Corporatising the Corporation

Think of a dynamic, professionally run property management company which operates a sprawling 46,000 acre township that is home to over 1.5 million people and includes an international airport, deep-water seaport, a dozen luxury hotels and superspecialty hospitals, world class R&D and educational institutions and a 25 million sq.ft knowledge zone. The company employs thousands of staff to take care of dozens of services to be provided to its customers. Led by a professional management and publicly listed, it raises hundreds of crores each year through a variety of means.

Now, if you thought I was referring to a mega-township like the King Abdullah Economic City , managed by a professional property development and management firm like Emaar MGF , you could easily be right. After all, big integrated townships are the rage these days in the real estate industry. And bigger the better, with sizes approaching and often exceeding 25,000 acres.

But what if I told you that I was in fact referring to a possible incarnation of that all-too familiar and often begrudged organisation, the Trivandrum Municipal Corporation?! You would think that I lost my marbles sometime in the recent past....quite understandable, given that the Trivandrum Corporations track record for efficiency, project execution and financial prowess is not exactly exemplary. Far from it! Yet, such a seemingly impossible but highly desirable state-of-affairs can come about, with the application of a few tried and tested management principles and strategies, which have helped little known companies grow into billion-dollar giants.

The fact is that there are two bodies which are primarily responsible for the development and upkeep of the Trivandrum metropolitan area - Trivandrum city and its suburbs. Namely, the Trivandrum Municipal Corporation (TMC) and the Trivandrum Development Authority (TRIDA).

Although their roles and responsibilities converge at many points, there are some broad areas of clear demarcation. TMC provides civic services - from street lighting to solid waste management to education and health - and is governed by a directly elected body of councillors. TRIDA looks after end-to-end developmental activities - including land acquisition, project tendering & management, operation, maintenance and BOT projects, and is mostly run by nominated members.

The synergies are very strong. Both TMC and TRIDA focus on the same geographical area, although TRIDA's sphere of activity is slightly larger. Both the organisations have to find income to meet capital and operating expenditure often running into hundreds of crores annually. And although TRIDA is much less visible to and interacts less intensively with the common man than the TMC, both have significant impact on all our lives. Finally, and quite sadly, both face the same kind of problems - budget shortages, inefficiency, red-tapism, capability gaps and manpower shortages.

It doesn't take rocket science to see that some reorganisation could make a lot of difference to the way these two lumbering behemoths work.

Of course, we are not talking of taking the democratic element away. Far from it, we would look at making it more effective. Whereas the TMC element in the merged entity, let's call it the Trivandrum Metropolitan Development Corporation (TMDC) will handle public policy, the erstwhile TRIDA element will focus on the execution, operation and maintenance of the entire civic infrastructure. Separating the Legislative and Executive elements will give both a chance to operate more effectively. For example, when a legislator is also part of a Standing Committee on a particular issue - say Public Works - his/her thinking may be clouded by operational issues and hence the policies made not be the best ones, since there may exist ways and means unknown to him/her of operationalising the best policies. In reality, it is unlikely that the TMC will be ready to relinquish all of its powers within the TMDC framework, so it may retain the taxation, record keeping, health and education parts while all project functions are devolved.

Now to understand how TMDC can be more effective than its predecessors, let's lean on some cutting-edge management policy. This part is drawn from a recent article in the Mckinsey Quarterly, entitled "Organizing for Effectiveness in the Public Sector". ( You can read it here, if you have a log-in. I suggest that you do read it or get an account soon to do so.)

The authors refer to public-sector institutions like TMC or TRIDA as being "large, complex bodies which are insulated from competition and have mixed, sometimes non-financial goals." They believe that five redesign levers can be used to create more efficient and effective organisations.

Strengthen the Top Team: There is no denying the importance of the top management team, be it a corporate giant and a municipal corporation. The management not only decides the strategy of the firm, but also directly or indirectly its operations, brand image and almost everything about the organisation. The two key elements of the management teams are its members and their effectiveness as a team. A career politician may not be the best urban planner or administrator. As a recent Tata Tea ad goes, politicians may not have any of the qualifications necessary for the posts that they hold. So it is essential that TMDC be infused with professional talent - managers, urban planners, engineers, architects and so on. The top team of TMDC must be a combination of elected and judiciously nominated/selected members. Next the team must work as a cross-functional unit and formulate strategy which can be quickly and efficiently translated into action.

