11M CALCUTTA

Editorial Consulting
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emn

Dear Readers,

The September'10 issue of Joka Strategist, brought out by Consulting Club, 11M Calcutta brings a
gamut of interesting and insightful articles from the consulting world. Our Feb'10 issue was very well
appreciated by the readers and we thank them for their valuable feedback. Our latest issue features
articles from professional experts in companies such as Baring Private Equity Partners and Wipro
Technologies. Also, the CEO of Zenesys Consulting shares his views on Online Consulting with the
editorial team. We also have some of the best articles from the student community at 11M Calcutta,
along with articles from the leading business schools in India like Indian School of Business (ISB) and
Management Development Institute (MDI).

Our cover story deals with the pertinent issue of rising social networking among the youth today. It
explores the rise of social networking websites compared to the traditional email usage and how the
trend of emailing has started to diminish in the world today.

In the magazine, an industry expert offers his views on the impact of the Direct Taxes Code Bill on the
IT and ITES sectors in India. Another of the articles emphasizes on the need of sustained innovation
for long term viability of businesses and presents a framework for an organization to create, promote
and sustain an innovative ecosystem. We also take a deep look at Green Investments and the trends
in shifting towards cleaner technologies. In addition to this, pharmaceutical industry in India has
been analyzed, with an insight into the strategies being implemented by the leading players to face
the upcoming challenges in this industry. Also, key recommendations that can be used as guidelines
by NGOs in designing their organizational structure have been covered in another article.

This edition brings a complex Crossword involving some of the major terms used in consulting
jargon, which promises to be a treat for all the crossword enthusiasts and those looking forward to a
career in consulting. We also bring the latest edition of Consultoon, a light take on today's consulting
practices.

We would love to hear back from you, your suggestions and feedback on this issue of Joka Strategist.
Please feel free to write to us at consults@email.iimcal.ac.in.
Happy Reading!

Abishek Chopra

Editor-in-Chief, Joka Strategist

EDITORIAL TEAM

President Sumit Singla Cartoonist Monalisa Majumdar

Editor in Chief Abishek Chopra Designers Arindham Biswas

Chaithanya Padi
Advisory Editor Pankaj Chatrath
 September 2010

123 458
Con nts
159 4.89 127
147 127 786
159 489
2 7~

Green Investment

6 Cover Story: Social Media Vs. Email

Debate about social networks replacing email services

11 Impact of DTC on ITjITes

Analysis of Direct Taxes Code and its impact on IT/ITes firms

18 Green Investment
Shift to Cleaner Technologies for safer environment as well as
cost efficiency

24 Organization Structure & HR Policy

About Key recommendations to NGOs for designing their orga-
nizational structure & HR policies
Joka Strategist
Joka Strategist is the magazine
34 Indian Phramaceutical Industry
published by Consulting Gub of Status and preview of major players in the domestic pharma
market
Indian Institute of Management
Calcutta once every four months.
38 Strategic Framework for Sustained
Innovation
Guidelines for new entities with aim to develop innova-
tion as their core competence

43 Interview with CEO

Founder of ZENeSYS, Saibal Sen talks about potential of
Online Consulting and its affect on the industry

48 Consultoon

49 Crossword-Consulting Terminologies

Social Media vs. e-Mail
Author
Tauqueer Ali
Consultant with Business Advisory
Services, Wipro Technologies
Abstract
The debate about social networks replacing
email services has been going on for several
years. New research and a deeper look at the
history of social networks reveal that email
services are indeed losing ground. In this
article, the author looks at various emerging
trends and shares his point of view about the
future of email services in a world dominated by
social networks.
Can social networks replace email?
There‟s a lot of debate going on about how
and when social networks will replace
emails. On one hand, the proponents of the
idea claim that we should look at teenagers
(who are shunning emails in favour of
social networks) to see what future has in
store for us, whereas on the other hand, the
staunch supporters of email services refuse
to believe that something as important as
emails could be replaced with something
else.
Apparently, the odds seem to be in favour
of social networks taking over a very large
6
COVER STORY
share of email services. However, the
reasons put forward by many evangelists of
the idea are diluted by subtle sales pitches
and tend to miss the bigger picture. For
instance, Sheryl Sandberg, the COO of
Facebook, says that what teenagers do
today becomes norm for the rest of us
tomorrow. This is not entirely true and
Sheryl was severely criticized for making
such a far-fetched contention based on
unwarranted assumptions.
Interestingly, a simple answer to the debate
can be found in the history of social
networks. Clay Shirky in his prophetic book
"Here Comes Everybody" mentions that the
origin of the entire social computing
phenomenon can be traced back to the day
when email services started including a
seemingly insignificant feature called
"Reply All". In fact, all social computing can
be crudely viewed as a super "Reply All"
feature on your email account. And since,
email is the genesis of social computing, it's
probably logical to expect that better and
more evolved email services (social
 COVER STORY
networks) will eventually replace Figure 1
traditional email services.
Widespread usage of social web has created
a new breed of customers; they are
demanding radical levels of transparency in
both private and public sector firms. It‟s
easy to see that traditional email services
were never designed for such levels of
openness and thus, will slowly but
inevitably give way to open social
networks. More and more private firms are
engaging customers on open social
channels, not only for creating buzz but
also for customer services. Companies are
realizing that delivering customer services
on an open channel creates radical levels of
The adoption of social media tools in
accountability among employees and
company intranets have been shown to
enhances trust among customers. Public
decrease email and telephone
sector agencies are not too far behind
communications by a sizable extent, as
either. For instance, government agencies in
much as 30% or more. This suggests that
the US (as mandated by open and
social tools offer real benefits that can‟t be
transparent government directive) have
achieved by telephone and email
already started open communications with
communication. In fact, our habitual usage
citizens; a large chunk of government
of email for collaboration could be quite a
communications (G2G, G2C and C2C) that
hindrance to our productivity (Figure 1). As
traditionally happened on emails is being
organizations learn to use social tools for
ported to open social networks.
collaborative pursuits, the usage of emails
Over the years, many market research firms for such purposes is bound to take a back
and independent analysts have published seat.
reports that provide ample evidence to
According to a study done in 2005, almost
prove that social networks are indeed
half of Web-using teenagers prefer to chat
replacing emails. For instance, Gartner's
with friends via instant messaging rather
social software prediction for this year says
than e-mail. Another research by Morgan
- "By 2014, social networking services will
Stanley and comSource (Figure 2)
replace e-mail as the primary vehicle for
found that the number of social networking
interpersonal communications for 20
users surpassed email users in September
percent of business users."
2009 whereas overall social networking

7

usage surpassed email usage way back in
November 2007; Facebook has replaced
email as the most popular way to stay in
touch with friends online.
Figure 2
Unsurprisingly, college students rarely use
email and when they do it‟s to
communicate with teachers, parents and
others who may be less connected to them
in social networks. It‟s pretty clear that we
are slowly starving email, demoting it to a
shorter and short list of appropriate uses.
Eventually, it will fall off the edge, like fax
is now that we can scan and send
attachments more easily than using
dedicated fax machines.
Lastly, going back to the “Reply All”
analogy; if something is good enough to be
shared with several people by clicking
"Reply All" button; it's probably good
enough to be shared with a larger audience
as well. Using emails to share such things is
tantamount to burying them and rendering
them useless for future. Perhaps the right
place for such things is a wiki or a blog
where they can be preserved as
organizational social capital.
8
COVER STORY
Besides the obvious reasons such as
simplicity and utility, the unprecedented
success of email can be largely attributed to
its open, decentralized and interoperable
standard. Social networks could be
considered as a viable alternative to email
only if their evolution follows a similar
path of open, standard and interoperable
standard.
In conclusion, it‟d be foolish to believe that
email services will cease to exist any time
soon; they are extremely useful for
asynchronous, private one-to-one
interactions. However, with radical levels
of transparency being demanded by people
and the imperative to store social capital for
posterity, the usage of email as a key
communication channel will certainly be
questioned in time to come.
References:
 Gartner‟s Five Social Software
Predictions for 2010 and Beyond -
http://bit.ly/alpH2e
 The Death of E-Mail (Slate Magazine) -
http://bit.ly/lC5ye
 Email Sharing‟s Not Dead Yet
(Mashable) - http://bit.ly/1Fi75d
 The End Of Email - Celebrating The
Imminent Death (SocialMediaToday) -
http://bit.ly/dbHVtE
 COVER STORY
About the Author:

Tauqueer Ali is a consultant with Business

Advisory Services, Wipro Technologies. He
has over nine years of experience in IT
services industry and has worked on
projects across Banking, Pharmaceutical
and Retail domains. He‟s an IIM Calcutta
alumnus (PGPEX 3rd Batch) and can be
reached at tali62@gmail.com. Tauqueer is
passionate about interactive digital
marketing and eCommerce; he currently
maintains two blogs on related topics –
http://digimantic.blogspot.com/ and
http://experienceweb.wordpress.com.

