E2-E3/Management/Aspiration Driven Transformation

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E2-E3 MANAGEMENT

CHAPTER-1 ASPIRATION DRIVEN TRANSFORMATION (Date Of Creation:01-04-2011)

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Aspiration Driven Transformation

Overview/Description: All businesses operate in a mix of dynamically changing environment. This environment gets influenced by many factors such as political, legal, competitive, regulatory, economic, technology etc. Every organization strives to perform better than the other by meeting the competitive challenges, by overcoming internal resistance and by adjusting appropriately to other controllable and beyond its control factors. In this regard, Jack Welch, ex CEO of General Electric has said beautifully: When the speed of change outside the organization exceeds the speed of change within ... The end is in sight! This session discusses the telecom business environment in India, need for change in BSNL and strategy adopted by BSNL for meeting the challenges. Lesson Objectives Telecom Business Environment Evolution of current telecom business environment since 1991 Industry Growth & Market share BSNL status Meeting Challenges of environment Changes options Factors impeding change How to overcome resistance to change Aspiration Driven Transformation in BSNL Change methodology in BSNL Project Shikhar Key pilot activities under Project Shikhar Restructuring in BSNL Telecom Business Environment Since 1991, Indian Telecom sector has seen unprecedented growth. From a monopoly to multi operator, multi services, multi technology, multi vendor scenario, the journey has been very fast paced. Department of telecom making over its function of regulation to TRAI (1997), dispute resolution to TDSAT (2000) and service provider role to BSNL (2000), the path has been adventurous. DoT had to introduce a technology neutral regime by offering UASL (Unified access Service License). The tele density growth is

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unprecedented, exceeding the projections of NTP 1999 to achieve 10 by 2007 and 15 by 2010 well before time. Since its inception BSNL adopted a Vision and Mission statement which was revised from time to time based on ground realities. Up to 2007, the Vision & Mission statement of BSNL was: Vision: To become the largest telecom Service Provider in Asia. Mission: I.To provide world class State-of-art technology telecom services on demand at competitive prices. II. To Provide world class telecom infrastructure in its area of operation and to contribute to the growth of the country's economy While efforts were certainly made to realize the vision, the external & internal environment of BSNL has resulted in an altogether different scenario. This necessitated the need to have a relook on vision and mission statement itself. Just have a look at the statistics given below: Market share of BSNL viz all as on 30th April 2010

Note: Others means Etisalat, HFCL, Videocon, Stel, Loop, Shyam, Uninor

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E2-E3/Management/Aspiration Driven Transformation BSNL revenue & profit graph since inception

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Obviously, the results are not in sync with expectations. A quick look at the revenue profile of various operators given below reveals another story. Operator *from web sources/V&D BSNL Bharti Airtel Reliance Comm Vodafone Tata Communications Revenue* (in Rs. Crore) 2006-07 2007-08 2008-09 39,715 17,888 14,468 10,565 8,857 38,046 26,436 18,638 15,477 8,297 35,811 36,962 22,941 22,224 9,963

BSNL Revenue Financial Year vise in Rs Crore Service 04-05 05-06 06-07 07-08 Landline 21853 20421 16605 12668 Mobile 3792 6433 9264 10579 WLL 347 481 568 618 Broadband 4 162 514 916 Circuits 421 530 512 757 Receipt from N.A 6972 6146 5655 other operators

08-09 9173 9828 636 1756 960 4304

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As can be seen above, the erosion of BSNLs number one position is gradual with steep gradient. This status has necessitated the company to look at certain fundamental questions such as: Are all the employees motivated to deliver better results? Are management practices conducive to growth and challenging competition? Is the Vision statement aligned to reality? Do all the employees know and believe in the Vision of BSNL? What fate is expected in next five years? What makes other operators grow in spite of little technology & tariff differences with BSNL? Is organization structure within BSNL too bureaucratic to deliver results?

