Thursday, August 16, 2012

How to Fix a Champion

Champions are the ones that have survived the test of time, continued to score, and outperformed the market perceptions. They select themselves. Nobody questions why they are on the list. If the sieve is fine, the finest pass through the filter. Once we get these 23 corporations, we see what is common amongst them that they survived so long and did so well. And retrofit an explanation of excellence. This is what Peters and Waterman did, and Jim Collins did. So this cannot be a methodology that is flawed. Not if we are reverential towards ‘gurus’ and not skeptical. Not if we do not apply objectivity and treat best sellers as authorities. Karunakar falls into this trap of looking at the past work of a few writers with awe. Even when he refers to an academic like Ghosal, he reverentially mentions the popular books that the gurus sermonize on. The basic flaw with the book in question is that it tries to retrofit an answer of excellence to the lists drawn up by him based on a Jim Collins’ criteria. He benchmarks this with lists of popular journals. At the end of it all, his list of 23 good to excellent [going to be great in the next 20 years as India becomes a developed nation] companies like Apollo Tyres, Torrent Power, Exide Industries do not figure in any the lists against which he tries to benchmark for at least two recent decades.

Let us not nitpick on the lists and for a moment assume that the 23 companies he refers to continue to be champions. How did they get there? Here the author uses the “case study” method. Usually a case study method entails studying say a company comprehensively, understanding the inter-linkages between different functions, examining the strategy over a period of time and distilling and codifying the learning. When one does multiple case studies, one expects to get the common elements across diverse organisations to understand what could be a winning practice. Not so with this book. It gets methodologically innovative. There is an upfront business model divided into three circles: Strategy [includes going global; cost leadership through scale; technology leadership and alliances; sales distribution network and focus on core or noncore], Leadership [includes openness to change, leadership skills, succession and history] and Execution Excellence [including TQM, ISO, BPR, ERP, TPM and Deming Award]. So we have a chapter under each of these heads and most of the 23 companies described under each sub-head in a couple of paragraphs. These are a list of initiatives taken by the companies, interspersed with profound looking graphs. For instance in a section under the head Technology Alliances there are a series of graphs – a bar graph on PBDIT/Total income and PBT/Total Income for the post liberalization era followed a full page line graph on debt equity ratio of the company being discussed. These pictures continue for each company and are accompanied by a paragraph that just does not discuss the financials.

Having described each of the themes and slotting companies under the themes, it is time to end the argument. However, in the 167th page we get a series of inane FAQs which repeats the methodology chapter, produces an apologetic argument for not including giants like WIPRO and Infosys [they were not incorporated in 1974] and IndianOil [It was not listed in 1974] and gives some recommended readings.

Another 10 pages of wrapping up and the text ends at page 180. We then have nearly 200 pages of appendices. These include a mix of graphs, download of financials of all the companies from the Prowess database, sysnopsis of inspirational books, and so on.

If a book mentions that “In understanding history and leadership, the book by Gita Piramal – Business Maharajas [1996] was researched with respect to select companies” we know where the author is coming from. The entire bibliography and references is restricted to company websites, popular business magazines, pink papers, and a few articles from Vikalpa, the IIMA journal. Most of the footnotes in the book read as “Source: Author”. Wonder what that means.

One thought publishing an academic book was tough. The publishers go through a rigorous process of a double [or at least a single] blind review, take the comments of the reviewer seriously and make the author sweat it out before the book sees the light of the day. The editors are usually ruthless on the emotional involvement of the authors. Sage publications is generally seen in the academic world with respect and reverence. This book shows the total failure of a review process and editorial intervention.

I wish I could say something positive about the book. Yes, it looks nice, is well printed and might be a good spine to display in “learn easy management” section of a library, if such a section exists.

Corporate Champions
Excellent Companies of India
B Karunakar
Sage [Response Business Books]
pp.380. Price Rs.450

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