Beruflich Dokumente
Kultur Dokumente
SA Khader, CMC
SAK Consultants & Associates, New Delhi
sakhader@airtelmail.in
ABSTRACT
In the market economy, characterized by free flow of goods & services, the firm level
Competitiveness determines the success as well survival of the enterprise. Enterprise
Managements are seized with the issue of maintaining and further improving upon their
competitive positions and are looking for models and tools that aid them in this process,
particularly due to complexities in managing business to provide balanced considerations to
triple-bottom-line features of Profit-Environment–Society. It is here the relevance of an
enterprise model integrating all these facets comes up as an aid, to enable continuous focus on the
competitiveness factors and its management & monitoring through the evaluation of strategic
interventions on a periodic basis. The basis of the model is “Competitive Assets when synergized
by Competitive Processes give Competitive Results”.
This paper tries to present such an Integrated Competitiveness Model, with an appropriate
quantification mechanism that is amenable to self-assessment and introspection of the related
strategies by the management. The application of such a model and its methodology results in
evolving strategic road-maps towards enhancing its competitive strength. Further, the efficacy of
this model is illustrated though an application case of an energy service providing company in
India, establishing the usefulness of the model for the contemporary enterprise and institutional
managements
1
Enterprise in the Information Age
A new paradigm of business operations has come up during this decade, primarily characterised
by increased competition compared to the hitherto prevalent protected markets. Competition is
the name of the hottest economic game these days. Donald M. Kendall, Former Chairman &
CEO of Pepsico says: ‘Hard-nosed Competition is the best assurance of healthy business.
Constructive competition between rival suppliers is central to a perfect market economy, where
all factors of the economy behave on commonly shared and agreed business practices and ethics.’
The last decades of the last century, typically known as the ‘on-set of the information age’,
characterised by new paradigms of global socio-political and socio-economic realities, ushered in
a new set of capabilities needed for competitive success. These are:
1. Ability to exploit Invisible assets (Human Capital)
2. Customer relationships (Develop Loyalties)
3. Innovative Product/Service Production (Targeted Customers & Branding)
4. Customised High Quality Products/Services (Low Cost & Shorter Lead Times)
5. Continuous Improvement of Process Capability (Quality, Response Time, Employee
Skills & Motivation and Knowledge Generation)
6. Use of IT, Databases & Systems (Speed & Knowledge)
Such capabilities can possibly be developed by tapping the innate abilities of human resources
primarily and managing them as sources of innovations for higher productivity & quality.
Companies with good environmental record and performance are more likely to take advantage of
the public image of ‘management with humane and societal concern’ and also ultimately result in
better brand image and brand equity from the angle of the customer, rather than having mere
environment friendly products and cleaner technologies. Multi-pronged approaches are prevalent
for companies to focus on environmental and societal needs of the enterprise; including adhering
to ISO standards (14000, 18000 & 26000) and UN’s Global Compact & AA1000. These are
Business Ethics, Development & Use of safe and Cleaner Technologies, Consumer & Investor
protection, IPR, Pollution, Resource Conservation, Labour Laws & Child Labour and
Expectations & Responsibilities of a Corporate Citizen and related Societal Concerns. In other
words, higher competitiveness means enhanced Social-Productivity. These are catching the
attention of large enterprises and the SMEs too are trying to follow suit, rather slowly. According
to Michael Porter, the impact of focusing on environment is not only benign and may have
significant positive effects on competitiveness by promoting efficient use of inputs, total quality
2
management and technological innovation – the same basic approach as for enhancement of
productivity
Knowledge Management
Conventionally Knowledge is equated with technology and one tends to view it as being vested in
the management of the firm. This view, however, is clearly becoming obsolete. It is now more
appropriate to look at ‘Knowledge’ with in the firm as a complex combination of technology,
information, experience, training and very importantly, as a result of effective processes inside
and outside of the firm to exchange all these aspects. More the knowledge in a firm, and more
easily it flows between people of the firm, the more efficient the firm is likely to be. A 21st
century organization has to focus on continuous development and refinement of its knowledge
resource through effective knowledge management processes, to retain its competitive advantage
over others. The enterprises in general should live up its tradition of Indian Sages who
demonstrated “Knowledge gets multiplied and better harnessed by sharing & rather than purely
from the angle of trading it as Power”
Companies being the prime vehicles for improved competitiveness at all levels, attempts are
made to help companies on evaluating their competitiveness. The enterprise-level
Competitiveness means that the enterprise should be able to achieve the following:
• Ability to retain the customer base as well add on to it through its continuous
development and supply of acceptable and competitive Products/Services that means it
must be able to enhance its market share
• Demonstration of growth by acknowledged enhancement of shareholder value or
attractive returns to partners and enhanced societal satisfaction and become a brand
• Adequate focus on internal human asset development for leveraging and harnessing the
competitive assets
Eminent Management Guru, Peter Ducker says that it is the enterprise that is going to compete
with its counterparts in the global arena, but not the country as a whole. The enterprise
Productivity & Quality (P&Q) level has a singular and profound influence on the features and
expectations from the customer’s point of view. This is basic to enhance the competitiveness of
the enterprise. Hence it is essential to study the integrated facets of improving P&Q on a
continuing basis mainly to understand the competitive strength of the enterprise as well as its
strategic repositioning to the fast changing requirements of competition in the global market.
