Couples of interesting things happened with me last couple of week’s related to social networking.
First, I gave a presentation in our LUTT (Lets Talk Technology) session [This is the forum across the company where the technical presentations will be made regarding emerging trends]. It was quite an interesting one in terms of talking about social networking media without talking about any application in particular.
The broad agenda of the session was to introduce social media, concept of web 2.0, how it is transforming the work we do. How it is transforming our day-to-day browsing habits. The important factor is as how social media is changing the game of marketing.
Second thing was, I actually created my Facebook account, I am active on Orkut and Linkedin, but wanted to follow the leader and get started on Facebook. Surprisingly, it seems everyone is already in there and been effectively using to express themselves!!
I have intention of using this account as a marketing tool. But, I do understand it takes a bit of effort and time to make it more professional. But, I am amazed to understand the potential social media has in bringing up a change in our lives.
Social Networking and you and you can’t miss this!!
Sunday, February 20, 2011
Sunday, February 06, 2011
Faulty model or part of strategy or just a stick on bad performance?
Couple of week’s back, Wipro scrapped the joint CEO model for it’s IT business and appointed a new CEO to run the business. There are several stories fly around as why this was done now.
Many analysts say the management structure was faulty, as the model can work at best as a stop-gap arrangement. Industry watchers believe it was Wipro’s performance over the last four to five quarters that prompted the rejig at the top, after a three-year experiment with the dual CEO structure. Its believed that Wipro did not take an aggressive enough market-facing approach during the downturn, there in the growth after the downturn was not as big as other Indian companies. It failed to encash the growth in Financial segment.
While Premji mentioned the company’s performance vis-à-vis some of its peers, the real threat to Wipro comes from Nasdaq-listed Cognizant, which is a few steps behind. While a section of analysts feels that Cognizant will overtake Wipro in terms of revenue growth in the fourth quarter of this fiscal, there are indications that it would have already done so in the October-December quarter.
Many also point out that Wipro’s business model just did not allow it to make the best of the recovery. The banking, financial & insurance sector accounted for 50-55 per cent of Cognizant’s revenues and in excess of 35 per cent at Infosys and TCS. “So, they have got the advantage of extremely high turbocharged growth, which has happened in the financial services sector — an advantage we did not get,” Premji has noted.
The failure of the dual CEO model, if you want to call this as failure at all, is not attributed to individual capability. It’s more about lack of communication. You have two people and will work in different ways. Dual CEO also means a lengthy decision-making process and contradictory viewpoints. It also means a lack of nimbleness in an organization.
In the case of Wipro, many feel perhaps this was a stop-gap arrangement for Rishad Premji to make his mark on the business. He is very involved in all the important decisions, but Wipro denies this and says there is nothing like it and board made the decision about this shift.
Whatever is the reason behind the change, it has surprised many people, both internal to Wipro and at outside industry.
(data was taken by different souces….)
Many analysts say the management structure was faulty, as the model can work at best as a stop-gap arrangement. Industry watchers believe it was Wipro’s performance over the last four to five quarters that prompted the rejig at the top, after a three-year experiment with the dual CEO structure. Its believed that Wipro did not take an aggressive enough market-facing approach during the downturn, there in the growth after the downturn was not as big as other Indian companies. It failed to encash the growth in Financial segment.
While Premji mentioned the company’s performance vis-à-vis some of its peers, the real threat to Wipro comes from Nasdaq-listed Cognizant, which is a few steps behind. While a section of analysts feels that Cognizant will overtake Wipro in terms of revenue growth in the fourth quarter of this fiscal, there are indications that it would have already done so in the October-December quarter.
Many also point out that Wipro’s business model just did not allow it to make the best of the recovery. The banking, financial & insurance sector accounted for 50-55 per cent of Cognizant’s revenues and in excess of 35 per cent at Infosys and TCS. “So, they have got the advantage of extremely high turbocharged growth, which has happened in the financial services sector — an advantage we did not get,” Premji has noted.
The failure of the dual CEO model, if you want to call this as failure at all, is not attributed to individual capability. It’s more about lack of communication. You have two people and will work in different ways. Dual CEO also means a lengthy decision-making process and contradictory viewpoints. It also means a lack of nimbleness in an organization.
In the case of Wipro, many feel perhaps this was a stop-gap arrangement for Rishad Premji to make his mark on the business. He is very involved in all the important decisions, but Wipro denies this and says there is nothing like it and board made the decision about this shift.
Whatever is the reason behind the change, it has surprised many people, both internal to Wipro and at outside industry.
(data was taken by different souces….)
Sunday, January 30, 2011
Need of Domain Experts
Indian IT industry in general is more technology driven and we don’t find more domain or technology experts. Recently we were trying to build domain competency in logistics field, but finding one domain expert was almost impossible.
There is a social and monitory pressure at the junior and middle levels to take up more people management roles as they are attractive in monitory and designation roles. Also, people manager is perceived as more powerful role.
However, leadership is not just about leading people, business and organizations. More and more companies, especially in technology space, are creating positions for domain experts. I have seen few of my friends choose to be domain experts over people managers and are doing good.
So, we are fast getting in to a situation where both technical and people management is considered equally important for running an operation of an IT company. In the recent past, Indian IT industry has really moved up in the value chain and created space for providing domain/technical expertise as business offering. This provides opportunities for domain and technology experts.
