If You Do Not Change, You Will Become Obsolete, reads the largest-lettered slogan on the 1,729-acre corporate campus of the 92-year-old TISCO. BT chronicles the inspiring story of how the behemoth is getting its 59,000 people to lead the biggest transformation of its lifetime.

By Rakhi Mazumdar

It's turning TISCO TOPsy-turvy. After all, what the Tata Iron & Steel Company (a.k.a. TISCO) refers to as TOP is actually a bottom-up approach to operational management that could transform the way the company produces 3.10 million tonnes of steel every year. Reversing the hierarchy, TOP starts at the bottom of the company, occupied primarily by the 25,000 workers on its shopfloors, and takes their most valuable output--not steel, but ideas--all the way to the top, where CEO J.J. Irani is presiding over what could be the biggest-ever tale of transformation at the 92-year-old company.

In the process, of course, TISCO is setting itself up as a benchmark in just how to energise the people of a corporation to be its principal change agents. "Watch closely," counsels Sujit Basu, 50, Director (Technical), M.N. Dastur & Co., "this could be the first step towards mental manufacturing: becoming an intelligent organisation by extracting ideas from people. In fact, this could set the rules of people-led transformation."

That it could. For, while many companies around the country--and the world--know by now that it is their people who are the only source of the knowledge resources with which to conquer the millennium, only a handful are privy to the secrets of just how to tap and channel their collective abilities. Now, with its Total Operational Performance (a.k.a. TOP) programme, aimed at unlocking the minds of its people and using them for productivity and cost-management, TISCO may just join their ranks. Says the 61-year-old Irani: "This will help us leverage the intellectual capital of our people, and reduce operational costs. We are spreading this methodology throughout the firm."

For TISCO, TOP is working as the force-multiplier to a company-wide total quality movement that, last month, won the Tata Group's oldest company the JRD Quality Award--the first to figure on the honours list that has been conferred by Tata Quality Management Services since 1995. Framed on the lines of the Malcolm Baldrige Award for quality instituted by the US government, the award applies the JRD Quality Values Model, which encompasses leadership, strategic planning, information and analysis, process management, human resource management, and business results, all of them circumscribed by both customer focus and satisfaction.

To win the award, TISCO had to bring to bear all the quality tools in its arsenal, which include the 5-S Framework, Statistical Quality Control, and TQM. And yet, while these quality initiatives have generated impressive cost- and quality-related results for the venerable steel-maker, Irani isn't convinced that they are all that his company needs. Says he: "We're improving, but many of our competitors are improving faster. And the business environment is changing faster than the pace at which these efforts were changing our operations."

The solution, then, was to look beyond the principles of quality to accelerate the change process. After all, TISCO had, in April, 1999, declared in its vision statement that it would become the world's most cost-effective steel-maker by 2007-08. With little time to lose, the search for a vehicle to propel innovation and change at a turbo-charged pace was set off. Analyses T.K. Mukherjee, 56, Vice-President (Operations), TISCO: "The changes in the outside environment threaten our very survival. We were changing, but the pace wasn't good enough. So, we began to look for ways to achieve this objective of accelerating change."

Formulating The Concept

Consultations with McKinsey & Co. quickly revealed that the storehouse of ideas for change lay within the company itself. Specifically, in the cerebrum cerebellum of each of its 59,000 employees. Or, as Mukherjee puts it: "Each and every employee of TISCO has to become a change-agent in terms of generating new ideas to make each activity more efficient. He has to be a change-motivated worker irrespective of his rank."

The challenge, therefore, was to design and implement a process that would bring out and apply these ideas. Until then, all that TISCO had done in this direction was to set up an internal e-mail system that gave every employee direct communication access to Irani. Given the volume of mail that was being generated, he was convinced that there was potential for an enterprise-wide initiative.

Simultaneously, McKinsey's studies revealed that TISCO's processes had the potential for cost-savings of Rs 200 crore. All it required was a company-wide movement to identify and attack these costs--without making new investments in terms of automation, new equipment, or new processes. Thus was born TOP, its focus being on effecting operational improvements through a planned process of extracting, assessing, and implementing ideas originating from people.

