CFO India June 2010 by Bhupinder Sharma

SPINE

AJAY SETH MARUTI’S CFO IS DRIVING FOR RESULTS p. 20

RIVALRY HELPS LESSONS FROM RENAISSANCE p. 40

INNOVATION IS KEY CUT COSTS, BOOST MANAGEMENT CONTROL p. 26

CFO INDIA

VOLUME 01

ISSUE 07

Rs.50

A 9.9 MEDIA PUBLICATION JUNE 2010

LOOK OUT, SUPERMAN!

LOOK OUT,

! N A M R E P SU

h? p.14 c u m o o t n o n e Have CFOs tak

VOLUME 01 | ISSUE 07

contents

20 Ajay Seth

JUNE 2010 VOLUME 01, ISSUE 07

cover story

14 LOOK OUT, SUPERMAN!

In the past 20 years, the Indian CFO has been a corporate superhero. But has he gone too far? By Bennett Voyles

10 Prashant Thakar

cfo profile 20 DRIVING FOR RESULTS Maruti Suzuki’s Ajay Seth is known for his straight talk. As competition hots up, he is pushing the pedal to the metal By Ullekh N.P.

i think 10 SMART AND FLEXIBLE All departments must be involved in an AOP review By Prashant Thakar

in practice 24 THE SCIENCE AND ART OF FORECASTING It could be a finance-led exercise, but it shouldn’t be a finance-only exercise By By Satya Easwaran

26 CUT COSTS, BOOST MANAGEMENT CONTROL A look at ways to automate expense-management processes By Jayant Dwivedy

COVER DESIGN BY ANIL T

30 MEET THE FAB FOUR FEMALE FINANCE LEADERS Talk about clarity, collaboration and decision-making in extraordinary times. By Ellen M. Heffes and Patrick Sweeney

36 David Lim

insight 40 USING RIVALRY TO SPUR INNOVATION Companies looking for new sources of creative energy might want to look backward. By Bernard T. Ferrari and Jessica Goethals

leader’s world 36 HOW TO INFLUENCE YOUR TEAM Nothing earns the respect of a team as much as when a leader walks his talk! By David Lim

cfo lounge 44 GIZMOS 46 TRAVEL 03

from the editor’s desk

letters to the editor topline art review books

06 47 48

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editorial DEEPAK GARG deepak.garg@9dot9.in

CFO INDIA cfo-india.in

MANAGING DIRECTOR: Dr. Pramath Raj Sinha

Goalkeeper in the boardroom I REMEMBER Colombia’s Rene Higuita for all the wrong reasons. A goalkeeper crazy about scoring goals, he would very often dangerously exceed his brief. He would stray far away from the goal area and dither with the ball around the half-area, enabling opponents to dispossess him of the ball and score. That’s entertainment indeed for fans of the opposing team, but biting off more than you could chew won’t make you popular with your own team, on or off the field. Like the goalkeeper on the soccer field, the CFO has to take tough and sometimes even split-second decisions in matters concerning the financial health of his company. Over the past two decades in India, he has, in fact, become the goalkeeper in the boardroom, developing strategies and tactics to put his company ahead of the race. In the days of the License Raj, the CFO’s role was vital, but he wasn’t necessarily a key decision-maker at the company. As Ishaat Hussain, long-time finance director of Tata Sons, sums it up, “Previously, a robot could have done the job.” Since liberalisation, the role of the Indian CFO has grown far more crucial than before. As new challenges emerged, he has had to constantly rise to the occasion. Writes contributing editor Bennett Voyles in our cover story that looks at the amazing growth of the CFO’s role: “Whether the company needed its enterprise planning software managed, currency risks hedged, new capital enticed from abroad or a cross-border merger arranged, the CFO had to be there.” The CFO role now embraces many tasks that weren’t part of his job description before liberalisation. Supervision of IT, strategic planning, procurement and administration, now often falls under the CFO’s purview at many Indian companies. So will we see more supermen or more Higuitas in the finance chair in the next few years? Probably a few of both. But companies would do well to ask what they can do now to make sure they never end up with Higuitas dithering in the midfield, so caught up in his chance for glory that he ruins the chances of his whole team.

EDITORIAL EDITOR: Anuradha Das Mathur CONSULTING EDITOR: Ullekh NP CONTRIBUTING EDITOR: Bennett Voyles DESIGN SENIOR CREATIVE DIRECTOR: Jayan K Narayanan ART DIRECTOR: Binesh Sreedharan ASSOCIATE ART DIRECTOR: Anil VK MANAGER DESIGN: Chander Shekhar SENIOR VISUALISERS: PC Anoop, Santosh Kushwaha SR GRAPHIC DESIGNER: Suresh Kumar SENIOR DESIGNERS: TR Prasanth & Anil T DESIGNER: SRISTI MAURYA CHIEF PHOTOGRAPHER: Subhojit Paul THE CFO INSTITUTE EXECUTIVE DIRECTOR: Deepak Garg NATIONAL HEAD: Bindu Krishna MANAGER: Poonam Bhargava ASSOCIATE: Priyam Mahajan SALES & MARKETING V-P SALES & MARKETING: Naveen Chand Singh NATIONAL MANAGER (SALES): Pranav Saran (+91-9312685289) NATIONAL MANAGER (EVENTS & SPECIAL PROJECTS): Mahantesh Godi (+91-9680436623) NATIONAL MANAGER (ONLINE): Nitin Walia (+91-9811772466) ASSISTANT BRAND MANAGER: Arpita Ganguli CO-ORDINATOR (AD SALES, MIS, SCHEDULING): Aatish Mohite SOUTH: Vinodh Kaliappan (+91-9740714817) NORTH: Vipul Goel (+91-9654447689) WEST: Sachin N Mhashilkar (+91-9920348755) PRODUCTION & LOGISTICS SENIOR GENERAL MANAGER (OPERATIONS): Shivshankar M Hiremath PRODUCTION EXECUTIVE: Vilas Mhatre LOGISTICS: MP Singh, Mohamed Ansari, Shashi Shekhar Singh PUBLISHED, PRINTED AND OWNED BY Nine Dot Nine Interactive Pvt. Ltd. c/o K.P.T. House, Plot 41/13, Sector 30, Vashi Navi, Mumbai – 400703, India PUBLISHED AND PRINTED on their behalf by Kanak Ghosh PUBLISHED at Nine Dot Nine Interactive Pvt. Ltd. c/o K.P.T. House, Plot 41/13, Sector 30, Vashi Navi, Mumbai – 400703, India PRINTED at Silverpoint Press Pvt. Ltd. TTC Ind. Area, Plot No. A-403, MIDC Mahape, Navi Mumbai 400709

SUBSCRIBER SERVICES: Call +91-11-45069999 Visit CFO India’s Website

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letters to the editor

VOLUME 01 ISSUE 06 MAY 2010

CATCHY HEADLINES I am a regular reader of the CFO India magazine and I think the topics covered are presented in an interesting way. The style of writing is good across the magazine. Most headlines are very brilliant. —Rakesh Kumar, Delhi

Learning experience

The cover story by Bennett Voyles was thought-provoking . It puts the spotlight on the urgent need for more interaction between different departments of a company to stregthen the way businesses are run. I really enjoyed reading it. —Sam Daniel, Delhi

KEEP IT UP The digital version of the magazine looks cool. The articles are good and well-written. The magazine’s design is simply superb. —RR Khanna, Washington DC

EASY TO READ The magazine is successful in that it offers a complete picture of the finance function. The design is excellent. I love David Lim’s columns. —Manisha Singh, Delhi CFO India offers a good mix of write-up that attracts not only the finance community but also those outside of the finance function. I have recommended it to students doing their CA in my neighbourhood. —Shithor PR, Bangalore

PUTTING TOGETHER I really enjoyed reading the cover story on former CFOs who are now handling other functions. And I have noticed that the profiles of senior CFOs are good, too. McKinsey articles, as expected, offer a lot of insight! I love the mix of the magazine, too, since you have art, travel and books sections. It is really brilliant. —Amrith Lal, Delhi

STIMULATING HOSPITALITY SECTOR Krishnan Nair’s column on problems facing the hospitality industry was interesting. I think he has argued well the need for our leaders to walk the talk. —Biju Mathew, Mumbai

The article on compliance by design by Jayant Dwivedy is stimulating. I expect more such write-ups in the coming issues. —Aradhana Vijay, Chennai

NEED MORE ANALYSIS The news items in the magazine should be replaced with analytical stories. I must say that most of the stories—cover stories, CFO profiles, travel and art—are well-written. —Pandyan K, Mumbai 4

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06.10

topli n AFTER THE ROW

Well, you know, I was a human being before I became a businessman

PHOTOS.COM

—GEORGE SOROS

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ULIPs to become more attractive A FORTNIGHT AFTER FINANCE MINISTER PRANAB MUKHERJEE MADE THE PROMISE that the government will resolve the row over the regulation of unit-linked insurance policies (ULIPs), he kept his word. The government ended the row by promulgating an ordinance stating that ULIPs with an investment component are insurance products which will come under the regulatory jurisdiction of the Insurance Regulatory Development Authority (IRDA)—and not the Securities and Exchange Board of India (SEBI). The Centre amended four Acts to make it clear that ULIPs are not securities and they didn’t form part of collective investment schemes or mutual funds. These amendments nullify SEBI’s April 9 ban on 14 insurance firms from issuing ULIPs because they are made effective retrospectively from that date. While making it amply clear that SEBI has no regulatory jurisdiction over ULIPs, the government also ensured that SEBI or any other regulator will not step into the jurisdiction of other hybrid products. “We will resolve this issue soon. I understand the IRDA

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has taken some very positive steps in respect of regulations of ULIPs which are in the interest of both the insurance industry as also the policyholders,’” Mukherjee had said. To avert any similar further regulatory turf battle, the government has also set up a high-level panel—with representations from the Reserve Bank of India, SEBI, IRDA, PFRDA and the government, according to reports. It is made mandatory for the regulators to refer to the panel any dispute or difference of opinion over the regulation of a hybrid product. The panel will have to give its decision to the government within three months and it will be binding on all regulators. The government ruling is seen as a relief to existing policy holders who were unsure of continuing with the product and new investors were wary of buying them. ULIPs are hybrid products incorporating investment and insurance cover. They account for more than 85% of the portfolio for life insurers. Meanwhile, the finance ministry has sought some changes in the investment-cum-insurance products which includes a life cover of 10 times. Currently ULIPs have a minimum risk cover of five times. “The ministry has asked us to bring in certain changes while ruling the matter in our favour. After the proposed changes, the risk cover will go up substantially,” a senior IRDA official was quoted as saying in the Business Standard. The report in the daily also said that the ministry has recommended capping of overall charges and surrender charge. For sure, the new guidelines are expected to make ULIPs more attractive for investors. Insurers will have to mandatorily offer a life cover, health cover or annuities with life cover. Also, ULIPs will have a minimum lock-in period of five years compared with three years now. Partial withdrawals will be allowed only at the start of the fifth year. “They (the government) has also suggested that the minimum life cover should be Rs 1 lakh,” the official added. “We will revise the guidelines for ULIPs to make it attractive for investors. Insurers will also be given more time to redesign these products,” IRDA chairman J Hari Narayan was quoted as saying in a report in the Economic Times.

TRADE QUOTIENT

May exports rise as demand picks up in the West India’s May exports rose an annual 35% to $16.1 billion, thanks to improving demand in the West. While demand has picked up from some of the country’s biggest export markets, including the United States, commerce secretary Rahul Khullar has cautioned the euro zone debt crisis could reduce appetite for Indian goods, Reuters reported. He said a depreciating euro has hurt exporters. “There is some degree of recovery on the export front,” Khullar said, adding “don’t get carried away by the numbers ... it is a huge base effect kicking in.” Imports rose 30.8% from a year earlier, Khullar said. That left a trade deficit of $11.3 billion, the highest figure since November 2008 as oil imports rose more than 70% in April-May and with high demand for iron, steel and inorganic chemicals to fuel India’s fast-paced industrial growth, said a Reuters report. India is targeting close to 15% export growth in the current fiscal year, following a drop of 4.7% in the 2009/10 fiscal year. Khullar said iron ore exports for April-May have more than doubled over a year earlier, while oil exports have benefited from India’s growing refining capacity and rising external demand. Indian exports have grown strongly in the past half year after 13 straight months of decline. Some sectors lag and the federal government has provided aid to struggling exporters.

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PHOTOS.COM

DEMAND FOR GOODS IS PICKING UP IN SOME OF INDIA’S BIGGEST EXPORT MARKETS.

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BUSINESS OUTLOOK

Mukesh looks at doubling spread MUKESH AMBANI, THE BILLIONAIRE chairman of Reliance Industries Ltd, has unveiled mega plans for power and telecom to double enterprise value to $160 billion in 10 years. He also vowed to supply gas to power plants run by brother Anil Ambani “as and when the power plants of ADAG (Anil Dhirubhai Ambani group) are ready to receive gas”. RIL, India’s most valuable company with a market capitalisation of Rs 345,000 crore, plans to use its strong balance sheet to fund coal, thermal and nuclear power plants, add capacity to produce polyester and chemicals to create “unprecedented value” for investors. Ambani, the richest man in Asia, said that RIL was ready for a “big surge forward” and will use its strong finances for “inorganic” growth in sectors like telecom, reports said. “It took three decades for RIL to create an enterprise value of over $80 billion (Rs 370,000 crore). I feel hopeful and confident that RIL can accomplish value creation of a similar magnitude in less than a decade,” he said, while proposing 70% dividend or Rs 7 a share for 2009-10, at the annual general meeting held recently.

