Why KAIZEN?

Once I was with Masaaski Imai at Poland, he is our Chairman and father of the Kaizen concept (just 81 yrs young, based in Japan). He asked 100 odd CEO’s present – why Kaizen? Why improve everyday?

Well, CEO’s said – to grow top line, bottom line, cut cost, customer delight etc, the standard Harvard answers!

He said NO – he went on to say, ‘improve , do Kaizen, get Lean ….so you and rest of your team can go home on time!! That was a whack on our heads!

Most times Muda (waste) robs our time and energy. As we identify Muda, we can reduce it. Time and resources get better utilized.

Jayanth Murthy

Director – KAIZEN Institute, India

Everyday, Everyone, Everywhere

8 stage process of creating major change

1. ESTABLISHING A SENSE OF URGENCY

•Examining the market and competitive realities

•Identifying and discussing crises, potential crises or major opportunities

2. CREATING THE GUIDING COALITION

•Putting together a group with enough power to lead the change

•Getting the group to work together as a team

3. DEVELOPING A VISION AND STRATEGY

•Creating a vision to help direct the change effort

•Developing strategies for achieving that vision

4. COMMUNICATING THE CHANGE VISION

•Using every vehicle possible to constantly communicate the new vision and strategies

•Having the guiding coalition role model the behaviour expected of employees

5. EMPOWERING BROAD-BASED ACTION

•Getting rid of obstacles

•Changing systems or structures that undermine the change vision

•Encouraging risk-taking and non-traditional ideas, activities and actions

6. GENERATING SHORT-TERM WINS

•Planning for visible improvements in performance, or “wins”

•Creating those wins

•Visibly recognizing and rewarding people who made wins possible

7. CONSOLIDATING GAINS AND PRODUCING MORE CHANGE

•Using increased credibility to change all systems, structures and policies that  don’t fit    together and don’t fit the  transformation vision.

•Hiring, promoting and developing people who can implement the change vision

•Reinvigorating the process with new projects, themes and change agents

8. INSTITUTIONALIZING NEW APPROACHES IN THE CULTURE

•Creating better performance through customer- and productivity-oriented behaviour, more  and better leadership and more effective management. 

•Articulating the connections between new behaviours and organizational success

•Developing means to ensure leadership development and succession

Source: Leading change, by J P Kotter, 1996, Boston: Harvard Business School Press

Index of Eight Core Industrties

                              Index of Eight Core Industries (Base: 2004-05=100)
                                                        December 2012

1. The summarized Index of Eight Core Industries with 2004-05 base is given at the Annexure.

2. The Eight core industries have a combined weight of 37.90 per cent in the Index of Industrial Production (IIP). The combined Index was 154.6 in December 2012 with a growth rate of 2.6% compared to their 4.9% growth in December 2011. The decline in growth in December, 2012 was on account of negative growth witnessed in the production of Coal, Natural Gas and Fertilizers. 

During April-December 2012-13, the cumulative growth rate of the Core industries was 3.3 % compared to their growth at 4.8% during the corresponding period in 2011-12.

Coal

3. Coal production (weight: 4.38%) registered a growth of (-) 0.2% in December 2012 compared to its growth at 5.5% in December 2011. In  cumulative terms, Coal production recorded a growth of 5.7% during April-December 2012-13 compared to its growth at (-) 2.7% during the same period of 2011-12. 

Crude Oil

4. Crude Oil production (weight: 5.22%) registered a growth of 1.0% in December 2012 compared to its (-) 5.6% growth in December 2011. Cumulatively, Crude Oil production recorded a growth of (-) 0.4% during April-December 2012-13 compared to its growth at 1.9% during the same period of 2011-12.

Natural Gas

5. The growth rate of Natural Gas production (weight: 1.71%) was negative both in December, 2012 at (-) 14.9% and in December 2011 at (-) 10.8%. Cumulatively also, Natural Gas production registered a negative growth of (-) 13.3% during April-December 2012-13 and (-) 8.8% during the same period of 2011-12.

Petroleum Refinery Products (0.93% of Crude Throughput)*

6. Petroleum refinery production (weight: 5.94%) had a growth of 5.0% in December 2012 compared to its growth at 0.7% in December 2011. In cumulative terms, Petroleum refinery production registered a growth of 6.9% during April-December 2012-13 compared to its 4.0% growth during the same period of 2011-12.

Fertilizers

7. Fertilizer production (weight: 1.25%) registered a growth of (-) 3.8% in December 2012 against its growth at 0.8% in December 2011. Cumulatively, Fertilizer production registered a growth of (-) 3.4% during April-December 2012-13 compared to its (-) 0.5% growth during the same period of 2011-12.

