A letter by Indra Nooyi

Dear Fellow Associates,

October 22nd was a difficult day for me. This was the infamous Friday when my beloved baseball team, the New York Yankees, were eliminated from the playoffs by the Texas Rangers. You see, all of us NY Yankees fans just take it for granted that our team will be in the World Series, and maybe even win it again.

But alas, it was not meant to be. The Texas Rangers outscored, out fielded, out maneuvered and simply out-played the Yankees throughout the entire American League Championship Series this October. They won the best of seven games 4 to 2.

I was fortunate enough to attend the fourth game of the playoffs at Yankee Stadium here in New York. The weather was beautiful. The view from my seat fantastic. The outcome, not as good. The Yankees lost that game 10-3.
For the three and a half hours I was at the game, I watched the teams and plays very closely. The Rangers had a spring in their step. They looked hungry. They were on the attack. They hustled. They made the impossible plays.

The Yankees on the other hand played their normal, winning game. Quiet, confident, no fireworks, no surprises. In fact, their play was so predictable it looked boring.

On reflection, there are many lessons I took away from the Championship Series:

1. Just because you are the leader in your field, you cannot afford to become complacent.
2. The attacker coming up from second position has a natural advantage. They have nothing to lose, and everything to gain.
3. If your opposition is comprised of players from a different generation (age-wise), anticipating how they think and what they will do is much more of a challenge.
4. Experience alone is not enough. To win, you need agility, flexibility, adaptability.
5. Be prepared to upgrade your talent and playbook constantly if you want to play in the big leagues and win. Upgrade talent and your playbook when the going is good.
6. Just because you have a winning season does not mean you can win during the championships. Competition can come from unexpected sources.
7. Don’t take any competitor for granted. Don’t assume you can beat someone in a championship game just because you beat them in the regular series. Always study competition with a fresh pair of eyes.
8. Throwing money at an issue (players in this case) does not win you a trophy. Intelligence, shrewdness and a new strategy will trump cold hard cash.

I could go on and on. But I hope you get the point: just as I took lessons from this baseball series for the running of PepsiCo, I hope you too draw lessons from your daily experiences, hobbies and family life. Sarah Caldwell, the American opera director, once said, “Learn everything you can, anytime you can, from anyone you can - there will always come a time when you will be grateful you did.”

And while I am in despair over the Yankees' loss, I am grateful for the lesson it taught me.? Every interaction, every event, every piece of information we come across can hold a valuable lesson for each one of us. We just have to keep our eyes, ears and minds open to it.

My congratulations to the Texas Rangers!

Smart Hiring

In this world where there is a dearth of skilled labour, employee attrition rates are rising high and training costs are burgeoning, retaining skilled workers at an optimum cost is a challenge for the Human Resource (HR) managers. As per a research, it costs an average of two and a half times an individual's monthly salary to replace an employee who doesn't work out. The companies know that they have to get their hiring right.

In mid-2000s, Gitanjali Group had made an epochal effort of hiring a bunch of differently-abled people to be a part of the unit. It was not really a choice, but they had little options. As a part of their pilot project, eight disabled people were identified with the help of local NGOs to work at their newly established Hyderabad unit. Says Madhusudhan Reddy, vice-president, HR, Gitanjali Gems, Hyderabad, "We found out that the output of these people was as good as any able-bodied worker." What's more, "people with disabilities are loyal and resilient," adds Mehul Choksi, the company’s chairman and managing director, "and the training and hiring costs pay for themselves quickly as their attrition rate is lower than the other sections." In 2008, Mehul Choksi laid the foundation of Saksham, a CSR initiative, which focused on the empowerment of People with Disabilities (PWD’s) through training and employment. The goal of the project is to create conditions for their rehabilitation and integration into society and also helps the company to meet its business objectives.

