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A BOOK OF SELECTED CASES

Volume XXII

STEEL AUTHORITY OF INDIA LIMITED


Management Training Institute
An ISO 9001 : 2008 Institute
Ranchi - 834 002 (Jharkhand)
Copyright © Management Training Institute
Steel Authority of India Limited
Ranchi - 834002 (India)

June 2017

Cases have been prepared as a basis for classroom discussion. They are not designed
to illustrate either effective of ineffective handling of situations. Suggestions / feedback
on this issue of “A Book of Selected Cases” may be sent to sandipdash@sailmti.com/
nhrdnetwork.ranchi@gmail.com
Editor
MkWñ fueZysanq egkik=kk
funs'kd (dkfeZd)
Dr. Nirmalendu Mohapatra
Director (Personnel)

Message

It is heartening to see that 'Anubhav' - the Management Case Study contest


being organized jointly by SAIL and NHRD has completed its fifth edition
and has evolved into a much sought after learning platform.
Case studies have long been used for developing managerial acumen
and competencies for understanding the myriad diverse situations and
complexities that are encountered in businesses. It is an appreciable and
encouraging phenomenon that more and more practicing managers are
now sharing their experiences by way of case studies which are discussed by
the students of management to get a feel of real life business dynamics and
decision making.
I wish the organisers of "Anubhav" - the case study contest and also the
publishers of "A Book of Selected Cases" all success in their mission towards
creating a culture of learning amongst new generation managers and
dissemination of knowledge.

(Dr N Mohapatra)
dkek{kh jkeu
dk;Zikyd funs'kd (ek-la-fo-)
Kamakshi Raman
Executive Director (HRD)

Message

Whether it is Newton discovering gravity in apple orchard or Archimedes


discovering buoyancy in water bath, all major redefining moments of human
civilisations has come through reflection on one’s own experience and sharing
its insight with others. This is the common thread binding all learning and
development stories in the society and same is the spirit behind case study
methodology for management lessons.
This second volume of “A Book of Selected Cases” has a wide range of cases,
both in style and core issues handled. These have been culled from “Anubhav”
– the management case study contest, in which participants from different
organisations and management institutes have participated.
I am sure that, the students of management and the practicing managers from
all sectors will find the cases highly useful in drawing out their management
lessons and also in better understanding of the dynamics of business decisions.

(Kamakshi Raman)
Mk- v;ksè;k ukFk nk'k
egkizca/d (ek-la-fo-)
,oa vè;{k ,u-,p-vkj-Mh- usVodZ NHRD
jk¡ph
N E T W O R K
Ranchi Chapter

Dr. A. N. Das
General Manager (HRD)
& President NHRD Network
Ranchi

Introduction

As President of National HRD Network, Ranchi Chapter it gives me a great


pleasure that we have been hosting national level contest, Anubhav – the
management case study contest, which has participation from all parts of the
country and different sectors of our economy. The list of finalists of Anubhav
2017 from which cases have been selected for this edition has both practicing
managers and academicians in equal measure and this reflects the general
appeal and popularity of this contest.

I am sure the readers will find the case closely resembling their own situations
and therefore prove useful for developing theirperspective and insights on
different managerial issues, apart from providing good academic source for
management learning in classrooms for students.

(Dr A N Das)
A Book of Selected Cases
Volume XXII

CONTENT

Promoting Out-of-Home consumption of Tea in a funky dafe


1. format : Tapri - The Tea House 1
Kavaldeep Dixit, Ranjul Saxena and Bharti Sharma

The Aroma os Success - The ITC & Ormas Story


2. 14
Kiran J Mahasuar

Leadership in Unfamiliar Environments : Airbus' Establishement


3. of an Engineering Center in India 26
Roger Moser and Gopalakrishnan Narayanamurthy
Engaging Blue Collar Employees at the Workplace : Does
4. Supervision Matter? 54
Simran Sutaria and Sameer Sudhakar Pingle
Finding the right fit : A new approach-Radfarm Pvt. Ltd.
5. 63
Tannu Priya and Kumar Deepak

The 200cr "Rat Hole"


6. 69
Shipra N Hemrom and Sandeep Kumar

Innovation - A paradigm shift for Durgapur Steel Plant


7. 81
Lohitendu Bandu, B K Padhi and Ariff Khan K A

Rise of the Phoenix


8. 93
Abhishek Kumar and Soumya Sachdeva
Promoting Out-of-Home consumption of Tea in
a funky café format: Tapri-The Tea House
“Two young MBA graduates, Ankit Bohra and Saurabh Bapana, took up the entrepreneurial
route after leaving their cushy bank jobs in Mumbai and set up, of all things, a tea shop in
Jaipur. And in a city with a fast-growing cafe culture that boasts of brands like Costa Coffee
and Cafe Coffee Day.”
Quoted by Times of India, December 04, 2011
Introduction

T
ea isn’t simply tea in the country but it is like a staple beverage and a day without
it is unimaginable and incomplete. The importance of tea drinking in India cannot
be confined to words, it has always been a part of the morning routine of Indians
and the country has the largest consumers of tea in the world. India is the also the second
largest tea producer globally and all varieties of tea are produced in the country with
majority of the production taking place in West Bengal and Assam. While CTC (crush,
tear, curl) accounts for around 89 per cent of the production, orthodox/green and instant
tea account for the remaining 11 per cent. Production of tea reached 1,233.14 million kg
in 2015-16.
Tea drinking in India dates back to 750 B.C. when the locals used wild native plants for
brewing it but it was Britishers who promoted consumption of tea in the country and
today drinking tea has become an integral aspect of the India culture.
Factually India is largely a tea-drinking nation, but strangely no big tea cafe chains exist in
the country, compared to the coffee cafes. However, Indians are progressively becoming
exposed to international cultures and turning experimental in their eating habits, seeking
new food brands and cuisines. A similar trend is being observed in the café market which
is escalating the growth of tea-based concepts in India. This is probably why the new
generation of entrepreneurs is taking initiatives in making tea points more structured and
over the last couple of years a few high-quality tea bars have opened up in various parts
of the country where consumer fond of tea can relish a cup of tea in an air-conditioned,
appealing cafe-like setup.

Case Written by : - Dr. Kavaldeep Dixit, Professor & Vice-Principal, International School of Informatics and
Management, Sector 12, Mahaveer Marg, Mansarovar, Jaipur-302020, Rajasthan
Dr Tanjul Saxena, Associate Professor, IIHMR University, 1, Prabhudayal Marg, Sanganer Airport,
Jaipur- 302011
Dr. Bharti Sharma, Associate Professor, International School of Informatics and Management, Sector 12,
Mahaveer Marg, Mansarovar, Jaipur-302020, Rajasthan

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A Book of Selected Cases

A tea bar of 100 sq.ft. requires an investment of 1–2 lakhs while for a 300 to 600 sq.ft.
one needs 6 to 10 times more of that amount. A tea lounge concept on the other hand
costs anything between Rs 15–50 lakhs. Boutique tea bars such as Chai Point, Chaipatty,
Infinitea, Tea Trails, Cafe 3.5 and QQ Tea have come up with branches in Bengaluru,
Mumbai, Pune and Delhi with each running one or two stores each.
A contemporary ambience, a wide and healthy variety of tea’s and usual accompaniments
sum up to make tea points a place where anyone and everyone can hang out. One such
start up and success story in this line has been of Tapri - The Tea House in Jaipur. Started
by two young individuals in the year 2010, Ankit Bohra and Sourabh Bapna converted
their idea of a “chai ki dukaan” into an organized place.
Demand Drivers for Tea
Value added variants of Tea: This hot beverage in value added formats and many exciting
variants had increased its appeal as well as consumption. Experimentation with new
flavours like fruits, herbal, ginger, lemon, elaichee tea etc. had opened up new arena in tea
industry. Certain tea bars like Chai Bar offered 133 varieties of Indian and international
tea, including flavoured tea, herbal tea, and fruit tea, to name a few. No coffee café could
match this variety.
Health & Wellness: Consumers in modern times were more health conscious resulting
in higher awareness of the health benefits of flavoured and green tea and eventually their
increased consumption.
Emerging Consumer Demands: Drinking habits and lifestyles changes had resulted
in greater willingness among people for quality tea. Increased consumer attention to
quality of products and active promotions by manufacturers had brought in a shift from
unbranded to branded tea consumption.
Out of Home Consumption: Local tea stalls and branded cafes had further increased out
of home consumption of both coffee and tea.
Tapri-The Tea House
At 6.00 p.m. on a chilly saturday, the coffee shops near
Central park in Jaipur seemed busy. But it was the
desi tea cafe Tapri that was really bustling with life.
On one table a group of professional looking people
were in active discussion over several cups of masala
chai and cookies on the other end at a cozy table for
two, a middle-aged affluent-looking couple relished a
leisurely cup of cutting chai. At another table, four old people played chess over tea and
enjoyed the amazing sunset view from the terrace along with the central park view,while
few foreign tourists were mesmerized by the beautiful and original interiors with a mix of

2
traditional and modern sitting, colourful kettles, and different themed tea sets.
Ankit Bohra and Sourabh Bapna, the founder and co-founder of Tapri tea retail outlet
were contented to witness so much "chai pe charcha". They were pleased at the sight of
such a diverse spectrum of customers entering and relishing product offering. It was not
just youth who frequented their outlets but people from all walk of life including women,
office goers, students, elderly retired, young couples all were drawn in by the offbeat
variants of tea served ranging from Pushkar chai to white tea.
Started by two young MBA graduates the tea shop was operational on 20th August, 2010.
Sourabh’s love for food and Ankit’s creativity made Tapri’s launch a reality. The duo took the
entrepreneurial route after leaving their comfortable banking jobs in Mumbai. ‘Tapri’an
unusual name that meant a small, temporary shed had been derived from Mumbai’s
local language, where Tapri was equal to a chai ki thadi. The idea originated during the
MBA course of the founders in an institute in Mumbai where they were expected to
submit a Business Plan on an innovative business idea and for the same they after much
contemplation over a cup of tea at a local thadi near their institute proposed the idea
of a hygienic Tea Stall for which they were awarded zero marks out of hundred. It was
there that the Tapri idea was incubated. Zero became a beginning for them and an end
too and they jokingly coined their group as group “Zero”to remind themselves that the
zero had to be made hundred in times to come. The founders proposed this idea because
they were sure that there was a need for a decent place for family, women and elderly
to enjoy a good cup of tea. They were also convinced that out-of-home consumption of
tea needed to be promoted seeing the success of café culture for coffee. After their post-
graduation for two years Sourabh worked for Citi Bank in Mumbai while Ankit worked
for Kotak Mahindra Bank and Crayons advertising. The salary and offers with hikes in
their jobs were very alluring for the two but the urge to start their venture was so strong,
that they just went for it. Gaining their finest learning’s from the “Taj Mahal Tea House,
Mumbai”, they were certain that they wanted to create a space where consumers of diverse
demographic profiles could unwind, celebrate tea and catch-up with their loved ones.
The challenges were many as initially they did not know “Whom to tap” and “How to tap”?
It was actually not easy for them at that point of time because they had no ready recipe
for identifying their customers in order to get a bigger share of the market. Moreover
there were hardly any tea joints in the city in 2010 that could have provided them some
guideline on their plan of action. There were barely any restro-lounges also seven years
back. Yes, Coffee cafes like, Cafe Coffee Day and Barista did exist but they were trying to
bring another beverage in the market.
Before turning their vision into reality they invested two years of their time and travelled
widely to tea-growing places in India including Assam, Darjeeling, to develop their
understanding about varieties of tea, its sourcing and delivery to the final customer.

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A Book of Selected Cases

They did a lot of home-work by conducting market research and visualizing whom they
wanted to target and serve. They worked extensively on their menu including the variety
of tea they wanted to offer and the snacks that they would club with the beverage. They
deliberated on the plan of how they wanted to serve their customers – Cafe, Restaurant,
Vending Machine, Thadi, kiosk etc. and since a modern café format was on their mind
they decided on the same. The duo settled on the theme, as they felt that in order to make
customer feel special one had to create the right settings. They created informal settings
for customers with books, musical instruments, youthful decors etc.
They brain stormed on where they wanted to serve as right strategic location made all the
difference. After thorough research they agreed upon opening their first outlet in Jaipur at
Lal Kothi with the name Tapri. They chose this location to cater to youth because students
flocked that place in great numbers because of many coaching institutes in the vicinity.
Ankit and Sourabh were convinced that they had to serve the best because customers
sought taste, variety and change at a tea retail outlet. The two worked hard to put their
back-end operations in place before they commenced. Sourabh said "We played on our
strengths, which is knowledge about Jaipur's market and we identified the areas where
we would get maximum crowd and assured returns. We observed how tea stalls at every
corner were making money. But as most were dirty, well-off people stayed away. We just
ensured the shop was clean." Basically “Tapri” was a theme based café where founders
tried to build the ambience of a local thadi. They aimed to provide space, freedom and
privacy to everyone so that people from all age group could enjoy their time there.
The brand logo decided was the “Chika” representing Chotu (young boy) who brought
tea, the interior of Tapri was also designed in the same manner of Thadi. Use of green
colour in the logo denoted natural handpicked leaves from the tea-garden. The menu
card, the visiting cards were all designed with natural tea-cup marks on them to enhance
affinity with the brand. In words of, Mr. Ankit Bohra “A lot of teas here are uncommon
for a common man. I reflected on myself, what I would want, what would I like to eat as
a consumer and how much would I be willing to pay for it. The casualness, the roughness
of a thadi, was our inspiration but our idea was not to replicate a thadi but to extend it, we
provided the infrastructure to make it comfortable for women and everybody else, which
otherwise one wouldn’t find at a thadi.”
The entrepreneurs commenced their journey with an initial investment of roughly seven
lakh rupees with Tapri Pratham their first outlet aimed at students and spread over 800
sq ft space where they attempted to minimize costs. The first outlet was a mix of fear and
exhilaration of leaving their corporate jobs and coming full fledged into business. The
group could achieve break even in the initial six months of operation at Tapri Pratham.
The success was followed by Tapri Central their second experimental ground, aimed at
all demographic profiles. Both the outlets were designed differently with different pricing
strategy. Both the outlets were rented. With an average walk in of 200 plus customers on

4
a regular sunny day, winters witness 100% occupancy throughout.
Both the locations were decided because of the footfalls in that area. Tapri Pratham
opened at Lal Kothi because the area attracted a lot of students and young crowd while,
Tapri Central was opened to target upwardly mobile families, women and customers with
fine taste. It was not easy to manage the Central Park outlet as the owner of the place was
not keen on renting it out. However after much persuasion he gave in and was one of their
loyal customers thereafter.
Tapri over time developed a reputation of one-of-its kind fully air conditioned and well
furnished tea house that offered tea and light meals to its guests in an inviting atmosphere.
It served different varieties of tea including Milk teas (Cutting chai, Masala chai, Kulhad,
Ginger, etc.), Non-milk teas ( Jasmine pearl, Darjeeling 2nd flush, Green tea, White tea,
Oolong and much more), Cultural preparation( Kahwa Kashmir, Pushkar Chai, Thadi
Nathdwara, etc.) Iced tea( Lemon-mint, Hibiscus, Peach, Mango, etc.) Light meals (
Sandwich, Frankie, Pasta, etc.), Attram (Light Snacks: Vada paav, Muska bun, Sevpuri,
etc.) and Shattram (Light Snacks: Cookies, Namkeen, Muffin, Brownie, etc.)
Sourabh said“The aroma of the tea makes our product different from any other item. We
bring to the customer not just the familiar cutting chai(tea) but also around fifty different
varieties of teas from around the world with their own unique fragrance, taste, benefits,
and traditions. In each tea offering we have attempted to bring forth a rare combination
that provides our customers with what they require a relaxing soothing feeling or an
energizing flavour. We also offer a wide range of accompaniments for our customers for
any time of the day snacks like Bada Pav , SevPuri , Namkeen Shots, Pasta ,Sandwich,
etc. We also sell raw tea for home purpose in different containers.”Ankit further added
“Our menu keeps evolving with a variety of over 70+ eatables and 50+ teas’. We continue
to innovate with our product offerings. We keep on modifying our menu by adding more
varieties of tea. We are considering to serve variety of juices, for our health conscious
customers, we may soon also add sprouts in our food items. The interesting part is that
we keep adding our own inventions to the menu and the customers have loved them. We
have received suggestions of converting Tapri into an exclusive tea shop, which was a big
compliment that we got.”
The uniqueness of the concept, was the affordability of the eatables and the personalized
ambience of the joint which made it truly different. Others were cafe, lounge or restaurant,
Tapri was more than a thadi and less than a cafe, it was a perfect blend of both. The
ambiance was kitschy and unique and the menu was like an old school notebook with a few
catchy words here and there. Since chai and all the snacks were hand-made and in-house
the founders made themselves 24*7 available and strived to deliver quality experience.
They also retailed tea for their customers packaged in wooden barrels, corrugated barrels,
recyclable silver foil sachets and in the form of tea-bags.They had recently launched the

5
A Book of Selected Cases

shop section on their website that had a variety of tea leaves, tea accessories, special gifting
and dating vouchers and other merchandise to further cement brand’s relationship with
its regular customers.
Tapri had synergistic corporate alliances with Goodricke Tea and Aircel. They sell
Goodricke tea from their outlets while they had a provision of in-shop promotion for
Aircel which in turn had provided their café free wi-fi access.Clay Craft India, retailer of
bone china and ceramic tableware, had collaborated with Tapri to provide consumers the
experience of enjoying tea in modified kullads in a variety of colours. Clay Craft India
had specially designed those mugs for Tapri tea admirers. In future they also planned to
introduce Mughal, European, 22 Carat Gold plated and Royal themed tea sets at Tapri.
Combined efforts transformed Tapri from a student hub to one of the preferred destinations
for a lot of corporate executives for their meetings.
Their future plans included launching two more outlets at strategic locations- MalviyaNagar
and VaishaliNagar in the pink city.Initially they wanted to follow the COCO (Company
owned Company operated) model only and that’s why they were planning to have a strong
foothold in their home market first. Balanced cities like Surat, Pune and Bengaluru exist
in the list of their next 5 years expansion plans.
Business Model
For designing and analysis of business models, empirical data needs to be collected
through primary and secondary sources. Researchers also utilize case study method
while developing business models. Johnson et al. (2008), Sorescu et al. (2011), Batista
(2013) and Reinartz, Dellaert, Krafft, Kumar and Varadarajan (2011) follow the case study
method for their studies. In the presentstudy we follow the case study method to develop
and analyze a retail business model in the Indian context. The elements of a successful
business model as proposed by Johnson et.al. were considered for present study.
As the study is exploratory in nature, we focused on a single organization and collected
relevant empirical data focusing on the differing innovative strategies adopted by the
organization to address its strategic growth needs in an intensely competitive marketplace.
The corporate presentations of the organization, the interview with Mr. Sourabh Bapna
one of the founder of Tapri, had been used to develop the business model. Secondary
sources were also referred to assimilate Ankit Bohra’s (the co-founder of Tapri) views.
Flourishing companies mostly work according to a business model that can be segmented
into four elements: a customer value proposition that accomplishes an important job for
the customer in a superior way than anything competitors offer; a profit formula that
figures out how the company makes money delivering the value proposition; and the key
resources and key processes required to deliver that proposition.

6
Customer Value Proposition
It includes target customer identification, analyzing the benefits customers seek, designing
and delivering the desired offerings. For the customer segment students and youth
Tapri Pratham was more suitable and preferred. The benefits offered by Tapri Pratham
included relaxation, good ambience with music, convenience with tea and tasty snacks.
For couples Tapri offerd a comfortable, decent place to sit and chat. Tapri Central the
roof-top outlet opposite Central park, catered primarily to upper middle class families,
women customers, connoisseur. It offered variety of tea, quality snacks, hygienic food
with in-store experience.
In accordance with the positioning theme suggested by Ander and Stern (2005) according
to which every retailer needed to be the best in one of the five dynamic positions (hot-
est, easy-est, big-est, quick-est or cheap-est; fine-est added by Mishra (2013) while
being acceptable in all other positions. The positioning theme for Tapri Pratham is easy-
est while for Tapri Central it is Fine-est.The first associations with which customers
associated Tapri included cool place to hang out, friendly, refreshing, nature’s inspiration,
high quality hygienic street food, assortment of tea and place which gave happiness and
delight. Most of the people visiting the outlet liked the brand name and felt it was catchy,
different and represented the concept well. Ankit quoted “I feel there is a lot of positive
energy around here which we and all our customers feel. It’s more about space and energy
which differentiates us from other places”.
Profit Formula
This essentially deals with the revenue model, the cost structure, the margins and the
inventory turnover. The revenue model covered the market potential for the business
which in the Tapri case was not a challenge. As there were not many tea bars in the city
of Jaipur at that point of timeand the market was on the growth path with tremendous
opportunity to expand it got first mover advantage. On the price front Tapri followed two
different pricing models for Tapri Pratham and Central based on the real estate cost and
the purchase potential of the place. The brand awareness for Tapri was also indirectly
contributing to the robustness of the revenue model.
The cost structure covered allocation of costs over various activities and the economies of
scale. Ankit Bohra said “India is the world’s second largest producer of tea, so the supply
side offers economical prices and consistency in quality to entrepreneurs, compared to
coffee, a huge chunk of which has to be imported. Even most domestic tea brands have
now begun to focus on sales within the country rather than on exports.”
While the exact cost structure, margins and inventory turnover was not available the
current operations indicate that economy of scale, margins and inventory turnover were
quite adequate and satisfactory for sustainability and growth of Tapri.