3
This kind of Competitive Performance comes from the Competitive Assets, when they are
managed or harnessed by deploying effective and Competitive Processes. Any model for
Evaluation of Enterprise level Competitiveness has to include these elements. Now, let us look at
a model (See figure) given at next page. An enterprise comes into operation in an economy or a
society that has all its unique socio-cultural and socio-economic characteristics and laws of the
land. The market environment consists of the domestic and external customers, and the
vendors/service providers. The enterprise is required to survive in the environment created by
these institutions, external to it and also shapes the external environment with its contribution in
terms of its values and ethics, practices and influence. The competitive assets include: i.) the
Human-ware (consisting of the senior management leadership and operating & servicing
Personnel), who in turn evolve strategies, plans & programs to run the business, ii.)
Technology, the accumulated knowledge-ware (with the people and also within the enterprise)
and iii.) In-house ability to utilize and exploit the external environment such as the
infrastructure, legal & administrative facilitation, market forces, socio-cultural factors etc, so as to
effectively serve the customers. Assets could be tangible and/or intangible; that facilitates the
enterprise, serve its stakeholders through its products, services and relationships.
As is commonly known, it is the customer focused and employee driven processes that provide
the ultimate service to the customer. The processes are the vital links in the supply chain between
the customer and the competitive resources ultimately result in the required customer satisfaction
& delight and convert into customer loyalty. More efficient and customer focused the processes
are; greater is the possibility of customer satisfaction. It is the effective synergy between the
competitive assets and the competitive processes (commonly known as process management) that
results in higher competitive performance, as relevant to differing stakeholder requirements. The
process architecture in an enterprise includes i). Strategic Management, ii.) Customer concern
Management, iii). Operating Management, iv). Technology Management v). Human
Resource Management and vi). Society Centered Processes.
While the assets & processes and productivity & quality built in the products/services, are
internal to the enterprise, ultimately the market performance of the entire organization, is a true
measure of competitiveness of the enterprise. The market push and pull forces get, influenced by
productivity/prices, quality performance & customer service and also the image and branding of
the enterprise as a socially relevant and responsible institution. But the patronage & support of
share holders, the institutions and government representing the economic environment is
also necessary along with the employee involvement that comes about from their
satisfaction. To continue to do business in the society, it is essential for the enterprise to
evolve itself as a responsive corporate citizen in maintaining environment & safety, good
employment practices, resource conservation, imbibing the social concerns of the society
and develop a brand by itself. Thus, the performance components are; i.) Economic
productivity, ii) quality & customer satisfaction, iii) social productivity and iv) resultant
competitive market and financial performance. The competitive edge at a finer stage has a
number of non-price related factors, which are linked with the ethical and responsible behavior of
the enterprise. Any mechanism for assessment & improvement of competitiveness needs to
consider these interlinked facets of performance along with keeping the’ assets and processes
tuned & sharpened to the fast changing needs of time. The following figure No. 1 depicts the
interlinking between different factors in an integrated model for Enterprises level
Competitiveness.
