Significance of lateral thinking

This article was published in the June’2007 issue of the magazine Educare

Lateral thinking is an unpredictable and unconventional approach to solve problems in a non-evident manner against the normal logical step-by -step linear or sequential thinking. Lateral thinking is a step-by-step method of creative thinking with prescribed techniques that can be used consciously. The objective here is not to get into technicalities of lateral thinking (well covered in Wikipedia) but explain lateral thinking in a way the students can understand through practical examples.

One simple example is that of my brother, a businessman who, several years ago, wanted to buy a personal computer when the production reached 10,000 units from the current 4000 units because only at that volume the computer was justified because of the administrative work involved. I pointed out to him that he could buy the computer first, then from whatever time that was saved by the computer could be used to manufacture those 10,000 units. He liked the idea and on implementing the same he was able to achieve a production figure far in excess of 15,000 units.

The best example of unconventional thinking the world over is that of Henri Ford who is considered to be one of the pioneers of the motor car. He saw profits in mass production and to make his car affordable to workers, he adopted a totally different approach. He shocked the world with what probably stands as his greatest contribution ever: the $5-a-day-minimum-wage scheme. The average wage in the auto industry then was $2.34 for a 9-hr shift. Ford not only doubled that, he also shaved an hour off the workday. In those years it was unthinkable that a guy could be paid that much for doing something that didn’t involve an awful lot of training or education. The Wall Street Journal called the plan “an economic crime, adopting biblical teachings where they do not apply” and critics everywhere heaped ‘Fordism’ with equal scorn. But as the wage increased later to a daily $10, it proved a critical component of Ford’s quest to make the automobile accessible to all. The critics were too ignorant to comprehend that because Ford had lowered his costs per car, the higher wages didn’t matter —except for making it feasible for more people to buy cars. He increased his market share from 10 per cent to 40 per cent while the share commanded by General Motors slipped from 23 per cent to 8 per cent. After cutting the prices 30 per cent during the 1920 economic crises, Ford commanded a 60 per cent share in the market that had grown by a factor of 12 in a decade. Within a decade and a little later his net worth increased from the original $ 28,000 to $ 715 million.

This upside down thinking or supply creates its own demand has been followed in India no better than Dhirubhai Ambani and his sons. This is what a Reliance manager has to say about Dhirubhai’s initial moves in the textile industry:

“Against conventional wisdom, he started manufacturing synthetics on a mega scale realising that the poor would pay more for a reasonably good quality because they got an image boost. He did not look down upon consumers or take them for granted. The polyester pasha had stumbled upon a polyester market which the older mills has missed completely. When Reliance entered the domestic market, it met with a lot of resistance from traditional cloth merchants whose loyalty was towards the older mills. Following a totally unusual approach, he bypassed the traditional wholesale trade, opened his own showrooms, tapped new markets and appointed agents from non textile backgrounds. While he may not have pioneered the concept of company stores, he pursued this policy on a grand scale. In a drive to achieve high volumes, Ambani spotted an entirely new market- the non metro urban segment and opened it up. Other mill owners watched enviously as Ambani scooped rich profits from fabric marketing in smaller towns as the first to both recognise and exploit their potential. Setting up capacities far in excess of what the market has required is the trigger that sets off unconventional thinking in Reliance; on product applications, new grades and interesting methods by which growth can be accelerated. It gets Reliance to think. If Reliance had set up capacities in line with the then-existing consumption standards, it would never have emerged as a pioneer because there would have been no trigger within the company.”

Reliance Petroleum’s systems manager once stated, “Being unconventional is the biggest convention in Reliance.” This is what their president, basic services, had to say about bidding “We bid successfully for the Gujarat basic services circle on the conviction that the more phone lines we give out, the greater will be the demand. Not a linear expansion, but a geometric extrapolation. Typical Reliance thinking? This is very true. This is what one of their assistant vice-presi-dents had to say in this connection

“Reliance has been built on the premise that supply will create demand. This is something that one must remember when the capacities installed by the company look crazily in excess of what the country may need at that moment in time. The installed capacity for polypropylene in the country when Reliance conceived of the project was two lac tonnes per annum (tpa) against an existing domestic supply of 1.5 lac tpa. Reliance commissioned its plant with 3.5 lac tpa capacity. Crazy? That one move more than paid off in the late nineties. The market expanded significantly and prove the above measure to be correct.

