The HP Way!

One of the turnaround stories I like is of HP. In last 5 years that company has transformed itself in to more profitable company and poised to hit big growth considering the recent acquisition in network and mobile computing space.

Net income during last five years has been up an average 18 percent per annum and raced ahead 25 percent in the first quarter of 2010.

All this is thanks to dramatic cost-cutting, the standardization of large-scale purchases like semiconductors and brutalizing culture of accountability for every penny in and out. This is the culture CEO Mark Hurd has bought in.

HP’s chief has also imposed a ruthless efficiency at the highest level. By packing board and top management with more business type executives than engineers and inventors. He has remade HP more in its own image of people who thrive on dissatisfaction and thirst for expansion. You see it reflected in Aug 2008 $13.9 billion acquisition of Electronic Data Systems and recent $2.7 billion grab of 3Com, the Chinese networking company.

Size matters in this business. With expansion of computer networks and data customers need a vendor that can manage many aspects of many businesses and help them to run efficient operations. Clients don’t want to deal with dozens of companies anymore. The new titans of the one-stop world include Oracle, which recently added to its database empire, Sun Microsystems maker of computer servers. IBM, the longtime consulting, software and mainframe power house; Cisco systems, now with servers built in to network and alliances with data storage giant EMC and virtualization software maker VMWare.

HP quickly saw the need to get in to services and the EDS deal boosted the much required image change and helped HP to offer software services along with servers. With recent purchase of 3Com, HP will be in to networking and handset business, thus providing complete range of services.

What really motivate me about this is the vision HP had towards making a success out and the way in which they went to implement it. It has been case study to many research papers.

Result of visionary leadership!!

Building performance driven company

Since we are almost building our BU (business) from the scratch; one of the important things we are thinking about is to build a performance and data driven company. The idea is to encourage risk taking ability and true performance and discourage the false claims.

We have a real long long way to cover, but good part is that we have understood the need for building such organization.

In my opinion building such an organization is not simple job and it needs a lot of courage from the management to call spade as spade. The challenge is to ability to measure the performance and communicate the result to all involved, especially who are not performing. One of the fundamental things we are trying to do is to set up a data driven performance measurement system where each one’s performance will be measured quantitatively, thereby reducing the relative performance grading.

Incidentally, I was talking through some of my friends who have been discussing the recent changes in their organization which appears to be based on the performance and to reward recognition. My intention is not to debate on which is good or bad; but to highlight a corporate truth which is a bit hard to digest sometime.

The hard part of building this kind of company is to have the leadership team which is performing and pumping in the required energy to rest of the team. It’s important to underline the fact that being in management position will not take my neck out of the block. I need to walk the talk and start performing in order to build a team which is performing.

I happen to visit one of our customer’s offices recently while in Norway; it is a consulting company. What impressed me about them is the array of systems and processes which are aimed to improve the performance of the organization and ability to encourage performing. It was really amazing to see a company of little over 250 consultants having such an attention to details. I would call that as a performance driven company, where everyone is accountable for his/her part of the business. Everyone is measured by some or other results which are directly linked to performance on the organization as a whole.

However, this post being posted in the time of appraisal and salary revision cycle is just a coincidental.

The Volcano, the uncertainty, the feeling, the chaos and a friend I explored

I have come to Norway for a business trip; entire top management team is here and we are stuck because of Volcano. We don’t know when we are flying back; our CEO had some urgent meetings in North America, tried to get out of Europe, but got stuck in Munich airport. It is chaos everywhere.

But its fun, we could able to laugh on this situation and try to keep ourselves motivated.

I met someone during these days, like a friend whom I have been missing, a person whom I can talk openly and share my feelings. It’s like returning to my college days all of a sudden. A smart, emotional, energetic, simple person having lot of thoughts in mind; with whom I can laugh openly. I have mentors in life who guides me; have team members who work with me, but what I was missing is a friend who can stand beside me.

One question, can someone talk that non-stop? I thought I talk much!!!

Our discussions have been around the corporate life, business models and simple principles of life, may be ordinary topics from all the angels. But the energy my friend brings in to the discussion it truly amazing. I am feeling like why I didn’t meet this friend earlier?

I am not sure what my friend thinks about my involvement; but I guess we have quickly stuck the wavelength match and I was amazed to see another person who is so close to my thought process, in spite coming from totally different background. We could able to relate to each other very well. It’s just a great experience. Sure we have different thoughts on few topics, but we agreed to disagree which rarely happens in life.

But life is all about such green spots where you will feel ‘life is beautiful!!’

Leadership Lessons from India: A HBR Review Paper

This month’s Harvard Business Review runs a review on ‘Leadership Lessons from India’; how best Indian companies drive performance by investing in People.

This survey was conducted across all sectors like Relience, Wipro, TCS, Bharati Telecom, Infosys, Mahindra & Mahindra, Aventis Pharma and many others. Interestingly none of the companies who are interviewed suggested that their companies had succeeded because of their own cleverness at strategy or even because of the efforts of the top team. They didn’t mention skills in financial markets, merger and acquisitions or deal making talents that western CEOs often claim as important points. They put entire success is because of employees.

The leaders of Indian’s biggest and fastest growing companies take an internally focused, long –term view and put motivating and developing employees higher on the priority list than short term shareholder interest. And it appears that this is a more Indian model and which seems to be working very well for all these companies.
It is interesting to note how Indian CEOs focus more on involving employees in building the strategy and involve themselves in motivating employees. Unlike western CEOs who leave the business unit heads or cost center owners to decide on the strategy and measure the heads based on the financial performance; Indian management seems to be involved in designing the strategy and periodically check if they need any help. Also, they act as mentors to all next generation leaders there by helping them to groom up to next level.

There are couple of other things which needs worth mentioning; ability to create a sense of mission through transparency and accountability and level of communication with-in the companies. It seems amazing everyone works towards a common goal. And Indian companies seem to engage all possible technologies to communicate to employees, be it formal open houses, social network sites etc.

It reminds me one story, which U.S president Lyndon Johnson loved to tell about asking a truck driver who worked at NASA in the 1960s what his job was.

The driver’s response “I am helping to put a man on the moon”. Such is the power of empowering the employees.

I learnt a lot from this article.

What I am up to?

It has been a real busy schedule for me these days. Last couple of weekends I have been traveling and weekend before that was busy with board meeting.

Last two weekends I have seen close to 2500 KMs of India and traveled through different parts of 7 states. (Chandigarh (UT), Punjab, Haryana, Uttar Pradesh, Uttaranchal, Uttarkhand, Himachal Pradesh). Had been to places like Delhi, Mathura, Agra, Haridwar, Rishikesh, Deharadoon). Planning to Amritsar and Wagha border next weekend.

This is incredible traveling and I am feeling charged up to see so much of India!
I will be traveling to Norway for a business trip on second week of April for a customer seminar. (BTW, the new business plan I submitted was approved and I am going for next level discussions, which is good)

In summary; it will be busy summary and planning to continue my Bharat Darshan!

Kahani Yek Company Ki

I have been thinking since quite some time; why companies fail? Few established companies, who appear to have solid track records, credibility, move in to the phase where everything becomes fragile.

Is it failure of leadership? Failure of strategy? Failure of execution? Failure of Understanding the customers? Or it is mix of all?

I would like to take a case study of Shri Balaji Telefilms, a company which produced popular TV serials like “Kyounki Saas bhi kabhi bahu thi” and “Kahani Ghar Ghar Ki” etc. Ekta Kapoor whipped Shri Balaji Telefilms in to a production frenzy of TV soaps and made families adjust their evening schedules to her show timings. In those days, every TV channel wanted to work with Balaji and it appeared the success is eternal.

This appears to be the case with most of the companies, where everyone feels the success and start thinking the success story would continue with the same pace.

Balaji Telefilms started thinking that the show it has been producing has eternal appeal and failed to notice audience tastes were changing out of daughter-in-law and mother-in-law stories. This is the example of missing understanding of your customer needs and changing your game plan as per that.

On top of this, there was no brake on spending, which resulted in reducing the profit margins, which is the failure of execution. As if this was not sufficient; Balaji screwed Star TV; who owned stake in Balaji telefilms in that time and Star and Balaji used to work as captive vendors. This is clearly a failure of strategy and looking at the bigger picture.

Idea of having Shri Balaji Telefilms as case study is not to project it as a failed company. Good part is, they realized it and started taking steps which would eventually re-build it to a successful company. But the question is, why companies get in to this stage where they start falling apart?

My take is, failure of leadership!!

The Sweet Success!

