Published on January 24, 2024
Back in 2002, the Delhi Distribution Board was facing a massive 53% loss of power due to factors as varied as power theft, faulty meters, unreliable readings and dilapidated network. The Government was granting a monthly subsidy of Rs.1000-crore just to keep the service going for the power supplier’s 1.9-million consumers. In 2002, the distribution was privatised, with Tata Power acquiring a majority stake to take over the management of the company. The same government employees who worked for the Board pre-2002 continued after Tata Power took over and enabled the business transformation – with the culture of execution excellence that Tata Power brought in. “The idea was get them to perform, not punish them,” said the architect of the 20-year turnaround story Sanjay Kumar Banga, President - Transmission & Distribution, Tata Power, while addressing the Leadership Series EDGE Webinar on Wednesday, January 24, 2024.
Today, 22 years on, Tata Power Delhi Distribution is counted among the top utility distribution companies in the world, rated A+ across all business parameters, certified as a Great Place to Work with customer satisfaction of 97% and with year-on-year performance improvement and loss reduction, the distribution losses have been slashed to the global benchmark of just~5.9%.
Speaking on ‘Execution Excellence for Business Transformation’, Sanjay shared the power distributor’s journey from being a loss-making PSU to emerging as one of the most successful private power distribution outfits in the country.
Enabling Excellence
Where the area for distribution of power was limited by the clear demarcation and the revenue was on the basis of tariff fixed by the Government, the challenge for the leadership was to foster a change of culture to make the job enriching for every employee, such that they look forward to come to work every morning. “From 2002 to 2010, the company’s entire focus was on reduction of losses and improving reliability; right from the leader to the lineman, everyone was aligned with the targets,” said Sanjay, adding that setting clear goals, drawing a well-defined operating plan and following up on its execution is integral to execution excellence. It is equally important to identify outstanding performers, give them new capabilities and reward them. “This instils a sense of ownership and pride in every employee, and they take the organisation’s criticism as personal offence,” said Sanjay, adding that the motivated workforce has been instrumental in the success of the company.
As much as it is important to excel at core competency, it is also important to nurture a culture of developing new competencies. For instance, the Tata group started with infrastructure and steel, but its growing competencies has paved the way for its presence across sectors. Similarly, Tata Power developed its core competencies as well as new competencies to become successful not only in Delhi but also in other parts of the country. “If a company does not develop new competencies, it runs the risk of becoming outdated over time,” said the Tata Power veteran, who is responsible for the transmission, distribution and power trading business of Tata Power, and overseeing the performance of Discoms across Orissa, Mumbai, Delhi and Ajmer, besides leading the transmission business in Mumbai, UP, Haryana and Rajasthan.
Expanding the Horizons
Around 2010, the company realised that there was limited scope to increase capabilities in Delhi – and a possibility of stagnation setting in. “We started a new business scheme to give better exposure for our people; to give them consulting opportunity with other state distribution companies across the country,” said Sanjay. By 2013, the organisation had a 500-strong consulting team who worked with 35 distribution companies across the country. “Our consultants earned more revenue from the power sector than the Big 4 consultancies in the country,” revealed Sanjay, adding that the objective was not to earn incremental revenues, but to engage the employees to give them a better sense of fulfilment while keeping them abreast with the latest technologies. “This way, we expanded our people capabilities, while the organisation remained a continuously learning organisation,” he said.
Execution excellence is a key capability. “When employees feel a strong sense of purpose and are given clarity of their role, they develop an emotional connect with the company and feel truly empowered,” Sanjay said. When it comes to execution, the operating plan is as critical as the strategy plan – the ‘how’ is deliberated as much as ‘what’. “There should be a clear focus on implementation; if it’s not there, you will drift from your targets,” advised Sanjay, adding that setting measurable quality targets is important. While Tata Power’s Delhi business has developed over 650 processes over time to become a benchmark company globally, it has also deployed technology across the spectrum to be counted amongst the top-20 technology-driven utility distribution companies in the world.
The Odisha Odyssey
In the journey from a loss-making Delhi unit to a thriving unit, the instinct to change became the DNA of the company. In 2020, when Tata Power took over distribution units in Odisha, a group of 200 employees from Delhi took the same DNA of excellence with them and repeated the success in Odisha too. “Replicating all practices and processes in Odisha, they did in one year what they took 10 years to do in Delhi,” shared Sanjay, adding that the distribution unit that was incurring an annual loss of Rs.1000-crore was turned around and made a notable profit of Rs.900-crore in the very first year of operation under Tata Power.
Creating a Culture
Most efforts at cultural change fail due to non-linkage with business outcomes. A cultural shift should not only be demonstrated by leadership but also the business outcomes should be clearly outlined. It is equally important to identify the truly deserving performers through a transparent process and linking rewards to performance. “Organisations can leverage technology and minimise manual intervention with a digital index to bring transparency, accountability and efficiency in the people assessment process as well,” said Sanjay.
Execution is a discipline and integral to a strategy; the leadership should be directly associated with execution and not leave it to managers. “Execution must be a core element of an organisation’s culture. Ideally, the leader should ensure that the right person is at the right place up to three levels down the line to set up a robust execution culture,” said Sanjay, adding that execution excellence comes with discipline and there is no place for leniency. “Understand your resources and your own limitations, set a target by doing an analysis on the previous year’s number and put some stretch to encourage innovation and motivation to drive the culture of execution excellence for business transformation,” advised the Group’s avid proponent of business excellence.