Wednesday, April 18, 2007

What Drives Business?

I was asked to write an article for our college magazine on the topic - 'What drives business?' and here's what I came up with.

This is a draft version. The complete version is in the magazine which comes out next month.
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(The following is a small fictional story that takes place in a company called Widgets India Pvt. Ltd. This story tries to look at what drives a business through the eyes of practitioners.)

The Introduction

Guru V Gurumoorthy
CMD and Director – R&D


‘Baloney’ was the word that came to my mind as I was discussing with Siva yesterday about the possibility of right sizing the company. Both of us knew that the decisions we took would affect the lives of so many families who have given so much for the success of this company.

I still distinctly remember the day I stepped back on Indian soil fifteen years ago after completing my PhD from the USA. Starting a company in India back then seemed a crazy idea. “Wishful thinking”, said everyone around me. But to me it was all very clear. I would have the power to give jobs to so many people if I came back, the same jobs I am supposed to take away now!

G. Sivaramakrishnan
Director – HR

I have not seen Guru in such a mood ever before. I have known him from the time we were kids, after all our dads worked together and we went to the same school. He has always been fresh and full of energy. To me he is still the kid I knew. Yesterday was different; he looked tired and sapped.

Guru started this company from scratch. With his patent for a new process of making widgets, he could have done this right in the US but he chose to come back. Money was never a problem for us from the start, getting people was. We had to make people leave their secure government jobs and join a young startup. Looking back, I would say they had made the right decision. But I guess the good times don’t last forever. Guru has not told me his decision yet, but I expect some big announcements today at the meeting.

Gaurav Shah
Vice-President – Marketing and Sales


I don’t know why we have this sudden meeting today. This better be good ‘coz I had to cancel a customer meeting for this. Gurubhai has been acting funny this week. I love this company and though we are going through tough times, I strongly believe that we will turn it around.

I still remember the speech Gurubhai gave at our college ten years ago. ‘The true leader is not the one who gets more accolades, but the one who wins more hearts’, he said. This simple truth has helped me close many a deal in my career. As a fresh MBA then, I clearly knew joining this company was my destiny. The more experienced among us told me that I would be spoiling my career and that a company making widgets would never succeed in India. They advised me to take up a job in FMCG or one in a big government company. I decided otherwise. I have never regretted my decision.

T. Shyamsunder
Vice-President – Accounting and Strategic Finance

‘Tough decisions have to be made in successful companies’, I tell Mr. Gurumurthy every time I meet him. He is a good man, but then we are running a business here.

I joined this company six months ago. I am supposed to be their turnaround man. I have studied the entire cost structure and pricing ability of the company’s products and submitted a report to Mr. Guru a week back. We desperately need to drastically cut costs if we ever hope to be competitive. I hope some useful decisions are made in today’s meeting.

Ragahvendhar Rao
President – Operations


I am hearing a lot about job cuts and this is really demoralizing the workforce. I hope we don’t take such drastic measures. Guru and his R&D team are almost ready with widgetX. Guru tells me how we will take off once the product hits the market. It’s just a matter of time, a year or two utmost.

I have been with Guru from the start. Siva, for lack of a better word, had poached me from a big government organization with a promise of more challenging work. And boy has he kept up with his promise! We have seen trailblazing growth in the past and I hope today’s meeting will set the direction to get us back on that track.

The Meeting

Gurumoorthy: “Good Morning Gentlemen. For the past few weeks, I have been having frequent discussions with most of you regarding the current situation of the company. Most of you have been, in this time, compiling data and taking an objective look at our sales, operations and financial performance. When I take a combined look at all the data I don’t see a pretty picture.

We started the manufacture of widgets in India and we are probably the most innovative company here currently, but as you see we are neither the top company financially or in the marketplace. I know that some of the major reasons for this have been the entry of multinationals and big Indian conglomerates into this business. This meeting though is not to discuss about them. Neither is this meeting for discussing the causes of our plight.

I have called you gentlemen, to discuss something more fundamental. I want you to do some soul searching and tell me what according to you really drives our business and taking it forward, will drive our business in the future?”

I did not want them to start a blame game by asking them as to what went wrong. Instead I wanted them to ask themselves what it is that when done right can right the wrong.

Ragahvendhar Rao: “With all due respects sir, what makes an airplane work – the engine or the wings?”

Gurumoorthy: “Point well taken Mr.Rao, but all I wanted was for everyone in this forum to come to the same level of understanding regarding all the activities in this company before we decide on a course for the future. I wanted everyone to appreciate the purpose and direction of departments other than theirs”

Gaurav Shah: “I believe a strong marketing strategy built around the needs of our customers is what has driven our business till now. All our competitors though have really caught up with us on that. But where we really stand tall is the customer’s knowledge about us. They know our customers but our customers know us!

We are one of the most well known and trusted companies in the market and our competitors are constantly being benchmarked against us. All we now need to do is to build a strategy to leverage this mind share to get the market share. I suggest we do a comprehensive and integrated marketing campaign that tells the market why we are different. We can introduce a slew of schemes, promotions, warranties and tie-ups backed by targeted advertising. This strategy is what I believe will propel us forward till we take off with the introduction of widgetX.

Gentlemen, we do not have the lowest price in the market. So, let’s be different.”

