Prize Catch or Head-Scratcher?: HP offer to EDS.

This week’s blog is just continuation of last week’s story of mergers and acquisitions. But EDS and HP deal is more of global in nature.

When Hewlett-Packard announced its $13.9 billion acquisition of tech services giant Electronic Data Systems on May 13, pundits heralded it as a bold move by HP CEO Mark Hurd. In one stroke, it seemed, he had put HP on a stronger footing with market leader IBM in the fiercely competitive tech services business. Together, HP and EDS will create a services giant with $38 billion in revenues, compared with IBM's $54 billion.

Yet a closer look at the deal raises questions about Hurd's strategy and choice of dance partner. EDS, pioneered the practice of taking over corporations' computing operations, was slow to respond in the early 2000s to the threat of nimble Indian rivals offering services at sharply lower prices. Revenues stagnated, and EDS racked up huge losses. Eventually, the company increased its overseas hiring, and bought control of an Indian company, MphasiS. (I wrote in my blog about this merger of EDS and Mphasis as how it makes sense and which was eventually figured in Rediff)

So this deal may not change the game when it comes to one of the most important factors in tech services. The top-tier services companies need large, low-cost, global workforces, and their operations need to be tightly integrated so employees with diverse skills collaborate smoothly. IBM, Accenture, and Indian companies such as TCS, Infosys and Wipro lead in this effort, while EDS and HP have lagged. The services sector is going through a shift, and this merger doesn't address the global service-delivery challenges that HP faces.

For Hurd, the logic is simple. He prizes EDS's giant outsourcing business because it has a large number of customers producing annuity-style revenues. There isn't much overlap between the companies. And he says there will be considerable cost savings. EDS CEO Ronald Rittenmeyer will run the services subsidiary.

Hurd, who excels at cost-cutting, had a choice between buying a big racehorse seemingly past its prime or a young colt with lots of potential. He bought the mature horse. Now we'll see if he can whip EDS back into shape.

Aztechsoft acquisition: Is this start of consolidation?

This week’s news that caught my thinking is Mindtree’s acquisition of Aztechsoft. On paper, it looks like a good deal in terms of money Mindtree will spend to acquire. Also, from strategic point of view, it might help Mindtree to gain that extra mile it wanted. Analysts believe, this is merger of synergies.

It is true, Mindtree has a target of meeting 1 billion in revenue and it wanted a portfolio in product development area. Off course this acquisition serves that purpose.

Since I am a small time investor in Mindtree, I would naturally want their top line to grow. But, the question that came to my mind is; is this start of consolidation in Mid-tier services companies in IT sector?

With rupee appreciation, challenging global conditions, stiff competition from global companies; are few points why doing business looks difficult for mid/small companies. I am not entirely ruling out a possibility of running the business in spite of these conditions. But the overall condition seems to be real challenging.

This kind of consolidation is quite natural and it is phenomenon across all industries. I remember my MBA professor telling about “Rule of consolidation”. It seems, in all the sectors, the consolidation happens and 3 or 4 big players will control the entire business there after. I remember him quoting American Airline Industry, American Retail industry, American Pharmacy industry. And surprisingly this rules sounds sense!

Off course I am not of the opinion that there will be only 3 or 4 companies in IT sector. But, the question I am raising is, is this beginning of consolidation? Where slightly bigger player will acquire smaller companies? Or is it just one-of-those cases?

I believe, we need to watch this mid-tier sector very closely and I am sure there will be surprises! Who knows?

The business behind IPL

The much waited IPL, the T-20 format of funfair, has started. Pundits jumped in quickly to announce it as hit, in terms of revenue, TV viewrship and on the field tickets being sold.

If we look at the business side of this format, it really makes great sense. And I think the concept of the game, revenue generation model, team ownership and even the concept of cheer leaders, is being lifted from American sports industry. The whole business behind IPL to me looks like a MLB, NFL or NBA, except one change, BCCI (Or body like BCCI) is not the ultimate beneficiary there! Every dollar earned comes back to franchisee.

The basic revenue model for the franchisee is; in-ground ticket sales, in-ground marketing revenue, and other in-ground sales revenue. Considering the amount of money they spend on team players, and other costs they need to take care, it might not be possible for franchisee to break even in first couple of years.

