Indian PSUs, still far from a digital deluge in Technology. 06-01

Indian PSUs, still far from a digital deluge in Technology

Public sector undertakings (PSUs) are the nation builders of India. Over the past couple of decades, they’ve catapulted the country onto the world stage in sectors from energy and finance to agriculture and transportation. Now they face a new challenge: digital, a force that’s impacting PSUs from the corner office to the factory floor. New digitally savvy rivals are gaining on traditional turf. The question becomes: Are PSUs ready to build the workforce of the future?

Maharatna. Navratna. Miniratna. The jewels of India’s public sector undertakings continue to shape the competitive landscape of India, contributing an impressive 25 percent of the overall gross domestic product.1 They represent some of the most trusted brands for consumers, and coveted employers for workers. Like other leading companies around the world, PSUs are investing in technology. Particularly digital innovation that will put them ahead of competitors, making them more agile and competitive.

But to date, one critical element of PSUs’ digital strategy has been overlooked: the workforce. It’s as if the prevailing thought is, “We’ll invest in the technology and our people will be digital by default.” But gaining the agility required to compete in the age of disruption goes beyond systems. It requires a deep shift for PSUs: in leadership, recruitment and organization. The current PSU culture is not well suited to such sweeping changes. Accenture Strategy research has identified the top ten attributes that correlate to successful culture change.

PSUs are on par with non-PSUs in only half of those attributes.2 PSUs rank in the bottom quartile for the remaining attributes, including talent management, adaptability and confronting conflict. In addition, current PSU employees are more skeptical about their organization’s readiness to leverage digital advances. Fewer than half (47 percent) of PSU employees, versus 56 percent of non-PSU employees, expect to derive productivity improvements or drive innovation from digital transformation.3 It’s a challenging starting point, but the direction is clear. PSUs in India need to embrace digital or witness their long-held national dominance quickly evaporate.

Accenture Strategy research has identified the top ten attributes that correlate to successful culture change. PSUs are on par with non-PSUs in only half of those attributes.

Digital has upended many traditional business models, philosophies and processes. One of those concerns the idea that leadership is practiced only at the top levels of the organization, by leaders who advanced through the ranks of an organization based largely on seniority. It was a system that worked well in an environment that was much less volatile and more predictable. Where skills like organization and delegation were paramount. While those skills are still important, there are other, more critical ones in the digital age.

 Leaders today need to thrive at building crossorganization and industry connections that lead to new sources of innovation. They need to influence all levels of the organization but without the authoritarian approach that marks traditional management. They also need to grasp new technologies and their impact on growth and gain the ability to experiment quickly and move on if the desired results aren’t achieved. PSUs need to open their organizations to feedback and ideas that lead to innovation. And flatten hierarchies, cutting out the layers and processes that impede agility. An influx of young talent signals a truth about PSUs in the digital age: old school leaders cannot lead digital transformation alone. They need to build mentors throughout the organization. And push out decision making to the edges by developing a pool of leaders with high digital quotient. Leading at the edge

The requirements of digital—to tap sources of innovation across functional boundaries and industries—means a change in the way PSUs are managed. Digital is horizontal. Traditional is vertical. While PSUs have invested in new systems and hardware to connect their operations, they have overlooked a critical element: the workforce. 73 percent of PSU employees recognize that digital will seriously transform the nature of their work over the next three years.4 They won’t be “digital by default.” Employers must rise to the challenge and change their current talent pools. Retraining them to handle new challenges and attracting a much more diverse new team. Let’s take energy as an example, an industry that is increasingly deregulated and privatized. As the industry shifts to a profit-driven business model, companies will need to recruit new skills like analytics, and sophisticated customer relationship capabilities. This will require expanding beyond the usual degrees in fields like IT and engineering, to backgrounds in statistics and internet marketing. In some instances, PSUs may want to tap into non-traditional sources of specialized skills such as on-line talent exchanges, or third-party partnerships.

Your workforce is not “digital by default”

73 percent of PSU employees recognize that digital will seriously transform the nature of their work over the next three years.

4 | Indian PSUs

To keep the sparkle in Maharatna, Navratna and Miniratna there are three things PSUs can do now to lead in digital: Define a disruptive business model Because of their traditional reach, and long-established marketplace presence, it used to be that no other rival could match the strength of a PSU. But digital allows startups to forgo brick and mortar infrastructure and rapidly achieve new levels of scale unheard of even a handful of years ago. Consider the Bank of India and ICICI Bank. In under two decades time, ICICI Bank has catapulted from startup status to competing neckand-neck with the PSU.5 How? By early on developing an aggressive online strategy that includes virtual banking and next generation mobile banking apps, among other digital moves. The message: it’s time for PSUs to get serious about digital investment. They need to take an ‘equity investor’ approach and incubate digital plays. That requires redesigning the organization for speed to leap ahead of competition instead of treating digital as adjunct to their current strategies. Leaders should learn from juniors With the long tradition of command-and-control leadership style, this flies in the face of management wisdom for most PSUs. But to survive in a digital world, senior leadership needs to turn to younger counterparts to gain a digital edge. This requires “reverse mentoring” where senior leaders learn from their younger counterparts. This learning goes beyond the basic skills like using apps and internet devices to learning about the internet of things, leveraging social networks for employee / customer engagement, and seeing opportunities where earlier none were apparent. PSUs are taking heed: in the general insurance sector, a raft of young officers were fast-tracked to the position of general manager in companies including National Insurance, New India Assurance and United India, among others. As a result, PSUs are starting to infuse new blood into their highest echelons.6 It’s a shot across the bows to PSUs that aren’t moving far, or fast enough.

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Rewrite the value proposition to create competitive advantage To attract and retain the kind of talent digital requires, PSUs need to craft value propositions that include benefits to society as well as opportunities for personal growth. Previous generations of Indians were focused on climbing the socioeconomic ladder of success. Now that many have “arrived,” the focus of newer generations is giving back. PSUs, by the nature of their services, are about contributing to the good of the country. Companies need only to underscore that in their value propositions to attract new pools of talent looking for reward through social contribution. PSUs also need to emulate the offerings of their non-PSU competitors. Consider National Thermal Power Corporation.7 This PSU launched an innovative plan to attract and retain young talent at their often remote locations. They developed the concept of “PUPS,” which stands for providing urban facilities at projects. Included in the new facilities are cafes, libraries, Wi-Fi hotspots and other trappings of city living.

Brilliance of the jewels

Thanks to Accenture for the content.