Published on 31-3-2007

It is a great honor to address the students and guests at such an important function at a prestigious management school. Thank you for the opportunity

LEARN WHAT YOU ARE NOT TAUGHT

Text of Convocation Address at XLRI on Saturday, 31st March, 2007 by R.Gopalakrishnan, Executive Director, Tata Sons Limited.

It is a great honor to address the students and guests at such an important function at a prestigious management school. Thank you for the opportunity.

I have chosen the theme of my address to be Learn what you are not taught. This theme would appear to be strange, considering that you have just successfully completed a very rigorous program of academic study. Companies are offering you fancy salaries. And I come along and tell you that you have hardly got off the block! Let me explain.

Management is a profession in which only a fifth of what you need to know is capable of being taught. The balance of four fifths of what you need to know is what you cannot be taught. You have to learn it all by yourself. It is a paradox, but it is a fact.

Management is not like engineering or science, it is more akin to a performing art like sport or dance—because if you repeat the same action several times, you get very different outcomes. Think of what happens in cricket!

Managers can solve ‘technical’ problems through standard solutions. They also face ‘human’ problems to which standard solutions do not apply. Increasingly, managers work under a great deal of pressure to perform. As a result, they often do not consciously separate the problem on hand into ‘technical’ and ‘human’ categories.

Pressured with performance targets, modern managers quickly analyze a situation, identify the issues and problems, and plunge headlong into the implementation of their solutions. In the process, they generate and receive masses of data to acquire all the rational opinions and analytical information available. But after all the analysis has been done, it is often on the basis of unclear data that their mind is still to filter to interpret.

  • Should we or should we not acquire that company?
  • When everybody advises against this project, should we persist or abandon?
  • Will posterity see me as the idiosyncratic genius who ploughed a lone furrow or as a huge disaster?
  • Is the entry into this new line of business an act of folly or foresight?

This was very well caricatured in a mid-eighties advertisement for Columbia University’s executive program; it showed a lone executive looking out of a window with the caption, “You’ve surrounded yourself with people who are paid to give you good advice. And they do…Then the ball is in your court.”  It is a tough call for leaders —and invariably, believe it or not, it comes down to the leader’s gut feel and intuition.

Intuition at work

Business history is full of stories about leaders who trusted their intuition after exhausting their powers of analysis.

The great Indian industrialist of the nineteenth century, Jamsetji Tata, had bought some marshy land near the Nagpur railway station in 1874 at a low price. He floated a company called The Central India Spinning, Weaving and Manufacturing Company. When asked to subscribe to its shares, a local Marwari banker refused to invest in support of ‘a man who was wasting gold by sinking it into the ground.’ This person later admitted that Tata had put earth into the ground and pulled out gold.

In the late 1980s, ignoring all the market research evidence, Bob Lutz, then president of Chrysler, went ahead with the Dodge Viper car model. This was an outrageously powerful, eye-searing roadster launched at a time when Chrysler was down and out. Bob Lutz felt that the company had to take a lot of chances because it would go out of business if it did not. So he did a lot by intuition and ‘cut out all the crap normally associated with a new product.’

In the 1950s, Brooke Bond, the leading tea company, wanted to sell to the lower income consumer. After reducing packaging and other costs, their sales people made an intuitive observation–lower income households did not have cooking gas at home, so lighting the kitchen fire meant wood or coal. That meant a lot of effort and cost just to boil some water for tea. Hence the men went away early in the morning to the nearest ‘hot tea shop’ (HTS in Brooke Bond terminology) to enjoy a ready-made cup of tea. The cost per sip was higher than homemade tea, but it made sense to the consumer. Based on this intuition, Brooke Bond developed their HTS distribution system–and it was to stand them in good stead for decades.

In the 1970s, international companies were targeting lower income customers to use shampoo to wash their hair. Their market research and logical analysis confirmed that the price was too high. So their effort was to reduce the price per liter, principally by focusing on achieving lower packaging costs. An entrepreneur, trusting his instincts, figured that the cost per liter was not relevant; the unit price was the key factor. He launched a sachet of a few milliliters of shampoo for single wash at Rs 2 per sachet. The cost per liter of this product was higher than the bottles, but the unit price was affordable. Velvette shampoo captured the market; soon others followed.

All the above turned out to be great decisions. Nobody has a magic formula to develop intuition, but is there a common thread?

Knowledge, intuition and wisdom

 Knowledge is what you know you know.  Knowledge can be taught, you can acquire it from external sources.

Intuition is what you do not know you know.  Intuition is what cannot be taught, you learn it on your own. The owner of that knowledge has a set of understandings that he just does not know about.

When knowledge is integrated with intuition, it becomes wisdom.

The value of intuition increases as a person rises in the organization and finds that he has to solve more complex issues.  Senior leaders are, in fact, paid for their intuition: their knowledge is taken as a given.

The absence of intuition at crucial times is one of the reasons for the surprising failure of top leaders, who have established a reputation of success already.  In the practical world of the manager, human ambition, motivation, and social relations play a very important role. Intuition does not just ‘happen’, it can be developed.

