115, still going strong

Business houses desire to identify the values on which a lasting business can be founded. Shrinivas Pandit, a veteran HR professional, too attempts to find out those values by studying Mumbai's, by now internationally famous, Dabawalas - a 115-year-old business enterprise. The organisation structure of Mumbai's dabawalas who collects home cooked food from homes and delivers them to respective offices during lunch have been the object of various studies.

To most of us it would seem to be a simple, no frills delivery service, but hold your breath and consider the numbers that we are dealing with here; the Dabalwalas collect and deliver 200,000 such lunches every day to people within a 60km radius within a 3 hour time period. Because they collect and return the empty boxes too, this amounts to around 400,000 transactions per day. As for their delivery method, they use people powered hand carts and the public railway system. And the kind of workforce behind this gigantic operations game – a 5000 strong team of dedicated and loyal semi literates!

By any stretch of imagination this simple business is actually extremely complicated.

It is not possible to list all of the lessons that can be extrapolated from the way they do business, but one that sticks in the mind and is a salutary lesson for all service providers is: “……..if you change just enough, you achieve embracive happiness.” With an error rate of one in 16 million transactions, they have clocked in a six sigma performance (99.999999%) without any technological backup. Dabawalas work as a Trust and each one of them is a shareholder to the Rs. 500 million turnover. Thus each one of them is self employed. They work as a team dependent on each other, knowing very well that unless the team works smoothly, they cannot earn a living. What is more fascinating is that an organization of 5000 people has no strike record!!!!!!

The association of dabawalas has a 13 member Governing Council that includes the President, the Vice-President, General Secretary and nine Directors. Under this body are the group leaders who manage the 5000 members of the society.

Each group leader manages 25-30 dabawalas. They are responsible for business development and continuance as well as customer satisfaction. Each group is almost an entrepreneur in its own way. The groups generate their own revenue and manage day-to-day functioning, including arranging for substitutes. Thus each group is a Strategic Business Unit (SBU).

These SBUs collaborate to get new clients. Knowing the operational areas of each group they share information on clients - a superb example of competitive collaboration. This is possible because the common thread between each group is ‘delivery’. Even though the performance of dabawalas depends upon team performance there is scope for individual improvement too. Each dabawala has to exercise extra skill and effort to convert the process into deliverable. The system is built on the collaboration between deliverables and group effort. No single Dabawala can succeed in achieving his target without the help of his group and chain.

The cardinal principle is that the dabba has to be delivered on time, within those three hours, without any excuses. When a dabawala is absent the others share his responsibilities. The whole organization works on the principle of shared responsibility and not allowing the team performance to drop. It is not that problems do not arise, but team work being the quintessence of their job they have also learnt to sort them out.

The Dabawalas have to constantly keep pace with the rapid advancement in technology – as any business would need to do and here lies their forte. With the introduction of faster trains they had to find a way to keep pace with them while keeping an eye on costs. They couldn’t afford motorised transport, due to the huge cost escalation that would have taken place, and had to instead use bicycles. Using bicycles they picked up their collection speed – relying on raw human power to give them that competitive edge. For the dabawalas, monetary satisfaction may not be very high but what matters more to them is the satisfaction of keeping the customers happy at a bearable cost.

In the competitive world, everybody is in a race to win, which has made the work life rhythm go haywire. The stress levels have gone up, causing health hazards for large sections of people.

At the same time, services have become prohibitive in cost, unreliable and inefficient for customers at the middle and the bottom of the social pyramid but it can be reoriented on an architecture of values that nurtures the genuine service mentality. The Dabawalas ability to identify this opportunity ahead of others, and their loyalty to old customers with a dependable delivery service, have provided them a lasting business.

Ref: Dabawalas by Shrinivas Pandit (Tata McGrawHill)

India Shining

With the GDP growth stabilizing at over 9 per cent, the world has woken up to the Indian success story and we are ruling the international investment market.

Reflecting the robustness of the economy, the value of mergers and acquisitions of corporate India has crossed $48 billion for the first eight months of this year with outbound acquisitions surpassing the inbound deals in terms of both value and number. There were 164 acquisitions made by Indian companies abroad, more than double the number of acquisitions made by international companies in the country (inbound deals at 73). Europe contributed 53 %, UK 40 % and the US 33 % among outbound deal value.

Major acquisitions made by Indian companies abroad till August are - the Tata Steel's acquisition of Corus for $12.2 billion, Hindalco's acquisition of Novelis Inc for $6 billion, Suzlon Energy's deal with RE Power for $1.7 billion.

The US invested 5.5 billion dollars in India between 1991 and 2006; a period of 15 years, but India invested 2 billion in just a year (2006-07) and is likely to cross 10 billion dollars by 2010. Indian investment abroad is spread across industries ranging from pharmaceuticals to telecom, automobiles and ancillaries to IT, paints and paper. Global financiers are willing to fund Indian acquisition over global whales.