So, its ok to say I don’t want to manage people!
There is a social and monitory pressure at the junior and middle levels to take up more people management roles as they are attractive in monitory and designation roles. Also, people manager is perceived as more powerful role.
However, leadership is not just about leading people, business and organizations. More and more companies, especially in technology space, are creating positions for domain experts. I have seen few of my friends choose to be domain experts over people managers and are doing good.
So, we are fast getting in to a situation where both technical and people management is considered equally important for running an operation of an IT company. In the recent past, Indian IT industry has really moved up in the value chain and created space for providing domain/technical expertise as business offering. This provides opportunities for domain and technology experts.
So, its ok to say I don’t want to manage people!
Sunday, January 23, 2011
An air of confidence: How Indigo’s ambition is soaring
Couple of weeks back IndiGo airlines, which is a budget carrier in Indian skies, moved to European stock market when it announced the biggest deal in aviation history. Topping up an earlier plan to buy 100 planes with another 180 in a decade from 2015, IndiGo has demonstrated a shopping bag of $15.6 billion to buy Airbus aircrafts that would power its ambition to become an international player.
Barely five years after it started off as a humble budget carrier that people hardly noticed, IndiGo has emerged as a serious challenger to deep pocketed Kingfisher and Jet airlines. Indigo reported a profit of RS 550 crore last year, while most of the Indian airlines reported losses.
IndiGo’s success story starts from the concrete business plan its founders, Rahul Bhatia and Rakesh Gangwal, had and they built a very good initial team. Their first CEO, Bruce Ashby built the right systems, processes and competitive cost structure. They have been concentrating on what the customer wants, on-time departures, clean aircraft and good and clean flying experience, they stick to this plan and didn’t try anything else. The airline has impressive 80.6% ontime performance.
IndiGo’s 180 aircraft deal with Airbus has shifted the word’s focus on India. The historic order is a very strong comment on India’s overall economic growth, the growth potential of countries aviation sector and confidence of IndiGo’s business plan, its ability to execute such a large order and to raise the funds for it. This order for industry leading fuel efficient aircraft will allow IndiGo to continue to offer low fares.
Airlines have come and gone ever since the skies were opened up nearly two decades ago. While East West Airlines and ModiLuft had glamorous starts; Jet seemed to be only one going steadily forward until Kingfisher arrived. As it happened, the budget airline that fired the country’s imagination, Air Deccan has bitten off more than it could chew and ended up with Kingfisher Airlines, while Jet gobbled Sahara.
IndiGo, on the contrast, has behaved more like the tortoise in the race with hare. From day one, it has behaved as nothing but a no-frills airline and focused more on making the roads in the industry.
It appears that, IndiGo has clear business plan and strategy to expand itself as International carrier as it is completing 5 years of flying, which is required to get international flaying license. Clear message is, if you have a differentiator, you can win even though you are late entry in to the game.
Barely five years after it started off as a humble budget carrier that people hardly noticed, IndiGo has emerged as a serious challenger to deep pocketed Kingfisher and Jet airlines. Indigo reported a profit of RS 550 crore last year, while most of the Indian airlines reported losses.
IndiGo’s success story starts from the concrete business plan its founders, Rahul Bhatia and Rakesh Gangwal, had and they built a very good initial team. Their first CEO, Bruce Ashby built the right systems, processes and competitive cost structure. They have been concentrating on what the customer wants, on-time departures, clean aircraft and good and clean flying experience, they stick to this plan and didn’t try anything else. The airline has impressive 80.6% ontime performance.
IndiGo’s 180 aircraft deal with Airbus has shifted the word’s focus on India. The historic order is a very strong comment on India’s overall economic growth, the growth potential of countries aviation sector and confidence of IndiGo’s business plan, its ability to execute such a large order and to raise the funds for it. This order for industry leading fuel efficient aircraft will allow IndiGo to continue to offer low fares.
Airlines have come and gone ever since the skies were opened up nearly two decades ago. While East West Airlines and ModiLuft had glamorous starts; Jet seemed to be only one going steadily forward until Kingfisher arrived. As it happened, the budget airline that fired the country’s imagination, Air Deccan has bitten off more than it could chew and ended up with Kingfisher Airlines, while Jet gobbled Sahara.
IndiGo, on the contrast, has behaved more like the tortoise in the race with hare. From day one, it has behaved as nothing but a no-frills airline and focused more on making the roads in the industry.
It appears that, IndiGo has clear business plan and strategy to expand itself as International carrier as it is completing 5 years of flying, which is required to get international flaying license. Clear message is, if you have a differentiator, you can win even though you are late entry in to the game.
Sunday, January 16, 2011
Auction of IPL Players
Last week’s auction of IPL players reminds me of the fact that, if you have money you can walk out with any player you want. And infact there were some players which were not taken by anyone, which talks about the uncertainty.
This reminded me the NFL draft pick of American Football League (Its true with NBA or MLB to that matter) The difference there is, the week team gets to choose the first draft, in turn the strongest college player. When that auction happens, only the data about players statistics related to games are being displayed and his footage is shown so that teams can made decisions.
Salary will not be discussed there and that is up to the player and team management to sit down and decide on the salary, keeping the salary cap in mind. This allows the team to define the bonus structure and in turn keeps player on the toes to perform.
