Leveraging Technical Ladder for Improving Business Productivity

Innovation: next step for “Brand India” in IT

According to the NASSCOM report Strategic Review 2006: The IT Industry in India, “India brand” of IT industry is evolving from “Low cost, high quality” to include “Information security and corporate governance” and “Innovation”. And that is not surprising. Look at the business productivity of Indian IT players vis-à-vis global players. IBM Global Services had per person revenue of $270K in 2005, Accenture had $170K while for Indian players, big and small, per person productivity was anywhere between $20K to $45K. A low-cost player with $30K per person revenue may still be reasonably profitable. However, with rising costs of attracting and retaining talent, low-cost alone is not going to give us sustainable competitive advantage over longer period. Azim Premji, in an interview with Ravi Aron of Knowledge@Wharton (April 2006), mentioned the challenge as “To be able to build strong annuity based businesses and at the same time build other businesses that will establish differentiators”. He further mentions that for Indian IT industry to move up the value chain it should take on:

• Turnkey project responsibility (instead of doing part of the project)
• Execution of more complex projects
• Creation of intellectual property (IPRs)
• Development of technology products
• High end value adding work

To take on more complex projects mentioned above, Indian IT companies have recognized the importance of creating a talent pool with deep technical knowledge.  They have started initiatives like putting competency frameworks in place, some of them have started their own R&D Labs and created centers of excellence, while some others have started active collaboration with premier research institutes in India and abroad. However, India has a long way to go before it can compete with Israel or, for that matter; Taiwan as far as business productivity is concerned. It is inevitable that we need to put structures, processes and cultural enablers in place for creating and leveraging pool of technical talent to increase business productivity.

What is a technical ladder?

A ladder; which is fairly well understood and in practice; is the managerial ladder. An example of growth path associated with a managerial ladder is: Project lead, Manager, Director and Vice President. Typically an executive in managerial ladder is directly responsible for deliveries, or revenue target or a profit target (P&L). These executives also manage large teams and are decision makers. For services industry a Project lead manages anywhere between 5 to 15 people while a Director manages 200 to 500 people. Managing teams of this size is a critical competency.

Parallel to the managerial ladder, organizations define a technical ladder which has a path like: Member Technical Staff (MTS), Senior MTS, Distinguished MTS and Fellow. Almost all the large technology organizations like GE, Sun Microsystems, IBM, TI, Intel, AT&T have technical ladder defined for several decades[1]. In fact, a survey of how dual-ladder is functioning in the US was published in 1985 where 1500 scientists and engineers were covered (It is titled “The dual-ladder: motivational solution or managerial delusion?” by Thomas Allen and Ralf Katz). In 2003, IBM Global Services had 0.03% Fellows (56 out of a workforce of 175,000) and 0.1% Distinguished members (296 out of 175,000). TI has 0.6% Fellows and TI ensures that it does not have more than 1% Fellows. Typically organization treats people in tech-ladder on par with their counterparts in managerial ladder in terms of salary, bonus and stock plans.

Challenges with the tech-ladders in India

India faces peculiar challenges in making tech-ladder work. Two most critical challenges, in my opinion, are:

1.   Ensuring strategic alignment: Indian IT industry has grown primarily by helping their customers or parent organizations in doing relatively low-end work. All the architects and product managers (key technical decision makers) are either in customer organization or with their parent organizations (in case of captive centers of MNCs)[2]. Job of Indian engineers is to execute as per the given spec and they have been doing that diligently. Hence, there is no need for Indian companies to have an architect or a senior architect. What will she do after all? This is slowly changing as Indian engineers are demonstrating capabilities of doing complex work and also developing frameworks or products. However, it has not been easy to define roles and responsibilities of architects every quarter or six months and ensure that it is aligned with business needs, both strategic and tactical.

2.   Mindset: Another important aspect of technical ladder is that engineers simply don’t have faith that organization   believes in making it work. There are very few role models. Many of the architects or senior architects are cynical. Whom should I talk to discuss my idea? Whom should I talk to when the delivery manager says she does not have time to incorporate my architectural suggestion? There is nothing much we have that will motivate a 5 year old senior engineer to aspire to become a distinguished staff, leave aside becoming a Fellow.

Key success factors in making it work

I believe that we need to focus on following 2 key areas if we really want to create technical pool that helps us improve business productivity.

1.   Strategy aligned value creation: We need to create roles which create value for today’s business operations like delivery and business acquisition as well as do strategic value creation by doing prototyping or creating IPRs for tomorrow’s businesses. For example, we need architects who can study defect closure data and come up with ways to improve the way we do impact analysis. Similarly, we need engineers who can help business acquisition teams in writing better proposals or in articulating our capabilities to customers to acquire new business. We need people who will write white papers that can be published on the extra-net and help us enhance our brand. What is important is to create a critical mass of such people who can talk to each other and also act as role models to the younger engineers.

One may ask what is value creation which is not aligned to the strategy? An example would be to write papers or patents in areas which are not related to either today’s business or tomorrow’s business. Well, does strategy always happen by design or does it also emerge from what value organizational resources can create? I am sure one can give plenty of examples either way. However, for a database focused organization, it is a long shot to leverage innovation in VLSI design. And most of the Indian organizations don’t have pockets deep enough to let an MTS member go loose. Even a research lab like Microsoft Research has business alignment as one of the three Key Performance Ares (KPAs) for every staff member (research productivity and initiative being the other two).

 2.  Technical mentoring: A person in the tech-ladder is more likely to be an individual contributor (in some cases, she might have a few reportees). However, since the delivery manager or business acquisition manager is going to take calls on whether to take a suggestion forward, there are times when tech-ladder guy is going to be feeling low. We need to build a support structure such that she can go to someone, explain her frustrations and move on. Balancing between meeting the needs of the operations managers and that of a CTO is tricky and a solid mentoring program is going to be critical.