The Acceleration Trap: HBR Case Study

Harvard Business Review has an interesting research; which talks about how companies burn out and how to avoid this trap.

Faced with intense market pressure, corporations often take on more than what they can handle; they increase the number, and speed up the activities, raise performance and goals, shorten innovation cycles and introduce new management techniques or organization structures.

For a while they might succeed brilliantly; but too often the CEO tries to make this furious pace the new normal. What began as an exceptional burst of achievement becomes chronic overloading. Not only does the frenetic pace sap employee motivation but often companies strategic focus is scattered in various directions, which can confuse the customers and threaten the brand.

Leaders frequently try to fight the symptoms instead of the cause. Interpreting employees lack of motivation as laziness and or unjustified protest. Thus normally they increase the pressure there by worsening the situation, which results in to resignation and thus entire enterprise collapses.

This research has done study of around 92 companies over the period of time and it concludes that corporation can’t figure out when exactly it is hitting them. However, the good news is, there are some companies who have successfully countered this and came out much stronger brands.

There are two reasons why it caught my attentions;

One; I have seen a case study in order to show performance the entire organization was restructured in such a way, which was not making sense and the direction was to have a scalable delivery model in place. But the strategy never asked or answered about the growth as where it is coming from. On top of it, the strategic vision confused customers, employees and partners alike. I can co-relate this. Focus got distracted so much that the quality got suffered and top management had no clue as what is happening.

Second, more important, we are in the phase of growth and the learning for me as Business Head is to make sure we don’t get in to this trap. Though I don’t see any visible signs as of today, but concisely we need to avoid this trap.

We need to learn, if it is our mistake or someone else’s.

Head Over Heart: Forties deal with Parkway Hospitals

Beginning of this week saw a more matured decision from India Inc, where Singh brothers of Forties, booked the profit in Parkway and exited the race for controlling stake in Parkway hospitals in Singapore.

This decision is very significant. When Forties took 25% control in March, Malvinder Singh announced that he would relocate to Singapore to run Parkway, leaving Forties operation to younger brother Shivinder Singh. Forties even drafted the strategy of roping in the low cost offshore operations to reduce the cost of service.

This clearly shows how serious Singh brothers were with this deal and as per the press reports they were in advanced discussions with banks to raise the funds. To return back to India, in less than 5 months would be a huge face loss, if you have to consider business circles.

But, by agreeing to sell their stake to Khazanah, the Malaysian wealth fund, for profit of $116 million, the brothers have shown that they are practical businessmen, their head is their heart. There are no sentiments in the business!

Singh brothers have, in the past, have shown that they think ahead of time and think through head. When they decided to sell Ranbaxy, the family business, it was India’s largest, with interesting range of challenges on patent in the west. But, pharmaceuticals had become the business of big bucks and soon they started realizing this fact and opted for a partner for research and development. One thing led to another and the partner Daiichi Sankyo ultimately bought Ranbaxy.

Anyway, one question still needs answer is, why should a fund be interested in running hospital chains? It would have been better bet for Fortis to acquire it and run it, given Singh brother’s experience in India.

This is the mystery.