Solution to reversal of present situation is possible only if answer to above questions is known in a sincere manner reflecting the truth. The solution to such situation is the Change in the way we think, interact, behave and work. For introducing the desired Change we need to understand the fundamentals of Organizational Change. How Organizational Change Affects People? The following are among the most common consequences of organizational change as it affect people .. 1. 2. 3. 4. 5. 6. 7. 8. Change in the job content Changes in status Changes in location Redundancy Change in social grouping Loss of earning or earning potential Change in conditions of employment Change in peoples belief values and assertions.

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Resistance to Change: One of the finding from studies of individual & organizational behavior is that organizations and their member resist change.
Selective Information Processing

Economic Factors

Resistance

Fear of Unknown

Habit

Security

Figure: Sources of Individual Resistance to change Organizational Resistance : Six major sources of organizational resistance have been
1 Structural Inertia Threat to established Resource Allocation 2 Limited Focus of Change

Organizational Resistance

5 Threat to established Power relationship 4 Threat to expertse

3 Group Inertia

identified. Figure: Organizational Resistance Overcoming Resistance to Change: Six tactics have been suggested for use by change agents in dealing with resistance to change : Education and communication Participation Facilitation and support Negotiation Manipulation and co- operation Coercion

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More emphasis needs to be given for effecting successful change in using first three tactics i.e. Education and Communication, Participation, Facilitation & Supports. For an organization to successfully implement change, it must be change-readymeaning that the people and structure of the organization are prepared for and capable of change. Typically, three conditions are present in a Change Ready Organization: First, effective leadership is in place at all levels in the organization. Inept leaders are deterrents to organizational performance and ability to change. A company may have excellent pay, benefits, and employee-friendly policies, but if incompetent leaders are in place, its employees will not be motivated to change. Second, employees are personally motivated to change. Change happens when people are sufficiently dissatisfied with the status quo and are willing to make the effort and accept the risks involved in doing something new. Third, the organization is accustomed to working collaboratively. Effective change demands collaboration between willing and motivated parties. Planned change Planned change is the change activities that are intentional and goal oriented. First it seeks to improve the ability of the organization to adapt to changes in its environment. Second, it seeks to change employees behavior. If an organization is to survive, it must respond to changes in its environment. Who is in organizations responsible for managing change activities ? The answer is change agents. Change agents is defined as the persons who act as catalysts and assume the responsibility for managing change activities. What can change agents change : The options essentially falls into three categories : structures, technology and people.
What are the Change Options ?

Structure

Technology

People

Figure Change Options

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Changing structure involves making an alteration in authority relations, coordination, mechanisms, job redesign or similar structural variables. Changing technology encompasses modifications in the way work is processed and in the method and equipment used. Changing people refers to changes in employees attitude skills, expectations, perceptions and /or behavior.

McKinsey 7S framework: One successful model of organizational effectiveness that has persisted is the McKinsey 7S framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful. The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help: Improve the performance of a company. Examine the likely effects of future changes within a company. Align departments and processes during a merger or acquisition. Determine how best to implement a proposed strategy. Strategy: the plan devised to maintain and build competitive advantage over the competition. Structure: the way the organization is structured and who reports to whom. Systems: the daily activities and procedures that staff members engage in to get the job done. Shared Values: are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style: the style of leadership adopted. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the employees working for the company. Strategy, Structure and System are the "Hard" elements are easier to define or identify and management can directly influence them. These are strategy statements; organization charts and reporting lines; and formal processes and IT systems. Shared Values, Style, Staff and Skills are "Soft" elements, more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful. The change methodology can be summed as:

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E2-E3/Management/Aspiration Driven Transformation Defrost a hardened status quo Establish a sense of urgency Create the guiding coalition Develop a vision and strategy Communicate the change vision Introduce new practices Empower a broad base of people to take action Generate short term wins Consolidate gains and producing even more change Ground the changes in the culture, and making them stick Institutionalize new approaches in the corporate culture

