What makes one company succeed, while another, in the same operating environment, falter? Sometimes, luck plays a role but in most cases in business history, the difference between survival and extinction is more about discipline versus excess, adaptation versus rigidity. Just look at the divergent stories of Kodak and Fujifilm—both legendary firms in the film business. While Fuji realised its days were numbered and managed to reinvent itself by launching new—yet unrelated—business lines in things like cosmetics and optical films for LCD flat-panel screens, Kodak is a shadow of its former self because it couldn’t articulate a strategy beyond images.
In India, a similar tale of contrasting approaches—and fortunes—can be seen in the airline industry. While Kingfisher airlines cannot be relegated to the dustheap of airline history as yet, its abysmal performance in the last few years makes it stand out in stark contrast to IndiGo—India’s most profitable airline. Why did one soar and the other plummet?
One answer has to do with Kingfisher’s schizophrenic approach to a business model. Kingfisher was launched as an all-economy, single-class configuration aircraft with food and entertainment systems. After about a year of operations, the airline suddenly shifted its focus to luxury.
On the other hand, IndiGo preferred to wait and have a solid business plan in place. Its plan was to stick to operating a single configuration aircraft, providing point-to-point connectivity. The airline launched with one aircraft and had a plan to add an aircraft every six weeks, giving them enough time to stabilize
An experienced and professional team in the cockpit is a basic requirement for any airline to be able to withstand stormy skies. Yet, things went out of control further because Kingfisher never had a professional airline management in place. IndiGo’s approach was more measured and professional. It’s first CEO, Bruce Ashby, was in India 18months before the launch, and an experienced team at the management/board level has been key reason of IndiGo's success.
Another difference between IndiGo and Kingfisher is in the former’s ability to strike savvy deals—especially for its aircraft. The 100 Airbus aircraft deal signed in 2005 was a game changer as they managed to get an exceptional price and gave them the strategic ability to leverage it significantly.
Some companies just fail to learn—either from the examples that its peers may have set for the industry, or from its own past mistakes. Now, Kingfisher has decided to change its model yet again—discontinuing its Kingfisher Red brand and completely converting its fleet to a dual class, full-service configuration.
The positioning of the Kingfisher airlines was also a problem since beginning. The image was aligned to the ‘Life Size’ image of its promoter, Vijay Mallya. Where as it should be like focusing on the operation make it work before taking next step. You can’t expand business without putting the operation in place.
This raises the question in mind, how important the management is? Why management has to have a clear strategy and focus on operational efficiency. And how it is important to have a management which understands the business?
Business is all about having the killer focus on business!!
Showing posts with label Business Strategy. Show all posts
Showing posts with label Business Strategy. Show all posts
Sunday, February 26, 2012
Monday, September 19, 2011
Founder CEO or Professional CEO?
The founder CEO of my last organization, Manu Parpia, when he decided to pass the operational control to a professionally hired CEO; mentioned to his close circle that after a certain time founders need to step back and give control to a professional CEO and see he/she builds it to a great height.
Manu is back as CEO of Geometric after gap of four years, this is different story.
But, the point we need to draw is founder CEO or professional CEO.
It’s very difficult to take one side in this argument. We have seen cases, like Infosys where the founder team continue taking the charge, Wipro saw Pramji back in to helm after short time of non-founder CEO. At global level Google saw this kind of transition.
But, there are several example in medium enterprise segment, where professionally hired CEOs made it big and taken the organization in to a newer height.
As I wrote earlier, it’s very difficult to assume one way is best or the other. Founder CEO Model seems to work as one person or group of people seems to have control on the course of the strategy of the company, the direction it needs to take. (Though board decides it finally). It has disadvantages as well in not able to get out of the mold and scale to new heights. It will lack bigger ideas or broader market experience to position the company.
On the other hand, professional CEO would need lot of time to understand the organization culture and its strengths/weakness. Understanding the current problems and then creating a strategy to provide value to customers will be a huge task to manage.
Building the organization and managing the business and stakeholder’s expectation should be primary focus of the company.
If customer/business growth becomes the center of any company, it will have bright future.
Currently we are going through some organization changes in my company and these are the thoughts came to my mind looking at current state of merger and takeover.
Manu is back as CEO of Geometric after gap of four years, this is different story.
But, the point we need to draw is founder CEO or professional CEO.
It’s very difficult to take one side in this argument. We have seen cases, like Infosys where the founder team continue taking the charge, Wipro saw Pramji back in to helm after short time of non-founder CEO. At global level Google saw this kind of transition.