In my opinion, that is a correct way of putting the college players in to professional world. Imagine if we have similar thing where we induct Ranaji players in to mainstream?
That’s why I like American sports and I feel it is more professional!
This reminded me the NFL draft pick of American Football League (Its true with NBA or MLB to that matter) The difference there is, the week team gets to choose the first draft, in turn the strongest college player. When that auction happens, only the data about players statistics related to games are being displayed and his footage is shown so that teams can made decisions.
Salary will not be discussed there and that is up to the player and team management to sit down and decide on the salary, keeping the salary cap in mind. This allows the team to define the bonus structure and in turn keeps player on the toes to perform.
In my opinion, that is a correct way of putting the college players in to professional world. Imagine if we have similar thing where we induct Ranaji players in to mainstream?
That’s why I like American sports and I feel it is more professional!
Python-swallows-an-elephant: iGate and Patni Deal
iGate with Apax Partners, will acquire 63% of the company for the final price of Rs. 503.50 effectively valuing Patni, the company at $1.5 Billion. By Indian law, iGate will have to make an open offer to acquire an additional 21% of the company.
With that, a company with revenues of about $200 million in 2009 acquires control of a company with revenues of about $650 million. Even by market cap, iGate is a third smaller than Patni
This really shows the risk taking ability of a company and it’s management. Phaneesh Murthy is known for his risk taking ability and he has been a go getter. He has built Infosys from a mere $2 million to over $700 million when he was head of sales and marketing at Infosys.
Acquiring Patni was Murthy’s biggest challenge so far, but it is in line with his commitment to make iGate a $ 1 Billion firm by 2012, a tough job for a $200 million company. Never the less, this deal gives Murthy the size he was looking for.
But, he is still a long way from playing with big league players like TCS, Infosys and Wipro. As Murthy himself admitted, “The Challenge is to take a company, which is moving like a auto rickshaw and convert it’s pace to that of a speeding car” He already said, building the combined go-together market strategy, building strong account management principles so that top accounts grow at much stronger pace and creating integrated leadership team would be the priority.
I have seen an acquisition of around $20 mil, which was miserably failed, though there was lot of synergy. Currently I am experiencing a bigger merger, which is being done in much more systematic way. But one thing I am sure about, if there is one person who can make this deal or integration work is Phaneesh Murthy and given the way in which he transformed iGate; he will pull this quite successfully.
Its all about leadership.
With that, a company with revenues of about $200 million in 2009 acquires control of a company with revenues of about $650 million. Even by market cap, iGate is a third smaller than Patni
This really shows the risk taking ability of a company and it’s management. Phaneesh Murthy is known for his risk taking ability and he has been a go getter. He has built Infosys from a mere $2 million to over $700 million when he was head of sales and marketing at Infosys.
Acquiring Patni was Murthy’s biggest challenge so far, but it is in line with his commitment to make iGate a $ 1 Billion firm by 2012, a tough job for a $200 million company. Never the less, this deal gives Murthy the size he was looking for.
But, he is still a long way from playing with big league players like TCS, Infosys and Wipro. As Murthy himself admitted, “The Challenge is to take a company, which is moving like a auto rickshaw and convert it’s pace to that of a speeding car” He already said, building the combined go-together market strategy, building strong account management principles so that top accounts grow at much stronger pace and creating integrated leadership team would be the priority.
I have seen an acquisition of around $20 mil, which was miserably failed, though there was lot of synergy. Currently I am experiencing a bigger merger, which is being done in much more systematic way. But one thing I am sure about, if there is one person who can make this deal or integration work is Phaneesh Murthy and given the way in which he transformed iGate; he will pull this quite successfully.
Its all about leadership.
Friday, December 31, 2010
Happy New Year-2011
I am feeling like it’s been only couple of months back when I wrote similar kind of message last year. Time flies, real fast.
Personally, this year has been series of new learning for me; learnt so many new things; the list goes endless. Explored new things in life; started looking with new perspective; it is a welcome change. Kept my workout routine Though there were ups and downs in life, but learnt from each one of them.
Professionally; there were so many changes and learning. But I guess I am satisfied with the journey so far. Learnt new things, learnt on how to build new relationships, new businesses and was involved in building the business unit. It was a wonderful experience.
Like last year, I have designed New Year resolution for myself, and I am quite confident that I will stick to follow these;
•Be regular in blogging and in workout. Maintain a good and healthy body.
•I want to be more regular in reading, my reading hours have come down drastically in the past year. I want to read more and more.
•Want to build much bigger business, focusing on profitability. Have more business friends.
•Learn few new things, which I have not done so far. (Cooking is on priority in the list, but wanted to try few new things this year)
•Try to be a better human being.
I know I have done mistakes in the outgoing year, I am hopeful that all of those who got hurt by me will excuse me. I also got hurt in few occasions, but I have long forgotten them already. I might have achieved few things, however I want to remind myself it was not me alone who was responsible for this, I might have failed in few attempts; but I want to motivate myself that this is not the end of the road.
New Year, new beginning, new dreams and new push. Let’s make most of from 2011.
Wish you all a happy and wonderful new year 2011.
Personally, this year has been series of new learning for me; learnt so many new things; the list goes endless. Explored new things in life; started looking with new perspective; it is a welcome change. Kept my workout routine Though there were ups and downs in life, but learnt from each one of them.