9
 DTC

A Study on the impact of DTC

on IT/ITES industry in India

Author
Nitin Gupta
Member of Fund administration, Portfolio
Value addition and Transacting team at
Baring Private Equity Partners

Abstract

In an attempt to simplify the direct tax

provisions, the Government released the Direct
Taxes Code Bill, 2009 („DTC‟) in August 2009
for public comments. The provisions of the
DTC, especially those relating to Minimum
Alternate Tax („MAT‟) on gross assets,
withdrawal of tax holiday to SEZ units, etc. met
with vociferous protests from various
stakeholders. Several representations were
made, based on which, the Government
identified some major issues and recently
released the Revised Discussion Paper („DP‟) on
DTC. An analysis of the proposals in the DTC
read with the revised DP that are likely to
impact the Information Technology („IT‟) /
Information Technology Enabled Services
(„ITES‟) sectors is set out below.
KEY PROPOSALS AND THEIR IMPACT
Tax holiday to SEZ units and SEZ
developers
Current situation:
Under the existing provisions of the
Income-tax Act, 1961 („the Act‟), tax holiday
is available to IT/ITES units operating from
Software Technology Parks („STP‟), Export
Oriented Units („EOUs‟) and Special
Economic Zones („SEZ‟). While the tax
holiday in respect of the STP and EOU
units has a sunset clause of 31 March 2011,
SEZ units can avail of the tax exemption for
15 years (which may extend beyond 31

11

March 2011) subject to fulfilment of certain
conditions. Further, even SEZ developers
are eligible to claim tax exemption in
respect of their profits for a period of 10
years.
DTC Proposals:
The DTC proposals sought to end the
profit-linked incentive regime. Whilst the
DTC provided for grandfathering of tax
holiday available to SEZ developers for the
unexpired period, conspicuous by its
absence was the grandfathering of tax
holiday for “existing” SEZ units. However,
the revised DP now provides for
grandfathering of tax holiday for existing
SEZ units for the unexpired period.
Nonetheless, as a matter of policy it has
been decided that no further profit linked
incentives are to be provided to newly
established SEZ units post enactment of
DTC.
Comments:
IT/ITES sector has been a key driver to
India‟s economic growth trajectory. The tax
incentives offered to companies operating
in this sector provided them with an edge
in today‟s fiercely competitive market. As
such, withdrawal of these tax incentives to
new SEZ units under the DTC would prove
counterproductive The SEZ policy laid
down by the Government along with the
tax incentives offered to developers as well
as unit holders has largely contributed to
the success of SEZs in India. In such a
scenario, absence of profit-linked
deductions to new SEZ units would be a
retrograde step for the development of
12
DTC
SEZs in India, given that most of the SEZ
unit holders in SEZ notified zones are
IT/ITES companies. India continues to be a
major attraction as global outsourcing
destination. Tax incentives to IT/ITES
companies have been a major driver for
this. Withdrawal of tax incentives will
impinge on the competitive edge of India‟s
IT/ITES sector. Accordingly, the
Government should be requested to
continue with the incentives for SEZ
especially in the IT/ITES space.
Minimum Alternate Tax (MAT)
Current situation:
In light of the tax holiday available to the
IT/ITES sector, MAT is a key provision
impacting the sector. Currently, MAT is
applicable at the rate of 18% of the book-
profits computed after making specified
adjustments to the net profit of the
company. Further, the companies are
allowed to carry forward the MAT credit
(which is the excess of MAT tax paid over
the tax computed in accordance with
normal corporate tax provisions) to future
years. Presently, MAT provisions are not
applicable to SEZ units and SEZ
developers.
DTC Proposals:
Under DTC, read with the recent DP, MAT
is to be paid with reference to the book
profits of the company. However, no
specific rate and computation methodology
has been proposed.

Comments:
Given that the DTC intends to do away
with most exemptions, the industry lobbied
hard for a complete roll back of the MAT
provisions since there would not be any
substantial timing or permanent differences
between taxable income and book profits
on account of lack of tax exemptions.
Whilst MAT continues to be retained in the
DTC, one may seek solace in the fact that
the revised DP has reinstated it as a tax on
book profits as against the earlier proposal
of draconian levy of MAT based on the
gross assets of the company. Whilst this is a
welcome change, there are several other
issues concerning MAT that remain to be
addressed viz. grandfathering of existing
MAT credit and eligibility to avail MAT
credit in future years. As was provided
under the Act, SEZ units and SEZ
developers should not be made liable to
MAT.
Test of Residency
Current Situation:
Under the provisions of the Act, a company
is resident in India in any previous year, if
the control and management of its affairs is
situated „wholly‟ in India.
DTC Proposals:
Under DTC, it is proposed to shift the test
of residence of a company from „control
and management‟ to „place of effective
management‟ in line with International
practice. Accordingly, a company
incorporated outside India will be resident
13
DTC
in India, if its „place of effective
management‟ is situated in India.
Place of effective management of the
company would mean:
 Place where the board of directors or its
executive directors make their decisions
 In cases where the board of directors
routinely approve the commercial and
strategic decisions made by the
executive directors or officers of the
company, the place where such
executive directors or officers of the
company perform their functions.
Comments:
Although the concept of „place of effective
management‟ proposed under DTC is in
line with international practice, it is
important that this provision is
administered in a fair and pragmatic
manner. The new residency definition
could impact businesses where key
decisions are taken by Indian
management/executives and merely
adopted by the board overseas. Typically,
this would be the case in multinational
groups having management structures
where the global/regional CEOs, CFOs are
based in India.
Treaty Override
Current Situation:
Under the Act, the provisions of the tax
treaties prevail over the domestic law to the
extent they are more beneficial to the
taxpayer.

DTC Proposals:
The initial draft of the DTC provided that in
the case of a conflict between the provisions
of a treaty and the provisions of the Code,
the one that is later in point of time shall
prevail. This led to apprehensions whether
the proposal would lead to treaty override
and render the existing treaties otiose. The
DP seeks to restore the beneficial treatment
between the Act and the Tax Treaty except
in specified cases-
 where GAAR is invoked or
 when CFC provisions are invoked or
 when Branch Profits Tax is levied
Comments:
The specific draft provisions of DTC are
still awaited and would need a careful
examination to evaluate their impact on
cross-border transactions.
Controlled Foreign Corporation
(CFC) Provisions
Current Situation:
Under the Act, there are no CFC provisions.
DTC Proposals:
The introduction of the CFC provisions has
come as a major surprise for India Inc. The
CFC provisions have been brought in as an
anti-avoidance measure. Under this,
passive income earned by a foreign
company controlled directly or indirectly
by a resident in India, and where such
income is not distributed to the
shareholders, resulting in deferral of taxes
14
DTC
shall be deemed to have been distributed to
the shareholders in India.
Comments:
CFC provisions are likely to bring
additional complexity in the tax legislation
and could significantly impact Indian
companies having outbound investment
structures. Specifically, CFC provisions
could create cash flow problems for Indian
companies since they would be subject to
tax without corresponding receipt of actual
dividends. This would necessitate a review
of the existing overseas investment
structure.
Exempt-Exempt-Taxable (EET) vs.
Exempt-Exempt-Exempt (EEE)
Regime for Saving Schemes
Current Situation:
Under the Act, long-term saving schemes
like Government Provident Fund (GPF),
Recognized Provident Fund (RPF), Public
Provident Fund (PPF), Life Insurance etc.
are covered under the EEE method,
wherein the contributions,
accumulations/accretions thereto and the
withdrawals are exempt from tax.
DTC Proposals:
EEE method of taxation is to continue for
specified Provident Funds and for the
Pension scheme administered by Pension
Fund Regulatory and Development
Authority. Investments in approved pure
life insurance products and annuity
schemes will also be covered under EEE

method. It has also been clarified that
investments made before the
commencement of the DTC in instruments
which enjoy EEE method under the existing
Act, would continue to enjoy EEE method
for the full duration of the instruments.
Potential Implications / Key Issues:
The continuation of EEE regime is a
welcome step as it will provide a tax free
lump sum amount to individuals to meet
their post-retirement financial requirements
and would provide a significant benefit to
the people driven IT/ITES space.
Transfer Pricing
Current Situation:
Currently, there are no provisions under
the Act in respect of Advance Pricing
Arrangement („APA‟).
DTC Proposals:
It is proposed to introduce APA for upfront
determination of pricing methodology of an
international transaction.
Comments:
Whilst the scheme specifying the procedure
of APA has not yet been released, one hope
that the same will find place in the final
draft and shall be in line with the
international practice.
Leased Assets
Current Situation:
15
DTC
In the absence of any specific provision
under the Act, there is a lack of clarity
surrounding the treatment of assets
obtained on finance lease by IT/ITES
entities. In certain cases, companies are
facing litigation from revenue authorities
on the question of whether they are eligible
to claim depreciation on such assets.
DTC Proposals:
Under DTC, the lessee would be treated as
the owner of assets obtained on finance
lease and therefore, eligible to claim
depreciation on the same.
Comments:
This is an important provision for the
companies in IT/ ITES space and it will
help to end the long drawn litigation
regarding „ownership‟ of such assets &
depreciation eligibility with the Revenue
authorities.
General Anti Avoidance Rule
(‘GAAR’)
Current Situation:
Under the Act, there are limited specific
anti-abuse provisions.
DTC Proposals:
The DTC proposed a GAAR. Under GAAR,
Revenue Authorities have sweeping
powers to, inter alia, disregard, combine or
re-characterize any part or whole of a
transaction/arrangement if the
transaction/arrangement was considered to
be an „impermissible avoidance
arrangement‟ For the above purpose,

