Written by Madan Sabnavis
It has become fashionable for experts to create models and templates for successful organizations. There are many books on this subject, but there are two ways to approach this problem. The first is to look at successful organizations and draw lessons from them. This is also true in terms of the lessons that can be learned from such experiences. The other is to build a model that outlines what you must do to be successful. Sandeep Chennakesh takes the second route in his book titled Your Company is Your Castle. This title is eloquent because he draws analogies from architectural parallels. This is a new way to express ideas.
The author has eight structural elements that are part of this framework, or castle-building process. The castle analogy also applies to businesses because, like any monument, it must be constantly defended. Therefore, care must be taken in defining goals as well as processes. The latter is more important. Because organizations are not run for goals, but for the routes taken to continue creating value on a sustainable basis. You need to take a long-term perspective. This also means that you need to anticipate change and respond in an appropriate manner.
More importantly, stay in touch with the real world and avoid getting carried away when things are going well. To this end, the basic principles of castle construction are important.
One of the factors relates to the culture of the organization. This is very important because, after all, companies are run by people and must be aligned with the goals and strategies adopted. Similarly, certain functions, for example customer service, are part of a culture where standards need to be set and adhered to, and deviations monitored. While sales are the immediate goal, a customer-responsive culture is key to maintaining momentum.
This is where leadership becomes important. Because this quality can make a difference in any organization. This person will not only drive the strategy after board approval, but also ensure the right people are in place to execute the plan. This is perhaps the distinguishing factor across companies within the industry. Those at the top may have the right idea, but if the right people aren’t there, execution can fail. People are important because if leadership fails to execute the plan, it can fail. This is where organizations that reward meritocracy tend to outperform those that don’t.
It is strategic that he calls another part of the castle “the wall”. Decisions made here affect another structure, what he calls the “basis” for “growing cash.” The most important thing when there are many shareholders is profit generation. To ensure profit generation, it is essential that revenue grows, and since profit is the difference between revenue and expenses, the latter must be optimized. These may sound elementary, but if a company slips up here, it’s only going downhill. That’s why the walls must be strong.
This means developing appropriate strategies to influence investments made in the face of cash scarcity. The need to study the market and competition is also important, as all strategies are developed with the external environment in mind. Therefore, you need to understand changing market trends. In some cases, it may be necessary to differentiate products and services. Companies may also achieve high slack indices when they feel comfortable and immune to such changes. It is also important to embrace changing market trends, otherwise you may be left with outdated products.
Again he uses several images and calls his product arsenal “East Tower”. There is a follow list created by the author. This should be an integral part of your profit-seeking strategy. In a similar way he creates other templates that must be adhered to when creating this castle. He refers to the “castle roof” as the stakeholder realm. This is the ultimate responsibility of all business owners. Therefore, the model must be robust and shock-resistant.
The author has clearly brought together all the elements that successful organizations not only survive, but thrive over time. Stakeholders are looking for four principles to follow at all times. The first is to maintain financial health at all times. The second is the ability to execute to ensure that the first is achieved, rather than simply being based on promises. Third, be innovative. This gives you peace of mind that your company is evolving with the times. The last step is continued engagement with stakeholders. That’s why a company’s quarterly investor conference call is so important because it’s a two-way conversation.
He concludes on a personal philosophical note with seven beliefs that individuals need to hold on this journey. This may be more in the realm of self-help books. He talks about being curious, dreaming with conviction, and leaving your comfort zone. These are always challenges for those who cannot actually start their careers with these tenets in mind. The same goes for dealing with adversity, where there is more of a spontaneous response than a mature one. Even a 60-year-old CEO is rarely mature enough to handle such adversity.
This book is full of advice and even philosophical at times. But some examples would make it easier to read. The question is, if every part of the castle makes business sense, why don’t companies follow it? Obviously, most CEOs act on their intuition rather than following a book.
The author is Chief Economist of Bank of Baroda.