Observes Jehangir Ardeshir, 36, Divisional Manager (TOP), TISCO: "Operational excellence is the fundamental point. To achieve this, TOP insists that you squeeze the maximum out of your assets--both men and machines." However, for TOP to succeed, it wasn't so much the concept as the execution that TISCO had to manage correctly. Given the depth of its intellectual capital, that innovative ideas would emerge was never in doubt. Nor was its ability to bring about change being questioned.

After all, TISCO already had a real-life example of TOP at work. Managers at Timken, its bearings-manufacturing joint venture with Timken of the US--in which it divested its stake in December, 1998--attribute the company's turnaround in 1998-99, after 4 years of losses since it began operations, to the success of a TOP work-alike. Implemented under the name of Accelerated Continuous Improvement (ACI) in October, 1995, the initiative, covering 7 units in 4 phases, generated a detailed analysis of every process in terms of cost-structures, potential savings, and new targets.

After one-and-a-half years of implementation, the programme delivered a 50 per cent increase in output with only a 15 per cent rise in manpower, so that product-costs fell sufficiently for the company to make profits. Most important, it revitalised the workforce, and put it at the centre of the turnaround. Confirms Vinod Dasari, 35, CEO, Timken: "With a programme like this, your entire corporate attitude can be changed into a Can-Do culture."

Adds Jatinder Mehra, 60, Managing Director, Essar Steel, which is taking up a similar people-led transformation programme: "A people-driven programme like this could help achieve business plans on the basis of benchmarking through motivation and interaction between employees." However, the difficult part--not just for TISCO, but for any company embarking on a similar mission--lay in persuading the workforce to become part of the process, in ensuring that good ideas survived and bad ones perished, in assuring people that their suggestions would be translated into action. In short, in making the movement sustainable. Structuring the initiative and managing the rollout, therefore, were the keys.

Executing The Rollout

For starters, using McKinsey's advice, TISCO introduced TOP to its operations in waves, and not at one fell swoop across the organisation. The objective was not only to gather expertise in managing the process, but also to secure powerful results that could secure the buy-in of its people. And sequencing the rollout across different operations was important because that helped multiply the gains.

Advises Suresh Pandey, 52, Director (Operations), sail: "Start upstream, since the gains made here will immediately show up in the finances of downstream operations too even if they haven't been brought under the programme." That's why TISCO began TOP with its hot metal, sinter, and coke-making operations since these are the starting-points of steel-manufacture. However, the implementation began with a pilot project in the steel-melting shop ld#1, so that the programme could be fine-tuned.

Equally important, Irani ensured that the introduction and rollout was split into several distinct phases, with clear objectives and processes being prepared for each stage. The idea was to ensure the participation of the people and, eventually, to transfer the ownership of the changes to them. Thus, TOP has been designed specifically with the focus on motivating people rather than achieving quick breakthroughs, on managing ideas rather than rushing into actual implementation.

Explains Ardeshir: "The communication-process was initiated through slogan contests across the plant. Channel-T, TISCO's cable TV network, was asked to prepare programmes on units which were taking up TOP. And the commitment of the management to the entire process was conveyed by asking some of the most promising managers to focus exclusively on the programme." The company took special care to ensure that the TOP teams would be manned by people who have a stake in bringing about change for future improvement; individuals, in other words, who were not anywhere near the end of their career.

The typical TOP team comprises between 6 and 10 bright, energetic, articulate managers, aged between 25 and 35. At TISCO, this team is aided by 2 facilitators from McKinsey, and 2 from within the company--Ardeshir and T.C. Alexander, General Manager, (Maintenance)--with the former working on the mission in a full-time capacity.

And the CEO deputed Mukherjee to act as a sponsor, representing the TOP management. This involvement of senior managers is, needless to add, mandatory as that is the only way workers can be convinced that the initiative is a serious attempt to increase operational efficiency--not a fad.

That TISCO's application is generating results is evident not just in hard productivity gains, but also in the mindset changes. Empowered by TOP to do anything they want to for achieving results, workers are shedding their inhibitions to discuss issues with people across functions and up the hierarchy. Asserts Ardeshir: "The most important gain is that once people get into the mould of thinking differently, they are truly enthused to innovate."

Managing The Sequence

Phase I: BRAINSTORMING
The first 2 weeks are spent grappling with the processes and their costs, questioning every assumption to check whether it can be reworked for productivity-gains. It begins, as it must, by asking questions. Observes Alexander, 57: "It is only when you start asking questions that people are provoked into developing answers. And who will come up with the answers but the people themselves?"