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Transformation Exercise in BSNL Based on above, a massive transformation exercise has been taken up in BSNL. As can be seen from market scenario, while private operators revenue and customer base has increased tremendously, BSNLs market share as well as profitability is on the decline. Fear and worry of management as well as the employees is obvious. In order to regain its lost glory, a root cause analysis was must to assess the underlying issues and address them. BSNL management appointed a consultant and in a country wide survey conducted by the consultant, some of the identified factors were: Lack of shared vision among employees: In general, employees performed their duties from morning till evening without knowing what they all were trying to achieve for the company. Inability to see big picture: Employees were not aware how their contributions fit into the overall goals of BSNL. In general no clarity on BSNLs corporate vision and objectives. Too broad structure: Broad structure having multiple responsibilities lead to dilution of focus on key growth areas and also made it difficult to identify and assess the impact of performance of various services offered by BSNL. Lack of documented role, responsibilities and accountability matrix left to individuals to define it as per past experience, practices and their wisdom. Legacy processes: The way work got processed through legacy processes lead to inefficiencies and delays. Taking clues from above factors, A detailed SWOT analysis of BSNL was carried out by interviewing many employees at various levels in BSNL. SWOT stands for Strength, Weakness, Opportunities and Threat analysis. Brief on SWOT analysis is given below:

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1. StrengthsStrengths are the products, services, resources, and capabilities of the company that promote an increase in sales. In other words, strengths enable the company to increase its market share. Strengths are internal elements, for example, good customer relationships; well-planned, efficient departments; clear business objectives and adequate financial, technological, and human resources. 2. WeaknessesWeaknesses are the shortcomings in any products, services, resources, or capabilities of the company that cause it to show a decrease in business. Weaknesses cause a decrease in market share. Weaknesses are internal elements, for example, internal production problems, an unclear business strategy, high employee turnover, and a poor market image or deteriorating market position. 3. OpportunitiesOpportunities are factors that a company can develop due to outside circumstances. Opportunities are the situations that have a potentially positive impact on the company. Opportunities are external elements, for example, new markets emerging for new products being developed, economic recovery, expanding overseas markets, brand loyalty from long-standing customers, and industry association conventions and trade shows. 4. ThreatsThreats are problems or sets of circumstances outside the company that can potentially have a negative impact on the company. Threats are external elements, for example, economic recessions, changing customer needs and wants, new competition entering the market, changing customer demographics, and a lack of materials to manufacture the product. Try to identify the following for BSNL by applying above definitions: Feature Strength/Weakness/Opportunity/Threat Valuable assets-copper, fiber, buildings etc. Declining handset costs More Competitors Large Talented manpower Low employee motivation & involvement Declining Tariff due to competition Growing market of mobile connections Age profile of manpower

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Based on SWOT analysis and after identifying various issues it was decided to launch Aspiration driven transformation process in 2008 titled as Shikhar This activity was divided in two phases, Phase-I and Phase-II. PHASE-I of Shikhar Developed a shared aspiration for BSNLs future. Articulated a well-defined strategy to take BSNL back on the path of growth and profitability. Created a 5-year business plan outlining a range of potential outcomes. Develop a thorough sales & marketing strategy for each of the core businesses (Landline, Mobile, Broadband, enterprise etc.) Outline key implications on operations and customer service to support various businesses. (Business Process reengineering) Define the right organizational model to achieve the strategic objectives, along with critical changes needed in HR policies. (Restructuring) Initiate implementation of initiatives in the form of Pilots Vijay (Improving sales & distribution for mobile business to capture more market share), Dosti (Tap and strengthen PCO business), Udaan( Improve landline and broadband business) , Sanchay (save money) and Kuber (focus on revenue assurance and key customers) with detailed design and on-the-ground implementation. Vision of BSNL under this shared aspiration for BSNL to be, by the year 2013 is: Be the leading telecom service provider in India with global presence. Create a customer focused organization with excellence in sales, marketing and customer care Leverage technology to provide affordable and innovative products, / services across customer segments including end to end converged services. Mission statement of BSNL under this shared aspiration for BSNL to be, by the year 2013 is: a. Be the leading telecom service provider in India with global presence Maintaining a high rate of growth to protect and increase its market share in all segments of operations Generating value for all stakeholders-business associates, vendors, shareholders & employees Maximizing return on existing assets with sustained focus on profitability Becoming most trusted, preferred and admired telecom brand