For example, creating a "strategy to wipe out poverty" will be of little help, whereas a strategy to use Self-Help Groups to improve economic self-sustenance is much more readily implementable, if less grandiose.

Separate the Design and Provision of Services: This is essentially what we talked about earlier, in having separate legislative and executive wings. So while the legislative focuses on policy, the executive wing can focus on execution and operation, and can be more easily held accountable for their performance. This divergence of roles also helps to focus on more on bringing about quick and sweeping change.

The executive can focus on improving efficiency and effectiveness. One ready example is by combining procurement of goods and services. While the different departments of the TMC and TRIDA earlier bought cement, steel, diesel or printer catridges in disparate, relatively small lots, a combined purchase wields far greater power with suppliers and consequently gets a better deal - be it in outright discounts or better after-sales services.


Define the Role of the Organisational Centre: Most organisations, the TMC and TRIDA are no exceptions, have large headquarters setups, large not just in the size of the buildings but in that of the staff and the accompanying budget. In a Yes Minister-ish model, these often end up being the biggest cost head on the annual budget. By strictly defining the role of each and every department and staff member, a lot of rationalisation can be achieved. For example, in TMDC, the people coordinating between TMC and TRIDA become redundant. In a country, where laying off a public sector employee is as likely as an ice cube in hell and as politically dangerous as throwing a live grenade down own's shorts, it needn't be the case. Staff can simply be redeployed to front-line offices and units, which being smaller are usually more accountable, or they could retrained to acquire new skill-sets. In short, we can go from a behemoth whose one end doesn't know the address of the other, to a series of agile units aligned around a small but capable HQ.

Integrate Performance Management: Usually considered as difficult as untying the proverbial Gordian Knot because of unionisation, sedentary pay structure, the absence of competition and what not, performance management can still be deployed in an organisation like the TMDC. With smaller units making the measurement of outcomes easier and innovative performance incentives like further education opportunities or faster career progression, there is a good chance that performance management can be operationalised successfully. While this is so, it will still be one of the most difficult parts of the change management efforts for the TMDC. One critical factor will be keeping things simple, some performance management systems are so complex or opaque that they are often accused of being full of favoritism and often end damaging the organisational culture. Additionally, the benefits of the system must be quite evident to all levels of personnel.

Learning New Skills: This doesn't necessarily mean that the sweeper on the roads learns skills to be a councillor and vice-versa, although it may give the latter a better understanding of the hardships of the former. Rather, this part of the organisational transformation will initially target to help personnel acquire new or updated skills which will directly help them to perform their existing roles better. So this could be to help the road sweeper learn how to operate a vacuum machine or the councilman a PDA. This sort of training is already happening at TMC as it progressively converts from seas of dusty files to an electronic office. Its one-stop interaction centre has already proven to be a boob to the harried citizens of Trivandrum. Later, the training can be expanded to include areas related to the current function or even to aid career progression within the functional area. This strategy of skill improvement in related areas helps to bring the most significant and the fastest benefit in terms of productivity improvement. The last-stage could be bring in a limited type of multi-tasking by acquiring news skills and experiences, but still usually within one broad function.

Well, the theory sounds fine, but what will it bring you and me? After all, we will be footing most of the bill for this exercise. For starters, it will increase efficiency within TMDC by setting better strategy, ensuring better execution by skilled staff who are also motivated to go that extra mile. This in turn drastically improves the customer experience, which translates into you and me having an easier time the next time you drop into a TMDC office or having streets swept daily...with machines to boot! Brightly lit streets, wide roads, plenty of water - sounds too good to be true.

Well, it could be far too good to be true if one crucial ingredient is missing - money. Without that, any amount of efficiency will not matter. It is one trait both the TMC and TRIDA share, the chronic shortage of funds. While this state of affairs is mostly due to the unviably low user fees (read land tax, building tax etc) and inefficient financial management of the two bodies, it is exacerbated by the lack of any innovative ways of fund raising. The first part of the solution is to rationalise the user fees, a process already being started by the developments signed with the Asian Development Bank. Even the Left Front has come to terms with the fact a hike in user fees is necessary to prevent the local self-government bodies going bust. Coupled with sound financial management, this will help somewhat to fill TMDC's coffers but still not be able to fund major capital expenses. For this, TMDC will have to adopt a method of funding now widely used by its peers in almost all of India's other major cities and utilise the one valuable resource it has - land.