„impermissible avoidance arrangement‟
means an arrangement, the main purpose
of which is to obtain tax benefit and, inter
alia, which lacks commercial substance or
which results in the abuse of the provisions
of the DTC. The DP provides that every
arrangement for tax mitigation would not
be classified as an „impermissible avoidance
arrangement‟. Further, an arrangement
would also have to satisfy any one of the
following conditions to qualify as an
„impermissible avoidance arrangement‟:
 It is not at arm‟s length
 It represents misuse or abuse of the
provisions of the DTC
 It lacks commercial substance
 It is carried out in a manner not
normally employed for bona fide
business purposes.
The DP also provides for safeguards for
preventing abuse of GAAR:
 The Central Board of Direct Taxes
(CBDT) will issue guidelines to provide
for the circumstances under which
GAAR may be invoked
 A threshold limit of the tax avoided
would be provided for invoking GAAR
 The forum of Dispute Resolution Panel
(DRP) would be available where GAAR
provisions are invoked.
Comments:
The guidelines to be issued by CBDT would
need careful examination to assess the
scope and impact of these provisions.
Further, whether reference to the DRP
against GAAR invocation is an appropriate
remedy, remains to be seen. It is also an
16
DTC
open question whether GAAR can be
invoked for transactions undertaken prior
to the enactment of DTC. A suitable
clarification may be provided for this
purpose.
Concluding Remarks:
While there were several other
representations to the Central Government
on the DTC, the DP only addresses above
major issues. I hope that the representations
find place in the revised draft of the DTC.
While the overall aim of DTC is to achieve
certainty of tax impact and simplicity in tax
administration, it could pose significant
challenges to the IT / ITES industry.
Specifically, DTC could have a significant
impact on the effective tax rate of these
companies, coupled with introduction of
complex provisions such as the CFC. Before
finalizing this important piece of
legislation, the revised DTC Bill is likely to
be placed before the Steering Committee
and I would be delighted to receive your
inputs and suggestions for making
representations for IT/ITES sector before
such Steering Committee.
About the Author:
Nitin Gupta is a member of Fund
administration, Portfolio Value addition
and Transacting team at Baring Private
Equity Partners. He is qualified chartered &
cost accountant and also holds a Bachelors
degree in commerce from Hansraj College,
Delhi University and can be reached at
nitin.gupta@bpepindia.com
 GREEN INVESTMENT

Green Investment

Author Abstract
Raghav Nanda
2nd yr PGPM MDI Gurgaon Knowing exactly what has been going around
the world no one is unaware of the fact that the
need to shift to clean technologies is stronger
than ever. Global warming and dilapidating
environmental conditions are not the only
reason for adapting cleaner technologies, with
the advanced technology clean energy
technologies are becoming cost efficient and
cheaper than their respective counterparts. The
so-called dream of low carbon economies needs
huge support not only in terms of money and
investment but also in terms of supporting
policy frameworks from government

18

What is green investment?
Investment in any business involved in
operations that helps in improving the
environment.
The present conditions present huge
investment opportunities for investors
especially PE/Venture funds provided they
understand the scale and nature of such
opportunities. This concept has already
been discussed at various global platforms
which prove that various global „powerful‟
bodies are working out ways to prevent the
climate. Recent Copenhagen meet could be
considered as one such example.
Road to clean energy technologies
We know the importance of fossil fuels
which have always been the major source
of energy and definitely will be the major
source in the near future. But the need for
renewable cost efficient energy resources
was always there and due to the improved
technologies and innovations it is now
19
GREEN INVESTMENT
possible for us to aim for clean energy
sectors.
Major sectors that can help us in creating a
low carbon economy are-
 Onshore Wind
 Offshore Wind
 Solar Photovoltaic
 Solar Thermal Electricity Generation
 Municipal Solid Waste-to-Energy
 Sugar-based Ethanol
 Cellulosic and Next Generation Bio-
fuels
 Geothermal Power
The Need and Scale of Investment
Some believe that the progress in this field
has started while some still firmly believe
that we are yet to take the first step.
Whatever the case may be all of them
believe that the need of investment is going
to increase year by year as it is going to be
the decisive factor for the growth of low
carbon economies. No-one really knows the
exact amount of investment needed to take
forward this concept. According to the 2008
estimate of the International Energy
Agency‟s World Energy Outlook (WEO) an
investment of US$550 billion needs to be
there in renewable energy on a yearly basis
if we are to limit concentrations to 450ppm
CO2.

While an increase in spending for global
energy infrastructure has been found but
the recent financial crisis has not left the
upcoming sector unaffected. Total
investment volume of clean energy in 2008
has been found to be less then what it was
in 2007. Though investment has reduced
marginally we are still far away in terms of
the attention this sector demands. The
credit to the sustained investment goes to
the venture capitalists and the private
equity investments which have taken
cleaner technologies as a challenge not only
to save planet but also to grow.
The recent economic downturn has shown
the importance of government and its
policy framework to the whole world and
the role they can play in supporting and
encouraging green investment can also not
be questioned. The fate of the companies
going for clean technologies also depends
on the support and facilitation they receive
from government of their respective
countries. It is time that governments and
other regulatory bodies understand the
need of the hour and support the process of
green investment without any loopholes.
The major challenge for the policy makers
is not only to maintain the momentum of
clean energy industry in this unfortunate
time of crisis but also to encourage
investment in future. We need to
understand the importance of every penny
we invest for a clean future. In this world of
innovation and continuous improvement
clean technologies are no exception, rather
than just using new technologies we should
build and develop technologies that could
20
GREEN INVESTMENT
be sustained in future. With the increase in
awareness and usage of clean energy
resources there soon will be period when
everyone will be trying to develop green
technologies and only those who will have
the potential of developing sustainable and
cost efficient technologies will be the
winners. The increasing awareness on this
issue and the response shown by various
global bodies, promises huge growth for
this industry.
It is important not only for developing
nations to include this industry in their
growth stories but also for others to lead
the way taking advantage of their being
already developed. Copenhagen summit
was one such opportunity to unite for the
cause. After eight draft texts and all-day
talks between 115 world leaders goals were
dropped and targets were lowered. This
failure of Copenhagen summit shows there
is still a need for leaders to understand the
urgent need for „rebuilding‟ environment
rather than to fight for their own interest
without considering the interest of billions
of people they represent.
India and green investment
India too has a great responsibility to
support green investment as it is one of the
few economies which were not hit badly by
financial crisis and is in position to
start/sustain green investments. With a
budget focused on fiscal consolidation,
inclusive growth and improving
investment environment India has already
started implementing its plan for fast
recovery.