Steel (Alloy + Non-Alloy)

8. Steel production (weight: 6.68%) had a growth rate of 5.2% in December 2012 against its 10.2% growth in December 2011. Cumulatively, Steel production registered 3.6% growth during AprilDecember 2012-13 compared to its 9.1% growth during the same period of 2011-12.

Cement

9. Cement production (weight: 2.41%) registered a growth of 3.9% in December 2012 against its 13.6% growth in December 2011. The cumulative growth of Cement Production was 6.1% during AprilDecember 2012-13 compared to its 5.8% growth during the same period of 2011-12.

Electricity

10. Electricity generation (weight: 10.32%) had a 4.4% growth in December 2012 compared to its 8.9% growth in December 2011. The cumulative growth of Electricity generation was 4.6% during AprilDecember 2012-13 compared to its 9.3% growth during the same period of 2011-12.

* RPL (SEZ) with refining capacity 29MMT was commissioned on 25.12.2008 but crude throughput not reported by the refinery and not included in production for entire period.

N.B: Data are provisional. Revision has been made based on revised data obtained

Detailed report: http://www.eaindustry.nic.in/eight_core_infra/Eight_Infra.pdf 

Source: Govt of India – Ministry of Commerce

IIP contracts 0.1% in November 2012, boosts odds for rate cut

India’s index of industrial production (IIP) contracted to a four-month low of 0.1 per cent in November 2012, after growing at a robust 8.3 per cent in October, due to a poor performance by the manufacturing and mining sectors and a decline in production of capital goods.

The numbers have dented hopes of a recovery in economic growth and strengthened the case for an interest rate cut later this month by the Reserve Bank of India (RBI).

“One had expected a slightly bigger pick-up than what the numbers have shown. It is a bit disappointing. But on the whole, we seem to be getting out of the earlier space and seem to be going in the right direction. But the pace of growth is worrying,” Dr C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, told NDTV Profit today.

“…There are still some months remaining in the year. So we could see a pick-up,” he added.

An NDTV poll of brokerages and investment banks had found that the Index of Industrial Production (IIP), measuring the output at factories, mines and utilities, contracted by 0.5 per cent. It grew 5.9 per cent in November last year.

The banks polled were Nomura, CLSA, ICRA, Axis Bank, CARE, Credit Suisse, Deutsche Bank, HDFC Bank, HSBC, ICICI, ING Vysya, IndusInd Bank, Kotak Mahindra, Religare, RBS, Standard Chartered, and Yes Bank.

“Internally, we were expecting it. The IIP is not a very reliable estimate of monthly growth rate. In this particular case, you need to keep in mind that if you had high growth in October, it was because the base was zero. This year, Diwali was in November. Therefore, you saw a dip in November,” said Montek Singh Ahluwalia, Deputy Chairman of the Planning Commission. (Read here)

Diwali, which sees many factories shutting shop for a day or two, was celebrated in November last year. The year before, the festival was in October.

Manufacturing, which constitutes about 76 per cent of industrial production, rose 0.3 per cent from a year earlier, the Central Statistics Organisation said. In the April-November period, industrial production expanded an annual 1 per cent.

The general index for the month of November 2012 stood at 167.3. Factory output growth was 1 per cent in April-November period this fiscal year, down from 3.8 per cent in the corresponding period of 2011-12.

Mining output in November contracted by 5.5 per cent compared to a decline in production by 3.5 per cent in the same month in 2011. The sector’s production in April-November also declined by 1.5 per cent, against a contraction of 2.4 per cent in the year-ago period.

Capital goods output declined by 7.7 per cent in November, against a contraction of 4.7 per cent in November 2011.

The output of capital goods also contracted in the April-November period by 11.1 per cent, as against a dip in production by 0.1 per cent in the 2011-12 period.

Infrastructure output, or core output data, which is typically released before the headline number and accounts for nearly 38 per cent of overall industrial production, grew 1.8 per cent year-on-year in November, sharply slower than in the previous month.

Asia’s third-largest economy is on track to expand at its slowest pace in a decade for the fiscal year that ends in March, weighed down by a combination of weak investment and consumer demand.

In a report released Thursday, 10 January 2013, HSBC cut its gross domestic product (GDP) forecast for the year ending in March to 5.2 per cent from 5.7 per cent, and its forecast for the next fiscal year to 6.2 per cent from 6.9 per cent. The bank had previously cut its India growth forecasts for fiscal 2013 and 2014 in September.

December trade data, expected to be released later on Friday, could add to the misery, as exports, which make up around one-fifth of the economy, have fallen against year ago in the previous seven months.

GDP growth that once looked set to hit double-digits has been stuck below 6 per cent for the past three quarters. The slowdown is worrying for the government as it prepares for a series of state elections and a general election due in 2014.

