Management by Matrices

Enlighted Doership

2011-08-13T21:03:00.000+05:30

My latest column for The Hindu Business Line: Enlightened Doer-ship
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The presence of individual rewards in organisations presents an interesting problem. The ‘worker' in such a system is constantly drawn by two impulses, often at odds with each other — the first is the impulse to perform his duties effectively, and the second is to match his efforts towards the individual rewards on offer. This often leads to individual behaviours that are counter-productive to the larger goals and merely serve the short-term needs of individual rewards.

However, in reality all organisational accomplishment is possible only with the accomplishment of the collective, not an individual alone. Thus, an alternative view could be taken of the entire purpose of rewards, and the way to deliver them given the collective nature of organisational achievement. In this article, one such alternative approach is described.

ENLIGHTENED ‘DOER'-SHIP

The idea of enlightened doer-ship is based on two key ideas. The first idea is that the work is the primary reward in itself for the individual performing it.

In the absence of any individual reward other than the quality of work itself, one can expect people to focus purely on their creative energies being fully expressed through their work, and drop all other extraneous distractions.

The second feature of enlightened ‘doer'-ship is that results are measured purely on the basis of the achievement of the larger objective, and not individual contribution. This would ensure that detrimental behaviours such as credit seeking, unhealthy competition, and impression management would be eliminated. Success is defined purely at the level of a team, or a larger commune and not at the level of an individual. This ensures that all the horses drawing the cart, as it were, are doing so in the same direction and either everyone is rewarded or no one.

Enlightened ‘doer'-ship may at first sight seem to be an idealised state, where people believe the work itself is the reward, and constantly look at the larger organisational goal as a measure of performance. However, a deeper analysis will reveal that these are the two primary forces that lead to individual satisfaction.

The concept of monetary and non-monetary rewards for work is really a construct that admits that these two forces do not exist in the organisation.

And the reason why they don't exist is that the ‘design' of work and its rewards in complex, hierarchical systems places more importance on design simplicity, and management of egos than ideal solutions based on individual fulfilment.

DESIGNING A SYSTEM TOWARDS ENLIGHTENED DOER-SHIP

While enlightened doer-ship may appear to be a feature of an ideal society or organisation, there are ways to create a system based on this principle. Four key drivers can enable this change.

The first is the effective design of roles and the mapping of roles to the right people. Here, the first step is to ensure that each role is essentially one complete creative unit of the larger picture. The second step is to map the ‘meta' creative actions underlying that piece of work, with the capabilities of the person selected for the role. Achieving this first step also has another benefit — namely, a reduction in free riding on the part of individuals, given that all notions of rewards and success are linked to team performance (not individual performance). Once the right person is doing the right role, that is in synch with that person's creative impulse, the tendency to free ride would be minimal.

The second element of designing an enlightened doer-ship system would be a flat, functional hierarchy. Hierarchy, as applied today, has essentially become a form of reward. Superfluous levels are created in many organisations for no purpose other than to act as a reward to keep people motivated in the short term. The hierarchy in an enlightened doer-ship system would be essentially functional and contextual, and ‘permanent' levels would be created only where unavoidable. This means that the role of a leader in a group could potentially be played by different people in different contexts or assignments.

The third element is to ensure that all variable rewards are linked to performance at the level of the team or commune. Among other benefits, this will also ensure that all stakeholders are working towards the accomplishment of organisational goals first, followed by individual glory.

The fourth element is, of course, a receptive culture that values the entire concept. This may be the biggest challenge, and the transition period may be painful for an established organisation, given the degree of “unlearning” of past habits that would be required. For a start-up with a clean slate as it were, creating such a system would be relatively easier.

CONCLUSION

Enlightened doer-ship as described above is not intended to disregard talent or individual flair. All it does is dissociate talent and individual flair from the reward process. In other words, unless the larger goal is accomplished, no one in the collective is rewarded. And the individual is constantly rewarded for his individual flair on a day-to-day basis through his own work content. The path towards achieving this ‘enlightened' goal is a difficult one, and one that is made more complex given the scale of modern organisations, but is a path that must be taken, from the perspective of individual and organisational purpose fulfilment.

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Building an Organizational Grammar

2011-04-09T21:48:00.000+05:30

My latest column for The Hindu Business Line - Building an Organizational Grammar
Full text follows
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The full potential of a language can be explored once a grammar systematises key patterns. The user can focus more on creating and communicating ideas and less on creating the structural means to do so.

Similarly, a formal grammar for organisations would enable them to focus greater energies on manifesting their purpose, without constantly reinventing the basic building blocks for doing so.

In this article an attempt is made to understand some of the conceptual units that could make up such a grammar.

Competencies and purpose

The first building block of the organisation is a collection of competencies or areas of expertise. This translates into an overarching purpose (or purposes) for the organisation. Purpose, as such, is an insight-driven discovery, but the insight is usually built upon the bedrock of manifest and un-manifest competencies.

Additionally, purpose is usually an overarching theme that may be able to successfully capture multiple dimensions of the competencies contained within the organisation. The glue that unites competencies with purpose is a shared vision.

The physical manifestation of competencies and purpose could take two forms. Firstly, it clearly influences the areas in which the firm will choose to operate in. Secondly, and, more importantly, it manifests in the choice of leaders who need to be fully aligned with both the competencies and purpose of the firm.

Platforms, Applications and Components

Platforms form the third building block of the organisational grammar. A platform essentially represents a market facing or internal facing proposition that the firm has to offer. A firm may have one or more platforms with possibly overlapping competencies and purposes. A product or service line is one example of a platform.

A platform is, in turn, a collection of one or more ‘applications'. Applications are fully functional, meaningful units, and can be replicated easily. For instance, an e-commerce application used by a firm in one service platform to distribute its products may easily be replicated across platforms.

A component would be small, repeatable units of competencies which may be contained within multiple applications. A component in isolation may not be meaningful, but creates value when it aggregates with other components. A collection of inter-related components would usually make up an application. Of course, components, in turn, may aggregate amongst themselves to form larger components. The linguistic equivalent of a component-application-component paradigm would be a word, sentence and paragraph.

In a really well-designed organisation, it will be evident that the very competencies and purpose that form the first building block of the grammar are found even in the smallest components, applications and platforms in the firm. This is not unlike a fractal, and its feature of ‘self-similarity'.

Applications of a Grammar

A clear understanding of the grammatical elements available in an organisation can become an important guide to actually designing the structure of the firm. Often, one finds firms where components are embedded so deeply into applications and platforms that they aren't well understood outside them, leading to frequent attempts at reinventing the wheel. Organising around grammatical elements will ensure that everything that is created in the organisation finds its full expression. Knowledge management would be a critical element in a ‘grammatically structured' organisation, in order to ensure that component level expertise is consolidated centrally and redeployed as required.

The second arena in which a grammatical element based approach helps is in the identification of talent to place into those elements. While some people are component level thinkers, others may think at a platform level, and still others may excel in conceptualising visions of future states.

A third area in which a grammar-based approach helps is the effective design of conglomerates which operate in multiple spaces, while operating within its overarching purpose or competency areas. Too often one comes across cases of destructive diversification that have nothing to do with the competency-purpose-platform skills of the parent firm.

While this is only a brief attempt at visualising what a formal grammar for firms might look like, it is not difficult to see that a clear, well-tested grammar may have a lot of applications that help organisations fully utilise their creative energy, with both market-facing ramifications (increased revenue, etc,) and internal implications such as enhanced fulfilment.

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Organizational Culture Change

2011-01-30T18:38:00.000+05:30

Check out my latest article at The Hindu Business Line - Organizational Culture Change. Full text follows:
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The changing culture is a complex problem faced by many organisations. It's a lot like repairing the engine of a moving vehicle. While new firms have the luxury of gradually building the culture that best serves their interest, larger organisations tend to find themselves ‘stuck' with cultures that may be completely at odds with their stated vision or strategy. The big question then is whether it is possible to change culture mid-course. The answer may lie in understanding how culture is created in the first place.

Individual & organisational values

The crux of culture is values — in simple terms values expressed in the form of behaviours is what is perceived as culture. Values themselves may be of two kinds — individual and organisational.

The source of organisational values is usually the values of the founders. However, with time, as the firm transitions the values could change. This could be due to a lack of attention paid to the developing culture, particularly when meeting the demands of rapid growth. This takes the form of indiscriminate addition of individuals whose values may be at odds with the founding values. While organisational values may be documented formally, the ‘real' organisational values are informally “stored” in the minds of members of the organisation.

Individual values may be of two kinds — expressed, and suppressed. Expressed values are those that members of an organisation choose to express in their behaviour based on their assessment of what is required in the organisation or ‘what works'. The other values possessed by an individual member may be suppressed, at least in the organisational context. It is this interplay between “stored” organisational values and individual values that develops into “culture” in the manifested form. The metaphor of an iceberg could represent this interplay. What is seen above the surface is culture, but what lies beneath is the cause — the complex, ever-evolving dynamic of organisational and individual values.

The right culture

The next question that arises is — what is the right kind of culture for a particular organisation. The simple answer to this would be — the culture in which there is no conflict between organisational and individual values, and where organisational values themselves are aligned to what the organisation seeks to achieve. It is important to recognise that the culture manifested at any time is indeed already the most appropriate culture for the current interplay between organisational and individual member values.However, this culture may happen to be completely counter-productive to the organisational goals, owing to degraded organisational values or high conflict between individual and organisational values. Any attempt to transform culture by simply manipulating the manifest dimension of culture will not succeed unless the underlying interplay of values is not addressed.

Thus, culture transformation must address both organisational and individual values. On the organisational values front, one may first need to begin with an assessment of what the organisation's values really are. If the current state of values is a diluted version of the original intent, a fresh rediscovery or redefinition of values may need to take place in order to define an ideal state.

On the individual values front, the first intervention should be at the ‘input' stage, where new members are inducted. If a well-defined organisational identity or value is in place, it is not difficult to identify and add individuals who are in alignment. The bigger challenge is for existing members. Here, the solution is likely to be a more gradual one. It may involve a reassessment of all levels in the hierarchy to determine the “culture” icons best suited for leadership roles in the “new world” as it were. Leadership roles are the key fulcrums upon which culture is reinforced. This is because leadership behaviours typically tend to activate the relevant values in followers (provided the followers subscribe to those values at least partially). Over time, a culture transformation process would start to work on the organisation's memory, replacing negative versions of the organisation's values that are “stored” in the minds of members with fresh versions, till the new version becomes the new normal.

Setting right a malfunctioning or poorly aligned organisational culture is undoubtedly a complex process and may require an intuitive, right-brained mindset on the part of the designers, as well as multiple iterations to arrive at the right solution.Finally, culture needs to be an integral component of organisational strategy, as it is the foundational building block upon which the organisation's purpose can be manifested into reality.

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Selfless Leadership - An Indian Perspective

2010-08-17T07:37:00.001+05:30

My latest article in The Hindu Business Line - Selfless Leadership - An Indian Perspective.
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Most leadership theories (with a few exceptions, of course) are variants of a ‘hero' based ideal. In other words, the leader is a heroic individual of some sort who summons his followers to accomplish great things. Additionally, there is a tendency to glorify leadership as an achievement or a sort of reward for one's performance in a specific sphere of life.This has led to a situation where society tends to confer leadership upon individuals simply because they are able to function effectively in their individual roles without evaluating whether the individual truly possesses the skill to lead others.Any system that follows such a pattern of leader selection is bound to create a society of unfulfilled ‘followers'.

An Indian definition of leadership
Is there a distinctly Indian definition of leadership? The answer to this may be found in India's cultural foundations. The central idea of the Indian philosophical tradition is the idea of selflessness. An individual begins on his path of spiritual evolution with the initial ego-centric belief that he is distinct and special in relation to others, but as he progresses further he realises that while the particularities of his existence or station in life may be distinct from others, the underlying conscious principle is the same.Krishna's demonstration of his own cosmic form (containing the entire universe within it) to Arjuna in the Gita essentially reinforces the same idea of a universal consciousness that cuts across all beings.It may be argued that an individual who is able to perceive this unique combination of specificity and universality in other human beings is the one who is best suited to lead others.In other words, an individual with a greater degree of selflessness is the ideal candidate to be a leader of other human beings.

Ideals of a selfless leader
A leader whose foundation is the idea of selflessness manifests this in many forms in his relationship with followers.
Freedom: The first ideal of such an enlightened leader would be ‘freedom'. A selfless leader would allow other individuals to operate with a high degree of freedom while providing an outline of what needs to be accomplished.How the follower navigates his way towards the outcome is entirely left to his creative faculties. This approach contradicts the traditional organisational way of getting things accomplished — fear and conformity to pre-defined safe paths.Fear and conformity-based leadership styles are essentially expressions of a control-based tendency which, in turn, stems from an inherent ego-based foundation which demands that all outcomes bear the stamp of the leader.A selfless leader, on the other hand, will demonstrate a lesser tendency to control simply due to the absence of any desire in him to stamp his individual personality on everything that his team produces.

Follower evolution centricity: A selfless leader would be constantly conscious of the specific evolutionary state of his follower, and would constantly try to raise him to higher levels of selflessness.Thus, the role of such a leader is not only to create outcomes through his team, but also to raise followers to his own state of being. In fact, all outcomes are in the distant future, and all that can be done in the present is really to ensure that people working towards those outcomes are raised to higher levels of consciousness (which is essentially the ideal of Karma Yoga).

Enlightened doer-ship: An enlightened leader would constantly reinforce the idea of enlightened doer-ship. This means that credit-seeking would be a shunned practice. This returns once again to the Vedantic ideal that the idea of a specific doer is an ego-centric idea. Ego-centric behaviour in any team pursuit rapidly diminishes the motivation and performance of other players in addition to creating a zero sum situation where people perceive that for one person to win, another has to lose. This does not mean that skilled performers are not rewarded — it only means that rewards are structured on a non-zero-sum, non-relative basis.One may even argue that skilled performance is its own reward and per se does not need any other reward to reinforce that behaviour!

In conclusion, it must be pointed out that a selfless leadership based organisation does not completely shun individualism. In fact, it celebrates individualism in a different manner — through the freedom it offers to its members to creatively express themselves towards the accomplishment of outcomes.All it does though is to check individualism that is expressed in the desire to possess greater control and power.

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Organizations as fulfilment engines

2010-05-19T07:57:00.000+05:30

My latest piece for The Hindu Business Line - Organizations as fulfilment engines
Full text follows:

What is the true purpose of an organisation? Is it merely the creation of wealth, or must there be a higher purpose to it? The East may have some answers to this question.Indian culture, as a result of its philosophical foundations in Vedic traditions, has never eschewed wealth. However, it has repeatedly stressed that the real purpose of life is a higher fulfilment whose end goal is self-realisation.Thus, material wealth of any form cannot become the end of any enterprise or human life. It may certainly be one of the outcomes, but is not the central purpose.Our institutions in all spheres - be it business, education or Government - seem to be losing sight of the higher purpose of their existence and have increasingly started viewing themselves as a means to an end. What then could be the higher purpose that an institution must seek to address itself to?

While there could be many ways of looking at this issue, one possible answer is that the reason for the existence of any institution is to provide an arena for fulfilment for its end-users (customers) and constituents (employees and other stakeholders).What might such a fulfilment-centred organisation look like across these two dimensions of external and internal stakeholders?

CUSTOMER FULFILMENT
The big question here is - which customer purpose is this organisation trying to fulfil? Unfortunately, the industrial era mindset is one of viewing customers as being no more than `wallets' waiting to be tapped. This is not to suggest that such firms are unethical - they are only responding to shareholder and investor expectations by behaving in a manner that only focuses on financial goals.Additionally, given the complexity of large organisations and the degrees of separation between the producers and end-consumers, it is no surprise that organisations view customers as abstractions.

The post-industrial world needs to view customers and their needs in the light of purpose fulfilment. Every customer is essentially seeking fulfilment of some sort through the consumption of goods and services. This fulfilment could be at a basic level of survival, or at the highest level of self-actualisation.

What if a business organisation were to align itself to this hierarchy of needs and claim as its mission the goal of raising the customer to higher levels of fulfilment? This may mean the creation of increasingly sophisticated products for which there may not be a market at the moment. The exact opposite of this is seen in many privately- owned electronic news media outlets. In the interest of `what sells', these outlets cater to the lowest in their `customers' instead of raising the bar to challenge their customers to evolve. They need to realise that producers of goods and services have a moral responsibility towards customers. In fact, this is a far higher form of corporate social responsibility than the contribution of a share of profits towards social causes.

THE INTERNAL PERSPECTIVE
Within the organisation two axes of fulfilment must be clearly defined - the first is the fulfilment of customers through the work done by a worker, and second is the fulfilment of the worker himself, and the two reinforce each other. However, as pointed out earlier, the distance from the actual customer, and the abstract way in which tasks are parcelled out means that the average worker no longer feels connected to the customer's purpose or even his own purpose.The way out of this alienation is to erase the boundaries between the firm and its customers, and allow customers to `infiltrate' with their views and allow these to actively influence corporate strategy.

The second dimension i.e. the worker's own fulfilment. This involves a systemic reevaluation of how careers are viewed from the traditional give-and-take transactional model to a fulfilment-oriented model. In the latter model, a service mindset (seva) will be very important. Seva, in the Vedic/ karma yoga context, is a work offered without any anticipation of reward, because the work itself is the reward in that it offers an opportunity to expand oneself from one's narrow selfish ego, towards a greater humanity.While this may seem like lofty idealism, it is easy to see its practical function. Activities performed without anticipation or anxiety for future rewards must necessarily bring greater focus to the work at hand, and hence, a greater quality in the outcome, as well as greater fulfilment.

In conclusion, India is well placed due to its unique cultural and historical context to bring alive the vision of fulfilment-centric organisations. The question then is whether we will choose to replicate the path taken by the West and its attendant pitfalls, or will we at some point integrate the best of the East with the West.

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Organizational memory and change

2010-03-23T20:42:00.001+05:30

My latest column for The Hindu Business Line - Organizational memory and change. Full text follows.

Memory plays an important role in a human being's tendency to change. As a person experiences more, he creates more memories and as a result becomes a product of his memories.In a similar manner, organisations too have memories which are essentially the sum total of experiences of the current members. While these collections of memories or knowledge are certainly useful in building and scaling expertise contained within the organisation, they often become impediments to change.Such organisations find themselves with a ‘culture' that is unsupportive to change and prefers old habits that are unproductive and safe. The only exceptions are tipping point situations where the cost of holding on to memories becomes far greater than the benefits of change.In the face of such situations, some organisations finally reinvent themselves, while others just become extinct or fade away.Another point to be considered is that even in such extreme situations the change process is designed in a top-down way, and thus there is an inevitable resistance through the levels within the organisation, making it all the more difficult to create change when it is most needed.