One of the biggest industries in my part of the country is Sugar. In childhood I knew only two industries, sugar and milk industries. Co-operative sugar mills have been established and have been doing really well in producing the sugar there by creating wealth for thousands of farmers.

But recently, Sugar has been seen as a big corporate initiative and Renuka Sugars (www.renukasugars.com ) is making big inroads and recently made two big acquisitions in Brazil and thereby creating a big wave. It’s been seen as a global player now!

Mr. Narendra Murkumbi, an IIM Ahmadabad graduate has seen the vision of making it big in Sugar and he and his mother did wonderful things together in establishing the company. Narendra is the public face of the company and based out in Mumbai. And his mother has been a relationship person and keeps a very close association with farmers and she is based out in Belgum, Karnataka.

Narendra has been known for thinking outside the box and thinking big. (Narendra dissolved his earlier company which was having 50 crores of turn over saying that is small thinking) The kind of the culture they have built in the company is of innovation.

Sugar is predominantly non-predictable business where a lot depends on the external factors. Factors such as crop condition in countries like Brazil and Chili, condition of monsoon, India’s agriculture policies; all pay an important role in deciding the profit margins. But, what Renuka Sugar’s have proved that, innovative thinking, global presence and shear execution efficiency can change the rule of the game.

This is truly a rare picture of stability in a cyclical industry!

When Google Runs Your Life

Your day begins with a wake-up call with your Google Android phone. As you run to the shower, you hit Google News and check headlines, then Gmail. Your first appointment of the day is moved to a location, which you don’t know. No worries, Google Map would help you locate the exact place where you want to go. Quickly update your expense report- including the sales presentation, using Google Template. Your Boss wants to discuss the group’s contribution to a marketing idea being discussed; Google Groups would help you to consolidate the ideas.

Someone wants a documented to be updated; you will update the common document using Google Document. And in addition to this you can do many work related searches throughout the day, including checking the stock price, get some code, get some query answered, download games; all using Google’s search engine!

And a little creepy, perhaps. Google wants to own your every walking minute online- at home, while in transit, at your workplace, wherever you happen to be. It makes connectivity so easy, through desktop, laptop or mobile phone. How much easier the life would be using Google Application that allows us to instantly share Google calendar, spreadsheets, memos, reports, email, corporate blogs, presentations and much much more.

I happened to meet a senior executive at Microsoft, who shared what Google is trying to do with the information on the web and largely how it will shape up the way in which we are doing computing. Google is trying to a methodology where it will stream the entire operating system when we connect through cloud computing. A good connectivity would ensure you have a small universe of Google computing power downloaded to your Net Book.

With this, no longer would you get pestered with notices on your PC to download an operating system to upgrade or extend the subscription of your web security. You wouldn’t worry much if your computer get stolen or fell in the bathtub. These net books are just like office furniture, if you don’t like them anymore, throw them out and start using a new one.

How cool that would be?

Blue Ocean Strategy: Applied to IT Services in IONNOR

I tried to do a mapping of ‘Blue Ocean Strategy’ to IT Services Business Unit in IONNOR and presented to executive team during a weekend meeting.

Just to set the context;
• This is just an internal presentation, to do a SWOT analysis between the market leaders in Nordic region, TCS and Cap Gemini
• The comparison was focused on the strengths and weakness of each company.
• IONNOR has been clubbed with ErgoGroup in arriving at this strategy.

In and all, it helped us a lot in framing the strategy for this year and identifying the focus areas which we need to take care on urgent basis.

It is so powerful that, with-in few minutes the strategy shaped up and we were in discussion as how to create a new market place where we are playing on our strengths and mitigating the risks.

It gives a lot of confidence and feeling of big league.

The vision behind Apple’s i

I am writing this blog from Oslo, Norway. Reached here through Vienna, Austria. I am currently traveling to meet customers.

Seven years ago, the globally recognizable boss of a certain giant technology company spoke often of the touch-screen “tablet” computer whose development he championed. This pet project was going to change computing for millions of people.

The man was Bill Gates, and the product was the Tablet PC – a device that, while still on sale, has fallen into the limbo reserved for failed electronic gadgets. This week, when Steve Jobs of Apple ended months of feverish speculation by unveiling his own company’s tablet machine – branded the iPad – the echoes were hard to ignore.



Tablets (bigger than a smartphone, smaller than a laptop, and without a keyboard) have been the graveyard of personal computing. If Mr Jobs, 54, can succeed, it will open a new phase in a comeback career. Behind the simple lines of the iPad lie a technological mastery, aesthetic flair and marketing savvy that have long set the Apple chief executive apart.

That is exactly the vision behind Apple’s i

Creating Competitive Advantage in Business

As part of new year resolution of developing strategic mindset :-), I have been reading few books which would help me to develop the required mindset of thinking a bigger picture. Recently I completed one such book which helped me to understand how the strategy can be developed.

Blue Ocean Strategy: How to Create Uncontested Marketspace and Make the Competition Irrelevant. The book, which debuted in 2005, is a must read for any corporation today. Resting upon four “formulation principles” and two “execution principles,” Blue Ocean Strategy teaches the reader to create uncontested market space and break away from bloody competition by strategically moving into the area the authors call the “Blue Ocean.”

The book is intricately designed to walk through the process of its six principles and teaches the reader how each principle is able to reduce risks inherent in any new strategy. Blue Ocean Strategy is not only a book to read but a strategy to adopt and implement for corporations that are determined to succeed in the long-run.

Based on in-depth study of number of leading industries, the authors remind us that in emerging business scenario there is no permanent great company or industry or market or business alliance , instead success comes from being proactive and anticipating cultural, socioeconomic ,environmental, technological advancement and adapting new frameworks and analytical business tools to develop Blue Ocean Strategy.

I was so much impressed by this book, I choose to present this during this month’s ‘Executive Management Meeting’. I have also decided to apply these principles to by Business Unit. Watch this space to hear how it has shaped up and how it is really helping me.

Yet another book which I picked up and which is running good is, ‘Creating Competitive Advantage: Give Customers a Reason to Choose you over your competition’. It is also impressive book, explaining how we can create competitive edge and grow the business.

What I found out from these books is; all the good companies do adopt new business models; change them and build new ones.

That is the difference between good companies and great companies!

Give me some sunshine, give me some rain, I want to grow all again!

Honestly, I am still in hangover of the movie, 3 Idiots.

It touched me, it made me to think, it made me to laugh, took me down the memory lane (10 years back to my IIT days), it made me to do a bit soul searching. It is hard to explain what exactly I felt, because so many things happened to me, all at same time.

The important message it gives about our grading system and one’s ability to question the current status. The actual implementation of education reforms might be far away from reality in current India, but it at least makes us to think about the need to think out-of-the-box.

The story telling has been powerful, through series of well thought characters. Most important question being asked is about human relationships and pursuing one’s dreams.

Throughout the movie I felt; only Chetan can raise such question and the plot of the movie and the subject is pretty much belongs to him. With due respect to the ability of Mr. Hirali’s story telling, but in my opinion, Chetan’s idea has been adopted to this movie completely and obviously some changes are made to add melodrama and emotions.

Anyways, it is a complete movie and certainly it has asked a very good question. But, personally for me, it opened my book of memories and time I had in IIT. First thing I did after watching the movie, is call my hostel mate, who was my close friend!

Give me some sunshine, give me some rain, I want to grow all again. Want to go back to 1998 and start all over again!

Expectations From the New Year

We are entering in to a new year now and I had a look at my New Year resolutions I made last year. Surprisingly, I have stick to the resolution I made. Still doing my fitness routine quite regularly. Had a good year in business and even in my new role started off good with new line of businesses and putting the puzzle pieces together for a profitable growth. I was quite regular with my blogs and self improvements.

This year, I would like to set aside some expectations/to-do-lists rather than setting the resolutions.

1)Build the profitable business: Need to work on this, need to think on new role I am in to and build a bigger portfolio.
2)Bigger Picture: I need to really work on this; I need to think big, really big. I need to see a bigger picture and act in a bigger way. I have the problem of thinking shallow and acting low.
3)Aggressive: I need to work on being more aggressive rather than taking things lying down. Be it business, customer, team or my financial goals.
4)Self Control: I need to learn how to be more patience and take things a bit relaxed way. Nothing happens by being impatient.
5)Time with family: I expect this year provides me a good opportunity to be with my family and have fun.
6)Do something crazy: Wanted to do some crazy stuff this year, hope this year gives me an opportunity. Some of the wish list were, seeing Himalayas, Taj Mahal, A Desert and experiencing Punjabi culture; are being fulfilled this year.
7)Financial Planning: Take control of money, understand the value of it. Plan it.