Professionally; there were so many changes and learning. But I guess I am satisfied with the journey so far. Learnt new things, learnt on how to build new relationships, new businesses and was involved in building the business unit. It was a wonderful experience.
Like last year, I have designed New Year resolution for myself, and I am quite confident that I will stick to follow these;
•Be regular in blogging and in workout. Maintain a good and healthy body.
•I want to be more regular in reading, my reading hours have come down drastically in the past year. I want to read more and more.
•Want to build much bigger business, focusing on profitability. Have more business friends.
•Learn few new things, which I have not done so far. (Cooking is on priority in the list, but wanted to try few new things this year)
•Try to be a better human being.
I know I have done mistakes in the outgoing year, I am hopeful that all of those who got hurt by me will excuse me. I also got hurt in few occasions, but I have long forgotten them already. I might have achieved few things, however I want to remind myself it was not me alone who was responsible for this, I might have failed in few attempts; but I want to motivate myself that this is not the end of the road.
New Year, new beginning, new dreams and new push. Let’s make most of from 2011.
Wish you all a happy and wonderful new year 2011.
Sunday, December 19, 2010
Six Ways to Refuel Your Energy Every Day
I read this interesting article on Harvard Business Review; and thought of sharing this..
Make sufficient sleep your highest priority.
The research is clear: we require seven to eight hours of sleep in order to be fully rested, and for our brains to optimally embed new learning. Great performers, ranging from musicians to athletes, often get even more than 8 hours.
Two simple strategies can help. The first is to set a specific bedtime and to begin winding down at least 30-45 minutes earlier — avoiding stimulating activities like answering email, and opting instead for more relaxing ones like taking a warm bath, or reading.
The second is to spend a few minutes reviewing what's on your mind before you go to sleep, and then write down anything that's worrying you. What you're doing is effectively parking these concerns so that they don't end up keeping you from falling asleep, or back asleep in the middle of the night.
Take a renewal break at least every ninety minutes.
The first key is to intermittently quiet your physiology. You can dramatically lower your heart rate, your blood pressure and your muscle tension in as little as 30 to 60seconds with regular practice.
With your eyes closed, try breathing in through your nose to a count of three, and out through your mouth slowly to a count of six. In this way, you're extending you're recovery. As your body quiets down, your thinking mind will also get quieter and you'll feel more relaxed
Keep a running list of everything — literally everything — that you want or need to do.
The more fully and frequently you download what's on your mind, the less energy you'll squander in fruitless thinking about undone tasks, and the more energy you'll have to be fully present in whatever you're doing.
Run up your heart rate or take a nap in the early afternoon.
If your excuse for not exercising regularly is "I don't have time," consider working out during your lunch hour
There may be no better way to clear the mind, lower anxiety and jump start your energy than by intentionally raising your heart rate into the aerobic or anaerobic zones.
If taking a run or going to a gym is too time consuming, how about taking a brisk 15 to 30 minute walk outside? Or if you're in an office building, how about walking up and down the stairs?
Practice appreciation — and savoring.
One of the least recognized ways we squander energy is in negative emotions. We're far quicker to notice what's wrong in our lives than what's right.
Look for opportunities to appreciate someone in your life, and share what you're feeling — directly, or in a note. You'll be giving the other person a shot of positive energy, but sharing positive energy will also make you feel better.
Look too for opportunities to appreciate yourself. Take time to savor small victories, give yourself credit where you deserve it, and forgive yourself when you fall short.
Develop a transition ritual between work and home.
When we leave the office, many of us carry work with us. The result is that even when we get home, we're still not truly present. Consider establishing a very specific way to disengage from work so you can leave it behind.
Make sufficient sleep your highest priority.
The research is clear: we require seven to eight hours of sleep in order to be fully rested, and for our brains to optimally embed new learning. Great performers, ranging from musicians to athletes, often get even more than 8 hours.
Two simple strategies can help. The first is to set a specific bedtime and to begin winding down at least 30-45 minutes earlier — avoiding stimulating activities like answering email, and opting instead for more relaxing ones like taking a warm bath, or reading.
The second is to spend a few minutes reviewing what's on your mind before you go to sleep, and then write down anything that's worrying you. What you're doing is effectively parking these concerns so that they don't end up keeping you from falling asleep, or back asleep in the middle of the night.
Take a renewal break at least every ninety minutes.
The first key is to intermittently quiet your physiology. You can dramatically lower your heart rate, your blood pressure and your muscle tension in as little as 30 to 60seconds with regular practice.
With your eyes closed, try breathing in through your nose to a count of three, and out through your mouth slowly to a count of six. In this way, you're extending you're recovery. As your body quiets down, your thinking mind will also get quieter and you'll feel more relaxed
Keep a running list of everything — literally everything — that you want or need to do.
The more fully and frequently you download what's on your mind, the less energy you'll squander in fruitless thinking about undone tasks, and the more energy you'll have to be fully present in whatever you're doing.
Run up your heart rate or take a nap in the early afternoon.
If your excuse for not exercising regularly is "I don't have time," consider working out during your lunch hour
There may be no better way to clear the mind, lower anxiety and jump start your energy than by intentionally raising your heart rate into the aerobic or anaerobic zones.
