Wednesday, April 27, 2016

ITC's Effective Vision is the Starting Point of its Success

After reading this week’s case about ITC’s Dairy Development Initiative, I was deeply impressed. As someone who has seen the market place for local farmers and dairy farmers in India, it dawned on me how incredibly difficult it must have been for ITC to bring individual farmers on board, and organize them into individual user groups. As in most rural areas around the world, processes and beliefs are usually passed down generationally and people are hesitant towards change. Social interaction in rural India is generally dictated by a stigma of “caste” and place in society. There are many rural development programs in India, but most are oriented towards providing infrastructure or bringing jobs to the community. It would be very difficult to bring farmers together if they were not already used to interacting with one another.

That being said, ITC still managed to produce multiple successful integrated value chains while creating shared value. It may be because understanding these nuances is addressed by ITC’s core competencies. It takes pride in understanding stakeholders and developing relationships. As we have learned, when processes and competencies are aligned towards an effective vision, successful results are produced.

It was apparent from the case that ITC has a clear vision. Management reiterated that creating shared value was of priority. This reminded me of an article we studied earlier, “Building Your Company’s Vision”. In this article, Collins and Porras defined that an effective vision consists of a core ideology and an envisioned future. ITC demonstrated that national development and societal value creation were part of its core ideology when Deveshwar chose to develop India’s pulpwood plantations instead of importing pulp.  It was cheaper to import pulp and the Bhadrachalam plant was not doing well, but ITC still stuck to its CSV approach.

In further evaluating ITC’s unique core ideology, I tried to identify its core values and core purpose. According to the case, its core values center around putting the “Country before Corporation and the Institution before the Individual”. This is supported by ITC’s commitment towards national growth and being an “Indian company”.  Its core purpose would be to create sustenance in India’s communities through educating and training self-sufficient user groups, and conserving natural resources. A second core purpose would be inclusive growth. It is clear that leveraging synergies between social initiatives and their products contributed to ITC’s success. According to ITC’s website, it identifies a “Triple Bottom Line”: Corporate Social Responsibility, Environment and Health Safety, and Promotion of Thought Leadership in Sustainability.

To complete ITC’s vision analysis, BHAGs and a picture describing the achievement of those BHAGs would need to be defined. Deveshwar expressed in his chairman’s address at the 104th AGM, that ITC envisions a future in which Indian products “compete and win” within the country and abroad. He speaks about the importance of world-class Indian products and securing their dominance in the global marketplace. This is a legitimate BHAG. It would take decades, and may or may not be achieved.

In conclusion, the success of ITC’s CSV approach surprised me. It managed to bring together fragmented markets and even works to replenish natural resources. After evaluating ITC’s unique vision, I am convinced that their effective vision is the starting point of their success.


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