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Executive Directions

It is a big distance between managing and leading. An advanced management programme can help shorten it

Published: Jul 7, 2010 07:12:18 AM IST
Updated: Jul 7, 2010 09:26:14 AM IST

When Xavier Gobille got the job of managing director at Renault South Africa in November 2007, the auto major’s subsidiary was bleeding: Sales were at an all-time low due to poor after-sales service and quality problems. The head office gave Gobille a twin mandate — get the company back in shape and win the perception battle. He knew he had a daunting task ahead of him.

Just three months earlier, Gobille had returned from Silicon Valley. There, he had undergone an intense five-week study programme at Stanford Graduate School of Business. He believed the course had equipped him to take on the challenge. He soon got down to work.

Over the next two years, Gobille engineered a dramatic turnaround of Renault South Africa. He improved service and availability of parts, expanded the dealer network, launched a slew of new markets and made handsome investments in local production. As a result, public confidence in the company returned to such a level that South Africa’s Car magazine recognised it as the Motor Company of the Year in early 2010.

Gobille Xavier of Renault South Africa
Gobille Xavier of Renault South Africa
Looking back, Gobille has a lot to thank the Stanford Executive Program (SEP) for his success. “Attending the SEP changed the way I see myself in the company and the way I can decode my company,” he says. “It seems like I have a different pair of glasses now that allows me through see through walls.”

SEP falls in the league of advanced management programmes (AMPs) that are aimed at the top rung of the management ladder such as CEOs and CEOs-in-waiting. A typical AMP ushers in talented managers into the complexities of leadership, equipping them with the tools to tackle them. Across the world, hundreds of corporations use AMPs to build their management pipelines and improve the quality of their strategic thinking.

Often, it is a brief but intense voyage of discovery for the rising stars of the corporate world. Gobille recalls how a senior Stanford professor called Robert Burgelman had a tremendous influence him. The teacher introduced him to concepts like the ‘rubber band’ model to talk about how to match strategy with action. Using what he learnt there, Gobille did some hard thinking about the way Renault South Africa was dealing with its stakeholders. He resolved to put in a system that would benefit all. He also looked at the media to understand how Renault was perceived. “After looking at all the different perspectives, I was able to decode the relationship between all the different actors and change things,” he says.

And it is not just professional managers that flock to AMPs to shape up their leadership profile. Entrepreneurs often need the programme when the scale of their business expands or when they want to lead a major transformation in their enterprises.

Just as India began opening up to the outside world in the early 1990s, Ajay Piramal, chairman of Piramal Enterprises, realised that his company was not yet ready for the big change.

It had a very India-focussed mindset, the most international thing it had ever done being to export. “I wanted a global mindset — a more global point of view even in simple things like customer service and quality standards, and a good understanding of how other global companies operate,” says Piramal.
So in 1992, he enrolled for Harvard’s AMP. His batch had stalwarts like Keki Dadiseth of Unilever. The weeks he spent in Boston exposed him to the current thinking in business.

“There were those small moments where you suddenly understood how IT can be used as a source of competitive advantage, or how quality can be leveraged to your advantage,” says Piramal. Once back, he woke up his company to the wonders of total quality management, information technology and global standards in customer orientation.

Making the Leap
Given that they play a role in shaping up future CEOs, AMPs don’t come cheap. A week-long course can cost as much as $10,000 and a longer programme of, say six to eight weeks, can set a company back by $60,000. That’s one of the reasons why companies are very selective about who they sponsor for such a programme.

Take ICICI Bank. It has hundreds of business heads and prospective business heads. Sending them all to AMPs is impractical. That’s why a chance for AMP is reserved for only those who are likely to be elevated to the bank’s board or those of its group companies. “It really depends on how big your organisation is and what is the critical mass of people you want to cover,” says K. Ramkumar, executive director. At the most, ICICI sends one person a year to an AMP. Mahindra & Mahindra sends two are three. BP sends three or four from the entire Asia-Pacific region.

Ajay Piramal, Chairman of Piramal Enterprises
Image: Dinesh Krishnan
Ajay Piramal, Chairman of Piramal Enterprises

Business schools, on their part, take AMP admissions very seriously. Most schools have very strict criteria on who they take and why. So if a company decides to reward an employee for past performance and send him to an AMP, the candidature would be rejected in all probability. Typically when a company nominates an employee, the institution carries out a series of interviews with the candidate to gauge the level of seriousness and the need. “If we turn anyone away, it’s because their objectives don’t align with what we are offering,” says Paula Beckmann, senior associate director for executive education at the University of Chicago’s Booth School of Business.

Apart from the usual criteria about work experience, seniority and diversity, some schools also look at the size of a candidate’s company. Harvard, for instance, only accepts people from organisations with annual revenues of more than $250 million. Pramod Chaudhari, chairman of Praj Industries, discovered this when he applied for the AMP at Harvard in 1995.

After reading his application, Harvard said that since he comes from an entrepreneurial background, he was more suited to attend their Owner Managers Program. The rupee revenues of his company, when translated into US dollars, did not meet the threshold either. “I finally convinced them by saying that what they convert directly from rupees to dollars is low but the quantum and nature of activity at Praj Industries is high so it’s more than justified that I be admitted,” he says.