We have already realized the impacts of
global warming and have taken initial steps
towards it. India has set a goal for slowing
the growth of its greenhouse gas emissions
planning to rein in its “carbon intensity” -
the amount of carbon dioxide (CO2) emitted
per unit of economic output -- by between
20 and 25 percent by 2020, from 2005 levels.
Out of India‟s total energy capacity of
150,000 MWs renewable energy accounts
for only 8 percent which not only shows the
need for investment but also a the
unrealized growth opportunities. The
Indian government aims to double the
green power generation and to take the
figure to 25,000 MWs in a period of four
years
India has already proposed a small tax on
production of coal to raise millions of
dollars for a National Clean Energy Fund
that could help the world's fourth biggest
polluter to shift to a low-carbon economy.
In last September India laid out new tariff
rules for electricity from renewable energy
21
GREEN INVESTMENT
sources, which promises to provide about
19 percent pre-tax return on any investment
made for renewable energy plants for an
initial period of at least 10 years. According
to Indian power officials, due to this very
step the benefits to be realized only from
thermal power plants, which actually
account for almost 60 percent of our total
generation, comes out to be 18.4 percent.
India also offers subsidized loans to all the
companies which are in the business of
building alternative energy power plants
and provides tax breaks and tariff subsidies
to encourage development of the renewable
industry.
Some of the examples of green investment
in India could be easily recollected from
past. A PE firm UTI Ventures had invested
around $8 million in Pesco Beam
Environmental Solutions, a firm involved in
waste-oil recycling and alternate energy
systems, Also IDFC Private Equity had
invested Rs. 35 crore in Ahmedabad-based
Doshion, a water management firm a
couple of years back. This shows that the
concept of green investment has already
been taken up by India long time back the
only challenge lien in sustaining the growth
of this sector and to encourage it. Similarly
another Venture capital funding of Rs 10
crore had been given by Sequoia capital to
Tribi Embedded Technologies .Nexus India
Capital invested Rs. 12 crores in Suminter
India Organics (exporters of organically
grown agro produce). Apart from these
investments from PE firms and venture
capitalists banks have also shown great
amount of interest in this field. Canara
 GREEN INVESTMENT
Bank had invested Rs. 4.5 crores in Natura Let’s go GREEN
Fibretech. Another major bank ICICI Bank
Considering the fact that the world has
invested Rs.5 crore in HMX Sumaya
been hit by the worst economic crisis ever
(environmentally-friendly HVAC
we must strengthen the fundamentals of
solutions). Also as a part of its plan,
economy so as to take the required path
Siemens has already allocated Rs 5bn to
towards recovery and sustainable growth
build wind turbines for the energy-hungry
which in turn is the major factor that affects
market, the first of which should be ready
green investment. We need to understand
by 2012. There is a great need of
that waiting for recovery and not taking
appreciating the efforts put in by such
required actions will make things worse.
companies towards this new beginning so
The coming few years are going to be
as to tell them that world cares about those
critical as it requires collaborative efforts
who care about the world.
from government, investors and other
As we all know India is one of the world's global regulatory bodies to start the
top producers of wind energy, and also transition towards a much greener world.
generates solar energy and power from Need is there and has already been felt it is
biomass, it is capable of doing what world just the support that is required.
expects it to do. Seeing the potential that
India has it has been estimated that India
will attract a whopping $21bn worth of References:
investment that would be focused on
enhancing activities supporting energy The Green Investing- a Report published
generation from renewable resources. by the World Economic Forum., January
2009

About the Author:

Raghav Nanda is a 2nd year PGPM student

at MDI, Gurgaon. He holds a Bachelors
degree in Computer Science and
Engineering from Panjab University,
Chandigarh and can be reached at
pg09raghav_n@mdi.ac.in

22
 ORG. STRUCTURE & HR POLICY
Organizational Structure & HR
Policy for Education Sector NGOs
in India
Author
Pratyush Sinha
Nitin Soni
2nd yr PGDM students IIM Calcutta
Abstract
This paper summarizes key recommendations
that can be used as guidelines by NGOs in
designing their organizational structure and
HR policy for their staff. Three broad areas of
HR policy recruitment, appraisal and salary
structure have been addressed in this report. It
suggests that efforts should be made at the
recruitment itself to hire right candidates. Also,
teachers‟ performance should be appraised using
contributions from his individual performance
& students‟ performance. Finally it suggests a
score card to appraise teachers. This paper also
outlines recommendations on how to improve
communication between the top management &
the staff.
24
Figure 1 An NGO run at Sundarban district
On April 1st 2010 Indian government
passed a historic law making education a
fundamental right of every child. Under
this law children in the 6-14 age groups are
entitled to Right of Children to Free and
Compulsory Education. Though the
intention of the government and policy
maker cannot be doubted the fact remains
that 1/3rd of Indian population is still
illiterate. It is anybody‟s guess that just
passing an act will not change the scenario
overnight. What this needs is an active
participation of the entire community in
this national endeavour. In this context, the
contribution of NGOs and social
organization would be noteworthy. Last
few years have seen a spurt of growth in
NGOs and social organizations who have
taken up the challenge of providing
education to the under privileged. Some of
 ORG. STRUCTURE & HR POLICY
the notable NGOs who are working in the
field of education are CRY (Child Rights
and You), GiveIndia, Literacy India,
Pratham & Prerna are some of the well-
known NGOs who are working in the
education and related field. There are,
however, multitudes of NGOs and social
organizations which work on a smaller
scale and lack resources & managerial
expertise and despite of their strong
commitment towards the cause, fail to
create desired impact.
The authors of this paper worked on a
consulting project with an NGO working in
Sunderban area in West Bengal. The
recommendations were widely appreciated
and at the time of writing this report, 80%
of the recommendations have been
implemented by the NGO. Though the
NGP had very dedicated and well-qualified
top ions management but faced following
challenges:
 Hiring right candidates for teaching
job: Candidates should not only view
his/her with NGO as another job but
should also be motivated & guided by
the ideals of the NGO.
 No appraisal system in place: Whether
to use a fixed/variable or no appraisal
system.
 If appraisal is to be used, how to link it
to student‟s & school performance.
 Lack of communication between the
top management and the staff
This article is organized as follows. First we
outline the recruitment process. Next, we
25
lay out the criterion for appraising the
teaching staff. We then propose a salary
structure which is designed to encourage
motivated employees and at the same time
is simple enough to implement. We
conclude by illustrating the steps involved
in implementing this policy. We also
illustrate how the implementation of this
HR policy leads to improved
communication between the NGO
management & the teaching staff.
Recruitment Process
An EGO should decide on eligibility
criterion and accordingly invite applicants
for recruitment process. Recruitment is to
be done based on a written test, demo class
and interview. Shortage of qualified
candidates doesn‟t permit that these three
processes be treated as three distinct
elimination rounds. All three processes are
to be treated holistically and a decision to
reject or hire should be made at the end of
all these processes. A recruitment panel
should be constituted to oversee the
recruitment process. Panel should consist of
High School Teachers in relevant subjects
and one representative from the NGO (this
is the current practice as well). Recruitment
process can be completed in one day or it
may be spread over a few days if required.
However it is recommended to conduct
demo class and interview on the same day
to utilize the availability of the panel.
 ORG. STRUCTURE & HR POLICY
Written Test: joining the NGO. It is helpful to know if the
candidate is sole earner of his family or if
Written test can be used as a measure of
he has any alternate source of employment.
candidate‟s motivation for joining the NGO
his or her fluency of thought and The panel should also inform the candidate
communication skill. In written test, an about the NGO‟s mission and its activities.
applicant should be asked to answer This may ideally be done before the start of
questions which demonstrate his/her the interview.
motivation for joining the NGO. Applicants
After the recruitment process is over, a
may be allowed to answer in Bangla or
consensus decision should be made by the
compulsorily in English when applying for
panel to hire or reject the candidate. Panel
teaching in English. A maximum word
may give its decision on the very same day.
limit of 500 words (typically one page of an
However the NGO must intimate its
A4 sheet) can be specified. Some sample
decision to a candidate within 7 days from
questions are as follows: a) Why do you
the day of the interview. Rejection message
want to join the NGO? b) How can you
(verbal or oral) should be carefully
contribute in achieving the goals of the NGO?
communicated so as not to discourage the
c) What do you like about teaching at the
candidate from applying in future.
NGO? Candidates are not expected to know
in and out about the NGO but a minimum
awareness of local activities of the NGO is
expected. Appraisal

Demo Class: In past, appraisal process has met with little

Demo classes could be a better way to
judge a candidate for teaching positions.
Candidate should be informed a priori
about demo class so that he or she can
prepare topics accordingly. Panels can
judge candidates on following parameters -
subject knowledge, communication skill,
interaction with students and suitability for
teaching job.
Interview:
Following the written test and demo class,
an interview should be conducted. Purpose
of the interview is to know more about the
candidate and his personal motivations for
success and the NGO had to revert to
uniform pay. Appraisals were done
primarily based on the feedback from local
community. It lacked transparency and
teachers getting lower raises were not given
sufficient explanation for their poor rating.
An appraisal system for teachers can still
work if objectivity, justification and
feedback system is built into the appraisal.
Teachers are to be appraised based on their
individual performance as well as students‟
performance. Appraisals should be
conducted on a half-yearly basis by a
suitably appointed the NGO‟s
representative.

