In these days of fast changing customer preferences, increasing global competition and rapidly disappearing competitive advantages, how does a firm foresee the changes well ahead of its customers and competitors and take preemptive actions to dominate the emerging future?
This question is very relevant in the present context of doing business. The future as I see it, would be strongly dependant on relationship management and R&D.
Cost advantages and breakthroughs would give you an edge for a period of time. But competition would gradually catch up.

If I were to speak about competencies and assets of an organization that are likely to remain valuable, I would restrict myself to one word ‘Innovation’

Organizations can squeeze costs and sweat assets. But all these initiatives have a limit. However, companies cannot avoid these initiatives, as they are still very important for businesses to remain competitive. But managing relationships will be critical for success. Relationship management would encompass the entire universe of your business i.e. most importantly your customers and employees. This concept should also involve your vendors and other stakeholders. Organizations will have to collaboratively work their vendors and educate them on controlling costs and improving quality. These collaborative efforts with vendors will immensely benefit organizations. Employee management will also be important, as employees will make the difference between average and successful organizations. Managing talent will be critical. Continuous training and other innovative HR practices will have to evolve to protect talent. So human resource management will have to be the fastest evolving field for all organizations.
The other aspect that organizations would have to regularly invest is Research & Development. R&D departments will have to continuously scan the universe for new products and technologies. They would have to be on their toes and continuously innovate. Businesses must make a serious effort towards increasing investment in R&D on a regular basis. This is a difficult decision for Indian companies, because if breakthroughs are not achieved, then your investment is dead. But organizational growth is going to be dependent on research and technology and no one can compromise in this area. It will be a differentiating factor in their business. R&D will not only have to work in the area of new technologies but also help business reduce cost by value engineering. This would make the firms more competitive and help them dominate the emerging future.

Which competencies and assets of an organization are likely to remain valuable even if future changes in customer choices or in value delivery processes do not exactly follow the past or present trend?
If I were to speak about competencies and assets of an organization that are likely to remain valuable, I would restrict myself to one word ‘Innovation’.
For businesses to succeed in future, it has to breed innovation continuously. This is going to be the single most important factor for success and good leaders already understand this fact. Technology could be developed and be accessible to every organization, which will reduce the company’s competitiveness. Hence organizations would have to continuously change and attune themselves to this reality. They would have to introduce systems/practices that will encourage innovation. For innovation, companies have to encourage entrepreneurship. It must also give greater autonomy to managers in their responsibilities and focus on investment-oriented rewards for achievement of objectives. While encouraging entrepre-neurship, organizations should develop high tolerance for failures and encourage risk-taking. This is another aspect that leading companies will have to learn, if they would like to dominate businesses in future. Most times in leading companies, new ideas do not get implemented. This is not
due to fear of failure but primarily because they cannot accept failure. However in these changing times, organizations will have to take greater risks to grow the business continuously. Hence creating an environment open to innovation gives people an opportunity to experiment, create and develop new concepts.

Why are certain organizations unable to retain the strategic flexibility required to continuously fine-tune their strategies, organization and processes on a regular basis in spite of the fact that such a requirement is now well documented and also known to most companies?
Rigidity is a dreaded disease that often creeps unknowingly into the system of an organization. It usually occurs in monopolistic companies and some organizations breed rigidity by creating an environment that supports this trait. It is this fact that in a changing environment, these organizations are suddenly faced with challenges from the environment or from new competitors, which unsettles these corporates. They are not able to fine tune their strategies and undergo restructuring that is required to help them cope with, and challenge, new competition.
Another instance is that top management’s perceived reality of the future provides a certain direction to the organization. If perceived reality does not come true, then the entire direction of the organization would have to change. This throws off gear even some of the most innovative organizations and acts a de-motivator for employees. It then becomes an arduous task for leaders to align the direction of the organization with the vision of the company.