If taking a run or going to a gym is too time consuming, how about taking a brisk 15 to 30 minute walk outside? Or if you're in an office building, how about walking up and down the stairs?
Practice appreciation — and savoring.
One of the least recognized ways we squander energy is in negative emotions. We're far quicker to notice what's wrong in our lives than what's right.
Look for opportunities to appreciate someone in your life, and share what you're feeling — directly, or in a note. You'll be giving the other person a shot of positive energy, but sharing positive energy will also make you feel better.
Look too for opportunities to appreciate yourself. Take time to savor small victories, give yourself credit where you deserve it, and forgive yourself when you fall short.
Develop a transition ritual between work and home.
When we leave the office, many of us carry work with us. The result is that even when we get home, we're still not truly present. Consider establishing a very specific way to disengage from work so you can leave it behind.
Sunday, December 12, 2010
Building the Next Layer
Just concluded India-New-Zealand one day series drew my attention for non-cricketing reasons. Though I didn’t follow the game as such, but one important factor about this series is that India fielded entirely new team and still won by clean sweep. Argument may be that opposition team was not up to the mark; but I can’t take out credibility from the winning team.
It seems, India has successfully built the next layer, meaning we have a strong backup plan ready. There are instances where a set of players retire and that team’s performance goes down. We have cases in Australia, earlier West Indies, Pakistan etc where when a set of star players retired the next layer was not in place and thus these teams struggled to attain the limelight again.
This means, Indian team has worked on a succession planning and has done really well.
Now, draw the similarities into business and there is a need to have this kind of strategic planning for every business or business lines. And more ever it has to be executed with lot of precession.
The reflection of a true leader is to build his own succession such that the operation should run even in his/her absence. And all true leaders have shown this ability and business has grown even after their exit.
Infosys, TCS and ICICI have shown this kind of succession planning where the CEO baton has been transferred to others, without impacting the business operations. Infosys is said to have been grooming next generation leaders with focus on building next executive team from within the company. Similar kind of effort has been in place for Tata Sons group where Ratan Tata’s succession is being currently worked out.
The learning here is, be at an organization or a business line; there has to be a succession planning, which helps you to elevate yourself in to new position, if your operation is taken by someone else. In this way, you can grow within the organization and also establishes you as a leader who plans strategically.
It seems, India has successfully built the next layer, meaning we have a strong backup plan ready. There are instances where a set of players retire and that team’s performance goes down. We have cases in Australia, earlier West Indies, Pakistan etc where when a set of star players retired the next layer was not in place and thus these teams struggled to attain the limelight again.
This means, Indian team has worked on a succession planning and has done really well.
Now, draw the similarities into business and there is a need to have this kind of strategic planning for every business or business lines. And more ever it has to be executed with lot of precession.
The reflection of a true leader is to build his own succession such that the operation should run even in his/her absence. And all true leaders have shown this ability and business has grown even after their exit.
Infosys, TCS and ICICI have shown this kind of succession planning where the CEO baton has been transferred to others, without impacting the business operations. Infosys is said to have been grooming next generation leaders with focus on building next executive team from within the company. Similar kind of effort has been in place for Tata Sons group where Ratan Tata’s succession is being currently worked out.
The learning here is, be at an organization or a business line; there has to be a succession planning, which helps you to elevate yourself in to new position, if your operation is taken by someone else. In this way, you can grow within the organization and also establishes you as a leader who plans strategically.
Sunday, December 05, 2010
The Science of Merger and Acquisition
We are currently working through a major merger and acquisition, actually our parent company in Norway is currently involved in this. And my recent Norway trip made me to understand more on this topic.
EBD Business Partners (Number one IT Services Company in Norway) is merging with ErgoGroup (Number two services company in Norway and my parent company), to form a bigger and stronger IT services company, serving Nordic market. (For more details, www.edbergogroup.com)
What really amazed me is the merging process a consulting company is recommending. (Boston Consulting is involved in this process). The problem was, both the companies have similar portfolio in terms of services and infact they were competing in the market. This complicated the entire process.
The process suggested here was something very innovative. CEO, being at L0, picked up his management team as L1 or level 1. The picking happened based on the merit, purely on the experience and qualification. This helped to form a correct portfolio which was good for merged company. And L1 is allowed to choose their management, L2, so on.
The result is, the completely redefined company with clean focus on business segments and focused geographies. And since competitive ones got the job; its good for the business and customers. Also, customers got merged so seamlessly that there was no change in operation, business as usual was the mantra since beginning and it happened in that way.
Now, the challenge ahead is to merge the processes and policies and tools. I believe it would be simple task as most important part of putting together a working organization structure is in place.
I was just amazed to see who smooth the entire thing was put in place. Good learning!
EBD Business Partners (Number one IT Services Company in Norway) is merging with ErgoGroup (Number two services company in Norway and my parent company), to form a bigger and stronger IT services company, serving Nordic market. (For more details, www.edbergogroup.com)
What really amazed me is the merging process a consulting company is recommending. (Boston Consulting is involved in this process). The problem was, both the companies have similar portfolio in terms of services and infact they were competing in the market. This complicated the entire process.
The process suggested here was something very innovative. CEO, being at L0, picked up his management team as L1 or level 1. The picking happened based on the merit, purely on the experience and qualification. This helped to form a correct portfolio which was good for merged company. And L1 is allowed to choose their management, L2, so on.
