May - 2012 - issue > In My Opinion
R Ramanan
Managing Director & CEO-CMC Ltd
Wednesday, May 2, 2012
Many organizations which have been around for quite a few years develop great Ability and competencies in specific areas over a period of time. Where they start stagnating or faltering is when they start becoming complacent with their past achievements, or allow bureaucracy to creep in to an extent that they lose desired internal as well as external customer responsiveness, or become excessively focused in ensuring top line growth while compromising on profitability considerations or not aligning to their core competencies. In that process they start losing the desired Agility in adapting to emerging market, technology and business trends thereby losing the Ability to ensure continuous sustainable growth of customer, stakeholder, employee, shareholder and societal satisfaction.

Often most of this is detected only after one or more of above factors have set in deeply in the organization. Course correction becomes extremely difficult because people and thereby organizational behavior has changed. People have got used to the current way of doing things, leading to a downward spiral. Any proposal to change is met with passive or active resistance at various levels, as it is too radical or too dreamy.

Managing change in such a situation is all about changing established mindsets. It demands constant communication through various channels for everyone to achieve their true potential with clear, consistent, inspiring messaging. It needs to be backed up with necessary organizational structures, organizational focus and process related changes to enable the achievement of the same. The end result should be to achieve a framework of great Ability combined with great Agility to enable continuous sustainable growth in revenues, profitability, customer, employee, stakeholder and societal satisfaction. We embarked on such a change initiative in CMC post acquisition by the TATA group, terming it C-Change – Ability to Agility, based on which we have experienced initial intended positive results, though it is still very much work in progress.

CMC 1.0

CMC has been one of the pioneering technology companies in India. Many industry veterans would remember its contribution in the computerization of Railways both on the passenger reservation system as well as freight management system which have been hailed as one the largest IT projects at a global level and a highly successful one at that.

However it is also a fact that soon after the visionary founding team led by Dr P P Gupta retired in the early ‘90s, the technology missionary spirit for various reasons mentioned earlier dissipated. This led to losing a lot of top notch talent and the routine of a culture with very little accountability took over. Globalizing opportunities were lost. Financials became poor in comparison to its other peers in the India who raced ahead in size and profitability. Pro-active customer engagement was replaced by complacency. Innovation & R&D were replaced by low margin trading of hardware. The whole situation led to low employee morale, whereas in the early 80’s CMC used to get the pick of talent from IITs and IIMs. The brand had deteriorated in less than a decade.

When the government woke up to the woes that had set in a pioneering company and decided to re-energize it through strategic sale to private sector in 2001, the TATA Group which had a healthy respect for CMC’s early technology accomplishments came forward to nurse it back to health and growth. CMC became a 51 percent subsidiary of TCS in 2001 under the leadership of S. Ramadorai, and currently under the leadership of TCS CEO, N Chandrasekharan.

CMC 2.0

CMC 2.0 was all about re-energizing, transforming and turning around CMC from a situation of low profitability, large debts, revenue uncertainty and volatility to a position of consistency in revenues, profitability, positive cash flows and focus areas aligned with its core competencies.

We had quite a few challenges to overcome. The financials were weak with operating margins of around 4.3 percent. The U.S. subsidiary had become dysfunctional and almost all revenue was coming from the government sector in Indian market. These were external manifestations and results of a deflated mindset, approach, neglect that had set inside.

C-Change called for a major change in mindset of the people - from an essentially domestic government centric mindset where government projects were often handed over a platter without much competition or regard to sustained profitability and cash flows, to an organization with a global mindset capable of bidding and winning projects on its own against world class competition, ascertaining itself as a value creator / accelerator to the parent TCS in the process. It was also necessary to set the framework of an organization capable of having global aspirations worthy of its potential. The last ten years have been a complex journey and today we can say with confidence that we have progressed quite a bit in that direction with great support and attention from the governing Board of Directors, active TCS management support, and synergies in the market place enabled by becoming a part of the TATA group.