I hope this New Year brings a lot of changes in me and my career. I will be working on these points.

Off course, my favorite things; exercise, reading, writing and networking will be continued.

The year that has been!

In 4 days from now; we are bidding goodbye to year 2009 and to the decade.

The past year has been full of happenings; year started with Satyam scandal; where probably most big scandal of India Inc has reported. This followed by quick action by government and all ended good with TechMahindra taking over. But it has created bigger impact.

This year also saw series of steps from governments all over the world to arrest the recession impact. It is quite clear that, this kind of stimulus packages helped world economy to revive itself towards end of the year. The tax payer’s money was used to revive companies and at end it made a lot of sense. Though towards the year end, Dubai world scared with the recession danger, but it saw some quick action from government.

This year also means bankruptcy of GM, Chrysler, and few other crown jewels of the industries once upon a time. There was strict cost cutting measures all over across industries; which led to hiring freeze and cut on salary and bonus. I guess, there are some companies which quickly understood the sentiments associated with this kind of cost cutting and took action to prevent it turning in to negative impact, some fail to understand which saw sudden jump in attrition.

From political front; general elections in India gave a more stable government and there was a change in US political scenario as well. Which, I would believe should lead to better ties between two countries leading in to more streamlined business relationship.

From personal front, there has been a change as well. And this is an extremely good change for me and family. Looks like it was much needed change and happened at right time.

Wishing you all a happy new year!

Evolution of Social Networking Business

One of the recent trends; which is very popular and money earning, is social networking business. When the concept came in to action first, it was kind of rewriting the Internet business book where a whole new market was developed.

When the concept started, it was used among friends/college kids to just be in touch and share some pictures/videos and let others comment on that. But, soon the business side of this concept came out. Now all social networking sites have evolved as major business networking sites. This allowed social networking to evolve as a business model and soon all these networking companies started making money by building revenue models around it.

For example, if I have a business and wanted to sell something, now I need not to have a full fledged website; I can just create Facebook/Orkut/Some other social networking page, where by subscribing to different groups I can make my business really popular. I can come up with different promotions, webcasts, and whitepapers there by really diverting the traffic to my business/social site.

This is something new concept.

You can do much more than just getting connected using professional networking sites like LinkedIn. It allows you to subscribe to user groups of your interest and thus participate in the discussion, or you yourself can initiate the discussion and allow others to comment on this. Personally speaking I got a job offer from LinkedIn; which got materialized eventually. These networking sites give you such a powerful media to express yourself.

It is quite interesting as how the money is getting generated in this business; for example there are three revenue models for LinkedIn.
1)Subscription: There are few services; which are still needs subscription, like to find out who really accessed your site. Individuals like you & me doesn’t need this. But, it comes real handy for business to know who accessed their site as they might be their potential customers. Thus this subscription helps.
2)Advertisement: They sell ads to different business and thereby making money
3)Selling Services as SaaS (Software as a Services): LinkedIn sells the services as software to companies to allow them to create site and allow employees to be part of it. This gives companies to establish the platform for employees to share ideas and be connected. Sometimes companied will form Alumni sites which might help them to attract old employees back.

One thing for sure, these networking sites have changed how we spend time on Internet now days.

Change in habits and ‘Hamara Bajaj!”

I concisely made a decision when we shifted to Chandigarh that we will not go for landline phone, which was otherwise would have been first thing after shift. I settled with a cell phone connection. I started thinking about shift in mindset which is occurring in recent times.

For example, hardcover suite-cases have gone now, you don’t see them in airports and railway stations anymore. MTV is not craze now since there are iPods, Video Players, cell phone is a recent phenomenon. So is T-20 cricket. We used to have so many quiz shows in TV when we were kids, but now more of reality shows. It was only (Dancing, ‘Rukawat Ke liye Khed Hai’) Doordarshan and now we have set of cable channels to choose from.

But, the transformation of scooter space is something what captured me! And the news I read about Bajaj fueled it further.

Slowly, Scoters (Gear Scooters, which we used to find when we were kids, not the gearless ones) are disappearing from Indian roads. The largest scooter manufacturer, Bajaj Auto Ltd, has announced last week that they would stop manufacturing scooters completely and focus entirely to build bikes. This is, perhaps, end to a habit and culture of ‘Hamara Bajaj Pride’; where our parent’s generation used to display.

From business point of view, the transformation of Bajaj Auto is incredible; CEO Rajiv Bajaj understood the change in habits of Indian consumer and started doing the transformation 4-5 years back. And it really paid off for Bajaj. Now majority of the business comes from bikes and scoter business is very low. Their earlier competitors (Read LML) are no more in the picture; who failed to read this change. This needs a lot of vision and understanding of consumer market. This kind of business strategy was criticized when it was planned and Bajaj still went head with his plan and proved all his critics wrong.

But, this is what the business strategy is all about, thinking ahead of the competition and time!

Outsider, Marathi, Mumbai, Sachin Tendulkar, English and India

Last month we have seen some incidents and media action/reactions where the issue was raised outsider and Maharashtrian. Even Sachin Tendulkar was questioned about he putting India ahead of Maharashtra.

I would like to see this in a different way. I am not recommending this way or that, but my fundamental question is, can we have that narrow mind? I have relocated myself to different countries, different states, where I have been given a warm welcome. I never felt that I am an outsider anywhere. Given this kind of experience it is hard to believe for me that someone asks for out-of-state people to go back or start talking in local language. I remember reading an article where Amitabh Bachchan was asked to talk in Marathi, the language which he can’t talk.

Can you force someone to use one particular language? Or imagine a situation where Bangalore asks all outsiders to leave the state if you are not local?

I really admire Sachin for his cricketing abilities, now I have started respecting him even more. Because of the fact that he respects India more and he is not shy about putting this across. This is the true Indian spirit and it would be a great motivation for all of us to really think beyond these state boundaries and start thinking like one united country.

I not denying the fact that local languages are important and we need to respect it. But, can a local language bring me enormous amount of opportunity English can bring? We are in a global economy now where India’s advantage has been English talking abilities, given this can we afford our kids to miss the global opportunity English brings up? Why don’t we allow our kids to explore the world through English? It’s vastness, it’s ability to bring good literature, it’s ability to bring best knowledge, it’s ability to provide you the communication channel with rest of the world?

As Chetan Bhagat puts it, local language is your mother and other (read English) is like your wife and it is possible to love both of them at the same time.
Time for all our leaders to understand this global mindset, this helps creating more jobs, not by asking reservation based on state.

Why you don’t get that Promotion?

It has been a while since I hit this blog, life has been hectic lately and now I got a chance to get back. Now since things are on track, I started reading as well currently reading Chetan Bhagat and HBR, both simultaneously.

I read one interesting review on Harvard Business Review, ‘Why you don’t get that promotion’? Author talks about why some guys get promotion and why some gets sidelined, though it appears that the sidelined guy is worth for a promotion. It has very interesting analysis.

It has been explained in this review, with an example, as how things work at the top when comes to promotion. Lately India Inc has some examples where set of people groomed as CEOs and out of them one was picked as CEO, leading to resignation of other guys. It happened in TCS in the past and in ICICI recently.
Author lists out key factors in Executive career advancement;
Non-Negotiable (factors that are absolutely necessary for you to be a contender).
o Demonstrating constant performance
o Being self driven to lead and assume higher responsibility.

Deselection Factors (Characteristics that prevent you from being considered as serious contender)
o Having week interpersonal skills
o Treating others with insensitivity
o Putting self interest over team and business
o Holding a narrow vision on the business and corporation.

Core Selection Factors (Capabilities that breed other’s confidence in your ability to succeed at the senior executive level)
o Setting direction and thinking strategically; spotting market trends and prepare the group or organization towards that opportunity
o Building a strong and continuously improving team.
o Managing the implementation work of any strategy without being involved too low and deep
o Building innovative culture
o Getting things done across the team, departments, geographies.
o Growing as executive, constantly seek feedback and work on the weakness.

This is wonderful analysis I have recently read and it answers few of my questions I had about corporate life.

Change in game field. Analysis on BP deal

The five-year BP outsourcing deal for $1.5 billion is the best piece of news that the outsourcing industry has had since the global recession began. Outsourcing is a phenomenon now, where Business needs to outsource so that it can cut costs and raise efficiency levels. The associated good news for the Indian software and services industry is that it’s leading players — particularly the trio of TCS, Infosys and Wipro — are now truly ensconced in the big league when it comes to global outsourcing. No large multi-vendor deal can be finalized without them getting a piece of the action.