The TOP teams interact with groups of workers and supervisors in a systematic fashion to ensure that each of their voices is heard. Acting as facilitators, the TOP teams help them benchmark the cost, efficiency, and productivity of the particular process that that group is involved with. Once the biggest gaps have been spotted, the Key Performance Indicators (KPI) for the process are identified. Explains Ardeshir: "These KPIs identify the areas where productivity-levels can be increased with the least possible investments."

The essence of TOP lies in getting the workers to conduct the benchmarking themselves instead of having the targets thrown at them from above. This way, not only do they take ownership of the improvement goals that they set for themselves, they also manage to delve deep into processes and sub-processes to identify hidden potential for savings and productivity-increase. Points out Alexander: "It was after we started off that we began looking at conversion-costs, and comparing them with those of world-class companies operating under similar conditions as we do."

To streamline the task of seeking solutions, all costs are classified at this stage as compressible or non-compressible. While the former refer to those that can be squeezed through existing processes, the latter comprise those that need process changes and reengineering before they can be lowered. This partitioning upfront ensures that no effort is wasted in coming up with solutions that will not work.

The company only sets aspirational targets for each genre of costs; a cut of 40 per cent in the compressible variety, for instance. The brainstorming sessions conclude with specific targets for productivity-improvement being set for each process. Says Alexander: "By now, people are thoroughly involved, so that the first objective of TOP--going bottom-up with innovation--is successfully met."

Phase II: HARVESTING
The next 8 weeks of implementation are spent generating ideas for meeting the targets set earlier. Intensive interactions between different sets of people are held, and knowledge being garnered from various sources is pooled in. From the expertise of shopfloor workers to research and academic journals, from interviews with former employees to the Net, anything and everything is mined for information and insights.

At the same time, people meet frequently to exchange ideas and improve on each other's suggestions. For instance, when the pilot wave was set off in the steel-melting shop ld#1, one of the KPIs was reducing loss of metal in the slag pot. Says Sanjiv Paul, 37, Deputy Divisional Manager, ld#1, and Unit Leader, TOP Wave: "We looked at global benchmarks--or, if these were not available, theoretical best-in-class performances--to find out how far we had to go."

Then began the process of gathering information and mining it for ideas. At one level, this was done through consistent questioning. At another, the answer-seekers contacted TISCO's technology-partner, Thyssen of Germany, as well as global and domestic competitors, like Pohang Steel of Korea and Essar Steel. Says Ardeshir: "The objective is to make the information- and ideas-bank as rich and varied as possible."

Frozen into TOP at this stage is the rule that every idea that is generated must be examined thoroughly, and not discarded simply because it seems wild or absurd. Thus, all suggestions are checked for their workability in terms of delivering lower costs, increasing throughput, and improving quality. And a hierarchical list is prepared, with the ideas holding the best savings-to-cash-and-time-investment--highest gains at lowest cost--ratio being at the TOP. A matrix is used, with feasibility on one axis and returns on the other, and the ideas are placed in it.

Since solutions are implemented purely on their merit--with the workers themselves sitting on judgement--and not on the basis of where they originate from, the sense of participation is so strong that no one stays out of the programme. Says D.P. Dass, 45, Vice-President (HR), Usha Martin, who has been visiting TISCO to observe TOP in action: "There has been a total transformation in thinking and the approach towards ideas. The proactive approach boosts morale among employees."

Phase III: SCREENING
At the end of the 12-week target-setting and idea-incubation process in every wave, the solutions that have survived the first 2 stages are referred to the TOP Steering Committee, which comprises Irani, Mukherjee, Amar Dhillon, Senior General Manager (Works), and Gopal Sinha, Deputy General Manager (Operations and Cost Research). Each TOP team-leader makes a presentation, outlining the ideas that have filtered up from her team, and explains the benefits and the payback-period. A team can take upto a week in preparing this presentation.

The precondition: all ideas must recoup their investments within 12 months. This is where the company's top management throws its weight behind the ideas, with the Steering Committee providing endorsement rather than exercising judgement. The rationale is that if an idea has made the cut through the stringent questioning during the first 2 phases--covering analytical, technical, and logistical details--it must be worthwhile.