ECO DRIVE

Maruti wants to be greener Maruti Suzuki plans to introduce a CNG variant of its upgraded WagonR hatchback within the next three months, which could be about Rs 70,000 costlier than the existing version. The car maker plans to expand its portfolio of eco-friendly vehicles, which could see other models such as Alto, Eeco, Estilo and SX4 also powered by CNG fuel.

BUYING MODE

Maran boards SpiceJet KALANITHI MARAN, FOUNDER OF INDIA’S SUNTV NETWORK LTD, has bought a 37.7% stake in discount carrier SpiceJet Ltd. for as much as Rs800 crore. Maran paid between Rs to 45 Rs50 per share to buy stakes from billionaire Wilbur Ross and U.K.-based B.S. Kansagra, according to reports. He has offered to buy an additional 20% of the carrier. Maran has said there would be no change in brand SpiceJet after its acquisition by KAL Airlines owned by his wife and him. “No changes on brand (SpiceJet)for now,” Maran told a business television channel. Commenting on the management, he said, “I am happy with the existing management and the airline has done well even during recession.” On his future plans for the airline, he said, “We are looking at the expansion of SpiceJet in South.” 8

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SUN TV CHIEF MARAN PLANS TO EXPAND SPICEJET’S SERVICES IN THE SOUTH

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Obama calls for cohesive action US PRESIDENT BARACK OBAMA HAS ASKED the world’s top 20 economies to work together to boost reforms and take aggressive actions to repair the worst global financial crisis since the 1930s, according to a report. In a letter Obama told the leaders of the world’s top economies including India, China and Russia: “Our highest priority in Toronto should be to safeguard and strengthen the recovery,” said an IANS report. “Together we designated the G-20 as the premier forum for international economic cooperation,” he wrote reminding the leaders of their key role. “It is important that the G-20 demonstrates its continued determination to work collectively to address the renewed challenges facing PRESIDENT OBAMA WANTS COUNTRIES INCLUDING INDIA, CHINA AND RUSSIA TO HELP STRENGTHEN the global economy,” the report quoted the letter. ECONOMIC RECOVERY. He also called for a commitment to “sustainable” public finances saying he was “concerned by weak private sector demand and continued heavy STEEL KING reliance on exports by some countries with already large external surpluses. “ “We need to commit to restore sustainable public finances in the medium term. And we should complete the work of financial repair and reform. LAKSHMI MITTAL HAS BEEN NAMED A VISIONARY BY FOR Obama said in his letter. tune magazine for extending support to help Indian athletes win Obama’s call for financial stimulus to restore the Olympic medals. The league of eight individuals also features economy in “the medium term” comes at a time two other Indians--Rikin Gandhi, the chief of New Delhi-based when many European nations are cutting spending NGO Digital Green, and Indrani Medhi, an executive at Microin order to reduce budget deficits. soft India, a Press Trust of India report said. “Resolving ongoing uncertainty about the transElaborating on the “The Fortune Global Forum Visionaries” list, the parency of bank balance sheets and the adequacy magazine said it set out to find “eight trailblazers whose innovative of bank capital, particularly in Europe, will help contributions to emerging markets and developing nations are as reduce financial market volatility and the cost of significant as they are universal”. borrowing,” he said. The NRI billionaire has found a place in the list as the founder of “I also want to underscore that market-deterMittal Champions Trust, which supports Indian athletes in as many mined exchange rates are essential to global ecoas six sports, the report said. The publication said the England-based nomic vitality. The signals that flexible exchange chief of the world’s largest steel company ArcelorMittal plays a pivrates send are necessary to support a strong and otal role in India’s ongoing quest for the Olympic metals. balanced global economy,” said Obama without “According to Mittal, the goal of the Mittal Champions Trust is to specifically mentioning China. identify, support and enhance the performance of talented up-andEconomists worldwide have criticised China for coming Indian athletes in six sports: track and field, shooting, wresrunning huge surpluses, a consequence of China’s tling, archery, boxing, and squash,” the magazine noted. rigid exchange rate, according to the report. The trust, started in 2005 with an initial funding of $9 million, sup“We worked exceptionally hard to restore growth; ports over 60 Indian athletes, including the Olympic gold medalist we cannot falter or lose strength now,” Obama said and shooter Abhinav Bindra. describing it as “a time of renewed challenge to the The Rikin Gandhi-headed Digital Green teaches farmers in small global economy”. villages the latest agricultural techniques with the help of multimedia “To support the recovery and strengthen the presentations and personal demonstrations, according to the report. ability of our financial systems to deliver needed Quoting Gandhi, the magazine said, his effort is “ten times more credit, we must maintain the momentum of finaneffective per dollar spent in converting farmers to better farming cial repair,” he said offering an action plan practices than more traditional approaches”. of issues.

topline

APPEAL TO G-20

Mittal on Fortune’s visionary list

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i think

Facts & Trivia

ZODIAC SIGN: Cancer PAST EMPLOYER: Shaadi.com FAVOURITE BOOK: Business Plan by David Lloyd FAVOURITE HOLIDAY DESTINATION: Vankaner, Gujarat

PRASHANT THAKAR V-P, SUVIDHAA INFOSERVE, says it is crucial to design a smart and flexible annual operating plan.

WHILE WE ARE ON THE EVE OF completing the first quarter of financial year 2011, many of us are busy compiling reports on company performance in the current quarter against an annual operating plan (“AOP”) agreed at the start of every financial year. Therefore, the stress is on variance analysis and on reasons why either revenue targets are short or why we over-spent on a particular expense. After all, now, every company understands that “the devil is in the details”. While I was doing this routine ritual of an analysis, I wondered if the role of the chief financial officer is limited to doing a post-mortem alone or should he also see a business situation based on economic conditions? What I realised is that all this starts with designing a smart and flexible AOP. I think the AOP exercise should not be limited to making an Excel calculation by projecting and extrapolating numbers based on historical informa10

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tion available with the CFO. In fact, it starts much before that. Not only can an “Excel”-based AOP prove to be a ruthless weapon, which can hamper the growth of a company, it can also completely blow off the company even before decision-makers realise what’s happening to them! Recently, I got an opportunity to witness both these scenarios and I believe it was an exciting experience that one can learn from in the field of finance.

It is imperative that CFOs see AOP reviews not merely as postmortem, but as analysis based on economic conditions.

AOP AS BUSINESS BAROMETER Revenues are forecast based on historical information; this widely takes care of key parameters which may impact revenue growth, among other things— some of them are outlined as seasonality, marketing spend, product capability, hiring of right talent and technology enhancements. In order to ensure that expected revenues are achieved within the budgeted spend, the execution exercise starts as explained below: The human resource department starts hiring the right talent, the marketing team gears up several campaigns (both above the line as well as below the line), and the technology team is put on alert to accommodate the growth; hence it ties up with service providers for contracts. While this was happening based on AOP, we, at our company, started monitoring each activity to make sure that we don’t end up getting into long-term

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contracts with parties. Hence the finance function’s activity at the company in this regard was planned as follows: On hiring: Hire 30% “in-house resource” and keep 70% “outsourced resource” with a contract obligation of three months and with a few conditions like the following: 1. Contract staff can’t be deployed for one year on any other competitor’s project once the contract is over. 2. If a company wishes to employ contract staff, liability of the firm is limited to paying a one-time fixed fee. 3. Once hired by the company, consultants can’t poach them for the next two years. On marketing: It was planned that the company won’t run big advertisement campaigns that go on for more than two months. At the same time, several deals were planned with the company’s partners. This was based on cross-advertisement opportunities to minimise spend and optimise visibility. Even when the company had to invest in the making of a TV commercial, it was optimised by doing voice-overs of the same ad in different regional languages, which helped the company target different audiences at the minimum cost possible. On technology: The company negotiated for a long-term contract with payment terms on quarterly basis as opposed to paying 100% advance, thereby hedging the risk of ouster of surplus cash from the company. The result was obvious. The entire company was conscious of spending money for the short term and each department evaluated the results at regular intervals.

It’s critical that CFOs not only coordinate with business units, but also get all functions on a common dais to get others to understand the objectives of the AOP review. AOP AS BOTTLENECK TO BUSINESS Let me now tell you about an interesting phase the company had gone through. At one point, I realised that AOP had turned into a bottleneck, ruthlessly derailing growth and innovation. While the company put a lot of effort in building optimistic revenue plans, it failed to nail down a detailed budget for its function-wise expenses which are often observed to be delinked from revenue, creating a hurdle at the time of execution. Some of them were: 1. Bottleneck between functions: The human resource department’s focus is always on hiring as per AOP, but the main point which often never gets asked is “what is the administration department planning for building infrastructure capacity to accommodate new hires?” The administration department cannot build new facilities merely for a few hires in order to keep control on spend as per AOP. Whereas on other hand, the worry for HR is that they would need “a sitting” even for one hire in the company. These conflicts invariably result in a loss for any company which has not been able to leverage the desired productivity from employees. 2. Bottleneck between business units: If there are requirements of employees from various fields having tasks that are interdependent between busi-

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ness units, then cases of conflicts are much bigger. Say HR is working without an idea of the number of employees to be timed for hiring in the right proportion and mix in order to gain maximum out of resources. For example: Between the technology and product teams, if the requirement is of 20 and 10 employees respectively, and HR has hired five employees of the technology team, then possibilities are high that the new hire from the tech team will have very little to do as no new product is available in hand to develop due to resource not hired at the product team. In a reverse case, if five employees at a product team are hired, then they will start building products without doing a feasibility study with the technology team. Hence, to overcome all these conflicts, it’s very critical that CFOs not only coordinate efficiently with business units, but also proactively get all functions on one common dais to get others to understand the objectives and outcome of the AOP review. Also, it is very critical that while financial executives capture figures and the science behind them, they also draw a clear geometry between functions and visualise execution difficulties each will face. I personally feel that AOP analysis is an exercise more to do with challenging every assumption and getting challenged on all demands or expectations. If written with such a clear objective in mind, an AOP review could prove to be an excellent business growth barometer for any company.

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COVER STORY

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In the past 20 years, the Indian CFO has been a corporate superhero, able to leap over every new obstacle. But has he gone too far? BENNETT VOYLES

SINCE LIBERALISATION, THE role of the Indian CFO has grown more

and more important. Whether the company needed its enterprise planning software managed, currency risks hedged, new capital enticed from abroad or a cross-border merger arranged, the CFO rose to the occasion.

But look out, Superman: Unlike Clark Kent, who never needs to file a story when a super-duty calls, the Indian CFO remains the company’s guardian of liquidity and financial control. At the same time, the piling-on of so many new duties, particularly the increasingly popular practice of using futures and derivatives not just to hedge risks but also to speculate, could lead to trouble, especially if boom turns to bust.

MAN!

ANIL T

Mild-mannered recorders Past performance is no guarantee of future results, as the investment boilerplate often says. Yet looking back at where CFOs began in the early 1990s and the level of expertise they have now reached suggests that Indian CFOs would not be a good group to bet against. Two decades ago, under the License Raj, the CFO was a vital function, but not necessarily a key decision-maker at the company. “Previously, a robot could have done the job,” says Ishaat Hussain, long-time finance director of Tata Sons. “Today you’ve got to be a nimble-footed, fast-acting human being.” Global competition gave the CFO many important new jobs beyond bean-counter-in-chief, almost overnight. “The CFO had to cease being a mere bookkeeper and change to being a strategist, a risk manager, a capital raiser and a partner in business decision making,” recalls T.V. Mohandas Pai, CFO of Infosys Technologies from 1994 to 2006 and now its director of human resources. “He also had to manage the expectations of investors and the demand for better and higher quality financial information and more transparency. He was constantly in the public eye and rewards were immense and punishment brutal,” Pai says.

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COVER STORY | LOOK OUT, SUPERMAN!

The CFO role now embraces many tasks that weren’t part of his job description before liberalisation, says Robin Banerjee, CFO, Suzlon Energy. “The role has moved from routine to strategic, from simple accounting and financing to miscellaneous areas of operations.” Supervision of IT, for instance, strategic planning, and procurement, and administration, now often falls under the CFO’s purview at many companies. Since 1991, almost everything but selling and manufacturing, research and development has become part of the CFO’s job. In the future, Banerjee says, he thinks there is a possibility that HR may even come under the CFO’s purview at some companies. (Indeed, this might sound far-fetched, but it’s actually already the case at Larsen & Toubro, where Y.M. Deosthalee has long worn both hats.) Pai, however, doubts that human resources is next. “I do not think the CFO’s empire will expand. HR is a specialised activity and very few can make the transition between jobs. The job will evolve to a higher level in scope with the CFO, the COO and CEO working together as a triad in managing the corporation, overloading the CFO reduces

GANGAPRIYA CHAKRAVERTI , BUSINESS LEADER OF MERCER HUMAN RESOURCE CONSULTING IN INDIA

“IT’S NO LONGER SUFFICIENT TO KNOW THE INDIAN REGULATIONS … NOW GLOBAL REGULATIONS ARE IMPORTANT TO FOLLOW AS WELL. CFOS TODAY ARE MORE INVOLVED IN SHAPING THE RULES, NOT JUST MONITORING COMPLIANCE.”

his effectiveness, as the CFO position is a specialised job,” Pai says.