However, if the great rush continues and people keep coming to ground and keep watching; no question; it really makes sense from business perspective. After all, every franchisee should make money by end of the season.

I do see few challenges as well; first thing is to manage the entire team in a professional way. As I can’t stop drawing similarities between a MLB and IPL, this format of the cricket should bring out competitive side of every player and players should not treat this like an exhibition match. Also, for owners, there has to be a tight monitoring of the revenue generated vs. cost incurred for team, otherwise, like any business, owners will end up loosing money.

In end, it is good for fun and it would be successful in entertaining the cricket lovers and in that sense it has served its purpose.

But question un-answered for me is; which team you really support?

India’s Best Managed Companies.

This week’s Business Today has a survey, ‘India’s best managed companies’. There are some parameters with which these companies are surveyed, like HR policies, Innovation, Customer focus and community services etc.

My biggest surprise after reading this is, there is no IT company appearing in this list. This led to so many questions in my mind.

• Is IT industry HR policies are not in par with other industries?
• The common perception is, IT Company’s talent management is of global standard, is that not true?
• IT service companies, to my knowledge at least, are best known for its service to customers and this industry is highly influenced by western culture in terms of service.
• Innovation: - I have a big question mark on this as well. Some companies have really innovative products and business models.

My intention is not really questioning the survey and its credibility; rather I am looking at software industry and trying to answer these questions to my self.

First thing comes to my mind is, is software industry is forgetting the common and basic rules of business? I can claim, for sure not. You can’t be in business without following the basic rules of the game.

So, next question mark I have is on HR. I personally feel, we, as an industry, needs to improve in this field. We need to be more innovative in terms of talent management, building the common feeling of team. Given the industry we are in to, what ever we have done in this area is very less. We all need better working place, better balance between work and life.

And, more importantly, we need to build the culture of innovation within the company. Apple and Google are true example of how innovation can be taken in to new height. Have you seen a screw fitted in to an iPod?

I can go on listing the things, which I feel we are missing. But, I would like to hear from you all. I would like to see a discussion on this.

Ideas? Suggestions? Feedback? Inputs?

Kingfisher+Deccan : How much sense the merger makes?

Recently Kingfisher acquired Deccan Aviation’s majority stake. Both are like Chalk and Cheese, with different operating philosophies and different target segments. What, then, is the rationale behind their merger? Why did this happen after all?

The two airlines have different business models and cater to totally different passenger segments. Air Deccan, after it’s arrival in 2003 has rewrote the Indian aviation industry. With low cost operating model, Air Deccan bought the prices down and thus allowed Indian middle class and business travelers to afford the prices. Result: domestic air travel really took off. However Deccan is still bleeding in terms of revenue.

First and obvious outcome of this merger is the consolidation in the sector. The reason is, weaker players pay more attention to cash generation than profitability and that brings down the financial health of the industry. So, this merger will help industry in consolidation.

Other compelling reason behind the merger is the potential for huge savings from cost synergies, route rationalization and bulk order deals. A close look at the two airlines reveals that except the business model there is no fundamental difference between two airlines. Sharing parking lots, maintenance, flight operations, cabin crew, pilots and ground staff really will save a lot of cost. Besides marketing network created by Deccan can be used by Kingfisher and visa versa.

Also, with this merger Kingfisher will get license to operate international sector. Due to 5 years ban, Indian operators are not allowed to enter international sector for 5 years of their operation. Since Air Deccan is operating since last almost fives years, getting the international license will not be an issue for Kingfisher.

Tough Air Deccan is at the lower end of the spectrum with lost cost service and Kingfisher is operating in service and business sector. But merger is promised to maintain separate identities thus serving entire spectrum of the industry. With international sector getting added up, it will only help in revenue generation. So, merged entity will serve low cost sector, service sector and international sector, thus becoming one preferred carrier for all needs.

Years ago, Mr. Gopinath changed the rules of the Indian aviation industry and rudely woke up the established players with his innovative pricing policies. Following this merger, Indian aviation industry will be consolidated with three players, Indian-Air India, Kingfisher and Jet-Jet Light.

The bottom line is, Mr Mallya’s gambit may result in a win-win situation. And also, good for passengers.