While ideas with investments below Rs 50 lakh are green-flagged automatically, those involving more than Rs 50 lakh have to be referred, under company policy, to a special study group. For TOP, these proposals go onto a fast track, with a clearance deadline of 48 hours. Says Ardeshir: "At this level, 98 per cent of the ideas are cleared and given the go-ahead."

Phase IV: DESIGNING
With the backing of the top management secured, every unit spends the last 2 weeks of the process designing the implementation of the ideas. The entire sequence of activities has to be planned out and documented, including What-If scenarios and details of the returns on investment and the actual improvements that will be achieved at every stage. Once the blueprint has been drawn up, the TOP team is disbanded, and the workers begin the act of putting the ideas into practice.

At the same time, a Cost Implementation Group (cig) is created, its members being the facilitators from McKinsey and 2 assistant managers from Operations and Cost Research departments. Its function: provide data on the cost base, monitor the implementation, and validate the results.

At this stage, the sense of ownership that had been assiduously cultivated runs the risk of dissipating. To ward off that threat, TOP involves conducting a ritualistic signing-off ceremony, where the head of a section commits himself, on behalf of the implementing unit, to use the idea effectively. This ensures that the sense of responsibility about the project doesn't weaken. Sometimes, when it seems that achieving the target may not be possible in any way, the implementors go back to ideating.

Admits Paul: "The last 30 per cent can be the hardest, and we often have to stretch for it. But that's what adds to the innovation." Once the targets have been met, they become the benchmark for the next round--beginning the cycle over again. Concludes Mukherjee: "Arguably, the biggest benefit of TOP comes from being able to energise the workforce into managing this entire process on its own, without the direct intervention of senior management.

After all, ideas that come from the people closest to a process usually have the greatest impact on performance. A classic example: a simple innovation that came from a shopfloor worker in the lowest grade at Blast Furnace G. It is mandatory for the temperature inside the blast-furnace to be maintained at between 1,460 and 1,480° Celsius--which requires continuous monitoring--to ensure that the hot metal produced is of the right quality.

The normal procedure was to insert a probe, which could be used only once since it was incinerated at those temperatures. But only the workers seemed to be aware that this was an unnecessary cost--and it was one of them who suggested using a radiation pyrometer instead. While the device cost Rs 1 lakh to install, there were no running costs. By contrast, 35-odd probes, each costing Rs 60, that were used every day worked out to an annual bill of Rs 7.67 lakh a year. Savings: Rs 6.67 lakh a year!

Auditing The Results

Inside the machining-centre on the bearings shopfloor of the rolling mill at TISCO, all the turning-machines faced in the same direction. So long as productivity standards were not questioned, no one realised that this orientation made it impossible for one worker to man more than one machine. But with the targets raised, the workers themselves provided the obvious solution: re-align the machines so that they face one another, allowing one worker to operate 2 of them.

And staggered the lunch-break for the 14-member team so that there would always be 7 of them on shopfloor, making machine downtime unnecessary. Thus, 30 additional minutes of uptime, added to the 450 minutes in a normal shift, meant a 7 per cent increase in productivity. It was, of course, TOP that alerted the workers to the need for--and the possibility of--such improvements.

Hundreds of such innovations are being executed at TISCO. Starting as it does with collective brainstorming, the sheer energy that TOP has unleashed in the mental processes of the company's people is one of the major benefits of the programme. Both the micro- and the macro-level results prove the point. In the 2 weeks at their disposal, the TOP team at the G Blast Furnace, led by Deputy Manager Ajit Dhanraj Kothari, 32, generated a staggering 300 ideas.

Then, 37 of these that were sent up to the Steering Committee were whittled down to 30, with a combined savings potential of Rs 30 crore. Even as 5 more ideas, capable of generating savings of Rs 7.50 crore, were added to the list, the implementors converted the concepts into action at a furious pace, with 18 of them translated into concrete steps already.

The innovations were fired by the benchmarking, which revealed that the furnace was producing only 3,233 tonnes of hot metal a year--using 610 kg of fuel per tonne of output--while comparable plants could produce upto 3,700 tonnes. After the improvements, the production-level topped 3,800 tonnes--at a fuel-consumption rate of 570 kg per tonne. Observes Kothari: "More than anything else, TOP has made us think. And it has given us the confidence that our ideas will be entertained and treated on merit."

