Silvio Schindler In India
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Executive Summary
In 1997 Swiss-based elevator and escalator manufacturer Schindler Holding, Ltd. decided to expand its operations to India. As the technology leader in elevators, Schindler was confident that the Indian market provided significant opportunities for growth.
The venture in India would be different from Schindlers other subsidiaries in several ways. Rather than focusing on Schindlers success with custom equipment, the India operations would focus on standardized products. In addition, Schindler planned to outsource all of the manufacturing of components to local Indian suppliers with a few critical components being supplied by its European subsidiaries.
Schindler chose Silvio Napoli, a Harvard-educated MBA, as the head of the India expansion project. Napoli was involved in the planning of the Indian subsidiary and had worked closely with key Schindler executives on other strategic initiatives.
Napoli faced many obstacles while trying to implement the new strategies in this new subsidiary. Not only did Napoli have the formidable task of selecting a management team and beginning operations, he also had to deal with resistance from other Schindler subsidiaries whose cooperation was crucial to the success of the chosen strategy.
The difficulties faced by Schindler India highlight many change management issues. Napoli faced considerable resistance to change from the European subsidiaries and his Indian management team. This resistance produced an organization that was incongruent in its goals and actions. Additionally, the importance of appropriate strategy selection became evident in this case. Although the standardization approach had been successful in Europe, the logistical, economic, and market difficulties created by this strategy proved to be unsuccessful in India.
Introduction
The Silvio Napoli at Schindler India case illustrates the planning and early stages of implementation of a Swiss-based manufacturer expanding into the Indian market. In 1998 Schindler Holdings Ltd. was a multi-national manufacturer of elevators and escalators with revenues of 6.6 billion Swiss francs. After a lengthy visit to India, CEO Alfred Schindler saw the market as the next China and was determined to position his company in this emerging market. Alfred tried to expand into India via a partnership with Bharat Bijlee Ltd., but negotiations broke down. By this time, Indian governmental laws allowed multi-national corporations to establish wholly-owned companies in India. Schindler took advantage of the legislation to establish a wholly-owned company. The business plan called for a $10 million investment and relied on the manufacturing and selling of a standardized product line of elevators and escalators. The Schindler Holdings Ltd. board chose young Silvio Napoli to execute the new business plan.
Napoli was faced with numerous obstacles to implementing his business plan almost immediately. This paper will explore the situation requiring change and Napolis leadership during this change situation. This paper will conclude with a strategy for dealing with several of the problems faced by Napoli and Schindler India.
Question #1
What were the different changes outlined in Silvios strategic plan? Which of these changes would you classify as first and second order changes?
Napolis strategic plan called for two primary changes. First, Schindler India would sell core, standardized products, with no allowance for customization. Second, the company would outsource key manufacturing and logistics functions. The strategy to sell core, standardized products would be classified as a second-order change. Schindler had actually developed a standardized elevator as part of the Swatch Project in 1995, but Napolis decision to sell only standardized, non-customizable elevators in India was a transformational shift in corporate strategy. Schindlers European facilities produced and sold a standardized elevator, but they also sold customized products. Schindler India would compete for market share with two standardized elevators- the S001 and S300P. This was a shift in strategy that is a characteristic of a second-order change.
The other change, the outsourcing of manufacturing and logistics, was also a second-order change. In the elevator industry, it was a radical concept to have no in-house manufacturing, no centralized assembly, and no logistics infrastructure. Schindler India would be relying heavily on local suppliers, similar to Mercedes expansion into India, to deliver a quality product in a timely manner. This was a major strategic change from the way Schindler operated in Europe.
Question #2
What images of change do you see in this case?
Silvio Napoli is illustrated in the case as being a director. Napoli had a clear, concise plan with incremental goals, and he was going to lead the way for his organization. Napoli took it upon himself to direct Schindler India in a way that would produce the desired changes and results. Co-workers described Napoli as “driving very hard,” “impulsive,” “impatient,” “over-communicative,” and “wanting everything done yesterday.” Napoli realized the importance of hiring a group of people with a common set of values; values he described as integrity, assiduousness to work, and drive. Napoli spoke of looking for people with “the right attitude and energy, not just (looking for) elevator people”.
When employees deviated from the companys plan and Napolis vision, he was quick to respond. While he was away for the birth of his child, he discovered that someone at the company had accepted an order for an expensive glass pod elevator, which was not a standardized product, and, therefore, was not in line with the companys strategy. Napoli expressed his displeasure over the order with M.K. Singh and followed that up with emails to the managers to remind them of the corporate strategy.
Although the information presented on M.K.Singh in the case was somewhat limited when compared to Silvio Napoli, Singh came across as being a nurturer of change. Nurturers of change are characterized as facilitating organizational qualities that enable positive self-organizing to occur. Nurturers see specific outcomes and directions of change emerging from the qualities and capabilities of the organization, not as being intentionally produced. Singh was described by co-workers as being “friendly