Not that it was a unique strategy; it's just that no one at the company had thought about it seriously before. Jewellery making is an art that requires extreme precision but does not require a lot of moving around. The company realised that while vision impairment would be a serious handicap for such work, people with disabilities of lower limbs or other problems would have no trouble getting the work done. There was no pre-requisite in terms of educational qualifications - the company decided it was going to provide skill training over 90 days to take care of all the needs of the job. The age requirement for the trainees was set between 18 and 30 years. Besides a monthly stipend of Rs 1,500, the company offered them food, accommodation and travel expenses during the training period. The trainees were also taken through sessions on personality development.

Interestingly, there is hardly any difference in the cost of training of an able-bodied worker and a differently-abled worker. While Gitanjali spends around Rs 12,000 on a differently-abled candidate, the same comes to Rs 10,000 for an able-bodied candidate. As attrition comes down, they are able to save up to 20 per cent on the training cost. After completion of the training period, both sets of workers start with a monthly salary of between Rs 4,500 and Rs 6,000 per month (excluding provident fund). The incentive-based pay structure allows an employee to earn more on meeting a daily target of 18 pieces of jewellery.

While the upfront investment was a little higher, the extra investment on differently-abled people has fostered great loyalty. Consider this. The Hyderabad factory alone has 1,050 able-bodied and 250 differently-abled people. While the attrition rate in Gitanjali's manufacturing units is about 15 per cent for able-bodied workers, it is less than 2 per cent for differently-abled workers at the Hyderabad unit. Disabled workers tend to be less distracted and stay more focused on the job.

The spirit of competition is soaring at the Hyderabad facility of Gitanjali. "When differently-abled workers become star performers it creates a positive pressure on every worker in the factory to do better," adds Reddy. Gitanjali plans to increase the number of disabled workers at its various facilities to 1,000 in the next five years. "The biggest benefit of an integrated workplace is that all employees now enjoy a more compassionate workplace," says Choksi.

They have an interesting story to tell and we have a reason to learn how little changes can translate into significant steps towards smart management. Is that what we call Out-of-the-box thinking?

What makes Walmart so efficient?

Walmart is serving its customers more than 200 million times per week at more than 11,000 retail units in 27 countries. Without fail, how does it manage to serve those various customers?

Well, it uses a unique technology – RFID for its supply chain management. The change came when they replaced the ubiquitous Universal Product Code (UPC) bar code by smart labels, also called Radio Frequency Identification (RFID) tags. RFID tags are intelligent bar codes that can talk to a networked system to track every product that one puts in their shopping cart.

Every employee has an access to the required information regarding the inventory levels of all the products in the center. They make 2 scans- one for identifying the pallet, and other to identify the location from where the stock had to be picked up. RFID tags are intelligent bar codes that can talk to a networked system to track every product that one puts in their shopping cart. Bar codes & RFID are used to label different products, shelves & bins in the center. The hand held computers guide employee to the location of the specific product. The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server. The computers also enable the packaging department to get accurate information such as storage, packaging & shipping, thus saving time in unnecessary paperwork. It also enable supervisors to monitor their employees closely in order to guide them and give directions. This enables Wal-Mart to satisfy customer needs quickly and improve level of efficiency of distribution center management operations.

Battery powered tags may operate at hundreds of meters. Unlike a bar code, the tag does not necessarily need to be within line of sight of the reader, and may be embedded in the tracked object. RFID tags are used in many industries. The RFID tag attached to an automobile during production can be used to track its progress through the assembly line. Pharmaceuticals can be tracked through warehouses. Livestock and pets may have tags injected, allowing positive identification of the animal. On off-shore oil and gas platforms, RFID tags are worn by personnel as a safety measure, allowing them to be located 24 hours a day and to be quickly found in emergencies.

While our government is still grappling with various issues of Walmart’s entry into the country, we must look into the infrastructural, technological and product benefits that they can bring along with them, things which are essential for the country’s development, things which we are not even aware of.

Have a look at the video I have attached here to get a better insight to the RFID technology.