The result is, the completely redefined company with clean focus on business segments and focused geographies. And since competitive ones got the job; its good for the business and customers. Also, customers got merged so seamlessly that there was no change in operation, business as usual was the mantra since beginning and it happened in that way.
Now, the challenge ahead is to merge the processes and policies and tools. I believe it would be simple task as most important part of putting together a working organization structure is in place.
I was just amazed to see who smooth the entire thing was put in place. Good learning!
Sunday, November 28, 2010
Reflecting thoughts amidst white Sunday
I am in Oslo, its snowing. I could see a white city through my Radisson window. I dared to walk in the snow, explored a bit and came back thinking I might not take prolonged cold weather.
I caught up reading a book, currently I am reading a book titled ‘How to become CEO’, I am liking it because it is full of practical examples and many a times questions normal wisdom of B-School teachings. I am also reading ‘Build to Last’; where the articulation is about how visionary companies are built and how they sustain themselves even after their charismatic leaders move on.
Also, my last night dinner with Chairman of IONNOR was full of business talks, about building the business, importance of mentors in life and all about importance of strategic thinking.
Week full of learning!!
But, sitting in front of fire place this morning made me to reflect about the journey called life, its surprises and its twists and turns. When you think you understood the puzzle of life, there comes a new twist, which makes you feel, life can’t be understood as a whole (Don’t worry, I am fit, fine and there is no change in job and life as usual :) ) I reflected about my goals and ways to achieve them; what it takes to reach there.
Want to come back home, I am missing India!!
I caught up reading a book, currently I am reading a book titled ‘How to become CEO’, I am liking it because it is full of practical examples and many a times questions normal wisdom of B-School teachings. I am also reading ‘Build to Last’; where the articulation is about how visionary companies are built and how they sustain themselves even after their charismatic leaders move on.
Also, my last night dinner with Chairman of IONNOR was full of business talks, about building the business, importance of mentors in life and all about importance of strategic thinking.
Week full of learning!!
But, sitting in front of fire place this morning made me to reflect about the journey called life, its surprises and its twists and turns. When you think you understood the puzzle of life, there comes a new twist, which makes you feel, life can’t be understood as a whole (Don’t worry, I am fit, fine and there is no change in job and life as usual :) ) I reflected about my goals and ways to achieve them; what it takes to reach there.
Want to come back home, I am missing India!!
Sunday, November 07, 2010
Managing customer relationships
American and Indian companies signed deals worth $10 bn on the first day of US President’s visit to India, underlining the increasing role economic ties will play in relations between the two countries.
I was wondering, why such deals get announced when a high profile visits like this? Actually, I was trying to draw a parallel, not comparing apple to apple; however trying to reason out a pattern. Why visiting customers result in to business?
In my experience so far, whenever there is a business trip to customer site, there tends to be some activities happening and I ended up closing some business. Lets understand, from all practical purpose, why this is so?
In my opinion, it’s more of a relationship building and providing a face to the voice you have been hearing. You are working with a customer over years and you tend to build a strong relationship. And then your trip comes to meet the customer, and customer’s confidence in you greatly increases and this results in business. It is not just as simple as this, its complex but this is more of a high level explanation.
There is few fundamental things one need to do. We need to talk what customer wants to hear, rather than pushing my agenda. If you get down to a level where you try to understand the issues your customer is facing on an operational level, mapping those to requirements become very easy. Actually!!
The companies who do it quite effectively have managed to get more business from same customer and have developed them in to multi-million accounts through cross and up-selling. TCS and Cognizant have proved that with sheer focus towards customer relationship will result in to more loyal customers.
On the contrary some companies think its waste of time and money to spend towards customers. I failed to understand the thinking behind this.
Business is all about building stronger relationships.
I was wondering, why such deals get announced when a high profile visits like this? Actually, I was trying to draw a parallel, not comparing apple to apple; however trying to reason out a pattern. Why visiting customers result in to business?
In my experience so far, whenever there is a business trip to customer site, there tends to be some activities happening and I ended up closing some business. Lets understand, from all practical purpose, why this is so?
In my opinion, it’s more of a relationship building and providing a face to the voice you have been hearing. You are working with a customer over years and you tend to build a strong relationship. And then your trip comes to meet the customer, and customer’s confidence in you greatly increases and this results in business. It is not just as simple as this, its complex but this is more of a high level explanation.
There is few fundamental things one need to do. We need to talk what customer wants to hear, rather than pushing my agenda. If you get down to a level where you try to understand the issues your customer is facing on an operational level, mapping those to requirements become very easy. Actually!!
The companies who do it quite effectively have managed to get more business from same customer and have developed them in to multi-million accounts through cross and up-selling. TCS and Cognizant have proved that with sheer focus towards customer relationship will result in to more loyal customers.
On the contrary some companies think its waste of time and money to spend towards customers. I failed to understand the thinking behind this.
Business is all about building stronger relationships.
Sunday, October 31, 2010
CEO's Suite
Latest issue of Forbes draw my attention to latest model of Audi A8.