But, there are several example in medium enterprise segment, where professionally hired CEOs made it big and taken the organization in to a newer height.
As I wrote earlier, it’s very difficult to assume one way is best or the other. Founder CEO Model seems to work as one person or group of people seems to have control on the course of the strategy of the company, the direction it needs to take. (Though board decides it finally). It has disadvantages as well in not able to get out of the mold and scale to new heights. It will lack bigger ideas or broader market experience to position the company.
On the other hand, professional CEO would need lot of time to understand the organization culture and its strengths/weakness. Understanding the current problems and then creating a strategy to provide value to customers will be a huge task to manage.
Building the organization and managing the business and stakeholder’s expectation should be primary focus of the company.
If customer/business growth becomes the center of any company, it will have bright future.
Currently we are going through some organization changes in my company and these are the thoughts came to my mind looking at current state of merger and takeover.
Sunday, June 26, 2011
Business of Collaboration
The coming together of arch rivals Subhash Chandra’s Zee entertainment and Rupert Murdoch’s STAR India to create a distribution company will have lasting impact on the TV distribution landscape. The joint venture called Media Pro Enterprises, (Media Pro, a 50:50 joint venture between STAR DEN Media Services and Zee Turner) will distribute 68 channels, including both firms flagship channels and plus the regional channels.
This is very interesting move from media and television industry perspective. Another example of such collaboration is ESPN STAR SPORTS, a joint venture in south Asia; between ESPN and STAR Sports, who compete in all other geographies. For any media company, content generation is most important thing and which takes a lot of attention. Media companies need to have their act together in content creation. Distribution is important arm, but it can be collaborated.
Similar consolidation happened in telecom industry, where the tower and infrastructure was handled through collaboration among different companies, who compete in the general market. A JV was formed to handle all the tower business. It makes lot of sense for the companies which will help to improve the margins and thus gives lot of competitive advantages when comes to the pricing model.
Such kind of collaboration is common in services industries as well. Infosys and Wipro, who compete in outside market in almost all the accounts, do collaborate when comes to certain technologies or certain customers. It is important to have a clear line of division between two companies when comes to such kind of collaboration.
What is important here is the customer or consumer. This is very healthy sign and trend that in order to serve customers, companies are coming together and forming Joint Ventures. This helps to improve margins and the quality of services will also improve (The media distribution for example, will help in digitizing the content across both the companies, and this makes the HD content possible) the service quality.
In order to improve the margins, such business models are being generated, which would eventually redefine how the business is operated.
For me, customer gets benefited and being consumer of such services/products I am happy by end of the day.
This is very interesting move from media and television industry perspective. Another example of such collaboration is ESPN STAR SPORTS, a joint venture in south Asia; between ESPN and STAR Sports, who compete in all other geographies. For any media company, content generation is most important thing and which takes a lot of attention. Media companies need to have their act together in content creation. Distribution is important arm, but it can be collaborated.
Similar consolidation happened in telecom industry, where the tower and infrastructure was handled through collaboration among different companies, who compete in the general market. A JV was formed to handle all the tower business. It makes lot of sense for the companies which will help to improve the margins and thus gives lot of competitive advantages when comes to the pricing model.
Such kind of collaboration is common in services industries as well. Infosys and Wipro, who compete in outside market in almost all the accounts, do collaborate when comes to certain technologies or certain customers. It is important to have a clear line of division between two companies when comes to such kind of collaboration.
What is important here is the customer or consumer. This is very healthy sign and trend that in order to serve customers, companies are coming together and forming Joint Ventures. This helps to improve margins and the quality of services will also improve (The media distribution for example, will help in digitizing the content across both the companies, and this makes the HD content possible) the service quality.
In order to improve the margins, such business models are being generated, which would eventually redefine how the business is operated.
For me, customer gets benefited and being consumer of such services/products I am happy by end of the day.
Sunday, June 19, 2011
Organic Growth of Business
Question is, being a business leader how you grow the business?
Simple answer would be to acquire new customers and there by driving your topline. More customers means, more reveue.
One of the strategies which we have adopted in our BU recently is to expand our business with carefully crafted strategy of having focus on multiple factors and reducing the risk of business continuity. We started working towards new customers, but there were certain steps taken in addition to conventional selling in order to build a stronger growth engine.
When your existing service model/business model is not resulting in to new business; the following approach should be taken to keep the growth intact.