After all we want good service and also want to save money when we fly, isn’t?

Employee Polls

Did you ever wonder why these employee polls are being conducted? Did you fell these are waiste of time and money?

Jack Welch tries to answer these 'obvious' question in his column in Business Week.

Good Read!

http://www.businessweek.com/magazine/content/08_04/b4068090140030.htm?chan=magazine+channel_opinion

Power of Strategy- ITC's Bingo Story.

ITCs entry into wafers market with Bingo chips is an excellent case study of how to enter in to already overcrowded market and be successful with right strategy.

A year ago, ITC Foods was looking at new business segments to expand its product portfolio. The packaged snacks category was growing at approximately 25-30 per cent every year. But it had only one national player — PepsiCo’s Frito-Lay. Ten months after it entered the category with its wafer snack brand, Bingo, ITC’s foray into the Rs 1,800-crore branded snack market has fetched the company a 16 per cent market share across the country.

Bingo’s success story is about how a combination of leveraging synergies, building on consumer insights and high decibel advertising can win the game. There were many advantages for ITC to enter this segment. The company could leverage its existing distribution network and also source from farmers easily, as its earlier foray into categories like atta and biscuits had already given it access to the supply chain.

Once this decision was made, a cross-functional team of eight individuals were sent across the country to research the snacking habits of the Indian consumer. After travelling to 14 cities and speaking to more than 1,000 people, the team came back with an insight that Indian consumers were looking for novelty and excitement in existing snacks.

The team found that while vada pavs and samosas still sell, vada pav with cheese and paneer-filled samosas, or for that matter, tomato-flavored khakra were the ones that excited the new and more demanding Indian consumer. Based on this information, the company decided to look at chips with innovative flavors.

For the recipes, the company went to the chefs in its hotels. The chefs came back with 16 flavors with twists like bindaas masti chaas, chatkila nimbu achar and tandoori paneer tikka-flavoured potato chips, chilli and tomato-flavored mad angles — inspired by khakras — and other snacks. The company decided that youngsters in the age group of 16-30 are the most experimental and hence they would be the primary target audience.

But there was another challenge. Advertising in the category was extremely crowded. Every week, two-three new brands (many of them, local) are launched and more often than not, they are targetted at the youth.

ITC also ensured that it reached its audience through every possible medium. It first created a website www.bingeonbingo.com with offers, online games, downloads and even mobile games. The site was advertised with banners on websites such as Yahoo!, Rediff and Sify.

On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product.
But, analysts believe the Bingo story is more about well-leveraged distribution. The company distributed more than 4 lakh large racks, to display the brand at all points of sale. The racks created so much impact that even competitors like market leader Frito-Lay’s introduced its own version of wafer racks. After all in India, joh dikhta hai, wahee biktha hai,”.

It is all about offering a differentiated product or service, which will clinch the market share. ITC has been there and have done it!.

New Year Resolutions for 2008.

• Get more profitable revenue for MatrixOne Services group.
• Be regular in blogging/writing articles.
• Continue hitting gym! (With same intensity that I have currently)
• Read more and think strategy!

It really happened in India!- A Book review.

I completed this book, almost in single sitting. And found this really good book. There is a ton of new things in the book, which we can adopt in day-to-day professional life.

Mainly, Kishore talks about how to dream big and convert that dream in to reality. This is book about step by step process of building a business group, starting from a humble beginning. Starting with Pantaloon retain, how Kishore build the big business empire ranging from apparel, home solutions, grocery and micro-retail (Focusing on retail in rural India), is really an astonishing story.

There are few new things which captured my mind. The idea of empowering managers of all level, there by building an organization which is known for making decisions and owing that. Like painting employee’s house on the eve of Diwali (Best known HR policy!). Coming up with new business structure every three years in order to be in business, up-to-date.

Innovative thinking or ‘re-writing’ the rules keeping the basic values intact is one thing which is being referred through out the book. Kishore writes, “An Organization dominated by systems, analyses and processes, will only be good at repeatedly performing one particular task very well. But it wouldn’t be able to innovate or create something really new”.