Analysts feel; for the smaller players, the next couple of years will be tough. Through the year-long process that BP undertook to finalize its order, it brought down the number of its vendors from 40 to five. During the boom years, when there were more orders than the large offshore vendors could service, the big clients also chose smaller players. Now, with less to go around and the big players having developed end-to-end capabilities, it is the smaller vendors which have lost out. To keep getting orders from large global clients, they have to make their niche offerings indispensable. The consolidation among offshore vendors in the commoditized space has been on for long, and shows no sign of abating. The Indian leaders are still getting orders because they have differentiated themselves by developing distinctive processes which have delivered better cost and quality.

Other part of the story is, IBM and Accenture, have got the juicier parts of the deal and the Indian players have secured the low-end work of application development and maintenance. So they are still some distance away from their long-term aim of going up the value chain by delivering to large client’s services like systems integration, enterprise solutions and infrastructure management. In comparison, the global incumbents have been able to beat the cost challenge by stabilizing their Indian operations. Simultaneously, the Indian leaders’ attempts to acquire consulting skills remain work in progress.

The second challenge facing the large Indian players is to deliver substantial savings in costs and gains in efficiencies. So while the new order will take care of volume and revenue, the same cannot be said about margins. The need to not just lower price but also deliver more for less means they will have to keep focusing on newer processes to raise productivity. That’s why all Indian majors are giving market guidance of margins under pressure.

It seems; the game field has changed and recession is to be attributed for this. At least, it has differentiated true players in the industry.

Time to look at future

One of the major news this week was the internal matter of Bharatiya Janata Party. At some stage in what has become a sorry mess, the leaders of BJP must sit together and ask themselves as how things got in to this stage. For, all the summary action taken against party leaders who have suddenly become dissident stands exposed as illogical and without basis.

I think of two points out of whole scenario.

Number one, if I were to compare this with any corporate functioning, this seems to be sheer failure of leadership. A leader should always think through a performance system where able and achiever stands to gain. It has not happened in BJP after recent elections. It is a scapegoat politics. This kind of leadership attracts failure for sure. Also, leader should be in a position to own up the responsibility of the failure and take every one in to the confidence and come up with an action plan. Leader needs to have that courage and honesty to accept what has happened and think through strategic steps as how entire operation can be improved. Perhaps, crisis is the time when we need leaders who can guide entire system out of danger. If leader appears to be helpless and leader starts the blame game, then there is nothing much can be done and this is what exactly has happened with BJP.

Second point, as a citizen of India, do I care much about what was history? Agreed, we need to have history and need to learn from that, but my point is, if a particular person is nationalist or secular is not going to solve my current problem. Let history be as what it has been. If someone wants to change the history let them..

As a political party, BJP should start understanding the current problem we are facing as a country. Plan for future as how you will provide education, how you will improve the transparency in the system; how one can create more jobs, how one can revive the industry/agriculture sectors, how you can build competitive infrastructure, how one can build a better healthcare system. More importantly, how entire dirt from the system can be removed.

Being Indian, I do care for this rather than some small piece of history. And this will attract more voters then doing commentary on history. Even media appears to have given importance to this where debates after debates has gone air and loads of paper has been used to write about views/counterviews. We don’t dam care about this.

Time to look for building the future!

Business of Digital Book

Kindle, a handheld book reader is new innovation which might help usher books into the digital age. On Nov. 19 last year, Amazon unveiled the long-awaited device. Kindle, available on Amazon for $399, holds about 200 books in a paperback-sized package and displays pages on a screen that appears more akin to paper than a backlit LCD screen.

Part portable library, part bookstore, Kindle is wirelessly hooked up to the Internet via high-speed cellular network; letting users download books at a moment's notice. Users can purchase books—some 90,000 titles are currently available—for about $10 apiece, and there are no connection-subscription fees.

Starting August, Sony Corp started selling its version of digital reader to compete with Amazon priced at $199. This news is the latest salvo in a battle between digital readers where Sony, Amazon and other companies are vying to establish themselves in a market that they expect to become a profit driver.

Whether the Kindle can finally ignite the digital book market remains to be seen. No doubt it is a true innovation and is convenient for avid book readers on the go and those who travel frequently, their high price might be an initial barrier.

Fed says, economy is leveling out!

The Federal Reserve said on Wednesday that the US economy was showing signs of leveling out two years after the onset of the deepest financial crisis in decades. In an important decision, US central bank also kept its benchmark interest rate to near zero; there by showing interest to support and guide the way to recovery. It seems, Fed made clearest statement to date that it seems the recession nearing an end and shattering financial markets are healing.

I still feel, companies would continue watching the way they spend money, but for sure it seems that worst is behind us. And even the domestic market results show the trend of improvement. Recent IIP data shows that there is improvement in the sentiments, which is also supported by worldwide rally of share market.

There is some good news from other part of the world as well. Germany’s GDP grew 0.3% in second quarter, bringing an end of continuous negative growth since many quarters. French GDP also grew by 0.3%. But in the 16 nation euro zone, GDP slid by 0.1% in second quarter, which is very good if you compare this with 2.5% drop in first quarter.

So, in summary, it seems spring is returning back and hopefully recession will be over soon. However, it has taught few lessons to every country and I strongly feel it has prepared companies in a better way to face any issues in the future. I am sure companies have updated their business risk management plans and might have drawn better strategies to prepare themselves for anything in future.

The World View

Heading Off a Resume Tsunami

Companies around the world are beginning to focus on retention measures to contain voluntary turnover of employees, as they expect a “resume tsunami” to hit them when the recovery begins, a survey by global consultancy Deloitte says.

According to the survey, after struggling with downsizing decisions amid the downturn, human resource executives globally have new concerns about building up of a resume tsunami, which may hit once the economy turns and employees begin to consider new opportunities.

This survey talks about few small steps which could help in reducing the retention problems.
• Take care of top performers and critical workforce segments.
• Hold managers accountable for retention
• Don’t kill survivors by drowning them with extra work
• Be careful about cutting compensation
• Tell the truth

The link to this survey is below; this is pretty good read.
http://www.deloitte.com/us/Debates/Retention

Indian IT industry and domestic market.

The UPA government’s decision to launch a national project that will give every citizen a unique biometric identity card, and to put Mr. Nandan Nilekhani as its chief, has a potential which can transform Indian software industry.

First, it sends a strong signal that use of information technology for development has arrived. Ever since importance of Indian IT industry became evident, there has been a debate if it can help Indian context of development. While IT’s benefits are obvious, it is still seen as a gap, much like generation gap and has created difference between the halves, those having IT compatibility and those who are not. Initially AP chief minister Chandrababu Naidu showed how IT can be used while managing the government, there after several states implemented IT in administration and governance.

Secondly, a large government spending on IT will bring about a huge change in the software industry and eventually in hardware industry. Currently domestic share compared to software export is way too less. Compare that with China, though software export of China might be less, their domestic industry is much bigger than their software export industry. Thus, China’s software industry is still bigger than Indian software industry (Though India is bigger software exporter).

Thirdly, this initiative would act as a means to showcase the power of IT to sectors which have not embraced IT yet, like Public Distribution System, PWD, National Highway program etc. This awareness would generate the much needed boost for the domestic IT market.

Above all, this identity card initiative would result in much better interface between government and public considering multiple advantages this card brings to the table.

Leading from the front

One of the points I was thinking this week is about leadership; couple of annual reports (MindTree and KPIT) really made me to think, as how top leadership is a game changer in difficult times like the one we are in middle of.

Though the time is tough; the leadership team of every company should step up and take the company along with. Every manager should be part of the change and really motivate the team to deliver. The difficult times would throw up the need for efficient leadership.

What impressed me about MindTree is though they are hurt by the market conditions and economic slowdown; however you can feel the vibration where the leadership team and management are confident about beating the slump. This confidence, if articulated down to each individual of the company, it would make team to stand up and fight.

In “Go kiss the world”, Subrato Bagchi has mentioned, during the technology bubble burst in 2000-01; if there was no able leadership of Ashok Sotta, the MindTree might have been closed then and there itself.

I feel in difficult times, management should stand up and take the risk and take everyone along by sheer motivation. This is what management gurus’ call, “Leading from the Front”. That’s what we need.

I can’t stop getting motivated from one of the “Lead India” video; which was circulated some time back. The message is what I liked and get motivated to push harder.