Transformation The CFO’s role grew more complex because Indian companies grew more complex, according to Krishnamurthy Subramanian, an assistant professor of finance at the Indian School of Business. On terms of both assets and liabilities, most Indian corporates are wildly more complex than they once were. Pre-1991, a restricted market made it relatively easy for a company to succeed once it won its license. “Whatever was produced was sold,” Banerjee explains. The government’s decision to open the economy up to greater domestic and global competition changed all that. “It is survival of the fittest now,” Banerjee says.

The CFO’s role grew more complex because Indian companies grew more complex, according to Krishnamurthy

Subramanian, an assistant professor of finance

at the Indian School of Business. On terms of both assets and liabilities, most Indian corporates are wildly more complex than they once were. 16

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In the struggle that followed, many companies found they needed more capital, greater cost efficiencies, and often, a merger and acquisition strategy —all areas where the CFO might shine. Exposure to global competition also entailed the need for a global acquisition strategy, Subramanian says. It opened up new opportunities to look outside Indian borders for more potential sources of that capital. Growth of foreign revenue also created a need to manage foreign currency risk exposure. Many old jobs expanded as well. For instance, although liberalisation might be expected to reduce the regulatory burden, the growth of exports and cross-border trade actually increased the amount of regulation that the CFO had to monitor, according to Gangapriya Chakraverti, business leader of Mercer Human Resource Consulting in India. It’s no longer sufficient to know the Indian regulations, she says. Now global regulations are important to follow as well. CFOs today are more involved in shaping the rules, not just monitoring compliance, and have also become advocates for regulatory change and simplification. Finally, liberalisation also provided new opportunities not only to hedge

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LOOK OUT, SUPERMAN! | COVER STORY some of the business’ new risks with futures and derivatives, according to Subramanian, but for some, even an opportunity to turn the treasury into a modest profit center—a matter of pride for a function that traditionally had to regard itself as a cost.

Faster than a speeding bullet-point As his job description changed, so too did the CFO. At one time, the rules the CFO had to follow were quite narrow and strict, CFOs say. Now, the job requires a high level of insight into the business. Over time, older financial executives with chartered accounting background and focus either evolved with the times or were replaced by a new breed of versatile executives. One sign of how radically the job has changed is in the credentials it requires. Where once it was necessary to be a chartered accountant, today a finance MBA is becoming increasingly acceptable, according to Chakraverti. Increasingly, says Subramanian, CFOs are not accountants but former bankers. The people they recruit to assist them are also, increasingly, out of the banks as well, tapped for a variety of kinds of financial expertise, such as M&A and trading. “The CFO today is a very different person from what he was in 1991. The CFO has today become more global, he needs to travel overseas constantly to meet with investors, to study competition, meet with partners and understand and study the level of competition from various areas...it is a sea change,” says Pai. CFOs today must possess a variety of skills that were not formerly necessary, from chatting up investors to engineering mergers and acquisitions. “Today a CFO has to have a strategic bent of mind, an ability to analyse and use data, be widely read and well informed, have vastly increased risk management skills and above all understand macro events and their impact on the micro business situation,” he adds.

“BEFORE LIBERALISATION, A RESTRICTED MARKET MADE IT RELATIVELY EASY FOR A COMPANY TO SUCCEED ONCE IT WON ITS LICENCE. WHATEVER WAS PRODUCED WAS SOLD."

ROBIN BANERJEE, CFO, SUZLON ENERGY

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COVER STORY | LOOK OUT, SUPERMAN!

Management skills have also grown much more important than in the old days. “They have had to learn to manage the diversity of the role,” Dhruv Prakash, former CFO of DCM Toyota in India, and currently the head of Korn/ Ferry International’s talent and leadership consulting business in India. Pre-liberalisation finance professionals tended to be less capable managers, he says. “They were not very good at focusing on the more strategic stuff, and tended to get lost in the details,” says Prakash. All that extra value the CFO provides hasn’t gone unnoticed, and it has paid off in a variety of ways. For one thing, the CFO is now a core member of the executive suite, running the company alongside the CEO and the COO. For another, the job’s title has moved upmarket as well. The Chief Financial Officer title wasn’t used in India very much up until about seven or eight years ago, says Banerjee. Until recently, most CFOs were simply called finance directors, as Hussain still is. Respect has risen in more quantitative ways as well. Since 1991, average salary for the CFO of one of the top 1000 Indian companies has climbed from Rs 4-6 lakh a year ($10,639 at the current exchange rate) to Rs 97.9 lakh ($206,383), according to Omam Consultants. Surprisingly, perhaps, all this positive attention hasn’t turned the head of many CFOs. While mid-level financial executives will change companies, Prakash says, CFOs still tend to be promoted from within. “There is increas-

TV MOHANDAS PAI, HR CHIEF, INFOSYS TECHNOLOGIES

HE (CFO) ALSO HAS TO MANAGE THE EXPECTATIONS OF INVESTORS AND THE DEMAND FOR BETTER-QUALITY FINANCIAL INFORMATION AND MORE TRANSPARENCY. HE WAS CONSTANTLY IN THE PUBLIC EYE AND REWARDS WERE IMMENSE AND PUNISHMENT BRUTAL.”

ing mobility, but I think CFOs are still fairly stable.”

Krypton in the cocktail Financial acumen has been an important part of the rise of the reputation of Indian companies over the past 20 years. Tata and Infosys, for example, are now familiar names to investors the world over, and with the current investor enthusiasm for infrastructure, L&T may not be far behind. But could the Indian CFO’s creativity and acumen lead to problems as well? Today, the trading in commodities contracts and derivatives that have grown out of its hedging management expertise is creating a small profitable sideline for some leading companies, according to Subramanian. However, he worries that continued success could lead eventually to a situation where “the tail wags the dog”.

The tremendous range of activities

financial executives must manage is perhaps an immediate source of danger. After all, even

Superman can’t be in two places at once. How

do you manage so many new and expanding tasks while at the same time monitoring the old?

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Subramanian says the corporates are far from as leveraged as some of the Wall Street banks, and trade now at say 2-1 versus the 25-1 leverage of a Lehman Brothers. Regulators are also more conservative in India than the US, which should provide some restraint. Still, Subramanian says it is possible that a hedge fund-like programme could be wildly successful for awhile, then eventually run into trouble. Companies might push too hard to keep up with their peers, then have their bets founder on unexpected global volatility. Or, a trading desk led by an adept team could then hand off work to someone much less experienced and capable—a significant risk in a market with a limited supply of financial talent. The scenario: unsupervised youngsters, who don’t really understand the products they are trading, try to follow their supervisors’ orders and accidentally blow something up. However, the tremendous range of activities the CFO must manage is perhaps a more immediate source of danger. After all, even Superman can’t be in two places at once. How do you manage so many new and expanding tasks while at the same time monitoring the old?

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LOOK OUT, SUPERMAN! | COVER STORY

Prakash believes that you don’t. “I think managing multiple functions is likely to become less feasible because the complexity of each function is growing,” he says. Others say that the connections between functions are also growing more complex. Hussain worries that at many companies, controls are much less clear now than was formerly the case. Automation has made that basic aspect of corporate finance much faster and easier to monitor, but without a

paper trail, it is harder to document the course of particular transactions. “I sit on a lot of audit committees,” Hussain says, “and we wrestle with this question of who is accountable.” At many companies, controls are now much less clear than was once the case. “I feel that the control environment now falls within many stools and one has to be very careful that accountability doesn’t get lost,” Hussain says. The other important task that today’s caped capital creators sometimes neglect, Hussain says: liquidity.

Respect for CFOs has risen in quantitative ways as well. Since 1991,

average salary for the CFO of one of the top 1000 Indian companies has climbed from

Rs 4-6 lakh a year ($10,639 at the current exchange rate) to Rs 97.9 lakh ($206,383), according to Omam Consultants.

“There is an overemphasis on sitting in strategy sessions and talking up the stock price, but every morning and every evening the CFO must look at what his liquidity position is and what his solvency looks like,” Hussain says. “That is his main job.” Not everyone shares Hussain’s gloomy view. Another old hand of corporate finance, Y.M. Deosthalee, the long-time finance chief of Larson & Toubro, is much more optimistic. CFOs have managed to take on the new tasks without compromising their old responsibilities, he says—and in his view, are now wellprepared now for the biggest job of all. “CFOs have acquired capabilities of adding strategic value, being a business partner without compromising the traditional control and risk management functions. In my view with the business acumen which several chief financial officers have acquired they are good candidates for CEO succession,” Deosthalee says.

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Facts & Trivia ZODIAC SIGN: Aquarius PAST EMPLOYERS: Eicher, Escorts JCB LAST BOOK READ: The Maruti Story by RC Bhargava FAVOURITE HOLIDAY DESTINATION: Istanbul FAVOURITE BUSINESS LEADERS: NR Narayana Murthy, NEWSPAPERS HE READS REGULARLY: The Economic Times, The Times of India FAVOURITE CUISINE: Thai FAVOURITE MOVIES: Old Bollywood and Hollywood war movies

DIPANKAR GHOSAL

O Suzuki, Azim Premji.

FAVOURITE BANDS: The Carpenters, Beatles

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CFO PROFILE

AJAY SETH, CFO, MARUTI SUZUKI INDIA LTD

Driving FOR

Results Ajay Seth has played badminton ever since he was a teenager. Company insiders hope that his skills of a different kind—as a CFO zealously complementing other functions—will help Maruti Suzuki forge ahead in the face of competition from bigger rivals.… He is pushing the pedal to the metal. ULLEKH NP

MARUTI SUZUKI INDIA LTD MAY BE MILES AHEAD IN COMPACT HATCHBACK CAR SALES— the company has a 50%-plus share—but a number of new entrants have joined the race in a big way the past year, including such formidable names as Volkswagen and Toyota, and maintaining that lead is becoming more and more difficult. It’s always hard to tell who will win a race like that, but if the deciding factor is the company’s financials, they may find that CFO Ajay Seth is a hard driver to pass... “He never gives up,” says former colleague Rohit Sharma, head, corporate sales, JCB India Ltd. “He doesn’t hesitate a second in approaching executives of other departments whenever he finds a problem to work out a solution … he has made more changes that benefit the company than any of his predecessors,” says Pankaj Narula, chief general manager, sales, Maruti Suzuki.

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cfo profile

It’s going to be a tough ride. Despite regaining its market share which had slipped recently, Maruti Suzuki’s profitability, analysts warn, may take a beating due to factors such as competition, raw material price increase and so on. For sure, its hatchback market share remains unaffected despite a flurry of new launches across the segment—Honda Jazz, Tata Nano, Chevrolet Beat, Ford Figo and Volkswagen Polo since April last year. In fact, seven of the 10 cars sold by Maruti Suzuki, in which Suzuki Motor Corporation of Japan holds a majority stake, fall in this segment. Batliwala and Karani Securities India Ltd says that sustained competitive intensity is bringing about a “sustained downward shift in profitability. We believe that among listed names, Maruti is more vulnerable to commodity price increases … export profitability will also be lower due to the strengthening rupee and drop in exports to Europe”. Maruti Suzuki’s executive officer (marketing and sales) Mayank Pareek was quoted in the media as saying that the company has been able to retain market share because it held fast to three core values: value-for-money, trust and reliability of the product and styling. He, however, had added that aggressive competitive pricing of hatchbacks has not been able to shift Maruti’s focus from providing overall value-for-money. The company is yet to conclude negotiations with commodity vendors for raw-material supplies this fiscal but it is possible that Maruti could go in for another round of price hikes if input costs continue to remain high, he was quoted as saying in a report. Make no mistake, Maruti Suzuki is simply in the fast lane: it plans to boost its production capacity for passenger cars in India to 1.45 million vehicles a year in 2012—this is for the first time that this figure will top its parent Suzuki Motor’s output in Japan; Suzuki’s annual production capacity in Japan stands at around 1.4 million vehicles. Maruti Suzuki plans to invest $21-43 million this year to upgrade its two existing factories, increasing its capacity to 1.2 million units from about 1 million at present. Besides, the carmaker plans to spend $360 million to build its third plant in the country, which is expected to have an output capacity of 250,000 units a year when it begins operations in spring 2012.

LEAVING NO STONES UNTURNED To be ready for it, Seth the CFO takes no chances with the company’s cash. “We put our money in structures such as debt mutual funds, fixed deposits and debentures rated as Triple A, etc.… The challenge is to maximise the yield, while bearing in mind that you can’t put all your eggs in one basket,” says Seth, explaining the basics of his function in the company. He reviews the company’s investment portfolio every month. And this hard work has paid off. “In 2008-09, when there was a liquidity crunch and when property firms were hit, we immediately withdrew money from avenues with exposure to such firms … it helped,” he says. Though Maruti has been a huge marketing success, he says that the finance function’s role in the company is extremely crucial in that “it plays a strategic role … it is more like a partner in business than that of a bookkeeper”. It is his department that has to bring to the attention of the rest of departments about “what new practices should be brought into business, what should be done on the technology front, what is the best fit for each unit, where do incentive schemes fit … what gets us maximum gains”. Equally crucial is his department’s inputs for the company’s associates. “Though we don’t offer any direct financial assistance to our associates, we help them facilitate long-term and short-term capital … we help them in areas such as implementation of IFRS, we ask them to get rated by agencies and inform them of how rating helps them reduce the rate of borrowing.” It is all about helping everyone excel at individual levels because “good companies are those that adopt the best practices”.