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E2-E3/Management/Aspiration Driven Transformation Rev date: 01-04-2011 To explore international markets for Global presence b. Create a customer focused organization with excellence in sales, marketing and customer care Developing a marketing & sales culture that is responsive to customer needs Excellence in customer service-friendly, reliable, time bound convenient and courteous service c. Leverage technology to provide affordable and innovative products / services across customer segments Offering differentiated products/services tailored to different segments Providing reliable telecom services that are value for money. d. Provide a conducive work environment with strong focus on performance Attracting talent and keeping them motivated Enhancing employee skills and utilizing them effectively Encouraging & rewarding individual and team/group performance e. Establish efficient business processes enabled by IT Changing policies and processes to enable transparent, quick and efficient decision making Building effective IT systems and tools Key Priorities Identified For Phase Ii Phase II is the implementation phase of Project SHIKHAR. Several critical areas are needed to be addressed during this phase to make the transformation truly effective and impactful. After considerable deliberations in multiple forums, the following key priorities for our organization have been identified: 1. Accelerating growth of mobile business by focusing on critical areas o Building extensive and strong distribution and retail footprint o Innovation in pricing o Acceleration of 3G sales to capitalize on first mover advantage o Improving effectiveness of VAS
2.

3.

Leading and shaping the fixed access business by focusing on critical areas o Addressing gaps in sales & distribution o Innovation in product and pricing o Building capabilities and offering on content and VAS o Improvement in service delivery and provisioning times Growing the enterprise business and becoming provider of choice by o Establishing key account management

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E2-E3/Management/Aspiration Driven Transformation o Innovation in products and solutions o Strengthening service delivery and service assurance
4.

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Expanding into new businesses o Developing the infrastructure sharing business o Monetise other embedded assets Focusing on financial assurance o Fixing billing leakages and improving collection o Reducing operating costs Improving customer service levels across different interface points o Improving effectiveness of call center and CSC o Building new areas such as online Implementing operations improvement initiatives o Increasing service levels by reducing downtime and improving turn-around times o Reducing operating costs where feasible Focusing on implementing critical HR priorities o Recruitment at DGM, MT and JTO/JAO levels o Capability development o Defining appropriate incentive management program Implementing new organisation structure across the organisation head office, circle office and regional office o Defining roles & responsibilities and key performance indicators in the new structure o Enhance effectiveness of new structure by appropriate top-management MIS and planning and budgeting

5.

6.

7.

8.

9.

Dedicated Teams To Drive Each Priority Area With a view to provide sustained focus and thrust to various initiatives, dedicated teams have been constituted in the Corporate Office to drive each of the priority areas. Each implementation initiative has the following Core team structure:

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Project Sponsor: Director/Executive Director in the Corporate Office responsible for providing overall guidance and direction, monitoring overall execution results, providing policy inputs and resolving key issues that need senior management attention Project Champion: CGM/PGM/GM level officer in the Corporate Office responsible for driving implementation of the project/initiative on a country-wide basis, monitoring overall execution results, preparing policy guidance, resolving key issues on a day-to-day basis and communicating on all projected related issues. Project Coaches: GM/DGM level officers in the Corporate Office responsible for dayto-day execution of the project/initiative, working with Circle and SSA level implementation teams (including training them on new ways of working), monitoring results at Circle/SSA level, trouble-shooting issues on a day-to-day basis and supporting Project Sponsors and Project Champions take the right policy decisions. Transformation Management Office A Transformation Management Office has been set up under GM (Corporate Restructuring) at BSNL corporate office. The TMO will be the overall coordinating node for the implementation phase. CONCLUSION BSNL is at a decisive juncture in the transformation journey. Starting year of implementation is very crucial for making substantial progress across the areas that have been identified for implementation. A lot needs to be accomplished and the passage is not going to be easy, but perseverance and commitment to the task of transformation on the part of BSNL employees will definitely help in achieving our common objectives. Continued enthusiasm and support of every BSNL member is essential for this endeavour to succeed. All employees of BSNL need to dedicate themselves to the transformation endeavour and thereby to shaping a robust future for BSNL.

