Business Excellence and Strategy - Speech delivered by R.Kannan
30th January 2014 at National Stock Exchange
On the Business Excellence – Annual Day
I am very pleased to be here today and would like to thank you for inviting me to be part of
We are living in a VUCA world, where things are vague, uncertain, Complex and Ambiguous
and the challenge for organistions today is to bring predictability to the performance from
operations. This has become a major concern for Governments and corporates after the
2008 financial and economic crisis. Every thing done well within a company is not a clear
recipe for success since the developments in the environment have a major impact on
performance of companies. Developments in the environment including the hyper
competition, challenge the proven business models and companies have to be agile and
nimble to address the emerging challenges with fast response. The businesses which were
very attractive five years back had become unattractive today. The viability of many of the
business models is being tested in this uncertain world and new models of doing business
are emerging and in a continuous, evolution mode. To address these challenges , it is
necessary to build a business excellence frame work spanning the entire organsiation.
The organisations which emerge as leaders in their field have Visionary leadership,Customer
focus, robust strategy, appropriate organisation structure, scientific allocation of financial
resources, sound HR policies,excellent business systems and good corporate governance
practices. The combination of above factors will go a long way in creating and preserving the
competitiveness of organisations.
Jack Welch Says . “A strategy is something like, an innovative new product; globalization,
taking your products around the world; be the low-cost producer. A strategy is something
you can touch; you can motivate people with; be number one and number two in every
business. You can energize people around the message.” GE is a great organisation which
introduced the latest management principles on Strategy and competitiveness and these
models are being adopted by corporates and management consultants in strategy
formulation across the world. GE as a company went through many business cycles and
witnessed many economic crises during its existence of more than hundred years and it
continues to perform very well even today. The company is a good example for large
corporates to adopt the best practices in strategy formulation and implementation.
Strategy development will be at two levels, one at the corporate level and other at the
business level. In a corporate level, the decisions regarding What business to enter, what
business to grow, what business to maintain and what business to divest are taken.
In Business level Strategy, it is the strategy to be adopted within a business and Strategy is
all about positioning an enterprise in the minds of the target customers. The battle of
companies and the leadership happens in the minds of the customers. Companies can adopt
Strategies like Cost leadership, Differentiation or combination of both to achieve a
competitive position in an industry. The strategy adopted by NSE is integrated and
combination strategy. In any industry , there will be companies adopting one of the above
strategies and the companies creating competitiveness do different things from others or
adopt different methods to do the same thing. The best strategy which provides the long
term competitiveness of an enterprise is the one, which is able to offer quality products and
services at affordable and reasonable costs. The companies adopting these strategies
emerge as market leaders and achieve margins which are much higher than the rivals, which
is evident from the experience in many industries.
Earlier companies adopted one of the above strategies, competing in a few product market
segments. The emerging trend is that companies are trying to compete in all price points
and cater to different customer segments . Starting point of successful strategy is right
positioning of the product which will attract the targeted customers.
Strategic management has two phases. The first phase in which the formulation of strategy
takes place ; the Vision, Mission and Objectives and overall direction are decided. In the
implementation phase, allocation of resources, adapting the organisation structure
systems and procedures in line with the change in strategy , performance monitoring and
implementing course correction are adopted. The methods like Balanced score card are
being utilised by many organisations today in the strategy formulation and strategy
implementation stage. The same process is being adopted to evaluate the performance of
employees at all levels to decide the incentives, bonuses and promotions.
For effective strategy implementation, adoption of business excellence model goes a long
way in achieving the intended goals of an organisation. Business excellence is one of the
main pillars of good strategy implementation. The difference between organisations which
succeed and fail is mainly determined by how well the formulated strategy has been
executed and seamless execution depends on the excellent practices adopted across the
enterprise in organisations.
Perfection is what every visionary leader wants to achieve. According to Aristotle,
“Perfection is not attainable, but if we chase perfection we can catch excellence.
Excellence is an art won by training and habituation. We do not act rightly because we have
virtue or excellence, but we rather have those because we have acted rightly. We are what
we repeatedly do. Excellence, then, is not an act but a habit.”
The companies use business excellence framework to attain and maintain competitiveness.
Business excellence process by itself is not strategy but a process by which effective
strategy implementation takes place. The framework covers the entire organisation .
Unlike in Strategy formulation wherein only a few in the organisation are involved, the
strategy implementation involves every one in the organisation. In this respect, the business
excellence framework has to be a company wide exercise and covering all the employees.
Each employee has a role to play in bringing out the best in the organisation. It is a
It had been empirically proven that the organisations which adopt business excellence
frame work report much better performance than those who do not adopt this frame work.
According to a Mckinsey study, internal processes in an organisation leads to variation in
performance to the extent of 50% compared to the peers.