With an envisaged geographical extent of 500-600 sq.km, the TMDC will have significant land reserves. These could either be smaller but high cost-per-acre plots in the city and its suburbs or larger but lower cost-per-acre plots in the outlying areas. In a State with the highest density of population in India, land is scarce and hence TMDC may not have the thousands or tens of thousands of acres at the disposal of its brethren in Hyderabad, Chennai or Kolkata. But this is where the State Govt. can step in, by transferring all excess land with its various departments to TMDC. For example, Kerala University is said to have almost 300 acres of excess land at its Karyavattom campus, right next to Technopark Phase I. The value of this land could be in the range of Rs 450-600 Crores. Quite a tidy sum by any standards, enough to fund 100 kilometres of 6 lane roads in Trivandrum or an entire Bus Rapid Transit System! A two-acre plot inside the CBD could fetch Rs 60-80 Crores, given the prevailing prices of Rs 30-40 Lakhs per cent! Examples of such fund-raising exercises are dime-a-dozen these days, as municipal bodies are increasingly left to fend for themselves by cash-strapped State Governments. It is not only the metros like Mumbai, Delhi or Hyderabad are able to reap the bounty, but tier-II cities like Vishakhapatanam, as developers race to establish themselves in these emerging investment destinations. And it need not be outright sales in every case. A PPP venture like the Rs 6,000 Crore Technocity will enable TMDC to receive annual payments whose cummulative value will far outweigh the proceeds of a one-time sale. Such revenue streams will help make up the lion's share of TMDC's annual operating budget. Come to think of it, TMDC should have already been in place to harness the Technocity project, being responsible for land acquisition and then forming a partnership with Technopark to create the Special Purpose Vehicle (SPV) with a private developer for the project itself. TMDC can also chip in with the basic infrastructure like roads as well as power and water supplies. Considering that the project is coming up on land in Trivandrum and is being promoted due to the success of our own Technopark, I find it natural that a share of the profits should be ploughed back here itself with the rest being used for ventures like district level IT parks in other districts, or maybe even to fund the near-bankrupt Infopark in Cochin.

The final element required is single-point responsibility and authority. TMDC should be able to coordinate the activities of all public utilities and services within its area. The first step in this direction has already been taken with the signing of an agreement which hands over the planning, tendering and ownership of the water supply and sewerage network in Trivandrum to the Corporation, while the Kerala Water Authority will remain the executive body overseeing the execution, operation and maintenance of all projects and systems. (Read the news here.) While this segregates and concentrates responsibility, we have to hope that it does not turn into another pass-the-buck contest. Under a similar agreement with the Kerala State Electricity Board (KSEB), the Corporation is supposed to pay the KSEB to operate and maintain the streetlights of Trivandrum City. Disputes over payments between the cash-strapped Corporation and the equally poverty-stricked KSEB has meant dark, dangerous unlit stretches for all of us. And while the two bodies trade accusations, motorists and pedestrians alike are meeting with accidents. While the structure of the agreement with the KWA, wherein the latter retains all operational aspects, should hopefully prevent deja vu, we need to extra vigilant and safeguards need to be built in to ensure this. A cash-rich TMDC, its cheque book bloated by the release of its land bank, should also help prevent this situation from arising.

The formation of a TMDC is a crying need for a fast growing city like Trivandrum. Today it leads the pack of Tier II IT destinations, which include cities like Mysore, Mohali, Vizag, Coimbatore and so on, many of whom already have fully-fledged Development Authorities with ready land-banks. If we don't follow suit, we run the risk of being left behind by these cities and forced to pick up scraps with Tier III players like Madurai, Vijayawada, Asansol or Cochin.

With the formation of a strong and capable TMDC, Trivandrum which has lead Kerala by miles in terms of urban amenities like piped water, electricity, sewerage, telephones and public transport, will once blaze a trail in terms of urban development!