Though I am not a great follower of automobiles and gadgets. But, this seems like a dream car!!!
http://www.autoguide.com/manufacturer/audi/2010-audi-a8-l-review-1204.html
http://www.india-server.com/cars/features/audi-a8-115.html
Though I am not a great follower of automobiles and gadgets. But, this seems like a dream car!!!
http://www.autoguide.com/manufacturer/audi/2010-audi-a8-l-review-1204.html
http://www.india-server.com/cars/features/audi-a8-115.html
Sunday, October 24, 2010
The business model of Joint Venture
Sometime back I wrote about the Hero Honda and Honda competing in the Indian automobile market. Now, it’s been agreed that Honda will exit from the joint venture. Around ten years back Honda started its own Indian venture and started competing with scoters to begin with. And the business strategy worked so far. We have similar stories with Suzuki moving out of TVS JV and Yamaha from Escorts.
In my previous organization; I have seen a JV very closely; starting from scratch to become a full fledged company and I always believed that was a master stroke to form a JV there by getting a steady business and access to latest technologies. It was a product JV and building a services business around would have made sense and exactly it was built around this concept. And it was a great success.
Initially, it made sense to both the counterparts, for Indian counter parts; who wanted cash for expansion and access to latest technology; it was a great win situation. For foreign counterpart it was more of access to new market and knowhow of local market. But in license raj this knowledge of local market only meant the knowledge of how to get the required permission from government. Rest of R&D, product concept, marketing, launching was done by foreign counterpart. It worked well in this way for some time and there were so many success stories around this model.
I remember reading somewhere about GE-Wipro joint venture which was conceptualized to be a great story. Over the years both the parties realized the drawbacks and decided to pull out. If my memory serves me correct, somewhere Premaji said it was the best thing happened to look beyond GE.
An overseas partner is expected to bring three advantages to the table; money, technology and brand. The relevance of these three things to be evaluated in current context. Indian businessmen are no more strapped for money. Many of them have done big-ticket acquisitions in India and abroad. And in last few years democratization of technology happened and technology is available for acquisition. Thus, Indians can buy the required technology out of the shelf rather than a JV. Now days, Indian brands are making more sense, and Indian brands are truly global now a days.
Thus, Hero is not seems to be worried about this breakup. TVS survived this and running stronger without Suzuki. The size of multinational, which appears to be a great advantage for JV is no more a positive point of India Inc.
In a way, the playing field has been leveled between multinationals and India Inc.
In my previous organization; I have seen a JV very closely; starting from scratch to become a full fledged company and I always believed that was a master stroke to form a JV there by getting a steady business and access to latest technologies. It was a product JV and building a services business around would have made sense and exactly it was built around this concept. And it was a great success.
Initially, it made sense to both the counterparts, for Indian counter parts; who wanted cash for expansion and access to latest technology; it was a great win situation. For foreign counterpart it was more of access to new market and knowhow of local market. But in license raj this knowledge of local market only meant the knowledge of how to get the required permission from government. Rest of R&D, product concept, marketing, launching was done by foreign counterpart. It worked well in this way for some time and there were so many success stories around this model.
I remember reading somewhere about GE-Wipro joint venture which was conceptualized to be a great story. Over the years both the parties realized the drawbacks and decided to pull out. If my memory serves me correct, somewhere Premaji said it was the best thing happened to look beyond GE.
An overseas partner is expected to bring three advantages to the table; money, technology and brand. The relevance of these three things to be evaluated in current context. Indian businessmen are no more strapped for money. Many of them have done big-ticket acquisitions in India and abroad. And in last few years democratization of technology happened and technology is available for acquisition. Thus, Indians can buy the required technology out of the shelf rather than a JV. Now days, Indian brands are making more sense, and Indian brands are truly global now a days.
Thus, Hero is not seems to be worried about this breakup. TVS survived this and running stronger without Suzuki. The size of multinational, which appears to be a great advantage for JV is no more a positive point of India Inc.
In a way, the playing field has been leveled between multinationals and India Inc.
Sunday, October 17, 2010
The Web we use
Think about how the internet has changed and is changing over the years. When it started it was more using the browser and was used to share information through static web pages.
Then it started slowly changing and internet commerce came in to existence where bank transactions, share market dealing, purchasing started happening over the web. This is where the internet boom got created and overnight millions of companies mushroomed out and died quickly. The companies who are having strong fundamental business plan survived.
Offcourse, Google changed the internet habits and established the concept of availability of information through searching, thus making information more accessible.
But, now think about a typical day today. We use a Facebook or Twitter application to keep in touch with friends, read mails through a push mail application like Blackberry, iPhone etc, use news aggregator to keep yourself updated about happenings around the world, watch a video on Youtube on a special application, download a song of movie using Torrent, play a game of online scrabble on the iPad, make a skype call on WiFi phone, use Blackberry or other device to quick chat using instant messaging system.
All these used the Net but not once used the browser to do it. You are using closed application which might actually piggyback on the internet but don’t use the browser to do any of these. Actually, thus we are killing the web!! It is estimated that at one time, accessing the Net was a 90per cent web browser job. Today it is less than 40 per cent (This is as per an analysis)
Thus the web as we know is dying very fast only to be replaced by the web that may just keep evolving and probably might last longer.
Then it started slowly changing and internet commerce came in to existence where bank transactions, share market dealing, purchasing started happening over the web. This is where the internet boom got created and overnight millions of companies mushroomed out and died quickly. The companies who are having strong fundamental business plan survived.