“Our competitors will have to get their product strategy right for India. It is not easy.” — AJAY SETH

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COMPLEMENTING EACH OTHER Narula says Seth has brought in significant changes in the way the finance function complements other functions in the organisation—something that could make the difference between the company forging ahead and trailing in the face of competition. According to Narula, Seth’s interests lie not only in his department’s smooth functioning alone, but also that of the whole company. Like Sharma, Narula also says that Seth is a team person. “The

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6/24/2010 11:37:17 AM

THE CHANGE, THE CHALLENGE Until the government liberalised the economy in 1991, the carmaker had enjoyed a near-monopoly in the country’s carmaking business and as Seth puts it, “the focus, which was until then on production suddenly shifted to marketing”. Liberalisation led to the entry of foreign players such as Hyundai, Fiat, Mitsubishi and Toyota. Even Indian auto players like Tata Motors and Mahindra and Mahindra entered the fray. “Inside Maruti, RC Bhargava and Jagdish Khattar, who were at the helm then, managed this change well,” says he. Drifting back to competition that is intensifying now, he reiterates that “it is not easy for others to take us on because we have a great advantage … we offer everything that a customer looks for when and after he makes a buy”.

He went to Bharatiya Vidya Bhavan and then SRCC College where he did his BCom. Seth, who was in the school cricket team, is, however, more fond of badminton. He used to play the game regularly. “Whenever I get the opportunity to play badminton, I don’t miss it.… It is still my passion,” he says. Like badminton, his other more enduring passion is country music. He lists out the names with certainty and ease. Roger Whitaker, The Carpenters, Glen Campbell, Paul Anka … there are more names, including the Beatles. “I am crazy about music. Interestingly, my two daughters are fond of guitar and singing.” His older daughter is a student at Indian School of Business, Hyderabad, and the younger aspires to be a law student. Seth soon talks affectionately about his family. He says he

cfo profile

changes he has brought in are highly palpable and will help us stay cohesive.” Staying cohesive is what most companies can’t afford not to do when they brace for competition from new entrants. However, according to Seth, any such foray is tough for Maruti’s potential rivals in India. In the mass small-car market, we definitely have that advantage, he says. “We produce the right model at the right price.” Our competitors will have to get their product strategy right and it is not easy, he says.

Seth has brought in significant changes in the way the finance function complements other functions in Maruti, says a colleague—something that could make the difference between the company forging ahead and trailing in the face of competition.

GODFATHERS While he most often talks of challenges and opportunities that lie ahead, he also looks back with pride. It was his first boss Jayaram Easwaran of Eicher who groomed him and taught him about “people connect”. He calls former CEO of Escorts JCB, Rakesh Chopra, his mentor “who gave me business insights, threw challenges at me and supported me through thick and thin”. Chopra could even read Seth’s body language. “There were several occasions in JCB where, in board meetings, Mr Chopra will gauge my body language to figure out what I wanted to convey … that was a great example of compatibility and team work.” He also gives his vote of gratitude to SY Siddiqui and Nakanishi in Maruti for “empowering and guiding” him.

COUNTRY MUSIC, BADMINTON Born and brought up in Delhi, Seth finished his studies— chartered accountancy—in the national capital before joining Eicher in 1984.

has learnt the sense of determination he has from his mother who stood by him in what he calls “moments of crisis”. His wife, a student of home science, is a Reiki expert. “I have never been a believer of Reiki … one day I was going to the airport, and I had a very bad cold and headache, but by the time I reached the airport, I was ok. Then I asked my wife whether she did Reiki on me … she said yes,” he says proudly. All of a sudden, he starts to talk of business again. “I think it is very important to be proactive than reactive in business … if you don’t learn from other functions, you don’t learn connect. And without connect, there is no business,” he says. That is the sound of conviction, not of arrogance. This is conviction of a man who when he worked with Escorts JCB, a joint venture between the Escorts Group and the UK’s JCB, was sent on a mission that was considered almost impossible. His task was to demand a price cut from the officials of Perkins who, on the other hand, were determined to raise the prices of engines they were selling to his company. He talked, talked and talked. Finally, he won them over: they agreed to slash the price. “Seth is also known for his out-of-the-box thinking … people who may not agree with him in the beginning come around by the time he explains what he means by a certain decision,” says Sharma. As Narula rightly points out, “It is not always easy being Seth, because it is not easy to stay ego-free as you go up the ladder.”

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inpractice

forecasting THE SCIENCE AND ART OF FORECASTING

It cannot be a finance-only exercise, but it should be finance-led BY SATYA EASWARAN

PHOTOS.COM

orecasting is a key management lever for predicting and optimising business performance. But it is important that forecasting is not seen as a responsibility of finance; it can be finance-led; but ultimately it is an organisational responsibility that is often extended to collaborate with external stakeholders such as suppliers and partners. This has always been part of the broader CFO struggle to transform finance from an inward-looking function focused primarily on financial reporting and controls, to one that spends more time focused on strategic decision-making and value creation. Traditionally, companies have viewed forecasting as more art than science and it is becoming clear that a structured and disciplined approach is needed to address forecasting and performance areas. Letâ&#x20AC;&#x2122;s understand this in detail. Plan to Perform is a core operational focus area for organisations, the others being Order to Cash, Procure to Pay, Record to Report; it usually starts off with the strategic plan of the company which then serves as the basis for preparing budgets, forecasts and setting performance measurement parameters and targets. All feedback from performance monitoring is then incorporated to further refine subsequent strategic planning. If you are the CFO, or in the CFOâ&#x20AC;&#x2122;s chain of command, you will instantly recognise the importance of planning and budgeting processes in

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setting, measuring and tracking performance of your organisation. However, the traditional plan-to-perform process used in organisations does not leverage the full power of the process, severely limiting its effectiveness. In most companies, the linkages between each stage of the cycle are also not strong enough to maintain consistent information flow. The results are follows: a) The companyâ&#x20AC;&#x2122;s strategic plan and business drivers

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The key imperatives for refining the Plan-to-Perform cycle are:

A. UNDERSTANDING THE ‘DRIVERS’ FOR THE BUDGET Driver-based budgeting provides a framework to look at budgeted areas from a standpoint of key drivers that influence it. This prevents the budget from merely becoming an exercise in numbers, but allows management to understand the core reasons and justification behind the budget numbers. The budgets themselves are static and mostly seen as the organisations start-of-year wish-list for its annual end state, be it in the areas of growth, cost, revenues etc. and hence should be followed by an efficient forecasting mechanism.

Organisations should take a holistic view of the plan to perform process before embarking on costly technology implementations in reporting and forecasting improvement areas. B. INCLUDING THE EFFECT OF RECENT EVENTS IN THE PLANNING PROCESS The budgetary figures established through the budgeting process are static, and gradually lose relevance due to rapid changes in external environment.

C. FORECASTING FOR CASH Companies typically forecast for growth and driving down costs; but do not have a culture that incentivises departments to forecast for cash. This is becoming increasing important especially now when one cannot take liquidity and credit for granted.

D. ‘INTELLIGENT’ PERFORMANCE TRACKING AND MANAGEMENT Performance reporting should combine both quantitative (from existing financial & operational systems) as well as qualitative information (e.g. customer satisfaction grades from third party etc.) to provide custom scorecards for the management community. The following are required for this to be successful: a) The strategic goals of the company and corporate business drivers have to be cascaded down to establish respon-

Companies forecast for growth and driving down costs, but do not have a culture that incentivises departments to forecast for cash. This is becoming important now when one cannot take liquidity for granted.

sibilities and measures for various business units and cost centres and ensure alignment across the organisation b) The employee performance and incentives should be structured around the cascaded measures c) “Top down” approach to scorecards for various management roles providing insights into business performance, understand and debate on forecasting variance, establish accountabilities for future initiatives and finally, to incorporate the discussions and outlook to the future planning process d) The reporting should not solely be an internal focused effort but enable building trust externally with the investment community e) Integrated planning and financial management systems Most organisations do not significantly leverage technology during the Planto-Perform process, and rely primarily on spreadsheets. This is not only inefficient and unreliable, but also does not allow collaboration across the organisation. Companies should take a holistic and integrated view of the Plan to Perform process before embarking on costly technology implementations in reporting, MIS and budget/forecasting improvement areas. It is important that it is not an IT agenda alone and should be driven from the office of the CFO. An effective Plan-to-Perform process is in many cases a competitive differentiator in the marketplace, and is key to organisational success.

THE AUTHOR IS DIRECTOR, CFO ADVISORY SERVICES, kpmgsatyaeaswaran@kpmg.com JUNE 2010

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forecasting

get de-emphasised during the budgeting phase; the budgets themselves become a mere exercise in theory. b) The forecasting is poor and seen only as a responsibility of finance. Poor forecasting ultimately leads to an erosion of shareholder value. c) Although integrated planning and financial management systems are gaining importance; the technology solutions adopted by most companies are less than satisfactory as evidenced by the excessive use of office spreadsheets in this process. d) And finally, the reporting process is only a data snapshot and performs poorly in evaluating performance vis-àvis the key business drivers set forth in the planning stage.

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inpractice

innovation CUT TRANSACTION COSTS, BOOST MANAGEMENT CONTROL

Jayant Dwivedy offers tips on expense management solutions and looks at what drives companies to look for such options

hat is expense management? It refers to a system deployed by a business to process, pay and audit employee-initiated expenses. It includes policies and procedures which govern spending as well as the technologies and services utilised to process and analyse the data associated with it. The software to manage expense claims, authorisation, audit and repayment processes can be obtained from organisations that provide licensed software, implementation and support service. Expense management automation has two equally important aspects—the process an employee follows in order to complete an expense claim and the activity accounts the finance staff undertakes to process the claim within the finance system. Expense-management automation is the means by which an organisation can significantly reduce transaction costs and improve management control while logging, calculating and processing corporate expenses. Independent research evaluating the use of automated expense management systems (EMS) has confirmed that the cost of processing an expense claim significantly reduces as the level of automation increases.

THE PRE-REQUISITES OF SUCH AN EMS SYSTEM ARE: PHOTOS.COM

The software provider should empathise with the business requirements of the client organisation and at the

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same time bring in innovation and best practices that drive the desired spend behaviour. The sponsors of an EMS implementation within an organisation usually display a visionary approach so as to capture the strategic needs of top management which they represent and the business at large going up to the front-end users (some of them in remote locations). Again it is a case of internal customer centricity! Here are a few responses from a few users: Neeraj Basur, director, finance, MAX Bupa Health Insurance, had the following to add about the company’s early implementation of an enterprise solution which he adopted

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*RW D

Expense management automation has two equally important aspectsâ&#x20AC;&#x201D; the process an employee follows in order to complete an expense claim and the activity accounts the finance staff undertakes to process the claim within the finance system. transaction-level budget control has been at the Bangalore-headquartered Allergan India. On his part, K T Rajan, director, operations, IS & Projects at Allergan India, says, â&#x20AC;&#x153;Expense management is a prime area of concern for most organisations. More so in the pharmaceutical industry where in a large portion of the actual spenders are on the â&#x20AC;&#x2DC;fieldâ&#x20AC;&#x2122;. The entire process from budgeting through to payables is complex. This gets further compounded by the fact that people are always on the move and most activi-

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innovation

and sponsored: â&#x20AC;&#x153;It was vital for Max Bupa as a start-up health insurance venture to create awareness and consciousness across the organisation on the need and importance of managing our cost judiciously and in the most prudent manner. We also wanted our people to get their productivity focus in place by eliminating time and effort spent on non-core, non-value-adding administrative activities such as expense management paperwork. We want to inculcate the culture of prudent cost management to obviate the necessity of â&#x20AC;&#x153;cost cuttingâ&#x20AC;? at any stage. We believe BAZ provides us the required platform for our cost management requirementsâ&#x20AC;Ś.â&#x20AC;? Hundreds of categories of common spend items across most organisations make a robust and standard EMS an important ingredient in the success story of spend control. The pharmaceutical industry, too, has the perennial problem of driving expense management at its sales-representative level. One such innovative implementation that has allowed

ties are dynamic, have short life-cycles and need to be executed swiftly. The workflow has to accommodate quick turn-around while maintaining the process rigour, with adequate checks and balances. BAZ solution enables us to manage the entire process from budgeting through to payables, online, real-time â&#x20AC;Ś A host of aggregation is possible from the transaction level which facilitates extensive analysis and intelligent decisions. Overall, it enables us to spend smarter realising optimal benefits.â&#x20AC;?

