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VG, as known in the business circle, made it to the Dean's honor list while completing his MBA from Harvard. He has not only received his doctorate degree from Harvard Business School but was also awarded with the Robert Bowne Prize for the best thesis proposal. In the past while studying in India, VG received first rank nationwide in Chartered Accountancy degree and hence, was awarded the President's Gold Medal.
Currently, Vijay Govinrajan works with top echelons of the business world and top management teams in Global Fortune 500 firms to help improve their strategy through collective discussion and implementation. Some of the companies that Vijay Govindarajan has worked with include: Boeing, Coca-Cola, IBM, J.P. Morgan Chase, Procter & Gamble, and Wal-Mart. He is also contributes his principles on strategy on many coveted world forum.
VG has been awarded with the Fellow of The Strategic Management Society Honor given to a distinguished group of scholars who have made significant contributions to the theory and practice of strategic management, Top 5 Management Thinker of Indian Origin by Business Week and "Winner of the 2006 Accenture Award" by California Management Review for his article Organizational DNA for Strategic Innovation (co-authored with Chris Trimble). Ten Rules for Strategic Innovators: From Idea to Execution coauthored by Professors Vijay Govindarajan and Christopher Trimble, was named Best Business Books of 2006 by strategy+business in the Strategy category [i] .
VG has continued in sharing his thoughts on how companies would become more effective in challenging economies and ways to execute strategy to innovate and sustain growth. His belief that companies have to be more entrepreneurial and must start a new enterprise from within their existing business is well acknowledged by the business circle. The key to shifting this focus is to move from ideas to execution and from leadership excellence to organizational excellence.
He has also coined a new term "Glocalization" which simply means that multinationals target only the best in any market, the rich 15% but the real potential lies with unlocking the other 85%. For e.g. adapting global products created for the U.S. customers in emerging markets simply will not work to capture the full opportunities. However, it can be tackled through reverse innovation. Reverse innovation is not only required to capture growth in these markets; it is the very oxygen that will fuel future growth of multinationals in their home markets. E.g. GE selling its ultra-portable electrocardiograph machine in the United States at an 80% markdown for similar products. This machine was originally built in India and China for doctors by GE Healthcare.
In a very interesting article, VG compares Shaun White to U.S. President J.F. Kennedy, and Indian visionary Ratan Tata. Vijay Govindarajan speaks on the 3 attributes that make Shaun White exemplary: a dream, huge ambition challenging orthodoxy and desire to push beyond the expected, resulting into a break through innovation. Shaun White took a risk to get a perfect score by completing the Double McTwist 1260 inspite of being assured of a gold medal.
Here, we would be discussing about VG and his contribution to strategic management through his bestselling book Ten Rules for Strategic Innovators: From Idea to Execution. When VG and Chris counseled firms, they analyzed that companies do not lack ideas but converting the ideas into break through opportunities. Even MNC's with successful business models eventually hit the ceiling on growth. This makes the emerging markets very attractive. These markets represent huge opportunities for gaining growth and competitive edge, from long term perspective. They lack a proven formula for making profits, since they are costly and risky, without ruling-out any possibility of a failure. They are hit by physical inertia- wrongly emphasizing on current infrastructure instead of building for the future, strategic inertia - limited view of inertia e.g. US railroad industry in 1970's ignored the fact that airlines could also at some point compete to capture their market and lastly, psychological inertia- hard mindset and unwilling to change unless something big happens e.g. Kodak were the forefront runners for digital camera but the whole department was lead by someone whose expertise lied in television.
Box strategy from Vijay Govindarajan [ii]
VG and Chris Trimble divide companies into 3 boxes: box 1 consists of the company projects to be implemented in 2010(present) , box 2 consists of company projects that were completed in 2010(past) and box 3 consists of projects to be implemented in 2011 (future). Even though companies spend a lot of time in box 1, the strategy lies in box 2 and 3. It's not only important to selectively forget the past but create future through forecasting and implementing provisions for non-linear changes. Based on a thorough and comprehensive, research of innovative initiatives, Vijay Govindarajan and Chris Trimble identify 3 central challenges to strategic innovation- forgetting some key theory that made current organizational model successful, borrowing assets from the original organization to fuel the new one and learning how to succeed in any emerging market. The New Company (NewCo) is altogether a different industry but still is part of the MNC (CoreCo), which is performing very well in the present situation.
The 10 rules that are emphasized by VG and Trimble are:
For building breakthrough innovations, it's important to tackle the 3 challenges- forgetting, borrowing, and learning. These central challenges can be tackled by a leader who leverages the power of organizational DNA
It's human to cling to CoreCo's orthodoxy, even when moving into new venture.