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A Book of Selected Cases

Key Processes
The systems and processes of the organization put in place for its day to day operations
is highlighted in this dimension of the business model. Ankit Bohra said “People think
wrong if they imagine a tea bar to be boring and dull. Tapri offers customers music of all
genres, air conditioning, hygiene, Wi-Fi, and a sitting experience tailor-made to prolong
conversations. He added: “If a good branded tea bar exists, it is a USP on its own. Coffee
has limited number of genres, blends, and companion snacks to offer. Tea on the other
hand has many blends and accompanying snacks such as fried, baked, salads, light meals,
and confectionery.” A process driven organization was better equipped and more stable
in handling situations. In case of Tapri most of the key processes like, tea variety, quality
and taste, assorted snacks, procurement, employee recruitment and training were well
defined and process driven. Over a period of seven years the outlet was making efforts
to develop benchmarks for its processes, adhere to them and optimize operations. The
evidence of the same had been highlighted through augmented customer footfalls and
repeat customers.
Key Resources
It plays the most important role in delivering the desired customer value proposition. It
includes the people, technology, products, partnerships and the brand. In a city of fast
growing café culture the brands like Brewberry, Costa Coffee and Café Coffee Day, Tapri
tea shop offered everything from cutting chai(tea) to the more premium green and white
teas. Drawing inspiration from the casual roadside tea stall and the relaxed attitude that
surround edit Tapri had managed to keep the same concept and revamp it up. Maggie
and Vada Pav were one of their famous snacks available in different variants. Talking of
promotions, the cafe attributed their growth to word of mouth publicity, till now they did
not invest in advertisements, first they were costly, second they were not sure whether
they were reaching the right customer so they concentrated on their product offerings for
they believed in providing class-apart tea and tasty food stuffs to create the required buzz..
However these days they were connected with their customers through social networking
sites like Facebook and on special days like, Friendship day, Valentine Day they wished
their customers.
They also had a drop-box facility in their outlets to receive first-hand customer feedback
to enable them to serve them better for they felt that one delighted customer would
bring ten more so a satisfied customer was their best advertisement. They have kept their
customers engaged through Facebook and Zomato. Customer feedback and reviews on
social networking sites depicted that the brand resonated well with the consumer.
Alliances with Craft India, for colorful, modified kullads, corporate tie-in promotion at
outlets with Aircel& Goodricke Tea and organizing Tapri thellas (stalls) at marriages,
parties and corporate events had further added to their brand value.

8
The above business model concluded that the ability of Tapri to identify different target
customers with differing needs and providing them with optimal value propositions,
thereby strengthening a brand had worked in its favor.
Challenges Ahead of Tapri
According to Day and Schoemaker (2006), “the biggest dangers to any company are
the ones you don’t see coming, and understanding these threats and anticipating
opportunities-requires strong peripheral vision”. Tapri is required to face the following
challenges in coming times:
• Out-of-home consumption of teais expanding thus, intensifying competition the
number of players in café format is expected to increase. Competitors such as Chaisa,
Tea Tradition, Tea Connect, Thirstea are also some other prominent Tea cafes in the
city considered by customers because of their ambience and economical offerings.
Entry of organized players like, Tata Starbucks Pvt. Ltd, through introduction of
Teavana, a tea retail chain is anticipated to bring more competition.
• High rentals and maintaining sustained traffic on all days plagues most cafes and
food joints.
• It is important to identify and analyze customer needs regularly in order to develop
relevant value proposition for each segment. Customer experience is an important
aspect for any retailer and Tapri has to ensure the continuation of the level of
customer experience and happiness of their customers.
• It is significant to identify other anchor points like offices, schools and colleges,
hospitals, bus terminals, to serve customers a freshly brewed cup of tea.
• Focus on multiple channels and multiple formats are required to reach the customer.
For Eg, Chai Point originated in Bengaluru works on Getting ‘Chai’ delivered at the
customer doorsteps in 30 mins.
• Human resource is one of the most important components in retail business and
trained & retained manpower is a challenge. Manpower needs to be cultivated,
nurtured and developed to increase footfalls.
• Sitting area is insufficient especially during weekends because of which customers
had to wait for long. Effective space management is the need of the hour for Tapri.
• Technology upgradation is needed to keep pace with changing times like the
interactive touch-screen table being tested at Pizza-Hut outlets to choose every
little detail of pizza order, from the size of the pie to the toppings.
On competition Sourabh said “In business competition is inevitable. Today if anyone
brings a new idea there are many who imitate it and enter the market. Competition is
both direct and indirect. There are many coffee joints, lounges, fast food outlets which are

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A Book of Selected Cases

wooing the same set of customers however, we set our own benchmarks, we analyze and
compare our past performance and initiate corrective actions. So, we are competing with
ourselves and everyday is a learning for us based on which we revise our strategy.”
Giving credits to their business involvement and good intentions; 5 to 10 years down the
line both Ankit and Sourabh visualized Tapri operating as an independent entity, though
it would continue to be their only business throughout. Giving their piece of advice for
the young entrepreneurs, they shared that business had to be an on-going process. One
should be able to reflect oneself through one’s business. Sourabh quoted “To be successful
in business I am personally of the opinion that the person should be calm, humble and
patient. He should be patient and should wait for things to grow slowly and gradually. In
new ventures entrepreneurs need to have confidence in their idea, value their work and
should be honest and hardworking. For long term sustainability one needs to listen to
their customer and innovate. Financial transparency and accountability is also important
for growth.”
Believing in Sir Arthur Pinero’s words “While there is tea, there is hope” Tapri can further
strategize its tea business, expand and enhance customer experience.
Teaching Notes
Synopsis
Indians are amongst the largest consumers of tea in the world and tea drinking specially
in the morning has become an essential aspect of the India culture. This is probably the
reason why the present-day generation of entrepreneurs are taking initiatives in making
tea points more structured. A modern-day ambience, a diverse and healthy tea and
usual accompaniments club up to make tea café a place where people of all demographic
profiles can hang out. This exploratory case study details the start-up and growth of one
such success story Tapri-The Tea House, one-of-its kind fully air conditioned and well
furnished tea house, which offers tea and light meals to its guests in an inviting atmosphere.
Started by two young individuals in the year 2010, Ankit Bohra and Sourabh Bapnahad
an idea of serving a centuries-old product in a contemporary way by converting a “chai
ki dukaan” into an organized place. For this they differentiated the product and service
to contribute to an overall experience and today Tapri serves more than 50 varieties of
tea using handpicked tea leaves from gardens of Darjeeling, Assam Nilgiri, China and
Japan. The entrepreneurs commenced their journey with an initial investment of roughly
seven lakh rupees with Tapri Pratham their first outlet aimed at students followed by
Tapri Central their second experimental ground, aimed at all demographic profiles. The
group could achieve break even in the initial six months of operation with its first outlet.
The case covers the business model for The Tea House along the dimensions of customer
value proposition, profit formula, key processes, and key resources.

10
Learnings from the case
The rationale for the study involves analyzing challenges and opportunities in
entrepreneurship, studying the feasibility of a business idea, assessing customer needs,
designing product offering and being unique. The organization considered is Tapri-
The Tea House, and the case focuses on the differing innovative strategies adopted
by the entrepreneurs to address its strategic growth needs in an intensely competitive
marketplace.
The Entrepreneurial Lessons for Cafes to be learned:
• Conduct thorough market research and visualize the prospective customers one
plans to serve. Streamline back-end operations before one commences. Largely
focus on backward and forward value chain starting from procurement of supplies
to in-store experience of consuming products in café.
• Choose carefully what one wants to serve in the Menu –Beverages, Fast food, Street
Food, etc.
• Choose how one intends to serve – Cafe, Restaurant, Vending Machine, Thadi,
kiosk etc.
• Decide where one wants to serve- Right location with high footfalls create the
difference.
• Choose the theme, because in order to make your customer feel special one has to
create the right settings.
• Serve the best because everyone is looking for taste, variety and change.
• Invest in brand building by continuing innovation and watching market trends.
• Keep pace with varying consumer taste and preferences.
• Make effective use of technology to attract and retain customers.
Target Audience:
The case will be beneficial for budding entrepreneurs, retail marketers, academicians and
research scholars. Entrepreneurs can understand how a unique business idea evolves.
What market research is required prior to launching a venture? How can one differentiate
in the crowded market space and deliver unique customer value proposition? Retail
marketers can study brand name and logo designing to appeal to the customers. They can
also visualize in-store settings and product offering to have repeat footfalls. Corporate
tie-ins for enhanced sustainability can also be comprehended from the current study.
Academicians and research scholars can establish a synergy between theoretical concepts
and practical applications from the case.

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A Book of Selected Cases

Management theory Applied:


The elements of a successful business model as proposed by Johnson et.al. (Table 1) have
been considered for present study.
Table 1: Elements of a Business Model (Johnson, Christensen & Kagermann 2008)
S. No. Elements Constituents of the Element
1. Customer Value Proposition • Target Consumer
• Jobs to be done
• Offerings
2. Profit Formula • Revenue
• Cost
• Margin
• Stock turns
3. Key Processes • Processes
• Evaluation Criteria and benchmarks
• Norms and policies
4. Key resources • People
• Technology
• Equipment
• Information
• Back end as well as front end channels
• Partnership
• Brands
Questions for discussion:
1. What were the major strategic issues that the founders faced and how did they
tackle them?
2. What are the strategies Tapri can adopt to expand, sustain & compete?
3. How is Tapri going to sustain the aftermath of strict competition from MNCs like
Starbucks and other unorganized players?
4. Discuss the Business Model of Tapri.
Suggested Assignments:
• Researchers can go to minimum two unorganized tea retail outlets and observe the
behavior of consumers of different demographic profiles while ordering diverse
varieties of tea.
• Researchers are required to analyze the elements of service failure and the effects

12
of any effort made by the tea retail outlets at service recovery. They have to build a
plan for service recovery for the concerned tea retail outlets.
References:
Batista, l. (2013). New business models enabled by digital technologies. Digital Economy.
Day,G.S., & Schoemaker, P.J. (2006). Peripheral vision:Detecting the weak signals that will
make or break your company. Harvard Business School Press.
Johnson, M.W., Christensen, C.M., & Kagermann, H. (2008). Reinventing your business
model. HarvardBusiness Review, 86(12), 57-68.
Kirti Dutta (2012); ‘Brand Management Principles and Practices’, Oxford University Press,
2012, New Delhi.
Kevin Lane Keller, M.G.. Parameswaran, Issac Jacob (2013); ‘Strategic Brand Management’;
Pearson Education, 2rd Edition, 2013, New Delhi.
Mishra Ashis. (2013). Business Model for Indian retail sector: The Café Coffee Day case In
conversation with V.G. Siddhartha, Chairman, Coffee Day. IIMBManagement Review,
Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha,(2012), ‘Marketing
Management A South Asian Perspective’, Pearson Education, 14th Edition, 2013, New Delhi.
Reinartz, W., Dellaert, B., Krafft, M., Kumar, V., & Varadarajan, R. (2011). Retailing
innovations in a globalizing retail market environment. Journal of retailing, 87, S53-S66.
Sorescu, A., Frambach, R.T., Singh, J., Rangaswamy, A., & Bridges, C. (2011). Innovation in
retail business models. Journal of Retailing, 87, S3-S16.
Food Service India Edition March-April 2012
Webliography
http://www.teaboard.gov.in/
www.indiatea.org/
http://www.fao.org/home/en/
http://www.teaboard.gov.in/pdf/Tea%20Statistics%20Global%20Scenario.pdf
http://www.theglobaljournals.com/ijar/file.php?val=MTcwMg%3D%3D
http://www.businesstoday.in/magazine/corporate/chaayos-by-two-iit-entrepreneurs-
brings-tea-in-cafe-format/story/216655.html
https://www.teacoffeespiceofindia.com/tea/tea-statistics

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A Book of Selected Cases

The Aroma of Success – The ITC & ORMAS Story


Abstract

I
n the 6000 Crore Incense Stick & allied offerings industry, one of the underrated success
factors is the procurement model for raw batti. ITC Limited in partnership with ORMAS,
A Government of Odisha body epitomized the blueprint of a successful public-private
partnership based procurement model. One of the interesting facets of this partnership was
the relentless pursuit of sustainable stakeholder welfare vis-à-vis profit maximization. In the
period 2009-2015, ITC & ORMAS orchestrated two key interventions in the Agarbatti Supply
Chain Model in the nondescript rural hinterlands of Odisha. The first was intended to re-
engineer the supply chain aided by forward and backward integration with the beneficiary at
the core of it. The second intervention aimed at gaining an exclusivity and stronghold in the
competitive procurement space by introduction of pedal machinery for agarbatti production.
The core objective being a win-win scenario wherein the beneficiaries earned more with less
drudgery and produced more. The impact of these interventions has been immense with
optimal benefits to the women beneficiaries, enhanced revenues for Producer Groups and
sustainable and assured quality procurement for ITC Limited.
“When women participate in the economy everyone benefits.”— Hillary Clinton
In a deeply religious country like India incense sticks figure in the shopping list of every
household. Be it in traditional kirana or a swanky shopping mall, it is a common sight
these days to find a cosmopolitan woman evaluating various brands of incense
on display. However, there is an interesting facet of this ubiquitous product. Behind
the enchanting aroma and the mystic fervor is a unique success story encompassing a
complex rural sourcing model and one i.e. indeed a true tribute to the herculean efforts
of poor & marginalized women of India.
The incense sticks, agarbatti and allied offerings market in India is pegged at around Rs.
6,000 crore; with the organised sector accounting for 40 per cent (or Rs. 2,400 crore) share2.
‘Mangaldeep’ (ITC Ltd.) and ‘Cycle’ (NRR Sons.) are the two major national players in the
segment. ITC enjoys a 10-15% Market share and the market leader NRR Sons enjoys a 15-
20% market share3. Historically, Agarbatti making has been a cottage industry and
consequently, the landscape is dominated by several unorganised players who account
for a lion’s share of the market. The market is highly fragmented with approximately 400
brands in circulation and 200 Players. Not surprisingly, top five price/pack combinations
account for only 25% of the Industry and bulk of the production and demand is
concentrated in low value- low margin (<Rs 5) packs. The past decade has seen a lot of
transition in market place and thanks to the ever-declining information asymmetry and
rising disposable income; the consumers today have become brand conscious & shown a

Case Written by : - Kiran J Mahasuar is the Manager-Marketing, Media & PR at MICA, Ahmedabad

14
distinctive affinity towards value- added/premium category products. This transition has
benefitted the Agarbatti industry in more ways than one. This Industry today is in the
cusp of a new phase of growth aided by significant Government patronage in select states
and is case-study on how to align the business needs with social development.
One such public private partnership that merits analysis is that of ORMAS (Odisha Rural
Development and Marketing Society) and ITC Limited. ORMAS is an autonomous body
under Panchayati Raj Department; Government of Odisha and ITC Limited is a century
old conglomerate with revenues of US $8 Billion4. The MoU was signed between ORMAS
and ITC on 14th October 2009. The DSMS (District unit of ORMAS) with the support
from DRDA has provided Skill development training to the beneficiaries after forming
their group and linked them to ITC for marketing of finished products. According to
ORMAS, this activity is benefiting 9701 rural producers of 14 different districts.5. As is
evident from the exhibit 1 below, the partnership has been immensely successful and
created a deep sustainable social impact.
2
http://www.thehindubusinessline.com/companies/itc-trying-out-new-agarbatti-
fragrances/article9603342.ece
3
http://www.thehindubusinessline.com/companies/itc-targets-18-market-share-in-
agarbattis/article6416531.ece
http://www.itcportal.com/about-itc/shareholder-value/ITC-Corporate-Presentation.pdf
4

Information taken from ORMAS Website http://www.ormas.org/content/19/15


5

Exhibit 1
Production of Hand Rolled Agarbatti under Production of extruded
ORMAS Agarbatti under ORMAS
Year Production in Price in INR Production in Price in INR
MT (lakh) MT (lakh)
2010-11 116.29 69.77 Not Started NA
2011-12 540.37 335.03 Not Started NA
2012-13 535.00 331.70 308.88 216.21
2013-14 326.97 205.99 490.95 343.67
2014-15 290.04 125.42 602.90 422.03
2015- 16* 12.57 7.54 203.83 142.68
TOTAL 1821.24 MT 1075.45 Lacs 1606.56 MT 1124.59 Lacs
*Data available till July 2015
Source: ORMAS (http://www.ormas.org/content/19/15)
Phase 1: Intervention through PPP model for Hand-Rolled Agarbatti
The Issues in Traditional Incense Sourcing Model: The Big Challenge

15
A Book of Selected Cases

Exhibit 2

Prior to ORMAS -ITC’s intervention in Odisha, the business model revolved around
middle-men and few traditional agarbatti manufacturing clusters and the value proposition
for a woman beneficiary was minimal or non-existent. Typically, the accredited vendor
of an established player would identify a traditional agarbatti cluster and approach the
middlemen operating there. The middlemen would mobilise the women and start the
rolling of agarbatti in the cluster by supplying raw materials sourced locally or from nearby
towns. After a fortnight or so they would collect the finished batti & pay a labour charge
to rollers ranging from Rs.5-10 per Kg. Then based on the pre-decided arrangement with
vendor, they would dispatch the Raw Batti for perfuming and packaging. However this
sourcing model was characterised by several structural flaws/challenges like
• Non-standardised procurement methods thereby resulting in varying quality of
produce being sourced & assembled in perfumery of vendor later
• Low wages for the women beneficiary with acute disparity from region to region
• Low quality of produce (B & C Grade)
• Low average yield on account of no incentive for additional production
• Inconsistent supply owing to non-availability of raw material locally
• High cost of procurement for vendor (Cost of Logistics , Low Volume)
• No control on quality parameters of raw material
• Non-standardised packaging and dispatch methods leading to loss-in transit
• Issues pertaining to Recurring commercial payments to middlemen and women
beneficiaries.
The Innovation: Re-engineering the Supply Chain
The onset of globalization & information explosion propelled the demand for premium
category or value-added incense sticks to grow manifold. ITC felt a need to increase the

16
supplies and ensure quality for the discerning consumers. What followed next was an
innovation in the business model which created a win-win situation for all the stakeholders.
The model can be depicted as follows
Exhibit -3

The Raw material moves from a Central warehouse to Hub locations and from the hub
there is an inward and outward flow of Raw Batti and Raw materials to sub-godowns
or sorting points operated by SHGs/Federations/NGOs. The central warehouse typically
has a 50 MT capacity and a Hub has a capacity of 20 MT. The capacity of sub-godowns
or sorting points operated by NGOs/SHGs/Federations varies from 2 MT to 5 MT. Each
SHG/NGO/Federation operates as an individual profit centre and there is no element of
subsidy or credit at any stage of the supply chain. The model has benefitted significantly
from ORMAS’s patronage wherein SHGs have been generously supported by ORMAS in
the initial stages for loan for working capital, Training & development etc.

17
A Book of Selected Cases

Win-Win Situation: A Comparative Analysis

Source – “The Journey of an Incense Stick - A Rural Success Story” (KJ Mahasuar). Indian
Management Volume 51 (2), PP 66-69, 2012
Phase 2: Going the Machine Way: Incense Stick Making through Pedal
Machines
Overcoming the Barriers for next phase of sustainable growth
The success of the hand-rolled agarbatti initiative also brought it with a set of challenges.
Prominent amongst them being
• High training cost for skill development and documentation processes
• Less remunerative to rural artisans vis-à-vis time spent
• Low volume of production & high drudgery of beneficiaries
• Replication of ITC-ORMAS model by competitors and predatory strategies to
wean away producer groups/beneficiaries (trained by ITC-ORMAS)
To overcome these challenges and to enhance the growth momentum in 2011, ORMAS-
ITC introduced the mechanization model of agarbatti manufacturing with twin objective
of using the pedal machines as an enabler tools to enhance productivity, ensure consistent
quality by reducing human intervention and subsequently enhance the earnings of
beneficiaries. Exhibit 4 shows the strategic pyramid business model that was adopted

18
with the stakeholder welfare maximization objective.
Exhibit 4

The Procurement Model

Source:http://itcportal.mobi/sustainability/sustainability-report-2014/
images/ sunehra 22.jpg
The basic procurement structure remained the same as was in the hand-rolled model.
However unlike a beneficiary producer group dealing with hand-rolled agarbatti where
the beneficiaries work in their homes, here the beneficiaries worked in a unit together
like a factory setup. There was also involvement of a mechanized blending process for
making the premix masala which is fed into the pedal machines for the extrusion. Exhibit
5 elucidates the detailed model for procurement. Annexure -2 showcases the machine
development cycle.

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A Book of Selected Cases

Exhibit -5

Exhibit - 6 shows the progress made in this initiative in Odisha and the acceptance of the
model of intervention. Exhibit -1 (In production of extruded agarbatti columns) reaffirms
the model’s success since introduction. Basis the data available, the revenues from the
extruded batti (from pedal operated machines) have exceeded that of the hand-rolled
batti. Also as the exhibit-1 shows, for the period 2013-14 & 2014-15, the production
through pedal machines exceeded hand-rolled batti (1012.85 MT vs. 617.3 MT)
Exhibit 6
Pedal Operated Agarbatti Machines under ORMAS Initiative - Fact file
Agarbatti Machines supplied by ITC Ltd. (From its internal budget)
Made in Vietnam and Wimco (a unit of ITC)
Cost Of the Machine Rs. 20000/- to Rs. 25000/- (at Odisha)
Productivity of the Machine 20 to 30 kg per day in wet condition and 14 to 22
in dry
Total machines installed in Odisha 662 as on 31/07/2015

20
Total district covered 12 (Mayurbhanj, Balasore, Bhadrak, Jajpur,
Kendrapada, Dhenkanal, Cuttack, Khordha,
Nayagarh, Kandhamal, Puri, Ganjam)
Total No of Clusters 37
No. of beneficiary involved 890
Income per beneficiary Rs. 120/- to 150/- per day
Buy back arrangement by SSE, Cuttack (Authorized Vendor of ITC Ltd.)
Source: ORMAS (http://www.ormas.org/content/19/15)
Impact Assessment Post Pedal Machine Introduction

Conclusion
India’s rich tradition of incense making goes back millennia, and the agarbatti market in
India is vibrant. Incense is deeply embedded in Indian culture and religious traditions
and many Indians believe there is a positive, highly spiritual nature to the fragrance that
permeates the air as incense burns away to ashes.
As the agarbatti industry moves into the next level of maturity & growth, the vital backward
linkages in supply-chain fostering an inclusive growth for all the stakeholders, shall be a
key enabling factor. Thus, the timely change in sourcing model and introduction of pedal

21
A Book of Selected Cases

machines for raw incense was a master-stroke by ITC-ORMAS which not only ensured
an abundant supply of the raw batti but also enhanced the earnings and bargaining power
of asset-less, vulnerable, marginalised and hitherto neglected rural women. This aspect
of inclusivity and a model with women at the core is what made this initiative so special
and notable. It was not the charity, but the parity approach to the process what is the key
take-way from this success story.
The author acknowledges the information provided by various beneficiaries and Mr. Janaki
Ballava Mishra of ITC Limited – Agarbatti SBU, Chennai.
Suggested Further Readings
• Innovative Technologies in Incense Stick Production Benefit Women http://www.
asintl.org/whats-new-innovative-technologies-in-incense-stick-production-benefit-
women.html
• ITC rolls out one billion incense sticks per month http://www.thehindu.com/business/
Industry/ITC-rolls-out-one-billion-incense-sticks-per-month/article14638007.ece
• The heady aroma of success
http://www.bloncampus.com/columns/brand-basics/the-heady-aroma-of-success/
article9479247.ece
• An initiative towards transformational change in society: a case study on Agarbatti
Manufacturing Unit at NarajMarthapur, Odisha
http://www.iosrjournals.org/iosr-jbm/papers/ies-mcrc-icscm/Part%205/49.pdf
Teaching Notes
Synopsys
In the 6000 Crore Incense Stick & allied offerings industry, one of the underrated
success factors is the procurement model for raw batti. ITC Limited in partnership with
ORMAS,. In the period 2009-2015, ITC & ORMAS orchestrated two key interventions
in the Agarbatti Supply Chain Model in the nondescript rural hinterlands of Odisha.
The first was intended to re-engineer the supply chain aided by forward and backward
integration with the beneficiary at the core of it. The second intervention aimed at gaining
an exclusivity and stronghold in the competitive procurement space by introduction of
pedal machinery for agarbatti production. The core objective being a win-win scenario
wherein the beneficiaries earned more with less drudgery and also enhanced their
produce. The impact of these interventions has been immense with optimal benefits to
the women beneficiaries, enhanced revenues for Producer Groups and sustainable and
assured quality procurement for ITC Limited.