New Age marketing: The power of Zoozoo

This year IPL; in addition to the cricketing entertainment, created other news as well, the Vodafone Zoozoos. The cute, cuddly characters that featured in a series of 29 commercials that ran right through the IPL matches suddenly caught the imagination of the public.

Three other telecom companies ran strong brand campaigns — in fact new commercials- during the same period. Airtel created two pieces of communication leveraging the chemistry of Vidya Balan and Madhavan. Idea leveraged their tie-up with the Mumbai Indians to run an interactive campaign of talking to the stars. Aircel aired their MS Dhoni advertisement of ‘aur bolo’. Yet the animated Zoozoos became celebrities in their own rights and outdid the ‘celebrity’ campaigns. They popped up finally in the stands during the finals of IPL; there were lakhs of entries about them in the blogosphere. The Vodafone Zoozoos were more than an advertising piece; they created buzz for themselves that increased the campaign’s impact manifold!

Borrowing from the cartoon world, they appeal to the child in most of us — yet the contexts and situations in which they are placed and the services they sell are so adult and real. Rounded edges, weird sounds yet decipherable language, and fluidity of movement add to the ‘innocence of feelings’ in a world that is getting more and more ‘manipulative and angular’ in thought.

The fact that the Zoozoos outdid well-known celebrities this season re-confirms that advertising cut-through is not dependant on the use of known faces. A strong campaign can create celebrities and the Zoozoos provide Vodafone with characters that can not only become brand mascots but also be converted into merchandising that can be monetized. In fact, that’s the unique power of animated characters, eg Disney ones — they are brands in search of products — slap them onto anything connected especially to children and the price goes up.

It will be a good lesson for all those companies who spend huge amount to catch the eyeballs. This is sheer example of thinking outside the box.

Recession, Employee discontent and economic recovery.

Debate has started everywhere in the world so as to whether or not the green shots of economic recovery are real, whether they are sustainable and how soon the recession would over. I am not sure, if the employee discontent and low motivation level of employees have been discussed in equal eager. I am also not sure, if high employee discontent has been recognized as the issue we need to handle.

There are two hard facts; first the employee discontent across the globe, across industry is so high that this level of discontent was not experienced in last quarter of century or so. Second, today’s corporate leaders, who have been developed their careers during the last twenty-five years or so, have little or no direct experience in handling serious employee discontent. This would, in my opinion, create a larger management issue when economic recovery starts to roll.

For example, Arcelor Mittal curtailed its European steel production by half in view of the market conditions. During the annual share holder’s meeting in May this year at company headquarters, 100 odd works attacked the company headquarters. Police has to be called to control the mob. This is in spite the fact that Arcelor Mittal had not taken any major lay-offs. Also in March this year, Sony France workers took hostile of its plant CEO and kept him overnight in the factory.

There are so many examples of recent past, in India and even in rest of the world, where employee discontent has out broken. I personally feel, recent Australian out broke on Indian students and workers are the example of that as well.

Assuming that employee discontent might spoil the economic recovery; thing we need to think about it is what corporate leaders can do about it?

The solution is tantalizingly simple, but requires a huge mindset change. Start treating people like people again.

With rise of software industry, the culture of labor union has reduced, thus labor issues have been reduced from corporate leaders agenda. (I am not arguing to form a labor union here, but trying to point out the shift in the scene and priorities. Though HR regained the importance like never before with software industry). Also, more line managers should realize that HR is the job of line managers and not the HR department alone, have personal connection with your team, understand the pains he/she is going through, and have personal touch to all your answers and solutions.

And every manager should begin this right now!

After many stumbles, fall of an American giant

It is a company that helped lift hundreds of thousands of American workers into middle class. It transformed Detroit in to main spot in the world economy, as symbol of American talent for innovation. It built luxury cars and car for every purse & purpose; which led to a saying “What is good for GM, is good for America”.
And now it is filing for bankruptcy, something that would have been unthinkable few years back.

It is the story of GM.

Rarely has a company fallen so far and so fast as General Motors. And while its bankruptcy appeared increasingly likely in recent weeks, the arrival of that very moment still is a staggering blow.

Analysts say, GM began along and slow process of undermining itself long back. It’s strengths like rigid structure that provided discipline earlier on, became the weakness and it lost its feel for reading the American car market it helped create as Japanese car makers took away its most loyal customers as GM was going through serious of strategic and cultural missteps starting from 1960s.

GM gave in to union demands in 1990 and created a program that paid workers even if plants were not running; forcing it to build the cars and trucks it could never able to sell. Thus GM often resorted to a practice called “launch and leave”, spending billions upfront to bring vehicles to market, but then fail to keep supporting them with sustained advertising. With market share shrinking, GM could not give its multiple brands and car models the individual attention which eventually helped Honda attract customers to Accord and Toyota to its Camry. It also lost interest and the patience and effort required to position the brands in the correct market.
During all these years, GM didn’t notice the change in the market place, where Japanese and Korean automakers are bringing- in more fuel efficient, less maintenance vehicles by focusing on innovation; but kept on building its gas guzzlers. Consumers started blaming GM for sub-par vehicles. They might have given them second, perhaps third chance, but eventually shifted the loyalty. Result of this? Through April of this year, GM’s market share was 19%, a steep drop from its peak of 54% in 1954.

This moment would reverberate beyond GM’s headquarters in Detroit, to its factory towns in Indiana, Michigan, Louisiana and rest of the world, as GM was truly a global company having presence in lot of countries.

Ultimately GM would come out of chapter 11, might form a new company which is sleek and might focus on fewer and better brands, but the bankruptcy filing is a fall of true giant, which created and ruled the industry for several years.

Back from Vacation

It was very good 10 days break, had a very good time. All these days while I was at my native, it rained and I felt like I am in some hill station.

Had relaxed time; spent time to connect with new people and did lot of reading.

Much required break, but now I am started feeling like “Welcome back to reality”.

"The last lecture"

This is the novel which I just completed reading; and let me tell you this, it touched me more than any other book of recent past.

Each year at a series known as The Last Lecture, a Carnegie Mellon University faculty member is asked to deliver what would hypothetically be a final speech to their students before dying. It is a wonderful tradition in which both speaker and listeners take a moment to reflect upon what matters most in this life. In September 2007, the speaker, 47-year-old computer science professor and father of three, Randy Pausch, didn't have to imagine that he was confronting his imminent demise because, in fact, he was. Pausch had been diagnosed with pancreatic cancer and, at the time of his Last Lecture, had only been given three to six months to live. Pausch's speech, entitled "Achieving Your Childhood Dreams," was every bit as upbeat and inspirational as the man himself. Rather than focusing on dying, it was a speech about living, about achieving one's dreams and enabling the dreams of others, about truly living each day as though it were your last.
It was about the importance of overcoming obstacles, of enabling the dreams of others, of seizing every moment (because as Randy puts it "time is all you have...and you may find one day that you have less than you think"). It was a summation of everything Randy had come to believe. It was about living.
In this book, Randy Pausch has combined the humor, inspiration and intelligence that made his lecture such a phenomenon and given it an indelible form. It is a book that will be shared for generations to come.
Why this touches most is, Randy knows that he is going to die; but puts a brave fight and virtually prepares his entire family for life without him. He spends the available time very precisely. While reading, you could imagine through as what might have been going through in the entire family.

"We cannot change the cards we are dealt, just how we play the hand."
--Randy Pausch

Rural India is roaring!

If you dissect the quarterly/yearly results of Hero Honda; which were published last week; one this is very clear, it seems recession has not impacted Hero Honda and there is a growth reported by them. More importantly, they have achieved this through growth in rural India.

Less affected by recession, the rural economy is spending much of the higher income derived from a good winter crop of grains and pulses, high minimum support price from Government and the relief from the government waiver of farm loans.

The general election (business standard has predicted that 2009 General election would contribute 0.3% to GDP), summer holiday season, marriages and even the effect of sixth pay commission hikes; all are aiding a massive jump in sales.

The strength of rural economy is getting reflected in Fast moving consumer goods (FMCG), cement and telecom; in addition to two wheelers and tractors.

All of a sudden; rural consumer is of great importance for India Inc now. The marketing teams are busy in defining the strategy to attract rural attention. Interesting enough; rural market is untapped in many areas and there is lot of room for the business for all. Due to media network, even rural market is aware of the new trends and products. And unlike his urban counterpart; rural consumer is ready to spend and he need not to bother about his job loss and EMI to pay every month.

Unfortunately, our business (IT and ITES) doesn’t have an exposure to rural India!