What stuck me is Kishore’s focus on business growth. He says, ‘if you focus more on operation, there is a limit to an extent you can improve the efficiency, rather then that companies need to focus on growth, operational efficiency comes by itself by following well defined processes”.

This book is all about having a dream and working to make it come true. It is a dream of middle class man, with all possible limitations one could have in life. Paulo Coelho writes in The Alchemist, ‘And, when you want something, the entire universe conspires in helping you to achieve it’.

It is all about that, having a dream and following that! In summary, it is a must read.

Finally; wishing you all a happy and prosperous New Year 2008. May your all dreams come true in this New Year.

It happened in India!

‘It happened in India’ is the autobiography of Kishore Biyani, founder and CEO of Future Group. Future Group has retail brands like Pantaloon, Central, Big Bazaar, Food Bazaar, and Pyramid.

Recently I purchased this book and have started reading it. It is too early to write a review on this book yet, I need to turn more pages to do that. But, this post is all about my first thoughts about Future Group and first generation entrepreneur, Kishore Biyani.

Mr Biyani has understood the Indian buyer’s mindset very well. And more ever, he is more of a calculated risk taker. This book talks about his strategy in all segment of retail business in India. He talks about ‘Sabase sasta din’ concept in Big Bazaar and how it created the word of mouth publicity among the people. This book can be liked because of such innovative ideas.

Being first generation entrepreneur, it is not easy to set up such a large business. We can see very few people who have been there and have done it. Sunil Mittal from Bharati group is another person who has done that. Mr. Biyani’s great achievements are in dreaming about big things and execute them up to greatest accuracy. In this way, it seems to be an inspirational reading.

Though, his ideas seems to be inspired from American retain business, like Home Depot (His recent venture of Home Town has similar business plan), Central (Similar business plan of Target) and Big Bazaar (Similar to WalMart), but these are truly ‘Indianized’ to server Indian consumer.

Any way, watch is space for more posts related to this book if I find it truly good. I am sure he has some thing to offer!

Need for Team work

The Five Messages leaders should manage

I was reading a review in ‘Harvard Business Review’ this weekend, titled ‘The Five Messages leaders should manage’, by John Hamm.

This is all about functioning of CEO and what they need to really focus on. Author says, CEOs need to focus on how to pass the correct message through out the organization, it’s very vital for company’s success. He compares the situation with Emergency Medical System, where all the team members seem to be on the same page, all the times. The doctors, the paramedics, the nurses, all of them share the same thought when comes to saving a life. The same situation should be there in the organization. Otherwise, the vision and dream of a company will remain in the boardrooms only. Author says, CEOs should not assume that all his top management shares the same thought that leads to disaster. CEO should inspire the organization to take up responsibilities for creating better future.

1) Organization Structure and Hierarchy.
Organization restructure should happen to align with market competition and that should always aim to take up the competition. In this competitive market place, aligning the company structure is the need of hour and CEOs needs to do a better job on communicating the organization changes up to the bottom level. Otherwise it just creates confusion amongst employees about what is the future of the company and who is what in new organization. Communication should be so effective that there should be no room for confusion or fear.Author gives example of HP and its then boss. He says, when reorganization happened, everyone was so confused about their future that the actual work stopped for 12 weeks, which is one full quarter! Instead, he says, with in 48 hours of announcement of restructure, CEO should have a company wide meeting and a web cast as why this is been done. To keep the confusion to a bottom level, CEO should have involved everyone in the structure plan.

2) Financial Results:
Results are another powerful concept that left unmanaged, poses a risk to a company’s long term health. When a CEO tells, focus on our results, senior managers often interpret that as meaning ‘Do whatever it takes to meet investor expectations’. By loosing the sight of the connection between employee behavior and results and failing to take advantage of existing opportunities, thus leaders miss out building a long term value for their firms.Results should be used as diagnostic tools in the service of improving future execution.

3) The Leader’s sense of his or her job.
Surrounded by people who seek their feedback and approval, some fall in to the trap of thinking that their responsibility is to be the person who has all the answers. The ‘answer man’ falsely believes himself to be the final arbiter of conflicts, decisions and dilemmas. This puts him in to a very lonely and isolated position.Effective leaders should understand their role is to get answers from others. Everyone has answers, ask questions, especially when some thing goes wrong.

