There is a rumor in the industry circles for possible acquisition of Genpact by Cognizant.
Onwards to the possibility of a Cognizant-Genpact combination. Why might this be a very good combination? Lets look at the reasons:
The businesses are very complementary. Genpact is less than 15% IT Services. Cognizant is 5% BPO. The lack of overlap means a few things, all of them major factors:
• In one stroke Cognizant as the acquirer becomes one of the largest and most sophisticated BPO service providers. In addition to already being a large high-growth IT Service providers.
• One of the worries in Services acquisitions is that you will end up offering the same services at the same clients at different rates and then the client will move all services to the lower of the two rates. That overlap is going to be minimal in this case.
• The senior teams of both companies will find homes in the combined company. In the medium term they should not have to merge leadership of business units.
General thinking is that the BPO culture is quite different from the IT Services culture and that will not bode well for a merger. I can’t see why they would think this. Both companies have a dynamic, growth-oriented culture and have professional management.
Also, on a related matter, both Genpact and Cognizant are listed in the US with no float in India. This makes things easier. Acquiring a company 100% in India is a little messier, procedurally.
The fact that GE is 40% of Genpact’s revenue is known and will be priced in to the acquisition price, post due diligence.
The rumor may or may not be true and even if it is true, the deal may or may not happen. But on the face of it, it makes sense. The combined company will be on target to be the second largest in the Offshore industry after TCS within less than a year based upon projected growth rates.
And in this industry size matters.
Sunday, September 26, 2010
Sunday, September 12, 2010
Obama, Ohio and Outsourcing
Political pressure in the US spell tough times for India’s technology companies; primarily the Ohio ban on outsourcing and Obama’s tax rebate plan for companies who are creating jobs in US.
Question is; how this will impact the offshoring business in general?
Let’s look at some facts and figures. The India’s IT export in 2009-2010 stands at $64 billion, out of which 61% business comes from US geography. Overall IT business of India estimates to 51% of the total software business of the world. There are 2.3 million jobs created in IT and close to 900 multinationals have their captive centers in India. Sizable numbers in any sense.
The fundamental reason that drives offshoring business is the skill availability, quality deliverables and the costs (70% less costly compared to locations in developed countries)
Why US government projects are important in first place?
• Business from government is fastest growing segment for IT companies
• Governments across the world are expected to spend close to $175 billion
• The IT budget of US federal government is around $35 billion
Now, is this the end of IT offshoring? Not really. While political obstacles may rise, India continues to provide key cost advantages. And the major cost saved is pushed back to US companies, so US business is saving more money. In addition to this, Indian companies have already started moving up in the value chain and have started providing key differentiator through calibrating the business processes of the customers. This would drive more savings.
After this news, worried IT companies went back to the drawing boards to redraft the growth strategies and revenue projections, but experts suggests it makes more sense to set up ‘near shore’ centers to drive more business there by creating more jobs in US.
But, really speaking, do we really need to take this? I mean, we are living in free world trade era and multinationals are allowed to do business at the cost of India companies as well? How about giving tax benefit if you don’t buy from US companies? Does that sounds good for US Inc?
I can’t stop thinking about this question, then why we need to buy from US companies?
Question is; how this will impact the offshoring business in general?
Let’s look at some facts and figures. The India’s IT export in 2009-2010 stands at $64 billion, out of which 61% business comes from US geography. Overall IT business of India estimates to 51% of the total software business of the world. There are 2.3 million jobs created in IT and close to 900 multinationals have their captive centers in India. Sizable numbers in any sense.
The fundamental reason that drives offshoring business is the skill availability, quality deliverables and the costs (70% less costly compared to locations in developed countries)
Why US government projects are important in first place?
• Business from government is fastest growing segment for IT companies
• Governments across the world are expected to spend close to $175 billion
• The IT budget of US federal government is around $35 billion
Now, is this the end of IT offshoring? Not really. While political obstacles may rise, India continues to provide key cost advantages. And the major cost saved is pushed back to US companies, so US business is saving more money. In addition to this, Indian companies have already started moving up in the value chain and have started providing key differentiator through calibrating the business processes of the customers. This would drive more savings.
After this news, worried IT companies went back to the drawing boards to redraft the growth strategies and revenue projections, but experts suggests it makes more sense to set up ‘near shore’ centers to drive more business there by creating more jobs in US.