22
Learning Objectives
The case study shall be highly useful to the target audience of corporate strategists,
Development Practitioners, Entrepreneurs, Consultants and Faculty Members of
academic institutions, Corporate Trainers and students.
Learners can take cues from the major aspects of this case study viz.
• Making the most of collaboration with a Government Body by capitalizing on
respective strength areas: In this case, ITC Limited provided the marketing support
and re-engineering of supply chain whereas ORMAS managed the community
mobilization and training of beneficiaries aspect. Thus by capitalizing on their
respective strength areas, they made the most of the partnership and also avoided
confrontation and conflict of interest issues.
• Innovation is the path to success: ITC – ORMAS on the face of competition chose
the path of innovation and the relatively difficult mode of mechanization process
which paid rich dividends. Not only did it helped the duo to get a first mover
advantage but also increased the trust quotient amongst beneficiaries.
• Competition, Collaboration, Co-Ownership – By focusing on Unit based production
in pedal machine units, the ITC-ORMAS model created all the three elements of
successful venture in one place i.e. competition amongst beneficiaries to maximize
production, co-ownership of machinery as it was the enabler for production and
collaboration to ensure the unit’s goals in terms of production are met and working
capital is managed optimally.
• Control of Operations: ITC-ORMAS Project Monitoring Unit operating out
of ORMAS in Bhubaneswar ensured all vendors, TP service providers etc. are
adhering to the highest quality norms and standard operating practices (SOP) for
procurement. In addition, review meeting of all stakeholders and partners is held
regularly to assess performance and suggest improvements.

• Stakeholder Welfare Vs. Profit Maximization – The introduction of pedal machinery


was a far-sighted approach and put stakeholder welfare at the core whilst keeping
the long term sustainability in view. This negates the traditional approach wherein
the commercial partner would have preferred to continue the hand-rolling
agarbatti process for the fear of loss of production and initial capital outlay involved
in provision of machines to beneficiaries. Having a long-term perspective always
helps.
Questions for Discussion
• Evaluate the major pros and cons. of pedal machine model from the perspective of

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A Book of Selected Cases

all stakeholders
• Do a SWOT analysis of this PPP model from the 3R perspective : Rewards,
Replication and Recognition
• What is the best way for this partnership model to expand, sustain & compete and
what factors should it consider? What could be the possible pitfalls?
Case Write-up Assignment
In reference to Annexure 2 & 3, it is evident that the ITC-ORMAS Project’s expansion is
limited to coastal and northern Odisha. There is little headway in Western Odisha which
is one of the major under-developed regions of Odisha. Suggest a model for replication of
this model in one of the districts of Western Odisha.
Annexure-1

24
Annexure -2

Annexure-3

25
A Book of Selected Cases

Leadership in Unfamiliar Environments : Airbus’


Establishment of an Engineering Center in India
Abstract

I
n 2007, Eugen Welte, CEO of the Indian Airbus Engineering Center, came to Bangalore,
India, to establish a captive Engineering Center from scratch. The case, which takes
place in 2011, illustrates several situations and leadership challenges Eugen faced
while establishing the R&D center in an unfamiliar cultural context. He faced challenges in
communication, trust, teamwork, recruitment, and culture.
The case outlines Eugen’s experiences and approaches to overcome these different leadership
challenges but purposely leaves most situations open for discussions. The case provides an
opportunity to discuss the following aspects:
1. General leadership challenges in India.
2. The challenge of teamwork in an ambitious and competitive working environment in
which team members are reluctant to take responsibility and share information.
3. The challenge of recruiting highly-qualified engineers in a highly dynamic labor
market and the importance of company culture to retain them.
4. The importance of trust and the role of networks when establishing a company in an
unfamiliar cultural context and market environment.
This case can be used in an intercultural management class as an introduction to various
intercultural challenges or as a summary after covering several topics highlighted in the case
(e.g. leadership, teamwork, trust, culture).

The authors are grateful to the management at Airbus who supported in writing
this case. This case is exclusively intended as the basis for class discussion rather than
to illustrate either the effective or ineffective handling of a management situation. The
case was compiled from interviews, internal documents, and publicly available sources.
The case was developed without external funding.
This case has been listed for distribution through the institution of the first author
(University of St. Gallen) in Case Centre. Listing a case in the Case Centre does not
transfer the copyright. Copyright remains with the author/authoring organisation.

Case Written by : - Roger Moser, Assistant Professor of International Management, University of St. Gallen,
Switzerland
Gopalakrishnan Narayanamurthy, Doctoral Student, Indian Institute of Management Kozhikode,
Kerala, India

26
Case Study
Eugen Welte, CEO of the Airbus Engineering Centre India Pvt. Ltd. (AECI), sat in his
office in the RMZ Infinity in Bangalore, India. It was in October 2011, he was thinking
about the upcoming relocation of Airbus’ engineering operations to another location as
the initial location had become too expensive and reached its capacity limit. Eugen’s AECI
had traveled a long way before reaching the current status.
In the end of 2006, the executive board of Airbus in Europe had approached Eugen,
who was then based in European Aeronautic Defence and Space Company (EADS) HQ
Germany, to offer him the position as CEO of the planned AECI. Without hesitation, he
jumped at the chance immediately and he was supported by his wife’s openness for such
a new experience. Throughout his life Eugen had loved challenges and new experiences
and the opportunity to build an R&D center from scratch in an unfamiliar culture and
business environment appeared to him as an attractive offer. Early 2007, Eugen started
the first Indian R&D operations of Airbus with 25 engineers in Bangalore. Since then
head count had increased to 262 by October 2011. Even though the AECI would only
move several kilometers down the road to a new complex, Eugen knew that the relocation
was a significant milestone to ensure further growth. He perceived the relocation as an
opportunity to look back on several challenges he had faced as a German expat while
establishing AECI. He expected this reflection to help him in arriving at solutions for
challenges faced so far.
Airbus1
Airbus, a Division of EADS, now Airbus Group, was one of the world’s leading
manufacturers of commercial jetliners and military airlifters in 2011. Airbus’s industrial
cooperation with Indian companies had begun as early as 1988 when Airbus signed a
contract with Hindustan Aeronautics Limited (HAL) to manufacture passenger doors
for the A320 aircraft. In 1976, Airbus sold its first aircraft to Indian Airlines, now part of
Air India, and continued to successfully sell numerous aircraft models to all major Indian
airlines. Airbus’s customers in India included Air India, Kingfisher, Simplyfly Deccan, Jet
Airways, Go Air and Indigo, with Indigo being the Airbus’s largest customer. In October
2011, Airbus had a market share of roughly 70% in the Indian commercial aviation sector
and planned to increase it to 80% over the next four to five years.
With its large domestic market for commercial aviation, aerospace and defense, India was
of strategic importance and one of EADS’s priority countries. Therefore, a local presence
in India was regarded as essential. Consequently, the management boards of EADS and
Airbus had started to increasingly invest in India and had established EADS India Pvt.
Ltd. in 2006, a 100% owned subsidiary of EADS, which was supposed to support the
development of the whole EADS group in India. An Indian sourcing office with branches
Compiled based on Datamonitor (2008), PricewaterhouseCoopers (2009) and authors interview
1

27
A Book of Selected Cases

in Delhi and Bangalore had also been launched in 2006 to support the different business
units of EADS in Europe in their sourcing activities in India, both for market access (local
content requirements) and cost reduction objectives (Exhibit 1). Besides these activities,
Airbus had decided to set up a first engineering center to integrate its operations and some
of its Indian partners under one roof to jointly perform engineering activities. One of the
main targets of AECI was to establish a state-of-the-art engineering center on Indian turf
in order to support local content requirements, tap to the Indian talent pool and benefit
from cost-reduction opportunities in the long run.
The Indian Aerospace Industry
As a consequence of high safety standards and technical requirements, the global
aerospace manufacturing industry was a capital-intensive and technology-focused
industry requiring absolute quality conformance and a very high investment level into
research and development. The global aerospace industry was characterized by a strong
rivalry among an increasingly small number of large multinational companies as a result
of ongoing consolidation processes. In 2008, total revenues generated by the global
aerospace and defense manufacturers amounted to $675 billion, of which 54% were
attributed to the Americas, 27% to Europe, and 19% to Asia-Pacific. As a reaction to the
high level of competition through cost cutting pressures and the continuous need for
innovation, the aerospace and defense original equipment manufacturers (OEMs) were
increasingly shifting formerly vertically-integrated manufacturing process into new kinds
of industry structures. The OEMs increasingly focused on the role of design and systems
integrators while transferring other responsibilities to suppliers structured in a tier-based
system. Thereby, major integrators such as Airbus or Boeing maintained complete control
over the program, but received equipment and systems from Tier 1 suppliers who took
over coordination responsibilities as well as financial and technical risks. For example,
Tier 2 suppliers developed and manufactured parts based on specifications from OEMs
or Tier 1 suppliers. Tier 1 suppliers had increasing responsibilities and made extensive
investments required especially at the beginning of the large and complex aircraft
programs. OEMs were so aiming at building strong, long-term relationships with a small
number of selected strategic suppliers willing to share risks. In this context, OEMs were
also trying to integrate more and more selected suppliers from low-cost countries into
their global supplier base.
In this context, India was a preferred location, not only from a supplier perspective
but also in terms of the attractiveness of the Indian customer market combined with
the offset requirements set by the Indian government (Exhibit 2). All segments of the
Indian aerospace industry were growing rapidly due to relatively high GDP (gross
domestic product) growth and increasing air travel. The military aerospace budget of the
Government of India had also continued to grow at six percent annually from 1998 to 2007.
2
George (2008). Aerospace Supply Chain: Opportunities for India Suppliers. Available at http://www.nasscom.
in/Aerospace-Supply-Chain-Opportunities-for-India-Suppliers-55118 (last accessed on 3 April 2017).

28
By 2012, Asia was expected to operate 24% of the global commercial airplane fleet, with
India and China accounting for the major part. For global aerospace companies aiming
at winning a share of the large future Indian military business, the Indian government
had implemented a defense offset policy requiring foreign companies to source at least
30 percent of systems and components locally in India for every contract encompassing
three billion Indian rupees or more. A similar policy for the civil sector was expected to
be introduced. The sourcing of engineering services from India was increasingly seen as a
measure that can contribute to the fulfillment of these requirements as well as significantly
reducing development costs. By getting work done in India, aerospace OEMs and Tier 1
suppliers were expected to achieve as much as 50% cost savings on engineering design in
the long run2.
The Airbus Engineering Centre India Pvt. Ltd. (AECI)
Most Western companies preferred to start with offshoring low-end engineering activities
in order to reduce costs when setting up engineering operations in emerging markets and
gradually move to high-end engineering over the years. However, AECI was deliberately
setup to perform high-end engineering work right from the beginning (Exhibit 3).The
AECI was a captive center – a 100 % Airbus-owned subsidiary in Bangalore. It was the
only Airbus engineering center outside Europe that does so called non-specific work –
engineering work not specifically done for a single aircraft project. This included high-
end engineering activities in the fields of aerodynamics, aerothermics (temperature,
ventilation),aeroelastics (effect on structure, e.g. vibration), and simulation of flight
management. The primary focus of the AECI was on non-specific design works (NSDW)
engineering and included activities in the area of fluid dynamics, loads &aeroelastics,
structure, digital mock-up, systems installation, flight management system, electronic
centralized aircraft monitor system, simulation and testing.
Offshoring/Sourcing of Engineering Services3
Engineering services refer to a range of activities such as product engineering, process
engineering, plant automation, or enterprise asset management. In the aerospace
industry, engineering services mainly encompass engineering design services, product
conceptualization, development, or testing, thereby focusing on four major aircraft sub-
segments, namely systems, avionics, structures, and engine performance and analysis.
In contrast to other services, the offshore sourcing of engineering services emerged only
recently. Of the $750 billion spent on engineering services globally in 2006, only $10-15
billion were offshored. In the past, the specific nature and characteristics of engineering
services were seen as an obstacle to effective outsourcing and/or offshoring. Further
concerns regarding engineering services were centered on a potential decrease in service
quality or inadequate intellectual property protection. Most challenges in sourcing
engineering services in comparison to business process outsourcing or information
3
Compiled based on Cygnus Business Consulting & Research (2007), NASSCOM & Booz Allen Hamilton
(2006) and authors interview.

29
A Book of Selected Cases

technology outsourcing were based on the fact that engineering services work was much
more specialized with a very low margin of error possible. Thus, suppliers of engineering
services must create specific training programs and develop domain knowledge for the
aerospace industry. When analyzing the range of engineering service providers in India,
one could observe the efforts of large services companies in addressing these issues.
However, in order to reap the market opportunity, the deficiencies and challenges present
in the Indian engineering services outsourcing landscape had to be overcome, especially
in terms of aerospace-specific engineering capabilities and domain knowledge.
Challenges of Offshoring/Global Sourcing
Possible challenges and problems that may arise in the course of offshoring/global
sourcing can be divided into three broad categories. Firstly, challenges evolve simply
from the physical distance that exists between buyers and suppliers and may impede
communication and coordination. Thereby, the geographic separation excludes the
possibility of close personal interaction and frequent face-to-face communication. This
may be especially problematic for activities requiring a high level of tacit knowledge
exchange which demand intense discussions among group members in order to make
it explicit. It is difficult to transfer tacit knowledge via electronic communication
technologies. The establishment of trust and a shared understanding were important for
the collaboration but it was difficult to achieve across distance. In addition, time zone
differences often restricted the available time for synchronous communication.
Secondly, challenges often arose due to location-specific issues. When sourcing from
India, this may include cultural differences, language difficulties due to different accents,
slang usage, or misunderstood implied meaning, country risks, different legal systems,
or high employee turnover. Cultural differences may lead to misunderstandings, cultural
bias, or delays and problems concerning performance delivery due to, for example, “the
unwillingness of offshore suppliers to admit they cannot perform the required tasks”.
Thirdly, problems were experienced in the home country in the form of dissatisfaction of
domestic employees, low levels of morale, or reluctance and hostility towards the offshore
workforce. Product engineers were unwilling to delegate responsibility as they were not
convinced of the capabilities of the offshore engineers. These challenges required Airbus
to have structures that may help overcome these issues and enable it to reap the expected
benefits.
Why Bangalore?
Not much discussion was carried out on where to locate the AECI in India. Bangalore, as
the traditional aerospace hub in India, emerged as the perfect location for this venture.
Manufacturing and engineering companies like Hindustan Aeronautics Limited (HAL),
National Aerospace Laboratories (NAL) and the Indian Space Research Organization
(ISRO) had been operating in Bangalore for several decades. The proximity of potential

30
high profile aviation partners and suppliers in the area of manufacturing and information
systems strongly contributed to the choice of Bangalore as location for AECI compared
to the more sourcing and marketing oriented activities in Delhi. Other factors including
access to engineering talent, sufficient infrastructure and the fact that major customers
were located in Bangalore contributed for selecting this location. However, while the
location for the AECI was a relatively straight-forward choice, the staffing of AECI’s
senior executive team had led to lengthy discussions. Eugen recalled:
“Long discussions were going on whether the CEO of AECI should be Indian or not. Taking
into account the colonial history of India, some believed that appointing an experienced
French or German manager would send a bad sign to the Indian staff. Appointing a non-
Indian CEO would seem like another invasion into Indian territory and would send a sign
of mistrust. The managing board of Airbus suggested appointing an Indian as CEO and a
long-time Airbus manager as CFO. However, I believed that exactly this move would send
a stronger sign of mistrust and would seem somewhat hypocritical – appointing an Indian
CEO but making sure to send someone you trust to watch the piggy bank.”
At the end, the management board of Airbus asked Eugen whether he wanted to take
on the challenge of establishing and managing AECI under the condition that all
other management positions such as CFO (Finance), HR (Human Resources), COO
(Operations) etc. were to be staffed with Indian nationals. Eugen recalled:
“My office door is always open so that I am easily accessible for my people. One day one of my
engineers came to my office and told me that I was the only reason that he joined AECI and
that he still was here. Frankly speaking, I did not understand what exactly he was trying to
say. So I asked him to explain. Just as we as employers test our applicants with painstaking
care, he checked the person who was assigned with the task of establishing the AECI. I never
saw it from this point of view. He told me he would not have joined if Airbus had assigned
an Indian CEO without a solid track record at Airbus. For him appointing someone with
such a long Airbus history sent a strong signal that the Airbus’s managing board was serious
about establishing a long-term oriented engineering center in the Indian market. The fact
that I was appointed as CEO of AECI gave him some kind of security that AECI would still
exist some years down the road.”
Getting Started
Eugen did not know much about the Indian working culture. But he felt ready to face the
challenge and serve as the first CEO of the first AECI operations in India. After holding a
variety of different high-level positions at Airbus - both onshore and offshore - he felt that
it was time to take on a new challenge. He was sure that the knowledge and experience
he had gained throughout his career would help him to successfully establish the AECI
in Bangalore. Airbus offered him a series of intercultural session in order to provide him
with the necessary intercultural insights. Eugen appreciated these sessions. Yet he always

31
A Book of Selected Cases

believed in open-mindedness to be the most important skill to immerse oneself in an


unfamiliar culture and industry environment.
Communication with Headquarters
Setting up an engineering center in a new and unfamiliar environment was a major project
which required good planning. Even though Eugen was not part of the AECI project
planning, he soon realized that the business plan of AECI which was well-developed and
carefully thought through was based on a European but not an Indian perspective. Eugen
did not plan to simply comply with the numbers of the business plan but became truly
competitive in the Indian market. He believed that the true success of a company can only
be measured relatively to the market it operates in – not to a predefined business plan
established by someone with little understanding for the respective market.
Eugen took around 18 months to gain a high level of autonomy from Headquarters and to
be granted free hand in daily-operations. In the first year, Headquarters wanted to have a
say in a lot of matters. Colleagues – mostly from the middle-management – having little
to no experience in India and being several thousand kilometers away felt as it was within
their responsibility to interfere with day-to-day operations. This made the implementation
of local operations very demanding and exhausting. Eugen spent a lot of time justifying
his decisions and explaining his underlying reasons to his colleagues at Headquarters. In
the first couple of months, he sometimes felt as if he spent more time justifying his actions
than on focusing on what he was in India for - establishing local engineering operations.
To a certain degree, coordination between Headquarters and a subsidiary was necessary
in order to minimize uncertainty and reduce the risk of failure. However, setting up too
many control mechanisms hampered the chances of success. Eugen believed that the
responsibility for local operations and its implementation should rest with the subsidiary
itself. Sometimes Headquarters introduced a policy that made sense and was well-
applicable in Europe – but not suitable for the local context. In such situations the CEO
of the subsidiary had to take a stand and do the best for the successful development of the
local operations – support of the management board at Headquarters greatly helped in
such lengthy discussions.
Eugen believed in trust to be the essential ingredient to overcome such obstacles. Building
trust required time and efforts. Having been part of Airbus for more than 30 years, Eugen
was able to show a good track record and he felt as if Headquarters should trust him and
place confidence in him. After all, everybody knew his high work ethic that would not
allow him to harm the company but to continue to foster its success. Furthermore, his
own intention was to transfer as much tacit and explicit knowledge gained in India as
possible to Headquarters to improve Airbus’s understanding of India.
Learning from Other Expatriates
Especially in the first couple of years, Eugen greatly appreciated the expatriate clubs and

32
informal CEO Clubs in Bangalore. Even now, such clubs offer an excellent platform to
exchange ideas and experiences between like-minded people with similar challenges
(Exhibit 4). Eugen remembered:
“Meeting people who have faced the same difficulties is very valuable. Members of such clubs
were usually very open-minded and were willing to share their experience with you. They
understood what you go through right now since they had experienced similar challenges
some years ago when they arrived in Bangalore. You can always ask them for advice.
Furthermore, these clubs offer excellent networking possibilities and the opportunity to discuss
current market trends, new technical ideas and concepts. This helped me to understand and
anticipate important current and future developments. The atmosphere is very open and
non-competitive as most members are from non-rival companies and industries. We even
invited each other to tour the facilities and operations of the other companies.”
Management Team
With a 30-plus year track record, Eugen knew Airbus like the back of his hand. The only
thing he did not have experience with was the Indian culture. Looking back at his first
year in Bangalore, Eugen recalled:
“I had an awesome management team. They were my cultural guides and they felt responsible
for me. This might sound a little awkward but they felt as if they were indeed responsible for
me and had to safe me from being harmed. They took me by the hand and maneuvered me
without any accidents through the Indian culture. It was a win-win situation. They protected
me from being harmed in this new and unfamiliar environment while I was supporting them
wherever I could when it came to topics related to Airbus. I was their guide for ‘Airbus issues’
– they were my guides for ‘Indian issues’. This giving and taking on both sides created deep
trust which is essential in order to set up operation such as the AECI from scratch. We all
knew in some sense that we were dependent on each other but I think we perfectly handled
it.”
Recruiting the Right People
Indians lived in a seemingly highly complex environment and this somehow naturally
predestinated them to think in much more complex relationships. Their brain structure
and way of thinking enabled them to immediately grasp complex ideas and break them
down into smaller problems. This capability was very helpful in the context of aerospace
engineering. When asked about why Western companies decided to go to India, one
often heard about the access to a large talent pool. India had the highest number of
engineering graduates. But after being in Bangalore for almost five years, Eugen took a
more differentiated view:
“Only 10 to 20 percent of the engineering graduates in India are employable for a high
end engineering job. The rest lacks one essential qualification – be it technical knowledge,
general skills or mature personalities. Due to the vast number of engineering colleges it is

33
A Book of Selected Cases

difficult to differentiate between good graduates and “not so good” graduates. The name of
the engineering institute does not necessarily guarantee good engineering knowledge of its
graduates. Therefore, we do not solely rely on the information the job applicants provide in
their applications. To make sure their information is correct we do two things. We perform
an employment check to test their engineering knowledge and a background check to verify
the information provided in their application.
I have experienced some unbelievable things during my time here in Bangalore. Applicants
purposely lied about the college they went to, their grades or something else just so that
they were invited for the job interview. Consequently, it is all the more important to have a
sophisticated recruiting procedure. Furthermore, I believe that the HR manager must be an
Indian because only they have the ability to efficiently and effectively assess the applications. I
have learned that Indians often tend to agree on something even though they have a different
opinion. They do so to not appear unfriendly or disappoint you. On the one hand, this is a
very friendly character trait, but on the other hand it makes it quite difficult to assess their
true intentions – and this creates misunderstandings. For people who have not grown up
in the Indian culture, it is hardly possible to understand such behavior and, therefore, an
Indian HR manager is a must.”
Indian Culture 4
The Indian culture was one of the oldest and unique. Hardly any culture exists in the
world as diverse and different as in India. India was the home to some of the most ancient
civilizations, including four major world religions, Hinduism, Buddhism, Jainism and
Sikhism. Religion played a critical role amongst all the communities in India. India had
four principle religions namely, Hinduism (80%), Islam (14%), Christianity, and Sikhism
with a small fraction of the population also practicing Buddhism, Zoroastrianism, and
Judaism. The celebration of festivals happened with much fanfare and respecting the
major festivals was mandatory for any company.
Lack of relevant information, political uncertainty, and its large geographical scale
leading to regional variations added to the complexity. The country comprised of rapidly
developing population. 70% of the people in India still lived in villages and worked in
agriculture, followed by 13% in the industry sector and 17% in services. Within India,
the literacy rate had been at almost 90% in the South and only about 45% in Northern
regions. India was described as an enormously hierarchical society which had a significant
impact on the most appropriate management style and organizational structure. In
a classic Indian company the boss provided explicit instructions to be followed by the
subordinates. Vague requests for action, with the expectation that subordinate would
show the necessary level of initiative were likely to end up in inaction as the staff would
be left confused as to the wishes of the boss.
4
Adapted from http://www.culturalindia.net/, http://www.worldbusinessculture.com/Indian-Management-Style.html, and
http://www.sourcingfocus.com/site/opinionscomments/understanding_indian_culture_for_ successful_business/.