‘Marriage made in Heaven’- Merger of Satyam and TechMahindra

This week saw a major deal is Indian IT industry where TechMahindra took over management control of Satyam. It will be a good relief for Satyam employees; they are in to more stable hands now; there was good amount of instability over last 3 months.

Also, appreciable point is how new board of Satyam and the Indian Government acted quickly to safeguard the Satyam employees, customers and shareholders. We saw a real quick decision making in this entire process; which is really commendable.

However, this deal is more strategic for TechMahindra; let’s see how;

Geography Expansion: TechMahindra is very strong in Europe and Satyam is strong in APAC and US. This merger will help TechMahindra to easily expand in to US and APAC, that too with strong customer base including GE, Cisco. This also helps to go beyond British Telecom in terms of new business and try cross selling in other existing customers. This is huge advantage. You can’t imagine the pain in building US operations from the scratch.

Business Expansion: TechMahindra is known for its telecom domain. Satyam is strong in SAP [About 45% of business] and Engineering Services business and BIFS. Thus TechMahindra will get built up practices of SAP and Engineering services. This is much required diversification.

Employee Base: Satyam has pretty strong sales force and outstanding techies, it is said, and some of the key business managers have already left though.

Thus, this deal seems to be a great fit and appears to be more strategic for TechMahindra. It leaped ahead as 4th largest IT company in India. Off course any deal comes with the challenge of managing the merger and management has to work towards aligning both the companies. Also, we should not forget the risk of liabilities Satyam might carry, no body knows about these liabilities as of now.

However, on paper it looks like; as what TechMahindra CEO put it ‘Marriage made in Heaven’.

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!

One Last Chance for Detroit

It used to be said that “what is good for General Motors is good for the USA”. That is not true any more. The company now accounts less than a fifth of all car sales in the US, while other companies produce and sell better, smaller, fuel-efficient cars that market might likes. And the word “bankruptcy” might have finally been uttered in GM context by president Obama; though he wants it to be “managed bankruptcy”; which means a safety net for employees and retires but not to the management.

Full bankruptcy of GM will pretty much destroys what remains of the company; and be a political bomb in terms of its psychological impact on the entire nation. So, there is one more chance given to the management; after CEO is been fired; in the hope that the union and bond-holders will make financial sacrifices needed to make company viable.

Now, new management at GM has to produce a plan for restructuring itself with-in next 60 days. But given the past failures of such plans; including the ones which was rejected last weekend by White House auto task force; it would be risky to assume that all will go well with-in next 60 days. This would be a huge task at hand; especially you are trying to revive a huge company like GM and that too in 60 days of stipulated period of time.

I think, this whole government’s protection net might act as an interim solution to a longer problem. It can’t solve the long term problems for sure. The issue with US auto industry is; over the years they produced over-priced gas guzzlers that have a declining market. Or as a management consultant would have put it; the companies are out of sync with the market.

In GM this was no secret, yet the company did little to address the issue and continue to focus on big gas-guzzlers because they were more profitable at that time and they thought this might continue. They didn’t notice decline in the profit margins and the sales.

It appears that; this would be one final chance for GM; if not the choice would be either sudden or slow death. If that happens, these 60 days would give us enough time to adjust ourselves to an idea of possible closure; merger or breakup.

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.

One Man Marketing Army

I thought of shifting a bit and discuss a non-corporate profile; who thinks like a corporate.

I am talking about Amirkhan, one of the people who I like because of his hard work and dedication and passion (Other person I like is Sachin Tendulkar, because of his sheer ability to improvise his game). Amir seems to do his homework completely before he gets on to shooting and classic example is Tare Zameen Par, where this homework was quite evident.

Have you noticed marketing effort around Ghajani? First there was a youth campaign around with his trendy hairstyle and then there was a serious of releases of Samsung mobiles, which he has used in the movie. The result? Gajani was run away success and this marketing effort was successful in creating the much required hype about the movie.

Also, Amir believes in quality and it is said he never endorses any brand if he doesn’t believe in its quality. His involvement is so much; it is said that you will see him using Titan watch, having Coca-Cola during breaks, having Tata Sky at home for watching TV, talking in Samsung mobile! (These are the brands he endorses) This is sheer dedication towards one brand and living what he says.

Let me not try to get in to review of his movies, my intention was to point out the marketing ability he has mastered recently and his involvement in making this marketing machinery works. And perhaps it appears that he does it single handedly and doesn’t involve any marketing research firm.

This amazes me!

The Sixth Sense-Technology Innovation

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.

Mahabharata, Psychology and Need for living right.

More I watch Mahabharata, more I hear from Krishna’s character in that, I become emotional about life and teachings of our Vedic scriptures.

This weekend, I started thinking about important of being correct and living a correct life, without harming any one. It is important to pass on that knowledge or ‘Sanskar’ to our kids.

Life is complex and there is no easy shortcut for it. You have to face through all the issues; but where we tend to do mistakes is of not understanding the importance of values in our lives. We take our life granted, there by creating problems for ourselves.

I know, it is a bit of emotional, philosophical and spiritual; but right now my mind is full of life’s lessons, given by our Vedic scripts.

Is there any better gift to next generation than this?

Indian IT: Trouble Today, but Optimism for the Long Term

Knowledge@Wharton has an article on National Association of Software and Service Companies (NASSCOM) India Leadership Forum held in Mumbai in mid-February.

This is abstract of what was being discussed in that forum.

This is certainly good news for Indian IT industry that long term looks good. But, the article also talks about need for business model innovation and ability to adapt to the change. Off course that comes with lot of risks.


Long one, but lot of 'gnyan' .

http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4354

"The Cable Guy"

I watched a movie this weekend, The Cable Guy. This is the story of a cable person; who’s growing up as a child was a problem. This movie resolves around social issues if upbringing of a child is not proper.


The movie unfolds around a person, Steven, who happened to meet this cable guy and starts talking to him as friend. Cable guy didn’t understand what is friendship means and starts crossing the limit.

It is very good movie and gives lot of insights of why upbringing of a child is most important.

Indian Aviation completes it’s full circle.

In 1995, Singapore Airlines and Tatas came together and proposed to start domestic airline. The idea was to invest jointly and have few airplanes to begin with, and expand eventually.

But this idea ran in to troubled waters as both home grown domestic players and government opposed this idea. The reason; the international carriers (Like Singapore airlines) have deep pockets and world class experience and domestic carriers can’t compete with them.

Fast forward fourteen years; Indian aviation seems to have completed its circle. With recent FDI changes, government has proposed to open investments from foreign airlines; which was being pushed by domestic airlines for some time now.

The reason seems to be obvious. Private carriers, without any foreign airline competition; have been burning the cash. The cumulative looses of these private players sums up to about $2 Billion. And they are in need of additional funding to keep the things moving. Given the global market situation; it is impossible to raise fresh funds; so these players are desperate for funding.

With most of the airports being run by private operators, who have collaboration with international players, it doesn’t make sense to draw the line. In case of airport operators, even 100% direct investment is allowed.

More importantly; in the recent part, almost all countries have opened up the direct investment in airlines industry. One of the arguments in 1995 was that not most of the countries have this liberalized policy.

I tend to draw parallels between aviation and telecom sectors in India. Kind of telecom revolution we are experiencing was possible mainly because of international players like SingTel and Vadafone among others, who took equity stakes in Indian players and helped the industry grow. Telecom has 74% direct investment policy.

Lets hope direct investment in India in aviation sector brings up required competition and revolution; so that common people like you and me can fly easily, without hurting the purse!

End of Indian Retail??

Subhiksha, one of the leading Indian retail stores, which re-invented the retail business model with its no-frill store formats, is in news in recent months/weeks. It has not paid salary to its employees since October, vendors have not been paid and the operation is standstill.

With absolutely no encouraging news from any of Indian retail stores (Future group has been better comparatively) many have already started writing off Indian retail phenomenon. In my opinion it is not a correct thing to do, and we need to keep some fundamental things in mind before we re-evaluate Indian retail opportunity.

Firstly, India is still experiencing strongest economic growth since last 60 years, with 7 percent GDP in 2008-09 and perhaps between 6 to 7 in 2009-10. This growing economy throws many new opportunities. Secondly, modern retain still accounts only around 7 per cent of the total retail channel in India, still dominated by pop-and-mom stores. Thirdly, the consumer spending pattern is consistently shifting and mall mania has started creeping in. So Indian retail story is intact.

Having these factors; why Subhiksha (And by large retail players) ran in to problems?