26
 ORG. STRUCTURE & HR POLICY
Measure of Teacher’s Individual
Performance:
Before the start of each session (typically 6
months session), teachers are required to
submit their teaching plans for the courses
they would be teaching to the respective
classes. During the course of teaching they
are required to maintain a teaching diary
and self-record their teaching activities on a
weekly basis. This teaching diary can be
used as performance measuring tool where
teachers can be evaluated based on the
quality of their teaching plan and the rigor
with which they follow their plans. Since
teaching diary is self-maintained, appraiser
should at his level best try to verify the
veracity of the record in the teaching diary.
Teaching diary can also be used by the
NGO management or the appraiser to give
appropriate feedback to the teachers on
their overall teaching plan and its
implementation.
Kind of teaching tools and methodology
used by teachers also serve as an indicator
of his teaching abilities. For example a
language teacher can conduct class debates
or poem recitation. A science teacher can
demonstrate low cost experiments to
generate interests among students. Few
examples include, making electricity from a
lemon (or potato) and demonstrating
presence of iodine in salt (iodized salt
changes its colour to purple in presence of
rice and lemon juice). The NGO officials
can also educate teachers about such low
cost teaching aids (for more information
refer to the book “Low-cost, No-cost
Teaching Aids” authored by Mary Anne
27
Dasgupta and published by National Book
Trust, India.)
An attendance book for teachers should
also be maintained to record his or her
availability.
Feedback from students, parents and local
community must also be factored in when
appraising a teacher.
Measure of Students’ Performance:
We realize that there are many challenges
when including student‟s performance as a
measure of teacher‟s performance.
However, teachers can be evaluated on the
basis of marks obtained by students and on
the basis of their turnovers. Ideally, a
comparison of average total marks of the
students of regular school and that of
students coached by the NGO School will
serve as a better indicator of the
effectiveness of the NGO‟s teachers. For
want of the data and simplicity, average
total marks obtained by the students at the
NGO Schools can be used to measure the
effectiveness of teacher‟s performance.
Drop out of an individual student can be
attributed to many reasons other than a
teacher‟s performance in the class. But a
collective turnover of say more than 10%
students does reflect poorly on the quality
of teaching at the school. Thus student‟s
turnover must be reflected in teachers‟
appraisal. It is hoped that including this
parameter in the appraisal will motivate
teachers to retain existing students and also
bring in new students.
 ORG. STRUCTURE & HR POLICY
Overall Rating Score:
We devise a scale based rating system to
appraise teachers. At the end of appraisal
exercise, each teacher is awarded an overall
rating (OR) scores between 0 and 10, 0
being the worst and 10 being the best. The
score is to be awarded to a teacher on the
basis of his or her individual performance
and on the basis of students‟ performance.
Note that the component of the score that
comes from students‟ performance will be
same for all teachers at a given school. This
is done to avoid any disparity among
teachers of different grades and subjects. It
is also hoped that this will ensure collective
responsibility of teachers in ensuring better
overall performance.
In computing the overall score equal
weights should be given to individual
performance of teachers and overall
performance of students. Please look at the
appendix for a sample scale for measuring
teacher‟s individual performance.
A formal description of the computation of
overall rating is as follows:
1. Score to judge individual performance
of teacher – Score „a‟
Parameters to be judged are as follows.
 Quality of half yearly teaching plan
submitted by teacher – A score of 10
indicates a well drafted teaching plan
and a score of 0 is awarded for failing
to submit any teaching plan.
 Adherence to teaching plan as
demonstrated by self-recorded teaching
28
diary & use of teaching tools & teaching
methodologies: A score of 10 is
awarded for following teaching plans
and using teaching tools and teaching
methodologies. A score of 0 is awarded
for not maintaining any teaching diary.
 Feedback from students: NGO
representative should assess feedback
from students. A teacher who receives
excellent feedback from students
should be awarded with a score of 10.
 Feedback from parents & local
community: the NGO representative
should assess feedback from parents &
local community. A teacher who
receives excellent feedback from
parents & local community should be
awarded with a score of 10.
 Teacher‟s attendance: Teachers with
100% attendance are awarded a score of
10. Attendance can be scaled
appropriately to reflect a number
between 0 and 10.
Appraiser can award a score between 0 and
10 for each of the criterion listed above and
compute an average score for the
individual performance of a teacher (see
appendix).
2. Score to judge students‟ performance at
school– Score „b‟
Parameters to be judged are as follows:
 Average marks obtained by students at
the school: Score awarded to a teacher
is directly related to the average marks
 ORG. STRUCTURE & HR POLICY
obtained by the students at the school:
The score is computed as
p = (Average Mark/Maximum Marks) *
10
 Number of failed students: Score
awarded to teacher is negatively related
to the number of failed students.
Failure of more than 10% of students
attract negative penalty.
q = 10 – percentage of students who fail
 Net change in the number of students
enrolled at the school: Score awarded to
a teacher depends on the net change in
the number of students enrolled at the
school. A score of 10 is awarded if there
is no or positive change in the number
of students enrolled at the school. A
score of 5 is awarded if 0% to 10% of
students leave school. A score of 0 is
awarded to teachers if more than 10%
of the students leave school.
r = 10
if net change in the number of students
is >= 0
r = 5
if net of 0 to 10% of students leave
school
r =0
if more than 10% of students leave
school
Score „b‟ can then be computed as, b = (1/3)
(p + q + r)
Weighted overall rating can now be
calculated based on the following formula:
30
29
Overall Rating (OR) = (a + b)/2, rounded to
single decimal point.
Find below a sample for the calculation of
overall rating.
Let a teacher obtained following score on
the following parameters:
i) Quality of half yearly teaching plan
submitted by teacher = 7
ii) Adherence to teaching plan as
demonstrated by self-recorded teaching
diary & use of teaching tools & teaching
methodologies = 7
iii) Feedback from students = 8
iv) Feedback from parents & community =
8
v) Teacher‟s attendance – 90% translates
into a score = 9
Score a = (1/4) (7 + 7 + 8 + 8 + 9) = 7.8
Let average score of students is 65/100, 5 %
students fail & net change in number of
students = 0 %
Score p = (65/100) X 10 = 6.5
Score q = 10 – 5 = 5
Score r = 10
Thus score b = (1/3) (p + q + r) = (1/3)(6.5 +
5 + 10) = 7.17
Overall Rating = (7.8 + 7.17) / 2 = 7.485 ≈
7.5
In order to keep the appraisal process
transparent, appraiser should share the
details of overall rating computation with
the teachers.
 ORG. STRUCTURE & HR POLICY
Non-Monetary Awards:
„Best Teacher Award‟ can be awarded to
deserving teachers based on the overall
rating score as calculated above. Teacher
can felicitated during Gram Panchayat
meeting by the Sarpanch, BDO (Block
Development Officer) or any other such
official. The NGO may also circulate an
organization level half yearly newsletter
among its staffs (teaching and other staffs)
which may include a section highlighting
the achievements of its star teacher, star
school or any special initiatives undertaken
by a teacher at a run school. The newsletter
can also be displayed at the notice board of
the NGO‟s offices.
Salary Structure
Total monthly salary = Basic Pay + Variable
Pay
Basic pay has to be determined by the NGO
management. Care should be taken to keep
the salary competitive when compared to
NREGA (Mahatma Gandhi National Rural
Employment Guarantee Act). Currently
under NREGA an individual can claim an
employment of up to 100 days at a
minimum daily wage of Rs. 100.
Total variable pay component has to be
decided by the NGO management. At the
end of the appraisal all teachers are to be
grouped into two categories- performer or
non-performer. A teacher who is awarded a
score of 5 or more is a performer and a
teacher who is awarded a score less than 5
31
is non-performer. A performer should get
twice the variable component of that of the
non-performer. Thus for example if
teachers with overall rating (OR) less than
5 get Rs. 50, teachers with overall rating of
greater than equal to 5 must get Rs. 100 as
variable pay.
Action Plan& Recommendation:
Action plan for implementing the report
consists of two stages. In the first stage, the
NGO management should review the
report and communicate its
recommendations across the organization.
Management will need to effectively
communicate the benefits of preparing half-
yearly teaching plan and maintaining
teaching diary to existing teachers.
Teachers need to be told that these
measures have not been put in place as a
check but rather the purpose is to help
them become better teachers.
The management should then put
appropriate organizational structure to
effectively implement the
recommendations. It should appoint an
official who should be responsible for
reviewing teaching plans, ensuring that
appraisals are done and for preparing
news-letters. He should also keep updating
himself on low cost teaching aids and
should communicate the same to teachers.
A mechanism to record attendance of
students and teachers should also be put in
place if none exists already.
We recommend that data on student‟s
performance and teacher‟s appraisal should
 ORG. STRUCTURE & HR POLICY
be centrally maintained at an NGO. Such
data can provide the NGO management
with a powerful snapshot of the
effectiveness of their organization in terms
of students and teachers performance. As
these data help the management, much the
same way, a news-letter from management
to teaching staff will help teachers know
more about the NGO and its activities. The
NGO should also help teachers by training
them about low cost teaching aids that can
be used for effective teaching.
References:
 NREGA
 http://nrega.nic.in/
 http://en.wikipedia.org/wiki/Nationa
l_Rural_Employment_Guarantee_Act
 Low Cost Teaching Aids for Rural
Schools in India
 http://knol.google.com/k/low-cost-
teaching-aids-for-rural-schools-in-
india#
 Give India http://www.giveindia.org/
 CRY http://www.cry.org/
About the Authors:
Pratyush Sinha is an MBA student at IIM
Calcutta. He did his B.Tech from IIT
Kharagpur and MS from University of
Illinois Urbana Champaign. He is very
passionate about helping the community
and prior to joining INCA (Initiative for
Community Action) club at IIMC, he was
active member of Asha, UIUC chapter.
Nitin Soni is an MBA student at IIM
Calcutta and has been an Area Coordinator
for CSR initiatives undertaken by Tata
Consultancy Services across North India.
At IIM Calcutta he is an overall coordinator
for INCA (Initiative for Community
Action), the IIM-C club offering
consultancy services to not-for-profit
organizations.