But, really speaking, do we really need to take this? I mean, we are living in free world trade era and multinationals are allowed to do business at the cost of India companies as well? How about giving tax benefit if you don’t buy from US companies? Does that sounds good for US Inc?
I can’t stop thinking about this question, then why we need to buy from US companies?
Sunday, September 05, 2010
Singapore Airlines: Cost leadership coupled with Premium Service
Last few years have been real tough for airline industry across the globe; increased cost impacted the whole industry in common. But there are few airlines which have shown that innovation and operational efficiency can lead in to profitable business.
Singapore Airlines is one such example which demonstrated the growth even in this worst period. SIA never reported annual loss since its inception.
SIA has combined the supposedly incompatible strategies of differentiation- which it pursues through service excellence and continuous innovation- and cost leadership.
SIA manages its two main assets- planes and people- so that its service is better than rivals and its costs are lower. The airline invests heavily in the areas of business that touch the customer in order to enhance SIA’s premium positioning. Everything behind the scene is subjected to rigorous cost control.
SIA spends more than its rivals in key areas, it follows a 4-3-3 rule of spending, 40% on training, 30% on revising processes and procedures and 30% in creating new products and services.
• Buying new aircraft: SIA replaces its fleet more frequently there by reducing the maintenance budget and improve customer experience. New aircrafts are expected to be more fuel efficient as well.
• Training: The airline invests heavily in to training and retaining its employees.
• Labor Costs: SIA staffs more crew per flight compared to its competitors, this helps in improving the customer experience and enables to provide more customized and personalized services to customers.
• Innovation: It invests in both radical and incremental innovation.
On the same way, it spends less on following things which are not directly touching customers:-
• Price Per Aircraft: It places large orders and generally pays in cash, thus reducing the purchase price of the customer.
• Fuel, maintenance and repair: SIA’s operating costs are much lower because it has newer fleet and energy efficient.
• Salaries: SIA keeps salaries lower by offering bonus up to 50% depending on SIA’s profitability. And also employs much younger crew thus keeping salaries low.
• Sales and administration: SIA doesn’t have a fancy, mid-city head quarters!! And keeps cutting the cost where ever possible.
• Back office technologies: SIA chooses to lag behind rivals in areas that don’t affect the customer experience. They quickly stop the use of technologies that customers don’t like.
This is a clear example of how pure operational efficiency, coupled with great strategy can help companies reinvent themselves.
Singapore Airlines is one such example which demonstrated the growth even in this worst period. SIA never reported annual loss since its inception.
SIA has combined the supposedly incompatible strategies of differentiation- which it pursues through service excellence and continuous innovation- and cost leadership.
SIA manages its two main assets- planes and people- so that its service is better than rivals and its costs are lower. The airline invests heavily in the areas of business that touch the customer in order to enhance SIA’s premium positioning. Everything behind the scene is subjected to rigorous cost control.
SIA spends more than its rivals in key areas, it follows a 4-3-3 rule of spending, 40% on training, 30% on revising processes and procedures and 30% in creating new products and services.
• Buying new aircraft: SIA replaces its fleet more frequently there by reducing the maintenance budget and improve customer experience. New aircrafts are expected to be more fuel efficient as well.
• Training: The airline invests heavily in to training and retaining its employees.
• Labor Costs: SIA staffs more crew per flight compared to its competitors, this helps in improving the customer experience and enables to provide more customized and personalized services to customers.
• Innovation: It invests in both radical and incremental innovation.
On the same way, it spends less on following things which are not directly touching customers:-
• Price Per Aircraft: It places large orders and generally pays in cash, thus reducing the purchase price of the customer.
• Fuel, maintenance and repair: SIA’s operating costs are much lower because it has newer fleet and energy efficient.
• Salaries: SIA keeps salaries lower by offering bonus up to 50% depending on SIA’s profitability. And also employs much younger crew thus keeping salaries low.
• Sales and administration: SIA doesn’t have a fancy, mid-city head quarters!! And keeps cutting the cost where ever possible.
• Back office technologies: SIA chooses to lag behind rivals in areas that don’t affect the customer experience. They quickly stop the use of technologies that customers don’t like.