Though, Subhiksha had tailor made business plan, but the biggest mistake probably was not building efficient supply chain and super-efficient retail operations organization. This is pretty much required to compete with next door Kirana shops and more even it is margin game. There was no financial and management investment in this area.

Also, Subhiksha tried to grow very fast. In this quest of growth, the basic paradigm of retail seems to be forgotten. Be it supply chain efficiency, optimized store location, store rentals or enhanced customer service which makes customers loyal.

I will go back to basic of what has been taught in B-school, keeping the fundamentals correct in business. There should be a close co-relation between operation and expansion and if we try to focus on only one thing at any given point in time, it is for sure we will run in to troubled waters.

A tiring tale

It has been really a tiring week, last two weekends I have been traveling, which added to my physical tiring. This week has been an emotional roller coaster as well.

Tough times through up great challenges and really tests you are a leader and mentor. No, I am not only talking about your life in business, but it checks in your personal life as well.

Question is, how you can lead your family, who look at you as source of inspiration, in difficult times? How you can continue being an encouragement source for your kid?

Point is to look at positive things of life and wait for correct time.

Operational Efficiency

As all the companies getting tighter on cost and seeing where they are spending each dollar; the question that come to me is operational efficiency and profitability.

Let me make it clear, I am not debating on if cost cutting is good or bad; it is certainly good to cut un-necessary cost, irrespective of good or bad times. I am thinking on operational efficiency.

In my opinion, there is a limit to which you can reach in operational efficiency; beyond that it is impossible to grow that number. It doesn’t make sense to try improving it any further. We should concentrate only so much on improving the efficiency, and there is no point in beating that any more. On the contrary, focusing on the business revenue and customer acquisition should be main focus and this focus has to be sharper during recession. There seems to be absolutely no alternative for this.

So, lets not get it wrong; it is business acquisition should be the prime focus of every company. If we put together a decent operational engine in place; that company becomes unbeatable.

Look at Wal-Mart, they have efficient supply and distribution system in place, a must have for any retail company. But rather than trying to make this system more efficient they have been focusing on increasing the business. Other examples are Big Bazar and ICICI bank. Both might not have state of the art and efficient operational excellence, but both seem to have focus on its customers.

It is DNA of a company which defines all such things and that is what we call as “Company Culture”. And this is precisely why some companies do well and some companies just can’t compete.

Any takers?

Stay Hungry Stay Foolish-Connecting Dots

Steve Jobs' 2005 Stanford Commencement Address

Drawing from some of the most pivotal points in his life, Steve Jobs, chief executive officer and co-founder of Apple Computer and of Pixar Animation Studios, urged graduates to pursue their dreams and see the opportunities in life's setbacks -- including death itself -- at the university's 114th Commencement on June 12, 2005

Satyam Saga

I can’t even stop of thinking Satyma and its sudden collapse through entire this week.

Several magazines have written reams together on this story; TV/Internet media has covered this story so extensively that by now we know minute by minute details.

But I am with some other thing. My mind can’t even stop thinking about Satyam’s employees and the mental trauma they might be going through. We make financial plans and investments thinking about the projected salary and cash flow; and here they go, entire plan got toppled and they are not even sure if they will get this month salary.

This is tough time.

May god bless all of us!

No tears for 2008

We are about to send off yet another year in to history. Perhaps most dramatic year!

We saw almost everything in this year, high and crash of stock market; financial system melt down; manufacturing sector reaching it’s bottom; inflation high/lows. In summary, we have seen all, which literally created liquidity problems to working and business community. Arguably this termed as worst year industry ever seen; where impact was seen across all industries.

Internationally, this year saw meltdowns like Lehman Brothers, narrow escapes of GM, Ford, Citi. Officially entire world is in to recession. Bad numbers poured in from US, Europe, Japan, India, Russia and China.

In general, we are not yet out of recession; we still need to deal with its impact.

It was large belief that BRIC countries (Brazil, Russia, India and China) are largely insulated from what happening in US and Europe, this year proved that concept wrong. No body in insulated and it impacts all alike.

From social front, we saw worst terror attacks, which took entire world shocking.

Though, silver line being Indian sports; this year we have been on high. We also saw premier sports event, Olympics being conducted with at most precision.

So, there will be no tears in saying good bye 2008. Let’s hope we will have better 2009; where the happiness and energy in the industry comes back.

Wish you a happy and safe new year ahead.

“Stay Hungry, Stay Foolish”

This is the book I just completed reading. It is about 25 IIM graduates; who choose to find their own ways by rejecting corporate offers.

Reading stories of Sanjeev Bikchandani (Naukri.com), R.Subramanain (Subhiksha), Jerry Rao (Mphasis), Nirmal Jain (India Infoline) gives immense motivation and inspiration.

Couple common things I observed out of all these 25 profiles;

Risk Taking: Entrepreneurs are born risk takers. In each of these profiles, we get to see about this fact. They don’t hesitate to take the risks.
Hardworking and persistent: Once they dream; they constantly follow that to make it happen. Though there would be difficulties on the way. They are not losers!

One thing for sure; these guys are from different ring of the Saturn!

How Mortgage Crisis in US Pushed The Whole World in to Depression.

Let me share you what I felt about this topic.

While we are getting ready to deal with ‘depression’ which has spread across the whole world now and saw some big names tumbling; the question comes up is, how in the first place a visibly simple mortgage crisis in US couple of years back turned to be a depression? Affecting the whole world?

The search leads to one word ‘derivatives’.

Derivatives are financial instruments that are used to reduce financial risk, just as a fire insurance policy is used to reduce the risk of a fire by compensating possible damage in the event of one. Why did, then, Warren Buffett, whose financial acumen is legendary, describe them recently as “weapons of mass destruction”?

Wikipedia definition of derivative is; these are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying). The underlying on which a derivative is based can be an asset (eg commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (eg interest rates, exchange rates, stock market indices, consumer price index (CPI) — see inflation derivatives), or other items (eg weather conditions, or other derivatives). Credit derivatives are based on loans, bonds or other forms of credit.

The main types of derivatives are: forwards (which if traded on an exchange are known as futures); options; and swaps.

Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect. This activity is known as speculation.

It is not hard to see why such “derived” securities or “derivatives” have become so popular. A bank that makes a loan, for example, for a house, faces many different types of risk. The borrower, for instance, may not be able to return the loan on due date. Or, he may not be able to keep up with interest payments. Or, the market interest rate may rise far above the rate the bank has given the loan, leaving the bank stuck with a loan at a low interest rate. Or an earthquake might hit the area demolishing the borrower’s business. Or, high inflation may reduce the value of the loan by the time it gets repaid. Derivatives are a way to “hedge” against these risks. For example, a housing loan to a borrower in, say, Pune can be combined with a housing loan in Mumbai and another one in Bangalore under one common instrument and this combined “derivative” can be sold to an investor. This combination reduces the risk of disparate housing markets such as Pune, Mumbai and Bangalore all suffering downturns at the same time. The investor in this derivative rightly believes that the instrument he holds has a balanced risk.

If derivatives can diversify risk, as just described, what can go wrong? For one, the borrowers may have mis-represented their income. Or, the loan issuer may not have verified their incomes. Or, they may have borrowed 95 per cent of the value of their houses such that if property prices decline by, say, 20 per cent, the asset cover may become inadequate. In all of these cases, should interest rates rise sharply, from say, 6 per cent to 10 per cent, these borrowers may no longer be able to meet their monthly payments. When Greenspan, who was Chairman of the US Federal Reserve Board, was told about similar issues developing in the US mortgage securities market he believed that such problems in the housing sector would be restricted to a city and could never become a national, let alone an international problem.

This would normally have been true, but mortgaged-backed securities were sold not only nationally in the United States but also throughout Europe and Asia. When the US housing bubble burst and borrowers started defaulting on their mortgage payments, the value of the mortgage securities fell precipitously. The shock waves were transmitted throughout the world. What started as a crisis in some specific parts of the US now became a worldwide financial crisis.

`It`s excitement, not stress`-Article on Chanda Kochhar

As joint MD of ICICI Bank; Chanda Kochhar has achived a lot.

Following is the link appeared in Business Standard; it gives a lot of insights.
http://www.business-standard.com/india/storypage.php?autono=337265
She call stress as excitement!

Business Around Entertainment Channels

There are so many entertainment channels which are coming out in India and this market place is becoming busy. The competition has been to capture the eye balls and channels are making all possible effort to attract people to their sofas.

 In recent weeks; there are array of General and news (Both general and business news) channels which got aired. 9X, Colors, UTV (Both General entertainment segment and business news) NDTV Imagine etc. And Colors, with its different program mix-up seems to be gaining popularity.