34
People in India grouped most Western foreigners into three categories, namely, Americans,
English and Germans. A certain amount of preconception fueled by media was built up on
how a foreigner would behave. Similarly, Western managers had their own pre-conceived
notions about the country and its people when entering India based on the information
from media reports and fleeting first time impressions. Time was required to adjust to
the new cultural surroundings and drawing conclusions should be avoided from initial
reactions. Several cultural behaviors in India also varied from state to state (Exhibit 5).
As with most countries, India had its own unique and subtle manner in which business
was conducted. Thus, success depended on the appreciation and understanding of the
cultural aspects in addition to patience and a high level of long-term commitment and
personal attention and involvement. Establishing and maintaining strong relationships
with Indian business associates was fundamental to success in India.
Company Culture
The Indian job market was highly dynamic. The demand for highly qualified engineers was
higher than supply. As a result, highly qualified engineers had plenty of job opportunities
and companies heavily competed for them. Finding and hiring the right people was one
thing, keeping them was another. From the very beginning, Eugen placed great emphasis
on creating a unique culture.
“Let us create an awesome culture, a culture where we can be innovative, grow professionally
as well as personally. We are a young company with no predefined culture. It is up to us to
create it. Everyone contributes to it, so let’s create a culture that we all can be proud of.”
Establishing a culture and mission that was more employee-focused and strengthened
the unity among them was very distinct in the Indian context – more than in the Western
business world. Consequently, invitations to all employees and their families for social
events were not uncommon. Looking back on what the whole team had achieved since
2007 made Eugen proud. The attrition rate at the AECI was about 3 percent while the
average in Bangalore was about 12 percent. Those engineers who left either went to work
for Airbus in Europe or pursued a PhD – only one person had left to work for another
company.
Highly-qualified Indian engineers required to be constantly challenged. Being a captive
center pursuing high-end engineering work, the AECI offered its engineers a working
environment that corresponded to their perception of an ideal working environment. The
AECI offered its employees interesting and challenging high-end engineering projects,
intensive training, excellent development opportunities, top branding and a pleasant
working atmosphere as well as working culture. Employees were viewed as the key assets
to be developed further; they were not viewed as a mere cost factor.
People Management and Work Culture
The Indian work context was unquestionably different to Europe. One of the things Eugen

35
A Book of Selected Cases

learned was that more emphasis had to be put on people management. Showing true
interest – not only in the work his team performed – but getting to know the people and
personalities behind was simply part of the Indian work culture – and the job of a CEO
rather than HR or others. The separation of work and family was not as strict as he had
experienced it in Europe. The relationships between AECI employees were quite close
and it was not uncommon to know a lot about the others’ families and to have frequent
chats in the hallways. Eugen recalled two events that represented the remarkable solidarity
among his employees: A father of an employee suddenly got cancer and all employees
donated blood to act as potential donors. Another employee had a premature baby– and
medical costs for appropriately treating premature children were quite high even in India.
Again the employees unified and collected money to support their colleague. Indians are
empathic people and if someone was struck by a personal tragedy, colleagues supported
each other wherever they could. However, when it came to non-performers in the work
context they could be extremely critical and rigorous. Low-performing team members
were given a chance to improve but were not pulled along by their team members for too
long.
Most work at the AECI was performed in project teams. On the one side, Indians were
quite competitive and in constant search for recognition. They were highly ambitious
and wanted to outperform others. Eugen believed that this characteristic was closely
linked to the general admission test which engineering student had to pass in order to be
admitted to one of the prestigious Indian Institutes of Technology (IIT). As soon as they
got hold of one of the desired places, competition even intensified as they then had to
compete against the best of the best. People on the same hierarchical level were therefore
often unwilling to share information as they saw each other as direct competitors. In the
context of team work, the unwillingness to share information hinders the performance
of the whole project. Being in constant search for recognition and praise, a lot of Indian
engineers had difficulties in the beginning with teamwork where most emphasis was put
on the final team result. In such situations, they felt that they do not get the appreciation
they ought to deserve for their individual achievements.
On the other side, some of the young engineers were rather reluctant to take responsibility.
Working in teams offered them with an environment where they could hide among their
team members and behind the ‘We’. The non-acceptance of failure in the Indian society
caused them to take responsibility only in situations where the outcome was largely
predictable or in situations where the responsibility rested on multiple shoulders. Eugen
had to find ways to overcome this phenomenon:
“One of the things I did was to introduce a recognition scheme, which issues awards for
the “best employee of the month” – recognition and praise for good performance stimulates
employees to become even better.”
During his years in Bangalore, Eugen also realized that Indians are in general more

36
sensitive than Europeans. Eugen recalled one meeting with one of his engineering team
where some interim project results were to be presented:
“We were sitting in one of our conference rooms and I asked one by one to present the status
of their current work package. I purposely did not ask one of the team members to present
his results since I thought they were too personal that I wanted to talk them through with
him in a separate meeting - just the two of us. So he was the only one of his project team not
being asked. In the meeting, I did not express my intention to meet him separately. When
we meet later he did not mention his disappointment. If employees have some issues, which
bother them, be it with a team member or their superior, Indians rarely address it proactively
by seeking a dialogue but rather work things out on their own. It could take days –if at
all – until they proactively address it. In this particular case, the engineer did not address
the issue at all. I found out how deeply he was mentally hit only when he approached me
to hand over his termination of his contract about six month after this incidence. I tried to
persuade him to stay by clarifying and explaining our misunderstanding as I really valued
his work and him as a person. But there was not much I could do as he had already handed
in his termination mentally on the day when I unintentionally “hit his feelings” in front of
his team. This of course was an extreme case – but I learned a lot from it.”
Challenges Ahead
Eugen was still sitting in his office at RMZ Infinity and started to think about the upcoming
month involving the task of relocation. Due to good planning, preparation and experience,
Eugen had no worries that the relocation would pass with only a few difficulties. One
thing that concerned him more was the objective to increase head count from 262 in
October 2011 to about 400 in 2014. An increasing number of Western companies entered
the Indian market and thus the battle for the best engineering brains would get more
intense. Eugen was wondering whether his management and leadership approach so far
was still appropriate and practicable to grow the engineering center to such an extent.
Being an expat for almost five years now, Eugen was also thinking about his successor and
wondered whether his successor would be another expat or of Indian nationality.
Exhibits
Exhibit 1: Two aspects that can be observed when offshoring to India
Source: Wohlfahrt& Moser, 2010

37
A Book of Selected Cases

Exhibit 2: Sourcing of engineering services from India in the aerospace industry

Sources: Cygnus Business Consulting & Research, 2007; NASSCOM & Booz Allen Hamilton,
2006; Price water house Coopers, 2009.
Exhibit 3: AECI performing high-end engineering work

Source: Authors
Exhibit 4: Ways through which expats successfully sensitize themselves culturally
Topic: The task of accustoming yourself to an entirely new environment is certainly daunting,
right? And if you are an expat working in India Inc, the transition into an unknown workplace
territory can be tough.

38
Name: Eugen Welte "IT'S INTERESTING TO SEE
Designation: CEO PEOPLE FROM DIFFERENT
Firm: Airbus Engineering Centre WALKS OF LIFE COMING
TOGETHER TO BUILD
Place of origin: Germany ORGANISATIONS IN INDIA."
Moved to India: 2007

• There is one important thing to understand - when you come to India, you are
just one person and there are more than one billion Indians - so think carefully
what you want to change. This advice from my Indian CFO helped me a lot to
strike the right balance.
• You cannot go to a new country with fixed ideas of your own; you have to find
a right blend of processes in training that are used well with the right tools and
clubbed with means available locally.
• You have to be open-minded.
• A strong family culture and belief in the system are certainly very important
assets of India.
• What always strikes me is the level of sensitivity of our young engineers.
• As a European, you sometimes don't have a radar system that is sufficiently
fine-tuned to read the Indian mind. I am happy to rely on my Indian colleagues
helping me to better navigate.
• Obviously, the widespread sophisticated vegetarian cuisine and holistic healing
system are other positive elements of Indian culture.

Name: Chris Greaves


Designation: MD "INDIA OFFERS A NEW
Firm: Gulf Region & India, Hays Plc LEARNING EXPERIENCE IN
A SIGNIFICANT GROWING
Place of origin: London
ECONOMY"
Moved to India: 2009

• In my experience, there is a higher proportion of Indian nationals working


overseas than there are expats working in India, so India is at the very start of a
globalized journey.
• Language can be a barrier, even when conversing in English. We forget that much
of our speech is made up of examples and similes, analogies and reference points
that come from a different culture.

39
A Book of Selected Cases

• I made the mistake in a presentation of mentioning some management


gobbledygook about 'getting our ducks in a row' and I was met with some very
blank faces! Also, I don't think that any amount of sensitivity training could
prepare you for the diversity that exists here.
• It can be still sometimes difficult to work in a culturally new work environment
but depends on how versatile and flexible you are.
• India has stronger emphasis on the value of higher education and the role this
can play in bettering people's lives,
• India has stronger family bonds with people prepared to make bigger sacrifices
to support family members,
• I have also seen an extremely strong work ethic in the Indian society. This might
be slightly controversial, because there is no welfare state to fall back on as there
is in Europe, and do we really want people working 60-100 hour weeks?

Name: Rita Soni


Designation: CEO
"DIVERSITY TODAY
Firm: NASSCOM Foundation
IS THE KEY"
Place of origin: U.S.A
Moved to India: 2006

• I think the most discussed difference between Indian and American work
environments is hierarchy.
• Biggest challenges that I overcame was living in a new city without a family/
friend base.
• I realized that even though Delhi can be an intimidating place, particularly for a
woman because of safety issues, chivalry is alive and well!
• Biggest adjustment has been for keeping in touch with family and friends in the
US. I am lucky that I migrated to India in 2006 when the ability to stay in touch
with family and friends in today's age is great; thanks to modern technology.
• One of the biggest cultural difference, which I appreciate is, in India, generally
people live with their parents and extended family for a much longer period of
time - particularly in Mumbai because of the cost of living. I like this culture
amongst my friends in India compared to my friends in New York.

Source: Adapted from: http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search &Sou


rce=Find&Key=ETM/2011/03/29/19/Ar01901.xml&CollName=ET_MUMBAI_DAILY_2007&DOCID=44
8690&Keyword=%28%3Cmany%3E%3Cstem%3ENASSCOM%3Cand%3E%3Cmany%3E%3Cstem%3EFou
ndation%29&skin=ETNEW&AppName=1&PageLabel=19%20&ViewMode=HTML

40
• The other cultural difference is more work-related. I think most people raised
in the Indian education system, look at career as a straight line, as a path. My
path has been quite crooked and I believe that it is actually what makes me more
valuable to the company - diverse experiences have constantly challenged and
changed my perspectives.
• Diversity creates a healthy situation where there are different perspectives to the
exact same situation. That idea of diversity also helps solve incredibly challenging
issues like training half a billion people needed for future industries of India,
raising the living standards of 800 million living below the international poverty
line and eliminating unnecessary risk to mothers and children simply because of
a lack of access to healthcare.
Exhibit 5: Excerpts on cultural behaviors in India
S. No. Excerpt
1 As a sign of respect it is customary to address persons by their family name
as opposed to first names. Very often younger people will persist in using
family names together with an appropriate title, such as Mr/Ms, as a sign of
deference and respect. If a foreign business person wishes to be addressed by
his Christian name he may have to request this several times over.
2 Indian society remains patriarchal and thus it is important to understand the
importance of hierarchy. When dealing with Indian businesses it is important
to ascertain who is the authority figure and who has the final say. Many
businesses are still family run and thus power vests at the top.
3 Hierarchy also runs within middle and junior management. An understanding
of this culture of dependence expected by a boss from his subordinate is
important when running a team of local staff. There is often a tendency to seek
support and advice in situations that may not warrant this level of dependency
by junior staff on his superiors.
4 Indian time keeping is not up to the mark of global standard and most of the
times lack punctuality. Deadlines are not always strictly adhered to in the
work environment. Hence strict guidelines and enforcement may be necessary
to adhere to western style fixed deadlines.
5 Foreign visitor has to understand gestures, body language and nonverbal
communication. The well-known Indian rolling of heads is often a sign of
acknowledgement and affirmation. It is not meant as a sign of any disrespect
and should thus be acknowledged appropriately.
6 Religious sentiment runs high and many Indian businessmen may defer
business decisions based on what may considered “good and auspicious” days.
Superstitions may also have to be accounted for in various business dealings.

41
A Book of Selected Cases

7 Allowing enough lead-time and budget for unexpected costs in projects would
be a proactive response. It is advisable to handle red tape with caution as
exchange controls and regulatory procedures can be highly bureaucratic. Exit
strategies must also be considered up front.
Source: Adapted from http://www.sourcingfocus.com/site/opinions comments/
understanding_ indian_culture_for_successful_business/
Teaching Note
Case Synopsis
In 2007, Eugen Welte, CEO of the Indian Airbus Engineering Center, came to Bangalore,
India, to establish a captive Engineering Center from scratch. The case, which takes
place in 2011, illustrates several situations and leadership challenges Eugen faced while
establishing the R&D center in an unfamiliar cultural context. He faced challenges in
communication, trust, teamwork, recruitment, and culture (Exhibit 1).
The case outlines Eugen’s experiences and approaches to overcome these different
leadership challenges but purposely leaves most situations open for discussions. We do
this for two major reasons. First, there is no right or wrong when it comes to interpersonal
behavior and communication. The case does not intent to limit the students imagination
and thinking by providing ‘solutions’. Second, the case intends to place students into new
and unfamiliar situations in order to sensitize them for business situations in a different
and unfamiliar cultural context. Eugen himself faced situations where he was not sure
what to do and how to behave – largely due to cultural differences. The case tries to mimic
this fact.
Target Audience
This case can be used in an intercultural management class as an introduction to various
intercultural challenges or as a summary after covering several topics highlighted in the
case (e.g. leadership, teamwork, trust, culture). The case may also be used in executive
programs because the participants presumably have the necessary international
background and experience to appreciate the issues in the case.
Learning Objectives
The case provides an opportunity to discuss:
1. General leadership challenges in India.
2. The challenge of teamwork in an ambitious and competitive working environment
in which team members are reluctant to take responsibility and share information.
3. The challenge of recruiting highly-qualified engineers in a highly dynamic labor
market and the importance of company culture to retain them.

42
4. The importance of trust and the role of networks when establishing a company in
an unfamiliar cultural context and market environment.
Teaching Plan and Case Analysis
Instructor might first introduce/repeat the key concepts on leadership, importance of
culture differences, and characteristics of emerging markets like India. This can happen
prior to the case study session. In a second step, the faculty might discuss the actual case
with the class depending on the way the class used to prepare/discuss the case study.
Six assignment questions listed below can help in having a defined flow of presentations by
different groups of students or discussions in the plenum. Each question can be presented
(10 min) and discussed (10 min) thereby allowing the class to complete the case analysis
and discussion in approximately 120 min.
Question 1: Which traits should a manager have to facilitate the successful establishment
of operations in a foreign culture like India?
Question 2: Which leadership style is best suited for establishing engineering operations
in unfamiliar cultural environments? Does the required leadership style change over the
development stages of an engineering center?
Question 3: How much autonomy does a captive engineering center in India require to
operate successfully? What is necessary to gain autonomy from HQ?
Question 4: Should an engineering center be headed by a local or expat manager? Assess
the decision of appointing an expat as CEO. Should Eugen’s successor also be an expat?
Question 5: Should a captive engineering center start off with high-end or low-end
engineering work? What are respective implications regarding workforce motivation?
Question 6: What mechanisms can be introduced to encourage engineers to take
responsibility and share information with their team members? How can the organization
ensure their long term loyalty?
Case Analysis Notes
Question 1: Which traits should a manager have that facilitate the successful establishment
of operations in a foreign culture like India?
As students present their points, this introductory discussion should be guided to make
following points:
• Communication skills
• Interpersonal skills
• Attitude: “Can do, get it done attitude”
• Competency

43
A Book of Selected Cases

• Inspiration
• Ambition
• Curiosity for new culture and open-mindedness
• Knowledge of foreign culture through readings and interaction with native Indians
Additional points for discussion:
• Importance of company culture
• Strong team
• Trust
• Importance of vision and mission
Question 2: Which leadership style is best suited for establishing engineering operations
in unfamiliar environments? Does the required leadership style change over the
development stages of an engineering Center?
For this question, we provide a general overview of leadership styles discussed in the
literature. As mentioned earlier, there is no single answer for this question but we expect
our overview to help in facilitating the class discussion. Different types of leadership
styles have been discussed in literature (Exhibit 2). Bolden et al. (2003) reviewed and
summarized the existing leadership theories as shown in Exhibit 3. Exhibit 4 lists the
main leadership traits and skills identified by Stogdill (1974). Katzenbach and Smith
(1994) have documented the critical behaviors of leaders (Exhibit 5).
The leadership style that Eugen has to adopt with regard to his headquarter is reflected
in persuasion and explanation. Eugen’s success as a leader completely depends upon his
ability to get things done across the organization’s hierarchy. The essential proficiency that
needs to be possessed by all leaders is persuasion as it supports them in moving people
toward a state that they don't hold currently. However, leaders also have to ensure the
right usage of the persuasion as any direct attempt to persuade colleagues may provoke
opposition and polarisation. In order to survive and succeed, a leader must learn four
essential skills of persuading people (Krakoff, 2005):
(1) Establishing credibility: Credibility develops from expertise and relationships.
Being open-minded and showing willingness to incorporate compromises helps in
establishing credibility.
(2) Understanding the audience: Identify tangible benefits to which your targeted
audience can relate. Identify key decision makers, stakeholders and the organisation's
network of influence.
(3) Reinforcing your positions with vivid language and compelling evidence:
Persuasion requires evidence supported by data in multiple forms (stories, graphs,

44
images, metaphors and examples).
(4) Connecting emotionally: It is important to demonstrate intellectual and emotional
commitment to your position and also to your audience position by getting accurate
sense of their emotional state.
Question 3: How much autonomy does a captive engineering center in India require to
operate successfully? What is necessary to gain autonomy from HQ?
To address this question, students will likely point to trust as the most important factor.
However, they should conclude that various other factors are worthy of consideration.
These might include:
• Good network within the company including management support
• Successful track record
• Convincing by actions
• Persuasive power and perseverance in discussions
Question 4: Should an engineering center be headed by a local or expat manager? Assess
the decision of appointing an expat as CEO. Should Eugen’s successor also be an expat?
To facilitate discussion, it might be helpful to list the pro and cons for both the choices as
shown in Exhibit 6. Taking into account the time variable (between 2007 and 2011 and
after 2011) might change the perception student have about the objective of establishing
engineering operations.
Question 5: Should a captive engineering center start off with high-end or low-end
engineering work? What are respective implications regarding workforce motivation?
In order to encourage discussion, motives for establishing an engineering organization in
an emerging market can be listed as they are strongly linked with the kind of engineering
performed in engineering centers.
Motives
• Access to sophisticated engineering talent pool to account for the missing large
number of talent in developed countries
• Market access
• Increasing brand awareness in emerging countries
• Cost issues and global labor arbitrage
Challenges
• Insufficient infrastructure
• Lacking strong intellectual property protection

45
A Book of Selected Cases

Workforce motivation
Interesting, challenging and diversified task have strong positive impact on motivation.
Graduates from Indian Institutes of Technology (IITs) and professionals with several
years of work experience are highly motivated and prefer working on challenging task.
Low-end engineering work: Difficult to attract and retain engineers
• Indian engineers equate low-end engineering work with work nobody wants to
perform in developed countries  not challenging and dead end for career
• ‘Not-invented here’ phenomenon
High-end engineering work: Easier to attract and retain engineers
• A lot of responsibility and higher degree of engineering freedom
• Steep learning curve and promising opportunities for personal and professional
development  increasing market value of employees; danger of other companies
soliciting engineers
• ‘Invented-here’ phenomen on  proud to be part of ‘real innovation’
Question 6: What mechanisms can be introduced to encourage engineers to take
responsibility and share information with their team members? How can the organization
ensure their long-term loyalty?
Encourage responsibility taking
• Explain and outline the personal advantages of taking responsibility
• Create a culture where failure is not only seen negative but as a chance of learning
and improving
• Spread responsibility among several employees to lower individual burden
• Open Door Policy – easy accessibility of superiors to ask for help and advice
Encourage information sharing
• Explain and outline the advantages of sharing information within the context of a
team building event
o working atmosphere
o efficient working style  team members as sparing partners
o quality of output
Make information sharing part of the agreed targets  employee has a monetary
disadvantage if not sharing information with colleagues
Practices for long-term retention
While reviewing the employee motivation theories and their implications for identifying

46
employee retention within organizations, Ramlall (2004) came up with causes of employee
turnover using different theoretical lens and in turn explains different effective employee
retention practices (please refer to table titled “Effective Employee Retention Practices
Used by Organizations” in Ramlall (2004)). Characteristics listed in that table can be used
to discuss the reasons behind reduced employee turnover. Based on literature, Deery
(2008) suggested a more holistic framework for improving employee retention rates in
organization (Exhibit 7). Similarly, Ramlall (2003) lists the factors affecting employee’s
turnover intentions and the reasons for the potential turnover or for choosing an
organization (Exhibit 8).
Exhibits
Exhibit 1: Leadership challenges faced by Eugen Welte.

