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Friday, April 18, 2014

Wednesday, November 18, 2009
Business

Corporate management

Otobi coming of age

A children’s corner at Otobi Centre in Gulshan. Otobi has put on a corporate look and grown into an employer of 5,000 people over the last few years. Photo: Amran Hossain

An organisation grows like a human.

Humans move from one stage of life to another, from infancy to childhood, from adolescence to adulthood, and so do their responsibilities and actions. Moving from the shield of their parent's care and protection, they learn to tackle the challenges of the real world. Likewise, an organisation should put itself on a path to long-term sustainability.

“When an organisation reaches maturity, the confining ropes must be unleashed," says Animesh Kundu, one of the members of the board of directors of Otobi.

Painter and sculptor Nitun Kundu founded Otobi with only Tk 5,000 in capital in 1975. About three months before his death, the operational matters of the company were delegated to management that was headed by Chief Executive Sabbir Hasan Nasir.

The company logged Tk 218 crore in turnover in fiscal 2007-08. The number of employees grew to more than 5,000 from 1,500 three years back.

The board now manages finance, approves policies and reviews company performance. Before his death in 2006, Kundu himself represented both the board and management.

The separation of ownership from management reaped benefits for Otobi. In its strive to stand as a strong global brand, the company took a series of initiatives, such as introduction of performance measurement tool, balanced scorecard, implementation of Enterprise Resource Planning (ERP) software and SAP.

Above all, creation of a culture of 'we' or 'otobians' and establishment of the values of innovation and discipline allowed the company not only to diversify products, but also to record growth. Its product portfolio now ranges from children's furniture to home and office decor.

In the three years to 2009, Otobi registered double-digit growth annually and made gains in the branded furniture market segment from 60 percent to 70 percent, at a time when the overall furniture market ailed mainly due to sluggish growth in real estate in the past few years.

Explaining the rationale behind making management more accountable, Animesh, also the managing director, says Otobi is a dynamic and innovative organisation and without these two qualities, the company will not be able to survive.

"To ensure dynamism and innovation, an appropriate culture is required so that talented professionals can show their creativity,” he said. “But ensuring a dynamic environment is not possible under an owner-driven culture.”

“It has been historically proven. If you want to ensure dynamism and innovation, you have to promote and establish a meritocratic culture and you have to make it sustainable."

The Cornell University graduate observed that a separation of policy formulation from the operational functions of the company will help it attain such a culture.

However, there is continuous interaction between management and the board. From time to time, management informs the board about the steps it is taking. But what management does have is the power to take instant decisions.

“Management has been fully authorised to take decisions so that it can maintain 100 percent operational efficiency,” he says, adding that this authority made the organisation much more dynamic and creative.

Animesh believes that an organisation is a living entity and one should deal with it from that perspective.

“If you treat it based on your expectations, you will act like a feudal lord,” he says. “If you give authority to management, it works with passion, which is not possible under an owner-driven culture.”

The other benefit, Animesh says, is an increasing rate of return and sustainability, which became possible thanks to a team spirit. “The joy of developing such a team is unique and it cannot be measured by profits.”

The Otobi board unleashes its control over management on operational matters at a time when a pro-business attitude to emerge as global brands by following modern business practices is being created among local entrepreneurs.

But along with the problem of inadequate infrastructure, Otobi's vision to go abroad with its brand faces setbacks in an absence of policies supporting development of global brands emerging from Bangladesh and crossing borders.

However Animesh and Sabbir Hasan do not lose heart. Today, they bet on human spirit, creativity and innovation.

“Now we dream and depend on human spirit,” says Sabbir Hasan.

“Access to funds, technology and information is easier today. But the cutting edge is in human spirit and creativity. You will have to nurture and keep faith.”

sohel@thedailystar.net

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Success from separation of ownership from management should set an example for other industries in the country, such as garments. It is a wonder why our business houses do not already practice this, when it is already proven to be a more successful model in the West. Why are our businessmen trying to re-design the wheel?Do they think they will succeed in developing a more successful model?

: zack

 

 


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