Table reflecton

Overturning the way we do things

A radical approach to managing large organisations that literally turns received wisdom on its head could be what we've been looking for. E&T reads an important new book on management theory'.

Not many books on management have words printed upside-down on the cover. In fact look carefully at the dust jacket of Vineet Nayar's Employees First, Customers Second and what you see is a reflection of the book's title and subtitle inverted through 180 degrees.

Simple shock tactic? Something to make the title stand out in the airport bookstore? Maybe, but this piece of graphic design whimsy is a clever crystallisation of the book's central message.

In Western business there seems to be a received wisdom, so deeply entrenched that no one bothers to challenge it: the customer is king. Go east, and in Japan - the world's second largest economy - the sentiment is more strongly reinforced: 'O kyaku-sama wa kami-sama desu' - the customer is god.

But for Nayar, CEO of global IT services company HCL Technologies, this is a view calculated to hurt companies in today's markets rather than help them. For most of us this sounds like heresy, but in a highly globalised, rapidly-evolving business climate Nayar argues that 'the best way for companies to meet their customers' needs is to stop making customers their top priority'.

We can all agree that this is, at least at first glance, a revolutionary idea but it's one that appears to have worked for HCLT, and this is Nayar's first-hand account of how he achieved it. When Nayar first joined the company in 1985 it had an annual sales figure of $10m. Today it employs 55,000 people and has revenues of $2.5bn. But the growth at a critical phase was 30 per cent, and while this may seem enviable, this was at a time when global IT giants were expanding at 50 per cent and HCLT was losing market share.

Nayar explains the predicament with a neat parable he learned from a racing-car driver. 'If your brakes fail in a race, the driver asked him, what would you do? Nayar thought about this and came up with two ideas: first, you try to slow down by any means, and second you try to leave the track. 'But both of these scenarios are dangerous to you and those around you, explained the driver. The correct answer is to speed up, get way ahead of the pack and then decide what it is you need to do.

But how does this apply to the notion that your employees are more important than your customers? Nayar argues that for a company with more than a few hundred employees, management is too far removed from the organisation to know what the real problems are. More often it is the employee in the customer-facing areas of the company that knows where real value is created. In other words, they know better. But, as is so often the case, management won't listen, or are too afraid to try.

'It is only by turning the organisation upside-down and making management accountable to value-creating employers that companies can unleash their employees' creativity, energy and passion,' he says, before claiming that HCLT's success in implementing this working practice shows that this is a self-renewing approach to business that continues to pay dividends for employees and their customers.

Nayar admits that he didn't have a grand plan when he started out and that the four phases - 'Mirror, mirror', 'Trust through Transparency', 'Inverting the Pyramid' and 'Recasting the Role of the CEO' - only became clear to him after the transformation occurred, but he argues that this approach can be adopted by any company in any industry in the world, with similar results.

Employees First, Customers Second is published by Harvard University Press, £17.99

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