Source: Authors.
Exhibit 2: Leadership style with regard to Indian management team and engineers

Source: Available at http://www.nwlink.com/~donclark/leader/leadstl.html. Last accessed


on 26 May 2015.

47
A Book of Selected Cases

Exhibit 3: Summary of existing leadership theories


Leadership theory Summary
Great Man Theories Based on the belief that leaders are exceptional people, born with
innate qualities, destined to lead. The use of the term 'man' was
intentional since until the latter part of the twentieth century
leadership was thought of as a concept which is primarily
male, military and Western. This led to the next school of Trait
Theories.
Trait Theories The lists of traits or qualities associated with leadership exist in
abundance and continue to be produced. They draw on virtually
all the adjectives in the dictionary which describe some positive
or virtuous human attribute, from ambition to zest for life
Behaviorist Theories These concentrate on what leaders actually do rather than on
their qualities. Different patterns of behavior are observed
and categorized as 'styles of leadership'. This area has probably
attracted most attention from practicing managers
Situational This approach sees leadership as specific to the situation in
Leadership which it is being exercised. For example, whilst some situations
may require an autocratic style, others may need a more
participative approach. It also proposes that there may be
differences in required leadership styles at different levels in the
same organization
Contingency Theory This is a refinement of the situational viewpoint and focuses
on identifying the situational variables which best predict the
most appropriate or effective leadership style to fit the particular
circumstances
Transactional This approach emphasizes the importance of the relationship
Theory between leader and followers, focusing on the mutual benefits
derived from a form of 'contract' through which the leader
delivers such things as rewards or recognition in return for the
commitment or loyalty of the followers
Transformational The central concept here is change and the role of leadership
Theory in envisioning and implementing the transformation of
organisational performance
Source: Bolden et al. (2003)

48
Exhibit 4: Leaders traits and skills
Traits Skills
Adaptable to situations Clever (intelligent)
Alert to social environment Conceptually skilled
Ambitious and achievement-orientated Creative
Assertive Diplomatic and tactful
Cooperative Fluent in speaking
Decisive Knowledgeable about group task
Dependable Organised (administrative ability)
Dominant (desire to influence others) Persuasive
Energetic (high activity level) Socially skilled
Persistent
Self-confident
Tolerant of stress
Willing to assume responsibility
Source: Stogdill (1974)
Exhibit 5: Key Behaviors of Leaders
Key behavior Description
Asking questions instead of By asking questions such as "What do you think we
giving answers should do?" or "How do you suggest we proceed?"
you take a step behind another person. Whether you
stay behind, of course, depends on your intention to
actually follow the suggestion or answer of that other
person.
Providing opportunities for This goes beyond the traditional notion of looking
others to lead you for growth opportunities for other people. Unless
the opportunity in question bears a real risk for your
personal performance outcome, you are not actually
positioning yourself as a follower.
Doing real work in support Rolling up your sleeves and contributing "sweat equity"
of others instead of only the to the efforts and outcomes of other people earns
reverse you their appreciation as someone upon whom they
can depend, regardless of the relative hierarchical or
functional position each of you holds.

49
A Book of Selected Cases

Becoming a matchmaker In addition to following other people yourself, you must


instead of a "central switch" learn to help them follow each other. This requires you
to get beyond considering yourself the "central switch"
through which all decisions flow. Instead, you need to
look for every possible chance to help people find their
best collaborators. "Have you asked Sally or Rasheed
what they think?" is often the only input required to
facilitate the effort at hand, although you then must
submit your effort and support to whatever the people
in question suggest.
Seeking common The pejorative meaning associated with consensus
understanding instead of management has nothing to do with either effective
consensus leading or effective following. Leaders who know when
and how to follow build deep common understanding,
not superficial consensus, around the purpose, goals,
and approach at hand. They submit themselves and
others to the discipline of ensuring that all sides to
any disagreement are fully understood by everyone,
recognizing that mutual understanding is far more
powerful than any particular decision to choose path
A over path B. All people will follow strong, commonly
understood purposes and goals more easily than the
"put-up jobs" associated with consensus.
When a leader must follow • Individual performance: As a leader, you must
follow another individual, regardless of hierarchy,
if:
• That individual, through experience, skill, and
judgement, knows best.
• That individual's growth demands that you invest
more in his or her skill and self-confidence than in
your own.
• Only that individual, not you, has the capacity (the
time and opportunity) to "get it done"
Team performance: As a leader, you must follow the
team if:
• The team's purpose and performance goals demand
it
• The team, not you, must develop skills and self-
confidence

50
• The team's agreed-upon working approach requires
you, like all the others, to do real work
Organizational performance: As a leader, you must
follow others, regardless of hierarchy, if:
• The organization's purpose and performance goals
demand it
• The need for expanding the leadership capacity of
others in the organization requires it
• "Living" the vision and values enjoins you to do so
Source: Katzenbach and Smith (1994)
Exhibit 6: Advantages of choosing a local and a non-local manager
Non-local manager Local manager
Knows culture and customs of mother Knows culture and customs of host country
company
Established network within the company No language barrier
Easier access to managing board Facilitates building network with suppliers,
employees and customers, networks might
already exist
Often take a different view than local 
positive effect of diversity
Source: Authors
Exhibit 7: Employee retention factors
Factor Sub-factor
Organizational and industry attributes Long, unsocial working hours
Low pay
Lack of career development
Stress
Personal employee dimensions Job burnout
Emotional exhaustion
Work-life conflict -
Other organization practices -
Source: Deery (2008).

51
A Book of Selected Cases

Exhibit 8: Reasons for choosing and leaving an organization


Factor
Location of the company
Compensation and attractive benefits
The job itself
Company’s reputation
Training and Career development
Job security
Organization culture
Challenge
Empowerment
Effective leadership
Emphasis on teamwork
Flexible work schedule
Trust in senior management
Recognition
Source: Ramlall (2003).
References and Readings
1. Bolden, R., Gosling, J., Marturano, A., & Dennison, P. (2003). A review of leadership
theory and competency frameworks. Available at http://www2.fcsh.unl.pt/docentes/
luisrodrigues/textos/Lideran%C3%A7a.pdf (last accessed on 27 February 2015).
2. Cooper, C. D., Scandura, T. A., &Schriesheim, C. A. (2005). Looking forward but
learning from our past: Potential challenges to developing authentic leadership theory
and authentic leaders. The Leadership Quarterly, 16(3), 475-493.
3. Cooper, C. W. (2009). Performing cultural work in demographically changing schools:
Implications for expanding transformative leadership frameworks. Educational
Administration Quarterly.
4. Deery, M. (2008). Talent management, work-life balance and retention strategies.
International Journal of Contemporary Hospitality Management, 20(7), 792-806.
5. Fischer, R., Ferreira, M. C., Assmar, E. M. L., Redford, P., & Harb, C. (2005).
Organizational Behaviour across Cultures Theoretical and Methodological Issues for
Developing Multi-level Frameworks Involving Culture. International Journal of Cross
Cultural Management, 5(1), 27-48.

52
6. Katzenback, J. R., & Smith, D. K. (1994). The wisdom of teams. New York: Harper
Business.
7. Krakoff, P. (2005). Leadership by Persuasion - Four Steps to Success. Available at
http://www.articlecity.com/articles/business_and_finance/article_5032.shtml. Last
accessed on 27 May 2015.
8. Puia, G. M., &Minnis, W. C. (2007). The effects of policy frameworks and culture
on the regulation of entrepreneurial entry. Journal of Applied Management and
Entrepreneurship, 12(4), 36.
9. Ramlall, S. (2004). A review of employee motivation theories and their implications
for employee retention within organizations. The Journal of American Academy of
Business, 9, 21-26.
10. Stogdill, R. M. (1974). Handbook of leadership (1st Ed.). New York: Free Press.

53
A Book of Selected Cases

Engaging Blue Collar Employees at the


Workplace: Does Supervision Matter?
Abstract

T
his case examines and discusses a situation that is faced by Shreeji Industries. It
is a small manufacturing concern that is involved in the business of producing
corrugated boxes since 1991. It employs no more than twenty employees and is a sole
proprietorship. It essentially follows a centralized hierarchical structure with three levels of
management. All the decisions are taken by the proprietor. The proprietor (Vipul) does not
interact with the shop floor workers directly but gets all the required information from the
supervisors. He wishes to expand his business and increase their operations. He intends to
do so by transforming their organisation from its present state to a more systematic and
efficient organisation. He wants to increase productivity and output by adopting various
techniques and measures. This step would require that all his workers working on the shop
floor be trained in a way that they become more efficient and productive. They have recently
received a huge trial order and if this customer is happy with the quality of boxes then they
would place an annual order. Thus, Vipul is keen on not only getting this order but also
using it as a means to enable his expansion plan. However, the situation takes a drastic
turn when the manager of the firm expresses his wish to resign because of an incident that
takes place between him and the shop floor workers. The workers on the shop floor refuse to
be productive and sincere and start acting carelessly. The management is concerned about
the behavior and performance of the workers. Further, the proprietor is apprehensive as the
problem has arisen at a time when he wishes to expand his business.
Introduction
Shreeji Industries is a reputed manufacturer of corrugated boxes used for the purpose
of packaging. It was established in the year 1991. Over the years many breakthroughs
were developed in-house and some of the new products developed were recognized as a
revolutionary concept in the industry. Having established a strong position in the Indian
market in 1996, it was decided to establish a global sales network. Customer's satisfaction
by delivering quality products has been the corner stone of Shreeji industries. The company,
therefore, believes in manufacturing all critical and precision components in-house.
The production facility is equipped with high precision machine tools and managed by
well qualified and experienced engineers and technicians. Research & Development has
always been the focus and strength of the company. This effort has helped the industry by

Case Written by : - Simran Sutaria, Student, BBA-MBA Integrated Programme, Institute of Management,
Nirma University, Ahmedabad.
Dr. Sameer Sudhakar Pingle, Associate Professor, Institute of Management, Nirma University, Ahmedabad.

54
many innovative products and technologies.
Industry
The corrugated packaging industry is a rapidly growing industry as corrugated boxes are
extensively utilized for the purpose of packaging in other industries. It is observed that
80% of industrial packaging is done with these boxes due to their light weight, ease of
fabricating and storing, effective cushioning etc. Further, these boxes are also utilized by
retail consumers for the purpose of packaging. The over 4,000 corrugated board and sheet
plants are highly labor-intensive, employing over half a million people – both directly and
indirectly. The industry is converting about 2 million tons of Kraft paper into corrugated
boxes. Factories are spread out in all parts of India, even in the remote industrially
backward areas. Presently it is a INR 15,000 crore industry which is growing at a fast pace.
About the Company
It is a manufacturing company located in the Vatva1 region of Ahmedabad, Gujarat. It is
involved in the business of manufacturing corrugated cartons used for packaging various
items. It is essentially a small sized organisation and has approximately twenty workers,
majority of which work on the shop floor. The organisation deals in different types, sizes
and quality of boxes and based on this, it has different types of customers. The customers
can typically be categorized into two types. The first type of customer is the one who
place orders regularly with the company and therefore are routine orders. The second
type of customer is generally a new order placed for the first time. The customers give
specific orders for the type of boxes they wish to purchase and the boxes are therefore
manufactured according to the explicit requirements of the orders placed.
The Problem
In the organisation, all decisions were taken by Vipul and these decisions were then
communicated to the employees working at the lower levels in the organisation. Sometimes,
the advice or suggestions of the manager were taken if decisions involved technical details
pertaining to machines or processes. The organisation, therefore, followed a centralized
structure for decision making. Also as it is a manufacturing concern it could not afford to
involve everyone in the decision making process because of various obvious reasons like
lack of required knowledge and experience. The hierarchy of the organisation involved
Vipul (the owner of the company) as its head or top management, a manager named
Ramesh and three supervisors. The workers reported directly to the supervisor and the
supervisors reported to Ramesh. He had to keep an eye on all the activities that took place
in the factory and was required to report the same to Vipul as he himself did not directly
come in contact with the workers. Vipul, however, did go on routine checks of the factory
to ascertain proper functioning.
1
Vatva is an industrial area located in the city of Ahmedabad. Ahmedabad is located in Gujarat, a state in
India

55
A Book of Selected Cases

The company recently received a trial order from a new customer. The company had been
asked to manufacture corrugated boxes of a certain type. If the client approved of the
boxes and is satisfied with the product, they promise to sign a huge annual contract with
Vijay Packaging. If the company got this customer, it will give a boost to its revenues and
increase its profits. Also, this contract was very important to Vipul as it has come at the
right time. Vipul had been, for quite some time now, planning to increase the scale of
its operations by increasing the productive capacity and output of the plant. He wanted
his organisation to work in a very systematic and orderly manner as opposed to the way
in which it was working. He wanted to develop a systematic shopfloor with standard
operating procedures and orderly flow of work. He wanted to eliminate wastage and
increase efficiency. He thought that the present capacity of the factory could be increased
by eliminating unnecessary processes and reducing wastage. He also wanted to equally
focus on improving the quality of the boxes that they manufactured by reducing errors
made by workers due to their carelessness and negligence. He wished to adopt various
tools and techniques of quality management like kaizen, quality circles etc. to enhance
not just the productivity but also the quality of the boxes.
After some extensive discussions with Ramesh, Vipul realized that if he wanted to change
the way his factory operated, he needed to bring the workers in confidence and without
their efforts towards the change, nothing at all could be done. Vipul had thought of
training the workers in such a way that they not only become more skillful technically but
also contribute towards making the shop floor organized, effective and efficient. “They
need to understand that if they themselves are not organized, systematic and disciplined,
the change cannot be brought about” said Vipul.
Theirs being a small company with less number of workers, each worker could be
evaluated and assessed. He wanted to develop a system of measuring the performance of
each worker so that the productivity can be measured and maintained. He intended to
measure their productivity by introducing performance charts for workers on the shop
floor, carry out performance appraisals to not only identify areas of improvement but
to develop an incentive system for workers. He wanted to slowly and gradually involve
the workers in the decisions that pertain to the changes in the shop floor and ways of
increasing production. Further, he thought of imparting technical training to the workers
to improve and increase their competency while handling machines and eventually
enabling them to multitask so that all workers can do everything and no stoppage in work
occurs. He thought that if the presently employed workers put in their hundred percent,
the productivity would definitely rise without incurring any additional cost of recruiting
new workers or purchasing additional machinery.
The Resignation
However, a few months back Ramesh had come to meet Vipul to talk about an important
issue. He said “I cannot work here anymore and I wish to resign”. Hearing this Vipul got

56
startled and asked for the reason. “The workers here are undisciplined, lazy and do not
pay heed to anyone” he said. “I don’t understand, can you please tell me everything from
the beginning” said Vipul worriedly. “The supervisors had been complaining to me about
the lazy and irresponsible behavior of the workers on the shop floor. They said the workers
had been coming in late for work, taking unnecessary breaks, eating and chatting during
the work hours and did not listen to the supervisors. To address their issues, I myself
went to the shop floor and talked to the workers. At that time the workers pretended and
said that they would be responsible from then on and apologized for their behaviour.
After a day or two when I asked a few supervisors about the behavior of the workers, they
said that nothing had changed and they had not put their acts together”. “So then what
happened?” asked Vipul. “I went back to the shop floor to scold the workers in an attempt
to show that such behaviour was not acceptable, but in turn they started misbehaving
with me and told me that we will do what we want to. You can go and complain to Vipul.
We don’t care.”
A few weeks passed by and the situation did not change. In fact, the output started to fall.
Vipul met the supervisors every day to understand the problems faced. Justifying himself,
Vipul said “First of all it is very important for me to understand the reason behind why
the workers are behaving in this manner, what they need etc. I cannot act quickly because
it might have a wrong impact. Therefore, once I get a hold of what is happening, I would
come to you directly with not only the problems but also the proposed solution”.
Vipul noted the same things on the shop floor as mentioned to him before by the
supervisors and Ramesh. The workers were least bothered of the work and did what
suited them. He observed that there was no record maintained of the workers regarding
the time at which they came and went. The workers were paid their wages for one full day
even if they did not work the entire day. All the workers were treated in the same manner
and there was no distinction between the good and bad performers which eventually
demotivated the good ones. There was no incentive system or rewards for the workers
and all were paid the same wages. Monotony and boredom prevailed as the workers had
the very same routine each day. Workers were not given due importance and attention
and were only contacted in case of any complains. Neither the supervisors nor Ramesh
interacted with them on daily basis. In simple sense, they were left to do what they wanted
to. For the refreshment of the workers, there was one break given for lunch at 1 p.m. and
the other at 5 p.m. In between, the workers had to work constantly though this was not
supervised as the supervisors were busy doing their work.
Ramesh observed all this and made a note of it. He understood that if more attention
was paid to the workers and their needs are met then they would be motivated, would
definitely work harder and behave responsibly. Somewhere he thought that the workers
lacked a sense of belongingness and purpose when they work here and are treated no
differently than machines.

57
A Book of Selected Cases

He called for a meeting with Vipul and reflected on what he observed at the shopfloor. “I
have recognized certain vital issues that have resulted in the situation that we are facing.
It seems that more than the workers, it is us who have to improve and we have a lot to
work on”.
Questions
a) Do you agree with Ramesh? Do you feel that the management should improvise its
approach towards the workers?
b) What measures should be adopted by Ramesh to solve the current problem?
c) Is it important to understand the needs of workers and cater to the same? Does this
have an impact on the productivity of the organisation (small)?
Teaching Note
Teaching objectives
The case provides instructors with an excellent opportunity to discuss the challenges
faced by a manufacturing firm. To understand problems faced by Shreeji Industries, the
participants are expected to use theoretical frameworks and also understand functioning
of manufacturing organization. The case provides ample opportunity to discuss: a)
Employee Relations Management b) Employee Engagement strategies c) Managing blue
collar employees in a manufacturing firm d) Effective Supervision
Indication of level of analysis
The case can be used for post graduate management programme as well as executive
education programme. It is ideally suited for first year post graduate students for Human
Resource Management course and also for second year post graduate students for
Employee Relations Management courses. The students should have basic knowledge of
Organizational Behavior and Principles of Management.
Pre-reading
• Kizer, Jennifer (2016), Strategies for Employee Engagement in a Small Business
Enterprise, Walden University Scholar Works
• http://peopledevelopmentmagazine.com/2015/05/20/employee-engagement-for-
smes/
• Suggested student assignment/s
a. Conduct SWOT analysis of Shreeji Industries
b. Visit reputed small manufacturing firm in India and try to understand their
functioning
c. Apply various theoretical frameworks for analyzing the case
d. Design employee engagement strategy for Shreeji Industries

58
• Analysis of the Questions
a) Do you agree with Ramesh? Do you feel that the management should improvise its
approach towards the workers?
A. The situation that the company is facing could have been avoided had the
management been more concerned and attentive to the needs and conditions of
the workers. I agree with Ramesh and I believe that it is important that the workers
feel that they are an integral part of the organisation and their contribution to
the organisation is acknowledged and valued. The management should take into
consideration the basic aspects of workers like their working conditions, their needs,
their aspirations, level of satisfaction with the organisation and management, etc.
In manufacturing units, it is often observed that issues and concepts like employee
engagement and employee satisfaction are often overlooked and the need to increase
efficiency and productivity of the units are given considerably more importance. Further,
because of the nature of the job, the idea of employee retention and satisfaction are often
dealt with liberally and thus the management does not direct its efforts towards improving
the levels of employee satisfaction and engagement.
The management should improvise on its approach towards the workers so as to improve
the effectiveness of the organisation as a whole. Further, if they wish to get the contract,
they will have to improve their relation with the workers in order to implement the
changes that Vipul had thought of. The company will find it increasingly difficult to fulfill
and secure future orders and clients if the present situation prevails. The company could
risk facing outcomes like falling productivity, stoppage of work, poor quality of boxes,
increased conflicts with the management, etc.
Thus, the management should look into the present situation and try to improve its
approach towards the workers by making efforts to enhance their cooperation with the
management.
Theoretical Framework: Craig’s model of Industrial Relations (Exhibit I) can be used for
understanding players in industrial relations, their interaction, dependency and outcome
of harmonious industrial relations.
b) What measures should be adopted by Ramesh to solve the current problem?
A. Engaged employee is almost three times more sincere toward his job in comparison
to those employees who are actively disengaged (Kular, Gatenby, Rees, Soane, &
Truss, 2008). Therefore the organization should focus on the aspect of employee
engagement in order to improve organizational performance (Basbous, 2011;
Sundaray, 2011). The first issue that needs to be addressed by Ramesh and the
management is how the workers are viewed as by the management and how the
workers themselves look at the management. This simply means that there must

59
A Book of Selected Cases

be a mutually dependent and harmonious relation between the two wherein both
of them feel trusted and respected by the other party. Ramesh needs increase the
amount of interaction that is held between him or the supervisors and the workers.
The management needs to look into the day to day needs and requirements of the
workers and they need to build a rapport with them.
For the purpose of increasing interaction, Ramesh can conduct weekly meetings with the
workers and supervisors to facilitate communication and feedback. Such meetings could
be formal or informal depending of the agenda of the meeting. Such meetings could be
attended by Vipul every month so that he also gets a chance to interact with the workers
and understand their perspective and gain insights from the same.
The management could conduct training sessions and workshops for the workers that
would aim at enhancing their technical as well as behavioral skills. This would not only
help Vipul in implementing the desired changes but would also help the management
while handling issues with the workers. This would also help develop a relationship
that is based on the sharing of interests of both the management and the workers. The
management should take steps that improve the collaboration of the workers among
themselves and with the management.
Apart from a compensation system, they should adopt a reward system wherein the
workers are rewarded for improved performance. This system could be based on monetary
as well as non-monetary rewards which could include cash gifts, employee of the month,
non-cash gifts, recognition, etc. This will not only improve their motivation levels but
would also help enhance the loyalty of the workers towards the organisation and this
might help them to retain workers. This would make them enthusiastic and willing to
contribute towards the organisational goals.
Theoretical Framework: 10 C’s of Employee Engagement (Exhibit II)
c) Is it important to understand the needs of workers and cater to the same? Does this
have an impact on the productivity of the organisation (small)?
A. The productivity of any organisation depends largely on the productivity and
performance of its employees and thus for any organisation to succeed, it is
essential that the employees of the organisation succeed in their jobs and tasks. The
performance and productivity of an employee is affected by many factors and one of
the most important factors or key factor is employee satisfaction. This satisfaction
could be in terms of the compensation, workplace, relations with others, job role,
etc. The management in any organisation plays a crucial role in delivering this
satisfaction to the employees.
The role of the management is to understand the nature of the needs of employees and
design the role and various aspects mentioned above in such a manner that the employee is

60
content with the organisation. The employee is in a state that all his/her needs are satisfied
by the organisation and thus the employee is willing to contribute to the organisation in
the same way that the organisation contributes to satisfying their needs.
Thus, it is extremely important to understand and fulfill the needs of employees to ensure
that they succeed in the organisation and in turn help the organisation excel and achieve
its goals. By satisfying the needs of the employees, the organisation aligns the individual
and business goals and as a result creates synergies through the same.
Theoretical Frameworks: Exhibits I and II
• Suggested teaching approach
This case can be taught in 75 minutes class.
• Proposed session plan
This case is ideal for a 75 minutes session. Suggested session plan is as follows:
• The instructor may start with introduction employee engagement concept
(5minutes)
• Discussion about small manufacturing organizations in India (10 minutes)
• Central Problem of the case (10 minutes)
• Causes, consequences of the problem’s (20 minutes)
• Identification and alternatives, analysis of alternatives and solution (15 minutes)
• Linking the case with concepts of employee relations management and employee
engagement (10 minutes)
• Conclusion (5 minutes)
External Inputs ➛ Actors ➛ Internal ➛ Conversion Mechanisms ➛ Outputs
(External Subsystems)
Legal ➛ Labour ➛ Values ➛ Collective Bargaining ➛ Employer Outcomes
· Common Law (Employees & Association) · Management Rights
· Statutory Law Grievances and Responsibilities
· Collective Bargaining Law · Efficiency
Economic ➛ Emplyers & Associations ➛ Goals ➛ Day-to-Day Relation ➛ Labour Outcomes
· Product/Service Market · Union Rights and Security
· Labour Market · Hours of Work
· Money Market · Wages and Benefits
· Technology · Job Rights
· Work Rights
Ecological ➛ Government & Associated ➛ Strategies ➛ Third-Party Dispute ➛ Worker Perceptions
· Climate Agencies Resolution Interventions · Work Climate
· Natural Resources · Interest Arbitration · Employee Morale
· Physical Environment · Mediation and Organizational
· Grievance Arbitration Commitment
· Conciliation/Fact Finding · Union Satisfaction
· Mediation/Arbitration and Commitment
Political ➛ End Users ➛ Power ➛ Joint Committees ➛ Conflict/Conflict
· Legislative Action Resolution
· Executive Action · Strikes/Lockouts
Sociocultural ➛ ➛ Strikes/Lockouts '
· Values

' Strikes and lockouts can be both a convention mechanism and output Source Craig and Solomon 1996.