 Prathamhttp://www.pratham.org/

 Prernahttp://www.prerna.net/

 NGO India – Partnership System

http://ngo.india.gov.in/default.php?

 Literacy Indiawww.literacyindia.org

 Indian NGOshttp://indianngos.com/

 Right to Education,
Wikipediahttp://en.wikipedia.org/wik
i/Right_to_education

31
ORG. STRUCTURE & HR POLICY

32
 PHARMA INDUSTRY

Pharmaceutical Industry in India

Author
Sandeep Yadav
2nd yr PGDM student IIM Calcutta

Abstract

This article talks about the current status of

Indian pharmaceutical industry, a preview of
major players in the domestic pharma market. It
analyzes various challenges currently facing the
industry and strategies being adopted to
overcome those challenges particularly in the
Indian context.

Indian pharmaceutical industry is a success

story providing employment for millions
and ensuring that life-saving and essential
drugs are available at an affordable price
for largely middle class population of the
sub-continent. Pharma market in India is
valued at around INR 45,000 crores and it is
estimated to be growing at a rate of
approximately 10 percent annually with
astonishing growth rates in some
specialized segments for instance Oncology
(CAGR of ~25%)
It is a highly fragmented industry with
more than 20,000 registered units. 70
percent of the sales are accounted for by top
250 companies. It faces severe price
competition and government price control.
The pharmaceutical industry in India meets
around 70% of the country's demand for
bulk drugs, drug intermediates,
pharmaceutical formulations, chemicals,
tablets, capsules, orals and injectables.
There are about 250 large units and about
8000 Small Scale Units, which form the core
of the Indian pharmaceutical industry
(including 5 Central Public Sector Units).
These units produce the complete range of
pharmaceutical formulations, i.e. medicines
ready for consumption by patients and
about 350 bulk drugs, i.e., chemicals having
therapeutic value and used for production
of pharmaceutical formulations.
Following the de-licensing of the
pharmaceutical industry, industrial
licensing for most of the drugs and
pharmaceutical products has been done

34

away with. Manufacturers are free to
produce any drug duly approved by the
Drug Control Authority. Technologically
strong and totally self-reliant, the
pharmaceutical industry in India has low
costs of production, low R&D costs,
innovative scientific manpower, strength of
national laboratories and an increasing
balance of trade. The Pharmaceutical
Industry, with its rich scientific talents and
research capabilities, supported
Intellectual Property Protection regime is
well set to take on the international market.
Majority of the innovator drugs are
launched by the MNCs which have huge
R&D budgets. In their endeavor for
launching blockbuster drugs in India, the
domestic pharma companies are looking for
alliances with MNCs through strategic
collaboration or acquisition.
Top 10 pharma companies in India in terms
of revenues generated
1. Ranbaxy Laboratories Ltd.
2. Dr. Reddy‟s Laboratories
3. Cipla
4. Sun Pharma Industries
5. Lupin Labs
6. Aurobindo Pharma
7. GSK India
8. Cadila Pharmaceuticals Ltd.
9. Aventis Pharma
10. Ipca Laboratories Ltd.
** Abbott-Piramal is the biggest drug maker
now after the $ 3.72 billion acquisition of
generic business of Piramal by the US based
giant
PHARMA INDUSTRY
Major challenges being faced by
pharmaceutical companies:
 Severe competition: The presence of
hundreds of players in the market, low
margins, and restricted capital for
investment in R&D has resulted in a
price war.
 Unsustainable cost-earnings
differential: Worldwide, R&D costs
have increased more than the growth of
by
the industry resulting in a cost-earnings
differential that cannot be sustained
indefinitely.
 Delays in drug approval: Getting
approval from DCGI in India for a drug
approved outside takes a long time
 Increasing competition from emerging
markets: Companies in China, Israel
and Korea have arrived on the
international scene. In fact, India‟s
pharma exports to US took a severe hit
recently in 2009 because of that.
 Centralized WHO-GMP (Good
Manufacturing Practices) certification:
This proposal, if accepted will hit
Indian exporters as DCGI lacks
infrastructure for speedy disposal of
applications. The certificate is needed
by the manufacturers for exporting
their drugs outside and it has to be
renewed every 2 years
Way Ahead:
 Synergies in pipeline: Collaborations
to synergize the pipelines rather than
random acquisitions will be more
35
 PHARMA INDUSTRY
Way Ahead: References:

 Synergies in pipeline: Collaborations  Richard Gerster, Pharmaceutical-drug-

to synergize the pipelines rather than manufacturers encyclopedia: “Indian
random acquisitions will be more Pharmaceutical Industry”
successful in narrowing down the cost-  Cremer, Losch and Schrader, Mckinsey
earnings differential Quarterly, April 2009: “Maximizing
 Research & Development: Indian efficiency in Pharma operations”
pharma companies should start  Henske and Biesen, Business week, July
investing in R & D now and not rely 2009: “Mega mergers can’t cure the
only on the generics business. This will pharmaceutical industry”
need collaboration with MNCs and  Laws of Drugs and Cosmetics, DGHS
government support for the official site, MOHFW, Govt. of India
biotechnological companies in India
 More efficient drug controller: Better
infrastructure, minimal lobbying and
professional approach is needed
About the Author:
 Stop infiltration of Chinese and
Taiwanese drugs: Illegal or ill- Sandeep Yadav is a 2nd year post-graduate
monitored flooding of Indian markets student at Indian Institute of Management,
with Chinese drugs will do no good for Calcutta. He holds an M.B.B.S. degree from
us and for our patients as there is no B.J. Medical College, Ahmedabad. He
quality certification of these drug interned in GlaxoSmithKline
manufacturers Pharmaceuticals Ltd. and can be reached at
 Brand building: Domestic pharma sandeepy2011@email.iimcal.ac.in.
companies, in spite of their exemplary
work on cutting down on production
costs, have an image of plagiarists and
master copiers vis-à-vis MNCs which
are known for bringing innovator
drugs in the market. So, domestic
pharma companies need to work to
change that misconception.