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inpractice

Compliance and productivity improvement has been the key driver for the EMS rollout at Bharti AXA Life Insurance. And the company’s CFO V. Srinivasan said: “BAZ has helped us bridge one of the fundamental internal control requirements of procure-to-pay system. For an industry which inherently deals with a large number of employees that too spread across the nation in as many branches, a system like BAZ is vital. We have now rolled out every module of BAZ and have activated most of the control features. When rolling out the solution, managing the change was our key challenge hence we have kept on communicating and holding road shows to overcome this challenge. We have observed that our turnaround time has improved and the size of the accounts payable team has continually come down leading to significant benefits.” “BAZ application addresses the service industry needs of multi-location controls, paper less processing and tracking/ adherence to turnaround times [ from requisitioning to ordering to receiving to invoicing to pay-

INNOVATION AND BUSINESS LEADERSHIPSYSTEM DRIVEN EXPENSE MANAGEMENT BY ULLEKH N.P. (EDITOR CFO MAGAZINE) EFFECTIVE BLENDING OF SYSTEM and review mechanisms: A narration by Manish Bazari, Director, Empronc Solutions (for a Customer in the Travel Industry who actively use BAZ® to reduce costs and enhance compliance ) The global down turn in the third quarter of 2009 forced organizations to take a deeper look at their cost base and to deploy effective and sustainable cost control measures. Confronted with such a scenario, the Customer embarked on its journey of reducing its operating costs through a rigorous process of analysis, reviews and change management. The CFO put BAZ to use in their all India Operations. The effective use of BAZ, an integrated Expense Management Solution, along with its automated Budget Control enabled the company to have cost control on a real time basis. The solution deployed across all company locations took cost control to the transaction level. The software is used by at least 500 direct users of the company for a variety of business transactions around Spend Management. The cost focus supported by an open culture, team work and early use of an automated solution enabled a mid teens reduction in operating costs. Mandating that the system is used for all types of expenses such as direct purchase, services, employee reimbursements and travel enabled the desired level of control to affect savings and to deliver the cost reduction targets. Integrity of the budgets was ensured in a changing environment. The visibility achieved through the system and the e-alerts reduced the dependency on people for compliance. The organization is now focused on sustaining the benefits and at the same time keeping expense growth lower than the growth in the business. The ease of use of the software (on account of the user friendliness of the screens, workflows and system driven controls) provides a platform for scale-up on size and the use of other value adding modules to enhance capital efficiencies. As is the case with every growing organization, compliance and transaction productivity become paramount. This again was well achieved through the BAZ system that provided for the system implementation of the company policies, on line document control and the process work flows to support Corporate Governance philosophy of the company. The sheer comfort of being audit ready at any time is by itself a big step…and through system approach and solution, the Customer is getting there.

An automated solution definitely enables an organisation to have greater management control, bring transparency to expense spend and improve adherence to corporate policy. ment] seamlessly and cost-efficiently.” prophesizes Raman Garg, Deputy CFO, MAX New York Life. Sangramjit Sarangi, head, finance, SBI Life Insurance Company Ltd., adds that “BAZ expense management system has helped in tracking our expenses at granular levels (cost centre, location, employee, item), providing better and qualitative data for deci28

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sion making and controls. It also acts as a repository for the financial policies of the company ensuring compliance for all types of expenses with strong financial process workflows. We have been able to effectively execute controlled decentralisation of expense payment processing.” Well, finally, success comes through appropriate selection of a robust

enterprise-wide EMS tool, a focused and well-sponsored top-down implementation and cross-functional team work within organisations. We will be a leader in the enterprise spend process management space by focusing on customers, our people and our core values. We are ready to compete with the best in the world, in the space of expense management and control. BAZ delivers “compliance by design” and helps organisations manage spend by integrating what is not achieved in most cases—the bottom of the pyramid.

JAYANT DWIVEDY is CEO, Empronc Solutions at jayant.dwivedy@ empronc.com

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inpractice

leadership MEET THESE FAB FOUR FEMALE FINANCE LEADERS Talk about clarity, collaboration and decision-making in extraordinary times.

PHOTOS.COM

merging from the deepest recession in a generation—when many organisations have been fighting for their very survival—the recommendations of financial executives have taken on much more weight. Added to this, there has been significantly less time to reflect on some very difficult actions that have needed to be taken. If nothing else, the past year-and-a-half has taught that not heeding sound financial advice — provided by the company’s trusted finance executives—can lead to an organisation’s undoing. So what lessons can be learned from how top financial executives arrive at their most difficult decisions? Where do they seek information? What details inside their companies demand their attention? Which facts are most important? What trends are they tracking in their industry? To whom do they listen? And, if these executives are women, are gender differences and approaches to problem-solving evident? How do they identify key trends? Once convinced they’ve reached the right decision, how do they persuade others in the C-suite that the path must be accelerated, slightly altered or completely changed?

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BY ELLEN M. HEFFES AND PATRICK SWEENEY

CLARITY ABOUT FUNDAMENTAL VALUES Cindy Gustafson joined The Seattle Times in the fourth quarter of 2008, a time she characterises as “nothing more dramatic in my career”. The 113-year old family publishing business—the largest independent, locally owned metropolitan newspaper in the United States—was experiencing challenges as serious as any in its long history. Since then, she has been a steady and reliable leader providing counsel, discipline, support and data that were and continue to be essential in the company’s survival. In February, the company restructured its debt, which gave

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Hearing inputs from key leaders across the organisation is an essential step in order to assure decisions made would result in the company’s critical cash management objective. measures would take months to take effect, and it sort of seemed like there was no way out,” she says. So she began to focus on immediate cash generation, putting together for senior management a short list of actions that could have immediate results. “I thought it best to just focus on a couple of things and report back frequently on positive outcomes, and company management responded immediately and effectively,” she says. The plan had to keep in mind the short-term goal of getting cash up to allow for other more complex cost-cutting measures. One of the short-term measures was personally calling vendors and renegotiating terms without damaging relationships. She also put customers on credit cards in order to get paid 30 days faster. One skill she personally needed to address was collaboration. “I am naturally independent, and so my innate tendency is to make my own analysis, which I can do quickly, and then come to a decision,” she says. This time, however, she sought opinions from others with views different from her own and used those “to help shape better, sounder decisions,” and to ensure buy-

“Cash was tight, any cost-cutting measures would take months to take effect … I thought it best to focus on a few things and report back frequently on positive outcomes, and company management responded immediately and effectively.” —Cindy Gustafson, The Seattle Times

in regarding tough measures. “Being in finance, we have a pretty good overview and a big picture, which others might not have,” says Gustafson. On the other hand, hearing input from key leaders across the organisation— particularly areas of the business she may be less familiar with—such as aspects of operations or production— was an essential step in order to assure decisions made would result in the company’s critical cash management objective. For Gustafson, maintaining fundamental values at all times is vital, “because as a financial professional, they will be tested. And it’s much easier to make those decisions if you’re not also questioning your values at the same time.” For her, those values are expressed in the qualities she holds most dear: Being independent, having integrity and being open about what she knows. So, whenever she brings a proposal or finding to the executive team, she shares it so that they clearly understand the risks and returns, how she arrived at her recommendation and all the implications that agreeing with her advice could have.

KNOWING THE FACTS Eileen Burza, the CFO of Perdue since 2001, began her career in finance in 1970 as an auditor with KMG Main Hurdman (now KPMG). She had originally planned on being a high school chemistry teacher (as many women “of her generation” planned careers in teaching), yet she eventually graduated college with a degree in math and computer science and a minor in accounting.

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publisher Frank Blethen the breathing room to say, “The Seattle Times is here to stay. A year ago, rumours suggested that our days were numbered.” Negotiating the debt meant that the newspaper will be able to stay in business—though it will be quite different. In the past two years, costs have been cut by 34%, including employment being reduced to 1,245 employees, from 1,919. With such a backdrop, one would wonder why Gustafson—a CPA and FEI member of the Washington State Chapter for 25 years—decided to take this job. She’d previously been an independent consultant and held key financial positions at a biomedical research institute and a Fortune-500-sized investment company. She says she accepted the challenge because she felt she could play a meaningful role in helping to save a venerable institution. “It is one of the first newspapers in the U.S. to implement new software that is placing news content on smartphones and other electronic formats.” So it was the paper’s rich history, “a need for top-quality journalism to help preserve democracy”, combined with the owners’ drive to be innovative that engaged her interest. Gustafson didn’t know much about the business of The Seattle Times, but soon found that revenues had dropped precipitously—as a result of the effect of the deep recession on advertisers—and the company, like most companies at this juncture, was unable to borrow money. “Cash was tight, any cost-cutting

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Cindy J. Gustafson, director of finance and controller, of The Seattle Times Co.

“Maintaining your fundamental vaues is important, because they will be tested, and it’s much easier to make decisions if you’re not also questioning your values at the same time.”

WHILE THE FOUR

women profiled here have different approaches, it’s clear that the best decision-making involves four key attributes—some of which are derived from professional training (such as the fact each of the women started her career in an accounting/auditing environment).

Eileen F. Burza, vice-president and chief financial officer of Perdue Farms Inc.

“Decisions are only difficult when I don’t have all the facts or as much information as I need.” Sometimes, she concedes, you can’t get all the facts.

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“I’m a visual person, so I get experts and I start drawing pictures of the problem ... everyone has a chance to give us all the pieces that we consider before making the final call.”

Andee G. Petersen, CFO of Kaiser Foundation Health Plan, Mid-Atlantic States Region.

“Collaborating, ultimately, takes clarity—and an environment that encourages teamwork, rather than hero-worshipping.”

OTHER ATTRIBUTES DERIVE FROM THEIR INDIVIDUAL PERSONALITIES:

1. THEY ARE clear about their values— a trait that becomes very important when values are tested, as they have been since October 2008.

2. THEY FIND solutions by getting the facts. It starts by gathering all relevant data, then sifting through to determine which information is most important.

3. THEY SHARE advice so that others are able to get it. They don’t expect other executives to learn their language. Instead, they try to connect with others where they are. Or they create new analogies that others outside of finance will understand.

4. THEY ENJOY collaborating

with others—which doesn’t mean they will compromise. If need be, they will push against the crowd when the answer they have is the right one for the company.

She worked with a medical-products company, Square D Corp., and then as CFO of Seimen’s Building Controls Group, a high-tech company that designs, manufactures and installs complex HVAC and security systems and related products. It was quite a different world from her current role in 32

Carol B. Zoellner, corporate controller for Hallmark Cards Inc.

agriculture and food which, she says “is a much lower-margin business.” Over the past two years, her industry hasn’t been spared by the troubled economy. Burza, a CPA and member of FEI’s Baltimore Chapter, says the cost of product for the $4.6 billion, Salisbury, Md.-based Perdue has gone up

more than 25% because of grain, which has risen in the 30-40% range. Grain is the major input cost in the production of poultry. In this environment, Perdue, along with the rest of the poultry industry, has had to “learn how to absorb those costs, because it cannot raise prices on its products,” explains Burza. The biggest lesson she’s learned in her career is that “you have to distinguish between the things you can impact and change and the things you can’t”. When first starting at Perdue, she says, one of the first things she did was to help the business segregate market influences. “That way, when we look at our P&L and we look at our bridge to our plan, or we look at our bridge to last year, we can segregate those things that are not in our control—either pricing in the poultry markets or pricing in the grain markets—and, instead, we are able to concentrate on only those things we can control,” she says. If you worry about the things you can’t control, “you can drive yourself crazy”. When it comes to decision-making, Burza says “there are decisions that you have to make that you don’t like to make because neither choice is good, nor are the consequences what you want. “You’re not happy that you have to decide to shut down a plant or you have to decide to lay off people. These are not difficult decisions to make, just ones you don’t enjoy or feel comfortable making.” She characterises a decision as “difficult” when she doesn’t have all the facts or information she needs. So where does she get her facts? Sometimes, she reflects, you can’t get it all. For instance, her business is greatly exposed to grain markets. “You’d like to know whether the crop is going to be good or bad, but most times you can’t know that. So you’re always making a risk-based decision— what is the probability of A? What’s the probability of B? Or C?” Thus, she says, decisions have to be made on the basis of the information you have—at

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SHARING ADVICE SO OTHERS GET IT Carol Zoellner joined Hallmark in 1988, having begun her career in finance and then the demand-planning function for product development (now known as marketing). She moved back to a finance post and is now corporate controller. She was previously an auditor with Arthur Young (now Ernst & Young LLP). The Kansas City-based Hallmark, known chiefly for its greeting cards but also gift wrap and more, including owning Crayola Crayons, is a $3 billion enterprise. The company just celebrated its 100th anniversary. As such, Zoellner says there’s been much reminiscing about its rich history and the Hall family, whose third generation is running the family owned company. Until the recent recession, Hallmark had never laid off employees. Unfortunately, she says, greeting cards are a discretionary item and as a retailer the company “has definitely felt the impact of the recession”. Sales, which began falling in 2008, fell

significance. “If you are flying high and everything is going great, then the financials are not the focus of attention. But when things get a lot tighter—like they are now—everyone becomes keenly interested in what the numbers are saying,” says Zoellner, who is an FEI member with the Kansas City Chapter. Prior to the “culture shift”—remaining cognisant of the company culture— she notes, “we’ve had to be creative in how we make the case for change and create a sense of urgency.” But last year changed that. For the first time, the 14,000-employee company experienced about a 10% layoff across all divisions. Much of it was voluntary, says, Zoellner, as many retirement-ready employees took severance and left. “It was a very difficult thing to do,” she says, noting that at other difficult times—a fire burning the building to the ground and the effects of the Great Depression, for example—Hallmark had survived without any layoffs.