4) Time Management:
Every executive feels that time is in short supply. CEO must communicate to the company that resource of time must not be squeezed for all it is worth but instead must be strategically utilized. Time is fixed to choose wisely within constraints.

5) Corporate Culture:
Culture is not created by declarations; it derives from expectations focused on winning. Culture that encourages performance if you hire right people and implement processes that will allow the company to win. CEOs who fail to communicate the vision and expectations very clearly, produce meaningless culture.

I feel these are important points to be shared by a leader, after all, we all follow a CEO or a leader while we are with corporate hat.

Leaders should sell dreams and show path to execute this.

There is no other way out there!

Need for CGO (Chief Globalization Officer)!

The world is getting flatter and globalization has become a necessary thing for the expansion. If we look at any company, from Auto Major GM to Starbucks to WalMart, every one has global plans. And they want to expand globally.

The world is getting truly flatter and each company now required to work with different countries and people with different culture. Take example of Corus deal of Tata Steal or latest joint venture of Mahindra with Nissan motor company, globalization is the mantra for each organization. And each company needs to work with a global partner. And it is equally important to get this thing right; otherwise it might collapse at any point of time.

Even competition is getting global. We have a level ground now and competition is getting really global. Tata Motor is competing with GM and Ford to acquire Fiat and Mahindra tractors are competing with John Deer in US in farm equipment segment.

With this kind of global competition and global alliance, it is required to have a CGO, Chief Globalization Officer, who can really spearhead the idea of globalization, the business plan associated with global expansion and plan for the exact execution of it.

There are a lot of challenges in expanding globally, one need to get the supporting global level processes; also it is equally important to have global level quality. And this kind of preparation needs a lot of planning and careful execution. One needs to really build a global scalable business model.

Global Inc can get this right? Or do they need to have a CGO?

Private Equity Funds and CEOs

I was reading an article in Business Week about the pressure private equity funds put now a days on CEOs (Of companies they manage). Those CEOs are under tremendous pressure to perform, financially.

This article is cover up of Citi Financial CEO quitting last week due to bad performance during recent couple of quarters, where Citi had to write off heavy funds because of American mortgage slowdown.

It might be true, perhaps. USA business is now days heavily loaded with equity fund managed companies. In India, situation is bit different, however scene is changing fast and many equity funds are coming up.

Question I have is, is it fare to pressurize to deliver more? Or it is all fare? One view point is, equity funds are also under pressure to perform and they need quick bucks as well.

Or CEOs should have free hand?

I know question is not simple, but I am still searching for answer.

American Sports Business

Currently I am in US on a business trip. Got a chance to be here on a weekend and watch the Baseball World Series (!!). That triggered off this post.

If we keep aside the sports part and look at business face of it; we will be surprised to see how American Capitalism is playing a major role in sports as well. Sports business has really matured in America, where all players deal through their professional agents for the contracts.

There are two parts of it, one is professional agents in sports and another is corporate world’s involvement in these sports.

In a way, it is good for players. Their agents can take care about money and team a player needs to play, leaving players to concentrate on the game. In this way, they need not worry about the contract details. An agent’s main aim is to sell the players in his portfolio for more money.

These agents also guide the players in terms of career, about the care they need to take about their fitness, the public image they need to build, the social service they need to do in order to stay afloat. This kind of advice will certainly help players to be in the game for longer time.

Mark McCormick is supposed to be founding father of this kind of sports business, where his consulting company guided players like Bon Borge, Martina Navratilova, Jimmy Conners etc.

Each ball club is managed by a professional management team, led by their CEO. His ultimate aim is to generate more revenue for the ball club. So, they will hire more good players with the idea that if players are good, team will advance to next stage of the game (Like Semi final, Final etc) and thus brining more people to watch, which is nothing but more revenue. Such times these ball clubs and CEOs are under pressure to perform, so does the coaches. Coaches needs to take the ball club in to newer heights, otherwise their jobs will be at stake.

The point what we need to note is, American sports runs as any other business. And we can see the American management effect; like being ruthless, expecting results and generating more revenue, in all sports.

Compare this to India; the Subhash Chandra’s ICL has some elements of it, but yet to see how this gets shaped up. But, this is certainly a good change, it is just a beginning.