Our due diligence had shown that there were plus points too in terms of strength in the Indian market, good brand name in the government sector and a vibrant R&D culture. What was missing was strong employee engagement and connect, unrelenting focus on the right business mix in line with core competencies of the organization and sustainable profitability considerations, saying ‘NO’ to value eroding businesses which shored our top line but eroded our bottom lines, strong appreciation of current competition and the gaps in our customer centric orientation and agilities, process based delivery excellence ensuring consistency, rigorous quality management systems and processes of world class standards, development of replicable solutions based on R&D assets and emerging technology trends, and constant urging of sales and delivery organizations to moving to the higher end of profitability through system engineering and integration, and asset based verticals.

We summed up the task ahead with organization wide communication, evangelizing the slogan, “C- Change - Ability to Agility” in order to galvanize the organization into action.

As is the case in any serious change in organizational culture it was not easy or quick. Despite many strategy sessions of senior management and infusion of new blood at senior levels it was an uphill task to get alignment in the organization with our strategic goals. Even when many old timers accepted the new approach in theory, it was difficult to change entrenched practices and habits. One had to be firm with the cynics and encourage those with fire in their belly. More over one had to accomplish all this with the highest ethical standards of TCS/TATA Group and remain a people centered caring organization.

In a decade under TCS/TATA ownership the margins had moved from 4.3 percent to a little below 20 percent at the end of FY2010-2111. CMC’s adoption of the Tata Business Excellence Model team which uses the Malcolm Baldridge methodology to rigorously assess TATA Group companies’ processes has been inexorably moving up the processes related to business excellence and quality. It achieved level 5 in CMMI assessment and level 3 in PCMMI in 2011. Revenues from the subsidiary in U.S. have jumped during the period from insignificant to over $100 million with increasing acceleration.

A transformed CMC with an energized employee base, inspired aspirations, agile and enthused management team, global operations and an increasing global mindset has come into being. The time was ripe to take the company to the next level.

CMC 3.0

Far from sitting on our haunches CMC is now getting set for its next phase: CMC 3.0—“Customer Centric Change”. The goal is to achieve the next level of agility in customer centricity and thereby carve a niche for CMC in the best of Global System Engineering and Integration companies, leveraging the parentage / synergies of TCS and the TATA group. The whole organization, which today consists of 10,000 CMCites is gearing up to it.

Being part of change management and C-Change has been a very humbling and educative experience. The learning continues.

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Reader's comments(1)
1:Thanks Ramanan for this valuable article, attempting to chronicle CMCs journey over more than three decades. It\'s worth a proper study as there aren\'t too many Indian organization which have demonstrated as much \'living-ness\' as CMC has.

I was a fortunate to be a member of CMC from 1983 and 1994 and have been an involved witness to the rise and fall that you have mentioned in your article.

As a conscience keeper Dr. Gupta held the enterprise consciousness as long as he was around. I wish he had created an able successor who could continue to do the conscious keeping. But then, may be, as a part of the systemic design it was not meant to happen. May be CMC, as a true living enterprise, was destined to go through the meander of life and yet stay alive to go through a process of transformational learning.

It is not that CMC was not responsive (agile) or customer-centric then. The hook-rug story, I am sure, and incidences demonstrating its practice are known to you. Thanks to Dr. Gupta and some of his far-reaching initiatives qualities such as these and many more values were coded in the DNA of the living, conscious institution he managed to get co-created. An institution which breathed, grew, moved, lost way, faltered and renewed itself with its own life force, not because but despite of its people. Had it not been for such values to have been embedded in its essence, CMC wouldn\'t have even survived, leave aside attracting TCS as a care taking memetic agent and the merger impacting organizational mind sets.

In my humble opinion, it would be a much more wholesome and meaningful experience for the TCS-CMC combine to reckon the sub-structure of enterprise essence and work with it than around it. Should you feel the need of further dialog on this feel free to reachme@indroneil.com.
Posted by: Indroneil Mukerjee - 04th May 2012
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