This is a clear example of how pure operational efficiency, coupled with great strategy can help companies reinvent themselves.
Sunday, August 08, 2010
The Acceleration Trap: HBR Case Study
Harvard Business Review has an interesting research; which talks about how companies burn out and how to avoid this trap.
Faced with intense market pressure, corporations often take on more than what they can handle; they increase the number, and speed up the activities, raise performance and goals, shorten innovation cycles and introduce new management techniques or organization structures.
For a while they might succeed brilliantly; but too often the CEO tries to make this furious pace the new normal. What began as an exceptional burst of achievement becomes chronic overloading. Not only does the frenetic pace sap employee motivation but often companies strategic focus is scattered in various directions, which can confuse the customers and threaten the brand.
Leaders frequently try to fight the symptoms instead of the cause. Interpreting employees lack of motivation as laziness and or unjustified protest. Thus normally they increase the pressure there by worsening the situation, which results in to resignation and thus entire enterprise collapses.
This research has done study of around 92 companies over the period of time and it concludes that corporation can’t figure out when exactly it is hitting them. However, the good news is, there are some companies who have successfully countered this and came out much stronger brands.
There are two reasons why it caught my attentions;
One; I have seen a case study in order to show performance the entire organization was restructured in such a way, which was not making sense and the direction was to have a scalable delivery model in place. But the strategy never asked or answered about the growth as where it is coming from. On top of it, the strategic vision confused customers, employees and partners alike. I can co-relate this. Focus got distracted so much that the quality got suffered and top management had no clue as what is happening.
Second, more important, we are in the phase of growth and the learning for me as Business Head is to make sure we don’t get in to this trap. Though I don’t see any visible signs as of today, but concisely we need to avoid this trap.
We need to learn, if it is our mistake or someone else’s.
Faced with intense market pressure, corporations often take on more than what they can handle; they increase the number, and speed up the activities, raise performance and goals, shorten innovation cycles and introduce new management techniques or organization structures.
For a while they might succeed brilliantly; but too often the CEO tries to make this furious pace the new normal. What began as an exceptional burst of achievement becomes chronic overloading. Not only does the frenetic pace sap employee motivation but often companies strategic focus is scattered in various directions, which can confuse the customers and threaten the brand.
Leaders frequently try to fight the symptoms instead of the cause. Interpreting employees lack of motivation as laziness and or unjustified protest. Thus normally they increase the pressure there by worsening the situation, which results in to resignation and thus entire enterprise collapses.
This research has done study of around 92 companies over the period of time and it concludes that corporation can’t figure out when exactly it is hitting them. However, the good news is, there are some companies who have successfully countered this and came out much stronger brands.
There are two reasons why it caught my attentions;
One; I have seen a case study in order to show performance the entire organization was restructured in such a way, which was not making sense and the direction was to have a scalable delivery model in place. But the strategy never asked or answered about the growth as where it is coming from. On top of it, the strategic vision confused customers, employees and partners alike. I can co-relate this. Focus got distracted so much that the quality got suffered and top management had no clue as what is happening.
Second, more important, we are in the phase of growth and the learning for me as Business Head is to make sure we don’t get in to this trap. Though I don’t see any visible signs as of today, but concisely we need to avoid this trap.
We need to learn, if it is our mistake or someone else’s.
Sunday, August 01, 2010
Head Over Heart: Forties deal with Parkway Hospitals
Beginning of this week saw a more matured decision from India Inc, where Singh brothers of Forties, booked the profit in Parkway and exited the race for controlling stake in Parkway hospitals in Singapore.
This decision is very significant. When Forties took 25% control in March, Malvinder Singh announced that he would relocate to Singapore to run Parkway, leaving Forties operation to younger brother Shivinder Singh. Forties even drafted the strategy of roping in the low cost offshore operations to reduce the cost of service.
This clearly shows how serious Singh brothers were with this deal and as per the press reports they were in advanced discussions with banks to raise the funds. To return back to India, in less than 5 months would be a huge face loss, if you have to consider business circles.
But, by agreeing to sell their stake to Khazanah, the Malaysian wealth fund, for profit of $116 million, the brothers have shown that they are practical businessmen, their head is their heart. There are no sentiments in the business!