Designing organisations for change
The question then is whether change can actually be designed to occur well before such extreme situations. The best way to go about achieving this would be the creation of decentralised change protocols at the micro level ‘sub-systems' within the organisational system. This is because the idea of change is closely linked to the idea of ‘spontaneity', or the ability to respond to a situation without stopping to consider the past (memories) or future.It can easily be observed that within sub-systems, the ability to be spontaneous is far higher than within a complex system as a whole. This is because sub-systems have far fewer moving parts, and as a result are able to quickly change to meet new demands. How then can an organisation be designed in such a way that its smaller sub-systems embrace change?

Decentralisation & capacity building
Decentralisation: As organisations get larger, there is a strong tendency to centralise all protocols for change. This leads to tedious bureaucratic processes of ‘approvals' and over-analysis which inevitably quell not just the proposed change initiative but reduce the tendency for future such attempts.Thus, the first key is to decentralise the origination and execution of change initiatives almost entirely to the sub-systems. There would still be ‘rules' to be followed, but these would be known in advance.

Building capacity for change:
The immediate criticism of the first suggestion is that too much decentralisation may lead to excessive risk-taking or poorly thought out initiatives that fail to take into account the larger impact of the changes in the sub-system on the system as a whole.Thus, the second key is to actually build capacity within the sub-systems so that there is a deep understanding of how changes within the sub-system impact different parts of the larger system, as well as the ‘whole' of the system. This capacity could be built into individual change agents within each sub-system.

Emergent change
From the foregoing discussion it may appear that the entire process of change can only be autonomous at the micro level, and not at the macro level as a whole. However, one may argue that the best change for any organisation is the sum total of the spontaneous changes in all its sub-systems.

In other words, if the mechanisms for rapid, spontaneous change are embedded into sub-systems, there is no need to worry about the system as a whole. It will automatically reach the place where it needs to be.
Thus, change at the level of a system is essentially an emergent property of change at the levels of the sub-systems. As such, there may be no need to be too concerned about where the system as a whole is headed as long as the sub-systems have the required capacity to design and execute change. In such a situation, the only ‘central' role in the organisation as far as change initiatives are concerned would be the design of efficient and simple change protocols for the sub-systems, as well as capacity building to understand the impact of sub-system change on the system as a whole.

In summary, any process of change is dependant on the capacity of an organisation to temporarily discard its memories in favour of spontaneous responses to the environment. However, in most organisations, particularly the large ones, this process can happen easily only at the sub-system level. The key then is to ensure that there is adequate intelligence built into all these smaller units that make up the organisation, while believing that the sub-systems' process of change will automatically result in the evolution of the system as a whole for the better.
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Leadership phases in society

2010-01-26T19:12:00.000+05:30

My latest column for The Hindu Business Line: Leadership phases in society .Full text follows:
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Stagnation is the bane of any social order in that it disallows a full expression of society's potential.
Leadership is the lever through which society casts itself out of periods of stagnation towards periods of possibility. There appear to be essentially three phases of leadership in society (or for that matter any institution or organisation). These three phases represent three states of being or collective will, and not necessarily a sequence.

Expression:
Capturing the mood of the times The first phase is the formation of a strong collective mood due to various circumstances. This leads to the arrival of an individual who effectively expresses the current state of the collective consciousness, and is thus elevated to a leadership role. Political history is rife with examples of such leaders who brilliantly capture a prevailing mood to their own advantage. Such leaders may later be viewed harshly by history, but the fact remains that the collective will, at least temporarily, was in sync with the aspirations of these leaders. Thus in this first phase, the leader is very much a part of the collective, and a representative of its wishes. This phase may be termed as an `Expression Phase'.

Evolution:
Arrival of a transformational leader The second phase of leadership in society occurs with the arrival of a transformational leader. This leader's views may often not even match the will of the collective on a number of issues. He may craft a completely new agenda or vision for the future yet unforeseen. Yet, the persuasiveness, and the moral character of such a leader may cause the collective to suspend its current way of looking at things in favour of a completely new future. So, in this second phase, the leader is almost outside the collective, and yet successfully charts a new path for it. This phase may be termed as an `Evolutionary Phase'.

Revolution:
Collapse of old orders The third phase of leadership is a complete erosion of boundaries between the leader and the collective. This tends to occur in certain mass movements where the objectives to be accomplished become so ingrained in the collective that the leader may just become a figurehead, while the collective marches on, often crafting strategies and tactics on the go. This phase is based on a sense of distributed ownership, and is also characterised by a breakdown of existing norms and institutions. This phase may be called as a `Revolutionary Phase'.

The entire process may be quite long drawn, and when finally the goal is accomplished, society reverts to the first phase, wherein a leader is selected who will preserve and maintain the current will of the collective. TRINITY Interestingly, the three phases have a close relationship to the Indian idea of cycles of creation and destruction. The triumvirate of Brahma, Vishnu and Shiva represent the tendencies to create, preserve and destroy at a cosmic level. Thus, the evolutionary phase of leadership represents a creative era in which society reinvents itself. The preservation phase represents an era when society maintains the status quo. The revolutionary phase represents a destructive period when all old ideals and institutions may be cast aside in favour of a desired future state, sometimes without even knowing the precise contours of the future state.

It is interesting to note that in the first two phases, leaders continue to operate within the boundaries of existing institutions, while in the third phase the desire for rapid change far exceeds the need to preserve and work with existing institutions. Also in the first phase, there is a fairly precise articulation of how the future looks, while in the last there is only an articulation of how the future must not look. In sum, viewing leadership through the model of these phases enables us to get beyond the current personality-centric or heroic definition of leadership towards a new definition that is based on the complex relationship between what society `needs' at a given point of time and how it chooses to accomplish the same through a tool called the leader.

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Strategic Obsolescence

2009-12-08T18:27:00.000+05:30

My latest column for The Hindu Business Line - Strategic Obsolescence. Full text follows:

A major cause of the failure of most organisations is their inability to foresee their own obsolescence and remaining stuck in their old ways of doing things. In this article I argue that every organisation must actively plan for its own obsolescence, and work in parallel on future opportunities. In other words, becoming obsolete should be part of the core strategy of a firm.

This entails taking a flexible view on the core purpose of the organisation. Not surprisingly, most firms tend to ignore the possibility of extinction until it’s too late. This is because most of firms’ energies are involved in improving upon past metrics, and very less energy is devoted to the future that is emerging.

Studies show that the average Fortune 500 company only exists for about 40 years. This means that even the largest, most well-managed organisations, are woefully short on vision when it comes to evolving with the marketplace.

Model of innovation

The accompanying graphic demonstrates the implications of strategic obsolescence. Every new industry begins with an early wave of innovators or market creators who create a new market.

First movers have the freedom of pricing and tend to use this to their advantage by skimming the market. As more and more players get in, efficiencies increase and prices fall further as a result. At one point, the market is saturated and prices and efficiencies plateau out. At this point, in most industries the incumbents begin looking for growth by setting up subsidiaries in new markets, and doing more of the same.

Meanwhile, some new innovator may introduce a disruptive product that may act as a perfect substitute to the current product and still be just as competitive on all dimensions. Alternatively, another innovator may be working in a direction where future Government policies are headed (example Green Energy). This is when large, bulky incumbents are taken by surprise and end up facing the possibility of extinction.

A company that invests in its own ‘strategic obsolescence’ will start aggressively investing for the future at every downward slope of the Z depicted in the graphic (similar to the S-curve concept commonly used to depict innovation). Incidentally, the downward slope of the Z also indicates a transition from innovative product to commodity.

Examples

A number of industries demonstrate a lack of planning towards strategic obsolescence. American automakers who have always resisted green/ hybrid vehicles may have well found themselves at the cusp of a lucrative new opportunity had they invested in that opportunity many years back. Instead, they face imminent bankruptcies.

Similarly, the conflict between traditional electric utility companies and new green technologies is likely to play out in a similar manner as Governments invest in and incentivise these new technologies, while the existing players may lobby for their own self-preservation.

A lot of technology companies understand this idea quite well because the rate of obsolescence of technological products is far higher than any other sector (the ‘Z’ in their case would be more like a steep step).These firms have entrepreneurial teams that are constantly working on determining what the next wave is likely to be, and iterating new innovations to meet the challenges of the future.

An alternative approach seen today is the acquisition of early stage ventures that are already working on disruptive ideas, and incubating those ideas (even if they turn out to be failures in the future).While it may appear counter-intuitive to invest in one’s own obsolescence, it must be kept in mind that other firms working on disruptive innovations are already doing so. The options then are to either invest for obsolescence or face unexpected extinction.

In conclusion, it is important to view extinction as a given and thus not get too attached to the idea of a core product line that remains static, and oblivious to the changes in the environment. In other words, the firm not only ‘exists’, but is actually a living, breathing entity that is constantly ‘becoming’.

Being indicates status quo, while becoming indicates a vibrant, creative outlook that is open to an ever-changing environment.

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From Alienation to Meaning

2009-10-26T14:07:00.001+05:30

My latest column for The Hindu Business Line - From Alienation to Meaning . Full text follows.

It might sound like an unlikely place to find insights into human potential pertaining to the modern world, but Marx’s ideas on alienation continue to be relevant even in the world of free markets. It appears that the long journey spanning centuries from a factory-centred economy to a knowledge-based one hasn’t quite seen a proportional change in the way human capital is viewed. In this article, an attempt is made to bridge this gap by loo king at two concepts which mark the ends of the spectrum — Alienation and Meaning.

Marx identifies four sources of alienation that ‘workers’ in a capitalistic society feel.

The first form of alienation is that between the worker and the product of his labour, as he has no rights to it after production.
The second is between the worker and the process of production — in other words, predictable, well-defined transactions are the order of the day.
The third is alienation between fellow human beings as a result of a class structure or hierarchy that emerges in any organised structure like this.
The fourth source of alienation is alienation from the worker’s human essence, whereby all possibility of creativity and spontaneity are stripped away from a human being.

An important difference between humans and other animals is in the way they interact with nature — while animals interact in a static way to the external world, humans are endowed with consciousness and imagination which allows them the faculty of being able to visualise new future possibilities first in their minds, and then in the world outside.

Of course, all these sources of alienation were originally described in the context of blue-collar or factory work which was the dominant kind of labour in those days. However, quite surprisingly, the entire concept seems equally applicable to the modern world where the ‘worker’ is engaged primarily in white-collar work.
It’s quite astounding that the way work is viewed and structured has undergone so little updating in all these years. It appears that only a few token steps have been taken in the direction of moving away from alienation, without a clear articulation of where the destination is.

In this article, I argue that the ideological opposite of alienation is meaning, and that should be the direction towards which all future notions of work must converge.

The meaning infrastructure
A post-alienation world view would be based on the idea of ‘meaning’. All the four causes of alienation identified above would need to be addressed. The journey from alienation to meaning would need to be accompanied by the creation of appropriate infrastructure. This infrastructure would consist of four key pillars — each mapped to a source of alienation.

The first pillar would be the creation of significant distributed ownership of equity across the firm. This would mean far greater ownership than the token ESOPs that exist in the market place today. Currently, there is an under-estimation of the value of human capital relative to financial capital. However, it is encouraging to see that a large number of firms these days adopt some form of compensation in the form of equity.
The second key aspect of this new infrastructure would be a systematic extinction of ‘job descriptions’, and an emergence of ‘responsibility descriptions’. A responsibility description outlines outcomes, and not behaviours. How outcomes are accomplished is left to the imagination of the employee.

The third element of the infrastructure is the creation of flatter hierarchies that eliminates the needless creation of layers or artificial ‘career paths’ where each step tends to signify vintage rather than genuine upgrade of skills. Again, this concept is already widely in use, particularly in new ventures without the legacy of large, pre-existing hierarchies.

The fourth pillar is the recognition of innovation and creativity as key sources of value addition from the workforce. Currently, the perception of value addition is restricted to increase in revenues and reduction in costs. Innovation is seen as a response reserved only for crisis situations, as opposed to an ongoing process of articulating fresh responses to the environment.

Of course, there are many ways to create meaning, and this is just an indicative set of ideas.
An important quality of the modern ‘worker’ (or indeed human beings in general) is the belief in one’s own uniqueness. This belief translates into a need to create customised experiences for oneself in all dimensions of one’s life. It’s time society updated the way it views work to reflect this desire.

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Previously published articles:

Telecom pricing

2009-10-13T10:39:00.002+05:30

With the price wars in telecom intensifying each day in what is already the cheapest telecom market in the world, I think the logical next step in pricing innovation will be something like this: Pay Rs. X per month, and use your phone as much as you want.

I think this will happen in the next 12 months. This way the telecom companies will be able to protect or guarantee their Average Revenue Per User even if its at a low level. Of course, price wars will start on the monthly amount as well, and telecom companies will need to innovate further. Also, within the next five years, VOIP may also become a viable alternative to traditional telephony. Interesting times ahead.

Three skills

2009-10-12T20:01:00.002+05:30

Seth Godin has an interesting post on what he believes to be the three skill areas that ensure you are in demand as an employee:

Sales
Additive effort (someone who brings in efficiencies)
Initiation (someone who can initiate action... or start something transformational)

I think the three skill areas can be re-articulated as follows:

Someone who can increase revenue
Someone who can reduce cost
Someone who can bring creative ideas to life or create new wealth creating assets.

Seth rightly points out that the last skill is difficult to value. The first two are directly P&L oriented, while the last one is more fuzzy and takes time to enter the P&L, and is also prone to failure i.e. ( a lot of entrepreneurial initiatives tend to fail or fizzle out) .

Story of Stuff

2009-10-07T10:39:00.001+05:30

A really fascinating presentation - Link

In short, it argues that our entire economy and our self worth is now linked to the idea of being consumers who will infinitely keep the engine of production going, without being mindful of the destruction that this is causing to the environment, as well as the harmful effects on society as a whole.

I think the future lies in sustainable local economies, where most of the basic 'stuff' we need is produced in our local economy or neighbourhood, consumed locally, and then disposed and recycled. If something can't be recycled or disposed harmlessly, it should not be produced in the first place. Also the single biggest piece in this consumption engine is Energy, and hence the sooner we move to green energy the better.

It seems like change can happen more easily in developing and poor economies which haven't yet gone through the entire cycle of increasing incomes and consumption. On the contrary, we have India arguing at climate change forums that developing countries should be spared the burden of contributing to reduced carbon footprints etc. as all that would come at the cost of development. In other words, we are arguing that we will first replicate what the developed economies did, commit the same mistakes, and only then be held accountable for any damage we may caused in the process!

Brokerage Comparison - ICICI Direct, SBI, HDFC Securities etc

2009-09-19T13:13:00.008+05:30

Out of curiosity I did a comparison of brokerages across various providers of trading and demat accounts in India. Here are the findings:

For a delivery based volume of less than Rs. 50 Lakhs per quarter, here are the brokerages across some leading providers of trading and demat accounts.

ICICI Direct =fixed plan of 0.50%, (and a variable plan of 0.25-0.75% which is beneficial only for large investors)

HDFC Securities = 0.50%
SBI Demat = 0.50%
Reliance Money = 0.45%
Geojit BNP Paribas = 0.25% to 0.30%
Edelweiss = 0.30% to 0.50%
Fullerton Securities = Upto 0.50% on pre-paid plans
Angel broking = 0.35%

[Readers may drop in brokerage charges for other service providers and I will update the post accordingly.]

Life Settlements - The next sub-prime crisis

2009-09-06T20:24:00.002+05:30

Undeterred by the mess that it created with securitization of mortgages (the Subprime crisis), Wall Street is now working on a new kind of securitization, that of life insurance policies.

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

... And investors are not interested in healthy people’s policies because they would have to pay those premiums for too long, reducing profits on the investment...

More here

Some clear flaws that could make this the next bubble are:

1. With better health care facilities and medical research, people will end up living longer thereby reducing returns on these 'life settlements' for investors like banks.

2. Some currently fatal diseases may soon have cures, causing the value of this new product to plummet.

3. A large market may emerge where people buy insurance policies just to 'flip out' and sell it to a bank. This is exactly what happened with real estate mortgages, where a whole bunch of people bought houses simply hoping to flip out as the underlying value of their homes went up.

4. Life insurance companies will blow up due to larger payouts being paid as a result of a greater percentage of policies NOT lapsing (a lot of long term policies lapse because the insured / dependents may no longer need the benefits).

5. Life insurance premiums will go up, implying that more and more people who actually need insurance will no longer cover themselves. As it is the poor are already on the fringes of the mainstream financial market.

6. The best returns on this investment product will be gained when the insured person dies sooner than later - there may well be some strange consequences to this.

7. A big market would develop for sub-prime policies (policies of people who are likely to die sooner). This product would be in the highest demand. Some rating agency will slap a AAA rating on it. Either 1. or 2. listed above will cause a major blowout.

The article linked to above implies that Wall Street is going ahead full steam on this new product. Awesome.

Prospect Theory

2009-08-13T20:55:00.001+05:30

Check out this old post on prospect theory.

Netflix culture and values

2009-08-11T10:43:00.005+05:30

Here's an interesting internal presentation from Netflix on their company culture and values.

Among other things, the presentation argues that in order to preserve a high level of freedom as the organization transitions from start up mode to large organization mode, the organization will actually hire more and more star performers. In other words, you maintain freedom by hiring more responsible people who are good performers. I don't see how that is practical. A ten employee company can easily hire 2-3 stars and increase head count by 20-30%. However, a 1000 employee company would need to find 200-300 stars in the market place in order to maintain its star ratio as it were. This seems quite hard to do.

Culture

View more presentations from reed2001.

New Look

2009-08-08T16:03:00.002+05:30

Testing a brand new visual identity and template for Management by Matrices.

Argentina's peculiar coin shortage

2009-07-20T11:25:00.001+05:30

For well over a year now, small change has been hard to come by there. Stores hang “No Coins” signs in their windows, and offer candies instead of change. Taxi-drivers round up—or down—to avoid giving up precious coins, while smaller merchants sometimes turn away business if you have only bills to offer them. The government has fined banks thousands of pesos for refusing to hand over coins, and, in October, the city’s subways became temporarily free when the booths ran short of change. For the average Bonaerense, everyday transactions now entail a complicated calculation of where coins can be acquired and when they will be needed.

