Eastern Institute for Integrated Learning in Management

Subject: Organizational Design & Development

Project: Organizational Development in ICICI Bank

Faculty: Zeenat Sayeed

Project Prepared by: Saurav Goswami Sec: H6 Roll: 053 Session: 2008-10

Index

1. Introduction 2. Challenges of Change 3. Organizational Development 4. Organizational Development In ICICI Bank 5. Conclusion 6. Bibliography

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Introduction:
For any development there must be a change. Change is unavoidable for the growth of any organization. Change is imperative and so is the need of the individual, organization and societies to cope with changes for their survival and sustained growth. The entire value chain of organization from design to delivery is being subjected to increased uncertainties and hyper competition. Organization thus has to continuously align their structure, systems, processes and culture with the ever-changing global demands. As the communities of the world come together, interacting with each other and synergizing their efforts towards achievement of common goals they are also encountering problems arising out of clash of cultures, value-conflict, divergent ethical standards and different work habits. Recent interest is indicative of their importance. The number of books and articles on change has increased more than 100 times since the 1960s.

Challenge to Change:
Todays success is no longer a guarantee for tomorrows survival. A considerable number of companies included in the sample of excellent organizations in Tom Peter and watermans book, In search of Excellence have either lost the preeminence or ceased to exist. The cost of failures to successfully adapt to changes are indeed very high not only in terms of organizations survival but also in terms of cynicism that tends to set in amongst the employees themselves about effort made towards change. Despite a considerable failure rate, organizations all over the world have made quite a few organization wide interventions such as: Restructuring: Moving, Shrinking or eliminating organization units, delayering, downsizing, rightsizing, outsourcing. Reengineering: Changing the way the work is carried out, process redesign, process management, process innovation.
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 Productivity and quality improvement: Benchmarking, quality circles, TQM, JIT, Kaizen, Six Sigma. Leveraging, distributed intelligence, empowerment, participate management knowledge management.

The challenge today is to create change friendly organization that is responsive to discontinuous and unpredictable changes in its environment. Successful change efforts must be directed towards enabling the organizations design their own future and increase its control over the environment. It should develop mechanisms for enlisting the support of all strategic stakeholders in its journey towards the desired future state. Day-to-day improvements brought about in the organization member must be actively supported and encouraged. Developing a culture of continuous learning and innovation will be a prerequisite for institutionalization of change efforts.

Organization Change:
Perhaps the most asked but least answered question in business today is What can we do to make our business survive and grow? The world is rapidly changing into something too hard to easily predict, with a hundred opportunities and pitfalls passing by every moment. To add to this confusion, there are hundreds, if not thousands of techniques, solutions and methods that claim to help business improve productivity, quality and customer satisfaction. A company President, CEO or business owner has so many choices in these buzzwords, whether they be called Total Quality Management, Customer Satisfaction, Re-engineering or Teambuilding. They are like new shoppers in a giant grocery store: They are hungry, but there are so many brands, sizes and varieties you dont know what to buy. In response to this confusion, many do nothing, often afraid of making the wrong choices. Others change the techniques they use every few months, using the program dujeur method of organizational change, otherwise known as MBS (Management by Best Seller). Neither of these responses help the organization in the long run. Changing nothing will produce nothing. Implementing a different buzzword (Total Quality, Just in Time, Re-engineering, etc.) every few months
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often creates a whipsaw effect that causes mass confusion among your employees. These buzzwords are often a hammer in search of a nail, techniques applied with no clear focus as to the why, expected results or return on investment. One of the organizations we consulted with started on this path. Senior management proclaimed in a memo that Total Quality should be a way of life. One senior vice president declared that he wanted 25% of his organization using Total Quality tools within a year. This caused tremendous excitement in the organization, However, the follow-through was delayed, occasionally inappropriate and sometimes not there. Many employee became discouraged with the process and considered it just another management fad. With the next business downturn, virtually all training had stopped and little enthusiasm was left. Other organizations clearly focus on technical problems and on improving what they had. They are initially successful, but become victims of their own success. I call this an improved, planned incremental approach. Their initial quality improvement teams may be so successful they rapidly create more teams, without the qualitative organization-wide changes (re-engineering) necessary to sustain a permanent effort. One organization we worked with had over 70 quality improvement teams in a plan with only 300 employees. They had shown little results after their first successes, and asked us what their next steps should be. We suggested the unions leadership in their efforts, look at restructuring their organization along more product-focused lines, and possibly start profit sharing. They were not interested in taking any of these actions. A few months later, its parent company shut down the site, partly because of its poor productivity. Organizations need to move beyond the buzzwords into deciding what actions they need to perform that will help them grow and develop. In response to this problem, this article will provide you a framework for coping with organizational change independent of buzzwords or the latest management fad. Organizations must first decide on the framework their organizational change long before they choose a buzzword to implement.

