Conquering the Chaos: Win in India, Win Everywhere by Ravi Venkatesan Page B
Authors: Ravi Venkatesan
Ads: Link
managers with matrices in their minds.
However, creating the culture that supports matrix management is hard. A fascinating
case study by IIM Bangalore lays out the challenges of Bosch in India as it moved
from a geographical to a matrix organization where global product groups dominate. 4 The new organization created fragmentation, conflict, and other challenges, while
pursuing opportunities and managing across businesses in India. For instance, the
authors write:
Previously, Bosch in India was one group. There was a country head and all issues
pertaining to India were resolved efficiently. With multiple reporting within India
… there are conflicts and, often, long delays in resolving simple issues. Since production
divisions and sales divisions are different, they now fight over transfer prices …
This often leads to a blame game. A lot of time is spent on conflict resolution. The
head of a division in India has to report to the managing director of Bosch India
for disciplinary (i.e., administrative) purposes and to a person in the Asia region
for his targets. Within the division, there are three verticals: Sales, engineering,
and manufacturing. The head of engineering reports to the head of the division for
disciplinary purposes but to a different person in Asia for targets. The same holds
for the head of manufacturing. Each also has a functional reporting relationship with
a third person, who may be located in another geography. Earlier, investment decisions
were made in India. Now that people in Germany drive these divisions, some of these
investments may be unsuitable for the Indian context. For instance, they may want
an investment in an automated assembly line based on the European context even if
in the Indian context, manual assembly may be more suitable.
In the past, the country head might see potential in the market that the business
group did not see. The global group will have global priorities and may neglect India
in preference to another geography. An Indian client may develop an engine and want
us to develop a component but we might not be able to take it up, as it may not get
the approval of the global products group. In the past, we developed things like a
hand-held marble cutter, which has a market only in India. We might not be able to
do that now. There is less discretion in maintaining practices unique to the Indian
context. For example, taking high-performing dealers on a trip was possible with local
approval. Since this is not the practice in other countries, it is difficult to get
approval from the global products group, which is a norm in Indian industry. Executives
in India also feel that the culture and low maturity of managers makes the matrix
harder to work in India. Multiple reporting relationships give scope for personalities
to come into play. Strong assertive personalities dominate weak and submissive ones. 5
The dual reporting structure in many companies can be made to work, but it requires
mature leaders, both at headquarters and in the regions, who are able to keep the
best interests of the company ahead of their functional or divisional interests. Imprinting
the matrix in the mind of managers and establishing processes for making dual reporting
work—for instance, joint performance appraisals—take thought and effort, and many
companies haven’t done what it takes. The global leaders of divisions and functions
must have country-specific goals for major countries like India, so they are forced
to engage with it.
Even so, the matrix structure is a compromise. I am skeptical, particularly when companies
want to grow faster than the industry. Companies that lack scale in India need to
bite the bullet as GE has finally done. It is better to move to a simple structure
where all the functions and businesses needed to execute the business plan report
to a country head who becomes the point of
However, creating the culture that supports matrix management is hard. A fascinating
case study by IIM Bangalore lays out the challenges of Bosch in India as it moved
from a geographical to a matrix organization where global product groups dominate. 4 The new organization created fragmentation, conflict, and other challenges, while
pursuing opportunities and managing across businesses in India. For instance, the
authors write:
Previously, Bosch in India was one group. There was a country head and all issues
pertaining to India were resolved efficiently. With multiple reporting within India
… there are conflicts and, often, long delays in resolving simple issues. Since production
divisions and sales divisions are different, they now fight over transfer prices …
This often leads to a blame game. A lot of time is spent on conflict resolution. The
head of a division in India has to report to the managing director of Bosch India
for disciplinary (i.e., administrative) purposes and to a person in the Asia region
for his targets. Within the division, there are three verticals: Sales, engineering,
and manufacturing. The head of engineering reports to the head of the division for
disciplinary purposes but to a different person in Asia for targets. The same holds
for the head of manufacturing. Each also has a functional reporting relationship with
a third person, who may be located in another geography. Earlier, investment decisions
were made in India. Now that people in Germany drive these divisions, some of these
investments may be unsuitable for the Indian context. For instance, they may want
an investment in an automated assembly line based on the European context even if
in the Indian context, manual assembly may be more suitable.
In the past, the country head might see potential in the market that the business
group did not see. The global group will have global priorities and may neglect India
in preference to another geography. An Indian client may develop an engine and want
us to develop a component but we might not be able to take it up, as it may not get
the approval of the global products group. In the past, we developed things like a
hand-held marble cutter, which has a market only in India. We might not be able to
do that now. There is less discretion in maintaining practices unique to the Indian
context. For example, taking high-performing dealers on a trip was possible with local
approval. Since this is not the practice in other countries, it is difficult to get
approval from the global products group, which is a norm in Indian industry. Executives
in India also feel that the culture and low maturity of managers makes the matrix
harder to work in India. Multiple reporting relationships give scope for personalities
to come into play. Strong assertive personalities dominate weak and submissive ones. 5
The dual reporting structure in many companies can be made to work, but it requires
mature leaders, both at headquarters and in the regions, who are able to keep the
best interests of the company ahead of their functional or divisional interests. Imprinting
the matrix in the mind of managers and establishing processes for making dual reporting
work—for instance, joint performance appraisals—take thought and effort, and many
companies haven’t done what it takes. The global leaders of divisions and functions
must have country-specific goals for major countries like India, so they are forced
to engage with it.
Even so, the matrix structure is a compromise. I am skeptical, particularly when companies
want to grow faster than the industry. Companies that lack scale in India need to
bite the bullet as GE has finally done. It is better to move to a simple structure
where all the functions and businesses needed to execute the business plan report
to a country head who becomes the point of
Similar Books