Singh brothers have, in the past, have shown that they think ahead of time and think through head. When they decided to sell Ranbaxy, the family business, it was India’s largest, with interesting range of challenges on patent in the west. But, pharmaceuticals had become the business of big bucks and soon they started realizing this fact and opted for a partner for research and development. One thing led to another and the partner Daiichi Sankyo ultimately bought Ranbaxy.
Anyway, one question still needs answer is, why should a fund be interested in running hospital chains? It would have been better bet for Fortis to acquire it and run it, given Singh brother’s experience in India.
This is the mystery.
This decision is very significant. When Forties took 25% control in March, Malvinder Singh announced that he would relocate to Singapore to run Parkway, leaving Forties operation to younger brother Shivinder Singh. Forties even drafted the strategy of roping in the low cost offshore operations to reduce the cost of service.
This clearly shows how serious Singh brothers were with this deal and as per the press reports they were in advanced discussions with banks to raise the funds. To return back to India, in less than 5 months would be a huge face loss, if you have to consider business circles.
But, by agreeing to sell their stake to Khazanah, the Malaysian wealth fund, for profit of $116 million, the brothers have shown that they are practical businessmen, their head is their heart. There are no sentiments in the business!
Singh brothers have, in the past, have shown that they think ahead of time and think through head. When they decided to sell Ranbaxy, the family business, it was India’s largest, with interesting range of challenges on patent in the west. But, pharmaceuticals had become the business of big bucks and soon they started realizing this fact and opted for a partner for research and development. One thing led to another and the partner Daiichi Sankyo ultimately bought Ranbaxy.
Anyway, one question still needs answer is, why should a fund be interested in running hospital chains? It would have been better bet for Fortis to acquire it and run it, given Singh brother’s experience in India.
This is the mystery.
Sunday, July 25, 2010
Signs of recovery or still in hospital?
The signs that the global economy is far from getting back to normal lies in the first quarter results of Indian software leaders, TCS and Infosys. It does not mean that the recession clouds are still there and we need to really worry about the direction of Industry as whole, but it is not easy sailing and sunny all around yet.
The good news is, the spending is back, but not in the scale of what it used to be earlier. But there is spending with new implementation and upgrades. Not so good news is that prices are either stable or under pressure. Bad news is in order to deliver the growth and volumes, recruitment has gone up and thus the attrition has gone up.
The consolidated figures for the two firms indicate that both have to fight hard to remain where they were, though year-on-year tend e show TCS in better shape. Both have recorded a sharp fall in margins by 2.9 percentage points on quarter-on-quarter basis. This is way below than what it used to be some quarters back.
In terms of top line growth, TCS was clearly ahead last year, but in first quarter both have recorded a clear growth of 14 percent on quarter-on-quarter basis. This is driven by strong demand across markets and industries, which is clearly a very good sign that growth is happening across all industries.
But overall it can be said that though things have improved significantly, it would take at least a quarter to get back to the growth terms. Industry needs to innovate in business processes and try to find ways to help customers to reduce the total cost of ownership of the software.
The good news is, the spending is back, but not in the scale of what it used to be earlier. But there is spending with new implementation and upgrades. Not so good news is that prices are either stable or under pressure. Bad news is in order to deliver the growth and volumes, recruitment has gone up and thus the attrition has gone up.
The consolidated figures for the two firms indicate that both have to fight hard to remain where they were, though year-on-year tend e show TCS in better shape. Both have recorded a sharp fall in margins by 2.9 percentage points on quarter-on-quarter basis. This is way below than what it used to be some quarters back.
In terms of top line growth, TCS was clearly ahead last year, but in first quarter both have recorded a clear growth of 14 percent on quarter-on-quarter basis. This is driven by strong demand across markets and industries, which is clearly a very good sign that growth is happening across all industries.
But overall it can be said that though things have improved significantly, it would take at least a quarter to get back to the growth terms. Industry needs to innovate in business processes and try to find ways to help customers to reduce the total cost of ownership of the software.
Sunday, July 18, 2010
Period of relaxation and self reflection!
Last four weekends have been spent out of house and amidst nature and mountains. This was the time of relaxation and self reflection.
First, had been to Manali for a short vacation; it’s been a great experience and I was amused by the majesty and beauty of the Himalayan range of mountains. In fact it was a dream comes true for me as it has been a childhood dream to visit the Himalayas. The drive to Rohtang pass an experience by itself.
