Openness – the path to greatness and limitless self-discovery
Openness is a personal trait that lays emphasis on transparency and free, unrestricted access to knowledge and information as well as collaborative or cooperative management and decision-making rather than a centralized authority. Openness is the opposite of secrecy.
Most Indian and Asian companies are secretive and decision making is shrouded in deep rooted practices known only to a select few. In the bygone age of controlled economies secretive, authoritative and centralized decision models worked. The Indian fast food hotel group Nirulas started its operation in the year 1934 and presently has 70 outlets mostly in Northern India. In 2012 the sales turnover of Nirulas was estimated at Rs 100 crores.
Pulla Reddy Sweets the famous sweet maker from Kurnool, Andhra Pradesh was founded in 1948. The present sales turnover is estimated at Rs 45 crores. Most of the outlets are in AP and Telangana with a smattering few in USA.
Now let us look at McDonald's the world's largest chain of fast food restaurants with its 36,000 outlets, serving around 68 million customers daily in 119 countries as on 2012. McDonald’s was founded in the United States in 1940 and in 1948 McDonald reorganized its business using mass production line principle.
A typical McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. McDonald Corporation’s revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company operated restaurants. In 2012, the company had annual revenues of $27.5 billion (Rs 1,84,250 crores) and profits of $5.5 billion (Rs 36,850 crores) McDonald's is the world's second largest private employer behind Walmart with 19 lakh employees, with 15 lakhs working for the franchises.
Comparing Nirulas and MacDonald can be very enlightening. Nirulas in fact started 6 years before MacDonald! Whereas MacDonald grew to being a 1,84,500 crore company Nirulas remained a North Indian company with only 70 outlets and a turnover of around Rs 100 crores.
The startling difference can be attributed to the closed management style. Most family run businesses in India do not generally trust outsiders. There is a fear that outsiders will dilute the brand and may take over the business. As one Halwai (sweet maker) proudly claimed “no one else can make our sweets the way we make”. There is lies the crux with closed mindset. The business can’t be expanded as trusted family members are very few.
On the other side MacDonald has corporatized its business. Every aspect of the business is systems driven and except for some very secretive components and raw material everything else is shared OPENLY with the franchisee. MacDonald gets revenue from royalty, on sales and also on equipment sale. In many cases the establishment’s owner is MacDonald and it takes rent from the Franchisee!
The franchisee is encouraged and trained to increase sales. With the open business model every time a sale happens anywhere in the world MacDonald rakes in the moolah.
Modern economies are dynamic and work at the speed of light. They are manned by impatient young entrepreneurs who have unlimited drive and ambition. Most of the modern companies work on the principle of decentralization and open decision-making. Managers and owners don’t stay in isolated silos. They are one among their men and are expected to behave just like any other employee. CEOs and owners are admired but not feared nor do they have a demigod status. Examples of openness in Management and lessons :
1. CEO and Managing Director: The top performers of a successful software company had been summoned to the headquarters. They were all excited and curious at the same time. “What was happening”, no one knew! The grim faced CEO said “You are all fired”. This was indeed a surprise. The CEO went on to add “Oh yes, you are all fired as my employees. I feel that you have reached a Zenith and as far as my organization is concerned, you can grow no further. So I am firing you as my employees. But I am giving each one of you a capital of Rs 10/- crores. Set up a company where both of us will be equal partners. Each one of you can be the Managing Directors and we can share the profit equally”.
The CEO realized that there was only space for one person at the top. By allowing each of his top executives to be CEOs on their own he was ensuring their growth and also investing in them so that he could reap the fruits of success. It is said the present total turnover of the companies thus floated is five times the turnover of the original company.
Lesson: Be humble to accept the realities of life.
2. Johnson and Johnson’s (J & J) Tylenol: Tylenol was the most successful over the counter (OTC) painkiller product in the United States in the eighties In 1982 a person or some persons (unknown) replaced Tylenol’s extra strength pills with cyanide laced capsules and put them back in the shelves. The poison laced capsules were purchased and seven people died.
J & J’s first action was to alert the consumers across the nation not to buy any Tylenol products. J & J withdrew capsules from entire USA even though full withdrawal meant loss of over 100 millions of dollars of sale and loss of face. By withdrawing all Tylenol even through there was very little chance of finding more cyanide laced tablets, J & J demonstrated that public safety came first.
J & J released full page advertisements in all major dailies admitting full responsibility even though they were not directly responsible. This came as a refreshing change from companies that involve in subterfuge, litigation and even deliberately blame somebody else for their problems.
Lesson: Learn to say sorry, say it humbly and even if sometimes you are not at fault.
3. Flipkart's Big Billion Day (06th October 2014): was an online sale that has been heavily advertised in the media. But things did not go as expected and there were huge technical issues with Flipkart. The site kept crashing, error messages were coming in, and there was too much lag and orders were not booked, if booked orders were not confirmed.
FlipKart did clock 600 crore rupees sale. But its image took a bad beating. FlipKart was the butt of the jokes in the social media. Finally the CEO of Flipkart had to personally apologize on the same day to all the users and customers. He said that FlipKart would try to be better the next time around. It was very heartening to see the CEO send personalized apology messages and admitting his company’s shortcomings.
Lesson: Be proactive and take the proverbial bull by the horns.
4. Southwest Airlines: Herb Kelleher is the maverick co-founder and ex-CEO of Southwest airlines who saw to it that his airlines made money when all the other airlines were making heavy losses. His style of management was very refreshing. One incident that is always cited was the arm wrestling showdown with the CEO of Stevens Aviation in 1992. Both Stevens and Southwest were using the advertising tagline "Plane Smart." To settle the matter, Kelleher suggested an arm wrestling competition with the winner keeping the rights to the slogan. Kelleher lost the match, but the event generated so much good will and publicity that Stevens let southwest continue use of the tagline.
Lesson: Don’t take yourself very seriously. There could always be a pleasing way to settle differences.
5. 3M: is known for its innovative management style and path breaking products. 3M has a concept called the 85-15. 85% of the time the employee can do the assigned work and the other 15% he can do anything that he likes. Many of the employees of 3M are amateur scientists and they experiment with their ideas in the laboratories. Also most of the products that become successful at 3M are accidental discoveries.
But 3M should be appreciated. Management gives enough rope and encouragement for accidental discoveries and apparent failures. Failures as a product satisfying one particular need but stupendously successful in solving some other customer need.
Post-it Notes is one such product. But Post-it Notes was not planned. A 3M researcher was trying to find a strong adhesive. He developed a new adhesive, but it was even weaker than what 3M already manufactured. It stuck to objects, but could easily be lifted off. It was super weak instead of super strong! In short it was a failure. It was unused for years.
Another 3M scientist was using markers to keep his place in the hymnal choir, but the markers kept falling out of the book. The weak adhesive was used to coat the markers. With the weak adhesive, the markers stayed in place, yet lifted off without damaging the pages. The beauty of this product is that one can stick these notes on any surface and once the sticker is taken off the surface is not damaged. Post-it sticker can be used many times over.
Lesson: Allow people to be themselves. Let they plough their own path. Allow them to experiment. Let them make mistakes and learn from them.