Exhibit I Craig’s Model of Industrial Relations

61
A Book of Selected Cases

Exhibit II10 C’s of Engagement


1. Connect: Employee engagement is a direct reflection of how employees feel about
their relationship with the boss. Employees look at whether organizations and
their leader walk the talk when they proclaim that, “Our employees are our most
valuable asset.”
2. Career: Leaders should provide challenging and meaningful work with
opportunities for career advancement.
3. Clarity: Leaders must communicate a clear vision. People want to understand the
vision that senior leadership has for the organization, and the goals that leaders or
departmental heads have for the division, unit, or team.
4. Convey: Leaders clarify their expectations about employees and provide feedback
on their functioning in the organization.
5. Congratulate: Exceptional leaders give recognition, and they do so a lot; they
coach and convey.
6. Contribute: People want to know that their input matters and that they are
contributing to the organization’s success in a meaningful way.
7. Control: Employees value control over the flow and pace of their jobs and leaders
can create opportunities for employees to exercise this control.
8. Collaborate: Great leaders are team builders; they create an environment that
fosters trust and collaboration.
9. Credibility: Leaders should strive to maintain a company’s reputation and
demonstrate high ethical standards.
10. Confidence: Good leaders help create confidence in a company by being exemplars
of high ethical and performance standards.
Source: Seijts & Crim (2006)
Annexure 1
Organizational Chart

62
Finding the right fit : A new approach-
Radfarm Pvt. Ltd.
“So what are you planning to do differently now?”

T
hese words rang in his head like an alarm. He tried to fill himself with positive
thoughts to take on the new day with gusto. But his mind kept reverting to the
same question that had been bothering him for almost 6 months—what should
they do differently now? In fact, he wondered, what had gone so dramatically wrong
in the past few months that they were just not able to close on the position of an R&D
manager for their new plant in Pondicherry.
Ashish Sharma is a Senior Recruiter for the Talent Acquisition team at the R&D division
at Radfarm Pharmaceuticals Pvt. Ltd. He had been working for the company for over
two years now. Ever since the introduction of the new R&D plant in Pondicherry, he
had been working tirelessly towards filling open positions for the divisions within the
plant. However, despite having successfully closed around 13 positions across the existing
divisions, the role of the main R&D manager still remained vacant.
Could it be that the package as a whole- including pay, location, title, role- was not
attractive enough? Or was there something wrong with their approach? Whatever be
the problem, the hiring manager’s words were clear. He wanted a plan and he wanted it
within a week. All Ashish knew as of now, was that his days were about to get much more
stressful than they already are.
Background of the Company:
Founded in 1979, RadfarmPvt. Ltd. is a Pharmaceutical company that works towards
using technology to create and develop robust products for diverse markets across the
world. Their mission has always been to focus on innovation, technology and integrity.
The company currently has its headquarters in the US, and can boast of an employee
strength of around 15,000 employees and customers in over 150 countries. Since its
inception Radfarm Pharmaceuticals has come a long way from having just five products
under its umbrella to treat cardiology patients, to becoming the global leaders in the areas
of cardiology, diabetes and orthopedics medication.
R&D Centre:
Radfarm thrives itself on a strong research and development team. The company initially
started out with only one R&D center in Singapore in the whole of the APAC region.
However, India being one of the fast growing markets in terms of domestic demand, the
Case Written by : - Tannu Priya, Jr. Manager, Personnel, Bokaro Steel Plant, SAIL
Kumar Deepak, Jr. Manager, Blast Furnace, Bokaro Steel Plant, SAIL

63
A Book of Selected Cases

company soon found the need to expand and set up an R&D center in Pondicherry, India.
The company was facing growing competition from companies like Jasmine Laboratories
Ltd, a leading health care company in Pondicherry. In order to gain competitive advantage,
the company needed to cater to the increasingly diverse demands of the Indian market.
The new R&D plant set up in Pondicherry would help them to make tailor made products
which suited the preferences, climate and other requirements specific to India. In
addition to that, the Indian market being cheaper than the Singapore market, it was more
economical to open a new center in India.
The center consisted of 4 divisions. Each division was made up of a 5-member team
(Exhibit 1). The entire R&D center (including all 4 divisions) was to be managed by one
R&D manager, with a project manager under him.
Hiring within the plant:
Ms. Gauri Bose heads the R&D division in the APAC region. Ms. Bose has 16 years of
extensive experience in the field of Product Development and Research. She is an Indian
citizen, expatriated to the US. However, for all practical purposes, she is the sole decision
maker while hiring for any key position in the R&D plant in India, especially the new
plant set up in Pondicherry.
Initially, after CVs were shortlisted, the candidates had to directly go through a telephonic
interview with the hiring manager in the US, based on which the candidates were selected
for the role. This however turned out to be an ineffective method of selection since
candidates usually tended to sound more confident over call rather than during a face to
face interview or a Skype call. They then decided to change the process. Once the CVs were
shortlisted, the recruitment team in Pondicherry would conduct a telephonic interview
with the candidates. Skype interviews with the hiring manager were then scheduled only
for those who performed well in the telephonic round of interview. Despite these efforts, a
lot of candidates were still being rejected at the interview level even though on screening,
their CVs were found to be perfectly apt for the particular role.
R&D being a niche field, they faced competition from other companies. Poaching was
difficult because companies would offer a hike in salary to retain good candidates.
Radfarm, too, fought back by offering better compensation. Once a few candidates were
taken onboard, they were able to rope in candidates for other open positions through
referrals. “We aren’t too worried about the positions within the cell”, says Aashish.
Their major concern for the past few months has been to fill the position for the R&D
manager who will take charge of all the 4 divisions. It wasn’t just the problem of finding
the right fit. Even though the recruitment team was able to find people who matched the
job description to the T, the candidate would either get rejected by the hiring manager, or
would decline the offer.

64
Closing the deal- issues faced:
In terms of compensation, the company was willing to offer a package which falls in line
with the 50th percentile of the industry (Exhibit 2). This included all functions except for
sales. The compensation structure included a fixed component of around 45 LPA2 and
a 15% variable pay on the fixed amount. The employees were also offered stock options
4 once in 5 years. This was allocated as per the company’s discretion. On joining, the
company would make sure that they are well oriented into the culture of the organization.
They would get the opportunity to travel to the US to get acquainted with the team there.
The US team, too, would make trips to India in order to stay connected with the team.
However, despite the compensation and benefits offered, the company still wasn’t able to
make the offer attractive enough for candidates to accept it and come on board.
Moreover, a few candidates were of the opinion that the title being offered was a little
misguiding. While the competencies required for this kind of a role were that of a Director,
the title being offered was ‘Manager’ which was not normal as per the local industry
standards. However, Radfarm being a US based company, had to follow the titles defined
by the US policy.
Looking at the demographics of the candidates being shortlisted, most of them were in
their late 30s or early 40s, married and settled with their respective families. A major issue
highlighted by potential candidates is the inconvenience associated with moving to a new
location at this juncture in their lives. To add to the problem, some of the candidates were
from metropolitan cities and R&D hubs like Bangalore, Mumbai and Hyderabad. Moving
to a smaller city was a big decision to take, and not all of them were comfortable with it.
However, Ashish had thought about all this, he had got in touch with his seniors and
convinced them to re-designate the position of R&D manager as Executive I/c (Research
&Development) to make it sound more attractive while being in line with the ethos of the
US pharma organization. He even suggested a one-time relocation allowance to be given
to candidates from outside Pondicherry. Moreover, the company decided to provided for
a 15 day stay in a hotel for the selected candidate and his/her family.
But inspite of all this effort Ashish was not able to close the position of R&D manager and
was still losing his sleep over it. The problem was deeper than what he imagined.
Working with the hiring manager’s expectations:
Given Ms. Bose’s level of expertise and experience, it came as no surprise that her
expectations for hiring the perfect candidate for the job were quite high. However, the
recruitment team in Pondicherry soon found that there was a huge disconnect between
their idea of the perfect candidate and the expectations of the hiring manager. This was
reflected in the rate at which shortlisted candidates were being rejected by her.
There were instances wherein the recruitment team would find a candidate who perfectly

65
A Book of Selected Cases

matched the competencies listed in the job description, however their candidature was
rejected by Ms. Bose on the grounds of having poor communication skills, or not having
enough patents or papers inspite of having qualitative R&D experience or not the “right”
attitude or at time she just shrugged off saying,”I don’t see a spark ” or “I just cant have
anyone doing what I do with such pain and effort in Singapore”.
On digging deeper, Ashish got to know from people within R&D division that earlier there
had been times when a candidate rejected by Ms. Bose initially, was later selected within
the cell after being referred by an existing employee in the organization. On joining, these
candidates were known to perform well with no complaints from the team. This made
the recruitment team wonder what really was the basis of her rejecting the CVs which
they shortlisted in the first place. Should they merely trust the hiring manager’s choices
or should they acknowledge that there is a major disconnect between their expectations
and that of Ms. Bose?
Ms. Bose and her fear of losing control:
Ms. Bose joined Radfarm 18 years back as a young Research scientist fresh out of a
orestigious science college in Kolkata. Young, sharp and ambitious, Ms. Bose was soon
seen as a power to reckon with in a fairly male dominated workplace.
On speaking to his colleagues in India, US and Singapore, Ashish gathered a few more
insights into Ms. Bose’s persona.
One of them said,” She is one firebrand officer. Aggression is her other name, hardly any
lady-like character she has. But then you can’t blame her, its not easy for men to lend a ear
to a young woman in these rooms”.
Another told her,” She is stern and snappy, work is all that she cares about. No doubt she
is still single”.
Someone who worked with her said,” For Ms. Bose, its either her way or highway. She is
brilliant but difficult to work with”.
Ashish had a meeting scheduled with his senior tomorrow and while he was burning the
midnight lamp, several thoughts went around in his head, he jotted them down to gather
clarity:
Following is an excerpt from a page in Ashish’s diary:
i. Is Ms. Bose afraid of losing her power and position to an outsider, given that R&D
division of Pondicherry would lead to a shift in distribution of power as until now
the R&D division in Singapore was a standalone in APAC region?
ii. Is Ms. Bose looking for another mirror image of herself, often people at her position
fail to accept anything that is different from their own

66
iii. Does Ms. Bose want someone of her own to head in Pondicherry whom she can
“manage” better?
iv. Can it be possible that Ms. Bose is bent on stalling the development of R&D division
in Pondicherry altogether?
Teaching notes:
While Ashish fell asleep breaking his head over the issue at hand, you can help him by
suggesting an alternate course of action from below:
i. Should Ashish seek help of senior management to bridge the expectations gap with
Ms. Bose?
ii. Should they involve a workplace counsellor to speak to Ms. Bose in an indirect
manner and sort out the tension within her?
iii. Should he propose to his senior management to replace Ms. Bose as the final
approving authority for decisions with regard to hiring for R&D division?
Action taken:
Ashish finally decided to speak to his seniors about the issue and they decided to involve
a counsellor to speak to Ms. Bose and resolve her internal conflict. They agreed that such
an approach would help given that Ms. Bose is an important asset to the organization and
establishing a synergy between the R&D head of Pondicherry and Singapore was key to
the company’s success.
The counsellor spoke to Ms. Bose and helped her understand that she might be going
through what one might call an “Unconscious collusions”.Often when individuals and
consequently groups experience areas of stress they mobilize their defences and show
resistance to anything that might disturb their current state. He explained to her that her
struggle as a woman in a fairly male-dominated industry might have made her strong
but also triggered a defensive behaviour in her. Her constant need to prove herself to
stay relevant might have even left her insecure at some level leading to her “paranoid
thinking” and “stylistic bias”.
Since this approach would yield results in long term, for the given situation at hand , the
management decided to form a selection committee with Ms Bose as the head of the
committee so that a fair decision might be taken while respecting Ms. Bose’s intellect and
experience.
Now, Radfarm has an elaborate training program for senior executives to help them
understand the various facets of power and position. They have also introduced an
elaborate mentoring program across the organization to help executives learn how to
nurture other talents and developing a strong pipeline without feeling threatened or
stressed at any level.

67
A Book of Selected Cases

Case Questions:
1. The kind of trauma Ms. Bose is experiencing is often felt by Senior Executives in
organizations especially the ones who have grown in one organization for major
part of their life. Discuss.
2. Learning to manage power on part of individual and decentralising of authority on
part of Organization is vital for big organizations with large employee base. Discuss
how organizations can achieve this delicate balance.
3. How do initiatives like mentoring help in managing power and politics within an
organization?
Further Readings:
1. Managing with Power by Jeffrey Pfeffer
Exhibit 1:
R&D Manager
JG 11

Project Manager
JG 9

Division 1 Division 2 Division 3 Division 4

Process Development Clinical Development Process Development Clinical Development Process Development Clinical Development Process Development Clinical Development
Scientist Scientist Scientist Scientist Scientist Scientist Scientist Scientist
JG 8 JG 8 JG 8 JG 8 JG 8 JG 8 JG 8 JG 8

Process Engineer Process Engineer Process Engineer Process Engineer


(Chemical) (Chemical) (Chemical) (Chemical)
JG 7 JG 7 JG 7 JG 7

Process Engineer Process Engineer Process Engineer Process Engineer


(Biotech) (Biotech) (Biotech) (Biotech)
JG 7 JG 7 JG 7 JG 7

Clinical Researcher Clinical Researcher Clinical Researcher Clinical Researcher


JG 7 JG 7 JG 7 JG 7

Exhibit 2: Industry Benchmark


1st Percentile Minimum 30 LPA
50th Percentile Median 45 LPA
99th Percentile Maximum 60 LPA

68
The 200cr “RAT HOLE”
Abstract:

I
n the present shock world, the ability to filter the signal from the noise, or distinguish
between what’s urgent and what’s truly important will either put you in crisis or take
you out of it. In this troubling time, as new man in Water Works Division, Sujoy faced a
daunting task. The production of LIAS had been stopped due to unavailability of water in the
plant. Due to delay in planning and decision making a routine activity had become urgent
and finally culminated into a crisis. To make matter worse,the solution lied in the perils of
the state authorities. Will Sujoy be a leader in making and be able to normalize the water
inflow in LIAS or become another scapegoat?
“The key is not to prioritize what’s on your schedule, but to schedule your priorities.”
- Stephen Covey
It was the morning of 09.11.2016. A white envelope with “Suspension Order” written
in bold block letters was placed on the table of Mr. Bashir Ahmed by his assistant. Mr
Bashir acknowledged his assistant but he could see dismay and sympathy in abundance.
He emphatically rolled his chair away from his PC and the backlit spread-sheets and
formulas that had kept him awake and his eyes bloodshot in the past week. With a lot
of disappointment, he gave a second glance to the white envelope and kept on clearing
the important files from his desk before he left his office for the day. Working hard to get
suspended!! Irony had hit him hard.
Mr. Bashir,was the HoD of the Water Works Division (WWD) of the giant Steel plant
“LIAS”. LIAS was one of the largest steel plants of India. It was designed to produce flat
products and had provided a strong raw material base for a variety of modern engineering
industries including automobile, pipe and tube, LPG cylinder, barrel and drum producing
industries. But lately, due to dumping and stiff competition from new steel producers its
market share has gone down and the customer base was shrinking.
Bashir had joined the company as a Jr. Trainee and was posted in WWD. He was amused
to see, that so much of importance was given to the department; he felt it should be the
other way around. He felt that a separate department is not required for providing water
and definitely not a manpower strength in excess of 350. He considered all this a waste
of resources. But, after a career of 32 years at WWD in LIAS, his perception had taken a
3600 turn. Recently there was a shuffle in one of the most critical sections of the WWD.
Mr Sujoy, an AGM had been recently transferred to “water inflow” section of WWD and

Case Written by : - Shipra N Hemrom, Asst. Manager, Personnel, Bokaro Steel Plant, SAIL
Sandeep Kumar, Jr. Manager, Personnel, Bokaro Steel Plant, SAIL

69
A Book of Selected Cases

was learning the tricks of the trade. He was a man in his early forties, with a distinguished
service record. After 22 years at LIAS,he still saw himself as a budding creative rather
than an established suit. He understood his role and responsibilities. He later came to
know that the water inflow division was the most critical and least favorite among his
colleagues; Sujoy took up the challenge. He analyzed the setup of the new department
and its workings. He could clearly see that there was no proper SOP’s for many critical
jobs, lack of decision making at the lower level, and priority tasks were not identified.
It had been just been a few months and before he could do anything significant in the
department, the fateful day happened.
The Water Flows through the Rat-Hole (02.11.2016)
02.11.2016 started as any other day, but by the time the clock struck 10 AM there was a
chaos in the WWD. The Vice President- Utilities, Mr. Vinod Singh was informed by the
state authorities that a breach in Tilbhat Canal has occurred at Chainage 23, entry point
of 1st Aqueduct at 9.09 PM. The flow of water in the Canal was stopped immediately by
closing the Service Gate installed at the Canal mouth to restrict further damage to the
Canal. There had been a breach in the lifeline of LIAS.
Mr Vinod was the overall in-charge of the services Dept. of LIAS. He informed his seniors’
immediately. Vinod, along with Bashir took off for the site. Bashir took along Sujoy who
was now handling the water inflow section of WWD. The breach site was about 20KM
from the Plant, so they all sat with the VP in his car.
“How did a structure so mammoth collapse so easily”?Vinod enquired.“Sir, it’s a first time
I am seeing anything like this”. “I asked the reasons, Bashir” Vinod said annoyed. “We
have had minor seepages and small ruptures by anti-social villagers every now and then,
but nothing of such large scale, there has been no inspection of the base ever…..errs…. it
might be weak.” Bashir gathered some answers.
“How can you give these statements after such a long career, Bashir” Vinod raised his
eyebrows annoyingly. Before he could interrupt, Sujoy interjected, “Well, aren’t we paying
crores to the state to take care of that. Where is all the money going?” Pausing a moment,
Bashir opened up, “we do not get detailed reports of where the money is put into, but only
general statements. Now due to this breach there, we’ll have to bear the losses. What are
we going to do about it?”
“Are you asking me or telling me?”Vinod reverted sharply.“What’s the current level of
the pond today and for how long can we sustain without water from the canal?” Bashir
took a breath and explained, “Sir, The ideal level is 217.50 mm, anything lower than that
is ruinous. The water level had already dropped below 217.50 on 16.10.2016”. “Why has it
not communicated to me?” Vinod was losing his patience. “Sir, even I was not informed”
Bashir cut a sorry picture. “Sir, we had already requested for level indicators and suction
indicators but it was not taken seriously” Bashir gave his reasons.