Previously pilloried for his government’s inaction as the economy slowed, Prime Minister Manmohan Singh launched a series of reforms late last year to salvage a reputation made as the architect of India’s economic liberalization in 1991.

On Wednesday, the government hiked railway passenger fares for the first time in nine years and it is also considering raising subsidized fuel prices.

Aditi Nayar, senior economist  at ICRA, said the November IIP number was in line with expectations.

“The shift in the festival calendar was responsible for the sharp variations in industrial growth in October-November 2012. In our view, average growth for these two months provides a better gauge of the prevailing industrial trends; the improvement in industrial expansion to 4 per cent in October-November 2012 from a marginal 0.1per cent  in the first half of the fiscal year is moderately encouraging,” Ms Nayar said. “Nevertheless, with domestic consumption sentiments and investment activity yet to see a substantial improvement, we expect the central bank to reduce the repo rate in the upcoming policy review.”

Politicians and industry have pleaded for the central bank to reduce interest rates that are among the highest of the major economies.

The RBI has left its policy repo rate unchanged at 8.0 percent since April 2011, citing stubbornly high inflation, but has signalled it could cut in the January-March quarter.

Inflation numbers for both wholesale and retail prices are due to be released on Monday and should provide crucial input for the RBI’s upcoming policy review on January 29.

According to a Reuters poll of analysts, wholesale prices probably rose an annual 7.40 per cent in December, faster than a 7.24 per cent rise in the previous month.

Consumer price inflation in the same month probably stood at 10.20 per cent, above 9.90 per cent in November, the same poll showed on Thursday.

Several analysts believe the RBI should still have leeway to cut its policy rate if the uptick in inflation in December is not more severe, as inflation had been slowing in the previous two months.

The stock markets gave a muted response to the data. The benchmark 10-year bond remained flat at 7.85 per cent, while stocks retained their gains, with the Nifty is up 0.3 per cent.

“I think we need to create an environment in which the growth momentum is carried forward. Therefore, I would expect a pick-up to happen later. The general trend would be for inflation to come down,” Dr Rangarajan said.

“I expect the growth rate for the calendar year to be between 5.5 and 6 per cent and that for the next year to be higher for the simple reason that the change in investment sentiment to reflect. It takes time for the change in sentiment to reflect at the ground level. Therefore, I would expect growth to be 1 per cent higher next year. We should see inflation slowing next year. Our own expectation was that inflation would go down to 7 per cent by March. With certain changes in administrative prices, we need to see…but one can expect inflation to come down,” he added.

Source: http://www.profit.ndtv.com/news/

GDP to grow at 5% in 2012-13, lowest in this decade

India’s economic growth rate this fiscal is estimated to be sharply lower at 5 per cent, lowest in a decade, on account of poor performance of manufacturing, agriculture and services sector.

This estimate by CSO is drastically lower than what has been projected thus far by the government and RBI. (Source: TOI – 7th Feb)

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The Key to SURVIVAL Is To Learn to Add More Value Today, and Every Day. by Andrew S.Grove

Why Indians Lag Behind?

(One Indian = 10 Japanese, 10 Indians = One Japanese)

Lack of teamwork and co-operation is one of the most serious problems affecting progress in all areas of India and wherever Indians work worldwide. The key problem in India is always implementation, not lack of policies. We have great policies and ideas about how to do things, but severely lacking teamwork.

When the Japanese came to work in India to develop the Maruti Suzuki car, a joke went around that one Indian was equal to 10 Japanese: Indians were very smart, capable and dedicated individuals. But 10 Indians were equal to 1 Japanese: Indians lacked team spirit and co-operation.

What makes matters even worse is our “crab” mentality – if someone is trying to climb higher and achieve more, the others just drag him down. The signal that the others send out is, ” I wouldn’t do it; I wouldn’t let you do it; and if by change you start succeeding, we will all gang up and make sure that you don’t get to do it.”

The question is: Where does this attitude come from, and how do we recognize and handle it?

Hierarchical System

Part of the problem is our cultural background. We’ve had feudal and a hierarchical social system in which whoever is senior supposedly knows best. This was fine in earlier times when knowledge and wisdom were passed on orally; but in modern society, there is no way that one person can know everything. Today, you may find that a young computer-trained person has more answers for an accounting problem than a senior accountant has. Until we understand how best to leverage this diversity of experience, we will not be able to create and fully utilize the right kind of teams.

Sam Pitroda: ” In my younger days in the US , I attended an executive seminar for Rockwell International, where about 25 senior company executives had congregated for a week for strategic discussion. In the evenings, we would break out into five different groups of five people each. In those group workshops, someone would delegate tasks, saying: ” You make coffee; you take notes; you are the chairman; and you clean the board”. The next day, there would be different duties for each group member. No one ever said, ” But I made coffee twice or I cleaned the board entire day”. I thought to myself, if this were happening in India , people would be saying, ” But I’m the senior secretary – why should I make the coffee and you be the chairman?” Hierarchy comes naturally to our minds.