It is any way better than having out-of-the-form players getting selected based on number of years of experience he/she has, or because of he/she belongs to particular state.

What do you say?
(Don’t take me wrong, I am not against any player, I don’t follow Cricket :-)

The man who rewrote the supply chain concept-Michael Dell

I got a new Laptop, as my earlier IBM Lenovo got screwed up. The new one is sleek, Dell made, D630; boots and works faster!

This new one really made me to think about Dell Inc and the man behind its remarkable success, Michael Dell. Michael Dell came up with an innovating idea of selling directly to customers and thus redefining the supply chain concept. Its very hard business plan to reproduce and I guess this was Dell's USP when it started its business, in the area where there were established players like IBM, HP, and Compaq.

In 1994, Dell was a struggling second-tier PC maker. Like other PC makers, Dell ordered its components in advance and carried a large amount of component inventory. If its forecasts were wrong, Dell had major write-downs. Then Dell began to implement a new business model. Its operations had always featured a build-to-order process with direct sales to customers, but Dell took a series of ingenious steps to eliminate its inventories. The results were spectacular.
Over a four-year period, Dell's revenues grew from $2 billion to $16 billion, a 50 percent annual growth rate.

Profitability management, coordinating a company's day-to-day activities through careful forethought and great management, was at the core of Dell's transformation in this critical period. Dell created a tightly aligned business model that enabled it to manage away the need for its component inventories.

However, at the heart of Dell's profitability management was a seemingly impossible dilemma: the company had adopted a build-to-order system, yet it had to commit to purchase key components sixty days in advance.

Profitability, not inventory

The inventory in a channel is determined by the variance in supply and the variance in demand. Unless these variances are reduced, channel inventory can only be moved around, not eliminated. I think of this as the "waterbed effect." When you sit on a waterbed, it sinks in one spot and bulges in another. The water is redistributed but the amount stays the same.
Through its use of profitability management, Dell matched supply and demand on a daily, weekly, and monthly basis. It sharply reduced the variance, and the need for inventories simply disappeared.

In many companies, inventory substitutes for profitability management, tying up valuable capital and preventing the company from focusing on day-to-day business alignment. In most companies, managers face a choice between managing inventory and managing away the need for it.

This principle can be implemented to any industry, even to Software industry. We also deal with inventory, supply and demand.

By the way, are we managing profitability or inventory in our group? If the answer is profitability, we can have our cake and eat it too! If not, how we can improve?

Fit To Be A Effective Leader

I am a firm believer of the fact that leaders should have a high energy level, which generally reflect how they interact with customers and employees.

Its vital to have a very positive body language.

I was reading an article about how keeping fit is important for leaders. This business week article gives some examples and concludes how it would help you to become a better communicator.

So, one needs to start hitting the treadmill

What makes an effective executive?

I was reading this article in ‘Harvard Business Review’. Here is the summary of this article.

To become an effective leader, one need not necessarily be a man with charisma. What made them all effective is that they followed the same eight phases.

1) They asked, “What needs to be done”.
This question, almost all the times will have more then one urgent task. Jack Welch came up with answer, every five years, “what are needs to be done, now” and each time he came up with different answer.
2) They asked, “What is right for enterprise”.
Asking this question while making important decisions do not some times guarantee the best results, but not asking this question always leads to bad decisions.
3) They developed action plans.
Executives are doers. Knowledge is of no use for executives unless it is been translated into deeds. But before jumping in to action, executive needs to plan his course of action. How he wants to execute, about desired results, problems, check-in points etc.In addition to an execution plan, this action plan should contain a system for checking the results. Typically two; one halfway through and other towards the end. Without an action plan executives becomes a prisoner of events.
4) They took responsibility for decisions.
5) They took responsibility for communicating.
6) They were focused on opportunities rather then on problems.
Problems should be taken care of off course, but taking action on problems will not create results, it prevents the damage, where as focusing on opportunities produce results. Executives should put their best people on opportunities then on problems.
7) They ran productive meetings.
Decide before meeting, what kind of meeting this would be and set a fixed agenda. Its equally important to take MOM and distribute the action items to all present in the meeting. Also, it’s important to follow-up on these action items.
8) They thought and said, “we’ rather then “I”.

