It has become fashionable for experts to draw up models and templates for creating a successful organisation. While there is a plethora of books on the subject, there are two ways of addressing the issue. The first is to look at successful organisations and draw lessons from what was done. This goes in terms of lessons that can be learnt from such an experience. The other is to construct a model that outlines what all has to be done to be successful. Sandeep Chennakeshu, in his book titled Your Company is Your Castle, follows the second route. The title is eloquent as he draws analogies from the architectural parallel. This is a novel way of presentation of ideas.
The author has eight structural elements that are part of this framework or rather castle-building exercise. The analogy of a castle holds for a company because like any monument it has to be defended for all times. Therefore, there has to be care taken when defining the goals as well as processes. The latter are more important because organisations run not because of goals but the routes that are taken to continue generating value on a sustainable basis. A long-term view needs to be taken which also means that one has to anticipate change and react in an appropriate manner.
More importantly, one has to be constantly in touch with the real world and not get carried away when times are good. For this, the basic principles of castle building are important.
One of the elements pertain to culture of the organisation. This is critical because at the end of the day companies are run by people and they need to be aligned with the goals and strategies being adopted. Similarly, certain functions like customer service, for example, are part of culture where the standards have to be set and adhered to and monitored for any deviations. While sales is an immediate target, to maintain the momentum the culture of dealing with customers is critical.
This is where leadership is important because in all organisations this quality can make a difference. This person not only drives strategy after it is approved by the board, but also gets the right people to execute the plan. This is probably the distinguishing factor across companies in an industry. The top person may have the ideas that are right but executing could fail if the right people are not there. Leadership can fail if it is not able to execute the plan, which is why people are important. This is where organisations which reward meritocracy tend to be better than those which don’t.
Another part of the castle that he calls the ‘walls’ is strategy. Here the decisions taken have a bearing on another structure, which is the ‘foundation’ that he refers to for ‘growing cash’. Looking at the foundation, which is probably most important when there are multitude shareholders, is profit generation. To ensure that profits are generated it is essential that revenue has to grow and as profit is the difference between revenue and expenses, the latter needs to be optimised. These may sound rudimentary but once companies slip up here, there is only a downward descent. This is why the walls have to be strong.
This means having the right strategy in place that will have bearing on the investments made as cash is scarce. The need to study the market and competition is also important because all strategies are formulated keeping in mind the outside environment. Therefore, one has to understand changing market trends. In this context, it is necessary to keep differentiating products or services as the case may be. At times companies may just attain a high slack quotient when they feel they are comfortably placed and immune to such changes. Accepting changing market trends is also important or else one can be left with out-of-date products.
Here he uses some imagery again, calling the arsenal of products the ‘East Tower’. There is a to-follow-list which the author draws up. This has to be an integral part of strategy that will drive the quest to make profits. In a similar fashion, he draws up other templates that have to be adhered to when creating this castle. He calls the ‘castle roof’ the domain of the stakeholders. This is the ultimate entity to which all managements are answerable. Hence the model has to be robust and immune to shocks.
The author has evidently gotten all the pieces together for a successful organisation to not just survive but also grow over a long period of time. Stakeholders look for four tenets to be followed all the time. The first is sound financial health to be maintained for all time. The second is revealed execution capabilities that ensure that the first is achieved and not just based on promises. The third is being innovative as this gives comfort that the company is evolving with times. Last is constant engagement with the stakeholders. This is why the investor calls made by companies every quarter are important because there is a two-way conversation.
He ends on more a personal philosophical note where he talks of seven beliefs that individuals need to have in this journey. This can be more in the realm of self-help books. He talks of being curious, dreaming with conviction and leaving the comfort zone. These are always challenges for individuals who cannot really start off their careers keeping such tenets in mind. The same holds for dealing with adversity where reaction is more spontaneous than mature as one rarely has the level of maturity to deal with such setbacks even at the age of 60, when one is a CEO.
The book is full of advice and also philosophical at times. But several examples make it readable. The question is that when all the parts of the castle make business sense, why do companies not follow them? Clearly, most CEOs go by instinct rather than the book.
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