Next two weekends it was in Massurrie, it was an offsite trip from office, but the true beauty of the place, the experience of living out of tents, sheer beauty of mountains and clouds playing around; it was an awesome experience. The encounter with nature made me to think a lot.
In between this busy schedule, we had management and board meetings as well.
This time was really helped me to reflect myself and my life as whole perspective. I learnt so many new things during this time and it gave me a new set of direction in life. I am not sure if I become stronger, but I have for sure started being sensible to the things around me.
It also reflected me the work I am supposed to do in next one quarter and this is the time to act, perhaps act faster.
Monday, June 21, 2010
Employees First Customers Second:
This month’s Harvard Business Review has an interesting article on how Vineet Nayar, CEO of HCL changed the culture at HCL and thus maneuvered the company out of crisis.
Soon after he came on board in 2005, he started having serious of discussions with employees, managers and customers to get the perspective of the business and what each employee thinks about HCL and what changes they would like to see. To much of his surprise customers didn’t talk much about HCL’s products, services or technologies, but they spoke about HCL’s employees.
This led to a change process called ‘Employees First, Customers Second’
There are four keys for HCL’s transformation:
1) Mirror Mirror: Talk honestly, speak up the truth and enable people to see that a change has to be made.
2) Create trust through transparency: Find ways to build a culture of trust so that employees trust the requirement for the change. Share financial results, good or bad. Share sales pipeline, business updates. 360 feedback was implemented in the company and CEO himself started posting his 360 feedback on intranet. This prompted other managers to post their feedbacks and areas of improvements and their units performance on the intranet there by creating a transparent environment.
3) Invert the organizational pyramid: Make support functions and executives accountable to frontline workers, rather than other way around. This brings clarity and value.
4) Recast CEO’s role: Transfer the ownership of change from office of CEO to all employees. And encourage to ask questions to CEO.
Offcourse the result is for all of us to see, market capitalization has improved and share price is doing good. This has transformed HCL in to more robust player with sharp focus on the customers.
This is the change
Soon after he came on board in 2005, he started having serious of discussions with employees, managers and customers to get the perspective of the business and what each employee thinks about HCL and what changes they would like to see. To much of his surprise customers didn’t talk much about HCL’s products, services or technologies, but they spoke about HCL’s employees.
This led to a change process called ‘Employees First, Customers Second’
There are four keys for HCL’s transformation:
1) Mirror Mirror: Talk honestly, speak up the truth and enable people to see that a change has to be made.
2) Create trust through transparency: Find ways to build a culture of trust so that employees trust the requirement for the change. Share financial results, good or bad. Share sales pipeline, business updates. 360 feedback was implemented in the company and CEO himself started posting his 360 feedback on intranet. This prompted other managers to post their feedbacks and areas of improvements and their units performance on the intranet there by creating a transparent environment.
3) Invert the organizational pyramid: Make support functions and executives accountable to frontline workers, rather than other way around. This brings clarity and value.
4) Recast CEO’s role: Transfer the ownership of change from office of CEO to all employees. And encourage to ask questions to CEO.
Offcourse the result is for all of us to see, market capitalization has improved and share price is doing good. This has transformed HCL in to more robust player with sharp focus on the customers.
This is the change
Sunday, June 13, 2010
Business of Politics
Not much noticed news now a days is the Rajyasabha elections in India where Mr. Vijay Malya is competing and he is contesting with support of political parties.
If you look at the history, business men have been part of India politics, be it Mr. Bajaj, Mr. Anil Ambani. I do strongly support involvement of such business leaders in political debates where it is necessary.
During my stay in Singapore few years back one of the things I learnt about how Singapore government works. It is full of corporate leaders and government exactly works as a corporate office. I was told the Prime Minister himself owned a company as CEO and he bought in best practices to his government as well.
Though in India context I never heard about a business leader talks about any important national issue, however the parliament gives an opportunity and provides a medium to express such things.
I am not sure if things will change in near future with Indian politics, but we can hope that a corporate government style of functioning comes to India where everything becomes efficient.
If you look at the history, business men have been part of India politics, be it Mr. Bajaj, Mr. Anil Ambani. I do strongly support involvement of such business leaders in political debates where it is necessary.