4
Amenability for Self Assessment & Improvement
This model has structural similarities with the famous MBNQA model of assessing organizational
Excellence in Quality & Customer focus. Like, MBNQA and EFQM models, this model could
also be used for self-assessment by the management for gauging their competitive performance
and plan & implement programs for further enhancing their competitiveness. The system of
assessment includes giving weights to factors and sub-factors, which are further sub-divided into
five degrees depending on the seriousness and professionalism in realizing the best in that facet of
enhancing the competitive strength of the enterprise (on the lines of CMM Maturity Model). In
the present competitive business environment, an evaluation of enterprise competitiveness purely
based on performance without considering the Enablers would be incomplete. At the same time
too much concentration on enablers (Assets & Processes) and neglecting Results (Performance)
can be suicidal to the enterprise and there has to be a balanced approach to give equal weights of
50:50 to both. There is a break-up in the sub-factors as defined in the subsequent pages.
5
Finally, the evaluation by the company executives or external assessors is undertaken at the sub-
factor level. This is done by comparing the current situation in the enterprise against a five-
degree scoring scale (each degree having an equal weight – points, all adding up to the total value
of points for that sub-factor) specially developed for this sub-factor. For instance, the sub-factor
on ‘Leadership-Vision’ has a total of 10 points, which is further divided into a scoring scale of 5
degrees/levels of leadership-vision. On this scale the first degrees has 2 points, while the 5th
degree is awarded 10 points and all other degrees, lie across the scale with 4, 6 and 8 points
respectively. By adding the scores of different factors and sub-factors for an enabler like Assets,
the aggregate score for the competitiveness of the enabler can be estimated. As a starting point,
it is preferable that the enterprise’s competitive position is evaluated and compared separately for
Assets, Processes and Results. However, the total score for the competitiveness is arrived at
adding the aggregates of competitive assets, processes and results. In this system, it is possible to
compare the scores of an enterprise with its competitors as well as with any general enterprise for
its competitiveness performance and benchmarking. Further, it is also possible to undertake inter
temporal measurements of competitiveness for the same enterprise to assess the impact of
policy/strategy and programs in improving its performance. The case of an Energy Services
Company illustrated in subsequent sections would establish the efficacy of this model and the
self-assessment approach to enhancing Competitiveness.
6
Generic Model FSES Model (A Case)
7
10 Human Resource Management 10 Human Resource Management
10.1 HRM Process (Motivation etc.) 30 10.1 HRM Process (Motivation etc.) 30
10.2 Knowledge management etc. 10 10.2 Knowledge management etc. 20
11 Society-Centered Processes 11 Society-Centered Processes
11.1 Environment Focus Process 15 11.1 Environment & Social Concern 10
11.2 Social-Concern Process 20 11.2 --
8
A case of an ESCO (Energy Service Company)
Five Star Energy Services Co. (FSES) is one of the popular service providers in the power sector
in India and mainly engaged in Operation & Maintenance of state owned power plants, in
addition to providing project management services in new power plant construction, Renovation
& Modernization as well as Performance Optimization. The main area of operations is in the
thermal and gas based power plants. They have formidable competition from more renowned
companies like, NTPC, BHEL, PFC, IPPs & independent Power Procurers and well-known
global names in power sector consultancy.
FSES is developed in India by a renowned ESCO from Europe having global operations in this
field, and is about seven years old. It maintains a reasonably good brand image, particularly due
to its European linkage. Over these years it had been able to grow from 60 million rupees to 210
million rupees of turnover in terms of professional service charges alone, had been rather erratic,
not a steady growth. However, the CEO of the company who is a technocrat has a great vision of
making this as one of the top three ESCOs in India. It is felt that there is an opportunity to
multiply its turnover considering the perspectives of the government of India in the expansion of
power sector in India. The company would like to have multifold growth ranging from 10 to 35
times in their lines of business, particularly in the engineering & technology services as well as
optimization of power plant operations.
The services of FSES are predominantly knowledge based, has high degree of employee-costs
forming about 35%, while the admin and general costs form about 55% mainly due to the royalty
and other costs involved in the technology transfer and IPR related aspects of service-support
from its foreign collaborators. The competition in the lines of business is quite severe and
competitors are formidable public sector giants including China Power and also international
ESCOs with deep pockets & access to latest technologies and know-how such as Yogakawa,
ABB, Honeywell, Emerson, ENERGO etc.
