Wednesday, Sep 24, 2014

How to Manage Adversity: Account of a reformist in the public sector

V Krishnamurthy, the Indian public sector’s turnaround man V Krishnamurthy, the Indian public sector’s turnaround man
Posted: June 28, 2014 2:52 am | Updated: June 30, 2014 11:52 am

By: Pradeep K Deb

At The Helm: A Memoir V. Krishnamurthy
Publisher: Collins Business
Rs: INR 599

V Krishnamurthy was the turnaround specialist, who took over giant organisations like Bharat Heavy Electricals Ltd (BHEL) and Steel Authority of India Limited (SAIL) when they were in deep crisis and made them profitable. The systemic changes that he brought about lasted well beyond his time.

Maruti, which he built from scratch, is still the biggest player in the Indian automobile firmament. Krishnamurthy has also served as secretary to the government, as a member of the Planning Commission and the National Advisory Council (NAC), and in many other capacities. (When he wrote this book he was chairman, National Manufacturing Competitiveness Council, or NMCC). Culminating with the Padma Vibhushan, he has won innumerable awards and citations in India and overseas. Truly, in his own words, “A life well lived.”

At The Helm is not an autobiography. It is an account of what Krishnamurthy did in his professional capacity, heading public sector units. Former president APJ Abdul Kalam had pointed out to him that there is very little documentation of outstanding work done in India. And so this book emerged, documenting the efforts put in during Krishnamurthy’s time at the helm.

We learn how he restructured the management in BHEL to bring about greater cohesiveness and synergy among the units, something that he was to repeat in SAIL many years later. We learn of his determination to stay independent and take his own decisions; of his passion for quality control, and to “put people first”; of his firm belief in putting the needs of the customer first and even change management structures to meet customer demands; and of innumerable other steps, big and small, that he took to turn around BHEL and SAIL.

We read about the initial days at Maruti, a job thrust upon him by the late Indira Gandhi, and how, from the selection of the technology partner (Suzuki Motors), an organisation committed to customer satisfaction was created in record time exceeding even Japanese expectations. This book chroniclesthe achievements of a brilliant manager working under very adverse conditions.

And yet, after reading about the efforts of Krishnamurthy, and without the slightest intention of demeaning them, we are left disturbed. Everything that was done in these organisations are textbook reforms. The attitudinal changes Krishnamurthy sought to bring about are recognised by management experts as fundamental to the success of any enterprise. That Krishnamurthy had to put in so much effort to secure fundamental changes makes us wonder if spending so much money on the public sector was worth it.

Of course, Krishnamurthy strenuously argues for the public sector, almost advocating a return to the Nehruvian model of the public sector at the commanding heights of the economy. He argues against disinvestment, including that of Maruti, which he believes was done for a pittance. But his experience is perhaps the greatest argument for a market-driven economy. Even with Krishnamurthy at the helm, BHEL and SAIL only succeeded because of enormous government protection. For years, BHEL was the only supplier to the Indian power industry, leading to endemic delays and cost escalation in setting up power projects.

Even if it is now a professionally managed unit, was the cost to the economy worth it? Was it worth restricting the entry of other players (including foreign investors) into the manufacture of steel, only to protect SAIL? Even Tata Steel was not allowed to expand for a very long time. Was it necessary for the government to set up Maruti? Were the artificial barriers created through restricting licenses and allowing differential rates of taxes for Maruti cars justifiable in the larger economic context? Could the same expansion of the automobile sector have been achieved by licensing more private players? These nagging questions remain, despite Krishnamurthy’s justifications.

Krishnamurthy seems to have prospered only when the Gandhi family was in power and could provide unstinting backing. At all other times, including the term of PV Narasimha Rao, he was less successful. Surprisingly, throughout, he talks of the support he had from the bureaucracy — other public sector managers speak of a different experience. Perhaps it was because, as one finance secretary put it, he delivered what he promised while others did not.

Another aspect that comes out starkly is that his stints in government were never as productive as those at the helm of public sector units. His stints as industries secretary and member, Planning Commission, are less remarkable. He has been
with the NAC and the NMCC for nearly a decade, but the results are hardly as visible as his successes in the public sector.

This is a book worth reading, if only to find out how a legendary manager went about his job and how, working in hidebound organisations, he put people first. You might contest Krishnamurthy’s economic philosophy, but you cannot dispute his management skills.

The reviewer is an IAS officer who has been CEO of a PSU and was instrumental in its turnaround

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