Regional Winner, All-India Management Association (AIMA) National Competition for Management Students, 2011. The topic given was 'Building Sustainable Indian Multinationals - Agenda for Action'. The focus of our paper was on Innovation along with Kaizen (Continuous Improvement). We competed against B-schools from all over the West of India and won.

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By:
Lily David
Sharon D’Costa
Building Sustainable Indian
Multinationals: Agenda for Action

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Building Sustainable Indian Multinationals:
Agenda for Action
Based on the theme- The Balance between Innovation & Continuous Improvement
Claude Lévi-Strauss made a remark at the 1983 International Symposium on Productivity in
Japan, he said:
“We call some societies primitive because of their desire to remain in the same state in
which the gods & ancestors created them at the beginning of time, with a demographic
balance which they know how to maintain and an unchanging standard of living protected
by their social rules and metaphysical belief.”1
[Italics Added]
People who worked with small, privately owned companies may recall with a touch of
nostalgia that there was a genuine concern for improvement “in the air” before the
company was bought out or went public.
As soon as that happened the quarterly P/L figures suddenly became the most important
criterion, and the management becameobsessed with the bottom line, often pressing for
constant & unspectacular improvements.
As these companies grew, the greatly increased market opportunities across diverse
geographies, and technological innovation meant developing new products based on the
latest technology. This has become much more attractive or “sexier” than the slow, patient
efforts for improvement. In trying to catch up with market demand, managers boldly

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introduce one innovation after another, and are content to ignore the ‘SEEMINGLY’ minor
benefits of improvement.
Most managers who join the ranks during or after those heady days do not have the
slightest concern for improvement. Instead, they take an offensive posture, armed with
professional expertise geared toward making big changes in the name of innovation,
bringing about immediate gains, and winning instant recognition & promotion. Before
they know it, these managers have lost sight of improvement and put all their eggs in the
innovation basket.
Improvement is by definition slow, gradual, and often invisible, with effects that are felt
over the long run. Masaaki Imai2 in his book GembaKaizen3
says that the most glaring and
significant shortcoming of the western management today is the lack of improvement
philosophy.
The Oxford English Dictionary defines Kaizen as continuous improvement of working
practices, personal efficiency, etc., as a business philosophy. It is necessary to note that
Kaizen does not replace or preclude innovation. Rather, the two are complementary.
Ideally, innovation should take off after Kaizen has been exhausted, and Kaizen should
follow as soon as innovation is initiated. Kaizen and innovation are inseparable ingredients
in progress. Kaizen in itself is limited.
Fuji Xerox’s Yotaro Kobayashi says, “Kaizen improves the status quo by bringing added
value to it.It is bound to yield positive results if efforts are continued toward a clearly
defined goal”
2Masaaki Imai is known as the “Lean Guru” and the father of Continuous Improvement (CI).He has been a
pioneer and leader in spreading the Kaizen philosophy all over the world.

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Our goal today is to build sustainable Indian multinationals that are able to
maintain this balance between Kaizen & innovation, which has since history
weighed more in favor of innovation.
Many Indian Companies like ICICI Bank, Taj Group of Hotels, Patel on Board Courier, BHEL
Trichy, Vivekananda Hospital, Raymonds Ltd, Britannia Industries Ltd, Asian Paints,
MarutiUdyog, Toyota Kirloskar Motors, Tata Motors, several TVS group Companies have
realized the power of integrating Kaizen as a tool in their corporate strategy and have
testimonials about the same.Some Indian MNCs like Hindustan Unilever, Nestle already
practice lean techniques to reach deep into rural areas of every part of this country, at
extremely low costs.
Now it is time that all Indian multinationals focus on a balance between Innovation &
Kaizen as a part of their Corporate Strategy.
Agenda for Action:
The agenda for action should begin in the boardrooms of all our Indian multinationals,
where the balance between Kaizen and Profit or innovation needs to be restored. The
following must be considered:
 Is the top management committed to the introduction of Kaizen as a corporate
strategy? Is it committed to spending enough time to really understand Kaizen’s
implications?
 Is the top management committed to cross functional goals as quality, cost, and
scheduling? Is it committed to deploying the necessary resources, including training