More here

Tata Docomo's launch

2009-07-09T19:22:00.004+05:30

Tata Docomo's GSM service is being launched in a very Web 2.0 way, with a Twitter page ,Youtube Channel , and a very 'social' website with user comments, page ratings, share links for facebook etc. I see a very strong brand in the making - one that could challenge Vodafone. The pricing innovation of having a 1 second pulse rate is also a first. Of course, the actual network coverage and customer service will be the final decider, but all the preceding steps have been executed quite well.

Incidentally, Docomo has a strong R&D focus in Japan, which makes it the only player that is creating new technologies as opposed to just using existing ones. That's a fantastic source of long term competitive advantage in the face of 'commoditization' of telephony.

Bing Review: Microsoft’s first web winner

2009-06-02T22:27:00.003+05:30

For a change Microsoft gets it right with Bing. Bing clearly wins over Google on the following counts:

1. Visual Appeal- reminiscent of Ask.com’s earlier avatar.
2. Speed – it’s just as fast as google.
3. Clean categorization of ‘Related searches’, using Powerset’s technology (I presume)
4. A preview feature that helps you read content from the target site before clicking.
5. An overall philosophy focused on getting as much of the information you need from the search engine itself before actually clicking and going to a site, thereby making it a decision engine.
6. A spectacularly clean integration of Travel and Shopping into the search engine in a manner never seen before, including the special Bing Cashback discounts that you can avail by clicking through and buying products via Bing search results. (This feature is available on the US version of the site.)
7. Finally, Bing looks like it was designed for ‘real’ users, while in retrospect Google looks like it was designed more for geeks than regular users.

In short, Microsoft has surprisingly achieved the next frontier in search. Google may well outdo it in the future, but Microsoft has set the agenda for sure.

Insight Institutionalization

2009-05-11T11:32:00.005+05:30

My latest article for The Hindu Business Line appears here: Weaving Insight into an Organization's DNA. Full text follows.

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In Meno, one of the dialogues written by Plato, Socrates contends that all knowledge pre-exists in an individual; all he needs is the ability to find out what is already inside him. It appears that Socrates was referring to the ‘insight’ or ‘inspiration’ dimension to the creation of new knowledge.

A lot of times, new insights appear to us in a flash, out of no logical process based on facts. This statement holds true today too, as a significant portion of new knowledge creation is often based first on insight and subsequently on ‘finding evidence’ to support the conclusion.

Whatever the truth of this assertion, it is hard not to see that insight/ inspiration are key tools for knowledge creation. However, these two dimensions find little place in modern organisations.

Focus on facts

For long, fact-based approaches have assumed a prime position in management thinking. One reason for this could be that facts are not subjective and hence leaders may view facts as a risk-free way to push through initiatives, make decisions and find solutions to problems. However, it is increasingly becoming clear that decision making is a far more complex process, where the whole is often greater than the sum of the parts.

Systems Thinking is a form of analysis in which problems are solved not just by understanding a component or part of a system, but rather by looking at its inter-relationships with the ‘whole’. Such an analysis would clearly need more than just an analysis of facts; it would require inputs from more nebulous things like ‘inspiration’ and ‘insight’.

In the model depicted in the accompanying graphic, an attempt is made to understand how ‘insight’ is a function of many parameters — facts being only one of them. Data in the external world becomes information through its organising. Analysis of this information leads to partial insight. This is fulfilled through further contributions from past experiences of the decision maker, as well as the creative force of inspiration.

In the absence of experience and inspiration, it may well be argued that all decision making could be entirely done by machines and there is no need for human intervention. Moving on, codified insight becomes knowledge, which when acted upon becomes a practice. Practice in turn generates further data and so on.

Institutionalising insight

Unfortunately, most organisations do not invest in institutionalising the insight process. This means that ‘best practices’ may be discovered accidentally and not be scaled up to the entire system. Also, people end up sticking to existing norms, processes and approval mechanisms without questioning whether or not things could be any better. Here are some thoughts on how insight could be institutionalised.

Acceptance of failure: The first step is the creation of a culture that is extremely accepting of failure. It is not hard to see that the ability to see new creative possibilities is closely linked to a tolerant view of failure.

Investing in cross-functional skills: Organisations rarely invest in the creation of cross-functional skills amongst managers. One of the biggest threats to insight realisation is ‘silo-based’ thinking, where individual divisions seek to maximise their own self-interest, leading to highly non-cooperative political environments. In such environments, people tend to focus only on their ‘parts’ without realising that the ‘whole’ is greater than the sum of the parts.

For instance, most multi-product companies routinely fail in implementing effective cross-selling programmes because of this very reason. Once an investment is made in the creation of individuals who appreciate the ‘whole’, the above problems would diminish.

Hubs for insight realisation: To close the gap between insight and implementation, it would help to have hubs or teams that focus exclusively on realisation of insight in the real world.This would be done in the form of quick pilots, which if successful would scale up to become new practices.Often, line managers do not have the bandwidth to focus exclusively on such initiatives as they would come in the way of fulfilment of regular responsibilities or achievement metrics.

The role of new insight and knowledge creation in an organisation cannot be underestimated.Today, rapid advances in technology mean that the duration for which any organisation can hold on to a ‘competitive advantage’ is severely compressed.This implies that institutionalising insight is key to sustainability through the creation of new sources of competitive advantage.Hence, it is important to respect the role of insight and also understand that its source lies not just in fact-based analysis.

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Older columns:

Service before Profit

2009-02-09T12:43:00.004+05:30

My latest opinion piece for The Hindu Business Line appears here: Service before Profit
Full text follows:

We live in a world where the simple greed of private enterprise has led to a large scale economic recession. Yet, there is no serious discourse happening on whether things have fundamentally changed in the manner in which business is to be conducted in the future. As Governments announce bailout packages of unheard of proportions, it is abundantly clear that we are witness to an extraordinary period of ‘Keynesian’ State intervention in private enterprises and t he economy. This is as good a time as any to reflect on the fundamental motivations that drive business organisations and the role they need to be playing in the post-Industrial Revolution era. In fact, this period of time may well mark the last bridge between industrial era ideas of enterprise and the knowledge economy.

The Industrial Revolution

The Industrial Revolution was brought about by inventions like the steam engine and the invention of other technologies that enabled the mass production of goods at centralised locations and their subsequent distribution to markets. It may be argued that the seeds of a consumerist society were first sown at this time. Clearly, if you had the technologies at hand to efficiently mass produce goods, then it is only logical that at some point you would like to sell things to people who don’t need those things in order to keep the revenues coming in. Additionally, if shareholders demand growth in profits above all other considerations, the vicious circle becomes complete. In other words, all incentives point towards the creation of short-term bubbles in the quest for short-term gains.

Service Oriented Organisation

The post-industrial world clearly needs a new definition of what a business organisation exists for, particularly because service- and knowledge-based industries assume centre stage in it. It could be argued that this ‘new’ definition needs to place the notion of ‘service’ at its very heart. That definition could be as follows: ‘A structured social and economic entity designed for the efficient and scalable delivery of service to society in a financially and environmentally sustainable manner.’

It is important to note that this definition of an organisation does not include the word profit. Instead, it emphasises that a business needs to be viable both financially and environmentally. Man’s conquering of nature was an important characteristic of the Industrial Revolution, but the problems that the world faces today (climate change, for one) makes it clear that there is a need to get back in synch with nature.

In some ways, the definition also aims to integrate the western protestant work ethic (which some say helped achieve the Industrial Revolution), with the eastern notion of work as an offering (or service) to a higher power with no anticipation of results. Eastern philosophies pay more attention to the actual process of work and the attitude towards work as opposed to the results it produces. In our current context that means focussing on the everyday act of service to a customer as opposed to things like ‘ticket size’.

Implications of Service-Oriented Organisations

There are many implications arising out of using service as the primary metric of success. The first impact is on the notion of customer segmentation. Customer segmentation would now refer to the addressable group of customers who need a particular product or service, not necessarily those who can afford to buy it. Only when there is a genuine need can you genuinely ‘serve’. Everything else is mis-selling.

Secondly, it impacts the entire notion of pricing. Typically, businesses use pricing itself as a ‘strategy’, whereby a price is set on the basis of the value perceived by a customer as opposed to being based on the actual value of the product. When the former strategy is used, pricing becomes all about manipulation of customer perception, value through branding and positioning. In the new order, marketing and communication would centre around the communication of value and not the artificial creation of value.

Thirdly, shareholders would be rewarded more through dividends and less through capital gains. In other words, the excessive obsession with growth and diversification that characterises current industry would make way for a greater emphasis on quality of service and retention of customers while focussing on core competences. Of course, this does not apply to early stage businesses that are yet to scale up. Here, we are referring primarily to the large, well established players in any industry.

Finally, there would be an impact on human capital. It is not difficult to surmise that employees in a service-oriented organisation are likely to be more loyal and satisfied, and contribute more, simply because serving other people is far more meaningful than serving only a ‘bottom line’. It is easy to witness this phenomenon in public sector companies, which have a larger goal of ‘nation building’ that goes beyond mere profit.

None of these implications are beyond imagination. In fact, most successful organisations already use similar principles in various ways. Finally, it must be re-emphasised that a serviced oriented-organisation does not shun profits, but rather has its own way of looking at profits as part of a larger scope of end results and not the sole metric of achievement.

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Previously published pieces:

When work is invisible, so are its satisfactions

2009-01-06T21:11:00.001+05:30

Pretty interesting perspective on how the intangible nature of the work done by knowledge workers leaves them dis-satisfied at the end of it : link

The Free sourcing ecosystem

2008-12-08T10:49:00.002+05:30

My latest column for The Hindu Business Line appears today - The Free sourcing ecosystem
Full text follows:
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The first wave of outsourcing was enabled by major trends such as the rapid advances in information technology and communication, opening up of national economies and availability of skilled labour markets in these countries. Initially, outsourcing was viewed as a way to ship ‘non core’ activities out of the parent organisation to specialists offering the same service at a low cost. However, a study of the competitive advantages possessed by players in any indu stry would reveal that the notion of ‘core’ and ‘non core’ is gradually blurring.

While some players possess advantages in product design, others do so in distribution and some others in customer service. It is not difficult to imagine a future in which enterprises focus only on one kind of specialised activity in which they possess competitive advantages over other players and do not participate in other activities. Such an ecosystem would consist of highly specialised firms that come together in various configurations to innovate, produce and distribute goods and services to customers. What kinds of players would such an ecosystem of enterprises consist of?

Artists — Product and Design organisations: These would be knowledge-oriented enterprises that thrive on the study and creation of knowledge. Their primary function would be in the arena of product design and research and development. The revenue source for these companies would be the creation of intellectual property which would in turn lead to licensing opportunities. This model is not unlike that of an artist who creates an original body of work for which he can earn royalties over an extended period of time.

Craftsmen — Production companies: These are companies and individuals that are engaged in the act of actually producing goods and services. In other words, the role they perform is that of a craftsman or artisan who mass produces objects of a given design. The specialised skill they bring to the table is the ability to efficiently mass-produce products through appropriate use of resources and technologies. Additionally, these entities may also add value through product customisations and tweaks that build on existing intellectual property. The end product would either carry the brand of the production company or that of the product and design company.

Socialisers — Distribution companies: The role of socialisers is primarily to ensure that the output of the craftsmen reaches society through marketplaces. These are companies with distribution infrastructure that may support multiple products of the same industry or different industries. The underlying assumption is that in the end, the customer has the final word on product choice. The role of the socialiser is to ensure availability of all options. The revenue stream for these entities would be in the form of commissions from various production companies they serve.

Fulfillment providers — Service companies: Service companies would engage primarily in the arena of customer fulfilment and after-sales support. Once again, these companies may operate across products and across industries. Outsourced call centres are an example of entities that perform this function today. These entities benefit from economies of scale and are hence able to offer highly competitive prices to the production companies.

End customer (Co-creators and Evangelists): The end-customer is also an important part of the product life cycle. The first role he plays is that of an influencer through evangelism of good products. The second role he plays is that of a co-creator of new products. The views of the end-customer directly affect future design of new products. In this way, the end-customer is closely linked to the design companies and has an active say in the kind of products and services he would want to use.

For each industry, the combination of players that would come into play in this ecosystem would be different. Let’s look at how a model like this fits into an industry like asset management (mutual funds and so on).

In the ‘free sourcing ecosystem’, the ‘artist’ role would be performed by companies that purely specialise in research and creation of portfolios of instruments to invest in. There would be no ‘craftsmen’ because the product in this case is not a tangible, physical one. The ‘socialisers’ would be the various companies — like online trading portals, distribution companies and so on — that distribute these investment products . The ‘fulfilment providers’ would consist of BPOs that handle operations and after-sales support. The ‘end customer’ would be a co-creator whose inputs would influence future product design.

Depending on the industry under consideration, some players in the ecosystem may be absent. However, the broader idea is of a marketplace of specialised enterprises that freely come together in various configurations and freely separate and plug into configurations with other enterprises if things do not work to mutual benefit. It is not difficult to see that an ecosystem like this will ensure that there are minimal inefficiencies in the entire value chain from product innovation to product consumption.

Older columns are as follows:

Fixing the subprime mess

2008-10-24T13:33:00.002+05:30

Firstly, I'm no expert on this subject, but here's something I've been thinking of as a possible solution to the crisis.

Make all mortgage payments of existing homeowners in the US to be 100% tax free for a period of say 5 years. This would make the net cost of payments lower for the end customer and hopefully reduce foreclosure rates. It would also provide an incentive to households to divert as much of their income as possible to mortgage payments (after all they get to own their houses as well as pay less tax to the government). This in turn may help housing prices to stabilize instead of going down, and all those potentially worthless mortgage backed securities may finally have some value.

(PS: This is just an idea that popped into my head - haven't quite done enough research on the financial crisis to verify if this will work)

Update:
Very interesting news item on the CNBC site on the increasing rate of foreclosures in the US.
McCain wants the government to actually buy out mortgages.
"The administration is not doing what I think they should do, and that's go in and buy out these bad mortgages, give people mortgages they can afford, stabilize home values and start them back up again," McCain said in a live interview with his vice presidential running mate, Sarah Palin.

It looks like McCain is approaching this problem from the right direction in so far as recognizing that a possible solution likes in 'bailing' out end customers which sets a virtuous cycle in motion, as opposed to just bailing out financial institutions.

Satirical video on the markets

2008-10-22T20:05:00.001+05:30

All about the markets, investment banking and the sub-prime crisis.

Absence of 'Yuppie' centered entertainment

2008-10-15T12:55:00.004+05:30

Aadisht has a very good categorization of the rich, and a good follow up post on the fact that there is no Yuppie programming on TV and very little in the movies. In brief, he proposes the existence 3 kinds of rich people:

Yuppies - the educated MBA types with EMIs to pay and a monthly pay check
Lalas - Owners of big family businesses
Hippies - Creative types like actors etc.

Using the categorization above, I developed a hypothesis for the absence of Yuppie content in the entertainment sphere.

Why Hindi movies/ soaps are centered around Lalas and Hippies:

The first reason is that frankly Yuppies don't lend themselves to great stories of romance and adventure. For that you need Hippies or Lalas who don't have to worry about making a living. I mean two characters sending each other mails in Outlook can't quite hold an audience's attention (even if the audience is Yuppie).

2:
The hindi film industry is completely run by Lalas, Hippies, sons of Lalas (Karan Johar) and sons of hippies (Abhishek Bachchan). Now when a lala or a hippie writes a script it will inevitably be about Lalas and Hippies. For them Yuppies are some strange species that they see through the tinted windows of their E-Classes. You know, the strange species that drives red Maruti Swifts and follows traffic rules.

Soaps are also written and produced by rustic hippies and lalas respectively. So no hope there.

The only hope is when Yuppies crossover to become Hippies. Eg. Nagesh Kukunoor, Chetan Bhagat’s movie about the Call center etc.

My prediction is that pretty soon quite a few yuppies will make hippie transitions once they find out that corporate life is meaningless and/or pile up a truck load of cash in their savings accounts. Secondly the corporate film houses will realize that the lala/hippie fare doesn’t work too great with the multiplex crowd and will start funding small budget yuppie movies (Aamir, A Wednesday etc.)

So, there is hope.

Organization Culture as an Emergent Phenomenon

2008-10-13T11:56:00.001+05:30

My latest column for The Hindu Business Line is entitled Organization Culture as an Emergent Phenomenon.

The full text follows:

Emergence is a phenomenon that has been studied in many disciplines and it refers to the way complex systems and patterns arise out of a multiplicity of relatively simple interactions with no central coordination. Emergence is seen in systems such as nature, stock markets, traffic patterns and organisations. For instance, an ant hill is an emergent structure created by hundreds of ants, each of which is engaged in a particular kind of activity without being aware of the re sultant structure. Similarly, complex flocking patterns amongst birds actually emerge out of simple behaviours on the part of individual birds (such as trying not to collide with other birds while still being part of the flock). In other words, the emergent structure is more than just the sum of the parts. In this article I propose two ideas — first, that organisational culture is an emergent phenomenon and second, that ‘values’ are the underlying ‘simple rules’ governing culture.

An emergent reality

It is possible to view organisational culture as an emergent outcome of the countless interactions that take place between the various constituents of an organisation. Each participant is not aware of his contribution to the overall emergent culture, and behaves in an independent manner in all situations based on his own personal beliefs.

If this is the case, it would appear that it is very hard to ‘control’ what kind of culture may emerge in a given organisation as the behaviour of individuals is hard to predict. How then does one go about creating a particular kind of culture? The answer may lie in our understanding of emergent systems as being an outcome of individual agents acting on the basis of simple rules. When these rules are executed by a large number of participants, an emergent structure presents itself. Extending this to an organisational scenario, if a few simple rules were to be set that governs all interactions of an organisation’s members, the emergent reality — in this case organisational culture — can be managed to produce favourable end states.

Role of values

Most organisations already have the building blocks for this simple set of interaction rules in the form of ‘company values’. The only problem though is that company values are not designed keeping in mind their potential to influence culture. Some values tend to be based on universal morals such as ‘integrity’, while others, like ‘passion’, have no links to day-to-day behaviour.