Our economic past, characterized by scarcity, has been the driver for today's success. It forced us to be more efficient and do more with less. Not only did we get free lessons in optimizing our resources, but it also challenged us to find creative solutions, and then test these in a tough operating environment. It was virtually like getting a free MBA! Now, 'Made in India' has become the benchmark for software and services in the 21st century, just like 'Made in Japan' was the success story in manufacturing, automobiles and consumer electronics in the late 20th century. It is now a brand that epitomizes efficiency and innovation. Indian manufacturing & agriculture sector can ride on this wave to capture world business space.

If Indian IT learnt to walk in the West, it is now learning to run in India. Technology is helping bridge the rich-poor divide; distance education, telemedicine and micro-finance are helping achieve this. Less surprising, perhaps, is that India is creating innovative products aimed at the bottom of the economic pyramid. So products like a Rs 10,000 PC, a refrigerator built to survive voltage fluctuations and, of course, the Rs 100,000 car are all unique, indigenous, cost-effective solutions that could be exported. We are also deploying technology to ensure that citizens can avail of government services remotely without having to deal with India's mammoth bureaucracy. Innovation in technology is helping India. It boasts of the cheapest mobile phones and call rates of just Re 1 a minute and public transportation that runs on non-polluting gas. To top it all, it has a young population bursting with energy and aspirations - probably the only big market where first-time telephone users are cellular phone users that have bypassed landlines.

The fact that our multinational competitors are setting up shop in India is proof of India's competitiveness and the success of our business model. Innovative & creative products developed in India, supported by well-managed skill pool and open business policies are indicating that India is shaping a shining future for itself.

How Globalization is shaping India ?

Predominantly, Indians are also quick learners. We have learned the art of adapting to global business dynamism. Today India joyfully rides the global trend in each of its business categories and the effect of open economic policy and globalization is visible. But the situation was dismal even a few years ago and our incompetence in developing long-term strategy has taken its toll.

In the old days of self-sufficiency, the Indian auto industry emitted massive pollutants without a second thought. But competition with global producers in the domestic and export markets forced them to adopt Euro emission norms. In 1990 the Bombay Stock Exchange was a den of thieves, where crooked brokers and companies rigged prices and duped small investors. But once foreign investors entered the Indian market, they marked down the price of dodgy companies while paying high prices for companies with good standards. For the first time, honesty actually paid. With a thorough reform, now Indian capital markets are among the best in the Third World. All of the top drug companies want to become multinationals, and have raised their standards hugely. Indian pharma is now a big global player, with strengths ranging from reverse engineering to contract R&D, contract ingredient production, clinical trials, and basic research for new drugs. None of this would have happened without strong patent rights for drugs, something the government opposed tooth and nail and was finally forced to accept in the Uruguay Round of 1995.

Banking standards were abysmal in the 1980s, and bank balance sheets were fairy tales. But after economic reforms, Indian banks adopted Basel-1 norms, and are now moving towards Basel-2 norms. During nineties, consumer surveys showed that three-quarters of all food products sold loose were adulterated. Today, India has become a significant exporter of processed foods, and companies have to maintain global standards. The auto industry, two-wheelers, four-wheelers, and components have flourished and become world-class. Why? Auto companies need constant new models and improvements to compete, and Indian engineers can do this faster and more cheaply than US engineers. Yet, a company like Bharat Forge now employs no blue-collar workers at all. Only engineers, and this skilled force has made it the second largest forging company in the world. Gone are the old days when it took more than 5 years to get a car.

A significant section of the Indian growth was unplanned.

Far from having a strategy for promoting computer software, government policy suppressed it for decades. Narayana Murthy of Infosys says, it took him almost two years to get a telephone connection and a licence to import a computer. Because of trade union pressure, the government discouraged computerization of Indian services. The infamous bank-trade union agreement of 1993, provided for branch computerization at the rate of just 0.5-1% per year. India was saved by Silicon Valley, which hired Indians to work on US projects, and created skills though learning-by-doing. These skills then came back to India, and helped launch the software revolution. This was a by-product of US outsourcing strategy, rather than Indian strategy. The boom in brain-intensive manufacturing was also unplanned. There was much talk in 1991 of India following the path of labour-intensive exports that East and South-East Asia had pioneered. Alas, India failed dismally in labour-intensive industries, thanks to political constraints on labour laws. Instead, India is now flourishing in brain-intensive industries such as pharmaceuticals and automobiles. All top US companies are setting up Indian subsidiaries in search of cheap skills: if they don't have a low-cost Indian operation, they will lose out to others who do.

Indians are gleeful about the terrible bashing China's image has taken after a spate of scandals about the quality of its exports to the US. China converted this scandal in a huge blessing in disguise. They have improved standards sharply across industries in a short span. It’s a lesson for us. Unforgettable lessons that can take us to new height of international business if we improve production standards but also ruin millions of Indian investors if we don’t learn from it.

What should we do in the future?

We need to focus on connectivity and deregulation, rather than specific industrial policies. We should try to develop a global village, a open & globalized India where policy framework will develop long term competitiveness.