Living the Experience
Increasingly, institutions are putting stress on the learning that happens between the batchmates given that each one of them is already an accomplished individual. At Harvard, the diversity of experiences of the participants is allowed to flow through ‘living groups’. Groups of eight stay together in big residential units during the course. “Members of living groups are deliberately put together to represent diverse, yet complementary backgrounds, and they become advisers, coaches, and learning partners for each other,” says Michael

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Infographic: Hemal Seth

Tushman, the Paul R. Lawrence MBA Class of 1942 Professor of Business Administration and faculty chair of the Harvard AMP.

Past candidates say it works. Thomas Varghese, CEO of Aditya Birla Retail is a former student of Harvard’s AMP. His living group had people from the US, Thailand, Sweden, Africa and the UK. “During case discussions with my living group, I was astounded by the different ways in which people look at similar issues,” says Varghese. “That experience helped me enormously when I handled the Birla Group’s pulp business and I had to handle plants in Canada and South East Asia.”

This is also about building lasting relationships, and in some cases, about creating a peer ‘sounding board’ for life. Rajesh Jejurikar, CEO of the automotive division at M&M, attended the Wharton AMP in 2007. “I was looking for an opportunity to interact with a global set of peerage and this kind of experience which would help me understand what I need to work on,” he says. He worked with a diverse group for five weeks. “After having lived with you and worked with you for five weeks, they know you very well. They play a huge role in helping you change and improve, especially from the leadership aspect,” says Jejurikar who remains in touch with his batchmates.

Making it Work
An organisation sponsoring a senior employee for an AMP should be clear about what it expects from the programme. An AMP is not a one-stop solution for all the top management’s development needs. Often, it delivers results in conjunction with other development and training measures within the company. Two years ago, Canada-based ATCO Group sent a senior executive to an AMP. He was being groomed to become the chief financial officer. The idea was that the programme would remove his flaws and prepare him to take over. “But when the current CFO retired, we looked at him and realised that he still had some big skill gaps that hadn’t been identified and it would take another two to three years to close them,” says Tracey Wallace, senior director for organizational development at ATCO. “We learnt it the hard way that we should have a fully integrated programme – and that the AMP was just one part of the whole process.”

A. Wahab Bakar, head of HR at Nestle Malaysia, agrees. While he does send high potential employees from Nestle to NUS Business School, Singapore and IMD, Switzerland, he firmly believes that AMP is just one pillar in a three-pronged executive development process. “We tend to put more emphasis on the exposure they get on the job — either locally through job rotation or through assignments abroad. The other significant part is executive coaching,” says Bakar.

Pramod Chaudhari, Chairman of Praj Industries
Image: Vikas Khot
Pramod Chaudhari, Chairman of Praj Industries

Several companies have already begun to put in place comprehensive development programmes of which AMP is just a part. ICICI is one of them. Ramkumar says the bank starts by choosing areas that are topical, contextual and relevant to it over a two-year timeframe. It then invites professor from institutions like Wharton or Ross School of Business at Michigan University to conduct customised programmes for its employees. Executive coach and author Ram Charan and IMD professor Phil Rosenzweig have conducted such programmes for ICICI. “When we worked with Rosenzweig, one of the themes he covered was on how an organisation changed and grew. We asked him if it was possible for him to tell us about Vodafone’s experience of getting into Africa and Australia, and how they managed the organisation structure and culture,” says Ramkumar. Rosenzweig already had a relationship with Vodafone and knew the details.

When Ram Charan came, ICICI was passing through a rough patch and was being questioned in the media for its strategies. Ramkumar’s brief to Charan was simple: “You have seen the global finance crisis: Can you help us understand the pros and cons of going after scale and expanding in a short time?” He obliged.

Most recently, ICICI roped in McKinsey to conduct a simulation exercise just like a war game. Using live data such as balance sheets and earning statements from five banks (SBI, Axis Bank, HDFC Bank, PNB and of course, ICICI), five teams of eight members each competed on business planning. The teams included CEOs and business heads. “This helps build respect for the other bank — by taking their position you can see what competitive position that bank will take.” There were formal debriefing sessions and competitive environments and strategies in real-life situations were discussed. “You think like your competition for two days. To my mind, this should be categorised as an AMP,” says Ramkumar.
Mahindra and Mahindra, on its part, invites senior professors to coach its top talent. The late C.K. Prahalad and Wayne Brockbank had done so in the past. M&M relies on a global leadership consortium programme involving seven global companies and global faculty and a senior leadership programme that involves seven Indian companies and a mix of global and Indian faculty. But the biggest innovation is the Mahindra Universe Programme that is run in partnership with Harvard Business School at the Boston campus. The idea is to help build a multi-cultural management culture and get a feel of global trends, says Allen Sequeira, executive vice president.

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Infographic: Minal Shetty

All said and done, there is some amount of scepticism around the relevance of AMP in the fast-changing context of today. Different companies face different challenges and often need customised content. Not all AMPs can offer that. Also, executives often complain that there is a disconnect between what is taught at AMP and the real-world corporate culture. Some institutions are working to bridge this gap by splitting the programmes into parts and allowing the candidates to implement what they learnt, back in their companies.

(Additional reporting by N.S. Ramnath)


Note:
Two distinguished academicians Robert Burgelman and Adam Kingl will guide you on various issues related to choosing the right AMP and address the concerns you might have on how it will help your career growth. Read about the Forbes India AMP Clinic to know how you can send your queries to us.

(This story appears in the 16 July, 2010 issue of Forbes India. To visit our Archives, click here.)

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