So I have six simple messages:

  • Intuition does exist and it is very important for the manager, especially at the more senior levels of leadership
  • Analysis and intuition are not substitutes, they are complementary
  • A manager can develop intuition through viewing issues holistically, with the ’surrounds’ of the issues, and not in isolation. He should observe and learn from the peripherals of his vision, hearing, experiences and relationships
  • The manager’s intuition is enhanced through varied experiences and relationships, contemplation and reflection
  • A manager can develop his intuition by exploring and sensing beyond what is visible and audible
  • The leader needs to think about issues at the ‘edges of the spectrum of the obvious.’

As you graduate, think of what you have to do and how you should act to avoid becoming a ‘bonsai manager’ in the future.

A bonsai manager is one whose growth has not run the natural course because he has failed to draw sustenance from his natural environment.  The consequence is inadequate intuition.  As a result, bonsai managers are not able to work at the top end of their potential. To achieve your full potential, you should explore new vistas of your being, drawing on your innate genius.  Intuition will be a key differentiator for excellence in the future, more so than in the past.

In management, you are trained to avoid being emotional, to avoid telling stories, rather to be analytical and coldly factual. I say do the opposite. I commend to you the value of emotions, stories and memorable experiences in thinking about your management career.

People learn lessons on difficult-to-teach subjects such as good conduct and morality through emotional stories, fables and mythology taught by their forefathers. That is why many cultures have a rich tradition of parables, stories and mythology to help common people relate to complex subjects like character, honesty, hard work, sincerity and so on.

 The world as it will be

Think of how the world was two thousand years ago at the time of Christ. The world had 230 million people, and most people earned a living from farming. The methods to grow crops were about the same everywhere. So if there were more people in a region, then that region had more agricultural production. Hence there was a better standard of living in that region compared to others.

Of the 230 million in the world, 100 million people lived in India. With so many people, India produced more and was relatively wealthy. However this does not mean that India had no poor people. There were rich people and very poor people. The rich were very rich and the poor were very poor. There are historical and literary references to this. But, unlike today, abject poverty was a characteristic of all nations, not just India.

When Jehangir ruled India around 1600 AD, there were 500 million people in the world, of whom about 160 million were in India. Many foreign travelers visited India. They presented a picture of a small group in the ruling class living a life of great luxury while peasants and domestic attendants lived a life of misery.

One writer wrote, “The poor are so poor that they go naked save for a little bound about their middle.” In the year 1609, a visiting English captain named William Hawkins wrote to the court of King James I of England, “I am afraid that nothing that England produces can be of any interest to the people here, but everything here would be of great interest to England.” The seeds of British colonialism were thus sown!

Just as the population of the world (and India) increased very gradually, the real standard of living of people also increased very, very gradually. The income of the average American was only five times that of the average Indian in 1700.

However, after 1700 AD, some amazing things happened. Dramatically new inventions like steam and electric power became available for both agriculture and industry. Medical science improved health standards. These were eagerly grasped by some nations while others did not do so for one reason or another. Nations, which grasped these new methods, progressed more rapidly, thus widening the gap between rich and poor countries. The western nations marched ahead of India on account of this factor.

That is how the centre of gravity of growth shifted to the west.

By year 2000, the world had 6,000 million people.  The differences in income between countries had become very large. The average American had an income now, which was about one hundred times the average Indian.  However, during just the last twenty years from 1980 onwards, four really enormous changes have happened all over the world. These will make the lives of your generation vastly different from your predecessors.

The first is that there has been a revolution in computers, television and telephones. Your generation is growing up with these devices as an essential part of a normal day’s work. The consequence is that the world has shrunk. America and Australia are not far away any longer.

The second is that free markets drive more countries, and the people living in those countries. India, China, Russia, Eastern Europe, Vietnam and so on, together adding up to as much as half of the world’s population, have all come into the free market economy. Expressed simply, those people can today walk into a shop and buy milk, sugar, motorcars and other goods quite easily.

The third is that a huge number of people from India and other countries are available to do work in the world. This work does not require them to physically go to other countries. They can do work for foreign people who have work to be done while sitting right at home and using their computer.  These people are hugely hungry to improve their standard of living; they are restless for progress.

Fourth and last, the young people of the world are in India. Although one out of six human beings in the world lives in India, as many as one out of four young people below the age of twenty-five lives in India. Just imagine the power of a young and ambitious population, which is restless to improve its standard of living, and, for the first time in its history, has the means to do so. It is an incredible power that is about to be unleashed!

After four long centuries, these four factors have once again shifted the centre of gravity of the world’s growth right back to Asia, led by India and China. This is a completely new India in which you all are growing up—an exciting, pulsating India where opportunities abound in a manner that has never before been experienced anytime in the country’s history.

The future has arrived.

What does this mean for you? The world, which you have to navigate, requires you to have the attitude of an explorer. Explorers should be willing to go to places where nobody else has been before. They have to be bold enough to embark on journeys without knowing what exactly will work and what will not. Further, explorers have to be willing to listen and learn. They should seek the best available knowledge; they should study failures as well as successes. Explorers who win do not sit on the sidelines. They behave boldly and give fortune a chance to favor them. It is this kind of attitude that you will need in order to succeed.

The next fifty years till 2050 will be better years for more Indians than have ever happened in the two thousand years of recorded history of this country. Good luck and god-speed.

Word Count 2363

Mumbai                                                                       R. Gopalakrishnan

31st March 2007                                                         rgopal@tata.com

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