The results of equally startling proportions are becoming visible across the company. In its first 3 waves, TOP covered 1, 9, and 11 different units, respectively. Now, the fourth wave is about to roll, with 12 units coming under its sweep. If it builds on the savings of Rs 115 crore likely to be generated by the first 2 waves by the end of 1999-2000, the gains will, obviously, be spectacular. Insists Irani: "More important, the methodology will enable us to institutionalise the change and improvement-process throughout the organisation."

Questioning even the first principles of manufacturing on TISCO's shopfloors is just what TOP tops at. In the Wire & Rod Mill, for instance, successive billets used to be produced at intervals of 7 seconds, the gap being necessary to ensure that they weren't fused together. But after a worker questioned the need for maintaining that long a gap--why couldn't it be 2 seconds, for instance, so that production and productivity-levels would rise?--the process was re-oriented, increasing output by 6 per cent without a single paisa of investment. Exclaims Shyam Sunder, 36, Deputy Divisional Manager (WRM): "We had grown so used to the older method that we had simply not thought about it before. TOP gave us an insight into the potential of change. That shook us out of our complacency."

As a matter of fact, nothing has been as effective at demolishing set assumptions as TOP has. And many of the ideas that have emerged are so simple that they're even making people wonder why no one though of them before. For instance, it wasn't until TOP was initiated that a worker questioned just why all the cooling fans inside the cooling towers needed to be kept operational even in winter, when the external temperature drops to 15º Celsius.

TOP works no matter how young or old the company. Don't forget, at Timken, it was rolled out in the company's very first year of operations. But it is really as a driver of change in well-entrenched practices, a la TISCO's processes, that the power of this bottom-up initiative is most in evidence.

In general terms, the programme is making people believe that every problem can be solved since meeting productivity-targets is not an option, but a compulsion. At the Sinter Plant No. 1, for instance, which was set up back in 1958-59, production-levels had not climbed beyond 28 tonnes per sq. metre in the past 10 years. But, once TOP had been put into effect, the standard to be achieved was set at 35 tonnes per sq. metre. So, the workforce had no choice but to go about looking for ways to attain that level--and find innovative, low- or zero-investment solutions.

For instance, leakages in the suction system, due to the wear-and-tear of components, were proving to be a constant problem. These leakages used to be a function of the proportion of oxygen in the waste gas--and it was assumed that this level was unchangeable. Admits J.D. Sethna, 40, Divisional Manager, Sinter Plant No. 1, TISCO: "Somehow, we got into a mindset problem, and could really not hope that production could be increased further from that level." No sooner did the workers start brainstorming than one of them delved into his knowledge of chemistry to point out that replacing dolomite--magnesium carbonate--with a substitute named dunite--magnesium silicate--in the raw material could cut the proportion of oxygen in the waste-gas from 18 to 15 per cent.

The impact on the bottomline was, of course, amazing: The drop in leakages improved productivity by 32 tonnes per sq. metres per day, resulting in a fall in the production cost of sinter from Rs 743 to Rs 735 per tonne--or, annual savings of Rs 1.10 crore. Even the hard-to-please Irani was astonished. However, that's not where TISCO is chalking up the real benefit. Explains Sethna: "Even more important than the monetary savings was the fact that this showed how we can generate sizeable gains in a short time by coming up with the ideas ourselves." Ideas, crucially, that challenge the orthodoxy, making change easy.

Of course, no matter how effective TOP proves to be at garnering ideas from TISCO's people and motivating them to keep their creative juices flowing, it will not substitute strategy. Nor will it enable topline growth, market success, or customer-satisfaction. What it will do--no more, no less--is to allow the company to leverage all the real assets at its disposal, tangible and intangible, steel-grey and brain-cell grey--for maximising productivity and lowering costs. Observes Irani: "This is an important step for us. It will help us realise the ambition of becoming one of the least-cost producers of steel in the next decade."

Moreover, by giving operational effectiveness a new dimension--linking it to continuous, company-wide innovation and ideation--TOP could well set a new benchmark in managing people-power for top-performers. And that alone, ultimately, could take TISCO to the top.

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