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Stephen Manallack
Leadership is grooming future leaders
30 September 2006
To be successful on a global scale for the year 2020 and beyond requires Indian companies to fast track the growth of their home grown management skills and leadership abilities to operate confidently anywhere in the world, says Stephen Manallack*

A pessimist is not a good leader, as the post-Enron US business community is beginning to discover, but equally problematic is wild optimism that can lead to a form of hubris too often seen in booming economies. Yet, while pessimism was once a feature of India business leadership, it is now hard to find, with new leadership more grounded in a mix of dreaming and staying true to ideals.

The wild optimism that so characterised America in the late 1990's and before that the IT boom and Japanese bubble has seemed to miss most Indian business leaders, at least from their public utterances and examples of judicious decision making in the face of a world of opportunity.

One call to leadership from former US president Bill Clinton sums up this mood: "We all need to find as few demons as possible – and as many dreams as possible".

This seems to have been very much the driving force for K V Kamath, chief executive officer of India's second largest banking and financial services organisation, ICICI, who is seeking to transform ICICI into a top global bank - but with a difference.

Kamath's leadership strength shines through when he discusses ICICI's future, "We believe that to break into the top league of global banks, ICICI will have to follow a course that few banks in the world have done – and that is, leverage the rural economy."

Now leveraging the rural economy is something most bank leaderships have shied away from because it is hard work. Easier banking profits are to be found in the cities or overseas. But Kamath is staying true to ideals while pursuing growth with a clear eyed vision: "Our challenge is to invent a new business model where we can create a distribution base effectively in 600,000 villages in India, and to learn to do that at one-tenth the cost of urban India."

So instead of looking to build a massive and costly branch network that would never survive, Kamath and ICICI have turned old banking on its head by seeking out local partners who can incorporate banking services in their existing activities. It seems simple, but much of good leadership is the ability to see the wood from the trees.

But before ICICI could scale up its rural lending, it needed to cover risk and again Kamath led his business against conventional thinking – which had it that because the Indian rural economy depended so heavily on the monsoon, lending was too risky. Instead of taking "no" for an answer, Kamath found that the lending risk to rural India was insurable, could be sold to farmers and further that it could be reinsured outside of India so risk was properly spread. By going against conventional wisdom, ICICI had a rural lending model that he believes can be taken to 600 million people.

The interesting thing here is that the transformation of ICICI has been carried out by the management team that was already there, not by imported solutions. As Kamath puts it "To build a successful business, you have to be able to pick entrepreneurs very early and get them embedded into the business. They need to go out into the ecosystem, demonstrate their abilities, nurture the business and build it up.

Kamath's dream of building the new business is based on the experience of this success with his team and "the ability to empower people and to let them grow the business. That will be exactly the same way we are going to build this new business".

How does this change via management work? "You need alignment of interests for a team and a strong belief in your ability to execute. You need a can-do attitude."

Kamath has had to recruit a lot of people over this time and looks for five characteristics: intellect or a high level of competence; entrepreneurial leaders who can pick the right team; a can-do attitude; the ability to withstand shocks without getting flustered or losing direction, and; ability to focus, focus, focus without getting diverted from the core business.

In that sense, Kamath is one business leader who clearly sees that the dreams of his business depend on the people in it and in the process he has not tried to recruit clones. He is also clear that leadership incorporates the ability to correct your course when things start going off track because, as he says, "things never happen quite the way your models may have predicted". And he sees the job of looking out to see when things do go wrong as resting mainly with the CEO – meaning the good CEO really needs the ability to see across the whole business at the one time.

If one key measure of leadership is ability to adapt to change, then Bangalore-based Wipro, India's third largest software exporter, with annual revenues near $2 billion, faced such a need when high profile CEO, Vivek Paul, left the company. Azim Premji, chairman and managing director, Wipro Corporation, immediately saw that the business needed to get closer to the customer and to empower its team of talent. He led the business further into a new era (already begun) as a series of "verticals" or sub-companies, each facing the customer and in an autonomous way.

With the reorganisation, Wipro "tried to bring leadership closer to the customer". To do this, they de-layered the organisation and empowered business leaders.

But Premji is an advocate that you do not demolish as a "cash-cow business" in pursuit of your future. This means the company looks after the mundane annuity side of business while simultaneously exploring new businesses so that the company's image as a "partner" is contemporary.

His company sets out to build managers who integrate two opposing skill sets - technical understanding and managerial skills. To get this, Wipro spends a lot on selection and training of people. Training has two levels, first, campus induction training and technical training at the beginning, combined with training in leadership and soft skills. This leadership training is provided at the entry level and continues as the person moves through the tiers of management.

But a clue to Azim Premji's success can be found in his approach to leading people to achieve more – "We give people major responsibilities even if they are only 60 per cent ready. Our experience is that people are pretty elastic when you give them responsibility, and they just grow rapidly with the job."

Leadership qualities that are sought by Wipro include customer orientation, strategic thinking, self confidence, commitment to excellence, willingness to groom other leaders, working effectively in unstructured environments, adaptability, handling ambiguity and ability to work in teams.

Both Wipro and ICICI see their future leaders as developing from within. Clearly, as I have written before, to be successful on a global scale for the year 2020 and beyond requires Indian companies to fast track the growth of their home grown management skills and leadership abilities to operate confidently anywhere in the world — rather than recruiting so-called imported solutions. I have a feeling this is an approach Mahatma Gandhi was urging when he said, "You must be the change you wish to see in the world".

*By Stephen Manallack: communication consultant, professional speaker and trainer. Stephen is the author of You Can Communicate (Pearson 2002). He is on the management committee of the Australia India Business Council.
Website: www.manallack.com.au

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