What Derails a Team?

Group work requires a thorough understanding of the strengths and weaknesses of individuals irrespective of their hierarchy. Because of our background, we often don’t learn how to exercise and accept leadership- to lead and to follow – simultaneously. Some gravitate toward exercising leadership, and others gravitate toward accepting the lead of others. But in true teamwork, everyone needs to do both.

Being a good team player implies respect for others, tolerance of different points of view and willingness to give. The ability to resolve conflicts without either egotism or sycophancy is a very important aspect of being a team player: You have to agree to disagree. I find that people in India somehow tend to focus on achieving total agreement, which is almost always impossible. So before work begins people want everyone to agree on everything instead they should say OK. This is what we agree on, so let’s start working on this. What we don’t agree on, we will resolve as we go along”. For things to move forward, it’s important to work on the agreed-upon aspects and not get bogged down in the areas of disagreement. Yet another snake that kills teamwork is people’s political agendas. You’ve got to be open, clear and honest to be a good team player. Most people though, have a hidden agenda – they say something but mean the exact opposite. I call it “split-level consciousness”. To say and mean the same thing is a very critical part of a good work ethic.

Criticizing the individual or the idea?

When Sam was working in C-DOT (400 employee size company), If someone had not been doing well, Sam used to tell the person directly to his face in a general meeting. The employees said that was insulting and they should be pulled aside individually to be told of the inefficiency. But in today’s world, you cannot afford to do that every time. Besides, Sam figured that criticizing someone in a meeting was for the benefit of all present, and everyone could learn from that individual’s mistakes. It was then that Sam learned how Indians do not differentiate between criticizing an idea and criticizing an individual.

So in a group, if you tell someone that his idea is no good, he automatically takes it personally and assumes that you are criticizing him. No one can have a good idea everyday on every issue. If you disagree with my idea, that does not mean that you have found fault with me as a person. Thus, it is perfectly acceptable for anyone to criticize the boss – but this concept is not a part of the Indian System. So from time to time, it is important for an organization’s Chief Executive to get a report on the psychological health of the firm. How do people in the team feel? Are they stable? Confident? Secure? Comfortable? These are the key elements of a team’s success. For a boss to be comfortable accepting criticism from subordinates, he must feel good about himself. Self-esteem is a key prerequisite to such a system being successful.

Mental Vs. Physical Workers

Another serious problem facing India is the dichotomy and difference in respectability between physical and mental workers, which seriously affects team performance.

Mr. Sam had a driver named Ram, who he thought was one of the best drivers in the world. He used to open the door for him whenever he entered or exited the car. Right in the first few days Sam told him ” Ram bhai, you are not going to open the door for me. You can do that If I lose my hands”. Ram almost started crying. He said, ” Sir, what are you saying? This is my job!” Sam told him that I didn’t want to treat him like a mere driver. He had to become a team player. Sam told him that whenever he was not driving, he should come into office and help out with office work – make copies, file papers, send faxes, answer phone call or simply read – rather than sit in the car and wait for me to show up.

Diversifying tasks increases workers’ self-esteem and motivation and makes them team players. Now, even If Sam calls him for work in the middle of the night, he is ready – because Sam respects him for what he does. Team Interactions unfortunately, when good teams do get created, they almost invariably fall apart. In our system today it is very difficult to build teams because nobody wants to be seen playing second fiddle. It is very hard in India to find good losers. Well, you win some and you lose some. If you lose some, you should move on! You don’t need to spend all your time and energy of different cultural backgrounds, religions, ethnicities and caste groups – a fertile ground of diversity in the workplace. We should actually be experts in working with diversity. But it can only happen when we get rid of personal, caste and community interests.

There could be a 40-year-old CEO with a 55-year-old VP. It has nothing to do with age; capability and expertise are what counts. But you don’t yet see these attitudes taking hold in India . Managers in the US corporate environment who work with Indians – and in fact, with Asians in general – need to recognize that these individuals have a tendency to feel that they are not getting recognition or are not being respected. It must be realized that these individuals have lower self-esteem to begin with and therefore have to be pampered and encouraged a little more because they need it. This makes them feel better and work better. No Substitute for Teamwork. Teamwork is key to corporate and national governance, and to get anything done.

The fundamental Issues are respect for others, openness, honesty, communication, willingness to disagree, resolution of conflict, and recognition that the larger goal of the team as a whole rumps Individual or personal agendas.

Don’t be afraid of pressure.

Remember that Pressure is what turns a lump of coal into a diamond.

Source: Written by Sam Pitroda, Chairman & CEO of World Tel