According to the Reliance website, executives are constantly encouraged to think out-of-the-box, not traditionally or sequentially and the brothers themselves have this tremendous ability to think laterally and look at business as a series of processes. As Mukesh says, “We work in concentric circles, rather than in straight ranks, but there’s always a centre of accountability. To meet Dhirubhai’s deadlines in one of their major projects, Mukesh’s young project team discarded several established business practices in favor of unconventional methods which have now become part of Reliance’s corporate culture

Reliance followed lateral thinking very successfully in all departments. Though it is not a recipe for success which also depends upon the market profile of the particular industry at any given point in time, considering the kind of success Reliance has achieved, maybe it could have been a part of formal school curriculum the way Edward de Bono suggested.

From here, I am going to discuss lateral thinking in the education context but those desirous of knowing more about Reliance’s application of lateral thinking can read the gallery portion of their website or read the Dhirubhai Ambani section of the book Business Maharajas.

Edward de Bono, the world famous proponent of lateral thinking had said once that children and people should be encouraged to think of a different answer and not the right answer which genuine educationists also advocate. Edward de Bono had also said that lateral thinking is so important that it should be taught in schools along with other forms of thinking.

I once had a discussion on this issue with the best boss I had come across in my life, AK, who got several double promotions and went on to establish businesses of his own. Though in the context of lateral thinking, one has to probe different answers especially in education, the reality is poles apart. He narrated his experience at one of the most prestigious management institutes in India from which he did his MBA. On my request, he wrote down the experience.

They were given a case study for which they were asked to think and offer their solutions. In his words:

The problem/case

A 14 storied building had only two lifts. The municipal laws did not allow more than two lifts, so adding more lifts was out of question.

The building housed offices of various companies, all, obviously, in different floors – and more than one office in each floor. Due to the limited capacity of each lift, there was a long queue every morning at 9 am when offices opened. All the occupant office managements complained about this to the management of the building, and asked them to sort out the problem.

Solution given by my study group:

We came up with the following solutions, to be used in conjunction with each other:

1. Since the number of lifts cannot be increased, we should assign one lift for odd numbered floors, and one lift for even numbered floors.
2. Secondly, the lift should not stop at the first floor, as the offices based on this floor can easily use the stairs.
3. Request half the occupant offices to change their opening time to 9:30 am, so that the traffic is halved between 9:00 am and 9:30 am. Solution as per the professor (or as per the published guideline available with the professor):
1. Fix two full length mirrors along the lift area walls. This way people will look at themselves and others, and not feel the delay.
2. Fix magazine stands with magazines in them — those waiting for the lift would then not get bored waiting for the lifts. Our argument against the published solution:
1. If I am a staff in one of the offices, and I have to reach the office on time, or if I have a meeting at 9:15 am, how would looking at others and reading magazines help?
2. The published solution may be applicable in one way, but the concept of the published solution and our solution was different
a) The published solution looked at creating an environment so that people would not feel the problem of delay, or would not mind such delay;
b) Our solution aimed at removing the delay.

We argued, that management is firstly not about fixed solutions (this we said because the professor was insisting that his solution is the only solution). Moreover, management is about removing problems, not making it easier to face them. To explain my point to the professor, I told him, that if he (the professor) went to a doctor with a stomach pain, which resulted from inflammation of the appendix, the doctor could do as follows:

a) If he followed the concept of the professor’s solution, ie, making it easy to face the problem, the doctor would administer pain killers and play classical music, so that the professor would not feel the pain and would be distracted from the pain. But the problem would remain, and the pain would continue.
b) If the doctor were to follow our concept, he would operate on the appendix, so that the problem itself would be removed. Which solution should the doctor take?

Needless, to say, the professor got his way by asking me to leave class!

Einstein may have said “Imagination is more important than knowledge” and the Ambanis may have been phenomenally successful because ofunconventional thinking but there are some theoretical academicians who are hell bent on making the students toe their line and preserving status quo.

Sometimes I feel that lateral thinking should be applied to change education as well. This is what a couple of Reliance’s senior management people said about training, “We have tied up with a leading business management institution to train young. recruits.” We said : “Teach them in six months what the IIM fellows learn in two years. That is the foundation of our thrust into learning and training. The traditional concept of trainees for mechanical skills doesn’t work in Reliance. No one gets put out for six months to attend some fancy course after which he can be expected to come back and experiment with his ideas. Our concept of training is one day off to study and returning the following day to apply that to the running of the plant.”

This is the training or coaching approach of learning as opposed to teaching which would probably suit the learning style of many if not most students as a lot of people are inclined towards kinesthetic while doing a kind of learning which has been elaborately covered in my previous articles. Here also supply may create its own demand just the way T20 cricket has proved to be hugely successful in the last one year but one cannot know unless one tries but then, who educates the educationists?

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2 Responses

  1. sir
    This is good one
    I think lateral thinking is to de done at every point of Time in life

    Amit oza

  2. The style of writing is quite familiar to me. Did you write guest posts for other blogs?

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