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21st Century Business Leadership needs a mental shift

The concept of business existed since Medieval times and will exist even after 1000 years. To do business you need 2 parties, the buyer and the seller, the customer and the employees. Modern day business is plagued with the idea of a third party called the Shareholders who has complicated business and has caused most customers and employees great pain. Numbers have become order of the day and humans are being treated as a sugarcane in a squeezer as more and more organizations are trying to achieve more with less. Till the time Six Sigma, yellow belt, green belt,  lean and other quality management tools were used in manufacturing and production, the world looked like going towards efficiency however when the same tools get used on humans to measure their efficiency or utilization then we have pressed the madness button. Can you believe that we have progressed ( or shall say regressed) so much that we are trying to measure utilization level of an employee using the same tools that measures utilization of a car engine. Well I call that an insult to our Neo-cortex.

It is a Global Reality

My profession allows me to interact with senior leadership of my organization and even when I was working for IBM I had some good fortune to spend time with some top leaders. Although I want to state to you upfront that I did have some wonderful people managers for whom I mattered more than numbers, however by and large I did come across a pool of number crazy leaders who was ready to sacrifice people if they miss their annual targets ( Important here to note that by sacrifice I do not necessarily mean layoffs, it can be in forms of warnings or a bad appraisal or on promotions or on increments etc ) and when I came to know that in USA more than 70% employees are found disengaged ( As per Gallup Survey) or around 58% managers admitting that they never got any management training ( Study by Career Builder) or around 58% of employees stating that they trust strangers but not their Bosses ( Harvard Business Review survey) , there was hardly anything else left to convince me that what I was experiencing was not anything unique, it is a global reality. By now many of you might be thinking, why should I worry about some data generated in USA, it is a fair enough question. So now let’s look at what’s happening here, as per a survey conducted in 2018 it was shown that Employee’s lifestyle habits are costing Bangalore’s most cherished IT industry a loss of whopping Rs 24,000 crore every year (that is 7% of total Bangalore IT sector revenue) and the primary reasons have been stated as poor emotional and mental state of people. As I said before “It is a Global reality”.

The challenge lies before the 21st century business leaders to come out of this conundrum and make a clear demarcation in their mind about who comes first “People” or “Numbers”. If you select people you lose numbers and if you choose numbers you lose people which eventually hits your number later on. If you are still perplexed about this then please read on.

Are we following a Malpractice?

I always used to think whether business has been carried on like this in every century, and that question lead me to Mr. Jack Welch.  The great downfall of General Electric’s whose stock once rose to $59.44 USD in 2000 from a mere $2.24 in 1985 primarily under the number comes first champion and the manager of 20th century Mr. Jack Welch, is a shining example in front of all of us. In his book “Winning” Jack Welch wrote “It sounds awful, but a crisis rarely ends without blood on the floor. That’s not easy or pleasant. But sadly, it is often necessary so the company can move forward again” – This pretty much sums how Jack Welch ran GE. However now everyone has started realizing that the same principle of prioritizing numbers before people, annual layoffs to balance the books, incentivizing people to hit numbers, Rank and yank people, Shareholder supremacy etc which saw the rise of GE in short time is also responsible for the fall of GE in the long term. GE suffers a slow death as we speak with its stock choking at $11 USD now. At the same time, we have Costco, Southwest airlines, Virgin, TATA, Google, Apple, Ford, Amazon etc etc who understands the importance of Vision, values and people in business and they outperform their rivals in the infinite game of business. The success of Jack Welch inspired a lot of CEOs to follow in his footsteps and the concept of favouring numbers over people to gain in business quickly keeping up with annual mission statements and financial targets gained steam so fast that in no time we saw these practices became a normal way of life for corporates. Very few realized at that very moment that what worked in 20th century might not work in 21st century, what worked for short term will not work for long term.  As the famous statement made by Herb Kelleher of Southwest Airlines goes ” Business of business is people” or Virgin’s Richard Branson saying ” take care of your staff and they will take of your clients and business” …. all these statements point towards the same direction and that is long term sustainable business strategy.

Very important here to note that I am not a biased critic of Jack Welch and I do recognize and appreciate a lot of good work done by him but in this context, he did propagate an evil practice which has continued to plague business in 21st century. Although numbers are very important in business, just like fuel in a car, it keeps the engine running but whenever leaders come to a point where they have to choose between numbers and people, the great ones always chose people even if they had to suffer financial loss for the time being. Favouring numbers over people for sure will get you your financial goals and your balance sheet will look clean quarter on quarter however it will create trust deficit among employees and customers and over a period of time your business will collapse, in short it has a direct impact on longevity of your business.   In 1958 the average lifespan of an organization was 61 years and we have brought that number down to 18 years in 2018.  if only statistics can lie. Off course disruptive technologies also play a key role here however we cannot deny the employee disengagement stats and hence the losses incurred shared earlier in this article. This simply tells us that we cannot follow this malpractice anymore. 

A ray of Hope

The fundamental mistakes of bringing in the evil practices of 20th century putting a blind faith of GE model needs to be corrected if we have to raise and develop more healthy and sustainable workplaces. A workplace where people feels valued and respected and secure. Numbers can provide us a target or goal to aim at, missing it should not be the end of the game since business unlike cricket or football does not end on time, its purpose is continuation and continual improvement. I find hardly any difference between Stalin and most of the CEOs, one killed his own generals, the best ones following a loss and that weakened his own army allowing Germans to attack and cause damage, the CEOs on the other hand sacrifices own employees if the numbers are not met end of year making his own organization weaker and spreading fear among the survivors who eventually will leave the sinking boat well before time. I have even seen some CEOs are so crazy on meeting the financial targets that they are even okay to lose a customer… In this 21st century we can no longer follow the outdated and shallow principles of numbers. If we can offer a good quality of life and support to our employees and customers – numbers will eventually follow.



Thankfully the business world is not a gloomy dark place and there are some companies which stayed on the right track and few new ones also who has learnt from others. When you look at their performance for 4 years or 5 years you might not get impressed but when you step back and look at the wider curve you can clearly see that they have a worthy vision and their focus on their vision and people has clearly paid them rich dividends. Here are a few for your information. I am sure you all will find he rest. Our job as 21st century leaders should be to take this ray of hope and paint our offices with a culture where People actually gets this feeling every single day that a fictitious number does not define him. 

REFERENCES

https://www.marketwatch.com/investing
https://www.forbes.com/sites/davidsturt/2018/03/08/10-shocking-workplace-stats-you-need-to-know/#e143675f3afe
https://www.cnbc.com/2017/08/24/technology-killing-off-corporations-average-lifespan-of-company-under-20-years.html
https://www.timesnownews.com/business-economy/industry/article/employees-lifestyle-costing-bengalurus-it-sector-rs-24000-a-year/336008

“Winning: The Ultimate Business How-To Book” – Author “Jack Welch”

“ Start With Why: How Great Leaders Inspire Everyone To Take Action” – Author “Simon Sinek”