ASSIGNMENT

OF

ORGANIZATIONAL DEVELOPMENT

ON

Organizational Development in ICICI Bank

Submitted To: Submitted By:

Ms. Neetu Shivani, Gurjeet
Lec. Of OD Alish, Rajwinder
Dated: 17 Mar, 2011
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 1960’s.

Challenge to Change:

Today’s success is no longer a guarantee for tomorrow’s survival. A considerable

number of companies included in the sample of excellent organizations in Tom
Peter and waterman’s book, “In search of Excellence” have either lost the pre-
eminence 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.
 Productivity and quality improvement: Benchmarking, quality circles, TQM,
JIT, Kaizen, Six Sigma.

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  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 don’t 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 du’jeur” 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
often creates a “whipsaw” effect that causes mass confusion among your

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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 union’s
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

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,
was formed.

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
Ahmadabad. 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.

Managing Editor 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
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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."

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.

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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.

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
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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 latter’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.

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.

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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.

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,

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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 India’s 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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