Towards drawing up a strategic road-map for FSES, to enable itself to steer through the fierce
competition and reposition itself to its vision oriented goals and targets through self-assessment
approaches, using the above illustrated competitiveness model, the CEO constituted a team of
senior managers cutting across the functions like marketing/business development, operations,
technology & engineering, finance, human resources and the general manager. This team under
the guidance of a moderator has adapted the generic model to the specific conditions and factors
influencing the company’s performance and evolved the factors and sub-factors with their relative
weightings. FSES competitiveness model has only about 48 sub-factors in total as against the
total of 94 in the generic model. The same is compared and presented at Fig.No.2.
Subsequently, the team went on to delineate the detailed tool kit for these 48 factors, signifying
the states in which these factors could lie at a point of time depending on the management
policies, strategies and the level of vigor in their implementation. This again is adapted from the
standard tool kit meant for the 94 sub-factors, generally following five degree CMM Level
delineation. The following three sample formats of the tool-kit providing the
guideposts/benchmarks for Vision under assets-set, Strategy Formulation and Review under the
process-set and the value-added productivity under the results-set, clearly depict the five states in
which FSES could be depending upon the efforts of the management. For instance, in case FSES,
hopes to reach the fifth degree of vision i.e. a Shared Vision for it to be developed involving all
its stakeholders providing a balanced considerations to triple bottom line issues of the company,
one could imagine the kind of strategic interventions needed to be implemented by the
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management. Only, when such efforts are put in and the shared vision is made known to all, the
management qualifies for the 10 points that add up to the competitiveness index of FSES.
Vision
I II III IV V
2 4 6 8 10
Accordingly, for FSES to qualify for the fifth degree of strategic management process, it has to
evolve a strategy that is data driven, integrating the inputs & perspectives of all its stakeholders
including closer interface and participation of concerned in its periodic review, following a top-
down & bottom-up approach in this process, as described in the tool kit below:
2 4 6 8 10
Similarly, the results/performance of FSES need be measured and benchmarked either with the
best in class or the average unit in the sector for its competitive positioning. The tool-kit for the
related sub-factors do need to have quantitative factors/measures as illustrated below and there is
a need to have an appropriate measurement system in vogue for assessing its comparative
performance and further evaluation and improvement actions
10
Value Added Productivity
I II III IV V
2 4 6 8 10
PRODUCTIVITY PDY. AROUND 0 – 10% OVER PDY OVER 10 – 25% 25 – 50% OVER
AROUND 10% INDUSTRY INDUSTRY AVERAGE OF INDUSTRY INDUSTRY AVERAGE
BELOW INDUSTRY AVERAGE 5 – 15% AVERAGE IMPROVEMENT OVER
AVERAGE 0 – 5 % Improvement IMPROVEMENT OVER 15 – 25% 25% FROM LAST
NO IMPROVEMENT over last year PREVIOUS YEAR IMPROVEMENT YEAR
OVER THE PAST GVA increase OF GVA : 10 – 20% OVER OVER LAST YEAR OVER 50% INCREASE
GROSS VA IS MORE 10% OVER LAST LAST YEAR 20 - 50% INCREASE IN GVA
OR LESS THE SAME YEAR 0 – 5% Reduction in IN GVA RESTRUCTURED TO
AS LAST YEAR GROWTH IN Manpower over Last year 5 – 10% REDUCE OVER 10%
EMPROYEES NO. OUTPUT BUT REDUCTION IN MANPOWER
SAME OR MANPOWER STRENGTH STRENGTH
INCREASED REMAINS THE
MARGINALLY SAME
After finalizing the tool kit as per the adapted model, the team goes on to evaluate its current
position and assess the current level of competitive vigor at FSES to be around 229 out of 500
maximum points and find that there is ample scope for the management to initiate strategic
actions to move towards the top targeted performance of the company in a three year span with
the following definitive performance features.
When such results are achieved, the competitiveness Index would be 349 out of 500, measured on
the same line explained earlier. The relative inter-temporal factor performance profiles leading
the measures of Competitiveness indices are indicated in the following Fig. No.3.
