The 10-P framework for globalization symbolizes the aspirations and needs of employees and organizations in the new competitive settings. It comes a long way from the initial impetus provided to the subject by Michael Porter in his book Competitive Strategy (1980), and goes beyond his purely industrial organization perspective. The framework operationalizes the 4-Diamonds for a nation’s competitive advantage of Porter. The 10-P framework integrates theory of strategic management and practice of business policy and provides a structure for the practicing manager to evaluate competitiveness at regular intervals.
The 10-P framework explores a fine `fit’ between the soft and hard strategic choices. It seeks a self-motivated network of stakeholders who are able to self-actualize a high sense of satisfaction, self-worth, liberty and freedom in business organizational settings.
True to the vision of a world-class organization, the central fulcrum in the framework is a PEOPLE-ORIENTATION – both inside and outside the corporation. This approach presents a humane perspective to issues at hand and differentiates between a `satisfying’ approach and an `excellent’ approach. It realizes and reflects that modern economies and corporations thrive mainly on innovation in all respects of value-augmentation-creative thinking at the design stage, ensuring production at highest efficiency and minimum costs, and satisfying the customer in a most effective manner.
The rest of the 9-Ps are levered in a highly interactive mode with People and amongst themselves. A change in any of the Ps affects performance of the other levers and therefore the final outcome for the organization. The 9-Ps are: Purpose, Perspective, Positioning, Plans (and policies), Partnerships, Products, Productivity, Politics, and Performance (and profits). The 10-P framework is appropriate for auditing strategic competitiveness, a monitoring emerging opportunities and threats, devising a value-based action-plan and executing it in the context of globalizing organizations.
Organization is people: An organization is created by the people, it exists for the people, and continuously draws sanction from the people. From this humane perspective, the primary objective of an organization can only be to add value to the society by serving it with value augmented products. The people-focus implies that the primary purpose of an organization can never be to provide employment at the expense of customers or society in general-a drill routinely exercised in Third World countries, and especially in India by many public sector and government organizations during the height of regulated economic regimentation. Similarly, retrenchment of people (hire and fire) cannot be accepted as a no-holds-barred practice for maximizing organizational profits! Retrenchment is a myopic and non-creative response to the problem of cutting costs and improving productivity. The corporate manager in the new paradigm has the unenviable role of maximizing `people orientation’ as well as `task orientation’. In these emerging work values, each employee is empowered to take decisions under certain norms. For instance, under Just-in-Time culture, an ordinary shop-floor worker is empowered to stop the whole machine assembly line if he finds that the product quality has gone out of control.
Organizational purpose as used in strategy-making sense is interchangeable with mission, vision, core competence, strategic intent, and basic values. It is important not merely to produce and sell products, but to produce and sell quality products, without fail. Not only from the production side, but also from the distribution side, we must constantly review whether our customers are satisfied with our products and whether customers are satisfied with our service. We must be perfect in satisfying. Organizational purpose must be explicitly stated. An organization must enjoy social sanction by serving socially useful purpose. Purposeless organizations are liable to drift and become marginal in the course of time. A sense of purpose is important for other organizational reasons, including facilitating inter personal processes and formalization of relationships (the other characteristic of an organization). Globalization connotes dynamic human will for achieving larger social and human purposes.
Strategic management begins with a statement of clear perspective. Top-management perspective is not a bunch of hunches. Organizational perspective must be well-researched. In facing global competitive challenges, it is important that the firm possesses a global perspective, even though it might be competing and managing locally. Failure to develop an in-depth perspective results in missed opportunities. Polemical debates arise from lack of appreciation of multiple perspectives.
Some of the techniques for improving the perspective horizon and there by quality of decisions are: scenario-building, process consultation, in-house training programmes, job rotation, and cross-functional teams.
An important dimension in achieving world-class competitiveness relates to the positioning of the firm. This dimension has high interface with organizational purpose, planning and perspective, resulting in definitional confusion. Positioning of the firm is distinct from positioning of products in marketing. The term has remained mostly confined to abstract strategic management literature despite its obvious criticality to practice. An important dimension in strategy is to understand `where am I’, `why am I here’, `where do I want to be’, and `how do I reach there’. In other words, the strategic manager has to ascertain the existing position and future positioning of the firm. Positioning means the place in the industry which the firm would like to occupy in relation to its competitors from the perspective of the consumers. Does the firm compete on lowest-cost, mass-production, high-technology basis? Does it differentiate itself from others on the basis of superior and value-augmented products, or on high-ethic practices, employee policies, etc., which are unique in the industry? Once `positioning’ choice is made, many process and product related decisions flow.
The partnership approach suggests a sense of belief and trust in other person’s capabilities and skills. It opens the doors for people to look beyond the usual routined responses, and create an environment where people voluntarily come up with innovative solutions for seemingly intractable problems. Partnership is a ‘perspective’ as well as a ‘position’. Partnership has softer (intangible) and harder (tangible) dimensions. Going beyond the softer side of partnership-approach, development of long-term partners for weak competitors is essential for deriving sustainable advantages. Suppliers, bankers and other investors, employees, government, technology collaborators, transporters, and distributors do have a stake in the firm’s well-being (and vice versa) and therefore have to be treated as key resources. In this approach, the perspective is that there can be no profits at the expense of any resource.
Global competitiveness is largely an expression of firm’s relative productive efficiency. A country’s prosperity is indicated by the amount of value-added goods that are produced/made available for consumption. Labor productivity is generally the accepted measure of value addition with the assumption that the same individual would have different capacities in different technological environments and organizational contexts. A key managerial decision that vitally effects the firm’s overall productivity pertains to capital intensity of the project in terms of investments in land, building and machinery. This decision also affects leverage position of firms.
Leverages are of two types: the first, called the degree of operating leverage (DOL), is the firm’s commitment to fixed overhead expenses irrespective of business done. The second, degree of financial leverage (DFL), is the way the firm’s funds are distributed, for example, the debt-equity ratio. The degree of combined leverage (DCL) of the firm is the product of its DOL and DFL.
A product is a package of information which the customer interprets in his mind while going through the process of consumption. Therefore, the concept of any product must start with the customer in mind, and end with his total satisfaction. In this definition all products are ultimately services converted into information. Beyond quality, products must offer customers a satisfaction to a level where they become the best salesmen for the company forever.
PLANS (AND POLICIES)
The thrust of the 10-P framework is to integrate people’s personal growth and development with organizational objectives through excellent all-round quality. The premise is that the tasks are executed with finesse by satisfied and motivated people. To ensure that people remain aligned with the common sense of purpose and do not drift, the organization must have a clear, documented statement of objectives and broad plans. A firm’s `plan’ must contain a clear mission statement on the way it proposes to serve the customer.