During my stay in Singapore few years back one of the things I learnt about how Singapore government works. It is full of corporate leaders and government exactly works as a corporate office. I was told the Prime Minister himself owned a company as CEO and he bought in best practices to his government as well.
Though in India context I never heard about a business leader talks about any important national issue, however the parliament gives an opportunity and provides a medium to express such things.
I am not sure if things will change in near future with Indian politics, but we can hope that a corporate government style of functioning comes to India where everything becomes efficient.
Sunday, May 30, 2010
Air India, Doordarshan and Other Public Sector Companies
The recent Air India accident in Mangalore and subsequent strike of Air India Unions asks one question. Do any employee unions can call for a strike when a company is going through bad phase of recovering from the worst accident after two decades? I am not asking the legality of this strike, but asking this question from morality point of view.
All public sectors companies run or take help from tax payer’s money. And over the decades this tax money has been spent in most irresponsible way. When the concept of public sector was conceptualized; it was meant for providing better service to the consumers.
Slowly; after realizing the service level of India Airlines and the uncertainty of its operations; we have started giving up on it and have started joking around. And once Air India used to be national pride and I guess we started looking at more service providing public sector airlines rather than sticking to national pride and it makes sense.
More fundamentally, pubic sector is unable to cope with private sector competition. Air India is now irrelevance as it’s share in passenger traffic keeps dropping over the years. India Tourism Development Corporation (ITDC) runs second rate gift shop and hotel booking services. Doordarshan is massive embarrassment, which is not even taken seriously by rest of the broadcasting sector. Nobody thinks Doordarshan will ever beat Zee, Colours, or Star Plus, that’s not even an option. We never think of Air India being in the top league of airlines.
In every case, it is massive waste of tax payer’s money which is justified in the name of national pride and social obligations. But is that worth of it?
It appears that there are more politicians involved in this, who have no professional experience in running such businesses. And more ever, such public sector companies appear to run for politicians; who gets benefited in all deals these public sector companies make.
This is shear example of lack of accountability for tax payer’s money.
All public sectors companies run or take help from tax payer’s money. And over the decades this tax money has been spent in most irresponsible way. When the concept of public sector was conceptualized; it was meant for providing better service to the consumers.
Slowly; after realizing the service level of India Airlines and the uncertainty of its operations; we have started giving up on it and have started joking around. And once Air India used to be national pride and I guess we started looking at more service providing public sector airlines rather than sticking to national pride and it makes sense.
More fundamentally, pubic sector is unable to cope with private sector competition. Air India is now irrelevance as it’s share in passenger traffic keeps dropping over the years. India Tourism Development Corporation (ITDC) runs second rate gift shop and hotel booking services. Doordarshan is massive embarrassment, which is not even taken seriously by rest of the broadcasting sector. Nobody thinks Doordarshan will ever beat Zee, Colours, or Star Plus, that’s not even an option. We never think of Air India being in the top league of airlines.
In every case, it is massive waste of tax payer’s money which is justified in the name of national pride and social obligations. But is that worth of it?
It appears that there are more politicians involved in this, who have no professional experience in running such businesses. And more ever, such public sector companies appear to run for politicians; who gets benefited in all deals these public sector companies make.
This is shear example of lack of accountability for tax payer’s money.
Sunday, May 23, 2010
Emerging and Changing India
Last weekend I had been to Bangalore and Chennai for business trip. Incidentally I had been to these two places exactly nine years back. I went through memory lane after visiting few places; which I used to visit, like Marina beach in Chennai, old office, MG road in Bangalore etc.
In a ‘Karthik Calling Karthik’ style, went to a much happening sports bar in Bangalore and did clubbing. Oh yes, it was a great fun to be there, off course without drinks.
But; I could observe the changes happening in these two cities and that is quite noticeable.
First is the infrastructure: this has dramatically improved compared to my last visit. Roads, plans for metros, office and residential spaces; all seems to have changed. Though traffic has increased in exponential proportionate. Quality of transport has improved; you will get far better connectivity now days. I guess this is true with any city in India now.
Second difference I could see is Hindi. We could communicate with all local people in Bangalore and Chennai, which was a near impossible some time back. Clubbing was full of Hindi songs in Bangalore and never ever faced issues in communicating. I am not making a generalized statement like Hindi is now being accepted; but the point is ability to communicate at least. This might be because faster changing mix of north/south where people are migrating for jobs and education. It’s true with north part as well; we have best south Indian hotels in Chandigarh now who serve authentic south Indian food.