 There is news in the circles that ADAG is planning to enter in to this segment; and it will be interesting to watch how the equations would change once Relience enters. ADAG is known to its big and grand plans and I am sure entertainment segment will not be similar to what it is today.

 So far, Zee and Star have been market leaders with ‘saas-bahu’ serials and people certainly wanted some change. And few old Star TV executives, who went ahead to start 9X and Colors (And few others) understood this need in change and quickly shifted the gears to gain popularity.

 Though it doesn’t appear to be; but there is a whole lot of strategy and game plan behind all this, like any industry.

 We are interested in watching good programs after all; who cares if it is on Zee, Sony or Mony!

Go Kiss the world!

This is the auto-biography of Subrato Bagchi; which I just completed reading.

 “Go, kiss the world,” were the author’s blind mother’s last words to him. These words became guiding principles of his life. Through personal anecdotes and simple words of wisdom, he brings to the young professional lessons in working and living, energising ordinary people to lead extraordinary lives. ‘Go Kiss the World’ will be an inspiration to ‘young India’ and to those who come from small-town India, urging them to recognise their potential

 The book has been divided into three parts. First section deals with his birth and early days, second one talks about his earlier career and dilemmas while in the last section, he talks about his experience at Wipro and its growth from a small firm into what it is today.

 Excerpt: 

The pinnacle of my career at Wipro brought with it the opportunity to work directly for Azim Premji. Mitta had taught me to be a good human being before trying to be a leader. From Ashok Soota, I learnt what it takes to be a good leader. It was by observing Azim Premji from close quarters that I learnt about leadership from an entrepreneurial standpoint. Premji was acutely aware of the challenges that lay ahead for Indian companies in a progressively open economy. I learnt my final lesson on leadership on my last day at Wipro. He wanted me to stay back. I told him that one of my reasons for leaving was that we were very different people, we thought differently. He answered: “That is the reason we should work together.”

 Personally I am pretty much impressed by this book, the story of a middle class person, who started his career as Second Division clerk in Orissa government; went ahead to co-found a successful ideas-to-IPO organization. I am impressed by the openness and honesty of narration as well.

 It will be a very good reading and guiding material for young professionals like you and me; who many times, face dilemmas in life, which author calls as ‘Mid Life Crisis”! More ever it is a story of a young professional who wanted to make it by himself and the amount of hard work it takes to reach there.

 So, go kiss the world! 

Should we start teaching Mandarin to our kids?

After seeing spectacular closing ceremony at the Beijing Olympics and feeling the vibrations of Chinese drummers; one question we need to ask; how did China managed to put together such a spectacular show? And what it means to the rest of the world?

One thing is sure; China didn’t build this overnight; there is a hard work of 7 years (It was decided in July-2001 that China will hoist these games), there is a meticulous planning, spectacular management. Entire China has been preparing for this moment.

Let’s reflect on how China and USA have spent last seven years; China has been preparing for Olympics and USA has been preparing for al-Qaida. China has been investing in sports infrastructure/nation building and USA has been investing in installing metal detectors and security processes. I am not saying, what USA was/is doing wrong, probably it was required to fight terrorism. And as a country USA was supposed to respond to 9/11.

But, results are there to see for all of us. Lets look at the infrastructure China has built up, super speed electromagnetic trains; ultra modern airports, spectacular high-ways and great industry revolution. On the contrary USA seems to have missing the ‘Nation Building’ activities; for which America has been famous for.

For argument, we can say, though cities have good infrastructure; but rural China is like old; lacking proper facilities; in fact no one knows more about how China is! But point I am making is; under the banner of 2008 Olympics, China started a domestic revolution and a nation building process and I am sure; they will only stop when entire nation building process is complete. Now they have a proven process in hand.

I think, entire world need to take a note of it; though it is too early to say any thing. There could be a competition to US in technology, engineering, education and infrastructure.

It might be a good idea to start teaching Mandarin to our kids! Probably they might have to go to China to see future as we are seeing our future in US!

Who knows?

A ‘Golden’ Business Opportunity.

First of all, congratulations Abhinav Bindra; you made us feel great! We, all Indians; salute you for your hard work, dedication and determination. It was an incredible job!

Coming to business side of it; I feel it is a ‘Golden’ business opportunity. In fact, for two individuals; one Abhinav and second one is Michel Phelps.

This is a right time for our brand guru’s to focus on sports other then cricket. With Abhinav being a house hold name now; corporate world can utilize his fame to market their brands. There is other side of the story as well; if Abhinav gets promoted by corporate; non-cricket sports get more visibility. Though there is no history in India of non-cricket brand ambassadors; it might just start, who knows?

Phenomenon Phelps made history in this Olympics; and I am sure his brand is now ready to explode. CNN reported his current brand value is $30 million! Phelps has become a synonymous to swimming as Born Borge (Arguably) was to tennis or Tiger Woods is for Golf. By doing nothing; Swimming will get more popularity in whole world by Phelps name. That is the fame and brand he has created himself.

Corporate America is famous in catching such great players and builds the branding around him/her. Sports Marketing is very systematic there and I am sure Phelps will en- cash this.

I believe; both these cases are real golden opportunities, if done right.

After seeing Olympics this time; I can’t help myself but jump the lane and ask myself; how much our city (Pune) is prepared for an international event like CYG?

Do we really care that we want to be a good host?

The High Performance Entrepreneur

This is the title of a book I just completed reading, it is by Subroto Bagchi, co-founder of MindTree consulting, a mid-sized IT and consulting company.

On top, this book is about guidelines of creating a company, from a business idea, to IPO. The start, the VC pitch one need to make, branding & marketing etc.

In addition to above tips, this book gives enormous amount of learning for building a team; managing customers and managing difficult times; especially times like 9/11 and global recession. This book runs through different stages of a company, from a start-up from an apartment to multi-million dollar company. The author narrates MindTree story while he speaks these different stages. It catches because you can actually co-relate a theory with an example.

MindTree story is real amazing by itself; in terms of the way it progressed to achieve $100 million in a span of 6 years. This book gives a detailed description of culture and value system MindTree has and why it was build in that way. Author stresses the need for quality of services and gives instances as why this is important in today’s world.

In all, it has very good tips about starting and building a company. And it is an inspiring story to read. And more important lesson I learnt is following the dream you have, even if you face difficulties. After all, all MindTree founders were from pretty general middle class background and it is their hard work and resilience made their dream come true.

Building a company and watching it grow is like seeing your kid growing and going to college!

Nano: Tata’s Costly Promise?

There should be no doubts about that innovative idea, market it is targeting and given the technology and process knowledge, Tata Motors will bring out the Nano as designed. But, question need to answer is, is it going to be a costly promise?

Back in January, when Tata first unveiled the Nano at the Delhi auto show, this would-be king of econo-boxes grabbed more attention than anything shown at the North America International Auto Show in Detroit held the same month.

No matter. The Nano, a 623cc-engine compact that will get 20 KPL, instantly won kudos as a showcase of frugal Indian engineering. It sent shock waves through the auto world as carmakers reassessed how cheaply they could make small vehicles. For Ratan Tata, the car symbolized something much grander than just another product.

Steel Prices:
One problem is that Tata's cost concerns with the Nano are more serious than those faced by other automakers. First, at a time when global steel prices are touching record highs, prices in India are rising even faster.

Singur Plant:
Rising input prices aren't the only factor increasing costs. Tata Motor admits that its Nano plant in Singur is not ready yet because of protests and it might drag a bit, adding the costs, or it’s manufacturing has to be shifted to Pune site; which can’t handle Nano production yet, adding to total cost of operations.

No surprise, then, that analysts are wondering how Tata Motors can earn a profit on the Nano.

Supplier:
One obvious answer is to look at suppliers. But suppliers, already scrambling to make parts as cheaply as possible, can only be squeezed so far. So, this option will not going to yield more.

Volume:
Other option would be to look at volume, as per one analyst, until production volumes hit 500,000 units, it's difficult to be optimistic about any profits.

Passing rising costs on to car buyers through higher prices looks to be more difficult. With the 100,000-rupee price not up for negotiation, one option is to sell a larger proportion of higher-specification Nanos, which come with electric windows, air conditioning, and central locking. But while luxury Nanos will be more profitable per vehicle, higher prices risk edging out many customers who until now could only afford two-wheelers. One difficulty is that as the price edges closer to the Maruti 800, the Nano becomes less of bargain.

Business is all about such catch-22 situations!