36
 SUSTAINED
PHARMAINNOVATION
Strategic Framework for Sustained
Innovation
Author
Ankur Sharma
Post Graduate Program student at Indian
School of Business (ISB)
“The world leaders in innovation and creativity
will also be world leaders in everything else”–
Harold R. McAlindon
Abstract
The article emphasizes on the need of sustained
innovation for long term viability of businesses
and presents a framework comprising of a set of
four basic functions for an organization to
create, promote and sustain an innovative
ecosystem. The prescribed framework can be
used as a basic set of guidelines for new entities
(within or outside an existing entity) looking
forward to develop innovation as their core
competence or as a basis for a litmus test to
evaluate the innovation sustainability quotient
of existing entities.
38
INDUSTRY
No rule has manifested itself with such
catastrophic outcomes as has the rule of
change. Corporate giants have fallen or
have been brought down to meager
existence for they overlooked the
innovation revolution. The past century has
also been the witness to the rise of a new
order of organic entities that dwell on the
creative juices of their sustained innovative
ecosystem. An ecosystem, that consistently
evolves to respond to the rapidly changing
technological and economic environment. It
is not a coincidence that Google continued
to grow and thrive in the worst global
imbalance in recent history.
The question of essence is whether there is
a set of operating procedures that an
organization can follow to become an
innovation power house? Well, a straight
forward answer is no! But there is a
framework that may give organizations a
head start in transforming themselves into
the next Google. The framework defines the
way organizations can transform
themselves into “innovative ecosystems”
by providing for four basic nurturing
 SUSTAINED INNOVATION
functions that create, promote and sustain
innovation. These functions working
together form the “cycle of innovation”.
Any organization needs to focus on the
following 4 functions to establish and
sustain innovation and creativity as its core
competence.
 Definitive functions
 Assistive functions
 Promotion functions
 Corrective functions
Definitive functions: This set of functions
sow the seeds for growth of an ecosystem
that is essential for fostering creativity in an
organization. These functions involve
building the necessary thought,
environment, human and infrastructural
capital necessary for defining a creative
landscape. The first and foremost definitive
function is creation of a thought leadership
that understands and encourages new ideas
and ways of thinking. The success of Apple,
3M, Google and the likes is attributed to the
thought leadership of their promoters. But
more important than the people is the
essence that needs to percolate through the
organization and be reflected in its strategic
decision making. It involves redefining the
mission and the vision of an organization to
imbibe these values in the entire value
chain thus creating an environment where
innovation is a law of nature. For achieving
this aim, an existing organization may have
to break free from cognitive and action
inertia, forces that hinder organizational
changes by voluntarily or involuntarily
resisting change in thought and actions. In
39
terms of building the human capital,
organizations must ensure that only the
best, the most fertile and creative brains are
hired. As we would see later, this also acts
as promotion function as it facilitates peer
competition and provides a reputational
incentive, both of which are essential for
encouraging innovation. The final
definitive function for an organization is to
build the necessary infrastructural capital
by providing for communication and
collaboration tools that promote increased
interaction amongst employees from
different teams, projects and geographies.
Tools that help them know about the areas
of interest of their peers and developments
in other sectors that they may be interested
in.
Assistive functions: These functions assist
the potential innovators in an organization
to shape their ideas into realities. Broadly,
we can classify these functions into
organizational support and technical
support. With regard to organizational
support, an organization may need to
relook its policies and procedures that may
be choking the innovation potential of its
employees. First and foremost, for any
attempt at encouraging innovation and
creativity to work, the basic input that
organizations need to provide to its
employees is time. All other efforts at
improving the innovation quotient of an
organization would fail if the employees
are not provided exclusive time when they
can pursue their creativity. Secondly,
organizations need to provide a level of
autonomy to their employees empowering
 SUSTAINED INNOVATION
them to choose new and innovative means
to achieve the desired ends. These desired
ends may very well be the regular assigned
work of an employee. This would assist the
creative acumen of the employees by
bringing innovation even in their daily
work and thus create a platform for more
radical inventions. Organizations may also
want to simplify or bring in altogether new
set of processes for identification and
approvals for new research initiatives or
may just want to make such processes more
frequent, something that goes beyond the
customary annual or bi annual ideation
events. Another dimension in assistance
would be to raise the level of interaction of
its employees with the customer or end
user. This function has far reaching
consequences and potential for making
path breaking advances. By bringing its
40
employees closer to its customers,
organizations help in providing first hand
interaction which helps the employees
better understand the actual needs of the
customers which may not only lead to
better and more innovative solutions but
may also help the organization position
itself as a customer need driven
organization. It will also help them respond
better to preference changes over time.
Finally, assisting the innovator in providing
him/her with the required technical
infrastructure, knowledge tools and
training etc is one of the most important
assisting functions.
Promotion functions: Motivation and
encouragement are key functions in the
cycle of innovation. Innovators are free
thinkers, rarely motivated by monetary
 SUSTAINED INNOVATION
gains alone. More often than not, their
satisfaction lies in accomplishment and in
distinction. They derive their utility from
the repute they carry and the reverence
they command from their peers. As such, it
is of utmost importance that an
organization acts as a promoter of
innovation and creativity. It calls not only
for economic incentives but also for
reputational incentives that an organization
needs to provide to encourage excellence in
innovation. Distinctions and honours need
to be established to reward outstanding
innovators. To take it a step further, the
system of hierarchical progression can itself
be skill based which will ensure a tradition
of excellence and will help sustain the
innovative ecosystem in the long run.
to evaluate their progress on the path to
sustained innovation. To take it a step
further, metrics can be developed to
measure the performance of organizations
in providing for the given four set of
functions. Based on the relative importance
of each of the functions, such empirical
treatment may require a weighted system
of evaluation.
What is of essence is that sooner or later,
organizations will need to look inside,
evaluate their innovation quotient and take
concrete steps to develop a system of
sustained innovation or risk obsolesce to
the mighty power of change.
About the Author:

Ankur Sharma is a student of class of 2011

of the post graduate program at the Indian
Corrective functions: These functions relate
School of Business. He holds a Bachelors
to time bound re-evaluation and correction
degree in Computer Science Engineering
of the innovative ecosystem. They may
from National Institute of Technology,
involve some tweaking here and there and
Kurukshetra and has worked for four years
from time to time, based on a well
in the financial services sector. He can be
established system of assessment. They
reached at
may involve change in team composition or
Ankur_Sharma2011@pgp.isb.edu
size overtime or may involve a change in
policy or procedure in line with changed
circumstances. What is of essence is that
there should be in place, a system of
evaluation to check whether an
organization‟s innovative ecosystem is
aligned with its vision and whether it is still
consistent with the macro environment
which it‟s a part of.

The framework provides a set of guidelines

and measurement points for organizations

41

Scope of Online Consulting:
An interview with ZENeSYS’s CEO
Saibal Sen
Mr. Saibal Sen talks about the potential of
online consulting and how it is shaping
the industry. He also gives tips for
budding consultants who aspire to rise in
this business.
1. What ZENeSYS is all about? What
motivated you to leave your job in one of
the Top notch consulting companies and
start this firm?
As with most would-be-entrepreneurs, it‟s
a desire to create something of your own.
Working in big corporations means
43
INTERVIEW with CEO
following rules that are already set. There is
little room for strategic creativity. Although
I was working for a top-notch consulting
firm, I had no say in shaping the firm‟s
corporate strategy.
ZENeSYS is about tapping into the creative
energies of young professionals for an
online consulting learning and delivery
platform.
I believe that the desire to learn is a better
motivator than the desire to earn. Based on
this fact, ZENeSYS has created a consulting
skills teaching methodology using
successive levels of accomplishments. The
first level is learning, the second is applying
and the third is delivering live consulting
projects.
If you look at the training industry, you
will note that it is a commodity business.
Creating a top notch consulting training
business in the conventional mode is almost
impossible. This is because good quality
instructors need to be top-notch consultants
– who can earn more in consulting than in
teaching. So it‟s a catch-22 situation. We
have solved this problem by subsidizing
our training costs with live project
revenues.

Another cost saving solution is all our
learning, applying and live consulting is
done online. When I first started, our online
model was uncertain but now in the last 18
months we have solidly proven our model
with satisfied participants and happy
consulting engagement clients.
2. What led you to move towards
online consulting?
Online is the future. I am not saying all
consulting will go online but a new market
exists now in online consulting. The main
drivers for online consulting are:
 Need for lower cost, faster turnaround
insights for strategic decision making
 Overload of information (someone
needs to make sense of it)
 Harnessing the talent pool in India for
global delivery
Our vision is simple though it might be a
bit far-fetched today. We want to be like as
someone once said to us – “A Cloud
Consulting Solution”. When folks need
information – they Google. When someone
needs answers and insights, they should
come to ZENeSYS. The ultimate goal is to
have clients come to our website, fill out a
form, pay by credit card and get solutions
to their problems in 10 days max.
3. How has been your journey so far?
How strong is your competition in the
domain of online consulting?
It‟s back to the old world economy where
businesses need to grow organically.
44
INTERVIEW with CEO
Chances of getting funding are near zero
for a business like ZENeSYS since we are
not able to show returns of 10x magnitude.
This means that the ride is slow and
economically challenging. However, it has
been very rewarding in terms of satisfaction
levels. Our social network community is
now 350+ strong with 80+ of them already
certified. All our past consultants and social
network members on zenesys.ning.com are
highly engaged and are assets for future
growth. Everyone who undergoes training
and certification with us is required to join
our social network and is welcome to stay
engaged as a part of the community.
We are so much of a blue-ocean company
that while there is virtually no competition,
explaining what we do is a challenge.
Everyone likes to understand a new
business in terms of something that they
can directly compare with. For ZENeSYS,
we cannot really say “We are like XYZ.”
The best way to explain ZENeSYS business
model is “Online consulting services
through a team of our own certified
consultants”. 20% of our revenue comes
from online training and 80% from online
consulting to clients.
Our main competition is internal training in
consulting organizations. We are still trying
to break into the corporate training market.
We got very close to striking a deal with
one of the largest consulting organization
for their new hire training but lost to an
internal unit. Another major India based
consulting organization just bought 4 seats