Carol Zoellner’s direct approach helped. She asked questions in a challenging way, though she certainly intended no disrespect. When she felt strongly about a decision, she questioned people’s premises. deeper last year, particularly as key dealers were “hit hard by the credit crunch.” This year, she adds, “we’re being cautiously optimistic.” The company has been buoyed somewhat by stronger results in its United Kingdom operations and at Crayola. Being privately held, the company’s culture is such that finances are not spoken about openly. Now, she says, there’s been more interest in both the numbers and in governance, giving the finance function increased

What kinds of difficult decisions has she had to make during her career, and how does she go about it? For one, she had to integrate two units following a reorganisation. That involved merging two groups that did basically the same things, but differently, and end up with one set of procedures. After “trying to take the best from both worlds, I simply had to declare. We didn’t have the benefit or luxury of sitting around and debating it any longer,” she says.

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the time. What’s important, she adds, is learning not to second-guess yourself. “If you honestly believe that you had all the data you were able to obtain at the time you made the decision, and that you made it based on gathering as much information as you could, then whether you bought grain and the market went up or down, you can’t go back and say, ‘I should have done better or I wish I had done better.’ You just have to keep moving on and say, ‘How can I change it from here?’ ” Another approach she uses is to always anticipate the worst outcome. “If you’re developing a strategy and you consider the worst thing that could happen, you’ll learn that it rarely does. But in preparing for it, you’ll be a lot happier about the outcome than if you don’t prepare for it,” says Burza. That thinking, she says, contributes to an image of her to some as a pessimist. “But I think it’s part of self-preservation. If you can think about the worst thing that could happen, and you know what you’re going to do in that situation, then you’re ready for your back-door exit scenario,” she explains. Finally, she says, when considering a decision, it’s a matter of keeping in mind how important it is to the organisation. “The more important, the more people she will discuss it with,” thus providing more information. She encourages her staff to communicate up. “I remind them that just because people are executives, doesn’t mean that they are necessarily smarter or better informed. We all need as much feedback as possible. So I try to encourage an open dialogue.” As a result, she believes the executive team she’s assembled “has prevented me from making mistakes. I’ve thought I was making a decision with all the information, and someone pointed out to me something I didn’t know.” It’s easy, Burza says, for executives in organisations to be insular. “So I feel that one of my major responsibilities is to constantly make people feel comfortable talking with me.”

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Zoellner describes her distinct and unusual way of communicating from a financial perspective. She will draw pictures. Literally. As a visual person, she explains, “when we have a conundrum, I try to get the experts in the room and I start drawing pictures of the problem. They coach me, and they get up and add to the picture. Then somebody says, ‘No. The line goes like this.’ And, we end up with either a continuum or a diagram or something. But it is usually a clear picture. And something we all agree upon. “It’s very collaborative, and for me, it’s also very visual,” she says, adding “these are not pretty pictures. A lot of them have inputs and outputs—where philosophically we can go in this direction or that, maybe start high, move to a lower level, etc.” Basically, she notes, it’s a matter of getting the right people in the room — those who know the most about the subject and “making sure everyone has a chance “to give us all the pieces that we need to consider before we make the final call.” She says colleagues will often tease her because she has papers with draw-

Andee Petersen says being collaborative is fundamental to her nature. It dovetails perfectly with “the matrix management and the partnership environments in healthcare”. says, though she certainly intends no disrespect. When she feels strongly about a decision, she’ll question people’s premises. Sometimes she’ll hear: “I’m glad you asked that question. And I’m also glad I wasn’t the one you asked.” These instances, she says, are normally related to marketing or strategy issues, not finance. In the end, should her intensity inadvertently offend anyone, she’ll send them a greeting card. A Hallmark card, of course.

COLLABORATING, NOT COMPROMISING Though she started college as a piano major, Andee Petersen switched to business and became a CPA and an auditor with KPMG. She decided to focus her aspirations in the health-care industry

Part of what Petersen learnt in working with physicians is to start with the gathering of information and invite people to be part of the decision-making process early on. ings and words underscored all over her office floor. In the visuals, she’ll highlight similarities and differences and then step back and look at it — with others, again — until she has a direction. As a result, the people on her staff say the quality that most defines her is her ability to bring a new perspective. Her direct approach — asking questions in a challenging way—may sometimes come across as too direct, she 34

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because, as she says, “there’s something to be said for working in an area that makes people’s lives better.” Petersen, who is an FEI member with the District of Columbia Chapter, then spent a decade at a large health provider in California and moved to Kaiser Permanente, where for the past six years she’s been CFO in the Mid-Atlantic States region. Kaiser is one the nation’s best-known managed care companies,

and the one that President Barack Obama recently cited as a model for health care, noting the care his grandmother received when she was a patient at a Kaiser facility. Petersen says that being collaborative is fundamental to her nature and the way she works with others. It dovetails perfectly with “the matrix management environment and the partnership environment that you have to have in health care.” Working with physicians, she explains, requires quite a lot of partnership and collaboration. Her approach, she says is one that “seems to work best in this environment.” So how does she collaborate on difficult decisions with tight deadlines and with others who have very strong opinions? Part of what she’s learnt in working with physicians, she says, is to start with the data and gathering of information and invite people to be part of the decision-making process early on. “That produces better results, because you don’t get all the way down the road and find out that someone else had a different insight into how to look at a complex problem and if we had known that earlier, we might have even defined the data that we need differently. So you get better answers. But I think you also get better buy-in that way,” says Peterson. At the root of that thinking, she adds, is that “you are focused on what is the best answer and not focused on who gets the credit or who has the power.” To make all of this work means “being comfortable enough in yourself to step back and say, ‘This is really about getting the best answer and getting there in a way that may be a little more complex and not always

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handling tough decisions, as have the careers of all finance executives, but that one was probably the toughest because of following in the footsteps of a highly respected predecessor. Petersen says that was one of the times that “I really pushed the collaborative. I had to take a much stronger role in that situation of keeping the realistic financial projections in front of people. Part of how I cope with such situations is to hold myself accountable for looking at all of the options.” “A collaborative approach requires some disagreement along the way to make sure you’re not having groupthink—and thus missing some important points.”

solves problems by identifying the facts that need to be ascertained, uncovering trends and conveying what is important to the rest of the executive team. While each of the four profiled here trained as auditors, they also rely heavily upon their inherent personality qualities—including a need to get things right, a desire to bring others along who come from completely different perspectives and a confidence that enables them to push forward with what they know is the right direction. They start from a place of being clear about their values. They find solutions by being fact-driven. They then rely upon their interpretive skills to share their advice so that

As organisations and the economy in general emerge from the global financial crisis, success will depend, more than ever, on finding the right balance between what is and what can be. That makes individual lessons very important. Being collaborative, she explains, doesn’t mean you just go along with the sense of the group. “In this particular case, I had to bring them back from a decision they had already made. It took a firm financial analysis of the situation, sensitivity to the feelings of others and a genuine collaborative approach,” says Petersen. As a collaborator, she views her role as “the Definer”. She interprets the data, analyses the business environment, takes into account the broader situations and then articulates the situation in a way that promotes a better understanding of the real problem that is being grappled with—so that the team can then focus on the best possible solution. As top financial executives, each of the four individuals highlighted above

other executives are able to glean what is important. And they accomplish their goals by collaborating — though they will challenge the status quo, when they feel it necessary and the right thing to do. As organisations and the economy in general emerge from the global financial crisis, success will depend, more than ever, on finding the right balance between what is and what can be. That makes these lessons all the more important.

ELLEN M. HEFFES (eheffes@financialexecutives.org) is editor-in-chief of Financial Executive PATRICK SWEENEY (Patrick sweeney@caliper.com) is president of Caliper, an international management consulting firm, based in Princeton, N.J., which, for nearly a halfcentury, has helped Fortune 500 and fast-growing smaller companies hire and develop top performers. © 2010 Financial Executives International

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as easy or quick as making a decision on your own.’ ” When trying to urge others with strong opinions to collaborate, one of the most important things Petersen has learnt is how to frame the problem. “If we acknowledge up front that we need to be efficient and have the initial discussions about being very clear about the problem and the context and the ramifications, then we can be effective.” She’s observed that misperceptions can cause acting-out, based on not having all the information up front. So people might get blindsided. What’s important “is to make sure that everyone knows the decision that needs to be made, the ramifications, who will be involved in making the decision, the process that will be undertaken to arrive at an outcome and whether they have all the facts and understand the timeframe,” she says. “Collaborating, ultimately, takes clarity—and an environment that encourages teamwork, rather than hero-worshipping.” Petersen has honed her collaborative approach over the years. It didn’t always work for her. She describes an instance at a job prior to Kaiser. She has just taken on the CFO role and learnt that her predecessor—who was well-respected and had been with the company a long time—had recommended a course of expansion that had already been completed. But when she conducted the financial due diligence, she found that “the expansion was never going to be profitable and was never going to be able to even cover its own incremental costs”. She was recommending that the company reverse the action and divest. So, as the new kid on the block, she had to go to corporate leadership and the board of directors and say, “While I know we’re already down this path, it’s already public … this is what the likely future is, and I believe we should reconsider this decision.” She says her career has been full of

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LEADERâ&#x20AC;&#x2122;S WORLD WINNING MINDSE T S

How To

INFLUENCE AND Get Buy -In

FROM Your Own People

Nothing earns the respect of a team as much as when a leader walks his talk.

ABOUT THE AUTHOR David Lim, founder, Everest Motivation Team, is a leadership and negotiation coach, best-selling author and two-time Mt Everest expedition leader.

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LEADERSHIP IS ABOUT INFLUENCE, NOTHING MORE NOTHING LESS. Some leaders are in a position where they have the power to reward and punish their people. But ultimately, where we work in circumstances where we need the help of others who are not in our direct line of reporting, knowing how to win people over is an underrated skill. Former United States President Bill Clinton tells a story of when he entered the Oval Office as president, and thought that he would spend much of his time telling people to do this or that. Unfortunately for him, he recounts how he was quickly sobered by the

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1. WALK YOUR TALK Nothing earns the respect of a team as much as when a leader walks his talk. When Ernest Shackleton urged his crew to dump overboard all their unnecessary belongings to allow better passage through the deadly Antarctic icepack, he began by tossing overboard his solid-gold cigarette case—that made an impact. When I surrendered my place on summit teams on two different expeditions, so that better-suited team members were placed to go to the top, I earned their trust that —David Lim I would do what was for the best of the team or group, and that my personal ambitions were secondary. The recent recession saw an interesting response from senior leadership across the globe. ome CEOs agreed to work for a symbolic sum of $1 as a salary to turn around their ailing firms. Some well-paid government officers took a 10% pay cut. But when you are earning well over $1 million a year, rank and file become cynical if they too have to take an equivalent pay cut.

“Winning buy-in is a key leadership skill in getting your people on board.”

2. CHOOSE YOUR LANGUAGE CAREFULLY In influencing others, we describe things, people and our opinions using language. This language paints a “movie” in the mind of the listener. If all people have are you words to go by, choosing how you communicate can powerfully influence people. The more you can go into your listener’s world, the better able you are to win them over. Here’s a practical example: assume you are announcing a major change in certain IT systems to improve outcomes. Here are two examples of the message: “People, we are going to dramatically change the way we do things here. In the next few months, you will see big shifts in the IT systems in three out of the five departments. This

will lead to some significant changes in how we work and what we deliver. But I’m sure you’ll deal with these new things marvelously.” And this: “Colleagues, in the few months we will be making some improvements in three out of five departments, in information technology systems. So some things will change. But some things will stay the same. During this transition, we will be working carefully in improving how we work together and what we deliver to our fellow colleagues, and I will be able to answer your questions as to the changes and resources needed. ” For a conservative, risk-averse audience, which statement do you think hinders, rather than improves buy-in? One uses dramatic, sweeping phrases, and assumes buy-in is a given. The other uses more inclusive language, and inserts re-assuring elements; not to mention being open to more communication.

3. NEGOTIATE BY LISTENING AND BUILDING RAPPORT A negotiation happens when two parties meet to discuss issues of mutual interest where at least one party seeks to benefit from the decisions made there. So where there is resistance to buy-in, how do you increase your influence? Among the other skills mentioned above, you can do so by listening actively to the constituents that are keys to effecting the change you seek. This means to actively show you are listening through nodding of heads, and short asides and verbal noises that show you are listening though not necessarily agreeing to what is being said. Then, seek to improve rapport by making the other party feel more comfortable that you have taken on board their feelings and thoughts—again without necessarily agreeing. Once you have built up sufficient knowledge of the context and issues, and have gained some rapport, address your position, and invite the others to see how gaps between your position and theirs can be met. It may be easier to first agree on what can be agreed upon in principle. Winning an early agreement on easier issues helps tremendously in building momentum in negotiations.

