Emerging Markets Business Summer 2016 | Page 58

INTEGRATE & SUCCESSFULLY CONTROL YOUR VALUE CHAIN: SOBHA’S SECRET TO QUALITY The Lessons beyond Real Estate: •  Successful integration depends on a carefully crafted model that considers long-term market needs and provides flexible ways of meeting them. •  Integration requires long-term commitment and willingness to subsidize inefficiencies of smaller companies within a group. 4.  HAVE THE RIGHT MANAGEMENT IN PLACE. “We have been able to institutionalize the integrated process within Sobha, so we can remain ahead in the future. For this, we bring the best talent from all over the world to our companies with people coming from Australia, Germany, Italy, Singapore,” Ravi Menon, Chairman, Sobha India. “With a significant proportion of our employees being under the age of 40, there is a tremendous opportunity for young talent to be groomed into future leaders. These are the individuals who carry forward our obsession with quality, and who ultimately help shape the future direction of Sobha’s growth,” says Raj Chinai. Importantly, for corporations across industries, management responsibilities must be clearly defined to avoid misunder‑ standing. For instance, the requirements and responsibilities within Sobha’s furniture company are vastly different to those of the group’s construction business. However, while respon‑ sibilities may differ, it is also vital that management teams are united by a common vision and shared goals if they are to col‑ laborate on projects effectively. In Sobha’s case, established leadership in its more mature companies leads to minimal reporting requirements and macrolevel coordination, while in its newer and smaller companies, key executives provide the necessary support and management until the right team is established. As Sobha’s companies evolve, additional leadership responsibilities are introduced. The Lessons Beyond Real Estate: •  Placing the right leader at the helm of each business unit is essential, not just to the success of a single subsidiary, but to that of the entire corporation. •  Defining management responsibilities to reflect the varying needs of each unit is important, but so too is ensuring that they are united by a common vision. 5.  EMPOWER YOUR PEOPLE. “Human beings are comparable to batteries: you have to charge them. Training has to charge all employees of the company, not only the top managers.” “I tell my people: there is always a challenge, always look for that challenge. In Sobha there is so much learning happening on a daily basis,” says PNC Menon. Identifying the right employees is integral to maintaining a culture that focuses on exceptional quality. Yet, achieving this is the group’s most significant long-term challenge. Developing a team of skilled employees that innovates and strives to improve business practices is a goal that has to be continuously pursued. 56  Emerging Markets Business  Summer 2016 • Issue No. 1 First, regardless of management processes, efficiency gains rely on selecting and empowering the right employees. Even in the case of the famed Toyota Production System—a framework designed to conserve resources by eliminating waste—the Japanese automaker reached the conclusion that reducing employees did not necessarily result in improved efficiencies. On the contrary, empowering employees made for a stronger production system. In addition to empowering existing employees, companies should engage with universities and technical centers that open pathways to skilled employees and encourage the growth of talent. Training employees through regular programs is also an important step. These programs must address every employee, from the foremen to top management—a practice that Sobha has carried out for a quarter-century. The Lessons beyond Real Estate: •  Constant training across the pyramid of the organization keeps staff at the forefront of their disciplines and energized with the new ideas and tools required for success. •  Efficiency gains do not rely on the development of new systems, but on selecting and empowering the right people. 6.  UNDERSTAND YOUR MARKETS. “The number one factor we compete on is location. Then it’s quality. We are fortunate to have acquired land parcels in extremely desirable locations. Our next step is to design and develop products that justify the value of those locations,” says Siddharth Vaikunta. “In India, the greatest challenge developers are facing is that customers demand everything,” says JC Sharma, Vice Chairman and Managing Director, Sobha India. The first step in understanding a given market is to identify the core project drivers and value levers. From there, the priority is to secure the best possible location. For Sobha, a truly significant location allows the developer to introduce exceptional products that justify the value placed on the site. In turn, maximizing the value of any given location depends on a variety of parameters. Instead of offering a single product, such as office space or housing, Sobha develops mixed-use projects and diversifies its offerings, placing equal importance on design, programming and branding. By understanding, and in many cases forecasting the market, it introduces additional products that attract a wider spectrum of customers. Excellent design is especially important in parts of the world where social interaction happens primarily indoors, and where people want to own products that offer a high standard of comfort to their guests. In this regard, Indian and Middle Eastern customers can be demanding, with requests ranging from additional parking spaces, to landscaped areas within buildings. To meet these demands, the industry is expanding to cater to cultural and traditional needs and growing expectations. The Lessons Beyond Real Estate: •  Integration will fail if a group’s combined entities do not understand and meet the market needs. •  Location is key. Understanding the market enables you to identify the best possible place to do business, whatever the industry.