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Fig. No.3: Inter-temporal Positioning of FSES in Competitiveness Factors
Factor/Sub-Factor\Degrees I II III IV V
#
Leadership -Vision: *
#
-Values & Ethos: *
#
-Internal Perception *
#
- External Perception *
- Commitment * #
#
Strategy – Cost Reduction *
#
- Market/Customer *
External Relationships * #
#
People - Strength *
- Quality (Education/Skill) * #
#
- Attitude & Teamwork *
- Personal Vigor * #
#
Technology - Physical & IT *
#
- R&D Investment *
#
- Core Competence *
Technology - Patents * #
#
- Networking & JVs *
#
Externals: - Infrastructure *
- Competition * #
Processes
#
Strategy formulation *
#
Implementation *
#
Capital Asset Management *
#
Customer Concern Process *
#
Image Building *
12
Factor/Sub-Factor\Degrees I II III IV V
#
Operating Process *
#
Supply – Chain Management *
#
Outsourcing *
#
Technology Up-gradation *
#
Product & Process Development *
#
R&D Process *
#
HRM Process *
#
KM Process *
#
Environment/Social Concerns *
#
Results - Value Added (VAP) *
#
- Employee satisfaction (ES) *
- HR Productivity (HP) * #
#
- Cost of Quality (COQ) *
#
- CSI *
#
- Response Time (RT) *
#
- Product Innovations(PI) *
#
- Employment Practice (EP) *
#
- Market Share (MS) *
#
- Export Growth (EG) *
#
- Employee satisfaction (ES2) *
* #
- Public Image (PI)
* #
- ROI
13
The above bulleted chart indicates the detailed positioning the component strategic interventions
that would result in such a progress in the competitiveness of the company. The details of
strategic pursuits of FSES in respect of the four pronged strategies are outlined in the Annexure.
A review after an year showed that the company has been able to move to 288 from the earlier
position of 239, nearly moving towards reasonable enhancement of its competitiveness coupled in
enhanced turnover and profitability and other performance parameters such as turnover, market
share and employee satisfaction.
Conclusion
Enterprise Managements are seized with the issue of maintaining and further improving upon
their competitive positions in this hyper competitive domestic & global markets. Further the
performance optimization has become relatively more complex due to the need to provide
balanced considerations to triple-bottom-line features of Profit-Environment–society. It is here
the relevance of an enterprise model to integrate all these facets comes up as an aid, to enable
continuous focus on the competitive factors and also monitoring of competitiveness through
evaluation of management efforts on a regular basis.
This paper tries to develop such an integrated model, with an appropriate quantification
mechanism that is amenable to self-assessment and introspection by the management. The
application of such a model and its methodology results in evolving strategic rod-maps towards
enhancing its competitive strength. Further, the efficacy of this model is illustrated though an
application case of an energy service providing company in India, establishing the usefulness of
the model for the contemporary enterprise and institutional managements
14
Annexure
Strategy I:
Bring in Strategic Thinking & Strategic Planning
Development of Vision-Mission-Objectives & Values and Strategies
Vision statement to be made public to all stakeholders-Employees and
discus how to achieve this Policy on Business Values/ Professional Ethics (periodically
communicated and monitored) – Focusing on the Customers and their Requirements
Focus on Leveraging Core Competence of Foreign Principals & others;
Emphasis on Export of Services and Consulting in India may be Beneficial
Strategy II:
Strengthen Marketing & Customer Concern Processes
Develop a Culture to assess/measure Customer Satisfaction Index and integrate the feedback
Continuous Focus on Capturing Customer Requirements and on Cost Reduction, Quality
Improvement and Timely Delivery (Benchmark with national/international best)
Leveraging USPs of JV partners, install systems to effectively build a Corporate Image/Branding
in India & Abroad (including Professional Networking for Business Promotion)
Build/Strengthen Networking & Partnerships to Develop and New Customers & Services
Strategy III:
Strengthen Technological & Operational Processes
Reposition the Physical and Technological Infrastructure (HW & SW) to the State-of-the Art
(suitable to Technical Consulting sector & Benchmarking with Competitors) and continuous up-
gradation
Pursue Seeking and Maintaining ISO-9000 Certification and other professional internationally
recognized accreditations relevant to the fields of operation.
Focus on New Product/New Process Development through leveraging Knowledge Management
and Specialist Creativity
Develop a fully Professional Culture of Servicing the Customer in line with the changing norms
and standards of the power sector/consulting industry
Strategy IV:
Focusing on Tapping Employee Creativity