Offcourse, Google changed the internet habits and established the concept of availability of information through searching, thus making information more accessible.
But, now think about a typical day today. We use a Facebook or Twitter application to keep in touch with friends, read mails through a push mail application like Blackberry, iPhone etc, use news aggregator to keep yourself updated about happenings around the world, watch a video on Youtube on a special application, download a song of movie using Torrent, play a game of online scrabble on the iPad, make a skype call on WiFi phone, use Blackberry or other device to quick chat using instant messaging system.
All these used the Net but not once used the browser to do it. You are using closed application which might actually piggyback on the internet but don’t use the browser to do any of these. Actually, thus we are killing the web!! It is estimated that at one time, accessing the Net was a 90per cent web browser job. Today it is less than 40 per cent (This is as per an analysis)
Thus the web as we know is dying very fast only to be replaced by the web that may just keep evolving and probably might last longer.
Wednesday, October 13, 2010
The mind games people play
I was reading about heated arguments between an Indian player and an Australian player last week (BTW, I happened to see the entire teams of India and Australia in Taj-Chandigarh where I happened to be there on a business dinner).
This incident reminded me one incident happened in IIT campus when I was a student.
Me and my partner were participating in double wicket cricket tournament and we were most probably the top contender for winning. We had the best combination of bowling and batting. (I used to play good cricket by the way).
During the final, a second year B.Tech guy and his partner were playing against us. When we were bowling he started saying ‘this is going to be wide ball, this will be full-toss and hit him to six etc etc’. We both carried away by these comments so much that we started exactly bowling as what he was saying. Clearly, we allowed him to take over our minds.
And then, during batting, he will scream, ‘they don’t know batting, here you go, missed the ball’ etc etc. Needless to say, we again carried away and eventually lost the game from being very well positioned to win.
When I analyzed this whole incident; it appeared to me that I got so angry by his comments and decided to prove him wrong; in that tempo lost my natural game and thus was not up to the mark.
That day, I learnt a lesson, however angry you are; don’t let your analytical mind make any permanent decision at that point in time. I guess, I learnt how to deal with such situation and don’t over-react (This is only applicable to business life though, in my personal life I think I over-react)
This is working for me and Australian episode made me to think on the incident that happened in my college days.
This incident reminded me one incident happened in IIT campus when I was a student.
Me and my partner were participating in double wicket cricket tournament and we were most probably the top contender for winning. We had the best combination of bowling and batting. (I used to play good cricket by the way).
During the final, a second year B.Tech guy and his partner were playing against us. When we were bowling he started saying ‘this is going to be wide ball, this will be full-toss and hit him to six etc etc’. We both carried away by these comments so much that we started exactly bowling as what he was saying. Clearly, we allowed him to take over our minds.
And then, during batting, he will scream, ‘they don’t know batting, here you go, missed the ball’ etc etc. Needless to say, we again carried away and eventually lost the game from being very well positioned to win.
When I analyzed this whole incident; it appeared to me that I got so angry by his comments and decided to prove him wrong; in that tempo lost my natural game and thus was not up to the mark.
That day, I learnt a lesson, however angry you are; don’t let your analytical mind make any permanent decision at that point in time. I guess, I learnt how to deal with such situation and don’t over-react (This is only applicable to business life though, in my personal life I think I over-react)
This is working for me and Australian episode made me to think on the incident that happened in my college days.
Sunday, October 03, 2010
Your TV is heating up!
The competition is picking up to capture audience on your small screen. The differentiation of big and small screen is reducing fast. And working in TV is no more considered as demotion for big stars.
Look at how the general entertainment section, business news, general news segments are competing with each other! Be it Colors, Sony, Zee, TimesNow, ET Times, or CNBC. If Colors comes up with ‘Big Boss’, Sony is replying back with KBC and so and so forth. All are trying to catch you during the primetime.
Interesting part of the entire strategy is they have a business plan as how to capture the audience through content for target audience concept. For example, MTV focuses on youth; ‘Khataronke ke khiladi’ focuses on youth as well. The prime time serials are having target audience of ladies.
So, the competition to grab your attention is catching up and TV channels are mixing their contents in such a way, which appeals to bigger market segment and there by trying to cash. Look at the stars who are performing for us, Amitabh, Shahrukh, Salman, Akshay, Priyanka, all big screen stars.
Is this a sign of consolidation?
Look at how the general entertainment section, business news, general news segments are competing with each other! Be it Colors, Sony, Zee, TimesNow, ET Times, or CNBC. If Colors comes up with ‘Big Boss’, Sony is replying back with KBC and so and so forth. All are trying to catch you during the primetime.
Interesting part of the entire strategy is they have a business plan as how to capture the audience through content for target audience concept. For example, MTV focuses on youth; ‘Khataronke ke khiladi’ focuses on youth as well. The prime time serials are having target audience of ladies.
So, the competition to grab your attention is catching up and TV channels are mixing their contents in such a way, which appeals to bigger market segment and there by trying to cash. Look at the stars who are performing for us, Amitabh, Shahrukh, Salman, Akshay, Priyanka, all big screen stars.
Is this a sign of consolidation?
Sunday, September 26, 2010
Size Matters!! Possibility of Cognizant’s acquisition of Genpact.
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.
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 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.
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