An organisational value should ideally have two characteristics — specificity or uniqueness and linkage to behaviour. Specificity means that a value should be unique and based on the specific organisation under consideration. Secondly, values must be behaviour linked; they must clearly imply what kind of actions someone would need to perform to adhere to them. Of course, all universal values continue to operate regardless of whether or not they are an ‘official’ value. MindTree is a good example of a company with both unique as well as behaviour-linked values. Caring, learning, achieving, sharing and social responsibility are the values of this company (many surveys have rated it among the best employers).

Values-Interactions-Culture

The resulting model would be as depicted in the accompanying figure. At the heart of the model are values — these are to be very carefully determined by the leadership of the organisation and periodically reassessed. These values form the basis of countless interactions between members themselves, and between members and other stakeholders such as customers.

The resultant emergent phenomenon would be the organisational culture. In order to foster a strong link between values and actual behaviour, reward systems must be aligned to incentivise demonstration of values.

Finally, it must be recognised that well ‘designed’ values help to actualise the ‘unique goodness’ of an organisation through the creation of an enabling culture, which in turn ensures that people who intend to contribute meaningfully are not hindered in any way from doing so.

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Older columns are as follows:

The new Microsoft campaign

2008-10-01T19:21:00.002+05:30

I love the new Microsoft campaign ("I'm a PC"). It hits out beautifully at Apple's slightly elitist positioning of its products that sometimes suggests that if you are not an Apple user you aren't hip.

Changing Time

2008-09-29T00:56:00.002+05:30

My latest column for The Hindu Business Line is as follows:

Changing Time

As the Indian economy grows over the next decade or so and a predominantly young population enters the workforce, a big problem that is likely to emerge is a certain loss of meaning. The early symptoms are already visible in the form of high attrition and low employee morale and loyalty across all levels in most industries. It appears that human fulfilment would ironically face its biggest challenge from rapid economic growth and its numerous harmful side-effects. One such side-effect is the commoditisation of time.

Unsustainable bubbles

In a recent article, MIT professor Peter Senge proposes that the very notion of the Industrial Revolution is a bubble much like the dotcom bubble of a few years ago. The current climate change crisis we are facing is a fall out of this bubble, which is now in its last stages. Over a long period of time, rapid industrialisation has occurred in a manner that has been completely out of sync with nature and the costs of those actions are beginning to be borne now.

In much the same way, rapid economic growth leads to another bubble — an unhealthy relationship between people and the time they have on their hands. The people inside the bubble are led to believe that time can be spent on only two kinds of activities — either in the production of goods and services as part of the workforce or in the consumption of the very same goods and services. Needless to say, this view is completely out of sync with the way human beings are designed, as creative agents who seek fulfilment through multiple dimensions (depending on their orientation) including economic activities, community, family, art, service to society, spirituality and so on.

The leisure economy

The Leisure Economy is a book by Linda Nazareth that explores how “changing demographics, economics and generational attitudes will reshape our lives and our industries,” and how the ‘time bubble’ discussed in the previous section is headed towards its end. In the book, she proposes that as Gen X and Gen Y individuals dominate the workforce over the next few years, they will discard many old notions about work and leisure time. It is not hard to see that the cultures of companies founded by Gen X/Y entrepreneurs (like Google) is radically different from the cultures of older organisations with regard to how the workforce spends its time, as well as the manner in which a closer integration between work and other aspects of life is encouraged.

Timothy Ferriss, author of the best selling The Four Hour Work Week also makes a strong case for looking at work and leisure in a new way. Amongst other things, he advocates the idea of taking a number of ‘mini-retirements’ over the course of one’s working life as opposed to the traditional notion of retirement as one long stretch of time (of delayed gratification as it were).

Towards a more balanced world

While the leisure economy may be an emerging reality in highly developed economies of the West, it may well be some time before it comes true in developing nations. However, considering the globalised world we live in today, one could guess that the learning curve would be far more compressed. Either way, the trend clearly points to a future where people will look for fulfilment through multiple dimensions with the underlying currency being time and its balanced allocation across dimensions. Secondly, there would be a growing realisation that human fulfilment is an ongoing parallel activity across all these dimensions and suppressing one in the interest of the other will inevitably fail in the long run. Finally, the notion of time as a commodity would be replaced by the notion of time as a currency, as a form of income that is as important as financial income.

Previously published columns:

Health care entrepreneurship

2008-08-17T22:23:00.002+05:30

The invisible hand of the economy is beginning to touch health care in India:

Dr Shetty is turning serial entrepreneur. The grand plan is to set up health cities in several state capitals with training institutes for medical manpower. Health cities are large complexes that will house different specialties for treating major diseases, and both state governments and private equity have bought into Dr Shetty's vision for transforming the health landscape of the country.
While AIG and JP Morgan have pumped in Rs 200 crore each for a combined 25 per cent stake in the holding company Narayana Hrudyalalya Private Limited, state governments have offered large tracts of prime property in Ahmedababd, Jaipur, Bangalore, Bhubaneswar and Dehra Dun.

This is by far the most ambitious expansion drive among private players in the country with Dr Shetty expecting to add 20,000 beds in the next five years.

More here in a feature story on Dr. Devi Prasad Shetty

Wealth in Ideas and Relationships

2008-07-14T13:04:00.008+05:30

My latest column for The Hindu Business Line appears today. Providing both the link and the full text below.

Wealth lies in Ideas, Relationships
Mohit Kishore

“If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.” - George Bernard Shaw

In its own way, this quote seems to suggest, and quite rightly, that wealth lies not in physical objects but in ideas.

It seems that the biggest mistake businesses make is in their search for wealth in the marketplace.

There seems to be a notion that the purpose of business is to map the wealth in the marketplace, in the pockets of ‘target groups’ and ‘customer segments’, and somehow transfer that wealth into the books of the business by providing goods and services.

To me this seems a transactional, non-sustainable approach. In my view, real wealth lies in two things: Ideas, and relationships.

Ideas

No business can be sustainable over a prolonged period of time by merely doing the same thing over and over. The outsourcing industry works on the idea that technology can be used to do non-core activities for companies in remote parts of the world, where labour costs are lower.

However, it is evident that this idea alone is not enough to sustain the outsourcing industry for ever.

In India for instance, the fast growth in the economy, high attrition and rising wages means that the cost of operations for the outsourcing industry is going to rise, and the idea of labour arbitrage may soon lose relevance.

This means that for this industry to be successful, newer and newer ideas are required that ensure that competitive advantage is maintained.

The same is true for any organisation. Not many ideas are of eternal value, and hence there is a constant need to evolve newer and newer ways of doing things.

Mature economies realise the value of ideas, and this explains why one finds a strong culture of venture capital investors investing in small, innovative, early-stage companies working on new ideas.

They realise that the risks in such investments are high, but the rewards can be substantial.

Relationships

The second source of wealth lies in relationships, particularly with customers, and on a larger scale with other stakeholders — society, nation and the environment. Iconic companies tend to focus on one or more dimensions of these really well.

For instance, businesses of the Tata group in India have always had a strong sense of nation-building and social responsibility associated with them. The wealth that lies in strong relationships manifests itself in the form of brand equity, which is, in itself, a source of material wealth (through increased sales, customer loyalty, etc.)

Apple is another company that values its relationships with its customers to such an extent that there is a reciprocal relationship from its customers that borders on devotion – something that causes them to buy high-priced initial releases of Apple products despite knowing that the prices will come down drastically in a few months.

Transactions not equal to wealth

It appears today that a lot of organisations value transactions over ideas and relationships.

An undue focus on transactions as a source of wealth means that market share and sales assume a central role in business.

When this happens, there is a large amount of ‘mis-selling’, poor customer loyalty, a lack of focus on customer service, low value on ethical behaviour and an overall deterioration of enterprise value. Some pockets of the financial services industry (like credit cards) are already demonstrating the effects of such a deleterious strategy.

Wealth = Ideas + Relationships

This is not to suggest that wealth in material terms is bad. It is only bad when this wealth becomes the central driver of strategy.

In fact, a study of successful organisations clearly shows us that wealth in material terms (revenue, market share, and so on) is an automatic by-product of the wealth contained in ideas and relationships, and a strong focus on these two dimensions is not just a one-time affair (at the time of the founding of a business) but a long-term, on-going process of adaptation and evolution.

Previously published columns:

Business Today b-school rankings

2008-07-09T13:40:00.001+05:30

Business Today has once again come out with it's illogical survey of b-schools. I have already criticized it here last year. Wont add anything more!

Interview of UTV's Ronnie Screwvala

2008-07-03T16:57:00.003+05:30

UTV's Ronnie Screwvala makes some interesting observations about "Scale versus control" in this Knowledge@Wharton interview.

That was a crossroads that we had already crossed -- UTV as a company and myself personally. For me, scale is more important than control. Once you start thinking about scale, performance is going to count in any case because we are a public limited company. Whether Disney thinks I am a good CEO or the rest of the shareholders think I am a good CEO is equally bad or good -- because I have to be accountable for my performance. The other thing that comes about when you cross the 51% threshold in shareholding is that of overall accountability in that context -- and therefore management versus shareholding. If I think I am not the right person to lead the company at the next level of its growth, I could just continue to be a shareholder.
More here

Unlocking Potential

2008-06-02T13:32:00.004+05:30

My latest column in The Hindu Business Line: Unlocking Potential

Full text follows:

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Self-actualisation is a term that was first introduced by Kurt Goldstein and later popularised through Abraham Maslow’s theory on hierarchy of needs. It is the final stage of human psychological development, when all lower needs (physiological, safety, love/belonging and esteem needs) have been satisfied. Through self-actualisation, the individual attempts to make the most of his true self and potential.

Can this notion be extended to organisations and institutions? After all, in the same way that individuals strive towards self-actualisation, organisations too try to realise their true potential through the strategic choices they make. Of course, in a human context, self-actualisation leads to fulfilment, happiness and so on while in an organisational context, the equivalent end state could be financial success, sustainability, employee satisfaction and customer loyalty.

Relationship to corporate strategy

Organisational strategy creation can thus be viewed as the attempts by an organisation to manifest its inner good. This ‘inner good’ in my view is not a ‘general’ good. It is a particular inner good, specific to the organisation under consideration. Formulation of strategy then must take into account the fact that it is best to actualise this particular inner good, rather than try to simply replicate the models of other firms in the marketplace.

For one organisation, the ability to scale may represent its highest potential. In that case, a market share-based strategy would work well. For another organisation, the highest potential may lie in its ability to serve customers well. In such a scenario, adopting a quality-oriented strategy may work better where the focus is not on the number of customers but on customer satisfaction.

In other words, the human notion of ‘being yourself’ holds true for organisations as well. Indian public sector enterprises have faced this dilemma in the face of aggressive private sector players. Some public sector enterprises and nationalised banks, for instance, have made attempts at re-branding themselves along the lines of their private sector competitors by attempting more youthful and contemporary brand positioning strategies. It is debatable whether this will indeed be effective in winning more customers. Instead, a better strategy may have been to play on their true strengths such as ‘trust’, ‘stability’, ‘relationship orientation’ and so on.

Determination of potential

The question then is how does one determine what the highest potential of an organisation is? One way could be to look to the founding leadership and their values. A disadvantage of this method could be that as organisations begin to outlive their founders, founding values tend to get eroded and in some cases lose relevance.

The other way to determine potential is to look at the organisation as it is today and determine what it could be good at. This method has its own disadvantages because the situation an organisation is in at present may well be the sum total of bad choices made in the past.

One other way could be to start with customers. Finding out how customers relate to the organisation and ‘what works’ for them may be a useful starting point to determine the highest good.

When The Coca-Cola Company launched a new formulation of its drink called ‘New Coke’ in the 1980s it was met with serious protests from loyal customers, leading to the withdrawal of the product. To these customers, Coke was the quintessential American drink that represented American values, and hence any change to the brand was seen as almost blasphemous. It could be argued that loyal customers of the brand had a clear notion of the ‘inner good’ of The Coca-Cola Company much more than the executives working there. Thus, determination of potential may involve a holistic study of three axes — founding values of the organisation, existing values of the organisation and customer-defined values.

The end goal – purpose

Finally, self-actualisation (either for an individual or an organisation) is not necessarily an end result. It is also a process of making choices along the journey. The choice could either be what Maslow calls a “growth choice” or a “regression choice”, and the idea is to repeatedly make a growth choice when faced with a decision point. The act of making a growth choice is an act of evolution and evolution leads to greater fulfilment.

Put in the context of organisations, the very process of self-actualisation is likely to create a strong sense of purpose and direction in the minds of all stakeholders, and that alone is worth the effort.

(The writer is an alumnus of XLRI, Jamshedpur.)

Previously published columns:

Amitabh Bachchan's Blog

2008-05-17T11:46:00.002+05:30

With the attention that the Big B's blog is getting on Big Adda, it may not be a bad idea to convert Big Adda into a pure blogging platform and get rid of all the social networking stuff. Blogging is a standalone feature, which can succeed by itself, whereas a social network can succeed only if it has a critical mass of linked up users, and I don't see Big Adda achieving that in the face of Orkut and Facebook.

Secondly, with so many "stars" embracing blogging, it looks like blogs have completed the long journey from being a geek's tool to a mainstream medium.

XLRI Placements

2008-03-09T13:22:00.001+05:30

XLRI Placements

The lives of others | The conversation

2008-03-03T00:16:00.004+05:30

“The lives of others” – this year’s Academy award winner for the best foreign language film stands at the curious intersection between art, love, literature, politics, bureaucracy, and history.

The film is set in the erstwhile East Germany at the time when the Stasi (the secret police) placed pretty much every other citizen under surveillance. One such member of the Stasi (Weisler) is asked to monitor the renowned playwright Georg Dreyman who is suspected of having leanings towards the west. Weisler wires Georg’s apartment and then spends his days listening in and preparing daily reports of his suspect’s activities.

The real reason why Weisler is put on this assignment is so that Georg’s western leanings can be proved as basis for his arrest, which would then allow minister Hempf free access to Georg’s lover, the actress Christa-Maria. Once Weisler discovers this, his sympathies gradually shift towards Georg. Weisler finds himself immersing into Georg’s rich literary world of idealism and hope for a better future. Pretty soon Weisler begins to fudge his daily reports to divert suspicion from Georg on a controversial article that he publishes in the West after the death of his theatrical mentor. A man who was once an impassive arm of the state’s machinery now finds himself moved by Georg’s heady world of Brecht, Beethoven, passion, love and intrigue. From here on, the film takes interesting plot turns as Weisler, the neutral observer turns into an eager, yet invisible supporter of Georg’s actions.

It is here that “The lives of others” reminded me of an older Francis Ford Coppola film called ‘The Conversation’ in which Gene Hackman is a surveillance expert who is tapping into conversations between a couple. What begins as an unemotional impassive project turns similarly into one where Gene finds himself getting actively involved in the lives of his ‘targets’. It reaches a point where Gene steps in to avert a potential tragedy that would have occurred as a result of the information he has recorded (though at this point the film takes a completely ironic twist which I wont give away.)

It’s interesting to note that in both films, the surveillance expert begins as an unemotional witness to events but eventually turns into a sympathizer of his targets. Both films explore numerous other issues too, but central to each film is the idea that it is impossible for any human being to be a mere neutral observer of events around him. At some point the desire to influence events, to correct wrongs overcomes even the most stoic, duty-bound automaton type character like Weisler or Gene. Also, both films expose how ideology (political, professional…) need not always assume precedence in our dealings with the world, particularly in the face of raw human emotions that bind people even on opposite sides of the same issue.

Wikipedia articles on both films:
The lives of others
The conversation

How to make wealth.

2008-02-16T10:48:00.000+05:30

How to make wealth.

An evolutionary view of leadership

2008-01-22T08:22:00.000+05:30

Yesterday, The Hindu Business Line carried my latest column in which I explore the relationship of leadership to various kinds of wages. Link: An evolutionary view of leadership

Full text follows:
A casual perusal of the management section of any bookstore would suggest that ‘leadership’ is the most desirable goal that people have for their lives. This may indeed be true, but evidence in the real world suggests that there is more to leadership than meets the eye.

In the real world, leadership is often bestowed upon an individual who is most likely to work in the interest of the group he leads, even if it means sacrificing his own well-being. While, the first-half of that statement is rather clichéd, the second part is the one that is more interesting. It is our tendency to choose leaders who will not work for their own self-interest that leads most people to actually not want to be leaders themselves. They will gladly be followers and reap the benefits of having a leader who will work to maximise the wellbeing of his constituency, rather than step on the pedestal themselves. This argument is also found in Plato’s Republic.

Plato’s Republic presents this idea through an argument between Socrates and Thrasymachus in the course of which Socrates says: “No one willingly chooses to rule and to take other people’s troubles in their hand and straighten them out, but does ask for wages… In a city of good men, if it came into being, the citizens would fight not to rule. There it would be clear that anyone who is a true leader doesn’t by nature seek his own advantage but that of his subjects. What kind of wages is Socrates referring to? The answer is — money, honour or a penalty if the individual refuses to lead.” (Source: Justice and the Leader, by Plato from Republic Book I – Hackett Publishing, 1992)

Leaders and wages

Now, this seems to suggest that people only become leaders in order to get the above kinds of ‘wages’ and for no other reason. In other words, if there were no ‘wages’, no one would ever want to be a leader. This may be a bit far-fetched. Surely, history has shown us enough examples of ‘wage-less’ leaders such as Gandhi and Mother Teresa. The idea of ‘servant leadership’ developed by Robert Greenleaf suggests that a leader’s role is purely to serve the needs of his constituency and not to increase his personal power or glory. In other words, for such leaders the wages, if any, are purely incidental.

Is there any way to reconcile these two schools of thought — one which suggests that all leaders work for tangible or intangible ‘wages’ and the other that suggests that leaders should only serve their followers and have no other goals? It may be instructive to view the concept of leadership as an evolutionary hierarchy. At the lower end of the hierarchy are leaders who are in it for the wages. Needless to say, they too serve their followers, but do so with personal goals in mind. As the leader evolves over time, the marginal utility of wages would decrease and finally reach a point where he demonstrates the qualities of a classic servant leader who is focused on the needs of others.

Servant leaders

Examples of such evolution are easy to find, particularly among business leaders who after many years of building great companies move on to set up charitable foundations that are not profit oriented (the Bill Gates Foundation for instance). In between these two extremes, there could be many other variants with differing ratios of ‘wage’ to ‘wage-less’ orientations.