Effective executives differ widely in their personalities, strengths, weaknesses, values and beliefs. All they have in common is, they will get the things done. Effectiveness is a discipline and like any other discipline, effectiveness can be learned and must be learned.

I think we all have a lesson to learn from this article.

98.3 FM Radio Mirchi: What is the business Plan?

Yes, we do keep hearing Radio FM during some part of our day, may be it is during morning hours or during drive to office or back home. Though we enjoy the songs and RJ’s presentation, the business model which works behind the scenes is kind of complex.

It is untold truth that every business needs to be profitable to exist and it is fundamental element. And where does Radio Mirchi makes it money?

Daily Ads: The first revenue model comes to our mind are the advertisements being broadcasted during entire day. It does get revenue, but is that revenue a business can relay on? Mind you, the number of ads being broadcasted per day more or less can’t be increased, so this revenue is fixed. It can’t really make your top line grow.

In order to be competitive and to make top line grow, each FM needs to engage itself in backend revenue generator models. Look at the events being promoted by Radio Mirchi. They typically get involved with some firm and organize events through out a particular city or area, there by generating revenue from it. The associated firm gets a great marketing boost.

In addition to this, FM radios are being hooked up by marketing firms to survey a particular segment of people. With out our notice we kind of share our information about what we like and what are our shopping habits. This kind of marketing data has a huge value. Off course we do share our cell phone the moment we call.

In addition to this, companies select FM radios for promoting their products or service. Like ‘tikat Thursday’ or ‘Blockbuster Budhawar’, where companies give free vouchers and try promoting the services, needless to say, Radio Mirchi makes money in addition to Vouchers it sends to winners.

In US, the Satelight radio got a huge success, because of the unique business model they have in place. Perhaps it is slightly complex by the way in which it operates and generates money, but it is for sure a money spinner for investors.

We are kind of used to AIR broadcasting where, every thing was decided by the broadcasting ministry. And AIR, typically, don’t bother about the fact that it has to generate money. But, new FM radios needs to have a growing business and this market segment will only get interesting going forward.

‘Mirchi sunnewale always khush!’ :)

Check De India!

I watched Check De India, this weekend. And found many management lessons in it. It’s an amazing movie made keeping sports business in mind.

Team Comes First! :- It stresses the importance of playing as a team. In fact, ¾ th of movie Kabir Khan tries to build a team, which mentally thinks and acts in one direction. And more ever, he keeps on telling his players to ‘pass’ the ball, instead of glorifying themselves by scoring more goals. One’s person ego or personal pride should not come in between, they were for common purpose of winning the championship and they need to make sure they achieve that.

This is an amazing lesson we can learn from this movie. We need to think about team first, individual later. This is the reason of success of any team. This is true with sports or with any business team.

Motivation: Kabir kept on motivating his team, even they lost a game. He had strong faith on his team that they will deliver and up to his expectation they did deliver.
It is foolish to assume that each team member is equally capable of delivering the things. But, keeping everyone’s contribution to peak level is what coaches do. They know in which area each player is good at and they make moves accordingly.

Strategy: The main job of a coach is to make strategic moves, keeping his team in mind and Kabir exactly did that. Be it breaking ‘one-to-one’ mapping of Koreans or thinking about the final penalty push to be a straight one and signaling his team member to prepare for that, he made good strategic moves.

Build the dream: Kabir built a dream in team members that we will win the world cup, this is all coaches and business leaders will have to do. It is ultimately up to players to perform and make things work. Coaches can’t play themselves and win; it is players who do that. Building the dream and making sure each player has the same passion and dedication is extremely important, Kabir did exactly that.

Attention to details: Coaches and business leaders need to keep attention to the details. In this movie, coach kept track of even a small thing that might distract the team thinking and tried to minimize such things. Like, having one bad player in the team, who wants to disturb the rhythm. He took some tough calls, but it was for team again. There was no personal ego involved in it.


As a movie, there might be some negatives points; and I am not here to discuss that. But the theme is about the team. Why team comes first and why team needs contribution from each one to be a successful. It is about setting a goal, and taking your team towards that, even though people call you ‘Tughalak’. This movie certainly gives message to corporate world.

Check de India!