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programs for all its employees? Is it committed to following through and auditing its
progress? Is the top management committed to making cross functional
improvements?
The problems that arise within a given department (or function) are relatively easy to
handle, since the managers concerned usually have the authority and resources to
handle them. However, implementing cross-functionalimprovements necessitates
dealing with the crossover areas between departments. Who should have this
responsibility?
Job descriptions must thus include cross-functional responsibilities. If they do not, they
should be revised. The internal reporting relationships should also be reviewed at the
same time
Each function in a typical Multinational is staffed with proud professionals who have
received extensive education in their professions and have taken many years to attain
professional standing. Effective cross-functionalcommunication is not easy in such an
atmosphere, and profound attitude changes may be needed. It may even be necessary
to offer optional courses encouraging cross-functional thinking in the curricula of
business schools and other educational institutions in India. In addition, management
may find it necessary to transfer professionals in a particular function (engineering, for
example) to other functions such as production or sales
 Do the existing systems and corporate structures support the fulfillment of these cross-
functional goals (quality, cost, and delivery)? If they are found inappropriate for
meeting the cross-functional goals, is the top management prepared to make
necessary changes-even if this means changes in such areas as organization, structure,

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planning and control, and even personnel practices, including compensation and
personnel reallocation?
The corporate structure or organization should serve the cross functional goals.
Sometimes people speak of organizational strategy as if the organization dictated the
strategy. This is fallacious. Strategy should dictate the organization, and not vice versa.
What structure will be appropriate for achieving cross-functional goals may differ from
company to company and from industry to industry, and may also depend on the size
of the company.
 How can the company encourage white collared employees, engineers, for example to
get involved in production-related activities? Traditionally engineers have taken pride
in working on projects far removed from the plant site.Engineering jobs at the plant
site are often regarded as of lower status than those at the head office, and this is
reflected in their lower salary schedules. The typical engineer dreams of “making it” to
the central research laboratory with higher social status and more pay. The system as it
exists, in the west has been adopted by almost all Indian multinationals, and thus
encourages the better engineers to move out of production. Given that cross
functional liaison between the engineering office and the plant site is essential, the
system should be revised to put better engineering resources at the plants and paying
them at par with those in the central research laboratory.
 The Indian multinationals have aped the west when it comes to the hire-and-fire
environment; identification of a problem is often synonymous to a negative

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performance review and may even carry the risk of dismissal. Superiors are busy
finding faults with subordinates, and subordinates are busy covering up problems.
Kaizen starts with the identification of problems. There needs to be a change in the
culture to accommodate and foster Kaizen-to encourage everybody to admit problems
and to work out plans for their solution-will requires sweeping changes in personnel
practices and the way people work with each other.
 Last but not the least, our management will be required to introduce process-oriented
criteria at every level, which will necessitate company-wide re-training programs as
well as restructuring of the planning and control systems
In most companies, the questions that the manager asks are always directed at result-
oriented indices, such as monthly sales, monthly expenses, number of products
produced, and eventually the profits made. We only have to look at the reporting
figures employed by a typical company, such as the cost-accounting data, to see how
true this is.
When the manager is looking for a specific result, such as quarterly profits, productivity
indices, or quality level, his only yardstick is to see whether the goal has been achieved
or not. On the other hand, when he uses process-oriented measures to look into the
efforts of improvement, his criteria will be more supportive and he may be less critical
of the results, since improvement is slow and comes in small steps. In order to be
supportive, management must have a rapport with the workers, it is essential that
mangers develop a more supportive style in dealing with each other and the workers.

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Convincing the Corporate:
The corporate objectiveof maximizing profits may be attained by
1. Increasing sales and/or
2. Lowering both fixed and variable expenses.
Assuming that the two companies A and B are making identical products, the ultimate
difference in their competitiveness may be expressed in terms of their breakeven point.
Between the two companies it is quite clear which company is more profitable and more
competitive.And it is the different corporate cultures within these companies that account
for the difference.Kaizen strategy aims to maximize profits, both by lowering variable and
fixed expenses and by increasing sales.This can be done by improving the way business is
done at all levels, including the executive suite and the shop floor.
BreakevenPointandTotal Revenue
of companyA
BreakevenPointandTotal Revenue
of companyB

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Conclusion:
Thus Kaizen strategy can bring about the following effects:
People grasp the real issues more rapidly
More emphasis is placed on the planning phase
A process-oriented way of thinking is encouraged
People concentrate on the more important issues
Everybody participates in building the new system
The Kaizen concept is not only valid in Japan but also in other countries as all human
beings have an instinctive desire to improve themselves
Kaizen is a humanistic approach, because it expects everybody-indeed, everybody-to
participate in it. It is based on the belief that every human being can contribute to
improving his workplace, where he spends one third of his life.
Bibliography:
1. The International Symposium on Productivity in Japan-1983
2. Masaaki Imai
Author of the Best Selling KAIZEN
3. GembaKaizen-ByMasaaki Imai
A commonsense,lowcostapproachto management
4. The Kaizen Institute
5. www.wikipedia.com