I liked this fact where India is seems to be changing and I am really happy about how economical growth has bought changes to all parts of India. There could be sections of society where this has not reached yet, but this change would reach that section as well. Off course I am not making the statement India is changing only looking at Bangalore and Chennai, I am aware of changes happening in rural India as well.
By end of the day; if a country progresses the individuals progress as well!
In a ‘Karthik Calling Karthik’ style, went to a much happening sports bar in Bangalore and did clubbing. Oh yes, it was a great fun to be there, off course without drinks.
But; I could observe the changes happening in these two cities and that is quite noticeable.
First is the infrastructure: this has dramatically improved compared to my last visit. Roads, plans for metros, office and residential spaces; all seems to have changed. Though traffic has increased in exponential proportionate. Quality of transport has improved; you will get far better connectivity now days. I guess this is true with any city in India now.
Second difference I could see is Hindi. We could communicate with all local people in Bangalore and Chennai, which was a near impossible some time back. Clubbing was full of Hindi songs in Bangalore and never ever faced issues in communicating. I am not making a generalized statement like Hindi is now being accepted; but the point is ability to communicate at least. This might be because faster changing mix of north/south where people are migrating for jobs and education. It’s true with north part as well; we have best south Indian hotels in Chandigarh now who serve authentic south Indian food.
I liked this fact where India is seems to be changing and I am really happy about how economical growth has bought changes to all parts of India. There could be sections of society where this has not reached yet, but this change would reach that section as well. Off course I am not making the statement India is changing only looking at Bangalore and Chennai, I am aware of changes happening in rural India as well.
By end of the day; if a country progresses the individuals progress as well!
Saturday, May 15, 2010
Restructuring Indian Post
One of the oldest organizations in India is Indian Post; which is operating since post independent era. The biggest advantage Indian Post has is its reach. Every small village in India has a post office situated at the center place. Over these years, Post has been working in more traditional way of delivering the mails and register posts.
If we try to think beyond the traditional way of delivering the mails and think towards building it as a financial institute which delivers the banking and financial services to the rural Indians through its sheer reach. The economics of Microeconomics can be better accomplished through Indian post. Why can’t we convert post in to Indian Postal Bank?
Post can be converted in to financial services arm where the investment, insurance, debt funds and other financial products can be sold. But it is extremely important to note that these products are being sold to rural India and caution should be exercised while selling them. It’s not easy to sell mutual funds to a farmer!
Indian government releases so many products to rural and semi-urban citizens; why can’t we route them through post? This will ensure that there will be crowd getting pulled in to a post office and build set of products/services to be sold in post. It could be stationary, or greeting card or some on the counter medicine. Just sell what sells!
It needs a drastic change, I know this fact. But, it has to work like a corporate and come up with more diversified offerings according to geography and local conditions.
A drastic thinking is required?
If we try to think beyond the traditional way of delivering the mails and think towards building it as a financial institute which delivers the banking and financial services to the rural Indians through its sheer reach. The economics of Microeconomics can be better accomplished through Indian post. Why can’t we convert post in to Indian Postal Bank?
Post can be converted in to financial services arm where the investment, insurance, debt funds and other financial products can be sold. But it is extremely important to note that these products are being sold to rural India and caution should be exercised while selling them. It’s not easy to sell mutual funds to a farmer!
Indian government releases so many products to rural and semi-urban citizens; why can’t we route them through post? This will ensure that there will be crowd getting pulled in to a post office and build set of products/services to be sold in post. It could be stationary, or greeting card or some on the counter medicine. Just sell what sells!
It needs a drastic change, I know this fact. But, it has to work like a corporate and come up with more diversified offerings according to geography and local conditions.
A drastic thinking is required?
Sunday, May 09, 2010
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!!
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!!
Sunday, April 25, 2010
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.
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.
Tuesday, April 20, 2010
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!!’
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!!’
Sunday, April 04, 2010
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.
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.
Sunday, March 28, 2010
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!
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!
Sunday, March 07, 2010
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!!
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!!
Sunday, February 28, 2010
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!
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!
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