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Cover Story
 

Enter ‘Tactical’ Strategy
In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books
Issue Date - 17/02/2011
 
“Jspl has a much higher risk appetite”
John Elmore talks to B&E on how JSPL is preparing itself for huge capacity expansions in the coming decade

B&E: JSPL has evolved into developing a vertically integrated model and is making huge investments in the power sector. What are the major lessons from these shifts for corporate India?
John Elmore (JE): I don’t think that. I think we followed the core strengths. You don’t try and divert too much from your core otherwise you have a tendency to fail. I think Mr Jindal have been extremely smart about the strategy and what he’s trying to do. And he has followed his core strength, which has been leveraging the raw materials. So power actually played very well into that because of the coal mines and his ability to get the raw materials. Hence JSPL became the first independent power producer in the country really in the scale and the magnitude. Before every body else was going overseas, JSPL went overseas to source raw materials, and they did that in Bolivia, done it in Africa, Indonesia and Australia and we’re still looking for raw material assets overseas. And then the acquisition in Oman, which we just did, allows us the entry not just into the middle east market, but it focuses on the core strength which is steel and DRI production. You know if you are looking at now to change, you’re too late. You’ve missed the opportunity. It’s how we see the world and where we see the time, about 5 to 10 yrs from now that we’re focusing on and what do we need to get us there

B&E: Is there any critical reorganisation that you are anticipating in JSPL in the upcoming 5-10 years?
JE: Well I think that JSPL is growing from a very small company to a very large company. Its going to get bigger and continue to grow. Challenges come up in terms of execution and how do you institutionalise some of the things that you’ve done as it becomes physically almost impossible, to be involved in every aspect of the business and you have to trust the senior management and you have to trust people below that they can implement the vision coming from above and then driving it forward.

B&E: Assets globally are considered too pricy or too risky. How does JSPL manage this risk?
JE: There’s risk everywhere, there are cost implications, and it’s a question of appetite and I think that we have been very fortunate, and have been able to evaluate the risks properly. Mr. Jindal is not afraid to take risks that others might not be willing to take. Hence those have paid off. We will continue to look at countries where other companies may have challenges with. A family owned founder driven company has a risk appetite much higher than others. It’s proven that when we were getting assets in Africa, others are trying to get there. But we were there 4-5 yrs before them. We were there in South America, while others are now speculating on entering there. And that’s a very strong positive thing for this company.

 
Building strategic change capabilities
To survive, organisations must first determine what needs to be changed. Should they increase customer responsiveness? Expand into new markets? Improve product innovation? An approach must be found that enables the company to tackle immediate challenges as well as build long-run change capabilities
Coordinated By : Sugandh Singh

The ability to lead change is critical to every organisation’s future success. In today’s fast-paced & evolving business environment, change is the rule, driven by increased global competition, rapid technological advances, unpredictable economic forces and demanding customers.

Why most change efforts fail
Studies indicate that roughly two-thirds of change efforts fail. In some cases, the changes implemented were simply wrong for the organisation because the root causes of problems were never uncovered. In others, although the changes were right, they met with resistance, lacked adequate resources, were derailed by office politics, or lost momentum because their success was celebrated prematurely. Underlying these reasons for failure are several key factors. Many organisations tend to focus on a limited number of change dimensions, often emphasising the details of planning and ignoring other key facets. They may also downplay the strategic drivers of change, or view change as a one-time occurrence with a beginning and an end. These are just a few of the reasons, change efforts fall short of expectations and fail to cultivate the long-run change capabilities needed for ongoing success. As a result, these organisations are unable to seize opportunities, leverage core internal strengths, or sustain long-term competitive advantage.

Where are we now?
Answering this question requires an ongoing assessment of both the external business environment in which an organisation does business, and the organisation itself. Looking at the broader context provides valuable information about political, economic, social and technological forces and their impact. Building relationships with customers and other key external stakeholders also offers real-time insights about the competitive landscape including key differentiators and success factors. In short, understanding the “big picture” is necessary to build commitment for change internally and to ensure that future change positions the organisation for long-run sustainable competitive advantage.

In addition to an external assessment, analysing the internal workings in detail is also essential. Internal diagnostics allows the identification of what is working well, what needs improvement and, most importantly, the identification of the root causes as to why. Too often, organisations focus exclusively on problems and fail to understand what factors contribute to their success. Examining what works reveal processes or practices in the organisation that should be preserved in the change process. It may also reveal processes or practices that we want to replicate more broadly. In either, the analysis of problems, or what’s working well, it is critical to look for root causes. This entails discovering key drivers through the analysis of organisational dimensions such as strategy, leadership, structure, human resource practices, physical layout, technology and culture.

          

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