What, according to you, are the two most important assets of Asian Paints which have evolved over time but remained unchanged at the core? To what extent, these assets could be built through maintaining a unified vision over a long period of time?
Managing people and technology would be the two most important assets for Asian Paints. Both have evolved over time but remained unchanged at the core.
Asian Paints has always been a people-focused company. Over the years, it is our employees who have made the difference to our organization. Asian Paints has stressed on employee development and on creating leaders for tomorrow. The company has believed that to be a best employer organization it must always offer significant opportunities for personal and professional growth. It must provide personnel with challenging assignments and equip them with necessary training & skills to handle these assignments. The company has created a platform where talent is shared across the organization, as managers are given in different areas of operations. This gives them a good overall perspective of the business along with challenges of handling new areas of operations. For Asian Paints, Human resources will be more critical in future, than it ever has been in the past.

Asian Paints is India's largest paint company and ranks among the top ten decorative coatings companies in the world. The October 2002 issue of Forbes Global magazine USA ranked Asian Paints among the 200 Best Small Companies in the World for 2002 and presented the ‘Best under a Billion' award, to the company. Among its various other achievements, Asian Paints is the only company in India to have won the prestigious Economic Times - Harvard Business School Association of India award on two separate occasions, once in the category of "Mini-Giants" and the other in “Private sector Giants."

Technology is the other asset of the organization. Technology includes both, R&D and IT. Asian Paints has used technology throughout its years to gain a competitive edge in the market place. Today, the company has formulated the entire range of decorative coatings through homegrown technology. It has always given emphasis to R&D and continuously made investments in this area. In Information Technology, the company has continuously evolved its systems though the years. It has used IT as a tool to bring efficiencies and streamline operations. The use of IT and R&D will continue to be important in the future and Asian Paints will not hesitate in making investments in these areas to gain advantages for the organization.

Reconfiguration of value chain activities on a continuing basis is a key task of all companies aiming to retain competitiveness and achieve highest value-cost leveraging. Given this requirement, what were the key initiatives taken by Asian Paints during the last 5 years in this regard?
In last five years, reconfiguration of value chain activities to increase competitiveness has been one of the major focus areas for Asian Paints. In fact, Asian Paints has transformed as an organization. The sales and profit figures will reflect the strong financials of the company. But most important has been initiatives undertaken in all areas of operations to increase efficiencies. Some of the key initiatives undertaken are:
* Initiatives in manufacturing to reduce losses at factory
* Sourcing efficiencies
* Sweat existing assets for better productivity
* Introduction of new technology to drive efficiencies and increase productivity
* Implementation of a new supply chain solution
* Implementation of an ERP solution
Besides the above, we have focused on continuously improving environment management standards at our plants. Today all Asian Paints manufacturing facilities are accredited with the ISO 14001 certification for environment management standards. These systems have enabled the company to reduce effluent from the manufacturing facilities. The introduction of the new supply chain solution has transformed management of inventory and forecasting demand. The new solution that helps centralize demand forecasting has brought significant benefits for the company through reduction of working capital. It has completely changed the manner of functioning of the supply chain division.

It is often said that leadership complements management and vice versa. Based on your experience at Asian Paints, do you think leading and managing are two sides of the same coin?
If I was to differentiate between managing and leading it would be that while a manager administers, a leader innovates. While a manager has a short-range view, a leader has a long-range view. A leader investigates reality, while a manager accepts reality. A manager focuses on systems and structures, while a leader focuses on people. However management is no substitute for leadership, nor is leadership a substitute for management – they are complementary. And both are essential for ensuring business success.
At Asian Paints, we always believed it is important to create leaders. And through my years I have realized that the best way to create leaders is through entrepreneurship. The question is ‘How can I build an organization that will thrive on entrepreneurship?’ This has been the focus for our organization: to inculcate the spirit of entrepreneurship in our people. We have said ‘Give challenges to your people, give them the freedom to create their own boundaries, educate them about the values and culture of the organization. And then tell them to go ahead and innovate in their field.’ This has helped Asian Paints tremendously and has been one of the important factors for the success of the organization.

Ashwin Dani spoke to our Guest Editor,
Dr. Ranjan Das.