Viewing leadership in this manner, as an evolutionary ladder, also helps us resolve Plato’s problem of people not wanting to be leaders in the first place. The initial steps of this evolutionary ladder allow and encourage wages, thereby ensuring that people are motivated to take up responsibilities that they would have otherwise shirked, and the higher levels of the ladder are for people who are not in it for themselves.

The key thing then becomes identifying the right kind of leaders for the right kind of roles in society. An example of how things go wrong when there is a mismatch between the role and the wage orientation of leaders in that role is the political leadership in this country which has long been tarnished by cases of corruption by individuals who seek personal ‘wages’ over the larger good . On the other hand, middle managers in most businesses belong to the ‘wage oriented’ category, and they certainly seem to do justice to their roles by both maximising their personal gains as well as achieving organisational goals.

In conclusion, it makes sense to allow and embrace both wage oriented and non-wage oriented leadership, provided that the extent of wage orientation in the individual matches with the leadership role that is on offer.

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Previously published articles:

Obama

2008-01-12T21:09:00.000+05:30

This is an extraordinary piece of oratory:

The long tail opportunity

2007-10-29T01:11:00.000+05:30

Today, The Hindu Business Line is carrying my latest column in which I explore 'long tail' markets, a concept that was first made popular by Chris Anderson at Wired magazine. Link to the article on the Business line site: The long tail opportunity.

Here's the full text.

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We live in a world of infinite choices. Yet traditionally, mass media and mass marketing have always trained their attention on ‘hits’. The reason why they do this is the prohibitive cost of distribution of goods and services. Thus, an average bookstore owner needs to decide exactly which titles to stock in order to optimally monetise the limited shelf space that he has available. In other words, he needs to clearly identify the ‘hits’ which would s ell enough copies to justify their existence on his shelves.

This notion of ‘hits’ extends to all other types of products — music albums, films, fashion, retail stores and so on. So is there a market beyond these hits? Traditional wisdom would suggest that ‘non-hits’ is not a market worth chasing. The facts, however, prove the opposite.

With the advent of the Internet, limitations such as distribution costs and shelf space have ceased to exist. Thus, an Amazon.com can offer an unlimited choice of books by an unlimited number of authors that traditional bookstores cannot offer because the sales of such books would not make up for the cost of printing and distributing them. In theory, Amazon can make a book available on its Web site even if less than 50 people eventually buy it.

The long tail as a concept was first elucidated by Chris Anderson in his bestselling book by the same name. The long tail refers to the tail of the demand curve where infinite choices exist. The head of the demand curve consists of all the ‘hits’ which are very popular, and the tail extends infinitely to cover infinite ‘non-hits’, i.e. products with niche consumers. Earlier, marketers ignored the tail because they did not have the means to make the products in the tail available to their audiences, but today the Internet enables them to do so profitably. An analysis of Amazon’s sales by Chris Anderson indicated that a large proportion of its income actually came from obscure titles and not bestsellers.

Mass customisation

One major advantage of using the long tail benefits of the Internet is that it enables producers — of products, content and so on — to offer truly customised products to their target group. Apple’s iTunes, for instance, can offer songs by totally unknown artists who may not have a market in traditional mass media. YouTube offers small filmmakers the opportunity to showcase their content to the whole world. Self-publishing tools such as blogs allow you to write about extremely esoteric topics and still have a global audience for your offering.

The tail of the demand curve explains why small budget films such as Khosla ka Ghosla and Bheja Fry managed to become ‘hits’ in the face of competition from traditional big budget films. These smaller films managed to find an efficient distribution channel (multiplexes that screen many movies and hence diversify risk) to reach their small target audience (possibly educated urban youth who frequent multiplexes and prefer meaningful cinema to blockbuster entertainers). Such examples also prove that to tap into long tail markets, the Internet need not be the only medium.

The Indian context

Is Indian business geared up to the long tail opportunity? Sadly, the answer seems to be a big no. Not enough companies are actively using the Internet as a significant distribution channel for their products. In a market with about 50 million Internet users that is growing faster than ever before, it is critical for companies to have a significant footprint in the online world too.

Some players use the Internet as an online replica of their offline offerings. Big retail chains have launched such e-commerce portals that mirror their store offerings. A better strategy would be to use the Internet to purely tap into long tail markets. Companies in the financial services space can allow their customers to buy customised products that would otherwise cost a lot to launch due to the prohibitive costs of training intermediaries (this sector is today dependent on intermediaries). Telecom companies could use the Internet to launch a number of niche tariff plans. (I’m imagining a slider-based interface that allows me to precisely set my rental, STD, local calls and SMS tariffs).

The traditional argument against such ideas is that you need a critical mass of customers to launch a product. Yet, the magic of the long tail is precisely the fact that you are targeting customers who are not usually on your radar, but rather the small number of customers (which we could call micro-segments) who buy niche offerings. Multiply an infinite number of such micro-segments with the small volumes associated with each micro-segment and you have potentially huge revenues. The possibilities are endless at the tail of the demand curve and it can no longer be ignored in the midst of the noise generated by ‘hits’. What remains to be seen is how innovative we can get with tapping these micro-segments of the market.

(The writer, an alumnus of XLRI, works with a multinational financial services company.)

Previously published articles:

Social Graphs and Vanilla Networks

2007-09-21T21:28:00.000+05:30

Jyri Engestrom has an extremely interesting post on where social networks are headed. In this post, he points out Brad Fitzpatrick's views on how the social graph (the map of how users are connected to each other) should be made universal.

Brad's solution is to create a service where people go to aggregate all their networks into a master network, and then let other services check against that to automate friend discovery. The outcome to the user who signs up to a new service should be "These 8 friends of yours are already users here, would you like to share your books / music / pictures / trips / etc. with them?"

I'm not so convinced due to the following reasons:

1. Firstly, 'friends' is a nebulous concept and it varies from network to network (my Linkedin friends may not be the same as my Orkut friends), thereby making the whole idea of having a universal social graph quite impractical.

2. Secondly, Brad assumes that all the competing services will actually cooperate with each other to share their respective social graphs. I doubt that will happen. If it did, then it would be equivalent to voluntarily reducing exit barriers for its users.

But it looks like the problem that Brad is addressing is one of singular identity (say a Google Account or a Hotmail Passport) that uniquely maps people across applications. That's a separate problem in itself. Anyway, here is what I think will be the future of social graphs and networks.

Where I see this heading
I forsee that in the future there will be two kinds of 'social network' services:
1. A plain vanilla social network with the usual friend of friend and profile features.
2. Satellite social applications like say a photo sharing service, a book sharing service etc.

My guess is that there would be about 3-4 major plain vanilla networks. The satellite services would then sit on top of these networks and share their social graphs. So say I signup on Facebook (the plain vanilla network), and then I feel like signing up at Shelfari.com to share books with friends. I would just activate Shelfari inside Facebook. The Shelfari-Facebook tieup would not be exclusive. Shelfari could go and signup with all the other vanilla providers too. Facebook has already moved in this direction by allowing 'applications' by independent developers to hook into Facebook. The next level is for all these 'applications' to have their separate identity in the world outside Facebook, thereby allowing users of other vanilla networks to use them too. The following image should help clarify what I'm trying to say.

Thus, the vanilla networks would serve the purpose of being repositories of social graphs that independent developers of services can tap into.

An arrangement like this would be very useful for all web applications with a social dimension to them. The major vanilla networks house the social graphs, and the independent guys hook in as satellites and share revenues with the parent network.

Business Today's idiotic b-school rankings

2007-09-13T23:27:00.000+05:30

Business Today's annual practical joke entitled 'India's best b-schools' is out. The preliminary evidence is as follows:

SIBM is India's number 4 business school

MBA wannabes prefer ICFAI to FMS Delhi

Welingkar Institute of Management is India's number 3 b-school under the parameter 'Functional Head'. Under the same head SIMSREE Mumbai and ABS Noida are amongst the country's top10

Recruiters voted Welingkar as India's number 5 b-school

'Young Executives' ranked SIMSREE and Welingkar at joint number 3. If this is any consolation, these two b-schools managed to beat IIMC.

Without going into the merits and demerits of the aforementioned schools (I'm sure they are reasonably good places), let us now examine the methodology adopted by Business Today and AC Neilson that enables reality to be twisted and turned in any manner deemed fit by the editors of the magazine. The BT ranking claims to be based on the winning brands model i.e. it asks 'consumers' about their preferences with regard to certain brands (in this case b-schools) on certain pre-defined attributes with pre-defined weightages. Hang on. Winning brands? Do prospective MBA students pick their b-schools based on brands as opposed to facts? If that were the case, these applicants would surely flunk the Marketing Research course when they join b-school.

Imagine you have applied for a job, and the interviewer calls up 30 of your friends to find out their 'perception' of your academic performance, intelligence etc instead of objectively measuring it by asking you what your marks were, and verifying supporting documents. Such an interview would be a waste of time to attend - after all the interviewer is not interested in that trivial thing called facts. He is more interested in the feelings that your friends have about you! Your friend Mr.A might 'perceive' you as being a poor student, but 'facts' may indicate that you actually scored 95% in your boards. This is precisely the model that BT has used to rank business schools. They asked random respondents about what they 'felt' about the b-schools in question, and completely disregarded facts - facts such as average salaries, faculty count, published papers produced by the b-schools, infrastructure, exchange programs, international placements etc. Facts that are easily measurable if you get out of your Mumbai office and conduct a survey by actually talking to b-schools as opposed to conducting an inane perception survey with whoever you found at the water cooler. George Bush would love to commission a survey by BT-AC Nielson on the Iraq war - because like him, the BT-AC Nielson guys too hate facts - the prefer feelings.

I could go on and on, but some reputed bloggers have already trashed this survey in some detail. Do check them out.

Rashmi Bansal: This year, last year

Prof. Madhukar Shukla on last year's rankings:
http://alternativeperspective.blogspot.com/2006/07/b-school-ranking-survey-gets-f-grade.html

Outlook has chosen a fact based approach to rank b-schools. They seem to have done a good enough job for both Rediff and Mint to syndicate their content. Here is the link.

Private Equity Jobs

2007-08-31T19:02:00.000+05:30

No, you wont find any of those here. But here's an interesting take on the PE phenomenon by Slate.

Dear Diary:
Whatever possessed me to go into private equity? I was so naive. I thought it was just about financial engineering. That certainly is the impression they give you in the media. But turns out that it's actually about hard work! Who'd a thunk it? Here we are in the last week of summer, and everybody is in the Hamptons or in some villa in Tuscany. Everyone, that is, except for me, Private-Equity Man.

More here

Bonus Link: How to make a powerpoint chart, by Seth Godin, easily the best marketing focussed blogger out there.

Pursuit of happiness

2007-08-15T18:32:00.000+05:30

Studies by economists show that money is directly related to happiness until it leads people out of abject poverty. Beyond that point, the marginal utility of money (towards increasing happiness) keeps decreasing. The happiness level of someone making $1 million versus $5million is not too different. This however does not stop people from mistakenly viewing money as a source of happiness, and wasting their lives in it's pursuit, but as Will Smith speculated in the film 'The pursuit of happyness', maybe the whole point of that phrase is that happiness is something to be pursued and never attained?

More on leaderless groups

2007-08-12T11:41:00.000+05:30

Forrest Christian has an interesting response to my earlier post on leaderless groups. Do check it out here.

I particularly agree with his views on the 'Big man' school of management that involves people bowing to ONE supreme leader in whom we place our faith to lead us. Such structures may have worked well in colonial times, but certainly have no place in the modern workplace, and indeed society. In this context it is interesting that elections in the US tend to surround the 'Big Man' i.e the presidential candidate, whereas elections in India tend to focus more on political parties and their ideologies. I remember reading somewhere that on 'Individualism', Americans score much higher than Indians. I suspect that the Big Man school of management has it's foundations in individualism.

Personal Leadership

2007-07-28T12:30:00.000+05:30

Leadership by its very definition seems to assume the presence of a follower who needs to be lead. However, this follower may not always be another person. One form of leadership that I believe in is Personal Leadership - the ability to lead yourself from your current circumstances or situation to a better future. In other words Personal Leadership means taking charge of your own life or situation before taking charge of other people.

Leaderless groups - a case against hierarchy

2007-05-24T19:38:00.000+05:30

My latest article in The Hindu Business Line - Leaderless groups - a case against hierarchy. Full text follows:

In his treatise Dastambu, Mirza Ghalib documents the events in Delhi at the time the revolt of 1857 broke out. He writes: "Band upon band of soldiers and peasants had become as one, and far and near, one and all, without even speaking or conferring together, girded their loins to their single aim... City after city lies open, without protectors, filled with men who have none to watch over them, like gardens bereft of their gardeners studded with trees stripped bare of leaves and fruit." (Ghalib - Life, Letters and Ghazals; Ralph Russell; Oxford University Press 2003)

While Ghalib's political leanings are not the subject of this article, what is interesting is his view that the men behind the mutiny were leaderless and hence not worthy of being taken seriously.

Are there any examples to prove that a leaderless group can actually lead to efficient outcomes? Can independently-deciding individuals help a group achieve its goal?

History suggests that in certain situations leaderless groups can indeed achieve a stated objective. Leaderless resistance movements such as guerrilla warfare are a good example of this. Terrorists too tend to operate in independent cells (and not hierarchies). This probably explains why they manage to escape from beneath the eyes of hierarchical intelligence agencies.

Key advantages of a leaderless group include the fact that there is no centralised command and control system, which is vulnerable to attack. Each small group or individual behaves independently based on some shared values. This means that the group is not burdened by traditional hierarchical chains of command, bureaucracy and red-tape in its decision-making. Additionally, affinity of group members towards the cause is likely to be much higher since there is no central authority who forces membership and neither are there any negative consequences of giving up membership. In other words, only truly passionate individuals would aggregate in such a group.

Clearly, leaderless groups are structurally efficient. Are they functionally effective too? In the best-selling book The Wisdom of Crowds, James Suroweicki argues that large, independent groups of people are smarter than an elite few (leaders/ experts). For instance, on Who wants to be a millionaire, audience polls got the correct answer 91 per cent of the time, while the `phone a friend' experts got it right only 65 per cent of the time. He identifies four prerequisites for a `wise' crowd — diversity of opinion, independence, decentralisation and aggregation. There must be a diversity of opinion within the group, which is independent of the views of other members. The group must not have any central chain of command and there must be some way of aggregating various individuals' viewpoints.

The Wikipedia model

Wikipedia (a freely editable online encyclopaedia) is a good example of tapping into the wisdom of crowds. Individuals across the world collectively edit articles to produce content that is by and large of very high quality. There is, of course, the stray incident involving a writer editing an article to depict a deliberately biased point of view. However, Wikipedia does have a core team of editors who scan content for such anomalies. Thus, in effect, the people who contribute to the Wikipedia project are like a leaderless group, which is loosely monitored by a core team of editors.

An interesting thought experiment to conduct would be to evaluate whether such a model can be extended to other kinds of organisations. How could one structure an organisation to tap into the wisdom of crowds? Needless to say, leaderless groups are not suitable for certain kinds of organisations — for instance, a manufacturing organisation would clearly need a highly supervised environment. However, for organisations whose main output is knowledge (software, media) a leaderless approach does seem to be an interesting alternative. Open source software movements clearly show that people don't have any hassles creating intellectual property free of cost — with little or no supervision — if they believe in the larger cause.

Purely from a human psychology perspective, a group with a `leader' necessarily means that one individual becomes bigger than both the cause as well as the other individuals in the group. While this is good in a political cause (like apartheid) where it is important to truly inspire people, it may not be particularly useful in a more everyday cause, like a company that makes a product or service. In the latter, having overarching leaders can lead to harmful political behaviour and other efficiency-dissipating activities that can lead to drop in motivation levels. On the other hand, people are happiest when they work for causes (not people) much larger than their individual selves. In fact, offering work as a service to the Lord, without worrying about one's ego or the end result, finds support in the Bhagvad Gita too. Maybe, it's time organisations experimented more with leaderless set-ups (perhaps within individual divisions if not entirely). History certainly shows that it can work well in a number of contexts.

(The writer, an alumnus of XLRI, works with a multinational financial services company.)

Previously published articles of mine:

Google's Adsense Income - Is there a conspiracy?

2007-05-12T13:18:00.001+05:30

Google Adsense follows a policy of making payouts only when a user's earnings reach $100. Now, assume that Adsense (like everything else) follows a 80-20 rule i.e 20% of users make 80% of the revenue.

In other words, 80% of Adsense users would be making close to nothing. Assume that the average earnings of these users is about $50. Assume that Adsense has 10 million users.

Adsense users = 10 Million
80% of that = 8 Million
Average earnings of these 8 Million = $50
Total unpaid earnings = $400 Million (!!!)

Lets do some conservative math now
Adsense has 5 million users : $200 Million in unpaid revenues
Adsense has 1 million users: $40 Million unpaid
Adsense has only 500000 users: $20 Million unpaid
These are still large enough numbers to make us want to question what is going on.

Thus, Google could potentially be holding about $400 Million in cash that they probably never will payout because 80% of its users (like me) will never get enough hits to make $100 any time in the near future. Is this a deliberate strategy? Wonder if Google's earnings statements reflect these numbers, but I'm too lazy to check that out!

The least Google should do is to at least payout interest income to these users in addition to what they have already earned.

Technorati Tags: Google, Adsense

Spiderman could be 2007's biggest hit

2007-05-12T12:32:00.001+05:30

Rediff reports.

Interesting piece of news this, particularly because the regional language dubs of Spidey 3 (Tamil, Bhojpuri etc) are doing really well.Dubbed movies seem to be a good substitute for poor quality local movies.

While I'm no fan of dubbed movies, Spiderman is certainly the type of movie that wouldn't suffer artistically no matter which language it is dubbed into!

If Bollywood movies were dubbed into English, would they be able to attract a global audience? Of course the plots would still be hackneyed, but for all you know the western audience may lap it up with India being the flavour of the season. I doubt if these dubs would be any worse than those oriental Kung fu action flicks.

Interesting

2007-05-11T23:43:00.001+05:30

The Internet is playing a much more important role than anyone ever imagined. Brands are going to be made and destroyed on the Internet, and there’s a whole set of new marketing rules for it. One cardinal rule is trust and respect.

That's a quote from Keith Pardy, Nokia's senior vice-president of strategic marketing, which appeared in Mint recently.

Reminded me of what I had written for The Hindu Business Line many months back.