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Organizational Development In ICICI Bank Under Mr. K.V. Kamath, Managing Director and CEO, ICICI Bank Limited
In 1955, seven years since India had become independent, it was also the time to rebuild the nation and industrialisation was the only way forward. It was at this time that with the initiative of the World Bank and the Indian government, that the Industrial Credit and Investment Corporation of India, ICICI, wasformed. Sixteen years later in 1971, to give a new lease of life to its rather nondescript existence, the corporation hired a batch of young business graduates. Among them, was 24-year-old Kundapur Vaman Kamath; fresh out of management school in Ahmedabad. In time, Kamath would redefine banking in India and become a legend in his own right. Mangalore-born Kamath joined the Project Finance Division of ICICI as a management trainee in 1971. A quick learner, Kamath demonstrated his entrepreneurial skills early in his career and his sheer talent caught the attention of the then chairman of ICICI, N Vaghul. Kamath set-up new businesses in leasing, venture capital, credit rating as well as handling general management position. Taking his responsibilities a step further, he implemented ICICI's computerisation programme, which in later years would give ICICI a huge competitive advantage. For 17 years, KV Kamath looked beyond the obvious to create value for ICICI. In 1988, an opportunity came calling that would take him beyond the shores of India.

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Managing Editior of The Smart Manager, Gita Piramal, told CNBC-TV18, "Kamath was with ICICI for 17 years before he decided he needed a change. He went to Manila to the Asian Development Bank [Get Quote], and this was an absolutely critical turning point in his career. He learnt about new processes, how emerging markets work, he learnt to deal on a global international scale and this was absolutely important when he came back to India. He was with the Asian Development Bank for about eight years before he got a call from his mentor." Chairman at ICICI Bank [Get Quote], N Vaghul, recalls, "Within a few months of my joining I had interacted with Kamath. Kamath was at that time in the leasing department and I had more or less made up my mind that he would be my successor." By 1994, the impact of the economic reforms initiated by the Narasimha Rao government were beginning to show, albeit rather slowly. The same year, ICICI Limited had set up its subsidiary -- ICICI Bank. Two years later, in 1996, Vaghul's protege KV Kamath rejoined ICICI as its new Managing Director and CEO. Kamath immediately initiated strategic initiatives and structural changes across the ICICI Group that helped redraw its boundaries and take it to the next level. MD & CEO, ICICI Bank, KV Kamath says, "An organisation, which is 40 years old, you need to move some people into some positions, in which you think they would be better of and that's what was on top of my mind." Kamath's immediate priority after his return was to create new operations in the organisation and more importantly, to tap new markets. He introduced flexibility in the bank's functions and shaped them to respond to new market reactions. The company was now laying the foundation to become a financial powerhouse, but Kamath had a mammoth task ahead. Piramal explains, "Kamath had a daunting assignment to get a banking license. This was a very important moment because the Indian government had not issued licenses since Indira Gandhi had nationalised banks. But at this juncture, the government did issue licenses and there was a mad scramble for them. Amongst those who managed to get it -- the Times Group, the Hindujas, Kotak and of course ICICI. But this was just the beginning - he had far bigger dreams."