Companies that are established can beat start-ups if they can succeed in leveraging their assets and capacities.
Any strategic experiment would face critical unknowns. Therefore, success depends more on an ability to experiment and to let the risk of failure prevail.
To erase institutional memory, NewCo must be built from scratch, with new choices in staffing, structure, systems, and culture.
Addressing tensions and difference in synergies should be priority of senior management. Relationship between NewCo and CoreCo would deteriorate easily.
Evaluation of NewCo's business performance should be addressed during its planning process. It should be evaluated on the basis of CoreCo's evaluations
To ensure learning, NewCo must take a disciplined, detached, and analytical approach in making predictions and interpreting differences between predictions and results
NewCo should be held accountable for learning and not its results. You can achieve accountability for learning by insisting on a disciplined learning process.
Companies can develop capacity for super-growth through strategic innovation. Skills in forgetting, borrowing, and learning are the foundation. Managers must start building these organizational skills early in a company's life.
The reason why I agree VG should be considered amongst the top 50 management thinkers by thinkers50.com is for his relevant theory on strategic management. I personally feel that every organization's success depends on strategic experiments carried out on such unseasoned markets where flexibility in regulations is rarely challenged, but few firms know how to implement them. Many managers think that an idea is enough to get them from business plan to the pinnacle of the competition, but somewhere in the middle of the innovation process, lies a disconnect. In Ten Rules for Strategic Innovators, Govindarajan reveals common mistakes of organizations while moving from idea to execution-and explicitly explains the concept to build a breakthrough business while sustaining in an existing one. Breakthrough growth opportunities can create or destroy an enterprise and prospects. This can be explained by comparing record breaking high jumpers and en-route invention of new techniques to bridge new heights in the Olympics. First recorded high jump took place in the 19th Century. Earliest technique used to clear the bar were Scissors where the world record stood at 1.97metres. This technique had its benefits but stunted improvement in world record. However, early 20th century, this practice was broken by the introduction of Western Roll, which helped improve the world record from 1.97m to 2.03m. Even though the increase was minuscule, it made athletes and coaches ponder, forced them to research & introduce new techniques, at the same time challenge human strength and perseverance. The change did come and in 1956, Straddle jump was introduced which increased the world record from 2.03m to 2.28m. Athletes and coaches welcomed this new approach and associated with it. But this technique did not stay long and in 1977, Fosbury flop was introduced. As of today, the official the world record stands at 2.45m. High jump record holders were not interested in benchmarking against their competition; rather were continuously involved in creating next practices. Athletes that competed using old techniques did not perform to the capacity, their potential rather being underutilized. Athletes, who constantly strived to improve performance by using selective past techniques and concentrated on improving current performance through investing on futuristic techniques, thrived and excelled, just as companies would benefit by concentrating on box 2 and 3(strategic innovation). Companies that have outperformed competition broke records, more often than not became complacent, even arrogant and over time, lost relevance. E.g. Motorola , Blockbuster, etc.
A corporate example here would be, New York Times Digital. The way NYTD's operation is currently managed had evolved over a six year period, since The New York Times first ventured onto the Internet in 1995. NYTD was shaped by choices related to organizational structure, culture, staffing, and performance evaluation. As investments in NYTD (NewCo) were increased by NY Times (CoreCo), it was being considered a credible part of business and hence developed values and culture similar to the newspaper and adopted the decision-making biases of an established corporation. Lack of distinction created issues of doubts of insufficient resources being allocated to this business. While the ultimate business model for media websites was as uncertain as ever, many felt a straightforward "newspaper.com" operation could not possibly take full advantage of the Internet's vast potential. Competitors were investing heavily in their online operations, and investors were throwing money at anything with growing revenues, regardless of the possibility of failure. As a result, the Company implemented two decisions. First, in May 1999, management created a new operating division, NYTD (initially called Times Company Digital), that reported directly to corporate rather than newspaper management. Second, a "tracking stock" (a special class of stock which, in theory, tracked the performance of a division within a corporation) was launched that would enable NYTD to raise capital at relevant valuations. Conflict of synergies did arise during the initial stages, but were replaced into trust and confidence by the CEO of NYTD. The product managers were made to report to the GM directly to improve cross functional co-ordination, centralized operations and move to the new building, all were done to send a strong message that NYTD was a different company and valued things differently than NY Times. The performance was evaluated on the basis of learning than results. As a result company could double its revenue by first half of 2000.
Hence I feel Vijay Govindarajan's contribution to the field of strategic management is very relevant and applicable. Hence he deserves to be on the coveted list of the best 50 management thinkers.