in our next training batch. While this is a
small number, we think this is a great
beginning for cracking the corporate
market.
For competition in online consulting there
is guru.com and elance.com. However,
ZENeSYS is different because we use our
own certified consultants. The others use
freelancers which means clients have to
deal directly with the freelancers. In
contrast, at ZENeSYS, we take
responsibility of quality and overall project
management. We are the single point of
contact. In the last 18 months, we have
delivered dozens of projects and every
single client is willing to be a reference.
4. For the benefit of our readers please
briefly describe the nature of
ongoing/completed projects?
Our live projects tend to be in market
studies, recommendation on market
strategies and analytics for strategic
growth.
In training and certification programs, we
simulate a live project on topics of current
interest. One of the most notable projects
delivered to date was “Funding for
Startups” which was uploaded on
Slideshare.com and immediately received
more than 2,000 views and 150 downloads.
To ensure quality, we generally only use
certified consultants for our live projects.
We occasionally allow live projects with a
45
INTERVIEW with CEO
real client in our certification program. Last
year we did two. One was on study of theft
in open format retail stores in US and
another was researching the size and
prevention methods for counterfeit drugs in
the worldwide Pharmaceutical markets.
This year again we did two more. First one
was in business development for a
Technology Consulting firm in the US and
another was for a go-to-market strategy for
an online Placement Portal in UK.
Our most recent live project will be on
analyzing Private Equity funds. To do this
we will be partnering with a leading
financial industry analytics firm and co-
branding the quarterly reports.
5. If you have to pick one project out of
all that have been taken up by ZENeSYS,
which one would you pick as the most
exciting?
I would say this would be the project that
was done along with the interns from IIM-
C this summer. A PE firm recently bought
an online medical directory firm and hired
ZENeSYS to analyze the competition. The
objective was to identify the best practices
and opportunity areas in the online medical
directory services.
The project was so successful that we
created our own methodology for
“Competitive Landscape Analysis” on the
basis of learning‟s from thatproject. We are
now selling this as a standard service. A
team of interns from SPJMR recently used
the methodology for a client in Digital

Signage. Another leading market research
firm in Boston is reselling our methodology
under their own brand name.
6. What is the future plan of ZENeSYS
especially in context of its Indian
operations
The training side of ZENeSYS business is
very much geared for developing the
Indian professional. In this sense our
program is very unique. We feel that we
have developed an appropriate pedagogy
to unlock the creative potential despite the
rote education system in India. Almost all
books on consulting tend to talk about what
is consulting rather than how to deliver
consulting. Our training program fills in
that void.
The consulting side of the business is
currently focused on serving US and
European clients. Consulting in India is
only recently getting accepted. Till just a
year ago, hiring a consultant was shunned
because by implication it meant that the
client was unable to do his/her job. This is
changing now. In the last one-month alone
we received three referrals from our
network of certified consultants for India
based projects.
The first one is on valuation of a
partnership equity component in a Joint
Venture between a Chinese manufacturer
and an Indian reseller. The second one is
on creating a go-to-market strategy for
selling backpacks in the organized retail
46
INTERVIEW with CEO
sector. The third one is on market study for
prescription eyewear franchising market
sizing.
So in a nutshell, we see overall operations
of ZENeSYS shift from the US to India in a
big way by the beginning of next year.
Possible options are to franchise our model
with hybrid online/onsite training and
research centres.
7. What will be your piece of advice for
students who intend to make a career in
consulting, especially for students who do
not have any prior work experience in this
field?
I would offer three tips. First one is to
understand that consulting requires a lot of
dedication and hard work. There will be
times in a project when things seem
impossible. Too much data, too little data,
client is unresponsive, deadlines are
unrealistic, cannot find a solution etc. You
have to hold on to your self-belief and take
the bull by the horns. The answers will
always come to you soon enough.
The second piece of advice is improving
your communications skills. Whether you
are a research associate, a consultant, or
partner, communications skills are
paramount. This applies to both verbal and
written. Join debating societies, get
involved in live projects or participate in
competitions that require communications
skills.

The third is taking the time out and
working on consulting projects while at
campus. I know the schedules are packed
and it‟s hard to take the time out but think
of it this way. Your B-School degree is more
or less assured but your ability to get
placement of your choice is not. When you
work on live projects and live through the
experience of deadlines, demonstrating
your creativity and ability to communicate,
you will develop that self-assurance
necessary to do well in interviews.
Aside from these tips, do go though some
of the articles I have written on a popular
forum called Pagalguy.com. These articles
cover topics such as how consultants need
to think differently as compared to
engineers, career options in consulting, and
how to crack into consulting industry.
Search for ZENeSYS on
www.pagalguy.com and you will find them
all.
47
INTERVIEW with CEO
About Saibal Sen
Saibal has more than 20 years of consulting
experience from Americas, Europe, and
Asia Pacific. He started out his consulting
career as Management Consultant at
Arthur D. Little, Cambridge USA.
After leaving A.D. Little, he worked in
various senior management roles such as
Director of Business Development in
Motorola and VP at two Boston area start-
ups.
He founded his first consulting firm
KUBER Consulting in 1995. Recently in
2007, he founded ZENeSYS which is a
pioneering business model in online
consulting and training.
He has Bachelors in EE from VNIT, India
and a Masters in Management from the
London School of Economics.
 CONSULTOON
Monalisa Majumdar
2nd year PGDM student, IIM Calcutta

48
CROSSWORD CONSULTING TERMINOLIGIES
Sujata Rathi Yashashvi Takallapalli
2nd year PGDM student, IIM Calcutta 1styear PGDCM student, IIM Calcutta

Think you can step into the shoes of a top shot consultant? Let us put your consulting
jargon to the test.

Try solving the crossword below full of terms and slangs often used in the world of
consulting. The answers are on the next page with the consulting jargons explained. These
will help those who are serious about consulting as a career. So put your thinking caps on
and enjoy our crossword!

49
CROSSWORD CONSULTING TERMINOLIGIES

50
CROSSWORD CONSULTING TERMINOLIGIES
Hard Stop – A strict deadline; Used to
indicate that after the time indicated, the
listeners are on their own, because the
person stating that they have a hard stop
sure isn‟t going to be around to help after
then
Key – critical, essential, required,
important, central; The key analysis is
generally the linchpin; used as a noun as
well as an adjective, and with such
frequency that its significance has been
diluted, since everything is now „key‟
Case – The project or assignment one is
working on
On the beach – A consultant with no
dedicated or chargeable project
Elevator Pitch – The ability to communicate
an idea to someone in a minute or lesser.
The elevator test represents a hypothetical
situation where you are sharing
elevator with a VIP and need to give them a
quick summary/presentation during the
ride. Specially applicable when you are
communicating with partners
Value-Add – Simply put, it means that
value is being added
WWW – What Went Well
Storyboard – All decks are expected to
have a story or flow. The storyboard refers
to the rough slides created on paper to
outline the story
Steep Learning – To be able to learn fast
and start contributing to the project early
Buy-in – Taking the client and its various
divisions into confidence about the
proposed solution
Buckets – Modules or categories; Bucketing
refers to breaking a problem into various
modules or categories
Deck – The Power-point slides being
prepared for presentation to the clients
Helicopter view – A very preliminary,
high-level look at a problem without going
into the details
Deep Dive – An in-depth analysis of a
particular problem
Boil the ocean – Trying to do a whole lot of
unnecessary things
Take the lead on – A clever phrase used by
the
managers when they want to delegate some
unwanted work to a junior. Examples of
usage - “Hey, Why don‟t you take the lead
on putting together this module?”
MECE – Mutually Exclusive Collectively
Exhaustive – Putting all issues into
individual buckets where no two buckets
have overlapping issues
EBI – Even Better If
POTA – Pulled Out of Thin Air – When
there is no basis for assuming the value of a
51
CROSSWORD CONSULTING TERMINOLIGIES
parameter. The value of the parameter has
been pulled out of thin air. Synonyms are
WAG (Wild Ass Guess) and SWAG (Some
Wild Ass Guess)

So What – You‟ve done all the fundoo

analysis. So What? The so-what of an
analysis is basically about distilling out the
implications your analysis has for the client

52
 Joka Strategist is an in-house publication of the Consulting Club, 11M Calcutta and features articles
by thought leaders from the industry as well as the academia. The primary aim of this magazine is to
develop a long term interest and considerable following in the consulting field. It also aspires to
highlight consulting as a career option in the industry by drawing out various experiences from experts.

The Consulting Club at 11M Calcutta is a unique student initiative that collaborates with both tHe corporate
world and the academia from the consulting sector to provide a platform for students who want to pursue
their interest in management consultancy. The club organizes a diverse portfolio of activities throughout
the year, including industry consulting projects and consulting focused industry interaction for the stu-
dents. Some of the more popular activities include consulting related competitions, release of consulting
publications and information sessions about careers/ com anies in the consulting world.

Consulting Club 11M Calcutta

http:j /www.iimc-consultingclub.com