Tuesday, September 23, 2008

The Third Generation Company:


Years ago when I was working for reliance I read a book written by John Scully. The book was called Odyssey: From Pepsi to Apple. John Scully has written about his personal journey from being the youngest vice president of Pepsi to becoming the CEO of Apple. He describes the Cola wars, how team meetings and board meetings were conducted in Pepsi, The stress that he had to handle there and how eventually Pepsi got a better market share than Coca Cola based on these policies. Further down the book he describes his meetings with Steve jobs and Steve Wozniak and his experiences in Apple as the company’s CEO.

But the point which did capture my imagination was his description of First generation, Second generation and third generation companies. The first generation companies are as per him like the Coal mines which operated during the late ninetieth century. Places where the employees receive little respect and even little salary. Where the employees are treated more like animals of burden. A second generation company was something like Pepsi Co. Here the employees were treated with a respect and given good salaries, but were considered nothing more than accessories for the growth of the organization. The personal growth of the employee and the growth of the Organization were two different things. It was a place where the manager’s cabin was made of glass, but the company policies were hardly transparent. Employees got to know management decisions at the last minute and were expected to wear a tie in the office. But then in the 1970’s a new generation of companies rose in the US. This group he put under the third generation companies.

A third generation company has more open poliies and treat their employees like assets rather than accessories. Give them the freedom to learn and work the way they wanted. Allow them to have plans for their own betterment and assist them for it. Unlike a 2G organization which had many filters were each filter could say no to a particular decision, here decisions could be taken up by the individual. Of course the individual has more responsibilities, but he is also given the authority to execute them well. Apple as per him belonged to this category. It was an Organization were many employees spoke freely about dreams of opening their own companies without fear and resignations were never a problem for managers. As the company’s growth and success was linked to the individuals growth Apple became a fortune 500 company in a very short period.

And my mind I wondered during that time as to what it would be like to work in an organization like that. I was employed at Reliance during that time. A company which could hardly be called a Second generation Organization. It was more like a 1.5G organization. I felt stagnated and my growth was impeded. Bootlickers and Sycophants were in abundance. I was fortunate that my Boss much better than the rest of the senior management but none the less I felt frustrated by my work. But luck has its way. Based on the experience and knowledge I gathered at Reliance I got a job in ECI. Now I know at least how it is to work for an 2.5G organization. Just like Apple, ECI India’s growth has also been phenomenal. From a meager 5 million dollars in 2002 to 125 Million in 2008. It has grown more than 20 times in 6 years. In ECI individuals do feel free to take decisions and growth is not impeded by concepts like work experience and seniority. Everyone knows their role in the organization and aspires to do better. Employees are taken for annual meetings (or should I say annual holidays) to exotic places and given five star treatment. Team bonding is very high and discussions are always fruitful.

This radical shift in they way people are managed was probably always inevitable. The world is becoming a more and more competitive place and for a organization to succeed the employees have a huge role to play. Second generation concepts no longer hold good if a organization wants to grow at a rapid pace. Individual cannot be treated as mere accessories. My only hope is that Indian comapnies would learn from organizations like Apple or Google or for that matter ECI before it is too late.

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