1)Expand in to new Service Offerings/business verticals: The logical expansion in to new service lines or building new service offerings or altering existing offerings will help to fuel more growth as these new offerings will drive more business.
2)Expand in to new Geography: Taking a matured set of offerings in to a new geography and start building that business. But, challenge there would be to start it from scratch and build the business step by step. Start-with-small is the key here.
3)Redefining the business model/service model in existing market; bringing in more value to customers will result in generating more business as it obviously catches the attention.
Offcourse, its very important to understand when the existing market is getting flat and the correct time to execute this plan.
I am extremely satisfied with the execution of this strategy as it has started resulting in to more business.
Simple answer would be to acquire new customers and there by driving your topline. More customers means, more reveue.
One of the strategies which we have adopted in our BU recently is to expand our business with carefully crafted strategy of having focus on multiple factors and reducing the risk of business continuity. We started working towards new customers, but there were certain steps taken in addition to conventional selling in order to build a stronger growth engine.
When your existing service model/business model is not resulting in to new business; the following approach should be taken to keep the growth intact.
1)Expand in to new Service Offerings/business verticals: The logical expansion in to new service lines or building new service offerings or altering existing offerings will help to fuel more growth as these new offerings will drive more business.
2)Expand in to new Geography: Taking a matured set of offerings in to a new geography and start building that business. But, challenge there would be to start it from scratch and build the business step by step. Start-with-small is the key here.
3)Redefining the business model/service model in existing market; bringing in more value to customers will result in generating more business as it obviously catches the attention.
Offcourse, its very important to understand when the existing market is getting flat and the correct time to execute this plan.
I am extremely satisfied with the execution of this strategy as it has started resulting in to more business.
Sunday, April 24, 2011
Kuch Meetha Hoo Jaaye....
Let’s explore a simple question, how any company will expand its business; answer could be like expanding in to new geographies, add new offerings/products/services. But given the global competition it looks difficult to attain the growth if you try only these.
But there are few visionary companies who create new markets and thus expand. Apple, for example created new market with MP3 player, even though there was an existing competition, iPod created a new market by itself. Similarly, Apple products like iPhone, iPad created new market segments and thus boosted the business growth.
There are other examples as well, like 3M’s Duct tape, J&J’s Bandaid, Tata Motors Nano are few such examples where a new market segment was created through innovative products.
But there is some interested phenomenon happening with Cadbury Dairy milk chocolate. Cadbury is growing business by expanding in to new target audience and thus reaching new set of consumers.
Let’s look at traditional chocolate industry market reach, its generally kids or the collage going young generation. But Cadbury is slowly changing this.
First it reached to the festival celebration time, and marketed Dairy milk as a sweet which can be exchanged during the festival like Diwali or can be gifted to brothers/sisters during Rakhi. Secondly, it started marketing dairy milk as a substitute to a sweet you can take home when you are really happy and wanted to celebrate, like salary day or when you get a job or when marriage gets settled.
Now, Cadbury has reached to your dinner table literally. It is now marketing Dairy milk as a substitute to the sweet we use on day-to-day life. It’s been projected as a normal sweet we use after dinner as dessert.
Let’s look as how it expanded the target market. When they expanded in to festival celebration, they expanded out of traditional young market in to a household mass, but still limited to some part of the year, like Diwali, Rakhi, New Year etc. When they expanded the reach to happy moments, they reached our happy moments and became part of our lives. Now, in the process of reaching our dinner table, the target market has even expanded in to possibly each and every house!
This is very smart positioning of a product, expanding the business through innovative approach. In this process, the same product is being expanded in to different market segments, creating new consumers. Compared to traditional way of creating new products, this is clearly a different way of expanding.
What’s the sweet at dinner in your house today?
But there are few visionary companies who create new markets and thus expand. Apple, for example created new market with MP3 player, even though there was an existing competition, iPod created a new market by itself. Similarly, Apple products like iPhone, iPad created new market segments and thus boosted the business growth.
There are other examples as well, like 3M’s Duct tape, J&J’s Bandaid, Tata Motors Nano are few such examples where a new market segment was created through innovative products.
But there is some interested phenomenon happening with Cadbury Dairy milk chocolate. Cadbury is growing business by expanding in to new target audience and thus reaching new set of consumers.
Let’s look at traditional chocolate industry market reach, its generally kids or the collage going young generation. But Cadbury is slowly changing this.