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The visionary banker saw an encashable opportunity in the retail banking space. ICICI's strategy and product offering recognised the changing demands of a growing middle-class. Deputy MD, ICICI Bank, Chanda Kochhar, says, "When we rolled out the retail strategy in a big way -- that was again a huge change and therefore a hugely enriching experience because at that time, the entire consumer finance business was very nascent for the country as a whole. So, we really had to create a vision of what this business is going to be like for the country and of course it was absolutely new for ICICI. One was really moving in uncharted territories and taking decisions, taking a call as one moved along and learning alongside." Retail financing in the mid-1990s was an open field, with no major players and Kamath recruited a young bunch of strikers who would score winners for him. In 1997, ICICI became the first Indian financial institution to go online. At a time when word was experiencing the dotcom boom, Kamath was quick to sense the shift in customer demands. Fighting skeptics, Kamath went ahead with a plan to offer a multi-channel delivery system to its customers. Starting with just 5,000 online customers, ICICI today serves over 2.5 million people online. It opened the floodgates of a unique success story. By the end of the 1990s, Kamath had chalked out ambitious plans to spruce up ICICI from within. Supported by an able group of young aspirants who believed ICICI had places to go. Impatient by the dream and brimming with confidence to make ICICI a market leader, Kamath would soon take crucial steps that would influence the fortunes of this financial institution. In September 1999, within three years of taking over as the Managing Director and CEO of ICICI, KV Kamath drew up aggressive plans for growth. That year, ICICI Ltd got listed on the New York Stock Exchange, NYSE, the first ever Indian financial institution to go the American Depositary Receipts, ADR route.

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The next year, ICICI Bank followed suit and its ADRs made a debut at $14 on the NYSE, at a premium of over 27% over its issue price of $11. Post the listing with the NYSE; ICICI had ambitious expansion plans and this time, it was through inorganic growth. The process had begun way back in 1997 and between 1997 and 2001; Kamath engineered a string of acquisitions like SCICI Ltd, ITC Classic Finance, which had a strong retail base in Eastern India and a strong base in the West. Most significantly, it acquired Bank of Madhura at a time when its own revenues stood at Rs 2,500 crore (Rs 25 billion) and that of the bank at Rs 100 crore (Rs 1 billion), it was time for the next courageous move. The year 2002 was the landmark year for ICICI, the board of directors of ICICI and ICICI Bank approved the merger of the parent company ICICI and subsidiaries like ICICI Personal Financial Services Ltd and ICICI Capital Services Ltd, with yet another subsidiary ICICI Bank. The entire banking and financial operations of the group was bought under one roof. It was a reverse merger and quite rare in corporate India, where a parent company merged with its subsidiary and adopted the later's identity. KV Kamath explains, "The bank was the entity into which ICICI Ltd went backwards into. You did not then have to address the issues of regulatory clearance to do a whole lot of things because the bank already had those approvals and that facilitated the whole process and that was the critical reason. The other reason to use this route, was to clean up ICICI Ltd at the time of the merger and the only way we could do it was, if ICICI Bank was the entity into which ICICI Ltd merged." Soon after the merger, it was time for ICICI now in its new avatar ICICI Bank to takeoff and win new markets as well as look for horizons beyond the Indian seas. In 2002, ICICI set up offices in New York and London. The very next year it established subsidiaries in Canada and also joined hands with Lloyds [Get Quote] TSB in the UK. Offshore banking units were set up in Singapore and representative offices in Dubai and Shanghai.