All kinds of organisations need to embrace the power of the Internet as the new global market place where brands will be created and destroyed ... Brands would need to be `humble' and not mighty; brands will have to understand, rather than be understood; brands will have to listen and not talk.

Notice the similarity!

Structured Procrastination

2007-05-01T10:01:00.000+05:30

This is a very interesting article on procrastination that I found in my inbox. It's apparently written by a Harvard Professor. Presenting it in full below.

Structured Procrastination
by John Perry
Version of April 25, 1995
I have been intending to write this essay for months. Why am I finally doing it? Because I finally found some uncommitted time? Wrong. I have papers to grade, textbook orders to fill out, an NSF proposal to referee, dissertation drafts to read. I am working on this essay as a way of not doing all of those things. This is the essence of what I call structured procrastination, an amazing strategy I have discovered that converts procrastinators into effective human beings, respected and admired for all that they can accomplish and the good use they make of time. All procrastinators put off things they have to do. Structured procrastination is the art of making this bad trait work for you. The key idea is that procrastinating does not mean doing absolutely nothing. Procrastinators seldom do absolutely nothing; they do marginally useful things, like gardening or sharpening pencils or making a diagram of how they will reorganize their files when they get around to it. Why does the procrastinator do these things? Because they are a way of
not doing something more important. If all the procrastinator had left to do was to sharpen some pencils, no force on earth could get him do it. However, the procrastinator can be motivated to do difficult, timely and important tasks, as long as these tasks are a way of not doing something more important.

Structured procrastination means shaping the structure of the tasks one has to do in a way that exploits this fact. The list of tasks one has in mind will be ordered by importance. Tasks that seem most urgent and important are on top. But there are also worthwhile tasks to perform lower down on the list. Doing these tasks becomes a way of not doing the things higher up on the list. With this sort of appropriate task structure, the procrastinator becomes a useful citizen. Indeed, the procrastinator can even acquire, as I have, a reputation for getting a lot done.

The most perfect situation for structured procrastination that I ever had was when my wife and I served as Resident Fellows in Soto House, a Stanford dormitory. In the evening, faced with papers to grade, lectures to prepare, committee work to be done, I would leave our cottage next to the dorm and go over to the lounge and play ping-pong with the residents, or talk over things with them in their rooms, or just sit there and read the paper. I got a reputation for being a terrific Resident Fellow, and one of the rare profs on campus who spent time with undergraduates and got to know them. What a set up: play ping pong as a way of not doing more important things, and get a reputation as Mr. Chips.

Procrastinators often follow exactly the wrong tack. They try to minimize their commitments, assuming that if they have only a few things to do, they will quit procrastinating and get them done. But this goes contrary to the basic nature of the procrastinator and destroys his most important source of motivation. The few tasks on his list will be by definition the most important, and the only way to avoid doing them will be to do nothing. This is a way to become a couch potato, not an effective human being.

At this point you may be asking, "How about the important tasks at the top of the list, that one never does?" Admittedly, there is a potential problem here.

The trick is to pick the right sorts of projects for the top of the list. The ideal sorts of things have two characteristics, First, they seem to have clear deadlines (but really don't). Second, they seem awfully important (but really aren't). Luckily, life abounds with such tasks. In universities the vast majority of tasks fall into this category, and I'm sure the same is true for most other large institutions. Take for example the item right at the top of my list right now. This is finishing an essay for a volume in the philosophy of language. It was supposed to be done eleven months ago. I have accomplished an enormous number of important things as a way of not working on it. A couple of months ago, bothered by guilt, I wrote a letter to the editor saying how sorry I was to be so late and expressing my good intentions to get to work. Writing the letter was, of course, a way of not working on the article. It turned out that I really wasn't much further behind schedule than anyone else. And how important is this article anyway? Not so important that at some point something that seems more important won't come along. Then I'll get to work on it.

Another example is book order forms. I write this in June. In October, I will teach a class on Epistemology. The book order forms are already overdue at the book store. It is easy to take this as an important task with a pressing deadline (for you non-procrastinators, I will observe that deadlines really start to press a week or two after they pass.) I get almost daily reminders from the department secretary, students sometimes ask me what we will be reading, and the unfilled order form sits right in the middle of my desk, right under the wrapping from the sandwich I ate last Wednesday. This task is near the top of my list; it bothers me, and motivates me to do other useful but superficially less important things. But in fact, the book store is plenty busy with forms already filed by non-procrastinators. I can get mine in mid-Summer and things will be fine. I just need to order popular well-known books from efficient publishers. I will accept some other, apparently more important, task sometime between now and, say, August 1st. Then my psyche will feel comfortable about filling out the order forms as a way of not doing this new task.

The observant reader may feel at this point that structured procrastination requires a certain amount of self-deception, since one is in effect constantly perpetrating a pyramid scheme on oneself. Exactly. One needs to be able to recognize and commit oneself to tasks with inflated importance and unreal deadlines, while making oneself feel that they are important and urgent. This is not a problem, because virtually all procrastinators have excellent self-deceptive skills also. And what could be more noble than using one character flaw to offset the bad effects of another?

Update: This is the source

New look

2007-05-01T09:52:00.000+05:30

To make up for the fact that my posting has been erratic, I have changed the template of this blog. Same old content. New look!

On a serious note, I've got to get back to regular posting.

Also, if you wish to bring management related posts to my attention, do mail me and I will feature your post on this blog.

The PS3 Song - a Web 2.0 rant

2007-04-29T18:59:00.000+05:30

Interesting Web 2.0 approach to telling a brand that it sucks. Check it out!

Pearls before breakfast

2007-04-25T19:55:00.000+05:30

Read this.

Go ahead, everything else can wait.

The Bakshali Inheritance - IIMC convocation

2007-04-10T18:08:00.001+05:30

Convocation Speech by Ajit Balakrishnan: IIM Calcutta, 1^stApril 2007

An excellent read

Emergence

2007-04-05T19:41:00.000+05:30

I read about this interesting concept today.

Emergence is one of the founding principles of agility, and is the closest one to pure magic. Emergent properties aren't designed or built in, they simply happen as a dynamic result of the rest of the system. "Emergence" comes from middle 17th century Latin in the sense of an "unforeseen occurrence." You can't plan for it or schedule it, but you can cultivate an environment where you can let it happen and benefit from it.

A classic example of emergence lies in the flocking behavior of birds. A computer simulation can use as few as three simple rules (along the lines of "don't run into each other") and suddenly you get very complex behavior as the flock wends and wafts its way gracefully through the sky, reforming around obstacles, and so on. None of this advanced behavior (such as reforming the same shape around an obstacle) is specified by the rules; it emerges from the dynamics of the system.

Link via 37signals. Source: Andrew Hunt - The pragmatic programmers.

Sometimes the best ways to create complex outcomes is to create simple mantras to be followed religiously by all stakeholders.

The concept can be extended to organizations as a whole. If an organization has 3-5 pithy mantras that it will abide by in all its decisions, it can lead to complex positive outcomes. On the other hand if one were to start from the complex outcome and work backwards, failure is guaranteed. I believe that great vision statements perform this function in aligning the actions of organizational stakeholders.

Sony Bravia ad

2007-03-24T11:30:00.000+05:30

The award winning Sony Bravia ad manages to evoke an emotional response every time! And this link seems to suggest that those multi-coloured balls you see in the ad are real ones.

The music is by Jose Gonzalez, and the song is called 'Heartbeats'.

Web 2.0 marketing

2007-03-19T12:07:00.000+05:30

Former India cricketer Krishnamachari Srikkanth seems to believe in the networked marketplace. He is promoting his cricket website Krish Cricket on an Orkut community. He has an Orkut profile too, and is glad to add friends! His website targets cricket fans through mobile games, and other interactive content. What better place to find young people than Orkut?

What's more Srikkanth is also promoting Google's cricket blogging contest, and has his own blog too.

Interactive Brands - featured in The Hindu Business Line

2007-03-15T21:52:00.000+05:30

Today, The Hindu Business Line's Brand Line supplement carried this article written by me. Link to website: Interactive Brands

Full text follows:

Today's young adult spends significant amounts of her time using the Internet. The Internet has become the dominant medium of keeping in touch, networking, sharing views with people all over the world, researching and getting work done (if you are a knowledge worker). The membership figures of prominent social networking sites such as Orkut and Facebook is indicative of this undeniable trend.

The young adult of today's world is hyper-networked, interlinked to many more people than before, and part of many more conversations than ever before. Marketers who are today selling their brands to a spectrum of target groups of which such hyper-networked individuals constitute a small but significant chunk will realise (as these individuals age) over the next 10 years that the entire marketplace has turned hyper-networked.

Are brick-and-mortar companies prepared for this change? I doubt it. The difficulty of `selling' to such hyper-networked individuals is that they are highly sceptical of advertising, branding gimmicks and PR spiel. This group tends to form and create opinions through n-way conversations that take place on the Internet through blogs, social networking sites and e-mail. Such communication is not just text-based - it could even take place through videos (YouTube), images (Flickr) and voice (podcasts).

The important feature of these conversations is that the information they contain is viewed with much more trust, primarily because such conversations do not have a hidden profit motive. The equivalent to this global conversation is the `word of mouth' benefits that brands earlier enjoyed in the brick-and-mortar era.

Join the conversation

The solution that one foresees in such a scenario is for brands to turn interactive, and actually join the conversation. Interactive brands would be those that effectively conduct two-way conversations with their defined marketplace. The earlier era was one of uni-directional communication, which involved running advertisements and other branding initiatives on one-way communication media such as the television, radio and billboards. Potential customers were expected to passively absorb messages from such media, and consume the advertised product or service. Occasionally positive word-of-mouth contributed to brand choice in addition to the creative message. However, with the emergence of the Internet, word of mouth assumes a much more significant and globe-spanning role in brand choice.

Corporate blogs

How then do brands engage in two-way interactions with their defined marketplace? One effective way to do this is a corporate blog, which incidentally finds itself in Bain Company's list of top 25 management tools of 2007. A key benefit of a corporate blog is that it enables an organisation to communicate in an honest, human voice to the world at large.

This honest voice would involve such former taboos as publicly acknowledging mistakes as and when they occur, honest promises on customer service levels, transparent communication on future product launches and internal thought processes. In addition to this, customers can use this forum to openly talk to the company, and about their experiences with the company's offering. A static corporate Web site can never create the kind of interactivity and richness that a corporate blog can offer.

Community of users

Another way for brands to get involved in the conversation is to create communities of users. Two examples come to mind - The Royal Enfield owners club of the UK, and closer to home, Sunsilk's `Gang of Girls' Web site. Such communities allow customers to interact with other users of a product or service, and have conversations that have the incidental benefit of providing inputs to product development initiatives. Additionally, they would also help companies observe the evolution of their customers, and respond much faster than ever before.

It appears that brands will have no choice but to be part of the conversation between users, or risk being left out completely. This is not to say that traditional brand building approaches are no longer valid. They still have a role to play, but that role is more likely to help in reinforcing the brand's message, rather than creating it from scratch. Additionally, smart brands will no longer view people as `target groups' but start viewing them as people whom they can best understand through conversations.

Iconic brands tend to tap into a customer's self-actualisation needs on Maslow's hierarchy of needs. People get emotionally involved with brands when they can relate to the brand in a manner that goes beyond mere price or quality. It is equally important for brands to get emotionally involved with their users by joining the conversation, or risk commoditisation. The choice is clear!

(The writer, an alumnus of XLRI, is with a multinational financial services firm.)

Some of my previously published articles.

Cricket ads

2007-03-04T11:51:00.000+05:30

With the World Cup around the corner, it's time for some very interesting cricket centric ads. Marketers will try every trick in the book to associate their brands with India's inexplicable obsession with cricket, and hope for a reciprocal Pavlovian passion for the product to develop. This one is the new Nike ad. Excellent stuff. Notice how Sreesanth and Zaheer Khan have the most insignificant role in the whole story. I have a feeling the ad is trying to tell us that the Indian cricket fan is much bigger than the Indian cricket star. I love the way the ad has this "order in the midst of chaos" feel to it, that only Mumbai can create.

And here's an old Adidas ad featuring Sachin, that still gives me goosebumps. Notice how the phone rings throughout the ad, as the world comes to a standstill waiting for Sachin to face the delivery. This is probably the best Sachin ad of all time, because it just lets him do what he is good at (playing cricket) without having to mouth any inane lines like 'Visa power, go get it'.

Self promotion

2007-02-27T19:57:00.001+05:30

Many of us are uncomfortable about self promotion, even if it is with regard to something that other people would really want to know about.David Maister talks about this phenomenon in this very interesting post and podcast.

Technorati Tags: David Maister, self promotion

Corporate blogging - my thoughts

2007-02-26T22:18:00.001+05:30

Over at Abhilasha's blog I found some interesting questions raised by her on corporate blogging. In this post I attempt to answer a few of them:

1. Why should my organization blog?
For starters, if you are a consumer facing company (B2C), it helps to have an open conversation with your customer. Customers love to know what their favourite companies are upto. This is more so in the case of products that early adopters love (tech products, gadgets etc). A corporate blog can also become a very human touch point for customers, when compared to a boring website or even worse, a call center!

2. What realistic expectations can my organization have about the benefits of blogging, and what
obvious pitfalls or shortcomings should we be wary of?
A great, engaging blog does a lot more PR than a press release ever will. A great corporate blog can also help develop a loyal community of users around a product. Human beings love to be connnected to causes - sometimes, merely promoting a great product (like the I-pod) can be a cause. A blog can help create such a cause.

3. Who in the organization should blog?
I would say, the most important decision makers should. That way promises made on the blog will carry much more credibility.

4. What role does PR/ Corporate Communications have in this?
None! Blogs are the new age response to that tiring, sugar coated thing called the press relase.

5. What guidelines/policy should govern corporates bloggers?
Preferably none. However office bitching could be avoided!! A broad guideline coule be - say anything you want, as long as it is something that the customer is interested in knowing.

6. How can my organization measure the impact effectiveness of corporate blogging?
There is no need to really measure effectiveness. Think of it this way - what is the impact of a CEO talking one to one with millions of customers everyday? Its difficult to put a number to that. That's because the revenue you earn from a corporate blog is goodwill.

Technorati Tags: corporate blogs, blogging, cluetrain

XLRI Alumni in 2006-07

2007-02-25T23:04:00.001+05:30

Prof. Madhukar Shukla compiles what XL alumni have been upto over the last year.

Technorati Tags: XLRI, Alumni

Kawasaki on market adoption

2007-02-13T17:53:00.000+05:30

The top ten stupid ways to hinder market adoption

Guy includes one of my pet peeves - enforced immediate registration - as one of the barriers. Couldn't agree with him more. I don't understand what the additional value 'registration' brings in in an Internet scenario, where identities can easily be faked. I'd rather have a million anonymous users than 100 users about whom I know everything, and whom I can later target for promotional offers.

Corporate blogs

2007-02-07T21:28:00.000+05:30

What kind of companies should start blogs to communicate with their customers? My thoughts:

1. Smallish startups that don't have marketing budgets
2. Companies that have very few product lines, or even better just one product. That way the conversation can be 1 to N. N to N conversations are just noise!
3. Companies whose brands directly touch individual customers. I wouldn't recommend a steel maker to start a blog for instance. I would certainly like to see, say, a winemaker with a blog (like this one). People would like to talk to or listen to brands that they directly relate to.
4. Large organizations that have people who are mini-celebrities in their own right - Steve Jobs, Robert Scoble etc.

At the end of the day, a blog is just a medium. The message is always more important than the medium. So, unless you have something compelling to say to your customer don't start a blog!

Mohammad Yunus at FICCI Mumbai

2007-02-04T14:10:00.000+05:30

Recently, I attended a FICCI organized talk by Mohammad Yunus, the nobel prize winning proponent of microcredit. Thought I'd blog about it, but found an excellent existing post that covers it pretty well.

A talk by Mohammad Yunus

Networked marketplace

2007-02-03T21:22:00.000+05:30

An instance of how brands will suffer if they ignore the emerging networked marketplace.
Looks like Air Deccan will need to do some serious brand rebuilding.

Missed flight, delayed flights and Air Deccan

I think an interesting thing for Air Deccan to try would be to setup a corporate blog, and start an honest conversation with its customers, acknowledge where they are going wrong, and tell us what they are doing to fix things.

Retail, and the invisible hand of the economy

2007-02-01T11:35:00.000+05:30

Reliance, Bharti may storm microfinance.

A perfect example of how the invisible hand of the economy works. Each agent works in his own self interest, leading to a greater good for mankind. The retail revolution in India may unknowingly help in fighting poverty in rural India.

Self-aggrandization post

2007-02-01T11:25:00.000+05:30

Gautam, India's number one business blogger considers this blog to be amongst his list of top Indian business blogs. Yay!

Anecdote

2007-01-27T11:22:00.000+05:30

I have always believed in the importance of narrative, and stories in organizations. Sometimes, these narratives assume even more importance than logical/efficient decision making. A typical example is the commonly heard "this is how we do things here". I found an interesting blog that is dedicated to such stuff - Anecdote. Anecdote is a consulting firm that works in this niche area.

Here's an interesting post from Anecdote - the difference between a sound argument and a good story

Bruner called the two modes of thought ‘logico-scientific’ (or paradigmatic) and ‘narrative’, arguing that:

the types of causality implied in the two modes are palpably different. The term then functions differently in the logical proposition ‘if x, then y’ and in the narrative recit ‘The king died, and then the queen died.’ One leads to a search for universal truth conditions, the other for likely particular connections between two events – mortal grief, suicide, foul play. (pp. 11–12)

To compare the two modes, Bruner claimed, is to understand the difference between a sound argument and a good story.

What should I do with my life?

2007-01-25T21:57:00.000+05:30

I will be posting links to interesting articles that try to answer this question that has troubled mankind for long. Will update this post over the next few days.

Steve Jobs - You've got to find what you love

Po Bronson's book - What should I do with my life?

Most attempt to answer it with one eye open, one eye closed. We let our fears govern our decisions; rather than challenging the validity of those fears, we accept the boundaries set by those fears, and end up confining our search to a narrow range of possibilities, like the guy looking for his car keys under the streetlight because he’s afraid of the dark. Some broad examples: we confine ourselves to a range that is acceptable to our parents or our spouse; we confine ourselves to places inhabited only by people "like us," meaning of our class and education level; we place too much emphasis on being respected by an imaginary audience; we shy away from avocations that take a long time to mature and pay off

Synchronicity!