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fact that much of this time was spent persuading, cajoling and nudging various individuals and peer groups to move a few steps in the direction he wanted them to go. It was, and still is all about influence. So if the president of the US has a tough time, what about us in everyday workplace circumstances? Here are some practical leadership actions:

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In influencing others, we describe things, people and our opinions using language. This language paints a “movie” in the mind of the listener. 4. FIST FIVE Many meetings reach a point where a certain degree of consensus or buy-in is required. A nodding of heads and noises are heard and the CEO leaves believing buy-in has been obtained. And yet, three weeks later, people are wondering why people aren’t doing what they thought they had agreed to do. If you have experienced this, you will benefit from Fist Five, which is one of the things we teach on our leadership and team programmes. When an open-ended opinion is needed, or when strength of feeling is required, invite everyone to, on a count of 1-2-3, show his or her hands in this fashion: Clenched fist: This is a lousy idea and if we go ahead with it, I am leaving this meeting, party and discussion. 1 FINGER: I don’t support this; so don’t count on me for

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a lot of energy. 2 FINGERS: Very lukewarm about this idea or opinion. 3 FINGERS: OK. 4 FINGERS: This was great and you can count on my support. 5 FINGERS: This is such a great idea/proposal if we don’t’support it I will leave this meeting/discussion. I use Fist Five around a group or party as a quick pulse check on how people are feeling to questions such as: “How did you all think you performed as a team in the last exercise?”, “ What’s your support for our new staff initiative?” — and so on. Having a committed show of feelings immediately on request allows you to sort out who are solidly behind a view or action, and who are less so, allowing you address their hidden objections or resistance. Additionally, Fist Five, can show to some people how their views are very much in the minority, and have a bonus effect in making some office staff resume working to support initiatives after they have discovered how the vast majority are headed in a specific direction, though not necessarily theirs. Winning buy-in is a key leadership skill in getting your people on board. Use the skills described above and let me know which worked for you. DAVID LIM IS A LEADERSHIP AND NEGOTIATION COACH AND CAN BE FOUND ON HIS BLOG http://theasiannegotia-

tor. wordpress.com, OR david@everestmotivation.com

JUNE 2010

6/24/2010 12:33:24 PM

insight USING RIVALRY TO SPUR INNOVATION

Companies looking for new sources of creative energy might want to look backward—to the productive rivalry that catalysed much of the artistic innovation during the Italian Renaissance.

BY BERNARD T. FERRARI AND JESSICA GOETHALS

usiness leaders tend to raise their eyebrows when they read about parallels between history and modern management—and for good reason. There are undoubtedly many people who offer better leadership lessons than Attila the Hun, and it is unclear whether Alexander the Great can tell us much about business strategy. So it’s with some trepidation that we set forth the premise of this article: that the Italian Renaissance was such an extraordinary period of creativity it can shed light on how to stimulate business innovation. We’re quite conscious of other great eras of innovation—the 18th-century industrial revolution in Great Britain, the late-19th-century emergence of managerial capitalism in the US, and even the present period of digital innovation. One thing that’s striking about the Renaissance, though, is that it took place on a scale not very different from that of many large, modern enterprises. Northern Italy is no larger than the state of Michigan, and at the beginning of the 15th century, the three great centres of Renaissance creativity—Rome, Florence, and Venice—had a combined population of roughly 200,000.1 The ability of a population and region of this size to generate creative output—ranging from the world’s largest masonry dome to linear perspective, modern-day portrait painting, technical breakthroughs in glassblowing and bronze casting, the italic type of the Aldine Press, sfumato and chiaroscuro, and the designs in Leonardo’s sketchbooks—makes it, in our opinion, intriguing

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for innovation-minded leaders. What’s more, there are some uncanny parallels between what went on during the Renaissance and principles that have proven their worth in R&D organisations—such as collision between diverse experts, providing loose guidelines, and establishing stretch goals. Less in line with mainstream R&D practices: the degree to which Renaissance creativity was

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WHAT WE’VE ALREADY LEARNED FROM THE RENAISSANCE

teeming with painters, craftsmen, and sculptors.3 Rome, for example, attracted flocks of artists from throughout Italy seeking the patronage of the Vatican. The relatively small urban space forced them into frequent and often intense interactions with each other. Artists benefited from the diversity of the colleagues around them, and the high rates of collision with these peers allowed them to learn from each other, exchange ideas and techniques, and build off each others’ diverse accomplishments.

Some of the practices that made the Renaissance such a creative period have already been largely integrated into today’s R&D labs.

GIVING RESEARCHERS THEIR SPACE

PROMOTING “COLLISION” Consider, for example, the popular notion that constant collision between engineers, scientists, and managers will lead to better collaboration and ultimately yield the best ideas. The classic manifestation of collision is the multidisciplinary corporate R&D lab, where innovators of different stripes are gathered together in a single research facility. Among the most famous of these facilities are IBM’s Watson Research Center, HP Labs, Bell Labs, and GE’s Global Research Center. Virtual spaces, if built correctly, can also be effective for encouraging collision. Take the example of Tata’s Innoverse hub. This portal serves as a virtual innovation forum where employees from across Tata’s business units can post ideas, comment on them, and then vote on the ones they like the best. In one year it gathered 12,000 ideas, on topics ranging from R&D to management and strategy, several hundred of which have been turned into projects or implemented through operational reforms. 2 The concept of collision resonates with the creative energy of the Renaissance. Italy at the time was one of the most urban regions of Europe, and, although small by modern standards, the cities were densely packed centres

Many of the world’s greatest inventions have been stumbled on by mistake. Smart R&D managers recognise this and allow their researchers to turn mistaken or unexpected findings into new lines of research, products, or technologies. Recently, there has been much discussion of Google’s policy that allows researchers to spend time on their own ideas, projects, or personal development. It’s not a new idea. 3M has long

tracts could be quite specific, during the Renaissance, artists’ prominence in society increased, so that they increasingly could negotiate contracts that allowed for creative interpretation and stylistic flexibility. Michelangelo’s painting of the Sistine Chapel’s ceiling is a fine example of how an artist’s higher social position translated into greater negotiating leverage with patrons. In 1506, Pope Julius II decided to complete the painting of the interior of the chapel (the walls had been painted 20 years earlier) with a grandiose fresco across the entire ceiling. He went to Michelangelo, who was well-known as a sculptor (though not much as a painter), and asked him to take on the job. Only after some cajoling did Michelangelo agree. In the initial contract, the Pope proposed a scheme of 12 enormous figures of the Apostles. Michelangelo convinced the Pope to agree to a much grander subject that documented humanity’s need for salvation. Michelangelo later bragged that he had gotten the Pope to allow him “to do as I liked.”6 The artist’s ability to negotiate for flexibility contributed to the

Smart firms push innovators to shoot for the stars. Shell’s GameChanger plan is designed to seek out and fund good ideas. allowed its employees to spend 15% of their time on projects of their own choosing. 4 Similarly, at Tata Consultancy Services, each employee receives 5 hours of a 45-hour-work week for personal projects. 5 The Renaissance equivalent of setting R&D guidelines was the commission— say, for a painting or piece of architecture. These contracts would stipulate a subject to be painted, who would paint which parts of the work, the dimensions and medium of the painting, the timeline, and the amount of money to be paid. Although at times these con-

remarkable creation that is the Sistine Chapel ceiling.

SETTING STRETCH GOALS Smart companies establish practices and programmes that encourage innovators to “shoot for the stars.” Consider, for example, Royal Dutch/ Shell’s GameChanger program, which is designed to seek out and fund good ideas that have a low chance of coming to fruition but could have a profoundly positive effect on Shell’s business.

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built on professional rivalries— like the ones between Leonardo, Michelangelo, Raphael, and Titian— that are commonly viewed as some of the most productive in history. It may be that by overlooking the potential of rivalry, modern R&D organisations are missing an opportunity to promote ground-breaking innovation.

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GameChanger teams in each of Shell’s business units vet, select, and then support ideas as they are developed. Ideas can come from within the company or from outside innovators, although Shell retains the intellectual-property rights to any designs or products that might be generated. The company devotes 10% of its innovation budget to the programme, which generates fully 30% of Shell’s R&D projects. By recognising the power of good but far-fetched ideas, Shell has reaped the benefits of a number of new technologies that few thought were possible to achieve. Similarly, the masters of the Renaissance were constantly setting themselves artistic and engineering goals that were beyond reasonable reach. When Brunelleschi arrived in Rome, he set to work studying the remarkable architectural masterpiece that is the Roman Pantheon. The structure’s dome, in particular, fascinated Brunelleschi: he was awestruck by the sheer amount of space that it covered and puzzled over how such a feat of engineering had been achieved. Then the city of Florence began construction of its now-famous Basilica di Santa Maria del Fiore (more commonly known as the Duomo) and in 1419 sought an architect to build a dome to cover the massive, 42-metre-wide space above the church’s chancel. Such a vast space had not been capped with a dome since the Pantheon’s construction, in ancient times. Brunelleschi won the commission. To overcome this extraordinary architectural challenge, he developed a number of engineering techniques and construction practices. Brunelleschi’s final design entailed a double-shelled brick dome, with no external buttressing, that rested directly on the church’s drum. To complete the design, Brunelleschie invented a unique system of hoists, basing the technology on what he had read the Romans used to construct the Pantheon.

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WHAT THE RENAISSANCE CAN STILL TEACH US Despite these parallels, there is one important Renaissance innovation practice that rarely figures in today’s R&D labs—the use of rivalry. It is difficult to overstate the extent to which the Renaissance was built on the professional rivalries of its major figures. While these men generally held each other in deep respect and esteem, they also competed passionately against each other for commissions, recognition, and prestige. Competition can sometimes yield petulance and destructive energy. But rivalry during the Renaissance seems to have contributed to a competitive culture that bred creativity and innovation. Artists were rivals—but they were also colleagues and frequently friends.

An integral part of the philosophy of paragone was the belief that such direct comparison could motivate artists to greater feats. For example, in 1515 the young Raphael was commissioned by Pope Leo X to design ten tapestries for the lower walls of the Sistine Chapel. Knowing they would hang directly below the ceiling painted by Michelangelo, Raphael pushed himself to new heights of creative brilliance.8

HARNESSING RIVALRY TODAY There are few examples of companies that embrace anything approaching paragone in their R&D labs. To be sure, some companies hold innovation competitions, such as Tata Group’s recent Innovista challenge, which generated

Renaissance seems to have contributed to a competitive culture that bred creativity. Artists were rivals— but they were also colleagues. A MORE PRODUCTIVE KIND OF RIVALRY Rivalry can mean outright competition— a zero-sum contest in which two individuals or teams go head-to-head and one is declared the winner at the expense of the other. But in the Renaissance, rivalry was linked to a second notion, called paragone.7 In direct translation, paragone means “comparison.” During the Renaissance, it implied the placing of two artists, or their individual works, side by side in order to judge them, weigh them, distinguish them, and critique them. With paragone, two equal rivals were compared and celebrated for their relative achievements. Comparing two or more works in this way did not diminish one at the expense of the other. In fact, artists were sometimes commissioned to work on similar projects simultaneously, with each one presenting a subject in his own unique and brilliant way.

1,700 innovative ideas from across the company. But these one-time contests do not really replicate the kind of productive artistic rivalry that made the Renaissance so creative. Moreover, competition is generally discouraged in the business literature on innovation. Management experts prefer to talk about cooperation and collaboration within R&D centres rather than competition and rivalry. But rivalry does not necessarily preclude collaboration; we believe R&D managers should be seeking to integrate the two more deeply—in short, to implement a modern form of paragone. The best way to do so is to set two or more teams working on the same project at the same time. Again, this isn’t a new idea: recall the famous competition between the System 360 mainframe computer and the 8000 series at IBM during the early 1960s.9 And as Mark

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think deeper and harder about a given problem, leading to new levels of creativity. As long as this spirit of rivalry is managed effectively, R&D teams will push themselves further just knowing that their proposals will ultimately be held up in comparison to others. All that said, we are realistic about the challenges associated with rivalry. Even during the Renaissance, some rivalries grew out of control and at times led to duels, imprisonments, and murders. We have no doubt that poorly managed rivalry could devolve into the kind of

of paragone. Harnessing the creative energy of productive rivalry should yield more, and more valuable, business innovation.

PUTTING IT INTO PRACTICE Mark Little, the head of GE’s Global Research Group, offers a commentary on this article that describes how his company uses rivalry to stimulate innovation without disrupting a culture of collaboration..