70
Reference Table: Water level in the cooling pond
Cooling Pond level Code Status Action to be taken
>218.00 m Overflow No Action
218.00-217.50m Healthy No Action
<217.50-217.30m Alarming Monitor the parameters and variations
<217.30-217.10m Emergency Review the situation w.r.t consumption
and circulation, reduce losses and stop
supply to auxiliary deptt.
<217.10-216.90m Critical Controlled Production and one time
supply to township
<216.90-216.70m Disaster No Production , alternate day water
supply to township
Vinod started, “Well....the requisitions for the indicators have been sent months ago, what
happened.” Bashir replied tersely, “Because, it’s pending sanction, and I don’t know why”.
The situation was tense. To cool down things, Sujoy broke in. “Sir”, he said soothingly,
“the annual risk assessment was done, but the area of WWD was identified as
moderate!!”There was a light squeal of laughter from Vinod “everybody knows these
formalities….@^^%#%$... how a critical resource is at moderate risk?
When they reached, the state
government officials were
already at the site. It was found
that the RCC structure at the
entry point of 1st Aqueduct
has collapsed due to scouring/
erosion of supporting earth of
the Canal. It appeared to be a case
of ‘Rat Hole’ leading to seepage
from the Canal and subsequent
erosion of earth beneath the
Canal. RCC pillars supporting
the road from the Canal were also found to be dislocated and detached due to sinking of
the structure.
The Water Saga
LIAS received water from Damodar River from Tilbhat reservoir through a 34.5km long
Tilbhat Canal. This is a lined canal that passes through many villages. There are 10 nos.
of aqueducts in its entire stretch. Aqueducts have been provided where canal passes
over river / drain beds and other Drainages. Over the years the condition of the canal

71
A Book of Selected Cases

embankment has deteriorated because of pilferage of the precast concrete slabs provided
on the sidewalls.
As a result the filling portions have been vulnerable to breach because of erosion / rat hole
/ sabotage. The canal was the property of the
state government, but since it was used to divert
water from the river to the plant, the money
for maintenance and upkeep was provided by
LIAS to the tune of 55-62 Lakh per annum.
Apart from this, LIAS also made payments of
a whopping 1.2-1.5 Crore every month for the
water drawn from the canal.
The water from Tilbhat is received in cooling
ponds as make-up water of the central
recirculation scheme. Water drawn from the
canal was stored in the cooling pond and from
there was distributed throughout the plant
through a network of pipelines and numerous pump houses.
Lias In Troubled Water: The Repair (02.11.2016-05.11.2016)
“You handle the plant functions, pump houses and monitor the cooling pond” Vinod said
to Bashir. Bashir gave a nod. “Sujoy you stay here and keep me posted”. Sujoy was vexed as
he could do nothing. Vinod made a few calls and came back.“The State officials are taking
care of the canal; we have to wait for instructions from our management”. Sujoy a little
irritated replied “Sir, we give them huge amount of money for maintenance, and then
also this happens….errr..we’ll have huge production loss”. “What should I do now” Sujoy
asked in anticipation. “Just follow the orders” that’s all Vinod said. They all knew that the
breach will result in falling level in the cooling pond, leading to controlled production
which will snowball into huge losses for the company already struggling to maintain its
market share due to dumping and competition. The alarm bell had already rung.
The news of the breach spread like wild fire. Everyone was worried and anxious. From the
top to the bottom, plans were being discussed to come out of this alarming situation. Even
the general public was vexed as to what will happen. The following austerity measures
were enforced immediately:
a. Controlled rolling in Hot strip Mill
b. Water supply to Township water Treatment Plant curtailed
c. Supply of water restricted to One pump running in place of Two
d. Continuous drinking water supply in Plant curtailed to One pump running
continuously and 2nd pump running only during peak demand hours

72
e. A team of officers of WWD assigned to identify overflows and leakages throughout
the Plant for immediate rectification / repair
f. Regular monitoring of water level in Cooling Pond
g. Close monitoring of operations in Critical Pump Houses and cleaning of Rotary
Nets, Suction Chambers & Trash racks round the clock at frequent intervals.
It had been 48 hours past the breach. Sujoy stood at site inspecting what was going on. He
was instructed to give details of every passing hour. He made the following report:
a. Resources were found to be deployed at site by 08:00 AM in terms of men, material
and mechanical equipment (02 nos. JCB) for repair work of the BIT Canal.
b. Earth filling in the eroded portion by JCB, boulder soling and building up the base
of the canal upto the bottom level of canal from a depth of 25-30 feet (approx).
c. Flat brick soling at the bottom and side slopes for filling up the base.
d. Plain Cement Concrete casting over the flat brick soling at the bottom and side
slopes of the canal over a length of 35 feet in the breached portion.
e. MS reinforcements placing in position for Aqueduct side and simultaneous pouring
of concrete from the same side started. RCC casting over a total length of 150 feet.
As soon as he finished mailing the report he called up his VP. “Sir, I think the concrete
will not sustain the pressure. Sir, it has come to my knowledge that the canal has not been
shut in the last 22 years; still it might be having some critical points. Sir, this patchwork
may have greater repercussion later on”.“Why do you say so? Is the work not going fine?”
Vinod asked. Vinod was skeptical but attentively listened to what his new subordinate
had to say.
“Sir, there has been a lot of pressure from top management, even our Chairman has visited
the area. Since, there is no direct loss to the state authorities;they seem to be working
at a very gentle pace. They don’t understand the crisis situation and definitely not civil
engineering” Sujoy said in one breath. Frustrated and annoyed.

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A Book of Selected Cases

The Power Struggle: The Second Breach (05.11.2016)


At 7 am in the morning, the Head engineer of the state government informed that repairs
are done and the Service gate will be opened by 5cm after three hours.
“What does that mean? The water pressure will be huge…. Its wet concrete not steel. It will
not be able to handle all that pressure”Surprised,Sujoy questioned the state authorities in
disbelief. When Sujoy insisted them to review their plan, the civil engineer shot back,
“Excuse me, I have to follow certain protocols just like you. Have I ever questioned you
on how you run your plant?
“Sorry. I was just trying to help”, Sujoy defended awkwardly, but adamant to make his
point he continued “do you have any idea, how we are running the plant, if anything
goes wrong now, it’ll be a disaster”. He got no reply. He made a quick call to Bashir and
Vinod. Within 45 minutes both were there. They tried convincing the authorities to let
the concrete dry up and set. But everything was in vain.
The gates were opened at 10AM, and as anticipated the wet concrete could not sustain
the flow and the underlying earth got scoured again. And this time the damage was more
severe.
“Enough is enough;we all know what needs to be done. We have already lost 100 crores
of Rupees on a rat-hole. Sujoy chalk out a workable plan, we need to take the matter in
our hands now”.Vinod declared in sheer infuriation. The moderate has now become a
crisis.???
On 10.11.2016, another white envelope was dispatched to the WWD office.
The plant resumed normal production on 20.11.2016, after 18 days of the breach of the
Tilbhat canal. Rs. 200 Crore had gone down the mighty rat-hole.
Teaching Notes
Management Concepts
In every organization there are a number of activities being performed at the same time.
And there are people or team who perform those activities. Every activity however small
or big, performed by an employee or external party or whatever may be the case, is a link
in the chain leading to final output of the organization.
Even though every activity carries its own significance, some are clearly more crucial than
the others there by needing more focus and efforts.
There is always a huge to-do list to grab our attention and practically we cannot take care
of every need that arises. So the things get done only when they become urgent leading to
some things not ever happening and some reaches to the point where you can’t take care
of them. One thing that everyone wants to do is prioritization and having clarity about

74
what needs to be done and by whom.
What is a top priority and what can be taken care of at a later stage, if such questions
remain unanswered; it is hard to save yourself from being doomed. To handle such a
situation, Stephen Covey introduced Urgent and Important matrix. Covey stresses the
need to prioritize the tasks to achieve maximum positive results. The biggest challenge
a person faces is prioritizing, distinguishing the things on the basis of what needs to be
accomplished when i.e. knowing what is important and what is urgent.
Covey’s idea is based on Eisenhower’s thought who said “The urgent is seldom important,
and the important is seldom urgent.”
Urgent things require immediate attention and we all do respond to such tasks. Important
things are significant and show the results a little later so these things require initiative and
are often neglected at the expense of urgent things. You will surely not want everything
to appear in your life as a crisis, so prioritising tasks as urgent and important goes a long
way to strike a perfect balance.
Eisenhower’s Four-quadrant Matrix:
Eisenhower proposes a four-quadrant
matrix of urgency and importance that
acts as a framework to organize daily tasks/
activities happening in the organization.
This matrix has urgency levels on one
axis and importance levels on other axis
distinctly classifying tasks and allowing us
to understand where we spend the bulk of
our time.
Urgent and Important:
It forms the first quadrant of the matrix and
is labeled as the quadrant of necessity. The tasks in this quadrant are the crisis situations
where you have to act quickly, get into the right mode and perform the activities. This
quadrant is for the highest priority tasks. They need to be done on priority basis. Tasks
should be kept few as possible here, with the aim to eliminate. If too much time is spend
in this quadrant, it’s solely trouble shooting, and never finding time to work on longer-
term plans. If two or more tasks in this quadrant appear to be equally urgent, re-asses
these tasks with the team members who originated the tasks, or who depend on them.
This will help in reprioritizing these tasks accordingly. Also, if unplanned demands from
others that fall into the urgent/important category, acknowledge the task and respond
with a commitment to complete it. It involves urgent professional and personal matters,
emergency, lifetime opportunities and some disaster situations.

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A Book of Selected Cases

Important but not urgent:


This is where maximum time must be spent. This quadrant allows completing the tasks
in time with high quality in an efficient manner. The tasks in this quadrant are probably
the most neglected ones, but also the most crucial ones for success. Plan and prioritize for
these activities, so that the tasks from quadrant 1 and 3 don’t take over the whole schedule.
Also ensure that interruptions are minimized while performing the tasks. The tasks in
this quadrant can include strategic thinking, deciding on goals or general direction and
planning – all vital parts of running a successful business.
Not important but urgent:
The third quadrant is referred to as the quadrant of deception. The interruptions in daily
work like unimportant calls needs to be avoided. Certain distracting mails, meetings and
popular activities usually give a feeling of urgency but are actually just time killers. They
divert attention and take your prime focus area. Choose to delegate the tasks falling in this
quadrant to experts. Minimize the tasks that you have in this quadrant. This is where you
are busy but not productive. These tasks are often mistaken to be important, when they’re
most often busywork. These tasks are usually demands originated by team members. You
need to scrutinize and question them, and then help those who made the demands re-
assess the importance of these tasks. Prioritizing and detailing is the key. It’s important
to make a decision about these tasks as soon as they are confronted. Avoiding these tasks
will not suffice. As soon as they are assigned it should be done. Find out alternate ways
of achieving goals, whether it involves delegation to another person or taking a more
strategic approach to the task. This quadrant may also include tasks that exist simply
because “we’ve always done it this way.” Identify, question and challenge them. The way
it’s always been done doesn’t cut it if there isn’t a real purpose behind why things are done
the way they are. If we are able to do these properly crisis situation may be avoided.
Not important and not urgent:
The fourth quadrant is the one that actually disturbs the balance of the entire multi-
tasking scenario. This is where we go to escape after spending too much time in quadrants
1 and 3. But this may cause quadrant 2 activities to get postponed until they become
urgent and move to quadrant 1 – when it becomes too late to get them done effectively.
In fact, this quadrant doesn’t really include tasks, but rather habits that provide comfort,
and a refuge from being disciplined and rigorous with time management. To reduce these
activities and remove the temptation to go back to them, it helps to create a clear structure
for your day by focusing on the tasks in quadrant 2 rather being distracted by non-routine
tasks.
Case Analysis:
In the given scenario, everybody knew that water is crucial for steel production. There is

76
no chance that steel can be made without water. Hence the activity is important for the
company but since it's a continuous activity it was not perceived as urgent. To make sure it
didn't become urgent, continuous monitoring and regular maintenance was required. The
company paid huge amount annually to maintain the canal but there was no monitoring
on how the money was spent and what issues were resolved. It was considered to be
the job of state authority. Due to constant neglect in this regard, the breach took place
thereby making it an urgent task to repair the damage. Even during the repair work and
opening gates after first repair, comprehensive planning was not there. The focus was on
patchwork rather than complete resolution. Even when the state authority was warned
about wet concrete they opened the gates resulting in second breach. This showed lack of
foresight and risk analysis. In addition to this, there was a lack of role clarity among LIAS
officers as visible by their argument. There was no well-defined SOP for canal inspection
giving an impression that water availability was taken for granted to an extent. There is an
evident gap in the task prioritization and analyzing its significance.
Even though there is an involvement of state agencies in providing supply of water to
the plant, no concrete planned activity was done so as to ensure that there will be no
issues. First of all there was no schedule of any inspection or visit being done to see the
condition of dam/site. The responsibility was limited to making timely payment to the
state agencies. There was no way to ensure that the money was spent on the task and it was
done satisfactorily. No SoP was in place in this regard. If there was proper planning being
done, the disaster could have been avoided. Even after the first breach, there a lethargic
and laid back approach to the problem to be solved. After the second breach, everyone
was into crisis management mode. There were a few visible leaders, who acted calmly
amidst the panic/crisis. They used their expertise/experience to find solutions rather than
pondering about what happens next.

2003 WORLD CUP -How to chase a target - simple plan big achievements.
Break down the whole problem into small problems so that the solution can be found in a
more efficient way. LIAS was a centralized organization where all the critical decision was
taken by people sitting at the top which further delayed the decision making. The people
present at the site couldn’t call in the shots; they were acting as informers for the top mgmt.
It was like a coach/captain taking the decision for another team playing on the field.

A Remedy
The second breach created a crisis situation in the company as the water level was already
hitting the mark beyond which full production was not possible. Especially considering
the amount of work required and the time needed for same, there was panic in almost
everyone's mind. This was the moment when the LIAS management decided to take

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A Book of Selected Cases

matter into its own hands. First step in the right direction. Till this moment, the company
officers were acting as mere spectators at site and now they could decide on how to resolve
the issue and work on the plans.
Most important thing was to decide the sequence of activities i.e. to do first things first
which is easier said than done. The overall responsibility was given to Sujoy and he was
given a free hand to resolve the issue. Now, the roles were defined and the people who
were held responsible could make decisions rather than following orders. The decisions
taken were for long term and not for immediate relief.
Sujoy came up with the idea of repairing the breach by in-situ fabrication of a steel trough
about 34m ahead of the aqueduct at chainage 23and 10m into the aqueduct. The work
started at 8:00PM on 05.11.2016. The fabrication was completed on 15.11.2016 and water
was released in a controlled manner from 05 cm upto 20 cm. On 20.11.2016 the gates
were opened to the maximum and the normal plant operation was resumed.
Learning from this crisis experience, certain concrete decision were made by LIAS
management such as arrangement for alternate source of water, Scheduled monthly
shutdowns to repair the canal and water level indicators to be installed at the earliest

Repair work at Tilbhat canal by LIAS Water level indicatorinstalled


Discussion Points
1. Where do you think the problem lies:
a. Centralized decision making /Lack of autonomy
b. Dual ownership
c. Lack of planning
d. The managements inability to identify critical resources
2. Do you think Bashir was made a scapegoat? Has Vinod failed as a leader in
protecting his subordinate’s interest?
3. What would have been your priority “long term V/s short term” in the current
situation? Justify your statements.
4. What different LIAS could have done to avoid the crisis?

78
5. If you were in Sujoy’s place, what course of action would you take?
6. Discussion points:
a. Can LIAS claim the losses from state?
b. Should companies have alternate sources for critical resources?
c. Where would you fit the situation in the four quadrants of Eisenhower's
Urgent/Important matrix?
ANNEXURE 1: Status of Water level in Cooling Pond
Status of Water level in Cooling Pond
Date Level at 8:00 Flow (m3/hr Date Level at 8:00 Flow (m3/hr
am (Meter) at 9 am ) am (Meter) at 9 am )
01.10.2016 217.735 14,600 27.10.2016 217.3 17100
02.10.2016 217.74 14,600 28.10.2016 217.295 17300
03.10.2016 217.735 14500 29.10.2016 217.29 17300
04.10.2016 217.25 14500 30.10.2016 217.27 17300
05.10.2016 217.7 14500 31.10.2016 217.25 17300
06.10.2016 217.68 14800 01.11.2016 217.235 17500
07.10.2016 217.695 15000 02.11.2016 217.225 17500
08.10.2016 217.66 14800 03.11.2016 217.22 9000
09.10.2016 217.65 14800 04.11.2016 217.11 NIL
10.10.2016 217.635 15000 05.11.2016 216.995 NIL
11.10.2016 217.6 15000 06.11.2016 216.875 NIL
12.10.2016 217.58 14900 07.11.2016 216.755 NIL
13.10.2016 217.54 15800 08.11.2016 216.685 NIL
14.10.2016 217.52 16400 09.11.2016 216.615 NIL
15.10.2016 217.5 16400 10.11.2016 216.54 9100
16.10.2016 217.45 16400 11.11.2016 216.55 11000
17.10.2016 217.45 16400 12.11.2016 216.575 13900
18.10.2016 217.43 16400 13.11.2016 216.614 15100
19.10.2016 217.425 16400 14.11.2016 216.64 13800
20.10.2016 217.41 16500 15.11.2016 216.75 4800
21.10.2016 217.395 16500 16.11.2016 216.95 13400
22.10.2016 217.38 16900 17.11.2016 217.15 11900
23.10.2016 217.35 16900 18.11.2016 217.31 13000
24.10.2016 217.34 16900 19.11.2016 217.46 14100
25.10.2016 217.315 16900 20.11.2016 217.55 15500
26.10.2016 217.305 17100 21.11.2016 217.85 15600

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A Book of Selected Cases

ANNEXURE 2: WWD HIERARCHY

References
https://www.mindtools.com/pages/article/newHTE_91.htm
https://rapidbi.com/model-and-theory-urgent-vs-important/
http://journals.sagepub.com/doi/abs/10.1177/104649640203300204
http://www.rkvenkat.org/vasudha.pdf
https://en.wikipedia.org/wiki/Theories_of_urban_planning

80
Innovation – A paradigm shift for
Durgapur Steel Plant
Abstract
The case narrates the story of a steel company, M/s Durgapur Steel Plant (Steel Authority of
India Ltd) which was making profits consistently for the past several years. But eventually due
to various factors like globalization, fading away of boundaries of the international market,
the cyclic nature of steel industry, emergence of new players, excess capacity, things started to
change from a profitable company to need for sustenance. The company was making profits
for 10 years and all of sudden things changed, profit margins got squeezed, and gradually
losses replaced the profit pie. Companies within the industry which still managed to make
profits were driven by “Innovation”.
The case study narrates how the newly appointed Head of human resource(HR) of the
company realized the fact that the organization had exceptional talent, but still a sense of
innovation was lacking in them. Employees were focused on day to day jobs rather than
tomorrow’s needs. The study explains how he planned to develop a culture of Innovation
among employees to make the organization more sustainable. The case study explains the
step by step procedures, the discussions between the HR head &his team, and how they
planned to implement a culture of innovation as part of their job.
The problems covered in the case study includes,
1. Untapped talent of the employees
2. Developing a culture of innovation
3. Inculcating the idea that culture of Innovation is not a privilege, it’s a need.
The course of action started during last few years and the transformations that occurred
by 2015-16has been deliberated in the case.
November 24 2012 – 4.30 PM
Manager (HR) received a call, informing him to join for a meeting at Head of HR (Office)
at 5.00PM. Being Saturday, it was a surprise call at that time and some kind of urgency was
sensed. The Manager called his reporting boss, AGM (HR) to know if he knew anything
about the agenda for the meeting.
Manager (HR): “Sir, I received a call for attending a meeting at office of Head of HR. Do

Case Written by : - Lohitendu Badu, Asst General Manager, Research & Control Laboratory, Durgapur Steel
Plant, SAIL
B. K. Padhi, Asst. Manager, Research & Control Laboratory, Durgapur Steel Plant, SAIL
Ariff Khan K. A., Asst. Manager, Steel Melting Shop, Durgapur Steel Plant, SAIL

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A Book of Selected Cases

you have any idea about the agenda for the meeting?”
AGM (HR): “No, I am not aware of the agenda. But the whole team of executives of HR
department has been asked to attend the meeting.
I hung up the phone.
November 24 2012 – 5.00 PM
Head of HR: Good eveningeveryone, as we all knowthe profit margin of steel industry is
squeezing day by day and a large share of the profit is driven by innovations. We are one
of the leading steel companies in business and also have a pool of talented employees, but
a sense of innovation is lacking in them.
The main motto of today’s meeting is to analyze the causes for lack of Innovations in the
organization and how we can develop a culture of Innovation in our Durgapur steel plant.
I want you people to analyze it and come out with a solution by December 15 2012.
November 26 2012 – 3.00 PM (Conference Hall 2)
A brainstorming session on ‘how to improve a sense of Innovation among Employees’
was conducted. AGM (HR) started the session with an introduction to the purpose of the
session and the areas of focus as given in the following
a. To develop a systematic approach by departments towards Innovations on
consistent basis.
b. Developing a culture of Innovativeness.
c. Finding out Innovative employees and rewarding them.
AGM (HR) quoted astudy from the book ‘The middle manager as Innovator’ by R. Moss
Kanter
According to that study, it indicated that managers achieved success by
1. Persuading rather than ordering their people around
2. Building teams
3. Sharing of Ideas
4. Giving recognition willingly
With his introductory notes, brainstorming was done to analyze the need,the problems
associated and the method for developing innovativeness in employees
The outcome of the session is depicted in the fish bone diagram given below(Figure -1)
Fish Bone Diagram

82
Main points were concluded as below.

1. Employees are focused more on day to day jobs than tomorrow’s needs.
2. Absence of a platform to highlight the Innovations
3. Lack of motivation
4. Innovation was not compelling, it was a privilege
And
The team came out with the following conclusions
1. Develop an online Innovation portal
2. Making Innovation a culture
3. Rewarding the Innovators
4. Transforming Innovation from a privilege to “A must for survival”.
The outcome was satisfactory, but some of the employees were against the idea of
compelling the concept.
Sr. Manager (HR): “How can we compel someone to do Innovation, Compelling will have
a negative feeling and our people are not adapted to such kind of environment.”
And the fact was that most of them agreed on his point.
01 December 2012 (Office of Head of HR)

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A Book of Selected Cases

AGM (HR) explained the outcome of the brainstorming to Head of HR, and he concluded
with that one issue,
AGM (HR): “Sir, but the problem is that we felt that there should be a sense of compulsion
in Innovation, and we also feel that our employees are not adapted to such kind of
environment.
Head of HR: “Look,no body compels you to have food, but still you know you should
have it, because it is a matter of survival “. Move forward with your plans and the rest will
follow.
09 December 2012(Conference hall 2)
The team of CHRD met again for framing the Innovation scheme
The main issues where
1. Basic structure of the team.
2. Authentication of the originality of projects.
3. How to reward the employees.
4. How to involve more employees into the scheme.
And the team came out with the following solutions
- Develop an online platform which is easily accessible
- Frame a team with captain as executive officer
- Authenticating the submitted projects through respective department HOD and
GM
- Rewarding all the participants to motivate them and encourage others to participate
- Displaying the images of winners in company website to encourage employees
With the following conclusion, the scheme was developed (Refer Annexure -I& II)
Stage 1
The scheme was launched on January 11 2013 and the deadline for submitting the
Innovations for the year 2012 -2013 was made July 31 2013. By the end of July 31 2013, 68
Nos of vetted Innovations were received(Table -1)which included 263 members and out
of which top 15 projects were selected. Presentations were conducted to select the top 3
Innovations.
Submitted Vetted
Total Members Ex N-Ex Total
263 138 69 207
(Table -1)
Head of HR: “You all have done a good job, but we could see that we need to increase our