2007-01-25T20:51:00.000+05:30

On Jan 21st, I wrote this on an alumni group of XLRI

"I doubt if the i-Phone will succeed - the main reason being that for once Apple is entering into a field that already has a lot of path breaking innovation happening (in a few years phones went from being just phones to cameras to music players to e-mail clients etc).

The I-pod, on the other hand, was launched in an environment where there was hardly any innovation happening on the portable music player front. The Macintosh, and its GUI was also launched in a similar technological environment. Both these products turned into icons because of the disruptive innovation they brought in. Iconic products tend to tap into the customer's need to identify with something that is path breakingly unique unique, and not possessed by many (atleast to start off with).

My guess is that the i-Phone does not have enough disruptive innovation built into it."

On Jan 24th, Peter Fader, in an interview featured at Knowledge@Wharton said:

Fader: Apple is facing a very different market. It's a market that's far more mature than the MP3 Player market was at the time. It's a far more sophisticated customer base. Apple had the opportunity to go into the MP3 market and basically reshape that market and create the standard for customers' tastes and preferences.

Those things have already been done by the myriad players in the cell phone market. Apple can do a very limited amount of reshaping. I think that when this phone actually hits the market, some of the grand visions that Steve Jobs has as well as some of the Apple zealots are going to be rather disappointed.

Interesting to note the high degree of similarity. Talk about synchronicity!

Sanjeev Bikhchandani on Naukri's IPO

2007-01-16T23:51:00.000+05:30

An excellent interview by Gautam.

Companies look beyond IIMs for fresh talent

2007-01-16T19:57:00.000+05:30

Very interesting trend

Beyond a point, the rising salaries of entry level management talent from premier b-schools may actually become unsustainable, making them unaffordable for a lot of companies! Already, FMCG companies are facing the heat at premier campuses, with the financial services sector/ consulting firms offering much better pay packets. Wont be surprised if this trend becomes a full blown reality in the next few years, particularly with the small number of "premier b-school MBAs" churned out every year.

The spiritual organization

2007-01-06T22:44:00.000+05:30

A recent article of mine which appeared inThe Hindu Business Line.

Link to the article: The spiritual organization

Full text follows:

People who work in a `nine-to-five' kind of workplace must often wonder why `work' is structured the way it is. The modern nature of work has its underpinnings in the Industrial Revolution and its many factories. These factories presented an interesting challenge in how a large number of workers were to be efficiently managed to produce a desired level of output. Frederick Taylor successfully studied and analysed work in factories, with his simple motto being reduction in variability — in other words, viewing people as mere parts of a machine that had to work together to produce a desired product. Needless to say, this view of work and human resources could not last for long.

People do not necessarily work to satisfy an economic function. People work for various other reasons including fulfilment of their potential, following their passions and so on. Such motivations are much truer of the modern knowledge worker who works more in the realm of ideas and analysis as opposed to actions and objects. Yet, I find that most organisations still largely view job roles along the lines of the `parts of a machine' model described earlier. With most modern professionals spending a significant chunk of their waking hours at work, work ends up being an important sphere to achieve a lot of life goals apart from economic goals. Work may even become a path to spiritual development (suddenly shifting the focus from the here and now to the next world if there is one!). The Industrial Revolution (and the Protestant Reformation) on the other hand, made society focus more on this world, with work being an important component in it. The Industrial Revolution and the modern knowledge economy are at opposite ends of the spectrum in the nature of work they create. And yet, very little has changed in the approach that modern organisations have towards people.

Most organisations that claim to be modern in all respects — be it technology, strategy, CRM, operations and so on — manage to be extremely archaic in their people practices. I find a huge hangover from the industrial era still permeating the hallowed corporate hallways. It appears that the `modern' knowledge worker lives in a world populated by access cards, nine to five regimes, appraisals that tend to measure performance in the way a car's performance would be measured and so on. It is thus no surprise that the very term human resources seems to convey a view of people as input-output machines (pay salary, will work).

In my view, the organisation of the future must be a spiritual one. Its goals must be closely aligned with the life goals of its stakeholders. In such an organisation, I would give people the freedom to choose what they want to do, within broad constraints. The underlying theme would be that people inherently love to work when the kind of work they do is closely linked to who they truly are. This concept finds support in the Bhagawad Gita too, where Lord Krishna commands Arjuna not to be a coward, and to be true to his dharma (the true nature of one's personality). The current approach to hiring, on the other hand, seems to be one of `filling open positions'.

Second, the spiritual organisation would pay closer attention to the non-work goals of employees. This may mean allowing employees to spend significant chunks of time pursuing these goals even during the `working day'. Career growth paths would be super-customised and not standardised. Thus, on a broad level, a spiritual organisation would place self-actualisation before profits, and this paradigm would present itself in the organisation structure, hierarchies, roles, career paths, approach towards customers, products and so on.

It is not as if organisations have been entirely oblivious to the way people view work today. A lot of new age companies — technology companies like Google, start-ups and others — do experiment with people practices to foster a culture of flexibility and openness. Hierarchies too are becoming a lot more informal. However, if one looks at the entire spectrum of organisations and not just a few nimble new-age companies, there is still a long way to go. People have progressed from being mere `resources' to `human capital', which is the most important non-substitutable resource in this knowledge economy. It's about time this change is acknowledged and capitalism turns into human capitalism!

(The writer, an alumnus of XLRI, is working with a multinational financial services company )

Some of my previously published articles:

What's your manifesto?

2006-12-07T23:55:00.000+05:30

Click here.

Indian b-school rankings

2006-12-06T18:33:00.000+05:30

It's that time of the year when thousands of young Indians appear for the CAT, and a whole lot of other management exams aiming to grab that coveted seat in a top b-school. A few friends who have been appearing for these exams have been asking me for advice on which schools to apply to. So, here's my list of top Indian b-schools you would want to apply to, factoring in placements, faculty, research, industry perception, alumni network, and brand value. I am adding a few brief remarks against each b-school.

Presenting, my personal list in no particular order

IIMA- good across all parameters

IIMB - placements

IIMC - known for being the best finance campus

IIML - good placements, not so strong alumni network due to it being a relatively new school
XLRI - strong alumni network, known for its niche HR program in addition to the regular business management course.

FMS, Delhi - strong placements in BFSI, constrained by the Delhi University tag

MDI - up coming, placements seem good going by reports

SPJIMR - same as above. Still not in the big league.

This is what IMS has to say.

The difference between the top few schools, and the next set of schools is quite huge in terms of industry perception, salaries etc. Thus, if one is a serious contender (by which I mean someone who has been preparing seriously, or has been consistently doing well in all those simulated CAT tests) and doesn't make it to these schools, one may want to consider giving the GMAT and applying abroad. For someone with a lot of work experience, ISB is turning out to be a good option with it's flagship 1 year program.

Work experience versus freshers
Some years back, most b-schools took in a large number of freshers. However, the trend over the last few years has tilted in favour of people with work ex. The primary reason for this could be an increase in the number of work ex applicants, typically those with a few years in an IT company. I do not believe there is any other reason for this trend. So, if you are a fresher who has a call from an IIM, the probability of you getting through depends entirely on your performance in the selection process. I do not think you gain any points or lose any because of your lack of work ex.

Choosing a specialization
Some applicants start comparing b-schools based on specializations that they are interested in. In my view, unless you have had some sort of managerial experience, there is not much value in this exercise. Most people develop an inclination towards a specialization after they join a b-school. In my own case, I started off being very interested in marketing, and then by the end of it all had developed a stronger interest in Strategy and Organizational Behaviour.

Placements
With so much hype surrounding placements at the top b-schools, it is easy to get carried away. However, it is important to remember that the few jobs that get talked about in these news reports are just that - few. The majority of the batch does not walk away with a $200,000 salary. So keep your expectations realistic.

Academic Pressure
Initially, there is a certain amount of academic pressure at a b-school. It may appear quite unnatural compared to one's graduation degree. However, with time, one gets used to it, and learns to beat the system, and manage one's time efficiently. By the second year, life is a lot more relaxed, and one actually feels a bit bored when there is not much to do.

GD, PI preparation
In the group discussion, the main thing that one needs to focus on is 'contribution'. Nothing else matters. It does not matter whether you speak first or last. If you contribute positively to the discussion, you have done half the job. How does one contribute? There are two ways of contributing.
1. Contribute with content: This is a simple way of contributing. You bring in facts, personal experience etc. to make the discussion more fruitful. Even better than bringing in facts, is to bring in unique ideas or perspectives. This will make you stand out in the mind of the evaluator.
2. Contribute by managing the discussion: Here, you play the role of a coordinator, who directs the discussion, or atleast nudges it in a logical direction. You demonstrate skills like summarizing, logical reasoning, data consolidation and presentation etc. In addition to this you can also demonstrate critical skills such as interpersonal skills, team player skills (occassionally sacrificing your point of view for the sake of consensus) , and leadership skills.

The personal interview is your play ground to showcase your uniqueness as a candidate. Remember that you are contending with about 10 people for every seat on offer. You need to give solid, tangible reasons for the panel to pick you over the others. The interview, also offers you a fantastic opportunity to control the discussion, by leading it to your comfort areas. For instance, if you want to showcase your extra curricular accomplishments, grab the first opportunity that presents itself during the interview to steer the conversation towards extra curriculars. Remember, the interview is more of a conversation, than a quiz. You are free to speak beyond the scope of the question asked, or even initiate a discussion as and when such an opportunity presents itself. This of course does not mean that you steer every question towards your comfort zones. The key is to pick and choose.
--
Finally, it seems to a be a bit of a tragedy, that over 2 lakh applicants appear for CAT for just over 1500 seats. With so much demand, I would estimate that we would need atleast 20,000 high quality seats in the top b-schools each year to satisfy the demand of both of the students, as well as the industry which is facing a shortage of quality management talent in the market.

I hope this post helps people make an informed choice. If there are specific areas that you would like to discuss in more detail, do mail me at mohit[dot]kishore[at]gmail or leave a comment.

Red!

2006-12-01T22:31:00.000+05:30

Fantastic branding

A great example of how brands and get associated with causes.

Also visit, Blog Red.

"(RED) was created by Bono and Bobby Shriver, Chairman of DATA, to raise awareness and money for The Global Fund by teaming up with the world's most iconic brands to produce (PRODUCT) RED-branded products. A percentage of each (PRODUCT) RED product sold is given to The Global Fund. The money helps women and children with HIV/AIDS in Africa."

Live search

2006-11-18T19:39:00.000+05:30

Though I'm an avid user of Google's portfolio of web-based products, I'm always on the lookout for non-Google applications that can give the search giant from Mountain View a run for it's money. Live search from Microsoft seems to be a step in that direction.

The interface is simple, the search results are visually elegant, the quality of results are good, and it opens up pretty fast too.

Try Live Search

Worldspace, are you listening?

2006-11-15T20:38:00.000+05:30

I have been watching Worldspace's brand building initiatives over the last few months with some interest. First was the tie up with A.R. Rahman as brand ambassador. That was a fantastic move. Clearly Worldspace and A.R. Rahman are two brands that have a number of common characteristics - music, innovation, generation next, international etc. The tag line - 'There's so much to hear.' - also hit a home run. I expect that things should be finally looking up for Worldspace as a brand. It has probably finally made a move from the 'Awareness' stage to the 'Consideration Set' stage. However, there are some sore points that remain.

Product Placement in Lage Raho Munnabhai
This was a great move. Good product placements are inevitably those that are tied in closely to the film's script, unlike those that are in your face for no reason (Eg. Elf in Viruddh). The Worldspace guys got that much right. However, they showed actors in the movie listening to Worldspace 'on the move', in taxis, using receivers worn around the neck(!) etc. Of course, all this is not possible with a real Worldspace receiver, which needs to be stationary and aligned in a certain direction at all times. In my view this is a serious mistake. One of the biggest negative points about the product is that it is not portable. Now, covering up this exact point is not going to help. You don't want customers landing up at the retail shop, armed with their credit cards and then discovering this critical piece of information.

Subscription Fees
The second problem with Worldspace is the fact that it charges a subscription fees. I expect this to be the biggest roadblock in the way for success. When all other competing music offerings in the market - FM radio, AM radio, MP3 music(!), MTV - are free, why would a customer want to pay an annual fee to listen to music on a Worldspace. MP3 music is of a comparable quality as Worldspace, and happens to be portable too, in addition to being free. If ICICI bank suddenly comes up with a paid credit card in this era of free cards, I would consider it only if it had a USP that no other alternative provides. Worldspace has no such USP (digital quality music? that's a commodity. 40 channels? Maybe. Niche channels? Yes, but I can get the same music on mp3, I-tunes, Yahoo Launch Cast... ). With this being the case there is no choice but to be free. There are other ways to bring in revenue, such as advertising, up-selling receivers to existing customers etc.

The Iridium Story
Many years back, Motorola launched Iridium, which was supposed to be this satellite phone that you could use anywhere in the world. Unfortunately, the cellular phone wave killed it (of course there were other factors too). I suspect that Worldspace too may be the wrong technology coming into the market at the wrong time. Gone are the days when customers would be in awe of 'digital cd-quality music'.

The music devotee
So, could it be that Worldspace does not care about common customers like you and me? Are they going for a very niche target group that has specialized tastes in music, and would be willing to pay for it? If that were the case, why are they going for mass market promotions like the Lage Raho Munnabhai example? Niche brands are successful when they stand for only one thing to one group of customers, not when they stand for everything under the sun. If you want to stand for everything, be a mass market brand.

What I would do
If I were the marketing manager at Worldspace, I would firstly scrap the subscription fees. It is a major nuisance factor, and a mental roadblock for any customer to seriously consider the product. Secondly, I would storm the market with receivers (probably priced a little more than what they are priced right now, so that the subcription fee can be recovered) and ensure that there is a big base of users in the first place. Once a critical mass of users is in place, I would then considering selling 'add-on' niche channels at a price. Alternatively, I would launch a plain vanilla free suite of channels, and let users add on a bouquet of other channels. It is important that the customer experience the product in the basic form first, before you do an up-sell. Worldspace seems to be entering the market directly with an up-sell (offering all channels to all people at fixed, and exorbitant subscription fee).

Yes, there's so much to hear. Worldspace, are you listening?

Summer Placements @ XLRI Jamshedpur

2006-11-15T20:32:00.000+05:30

Great show!

Free Riding and Social Loafing [featured in The Hindu Business Line]

2006-10-30T19:29:00.000+05:30

Today's Hindu Business Line carries the following article by me.

Link to the article: Free Riding and Social Loafing. Full text follows:

Free riding is a problem that is commonly found in almost all organisational contexts. With most tasks being accomplished by teams, it is quite common for a few members to slack off and not contribute to the team's cause, and yet not have the results suffer. As an economic phenomenon free riding has been studied for a long time.

A simple definition of a free rider is an agent who does not contribute his fair share to the cost of production of a resource, but receives an equal share of the benefits.

A simple example of this is taxation. Monies collected through taxes are deployed in various projects such as improving infrastructure, healthcare and so on.

Yet, a lot of people get away with paying no tax and still continue to reap the benefits of using those resources. The free riding problem is actually an `n-player' version of the famous `prisoner's dilemma', where `n' is greater than two. Where only two players are playing, non-fulfilment of one player's contribution would amount to the project being abandoned. However, when `n' is greater than two, it is possible for some players to not contribute, while hoping that others do.

Another interesting example of the free riding problem is the recent reservation protests in India.

Most protestors felt that while the general category of students would have to work really hard for the coveted few seats in the premier institutions, the reserved category would have it much easier without contributing enough (in terms of effort). Of course, those in favour of reservation could argue that the reserved categories have actually made up for this through the socio-economic suffering and discrimination they have faced.

Social Loafing
Related to the concept of free riding is that of social loafing. Social loafing refers to a situation where an individual holds back his contribution because he perceives that he would not be getting a fair share of the rewards in the eventuality of success, nor would he be blamed for failure. In an experiment by French engineer Maximilian Ringelmann, involving a group of people tugging on a rope, it has been seen that as the number of people increases, the total force exerted also increases, but the average force per person is seen to diminish.

The key difference between free riding and social loafing is that a free rider does not contribute to the cause at all, since his contribution is not essential for success, whereas a social loafer merely reduces his effort fully knowing that it would be impossible for an external observer to determine the same.

Dealing with free riding and social loafing
The Ringelmann experiment suggests that the size of the group may have some answers to offer us. A good manager may need to precisely identify the number of people it would require to successfully accomplish a task. Second, social loafing is seen in situations where it is impossible to identify individual contribution.

Thus, a good way to prevent it may be to clearly define the individual's role in the group task. Third, it is seen that social loafing does not present a major problem in cohesive teams (the reason being that team members value their affiliation with the group more than any benefits associated with social loafing). Thus, the choice of specific team members for a task may also help in minimising social loafing.

Task significance may also have a role to play in increasing motivation levels to perform. Task significance refers to the relevance of the task to the immediate organisation, group, society or the world at large.

One suspects that social loafing may be a less common phenomenon in an NGO, compared to other types of organisations.

Reward systems
Reward systems such as stock options and performance bonuses too increase the cost of not contributing, as non-contribution would directly lead to reduced benefits for the individual team member. Thus, each team member would at least contribute in his own self interest.

This is, in fact, not unlike Adam Smith's theory of the `invisible hand' of the economy, where each individual agent does whatever is in his self interest, and this somehow leads to a beneficial collective result, which is quite different from what the individual expects. Both free riding and social loafing are phenomena that are seen in all kinds of organisations — companies, families, communities, neighbourhoods, governments and so on. It is thus not surprising to find Glaucon arguing (many centuries ago ) in Plato's Republic that an individual need not obey the law in situations where he can escape the consequent sanctions!

(The writer, an alumnus of XLRI, is working with a multinational financial services company)

The networked marketplace [featured in The Hindu Business Line]

2006-09-25T14:15:00.000+05:30

Today's Hindu Business Line carries the following article written by me. Link to the article on the Business Line website: The networked marketplace

Full text of the article follows:

"A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter — and getting smarter faster than most companies." — The Cluetrain Manifesto

The implications are clear. Modern organisations need to be more nimble, more clued into what is happening in the external world — in the real world. They need to `talk' to their customers, not `talk down' to their customers through flashy corporate ads. They need to project a voice that is authentic and not sugar coated in marketing spiel. Companies need to start appearing genuine, human, humane and vulnerable if need be. This is the message of The Cluetrain Manifesto, a pathbreaking book, which in the true spirit of the Internet is available freely on the Web.