One tool that can help organizations strengthen their management systems and processes
holistically, is the internationally-benchmarked Business Excellence framework. It provides
standards for managing people, innovation and service, which are key enablers of business
The BE framework helps organisations to assess their performance, identify gaps, and take
action for improvement. It encourages a systems-based approach to management, with the
adoption of a robust measurement system, to assess and monitor performance.
Measurement allows organisations to compare and benchmark their performance against
the best-in-class in their industry.
Employees play a key role in an organisation’s journey towards higher productivity and
business excellence. The business excellence journey of every company is anchored by its
employees. It is, therefore, important to align employees’ aspirations and efforts with the
Your branding of this effort, ACE ( Attitude, Customer and Excellence is very apt.) The
business excellence initiative should start with a positive and favourable attitude from every
employee. An effective implementation of identified strategies depends on the favourable
attitude from all the employees. Every employee in the organisation has to understand the
Vision , Mission and overall objectives of an organisation and align his /her personal
objectives with the organisational objectives. Their activities should be channelised towards
excellence in whatever they do. The attitude towards company’s vision,mission, objectives,
colleagues and customers should be in alignment with the overall organisational efforts in
achieving the overall objectives of an organisation.
Customers decide the future of an organisation . It is essential that companies understand
the customer expectations well and develop products and services which meet their needs.
Today customer awareness is very high and customers expect a fair deal from the
companies and they support companies which are very fair to the customers delivering the
expected value for the price paid.
In my career I had an opportunity to work in companies where new business excellence
initiatives were undertaken. Especially after the liberalisation the competition in industries
increased and the need for developing formal strategic plans and excellent business
processes became very important , to sustain the competitiveness.
1. Our Group is a family managed Enterprise. The group gives full independence to the
Executives who are in charge of different businesses and the involvement in the
group is more in Strategy formulation level and the budget finalisation is done at
board level. Once the budget is decided and allocation of resources is decided, there
is a complete independence to the CEOs on operational matters and the CEO’s have
the freedom of choice to change their tactics according to the emerging market
dynamics. There is an effective
performance measurement and management
system which is in operation which contributes a lot to the value addition to the
overall performance of companies. The best practices adopted by a company within
the group is being shared with other companies and group companies encouraged to
adopt the best practices in all their operations. Balanced score card frame work has
been used for Strategy formulation, implementation and performance appraisal.
Business excellence frame work had been introduced in a few companies in the
group and it is being introduced in phases across the group companies.
2. ICICI bank redefined the paradigm of banking in India.The banking business in India
today is totally different from the way banking was done 20 years ago in India. Under
the Visionary leadership of Shri.K.V.Kamath, intensive automation of processes and
reduction of manual intervention in operations enabled the bank to scale up the
growth very fast. Several new initiatives were taken under Operational Excellence
Initiative and Sig Sigma initiative, which helped the bank to acquire customers faster
than others and enabled cross selling of products. The importance of fee income
had become equally important as that of core income and existing branch and IT
infrastructure was effectively used to sell more products and services to the existing
and new customers. The diversification into new geographies helped the bank to
gain leadership in remittances business and cross border mergers and acquisitions.
The creation of trading platform under ICICI securities helped the company to gain
the leadership in the retail stock trading business. All this was possible through
involvement of all employees and eliciting the best ideas from employees. There was
a reward system for the innovative ideas given by the employees. It was enabled by
establishment of an Intranet which helped in knowledge sharing, training and
transfer of best practices .
3. Thai Airways in Bangkok ,benchmarked its performance , systems and processes with
the Airlines like Qantas, Singapore Airlines and Cathay pacific and fine tuned the
strategies to become more competitive. It has started hedging its fuel requirements
and monitoring the performance of each flight operation. This helped the company
to prune some routes, increase flights to routes where there was more traffic and
optimise the use of fuel. This has improved the overall performance of the company.
NSE is a world class organisation led by a Visionary and committed leadership. The Forbes
had acknowledged this fact and the leader of your organisation has been ranked among the
top 15 leaders in the world and among the top three leaders in India. NSE had set the global
bench marks and redefined the way the securities trading was happening in this country
with high transparency, good governance, robust processes and high quality standards. It
ranks among the top three in volume in all its activities in the world and continues to
improve its performance and if the pace of the Indian Economic growth continues, NSE will
become the leader in all its activities in the Global arena. Despite achieving an invincible
leadership in the near term and far ahead of the competitors in all the performance
parameters, the business excellence process has been identified as a key enabler for
sustaining the competitiveness of the enterprise in the long run. This is the articulation of
desired outcomes by your leadership
and the focus was not just on immediate
opportunities and challenges, but also on building capabilities for the future.
Business Excellence is a Journey and am sure every one of you is working towards the
excellence in your organisation.
I would like to congratulate this year’s award winners and all those who are here on the
Excellence journey. You serve as an inspiration for all other colleagues to continue the
and have an wonderful evening.