Organizational transformations are heartbreaking and painful. There is no shortcut. Don’t believe the many books advocating how to achieve transformational change painlessly. In fact, the leadership team must voluntarily seek pain to drive its transformation. Several years ago, when I was writing my first book, I was looking for a metaphor for organizational transformation. I learned a lot from my periodic visits to the Nilgiris and found a metaphor for nature: butterflies are good ecological indicators.
In 1986, a scientist and conservationist called Larsen Torben conducted a survey of butterflies in the Nilgiris. His office bears his name. He detected the existence of 301 varieties of butterflies in the Nilgiris. In 2018, Tamil Nadu Forest Department conducted the next survey and added three new varieties. Scientific American (August 10, 2012) graphically explained what happens to a starving caterpillar, which has gorged itself on nutrients – much like a start-up – when it begins to turn into a butterfly.
First, the voraciously overfed caterpillar digests its own body into an enzyme-rich soup. Second, while this harrowing digestive process leaves behind what looks like an amorphous mess, it’s not quite the case. Certain groups of cells survive because they contain the genetic code to regrow the body parts necessary for later mature life. These cells are called imaginal discs. Third, these imaginal discs help the animal rebuild wings and muscles to break through the cocoon and emerge as a breathtakingly beautiful butterfly.
Apply these lessons from nature to business. The equivalent of imaginary records is the embedded organizational culture – the unique characteristics of mindset, behaviors and actions that define the very being of the organization and must be preserved. How many start-ups think about the imaginary discs that they must embark in their start-up? How many voluntarily submit to a process of self-digestion after gorging on growth for a long time? Very few, I think, and that’s why the survival rate for start-ups is so low.
Think of the adult businesses for whom such “creative destruction” is essential to survive and thrive in the long term. Dramatic transformations from The Gap (records to clothes), Netflix (streaming DVD rentals), Tiffany (stationery to jewelry) are worth reading. IBM underwent a harrowing process of transformation in the 1990s. It’s so well described in Lou Gerstner’s book Who Says Elephants Can’t Dance. IBM survived and thrived. Apple did in 1997. However, Kodak, Enron and Lehman Brothers did not. These are part of the museum archives.
Jamsetji Tata started his business as a trading and textile business. For growth, it expanded into steel and hydropower generation. For culture, it has incorporated social responsibility mindset and behavior (imaginal discs) by endowing, among others, the Indian Institute of Science. His statement is eponymous: “In a free enterprise, the community is not just another stakeholder in the enterprise, but, in fact, the very purpose of its existence.
His successor, Dorabji, fulfilled his father’s unfulfilled ambitions in steel and hydropower production before diversifying the business into cement, construction, banking, insurance and related fields. The imaginary drives of corporate philanthropy have been bolstered by investments in, among other things, cancer research and a hospital.
Future successors, including JRD Tata, expanded the business into aviation, chemicals, truck manufacturing and thermal power. Throughout the century, textiles declined in importance and shifted from trade to manufacturing. Entry into the financial services business has been overtaken by regulatory events. The imaginary drives of social commitment have been reinforced by the long-term modification of the statutes of the companies, and the establishment of TIFR, TISS and the NCPA.
In recent years, the group has abandoned textiles, cement, soaps and a few others. The company has globalized the business and entered futuristic sectors like information technology, communications and passenger cars. The company’s imaginary drives have been bolstered by increased funds for the social agenda of Tata Trusts, the promotion of a national chain of cancer hospitals and the impactful deployment of the company’s CSR funds.
While these developments may read like a list of accomplishments, they are just story points. I can say from experience that the process was slow and painful. The inevitable shrinking of the portfolio was heartbreaking indeed, and the new portfolio was born out of entrepreneurial moves. Throughout the century and beyond, imaginary records helped promote the company, reinforcing its distinctive culture of community orientation.
No transformation can be painless.
Author and economic commentator
(The author was Director, Tata Sons and Vice Chairman, Hindustan Unilever)