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Brief on activities undertaken as part of Project Shikhar: Project Vijay (Mobile) Market retailer Map existing telecom retail universe; measure BSNL's reach and survey extraction Wireless market potential model and target setting Channel management team and structure Assess future evolution of market for BSNL and dynamically fix targets for SSA and sub-district (gross adds, net adds, retailer coverage etc) Franchisee channel structure Roles definition and create channel management teams Training for channel management team Channel norms Allocate areas to external and internal sales channels/representatives Prioritize retailer coverage based on volume potential Incentives structure for channel management team Day-to-day tracking and reporting Project Udaan (Landline & Broadband) Product, Pricing & Identify customer segments Analytics Map competitions' offers tariff plans & product features Analyze present subscribers' usage pattern & attrition rates of various plans Develop economic models for testing and ensuring feasibility of all plans Sales & Structure of sales team - both BSNL own team and DSAs and Alliances define roles & responsibilities Develop detailed sales process, sales incentives & allowances / awards Sales force training modules through external professional agency SD / SA New processes for advance feasibility checking & reporting (Network Process improvements to ensure fast delivery Operations) Customer Process modifications for Customer service interfaces and for Service supporting sales team Lead generation mechanism and processes to capture leads and pass to Sales team

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E2-E3/Management/Aspiration Driven Transformation Rev date: 01-04-2011 Project Dosti Billing and Collections, Improved processes Service delivery and complaint New Plans handling, Improve market share More interaction with PCO franchisees Project Kuber billing and Collections Ensure timely billing of circuits Processes for bad debt recovery Project Sanchay Savings Security Cost Fuel cost Inventory management Project Smile Customer Care Improved ambience of CSC, multimode payment of bills, Shop in Shop concept, Training to CSC staff etc.

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E2-E3/Management/Aspiration Driven Transformation Chapter 1:Aspiration Driven transformation

Sample Self Study questions:-

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Q1 . BSNL aspires to become the leading telecom service provider by the year i) 2011 ii) 2012 iii) 2013 iv) none Q 2 .UASL stands for i) Universal Access Service License ii) Unified Access Service License iii) United Access Service License iv) None Q3.Factors responsible for individual resistance to change is i) Economic factors ii) Habit iii) Security iv) All Q4. TDSAT was established in the year i) 1997 ii) 2000 iii) 2002 iv) None Q5. Change options are i) Structure ii) Technology iii) People iv) All Q 6 .Internal survey by BCG found i) Lack of shared vision among employees ii) Too broad structure iii) Lack of documented role , responsibility & accountability matrix iv) All Q7.For BSNL declining handset costs is i) Strength ii) Weakness iii) Opprtunity iv) Threat

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Q8. For BSNL age profile of manpower is i) Strength ii) Weakness iii) Opprtunity iv) Threat Q9. For BSNL valuable assets ( copper, fibre) is i) Strength ii) Weakness iii) Opprtunity iv) Threat Q10.For BSNL low employee motivation is i) Strength ii) Weakness iii) Opportunity iv) Threat

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Subjective Questions 1. 2. 3. 4. 5. 6. Name the Vision of BSNL Name the Mission of BSNL Name the individual Resistance to Change Name the Organizational Resistance to Change Name the different Project under Project Shikhar Name the Objectives of Project Shikhar

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