First it reached to the festival celebration time, and marketed Dairy milk as a sweet which can be exchanged during the festival like Diwali or can be gifted to brothers/sisters during Rakhi. Secondly, it started marketing dairy milk as a substitute to a sweet you can take home when you are really happy and wanted to celebrate, like salary day or when you get a job or when marriage gets settled.
Now, Cadbury has reached to your dinner table literally. It is now marketing Dairy milk as a substitute to the sweet we use on day-to-day life. It’s been projected as a normal sweet we use after dinner as dessert.
Let’s look as how it expanded the target market. When they expanded in to festival celebration, they expanded out of traditional young market in to a household mass, but still limited to some part of the year, like Diwali, Rakhi, New Year etc. When they expanded the reach to happy moments, they reached our happy moments and became part of our lives. Now, in the process of reaching our dinner table, the target market has even expanded in to possibly each and every house!
This is very smart positioning of a product, expanding the business through innovative approach. In this process, the same product is being expanded in to different market segments, creating new consumers. Compared to traditional way of creating new products, this is clearly a different way of expanding.
What’s the sweet at dinner in your house today?
Sunday, April 12, 2009
Tata Son’s US ambassador
Until I read this interview on India Knowledge @ Wharton; I didn’t even know that Indian business houses can think about such a strategic move.
To me it seems like a fantastic idea as I believe in building the relationships is the way to build business in any country. This is a fantastic move by Tatas having ‘an ambassador’ in US; from where they are having bigger business coming from.
The role definition is “I represent the views of the Tatas -- the objectives and goals of the Tatas in the United States. I interact with government officials, with regulators, with legislators [and] with people from the Executive Branch on some issues of concern and interest to the Tatas. I also report back to Tata headquarters -- to Bombay -- about what I hear in Washington, what the trends are, what people are thinking about India, what people are thinking about Indian business. I try to be a interlocutor, if you will, between the Tatas in India and the United States government in particular, but also with the population [or] America at large -- meaning with academia, with American business, with American think-tanks -- to sort of explain one to the other”
Link to the full interview is below; but I am pretty much impressed by this investment by Tatas.
Link to complete interview
True example of how visionaries always think differently!
To me it seems like a fantastic idea as I believe in building the relationships is the way to build business in any country. This is a fantastic move by Tatas having ‘an ambassador’ in US; from where they are having bigger business coming from.
The role definition is “I represent the views of the Tatas -- the objectives and goals of the Tatas in the United States. I interact with government officials, with regulators, with legislators [and] with people from the Executive Branch on some issues of concern and interest to the Tatas. I also report back to Tata headquarters -- to Bombay -- about what I hear in Washington, what the trends are, what people are thinking about India, what people are thinking about Indian business. I try to be a interlocutor, if you will, between the Tatas in India and the United States government in particular, but also with the population [or] America at large -- meaning with academia, with American business, with American think-tanks -- to sort of explain one to the other”
Link to the full interview is below; but I am pretty much impressed by this investment by Tatas.
Link to complete interview
True example of how visionaries always think differently!
Sunday, March 29, 2009
WOW (War on waste) - A Business Idea?
WOW (War on Waste) - A Business Idea?
Our WOW initiative made me to thing on some business plan.
First things first; Waste management with Indian context has no meaning. We tend to throw away the Waste as per our wish and there is no proper management of that Waste.
For example, Waste collection in Western countries happen systematically, where the paper, plastic, glass are collected separately and handled separately. Also, there Waste collection is so systematic, that you will not find more garbage on the streets. Also the recycling facilities are of higher standards there by ensuring the garbage is being cycled properly.
Cut to India, only 14% of the Waste in India is properly collected and recycled, compared to 70% in the west. The result we see all over the streets!
The main issue is, our wastage collection is not managed properly and India Inc has not noticed the potential of this opportunity. If managed as corporate it can be monetized. Our wastage collection is loosely spread and there is no management in that.
Indian paper industry imports Waste from West to produce the required paper and Waste collected in India feeds only 17% of the demand of this Industry. (Rest all is either imported or supplied through tree cutting) So, look at the opportunity!!
So, if a Pan India company can manage the Waste all over the country and streamline the operations, it will be a huge industry. Also, it will serve the benefit of environment as garbage collection will be clean, there by reducing the diseases spreading because of bad environment.
Our WOW initiative made me to thing on some business plan.
First things first; Waste management with Indian context has no meaning. We tend to throw away the Waste as per our wish and there is no proper management of that Waste.