Very few companies, if any, have woken up to the reality of the networked world. So, one sees companies that do the market research, decide the product and brand attributes, launch the product and wonder what went wrong. What is likely to have gone wrong is that your customers have been talking to each other and spreading the `word' faster than your `advertisements'. Be it film reviews, music reviews, product and gadget reviews, people are talking, and talking like never before. Products get trashed before the first ad comes out.

Here is an insight that organisations need to pay attention to: Customers trust human voices. This explains why nothing beats word-of-mouth publicity, and today the biggest word of mouth movement is happening on the Internet.

Building Relationships

After all, every purchase made by a customer is a new relationship created with the company whose product the customer has bought. When I receive my monthly phone bill, I notice that it bears a `relationship code'. Yet companies do little to nurture a customer relationship the way a human relationship is nurtured. Strong brands like Google actively engage their customer in the `conversation'. The Google Blog for instance, is a place where customers can see what the guys at Google are up to . It's about time brick-and-mortar companies too embrace this new form of conversation. And as the manifesto says, "Because they are networked, smart markets are able to renegotiate relationships with blinding speed."

Employees of organisations are also part of this new form of conversation. People are actively and virtually networking with each other to find out more about each other's organisations. Employer brands are being created and destroyed in this brand new market place as fast as thought and the strokes of a keyboard. Secondly, markets too want to talk to employees. They want the inside track on what really goes into their products. Companies need to let go and let this conversation happen freely. Robert Scoble (Microsoft' erstwhile star blogger) did more to humanise Microsoft than any ad campaign ever would have.

The way forward

As I see it, the way forward would be for companies to view `advertising' as one of the ways of talking to customers, and not the only way. All kinds of organisations need to embrace the power of the Internet as the new global market place where brands will be created and destroyed — where your multi-crore ad spend will be thrown into the bin when your customers rant about your call centre service on their blogs. The future is a world where mere brand logos and taglines wont suffice. It will be a place where brand voice (how your brand talks to your customers) will assume more significance. Brands would need to be `humble' and not mighty; brands will have to understand, rather than be understood; brands will have to listen and not talk.

It's a brand new era that is unfolding (and, indeed has been unfolding over the last few years). Blogs, social networking, Web 2.0 and so on are all going to fundamentally realign the way society is structured, and people will be netizens of the marketplace first and then citizens. The future looks exciting, and archaic institutions will need to embrace this change for their own good.

Machiavelli on Leadership

2006-09-19T20:43:00.000+05:30

"Moreover, men are less careful how they offend him who makes himself loved than him who makes himself feared. For love is held by the tie of obligation, which, because men are a sorry breed, is broken on every whisper of private interest; but fear is bound by the apprehension of punishment which never relaxes."

From Niccolo Machiavelli's The Prince

Seems to be a reference to Coercive power, which is one of the 4 sources of individual power.

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Legitimate power: From holding a formal position. Others comply because they accept the legitimacy of the position of the power holder.
Reward power: Target complies in order to obtain rewards controlled by the agent.
Coercive Power: Compliance is to avoid punishments controlled by the agent.
Expert Power: Based on a person’s expertise, competence, and information in a certain area.
Referent Power: The target person comply because they respect and like the power holder (agent).

Lessons in Positioning - Nokia n-Series Vs Reliance Infocomm

2006-08-26T20:46:00.001+05:30

My favourite ad on television these days is the Nokia n-series ad. I cannot think of any other ad that communicates to it's target segment as precisely (like a hot knife through butter, if I may use a Sidhuism) as this one. The film opens to the shot of a guy removing rings pierced on his face, and moves on to a guy with long hair, who gets a haircut (and I presume a new Nokia n-series phone), then we move on to a guy who trades in his old tattered jeans for a new one, and similar such life situations where people make that transition from being young and rebellious, to older more mature selves. The fantastic jingle begins with 'Zindagi ki nayi mod pe, aa gaye aaj hum' - which roughly translates to -Today, we have come to a new turn in our lives. The positioning is crystal clear - the n-Series is not your first phone, it's your second phone, the one you buy when you move up in life, the one you buy when you have had enough of living your rebellious college bum life, and move on to greater things (like employment, your first car etc).The whole ad just focusses on positioning and customer segmentation (by stage of life) - no rubbish about the phone's features or the prices. Sweet.

Check out the clip below

On the other hand, we have the new and youthful 'Reliance Infocomm', which has absolutely gone berserk with colours. Their new ad celebrates 2.5 million customers (and growing). However, the positioning goes haywire. The ad features these young twenty-somethings humming the new Reliance signature tune, while facts about the company appear to their right (in colours that I can only call vulgar). The average Reliance customer is NOT trying to make a statement about his cool quotient through his brand choice. It is more likely that he is a cost conscious person who wants a basic connection.

What seems to have happened is that Anil Ambani has decided that all his brands will be 'youthful', in stark contrast to brother Mukesh's staid brands. So, suddenly Reliance Infocomm (which had, and continues to have no brand attributes associated with it except cheap) finds itself in a desperate situation trying to be young and hep, instead of being itself - a lesson that is as important for a brand as it is for us mortals.

The analytical genius of Times of India

2006-08-20T12:15:00.000+05:30

This article (titled, Want salary hike, join financial sector) on increase in salaries in the financial sector points out:

"India Bulls was amongst the highest payers in financial sector with a 262.44 per cent increase in their staff cost. Firms like Geojit Financials, IL&FS and CRISIL also registered 82 to 85 per cent rise in their staff expenditures."

Thus TOI would have us believe that a 262% increase in staff costs, corresponds to a 262% increase in salary, thereby making Indiabulls the highest payer in the financial sector. Wow. Now, if Indiabulls doesn't hire you, I suggest you head to Balaji Telefilms , where again the staff costs went up by 251%. Needless to say, TOI would like us to believe that this means that salaries went up by 251%.

Do we need to point out that staff costs go up when you hire more people (both Indiabulls and Balaji being growing companies), and not necessarily because you are paying your people more.

"The salaries rose by over 251 per cent in Balaji Telefilms and the drop in the profits of firms like Cinevistaas, UTV, Zee Telefilms, Mid Day Multimedia and TV Today can be partly attributed to the increasing staff costs, the release added."

I can see the young journalist writing this piece as it was originally meant to be - one about salary costs going up and affecting bottom lines. But, why would an ordinary reader of TOI be interested in something like that? He would be interested if you told him that salaries (particularly his own) are going up. Now, with that marketing insight in place, all you need is to substitute the phrase 'staff cost' with 'salary' in a few places in the article, and you have a story about salaries - which can then be given a juicy title - Want salary hike, join financial sector. Subsequently, this story can be put up right in the front page of the website, where readers will keep clicking, generating more revenues for TOI (Cost per ad impression).

MBAs prepare people to manage nothing

2006-08-18T21:39:00.000+05:30

Or so says Henry Mintzberg .

To some extent it is true, because most MBA courses focus only on functional areas, and not on true people management or leadership. An ideal MBA course should probably focus on business concepts in the first year, and pure practical management and leadership in the second (possibly through social projects, live consulting projects, startup incubation etc.), culminating with placements.

I suppose one of the main reasons why IIMs, XLRI etc produce successful business leaders could be that the input raw material itself represents the topmost performers on the entrance tests with 10s of thousands of candidates, a group of people who I suspect would succeed anyway.

Carnival of the capitalists

2006-08-02T16:20:00.000+05:30

The lastest Carnival of the capitalists, featuring great posts from the week from business and economics blogs is out. Incidentally, this week's edition happens to feature Slow Leadership, a blog I recently wrote about.

Downtoearth.org.in - a new kind of cola war

2006-08-02T15:58:00.000+05:30

If it wasn't enough that softdrink makers use up precious reserves of ground water (thereby depriving farmers of the same) and spend very little on it, they now wish to have no standards to be set for pesticides in soft drinks. They contend that since vegetables, milk etc already contain pesticide, what harm can a little more of it do?

Three years after releasing the findings on pesticide content in softdrinks, the CSE continues its fight.

Read this, from downtoearth.co.in : The street fight
And read this from The Frontline: Thirst for Profit

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Update: Since this post is attracting more comments, thought I should add some more views on the way the issue is being handled by the cola companies. They seem to have realized that the best way to react to any controversy in India (be it terrorism, flooding in Mumbai etc) is to just keep quiet, and hope that the issue dies a natural death in our collective consciousness.

Secondly, this is also an example of how companies view customers as 'target segments', (who can be fooled into buying a product, leading to increased revenues) instead of actual people. What I would like to see instead is an 'explanation', not a yogic meditative silence on the issue. If you believe that the pesticide content in your product is at acceptable levels, tell us why you think the CSE is wrong, and don't put your US lobbies into overtime duty by threatening that this issue could affect FDI prospects in India.

Thirdly, the argument that there should be standards for inputs in the product (water, sugar etc), but not the final product is illogical. Consumers drink the final product, and not the inputs whatever their level of purity may be. I have noticed pani puri sellers who put up little signboards that say 'Only Aquafina water used for pani puris here'. Surely, we expect better from a multi-billion dollar MNC.

And finally, I am sure other industries too use up ground water. But lets have answers from the soft drink makers first, shall we? I suppose steel and paper contribute in some manner to nation building, whereas softdrinks just corrode teeth, and make people fat. Mangola (Pepsi's mango drink) for instance, contains about 15 grams of sugar per 500 ml, and if I am not mistaken, the dietary requirement of sugar would be about 12 grams for an entire day. (I could be wrong about this last bit though.)

And yes, in case you did not read the Frontline article at the top of this post, do so now. Click here.

Leadership vs Management

2006-07-31T19:18:00.000+05:30

I have always believed that leaders and managers are two different kinds of people. This article, distinguishes between leaders and managers quite well.

Leaders conceive and initiate strategies that create and sustaincompetitive differentiation and advantage. They continuously pursue and evaluate innovations that may lead to increased productivity, new business opportunities and markets, and new or expanded competitive advantage and differentiation. They direct and influence corporate activities and behaviors to develop an environment and processes that support and sustain these strategies

Managers implement strategies in day-to-day operations. They establish processes and systems, create business rules and operating procedures, and monitor performance to maximize the efficient production of the company's products and services. They have the frontline responsibility for ensuring efficient and appropriate use of company resources, including equipment, employees and capital.

Thus, in summary it appears that leaders think, and managers implement. Now, here is my insight:

Most orgnanizations actually reward good managers. Good managers, over a period of time tend to occupy leadership roles. Is this necessarily good? The skill sets that are required from a manager seem to differ from what a leader requires. A manager is likely to be one who is good at delivering results, planning, organizing, people skills, data analysis etc. A leader on the other hand would need to begood at analyzing the environment, predicting trends, understanding human potential (of his team), influencing people and so forth. Plato believed that philosophers would probably make good kings. In the same vein, it appears that a good leader would be one who is an evolved creature, who can get away from the mundane operational issues, and look far ahead into the future.

Now, if this hypothesis is true, shouldn't organizations look for different kinds of people to occupy these two kinds of roles. In other words, I would like to see organizations look at creating two kinds of talent pipelines - a management pipeline, and a leadership pipeline, and not mix up the two. The management pipeline would consist of the left-brainers, the people who know what needs to be done to get the job done - the analytical people, who are good at making plans, roadmaps etc. The leadership pipeline would consist of the people with softer skills - creativity, intuition, vision, good values, a sense of justice, fairness etc. A leader is almost like a lighthouse, that creates paths, while good managers are probably like sailors who know where to go thanks to the lighthouse, but need to use their own talents to 'get there'.

Needless to say, this classification may make the 'leaders' appear more glamourous, but that is the case anyway in most modern organizational hierarchies. I however believe, that both skills are equally valuable - without good management, ideas would just remain ideas.

The new and improved 'Management by Matrices'

2006-07-29T22:55:00.000+05:30

As you can see, this blog has just made the leap of faith, from being a drab old blog (in terms of look, not content!), to a sleek, sexy branded look. Many thanks to Joshua 'design' Karthik for that.

I recently discovered, that a few quality blogs (like this one), find this blog's content worthwhile to list it in their favourites. That was motivation enough for me to go for a more branded look, in addition to trying and maintaining a healthy posting frequency. Now, if only I actively 'promoted' this blog, I suppose more traffic would come in. However, I tend to be a little more traditional in my views as far as promotion is concerned. I would prefer my readers to do the promotion if they like my stuff, rather than do it myself. Yes, I seem to be disregarding, an important 'P' of marketing. Hmm..who knows, I may just decide to turn immodest!!

Watch this space for more...

Slow Leadership

2006-07-22T17:05:00.000+05:30

I thought I was the only one who did not support the modern management style of 12 hour working days, and break neck speed decision making. Turns out there is a dedicated blog on this, that advocates a form of leadership that they term 'Slow Leadership'. This is a link to their first archive page.

The eight key principles of Slow Leadership:

1. Right Tempo
2. Right Attention
3. Right Balance
4. Right Perspective
5. Right Direction
6. Right Relationships
7. Right Enjoyment
8. Right Gratitude

Reminds me of Stephen Covey's approach, that tends to focus more on the basic human side to leadership, and not the superficial jargon laden one. The move to the 'basics' has been an ongoing management trend that I have observed. Business schools too have realized that Organizational Behavior is probably a more important leadership tool than say, Financial Management. We seem to live in a world that admires speed more than anything else. There is an acute sense of there not being enough time to do anything, which stems from an equally acute desire to do everything at once.

In such a fast paced environment, we need to re-look at the people side to enterprise. We need to understand that organizations exist to serve not just customers, but also employees. Slow Leadership seems to advocate this deliberate slowing down. Human beings need to reflect, as much as they love to act. Modern organizations tend to focus more on action, and allow little time for reflection. In this quest for bigger, better and faster, are we becoming better people, or are we becoming 'resources', a term often used by HR managers to refer to people ?

Smaller cell phones please...

2006-07-03T18:21:00.000+05:30

I've been looking at the trend of mobile phones growing in size with amusement. I thought the logical way to go would be have smaller and smaller phones, till you had one that fit into your ear (or implanted into your brain!). On the contrary, mobile phone makers are trying hard to fit in every possible function into the device from camera's to FM radios to e-mail clients. As a result, the end product is a lot more bulky than a purely functional phone. A better way to do things would be to make smaller phones that do the basics, which have lighter batteries that last longer, which radiate less heat, which probably integrate voice with video and which finally make the 'talking to people' experience better.

It's about time somebody did to mobile phones what Apple did with the i-Pod - create a super simplified phone that can be used for only one thing - making calls. I mean, who uses a mobile phone for any serious photography??

Google versus Microsoft, and the Henry Ford trap

2006-06-15T18:16:00.000+05:30

Google and Microsoft differ fundamentally in their views on Office applications. While Google is all for having the application residing on a server, with the user accessing and using it through a thin client (browser), Microsoft believes in the traditional notion of having the application reside on your hard disk. [read about Google Spreadsheet]

In the medium term, with bandwidth being an issue, apart from the fact that there is only so much you can do inside a browser, I expect Microsoft to win the Office battle. In the long run too, with cheap hard disk space and cheap processors, I do not see much benefit in a browser based Office suite. One benefit that I forsee is that collaborative editing (example, Writely) may really take off (people in remote locations editing the same document over the Internet), but I am sure the guys at Microsoft will find a way to include collaborative editing within Office.

Is Google falling into the Ford trap ('People can have the Model T in any color - so long as it's black.') with it's insistence on developing applications that reside in the browser? Time will tell, but my hunch is yes.

Reward loyalty or performance?

2006-06-14T21:39:00.000+05:30

All organizations reward members for loyalty. I am wondering whether this is the right strategy, particularly when loyalty is not accompanied by performance. Is retention such a high priority that organizations would like to keep people (even bad ones) at any expense? The answer may lie to a small extent in the realm of emotions. An employee who has stuck around for long with a company is likely to have a strong sense of affiliation to it, and is likely to serve the organization favourably in his decision making and performance (even if it isn't peak performance). It probably pays to have such people with you, rather than those who crib at every opportunity, and may jump ship any day. Secondly, and more importantly, rewarding loyal employees may also help to serve as a signal to good performers that hints at what their own future might be like. The question here is whether the signal may actually fail, if good performers begin to think that loyalty assumes precedence over performance.

My personal view on this is that only performance must be rewarded. Rewarding loyalty, purely as a symbolic measure is just going to be that - symbolic - and not greatly beneficial. Moreoever, rewarding performance is likely to increase loyalty of good performers, thereby leading to a virtuous cycle. Productivity in goverment offices gives us a hint of what happens in organizations that only look at loyalty at the expense of performance.

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Nirav, points out an interesting example of a reward system that combines loyalty and performance - stock options! You get them only if you stick around, and you reap the benefits only if your company does well (which indirectly means that you have to contribute to the cause).

The Stock market - Could Mutual Funds support the market in some distant time in the future?

2006-06-12T20:44:00.000+05:30

I'm no stock market expert, but look what Mutual Funds were upto during the recent (and indeed ongoing) Sensex 'correction', and all the bloodshed that followed. This could be an indication that in the long run, MF's and retail investors could actually support the market.

I am also convinced that behavioural economists probably do better at the stock market than those who follow scientific methods such as 'top down' or 'bottom up' stock picking. But then, I am no expert!

Source: Frontline's cover story

Servant Leadership - another fad

2006-06-11T21:22:00.000+05:30

The concept of Servant-Leadership was coined by Robert K. Greenleaf (1904-1990) in his essay The Servant as Leader.

Servant leadership is a form of leadership in which the leader desires to 'serve' first, and then assumes a leadership role by conscious choice. Greenleaf recommends that the simple mantra is to just 'serve' others in whatever situation you are faced with. Followers, while being served, become 'healthier, wiser, freer, more autonomous, more likely themselves to become servants themselves'.

The concept seems to boil down to "selfless service", not unlike what Indian philosophical texts have been recommending for thousands of years now! To me the whole concept of 'Servant leadership' seems more like a management fad than anything else. It seems to be a fresh articulation of leadership tenets that have existed for long. In fact most business books fall under this cateogory, possibly because modern managers don't read enough, and need to be spoon fed with easy to remember concepts in the form of 'The One Minute Manager', 'Principle Centred Leadership' and other such 'for dummies' books.

Signaling theory

2006-06-11T13:40:00.000+05:30

An interesting post from a Fazeer's blog on economics, which I have been frequenting of late.

Signaling Theory…or why the hardest bit is getting past the secretary