too.
I always believed that in any organization, the disease or the cure, is vested in the top management, to be exact, in the top man. He can either take the organization forward or sink it. And this stint further reinforced this belief. The same set of staff and officers, who were earlier held accountable for all the wrongs, rose to propel the organization to the forefront of the nation, and that too in a remarkably short time frame.
Once during my first stint in Bhopal, an autorickshaw driver refused to charge me once he knew that I am a stranger to the city. That is the spirit of Bhopal.
I shall forever remember my days in Bhopal and shall relive them after retirement. Well that is the plan at present.