For example, Waste collection in Western countries happen systematically, where the paper, plastic, glass are collected separately and handled separately. Also, there Waste collection is so systematic, that you will not find more garbage on the streets. Also the recycling facilities are of higher standards there by ensuring the garbage is being cycled properly.
Cut to India, only 14% of the Waste in India is properly collected and recycled, compared to 70% in the west. The result we see all over the streets!
The main issue is, our wastage collection is not managed properly and India Inc has not noticed the potential of this opportunity. If managed as corporate it can be monetized. Our wastage collection is loosely spread and there is no management in that.
Indian paper industry imports Waste from West to produce the required paper and Waste collected in India feeds only 17% of the demand of this Industry. (Rest all is either imported or supplied through tree cutting) So, look at the opportunity!!
So, if a Pan India company can manage the Waste all over the country and streamline the operations, it will be a huge industry. Also, it will serve the benefit of environment as garbage collection will be clean, there by reducing the diseases spreading because of bad environment.
Sunday, March 15, 2009
It is Hero Honda vs. Honda now!
Honda Motorcycles and Scoters Ltd (HMSI) the fully owned Honda subsidiary, is now relatively small player in Indian motorcycle market with 14 percent share, selling mostly large engine capacity bikes. It also sells more scoters than bikes and it’s Activa scoter is a run away success.
This is changing fast. For, HMSI is taking on its own long-term partner in India, Hero Honda (In which Honda has 26 percent stake) and in the latter’s key area of dominance, the 100 cc mobike market. The Honda company is working on to get in to the same segment and hopes to get the market capture quickly, with it’s focus on quality. HMSI wants to make sure, the bike sales is more than its scoter sale. Which would be a big change from its current mix, where scoters are 65% of its entire sale.
It is quite evident that, this entry might give a sleepless night for Hero Honda, which enjoys 80% of the market share in 100 cc segment. And this segment also accounts about 60% of Hero Honda’s entire sales.
At the moment, both the players are not affecting each other and infact both are eating in to Bajaj’s market share. Recent data shows that Hero Honda’s sale was up 24 percent (Decent job considering the current economy and one of few companies who reported Q-o-Q increase in sales, how they did it is pretty interesting) and HMSI reported a jump of 14 percent.
Quite interesting!
Actually this is a clear example as how transparency works for benefit of both the parties. Each other are not affected because they know which segment they are targeting. Also, two companies have a committee which knows in advance what the other is planning to launch in India market, so that clashes can be avoided.
Notable point is 100 cc market has many segments and they would operate in areas where their partners do not. If we divide 100 cc segment in to parts starting from entry level to deluxe level, there is potential in every segment. And HMSI and Honda have clear demarcation as who will be in which segment. This helps to avoid competition among them selves and thus they are eating on Bajaj’s market share.
Personally speaking, there is lot of learning in this strategy if I apply this to our business operations. And I guess, we are in middle of similar situation and we need to appreciate moral of this strategy and see how all will be benefited.
This is changing fast. For, HMSI is taking on its own long-term partner in India, Hero Honda (In which Honda has 26 percent stake) and in the latter’s key area of dominance, the 100 cc mobike market. The Honda company is working on to get in to the same segment and hopes to get the market capture quickly, with it’s focus on quality. HMSI wants to make sure, the bike sales is more than its scoter sale. Which would be a big change from its current mix, where scoters are 65% of its entire sale.
It is quite evident that, this entry might give a sleepless night for Hero Honda, which enjoys 80% of the market share in 100 cc segment. And this segment also accounts about 60% of Hero Honda’s entire sales.
At the moment, both the players are not affecting each other and infact both are eating in to Bajaj’s market share. Recent data shows that Hero Honda’s sale was up 24 percent (Decent job considering the current economy and one of few companies who reported Q-o-Q increase in sales, how they did it is pretty interesting) and HMSI reported a jump of 14 percent.
Quite interesting!
Actually this is a clear example as how transparency works for benefit of both the parties. Each other are not affected because they know which segment they are targeting. Also, two companies have a committee which knows in advance what the other is planning to launch in India market, so that clashes can be avoided.
Notable point is 100 cc market has many segments and they would operate in areas where their partners do not. If we divide 100 cc segment in to parts starting from entry level to deluxe level, there is potential in every segment. And HMSI and Honda have clear demarcation as who will be in which segment. This helps to avoid competition among them selves and thus they are eating on Bajaj’s market share.
Personally speaking, there is lot of learning in this strategy if I apply this to our business operations. And I guess, we are in middle of similar situation and we need to appreciate moral of this strategy and see how all will be benefited.
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