84
employee participation in it”.
And as planned, a programme was conducted to felicitate the winners and all the
participants of the vetted projects. The pictures of the felicitation ceremony were put in
the website of DSP
Stage 2:
The innovation scheme was again made open in January 2014 to include the Innovations
for the year of 2013 -2014. The results got improved. 107 Innovations were registered
which included 412 members(Table -2). A 63% improvement in the participation.
Submitted Vetted
Total Members Ex N-Ex Total
412 220 136 356
(Table -2)
The same procedure was conducted in selection of winners and felicitation of the
employees. The felicitation ceremony photo was again included in the website
Stage 3:
Innovation scheme 2014 -15
119 innovations were registered which included 456 members(Table -3)
Submitted Vetted
Total Members Ex N-Ex Total
456 270 139 409
(Table -3)
Transformation phase
Everyone recalled the words that Head of HR told on 01 December 2012
“Nobody compels you to have food, but still you know that you should have it, because it
is a matter of survival”
Things changed, the innovation turned to be a key performance assessment area.
Employee themselves considered that participating in the scheme highlighted their efforts
and profitability of the company. They considered their involvement in the Innovation
schemes as a need for survival
Stage 4:
Innovation scheme 2015 -16
237 teams registered against 68 in 2012-13 and the no of participants improved from 263

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A Book of Selected Cases

in 2012 to 656 in 2016 (Table -4), an Improvement of 348 %


Refer Graphs 1 - 5
Submitted Vetted
Total Members Ex N-Ex Total
866 393 263 656
(Table -4)
Analyzing the Results from 2012 -2016

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Conclusion
The study shows the improvement in the innovations and overall improvement in Durgapur
steel plant(Annexure –III). The new innovation scheme provided an opportunity for
its employees to participate in innovations and achieving success through it. It can be
clearly seen that without compelling, a system driven approach like the above helped the
organization to improve its performance. Rewarding the employees for their involvement
in innovative projects also encouraged the participants and the non-participants to
further involve in Innovation jobs. Gradually in course of time, results show that the
employees of Durgapur Steel Plant have started a culture of innovativeness.
References; -
1. Navi Radjou, Jaideep Prabhu, Simone Ahuja, ‘Jugaad Innovation’(Publication 2012)
2. R. Moss Kanter ‘The middle manager as Innovator’by, HBR July –August issue 2004
3. Neville I Smith & Murray Ains worth ‘Managing for Innovation’, 1989
4. David O Sullivan & Lawrence Dooley ‘Applying Innovations’,2008
5. Cohen, L. M A continuum of adaptive creative behaviors. (1989) Creativity Research
Journal, 2, 169-183
6. Csikszentmihalyi, M. Creativity: Flow and the psychology of discovery and invention.
New York: Harper Collins,1996
7. Nitin Nohria, Boris Groysberg& Linda-Eling Lee, Employee Motivation: A Powerful
New Model, Harvard Business Review, Vol. 86, No. 7 - 8, July – August, 2008
8. Gary Hamel,The Why, What, and How of Management Innovation, Harvard Business
Review, Vol. 84, No.2, February 2006
9. Michael Hammer, Deep Change: How Operational Innovation Can Transform Your
Company, Harvard Business Review (HBR), April 2004
10. Graham Jones How the Best of the Best Get Better and Better, Harvard Business
Review, Vol. 86, No. 6, June 2008,
11. Martin Reeves, Mike Deimler, Bostion, Adaptability The New Competitive Advantage,
Harvard Business Review July/August 2011
12. B. Gailley,Developing innovative organizations, January 2010
Teaching Notes:
Synopsis
The case study shows how the newly appointed Head of HR and his team developed
innovativeness among the employees. He realized that the organization had exceptional
talent pool of employees, but still a sense of innovation was lacking among them. Employees

88
were focused on day to day jobs rather than tomorrow needs. The study explains how he
planned to develop a culture of innovation among employees by introducing aninnovation
scheme.
The efforts his team put in framing the innovation scheme and indirectly making it a part
of the job for employees without compelling them. All the innovators were rewarded and
it motivated them and the other employees also in involving in innovation jobs.
Management courses and situations suitable in which case can be used:
1. Innovation management & Entrepreneurship
2. Post graduate diploma in management studies
3. Bachelor of business administration
4. In organizations/industries to develop innovativeness among employees
Case discussion questions
1. Do you think that persuading to do jobs will have better results than compelling?
Give reasons.
2. Motivation is important to improve the involvement? Discuss.
3. Understanding the problem is the biggest problem? Discuss the importance of it.
4. The way you do things becomes a part of your job. Discuss.
5. Do you think the more an employee’s involvement in innovations, the more will be
his productivity?
Learning Points
1. Employees are creative, but creativity happens only when you persuade them the
need for it.
2. Success lies with persuading the employees than compelling them.
3. Developing an innovative culture is a big innovation.
4. Celebrating the success is a great motivation.
5. Results come when you provide them the platform to perform.
Relevant Theories
1. Lewin’s change model
The process of change entails creating the perception that a change is needed, then moving
toward the new, desired level of behavior and finally, solidifying that new behavior as the
norm.
- Developing an innovativeness among employees was the change that is focused in
this case study.
2. Theory X and Theory Y

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Theory X assumes employees are naturally unmotivated and dislike working and this
encourages an authoritarian style of management.
Theory Y is a participative style of management which “assumes that people will exercise
self-direction and self-control in the achievement of organizational objectives to the
degree that they are committed to those objectives”.
- Compelling the innovation without directly compelling was the strategy used in
involving the employees towards innovation.
3. Maslow ‘s hierarchy of needs
-The employees considered participating in the scheme highlighted their jobs, took it as an
opportunity to be creative.

ANNEXURE -1
Frame work of the innovation scheme

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Innovation Scheme Online Portal

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A Book of Selected Cases

92
Rise of the Phoenix

A
pril 2014: “I feel proud to dedicate Armada Steel Plant, India’s most advanced steel
plant to nation’s service”, said honorable Prime Minister addressing the crowd of
millions gathered on the occasion. With these words, ‘Phoenix’- India’s largest blast
furnace, embarked on a dream journey to rewrite the history of Armada. But this journey
started with a lot of hiccups. Transitioning from old plant with decades old technology to
state-of-the-art modernized plant was a Herculean task. Add to that a project delay of more
than 5 years. The whole process had its own share of challenges and Shahid Ali, head of
mechanical maintenance at Phoenix was having sleepless nights. The number of jobs and
extent of scheduling required to cope up with the operational needs were huge and solely on
his shoulders. And as if all that was not enough, frequent breakdowns almost brought him
to his knees.
The Ashes
Armada Steel Plant (ASP) was one of the three integrated steel plants of Ispat Works
Ltd. (IWL), India, which was undergoing major modernization. Post modernization the
saleable steel capacity was slated to be increased to 2 MTPA, the second highest in IWL,
the new Blast Furnace “Phoenix” at ASP would be the largest across IWL.
Armada is a small town in West Bengal which has golden history in steel making in India
dating back to 1910. After being under private ownership for more than 70 years, Armada
steel plant was acquired by Ispat Works Ltd (IWL) in 1980 as a wholly owned subsidiary
and later on developed as an integrated steel plant.
Armada steel plant started from a fully mechanical blast furnace where valves for furnace
operation were opened/closed via human effort, using mechanical advantage concept.
Such operations required persons with high physical stamina. Managing the manpower
called for very specific skill set. Automation was yet to see the light of the day.
In year 2006, Old Blast Furnace was upgraded
to semi-automated furnace which had The employees working in oldfurnacegot
certain level of automation and actuation via terrified when they first saw the valve
electrical/pneumatic/hydraulic drives. The getting operated by itself and believed it
transition of labors engaged in the operation to be a work of black magic with some
and training them to adapt with & look after weird looking thing(actuator) attached
automated drives took quite some time and is on it, in place of chain and pulley
a story in itself. arrangement inthe earlier arrangement.
A total of 4 blast furnaces had been

Case Written by : - Abhishek Kumar, Asst. Manager, Blast Furnace, IISCO Steel Plant, SAIL, Burnpur
Soumya Sachdeva, Junior Manager, HRD, IISCO Steel Plant, SAIL, Burnpur

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A Book of Selected Cases

commissioned and decommissioned across all these years. These single tap-hole furnaces
were very small, having a working volume of approximately 500-600 cubic meter & capable
of producing 300-500 Tonne of Hot metal per day (TPD). Raw material charging was
done via skip car and quality was not strictly controlled, cooling was done through open
circuit cooling system. Due to operation of multiple furnaces, production shutdown for
one furnace was a viable option hot metal supply from other furnaces ensured continuous
operations.
Shahid Alihad joined Armada Steel Plant as a Graduate Trainee in year 2004 and was
posted inthe Mechanical Maintenance department of the old Blast Furnace,at the time,
totally unaware of the changes and responsibilities coming his way in the near future.
The Rebirth
The Phoenix had a working volume of 4060 cubic meters and was capable of producing
8000 Tonne of hot metal per day with 2 of total 4 tap-holes remaining open in tandem.
It had state of the art modern technology equipped with Level 2 automation. Everything
could be monitored and controlled through computers. Skilled manpower; educated &
trained in various disciplines was required. Phoenix was capable of producing more than
10 times the old furnace. A stringent quality control was in place for the raw material. It
used closed type cooling circuit and water quality posed a severe threat. Hydraulics now
played a key role. Most critical machinery was powered via hydraulics, possessing very
complex circuits which appeared to have come from another world prima facie. Very few
in mechanical maintenance crew knew about hydraulics. The types of machinery installed
on site was massive in scale, absolutely new and highly advanced when compared to old
plant.
Amidst all this,Shahid Ali was transferred to Mechanical maintenance department of
Phoenix and was asked to head a team which was a blend of new recruits and partially
trained personnel from old plant.
PARAMETER NEW BLAST FURNACE OLD BLAST
(PHOENIX) FURNACE (NO. 2)
Working Volume (m3) 4060 530
Capacity (TPD) 8000 600
No. of Tap-holes 04 01
No. of tuyeres 38 12
Hot blast volume (Nm3/Hr) 5000 600
No. of annular gap elements (AGE) 03 01
Exhibit 1: Features of both furnaces: A Comparison

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Dire Straits
Being a plant with single operating blast furnace, unlike others, the tremendous pressure
to keep it operational was beyond any gauge’s scope. Project delay of more than five
years, escalated costs, aged equipment, shortage of manpower, inadequate experience
and knowledge about new automations- all this to operate a blast furnace which was
more than 10 times larger than the previous one- Shahid knew that a lot of effort had to
be made in order to ensure smooth operation and continuous production of hot metal
through Phoenix.

Shahid listed down all the problems that had started to emerge after the commissioning.
Three months ago, the main priority was smooth commissioning. But now he felt that
commissioning was still easier- keeping Phoenix in running condition was the biggest
challenge staring him on the face.
The issues were many, ranging from frequent breakdowns to manpower training to system
stabilization. But the biggest one was hydraulic stabilization.

BK: It has been three months since Phoenix was commissioned. But there’s no sign of
slowing these breakdowns! I’m fed up now.
SA: Sir, the breakdown that occurred yesterday was related to hydraulics. You know
that the new hydraulic systems are complex, most of the redeployed staff with us
cannot attempt to solve these breakdowns.
BK: But you also have 7 young executives who have joined in the last two years.
SA: Sir, most of them have undergone good trainings, and others are in the process as
well. But 7 are not enough to look after the whole BF. Add to that the aging equipment
that requires so much maintenance. Not only the installed machinery, the unused

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A Book of Selected Cases

spares are also corroding away. I need to give equal attention to planning as well.
BK: Do whatever it takes. I hope you do understand the criticality of the situation. If
Phoenix stops, Armada comes to a halt. We cannot afford that. Everything is being
monitored closely from the Chairman’s Office at Mumbai.

Dialogue between General Manager (Blast Furnace) Mr. Bhushan Kumar and Shahid Ali
Phoenix had nine hydraulic power packs spanning across the complex. During the
commissioning of Phoenix, a hydraulics team headed by Shahid Ali was formed
comprising of competent executives, non-executives and contractual workers. The sole
objective was to enhance system performance. The ride was full of bumps and obstacles.
A major hurdle was encountered during the third day after commissioning when Mud
gun of Tap hole No. 2 got stuck and closing the tap hole wasn’t possible.
Likewise there were some instances in stove area where valves were retracting from their
position, check valves were getting jammed in valve stands.
Very Important Less Important
Urgent • Hydraulic stabilization (Failure • Dedicated purpose group
analysis) • Additional manpower
• Resource management (Use-re-use) • Spare planning (Budget
• Putting systems in place: Preventive constraint)
Maintenance Schedule, Online and
Offline Testing Schedule
• Equipment specific training
Non Urgent • Equipment overhauling • Managing stores
• Storage of spares • Data logging (database
• Maintenance schedules creation)
(Regularize) • Arranging equipment
• Motivating manpower manuals
• Redeployment of
manpower

Exibit 2: Classification of the challenges in Mechanical Maintenance Dept. of Phoenix


Shahid was worried as to what would happen if things did not get stabilized soon. There
was negative feedback from the allied departments and also, the frequent breakdowns
in Phoenix received a lot of flak from top management. Phoenix was slowly becoming
a scapegoat for other non-performing departments, who were taking undue advantage

96
of being in an integrated steel plant. The junior team mates were really demotivated and
dejected in absence of any accomplishment. The fate of Phoenix rested on one man.
The Last Nail
May 2015: Barely an year after commissioning, on a usual evening, the Blast furnace
conveyer belt#4 ripped in the center for a length of about 500 meter. The production
came to a halt and there was tension in the air. The burden could not be charged into
Phoenix until the belt was repaired. The belt had to be replaced with a new belt but these
belts were custom made. And a new belt would take at least 20 days to be delivered to
ASP. Representatives from the Corporate Office arrived within 6 hours and a meeting was
called with the concerned Heads. Shahid Ali had only 36 hours to get Phoenix moving.
General Manager (BF) and other top officials from Maintenance & Allied departments
were apprehensive as to how and by when the damaged belt would be repaired.
Questions
Q1. Considering all the resources and uncontrollable factors, what can Shahid Ali do to
improve this situation?
Q2. Do you think that one man can bring about a radical change in the maintenance
of Phoenix, the new blast furnace? Please support your answer with management
theory.
Q3. How can management provide support to “change-drivers” in an organization
keeping in consideration that IWL is a PSU?
Teaching Notes
Managerial Grid Model of Leadership

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A Book of Selected Cases

The managerial grid model (1964) is a style leadership model developed by Robert R.
Blake and Jane Mouton. This model originally identified five different leadership styles
based on the concern for people and the concern for production.
The optimal leadership style in this model is based on Theory Y.
The grid theory has continued to evolve and develop. The theory was updated with two
additional leadership styles and with a new element, resilience.
The model is represented as a grid with concern for production as the x-axis and concern
for people as the y-axis; each axis ranges from 1 (Low) to 9 (High). The resulting leadership
styles are as follows:
• The indifferent (previously called impoverished) style (1,1): evade and elude. In
this style, managers have low concern for both people and production. Managers
use this style to preserve job and job seniority, protecting themselves by avoiding
getting into trouble. The main concern for the manager is not to be held responsible
for any mistakes, which results in less innovation decisions.
• The accommodating (previously, country club) style (1,9): yield and comply. This
style has a high concern for people and a low concern for production. Managers
using this style pay much attention to the security and comfort of the employees,
in hopes that this will increase performance. The resulting atmosphere is usually
friendly, but not necessarily very productive.
• The dictatorial (previously, produce or perish) style (9,1): control and dominate.
With a high concern for production, and a low concern for people, managers using
this style find employee needs unimportant; they provide their employees with
money and expect performance in return. Managers using this style also pressure
their employees through rules and punishments to achieve the company goals. This
dictatorial style is based on Theory X of Douglas Mc Gregor, and is commonly
applied by companies on the edge of real or perceived failure. This style is often
used in cases of crisis management.
• The status quo (previously, middle-of-the-road) style (5,5): balance and
compromise. Managers using this style try to balance between company goals and
workers' needs. By giving some concern to both people and production, managers
who use this style hope to achieve suitable performance but doing so gives away a
bit of each concern so that neither production nor people needs are met.
• The sound (previously, team style) (9,9): contribute and commit. In this style, high
concern is paid both to people and production. As suggested by the propositions
of Theory Y, managers choosing to use this style encourage teamwork and
commitment among employees. This method relies heavily on making employees
feel themselves to be constructive parts of the company.

98
• The opportunistic style: exploit and manipulate. Individuals using this style, which
was added to the grid theory before 1999, do not have a fixed location on the grid.
They adopt whichever behavior offers the greatest personal benefit.
• The paternalistic style: prescribe and guide. This style was added to the grid theory
before 1999. In The Power to Change, it was redefined to alternate between the
(1,9) and (9,1) locations on the grid. Managers using this style praise and support,
but discourage challenges to their thinking.
In this case, we can see that Shahid Ali is an inspirational leader, who has equal concern
for production as well as people. He is a classic example of Team Style (9,9) Leadership.
The following points of the action plan undertaken by him to turnaround the mechanical
maintenance of Phoenix demonstrate his concern for production and concern for people:
Before the Conveyer Belt Incidence
Deciding priorities
Shahid sat along with his team to decide priorities of the problems cribbing in front
of him. He called a meeting of all area incharges of mechanical maintenance. These
incharges were young managers, in their mid-20’s, who had graduated 2 or 3 years back.
Their strong analytical skills made up for their lack of experience in the given situation.
Hence feedbacks were taken from all area incharges and a priority list was formed. Now
everyone had a clear idea about the focal point of their daily activities.
Strike plan
Based on the priority list, all area incharges were asked to identify most critical and most
ill equipment. Most critical were required to be operated in any condition with backup and
most ill required maintenance ASAP. 24 hours of the day were divided into 2 halves. Each
area incharge was asked to identify the time for which the shortlisted equipment would
be available for maintenance or intermittently not in use. Due to shortage of manpower,
the maintenance groups were not available all the time. So area incharges learned to carry
out critical jobs like hydraulic adjustment or overhauling and then they were supposed to
assist and train the group available with them during their shift.
Testing Waters
Now that manpower was limited and certain jobs required very skilled approach,
team members adjusted their maintenance schedule as per availability of group. Some
equipment which were available at night only, were scheduled for overhauling at odd
hours like 2 AM or 3 AM. Area incharges spent most of their time in plant studying
equipment and their behavior under various conditions. Maintenance was carried out as
and when equipment was made available by operation team. There were no fixed office
hours. Shahid made sure that he was present in the plant taking care of all things in
a particular area when area incharge for that area was not available. It was a do or die

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A Book of Selected Cases

situation for him. And he made sure to stay, come what may.
Initially it seemed to be all in vain, as numbers of breakdowns were not reducing and
more and more equipment were being added to the list of critically ill. Shahid was having
a hard time handling all jobs simultaneously. There were occasions when he stayed in
plant continuously for 2-3 days. Very good with his sense of humor and wit, Shahid kept
his team mates encouraged and entertained during odd hours on site. He stayed with
them throughout the job which boosted their morale. Days became weeks and weeks
became months. Alas! sun finally started to shine.
The list of critically ill equipment was getting shorter. They started getting more time
for scheduled maintenance and breakdown maintenance gradually became history.
Periodical inspection and active onsite training ensured that small issues were taken care
of by the shift personnel. The central crew for maintenance kept themselves engaged in
eliminating weak links in equipment performance and enhancing its life.
From breakdown to preventive maintenance
The improvement in quality and reliability of equipment was beyond expectation. Critical
areas, like cast house, Stove GCP never saw the same breakdowns again. Area incharges
were more groomed than before, ready for bigger challenges and afraid of nothing.
Shahid made sure to take their fear of failure away along with breakdowns. Shahid asked
his team mates to explore the equipment that were idle for some time and comparatively
less critical. He asked them to read about it, inspect it, dismantle them (with utmost care)
and study the interior details and identify redundant or common parts for replacements.
Also he made sure to fix it back in case the team mates failed to do the same. There were
instances when he stood at a stretch for 16 hours to get a valve fixed in position.
This exercise enabled them to repair certain valves and gearboxes by scavenging it from
a less critical equipment. This bought them some time to arrange for spares and kept the
system running.
Hydraulics
Now that things were smooth and majorly in control, it was time to lookout for backbone
of all systems-hydraulics.
Oil cleanliness is a must for healthy hydraulic system. Shahidand team installed separate
hydraulic oil filtering machines across all powerpacks to filter oil online 24x7. First
month was enough to see the unseen. The oil was heavily contaminated and dark in color.
Machines required changing the filter elements every 10 days. After a month quality
improved and by the end of second month NAS 5 was achieved. With further tuning,
cleanliness level of upto NAS 3 was achieved and then consistently maintained. NAS 3
cleanliness is required by aviation industry. Another feather in Shahid’s cap, one of the
first across IWL.

100
n-house repairing of valves
Since spares were not viable and took time in procurement, Shahid took the opportunity
to dismantle the damaged valves against the recommendation of OEM. Since they were
already out of service, there was nothing to lose. He along with his team, dismantled the
hydraulic valve blocks and found pieces of plastics, metal stuck inside. They were cleaned
and valve was refitted. Upon testing, the valve’s performance was absolutely normal. This
was a major breakthrough.
Hydraulics trainings
He planned and released his team members for hydraulics training. Customised trainings
were planned by HRD department with outstanding results. The team gained deeper
knowledge of the system and were more confident.
Circuit improvement
Gradually with improved oil quality and clean valves, hydraulic jamming was history.
Now Shahid started focusing on system improvement and planning for long term spares.
Conveyer Belt Repair
Shahid took on the challenge and immediately set on the task of repairing the torn belt.
After lot of ideating, it was decided to sew and patch up the damaged area in the belt.
Once the repair started, enquiries were made for procurement of a new belt. The repair
was completed within 24 hours and for the first time in history of steel –making in India,
a blast furnace was put on line within a day after such a major breakdown. Order was
placed and the new belt was to be delivered in 20 days. This 20 day period was replete
with brain-storming sessions among Shahid and his team. The new belt replacement
would take 36-48 hours. Rigorous micro-planning was done and each minute of the next
shutdown was planned. The plan was executed with perfection and new belt was put in
place in 40 hours.
It’s been almost 1.5 years and Shahid has travelled an unparalleled journey towards
betterment. He is often asked “How did he do it?” In response he simply says “NOTHING
IS AN OPPORTUNITY FOR EVERYTHING”
References
1. Leadership Theories (http://www.leadership-central.com/leadershiptheories.
html#axzz4g22WIaoc)
2. Wikipedia (https://en.wikipedia.org/wiki/Managerial_grid_model)

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