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Kamath's passion for growth was fanning ICICI Bank's burning ambition to grow beyond its dreams and to achieve it, he added a new weapon to his armoury -technology. He introduced ATMs across the country using current technology as an enabler. ICICI Bank had experienced a growth rate of more than 180% in its very first year and a separate majority owned company called ICICI Infotech supported the IT operations of the banking section. But it was the innovative idea of introducing ATMs, that tips the scales in their favour. Kamath says, "To set up an ATM, you need three-four levels of redundancies. You set up recycling, you have to have a lease line, a dial-up line and you are still not sure the ATM would work 94-95% of the time. Today, you have ATMs available 99.99% of the time. So, there were these risks but we bet on technology." Piramal adds, "Kamath found himself sandwiched between State Bank of India [Get Quote] and the foreign banks who had an excellent retail presence. One of the ways is to meet the shortfall of being able to offer branch facilities, and at that time ICICI had just 50 branches. To meet that shortfall, Kamath hit upon an absolutely winning strategy and that was to install ATMs across the country." There are many who dream big and let their dreams fade. . . to die forgotten deaths. But there are still a few who nurture their dreams, give them wings and then turn them into realities. These are the people who make a difference and that's precisely what KV Kamath did. With the turn of the millennium, ICICI emerged as the largest private bank in India and fueling its growth was the untiring efforts of one man -- KV Kamath. He rightsized the organisation, expanded internationally and gave a fillip to its technology driven expansion plans, and then Kamath set his eyes on making ICICI a universal bank. He had a vision and it was to create an international banking experience in the country, which would provide complete financial services to different classes of customers.

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For the first time ever, the rural community was included. With the use of technology, the bank started tapping into the micro- banking space in rural India, utilizing partnerships with multinational and local agricultural institutions. Kamath repeated his earlier success with ATMs, when he introduced cross-selling in ICICIs banking system. He recognized the inconvenience faced by busy customers and brought in direct selling agents, who would reach customers easily, identify prospects and initiate dialogue. This not only helped ICICI deliver personalized banking facilities, but also changed the banking experience in India forever. Joint Managing Director at ICICI Bank, Lalita Gupte, says, "When I look at the vision for ICICI Bank in the next 10 years, I think major changes will take place. I see a very bright future ahead and I see the aspiration has been to move into the top league in the world - in top 25-50. This in a way reflects the place India will actually find in the global economy." "Several Indian corporates are going overseas in acquiring businesses and expanding into the global marketplace. Mr Kamath is a visionary and I do see that this will definitely have an impact on the bank, as we go forward." Piramal says, "In all the different directions that it was growing, Kamath also had to look after the legacy of the past. He had to streamline and rightsize the organisation. It had 33 subsidiaries, he gradually brought them down step by step from 33 to 24 and then 12 and he prepared the company for an IPO. This was an absolutely critical testing time for Kamath." In December 2005, ICICI Bank announced its initial public offer to the Indian market and amassed over Rs 80 billion. With a very well defined roadmap, ICICI Bank soon put in place, a formidable plan for its future. With its current asset over Rs 250,000 crore (Rs 2,500) billion and a net profit of over Rs 2,500 crore (Rs 25 billion), with a network of 614 branches and over 2,000 ATMs, ICICI Bank has left its competition years behind. Kamath's contribution to cutting edge innovations in the banking sector will soon recommence, and as if to acknowledge the years of dedication he has put in to making sure that ICICI Bank stands at the apex -- in 2001, he was named the Asian Business Leader of the Year. A fitting finale one would say. . . but there just might be more coming from him.
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Conclusion:
Organizational development is essential for every organization. Organizational change is a ongoing process and must be embedded in the organization and its interactive sub-system. The challenge today is to create a friendly organizational responsive to discontinuous and unpredictable changes in the environment. Organization Development is a planned change strategy that aims at improving the internal capability of an organization to continuously seek to align the individual organization and environment. Organization research has strong roots in action research in which organization members identify, diagnose, choose appropriate intervention and evaluate the outcomes and consequence. The target of change is the total system or identifiable sub-system. Involvement and support of top management is considered critical to effective implementation of the organizational interventions. Organizational development has a strong value orientation with belief in humanism, democratization, employee participation and multi dimension approach to individual and organizational effectiveness. ICICI Bank under the leadership of Mr. K.V. Kamath brought some dynamic changes in their organization from man management to bringing new innovation to their organization, which helps ICICI Bank to serve its customer in a better way and thus helps in expanding its business. Organizational development has taken place in ICICI Bank in a rapid pace which gave the bank an extra edge over any other private bank and soon it becomes the Indias largest private bank.

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Bibliography
1. Organizational Design and Development by Bhupen Srivastava 2. www.icicibank.com 3. www.managementparadise.com 4. www.wikipedia.com 5. www.rediff.com

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