Spurring value creation in IT services: An interview with the chairman of India’s Satyam Computers

Ramalinga Raju, founder and chairman of India’s Satyam Computers, has designed a business model that he credits with helping build the country’s fourth-largest IT services and business-process-outsourcing corporation. “Overall, our effort and investment in the business model has paid rich dividends,” Raju says in an interview with McKinsey partners.

Raju has established what he calls “full life cycle businesses,” which are responsible for a distinct set of activities that create value, from client services to internal functions. From this approach, Satyam has devised a model designed to deliver uniform client experiences and to keep everyone in the company focused in the same direction, despite phenomenal growth.

Better strategy through organizational design

Executives have a golden opportunity to orient strategy around organizational design and thus to make companies thrive no matter how market and competitive conditions change.

Organizational-design work is hard and time consuming, but its payback—in profits, costs, and risks—surpasses that of investments in product design and other traditional strategic initiatives.

Building strategy around organizational design represents an evolution away from the organizational structures of the 20th-century industrial age, when capital was the scarce resource and vertical, hierarchical structures were the key to efficient performance.

The key ingredients of progressive corporate strategy in the 21st century are “one-company” governance structures, knowledge and talent markets, and organizational designs intended to maximize collaboration among the talented workers who create today’s wealth.

Stress, Stress & More Stress

One primary concern regarding change is the stress it imposes on those undergoing the change. Managers, because they have obligations to their staff, not only have to deal with change as employees but also need to carry some of the concerns of their staffs. In the case of downsizing, the stress levels can be extremely high, because the manager is charged with conveying very upsetting information.
Stress is part of the job, but in times of change, it is critical that you recognize that it may cause you to act in ways that are less effective than usual. As with anything connected with change, the major concern is not short term but long term. If your stress levels result in marked loss of effectiveness, the risk is that a vicious cycle will be set up, where ineffective leadership results in creating more long term problems, which increases your stress, which reduces your effectiveness even more.

The Responsive Manager/Leader

The Responsiveness Paradigm outlined elsewhere in this newsletter is applicable at a number of levels. For example, it applies to organizations in general, and the ability of the organization to respond to the needs of customers, staff and other stakeholders (eg. politicians, etc). It applies to non-supervisory staff, and their ability to respond to the needs of their managers, customers and co-workers. This month we are going to look at responsiveness as it applied to managers, leaders and/or supervisors.

Influence Of The Responsive Manager

The responsive manager tends to succeed by building bonds of respect and trust with those around him/her. Staff respond positively to responsive managers; they work more diligently, work to help the manager and the organization succeed, and will go the extra mile when necessary. That is because responsive managers act consistent with the principle that their jobs are to help their staff do their jobs. So, a basic inter-dependence emerges based on behaviours that show concern, respect and trust.