A friendly degree of rivalry will spur teams to think deeper... R&D teams will push themselves further just knowing that their proposals will ultimately be held up in comparison to others. destructive competitiveness that R&D managers try to avoid, stifling the exchange of ideas and undermining collaboration. Most important, a company must supplement the implementation of paragone with a deep and pervasive culture of cooperation and collective achievement. The Renaissance masters knew that their greatest achievements were probably those that they would accomplish collectively. They wanted nothing less than to define a new age of art, culture, and civilisation—and they were never going to do this alone. Likewise, a great company will make sure its innovators understand that its most lasting breakthroughs and achievements are the product of a collective effort—and will celebrate and reward all who participate. Without knowing it, the world’s most creative companies have fruitfully embraced many practices that made the Renaissance uniquely creative. Executives who want to push their R&D teams to greater heights might consider drawing from the Renaissance philosophy

ABOUT THE AUTHORS Bernard Ferrari is an alumnus of McKinsey’s Los Angeles and New York offices, where he was a director; he is currently the chairman of Ferrari Consultancy. Jessica Goethals is a PhD candidate in Italian Studies at New York University. NOTES 1 See Elizabeth S. Cohen and Thomas V. Cohen, Daily Life in Renaissance Italy, Westport, CT: Greenwood Publishing Group, 2001, p. 7; Peter Partner, Renaissance Rome 15001559: A Portrait of a Society, Berkely, CA: University of California Press, 1980, p. 82; and Richard A. Goldthwaite, The Building of Renaissance Florence: An Economic and Social History, Baltimore, Maryland: Johns Hopkins University Press, 1982, p. 33. 2 Jessie Scanlon, “How to build a culture of innovation,” BusinessWeek, August 19, 2009. 3 See Elizabeth S, Cohen and Thomas V. Cohen, Daily Life in Renaissance Italy, Westport, CT: Greenwood Publishing Group, 2001, pp. 7–8. 4 Jessie Scanlon, “How 3M encourages collaboration,” BusinessWeek, September 2, 2009. 5 Jessie Scanlon, “How to build a culture of innovation,” BusinessWeek, August 19, 2009. 6 Loren Partridge, The Art of Renaissance Rome 1400– 1600, New York: Prentice Hall, 1996, p. 17. 7 Rona Goffen, Renaissance Rivals: Michelangelo, Leonardo, Raphael, Titian, New Haven, CT: Yale University Press, 2004. 8 Marcia B. Hall, ed., Rome: Artistic Centers of the Italian Renaissance, Cambridge: Cambridge University Press, 2005. 9 For more on this competition, see Rowena Olegario, “IBM and the two Thomas J. Watsons,” (especially p. 388) in Thomas K. McCraw, ed., Creating Moden Capitalism, Cambridge, MA: Harvard University Press, 1997. Copyright © 2010 McKinsey & Company. All rights reserved. Reprinted by permission.

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Little, director of General Electric’s Global Research Group, has explained in an article that his company makes extensive, though understated, use of competition. What we are suggesting is that the idea of competition—specifically, paragone—should be a part of more companies’ regular R&D processes. This may sound costly, but assigning several teams to tackle the same problem is not necessarily unproductive or inefficient if it leads to better solutions. Here are three principles for executives interested in harnessing the power of paragone: Forming teams. Competing teams could come from different divisions, include a diverse array of experts, and take explicitly different approaches to the same problem. After all, there are often many ways (sometimes coming out of different disciplines) to resolve an R&D challenge, and there is often no way of knowing which one is best without trying them out. Appreciating differences. During the Renaissance, paintings were placed side by side so that viewers could compare and appreciate them and other artists could borrow from them. In the same way, the various solutions that teams develop can be held up next to one another in order to judge them on their relative merits. On many occasions, ideas from one can be integrated into the other. Or a solution that is ultimately passed over can be sent back to the labs for development in new directions. Conducting “market tests.” Another way to replicate the practice of paragone is to bring designs to an internal jury or group of customers and let them weigh and contrast the different solutions. In some cases, more than one of the products may find customers who appreciate them, just as Renaissance artists each had their own following. Whatever the judgment mechanism, there is good reason to believe that having two or more teams working on a given project can have a strong motivational impact. A friendly and healthy degree of rivalry will spur teams to

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cfo lounge

GIZMOS

Canon EOS 550D Gadgets that you can use as you move around—and flaunt with pride ENTHUSIASTS, PHOTOGRAPHERS AND specifically Canon fans would have been excited and awaiting the release of the EOS 550D or the snazzy Rebel T2i as its better known as in other regions of the world.The upper mid-range DSLRs segment seems to be dominated by the Nikon D90 and the entry-mid range by the recent D5000. The Canon EOS 500D has been around and the 550D was expected and it’s finally here. The 18-megapixel sensor works out to a resolution of 5184 x 3456. The lens kit we received with our 550D was the common 18-55 mm (3x optical zoom equivalent). The Nikon D90 normally comes with a 18-105 mm zoom lens but let’s not forget it costs a bit more than the 550D. Liveview looks like a growing trend now. This camera has it, too. Price: Rs 51,995

NEW LAUNCHES

HP Pavillion dm3 1005AX

This is a sleek 13.3 inch notebook which houses the AMD Turion Neo X2 processor. The processor has a speed of 1.6 GHz which is generally seen in netbooks, but this one is a dual core processor.

WD My Passport Studio 640 GB With USB 2.0 as well as FireWire 800 connectivity, this drive is targetted at Mac users. The elabel is a persistent display, similar to the one seen on the desktop WD hard drives. It displays the type of data you are storing on the drive.

Logitech Performance Mouse M950 This is ergonomically designed and the contours that may appear severe at first, are, in fact extremely comfortable. The mouse is also pretty high— you can rest your palm on the mouse.

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ad Re Y st OG Mo L NE ’s NO ZI dia CH GA In TE MA

6/24/2010 11:46:54 AM

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TRAVEL

Petra Calling Ullekh NP visits the ancient city and returns to his hotel room to wash off rose-red dust!

YOU COULD EITHER TAKE A WALK OR HIRE A CAMEL TO MOVE AROUND IN PETRA, THE CITY BUILT BY THE NABATAEANS IN 6 BC.

I VISITED PETRA in the final stretch of my trip to Jordan. I had already spent some exciting days at Wadi Rum—where Lawrence of Arabia was filmed—at the Dead Sea and also at Bethany—where Jesus Christ was baptised by John the Baptist. I was then looking forward to take in Petra, the famous archaeological city, where Indiana Jones and the Last Crusade was shot many years ago. My only prayer was that this UNESCO world heritage site, my final destination in the tour, should live up to the hype—I didn’t want the last leg of my journey to be disappointing! Well, now when I look back, this capital city, built by the Nabataeans in the 6th century BC—with its amazing rock-cut architecture and a marvelous water conduit system along a passage way called the Siq—was awe-inspiring. In fact, Petra, famously described once as “a rose-red city half as old as time”, was unknown to the rest of the world until 1812, when it was discovered by Swiss explorer Johann Ludwig Burckhardt. I began my survey of the place on foot though there was an alternative—you could hire a camel or a horse or a mule. The long walk inside the Siq was pleasant though it was mostly crowded with people and camels. 46

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I don’t remember how long I walked—I was listening to my cheerful guide who kept talking about the engineering skills of the Nabataeans. And then suddenly, we seemed to have reached the end of the Siq, and he asked me to wait. “Now close your eyes and take two steps forward,” he said. I did what he asked me to do, and when I opened my eyes, ahead of me, at the end of the tunnel-like passage stood the structure that I had until then seen only in postcards. It was magnificent and rose-red. It was like in a dream. It was the entrance to the treasury of the Nabataeans—they call it Al Khazneh. I watched “the treasury” over tea and biscuits from one of the many stalls in front of it—it was a great feeling. And then when I went inside, I noticed that the place wasn’t kept clean. It was time to walk again and see other structures in the area, I decided. I also visited many more structures and ruins of this ancient capital city before my legs started to ache. Then it was already time for lunch: I ate at one of the fabulous eateries out there before hiring a camel from a bedouin to chug back to my hotel. The bedouins, aggressive and all dressed up in traditional attire, are excited about anything Indian and Bollywood—I realised that some of them knew more about Bollywood movies and filmstars, especially the starlets, than me! I was soon back in my hotel room and since I was tired I went straight into deep sleep for the next three hours. Then I returned to Petra at night— after washing off the redrose dust that had covered my body and clothes—to experience “Petra by Night”. The whole place was lit with candles—it was as crowded at night as it was during the day. But Petra, located in the slope of Mount Hor, looked far more fascinating and also cleaner at night!

Petra, famously described once as “a rose-red city half as old as time”, was unknown to the rest of the world until 1812, when it was discovered by Swiss explorer Johann Ludwig Burckhardt.

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6/24/2010 12:02:00 PM

art review ARTIST OF THE MONTH

A Shot In The Arm Ad professional-turned-artist Prasad Raghavan is at his persuasive best in Shot Tilt By Ullekh NP

THE POSTER TITLED “THE DECALOGUE”, A COLLECTION OF 10 POSTERS WITH INDEPENDENT THEMES.

TILL A FEW years ago, Prasad Raghavan used to make posters of a different kind. They were meant for and vetted by clients. One fine day he deleted the word client. The outcome: an artist was born out of an advertising professional. An award-winning creative director at Ogilvy & Mather and later at A (which later merged with Wieden + Kennedy), Raghavan decided in 2007 that he has had enough fun in the ad world. He soon went on to exhibit his works, most of which were film posters that were his own interpretations of famous movie titles such as the Thief of Baghdad, Gods Must be Crazy and so on—though the titles were borrowed, the content and style were his own. He has kept at it, and has now come out with far more thought-provoking commentary on movies and themes in his latest show, Shot Tilt.

ABOUT THE ARTIST Prasad Raghavan was born in 1968 in Kerala. He earned his bachelor’s degree in graphic design from College of Fine Arts, Thiruvananthapuram, in 1991. Later he worked as an art director at Contract Advertising, Saatchi & Saatchi, Ogilvy & Mather and Wieden+Kennedy. He has won a Cannes Lions for directing an ad film for Sony Handycams as well as for posters. Since 2007, Raghavan has actively participated in group and solo shows both in India and elsewhere. He lives and works in Delhi.

The huge poster titled The Decalogue is a collection of 10 independent posters that address varying themes and, as a collective entity, it becomes a mountain of the biblical kind, similar to our impression of Mount Sinai from where Moses is believed to have received the Ten Commandments. “As I work, images from the past cross my mind. I draw from history and books as old as the Bible … these symbols have to be observed in the contemporary context,” says Raghavan. Another large poster, Gods and Generals is, in fact, a charcoal drawing that has a mushroom-shapedbrained person sitting in a yogic position; his hands are actually rifles, ribs missiles, and his viscera is filled with bombs and there is fighter tank in his lap. He has also tried his hand at oil painting in Andrei Rublev, a name borrowed from his favourite movie director Andrei Tarkovsky. As a whole, it looks like a shop window in which carrybag-like objects are immaculately arranged; on them are phrases that, when read fully, become a quote from the master director: “Modern man is too preoccupied by his material development, by the pragmatic side of reality. He is like a predatory animal that doesn’t know what to go after. Man’s interest in a transcendent world has disappeared. Don’t be surprised if one day the earth disappears because man has swallowed it all.” The soft-spoken Raghavan has also used, generously, tag lines of several big brands to highlight what he calls the meaninglessness of false promises that corporates often dole out. In its entirety, the show looked truly promising in that it offers interesting interpretations of classic movies as well as an insider’s perspective of the mad, ad world that cashes in on modern man’s preoccupation with material gains. You could call it an accurate shot.

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books

NEW RELEASE

Great Insight MANY OF US first heard of Columbia

PICK OF THE MONTH

Smartest Product BlackBerry is everywhere, they say. Here is a behind-the-scenes account of the company behind this brand. STORIES OF STUDENT start-ups becoming global corporations is nothing new, but it seems that such buildfrom-scratch tales hardly lose their sting and appeal on repetition. Look around and you have Microsoft, Apple and several other IT companies that started off as small, college campus-based entities before they became successful businesses. So did Research in Motion, the maker of BlackBerry, a product that is called the boardroom in the family room. BlackBerry: The Inside Story of Research in Motion by Rod McQueen explores in detail RIM’s early struggle with bigger companies. It also offers a fascinating and absorbing account of its architects—co-CEOs Jim Balsillie and Mike Lazaridis. The Canadian company, which was set up in 1984—and went public in 1996—introduced the first BlackBerry device as a two-way pager in 1999. In 2002, it released smartphone BlackBerry, which supported push e-mail, mobile telephone, text messaging, Internet faxing, web browsing and other wireless information services. The book is interesting from start to finish because it is, in fact, the story of a stellar product—known primarily for its ability to send and receive emails—whose loyal users can’t imagine how they lived without it. —ULLEKH NP

Publisher: Hachette Price: Rs 495

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Business School professor Sheena Iyengar in Malcolm Gladwell’s book Blink. A choice expert, author and academic, Iyengar is recognised as one of the world’s leading experts on choice. Surprisingly, she is blind. Her book The Art of Choosing, which talks about the challenges and joys of choosing, is amazingly well-written. According to Gladwell, Iyengar’s work is excellent because “no one asks better questions, or comes up with more intriguing answers”. Well, she asks fascinating questions: Is the desire for choice innate or created by culture? Why do we sometimes choose against our best interest? How much control do we really have over what we choose? The good thing is she answers them all. Publisher: Hachette Price: Rs 499

OTHER RELEASES

The Trap of the Net SHALLOWS: WHAT THE Internet Is Doing To Our Brains by Nicholas Carr asks a pertinent question: is the net fostering stupidity? He argues, convincingly, that while human beings are, on one hand, becoming ever more adept at scanning and skimming, but they are, on the other, losing capacity for concentration, contemplation, and reflection. Price: Available on www.amazon.com

A Brand that’s King THIS IS A gripping story of an uneducated serf’s rags-to-riches rise as the maker and marketer of the world’s most famous vodka brand, Smirnoff, now owned by UK’s Diageo Plc. The King of Vodka: The Story of Pyotr Smirnov and the Upheaval of an Empire by Linda Himelstein also tells the tale of chaos that the Bolshevik revolution created in the life of the Smirnoffs. Price: Available on www.amazon.com

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