T. Shyamsunder: “Using our brand image to increase sales is fine but our current cost structure does not allow us to compete in the market. A detailed costing analysis has revealed that our variable costs are more than the price we command leading to negative contributions. We are bleeding gentlemen. Gaurav spoke about growth. I am here to talk about survival. And sound and prudent financial management is what will help us survive and drive us through these tough times.

Our competitors are driving our pricing decisions, but what they cannot decide is our costs. That is the variable we have in our hand. I strongly suggest we start a program to drastically cut costs. Our current employee utilization rates are an abysmal sixty percent. We should immediately lay-off some employees to bring the numbers close to ninety-ninety five percent. This single move will reduce our costs by five percent.

I know this is a tough call, but right now we need to survive and our survival depends on cutting costs.

Ragahvendhar Rao: “Downsizing is always the trump card we management have, to pull ourselves out of tough spots. But, by doing so we are just pushing the real issues under the carpet. We also have to see the long term effects of such a decision and the morale of the surviving employees. Moreover these are real people that we are dealing with and not just numbers.

In the past our production has invariably been able to meet the demands of the market on time. Our quality and reliability have really been the driving force in establishing our brand in the market. If we are able to increase our sales by measures suggested by Gaurav, we will be able to match that demand by moving to three shifts from the current two shifts increasing machine and manpower utilization rates.

Moreover through a process improvement program, we can improve the flexibility of our production. With that we will be able to churn out smaller batches of customized widgets exactly matching customer requirements giving us a better pricing ability compared to our competitors. All these improvements will augur well for the eventual launch of widgetX as well.

Friends, we can improve on the cost front without going in for lay-offs.”

Gaurav Shah: “Good suggestion Mr.Rao. I can include a ‘Widgets to order’ program as part of my campaign.”

G. Sivaramakrishnan: “Three shifts is a very good idea. This gives a strong signal to the workforce that the management is not going for a lay-off strategy. This will improve our attrition numbers.

Moreover our employees are our wealth. The experience that our employees have in the widget industry is way ahead of other competitors. It’s our people who have driven our business to the success and stature we enjoy today. We simply cannot afford to lose them to our competition. We will then be handing over our competitive advantage to them in a platter.”

Gurumoorthy: “Well said Siva. It’s definitely our people who have taken us to success and it is by them we will stand in times of distress. I am sure together we will be able to turn around the company.

I thank you all for taking time to answer my question. You have all answered in earnest and I now clearly see what really drives our business. No, all businesses in general. It is passion gentlemen. Passionate people like you make business successful. With each one as passionate as you are about your domain, when put together form a force potent enough to take on any obstacle we might face. It is not the engine or the wings that make an airplane work, but man’s passion to fly!

It is this passion that made me start this company. It is this passion that will take this company to greater heights.

Gentlemen, I present to you widgetX.”

Friday, March 16, 2007

Mission Accomplished!

Warning: This post is unlike any other post in this blog and it does not make sense.So plz. don't read it!

'Mission accomplished' was the first thought that crossed my mind when I got that job offer from my new employer. The very next thought incidentally was 'What next?'. Strange isn't it? A year ago, the situation that I was in, I would have given my right arm for this job - Chennai base location, onsite opportunities, Aerospace domain, a decent salary and a good brand to add to the resume!

A year ago I would not have asked for more. But today, it feels different. There was no joy after the placement was over. No elation. I even waited a week for that feeling to come. It did not. I have always been proud of the fact that I had limited wants. That I have always been happy over the smallest successes that I have had. That I could easily give what I had to those who wanted without flinching. That a Rs.30 book bought near Moore market gave me more happiness than a Mercedes Benz.That the only things that I ever wanted were a bike, a computer and an unlimited internet connection. Nothing more.

The MBA course or something else has numbed me. Nowadays, I neither feel sad nor happy. I just feel uncomfortable, irritated and out of place. There's something missing, I dunno what. I watch movies to escape this feeling. I have seen close to a 100 movies after our placement. Thats like 3 movies everyday!

No motivation to attend classes.No motivation to do something useful. Nothing. I am just hanging out everyday with a bunch of oddballs(just like me) and doing nothing. Somebody(God) save me!

I never wanted anything personal to hit this blog, but then I was irritated that I am not updating this thing like forever now. No new ideas u c. Hence this post.

Friday, January 26, 2007

IF

My dad introduced me to this poem just before I left for BITS...Gives me inspiration whenever I need! With placement season around the corner, I once again go back to this ocean of inspiration!

'if' by rudyard kipling

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream - and not make dreams your master,
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!

Rudyard Kipling

Friday, January 19, 2007

Marketing India!

Marketing India!

“The fastest growing free market democracy in the world!” screamed a billboard at the World Economic Forum in Davos. This might well have been the first tiny step for India’s marketing campaign to woo foreign investment, but to a nation that was for a long time inward focused, it is a giant leap.

The question is why India should market itself at all. After all, the Indian culture has always preferred the path of the understated and unspoken with branding and marketing being considered hubris. The answer is that as a nation we are at the cusp of events and our decisions now will determine our future. From being a nation filled with social strife and economic disparity to one of economic superpowerdom, we can be anywhere in between.

But then again, does marketing fit into the scheme of things? Yes, because we are in an era defined by globalization, technology and communication, reduction in traditional boundaries, and stronger focus on international relationships and strategic alliances. And in this era, every nation has a position in the global pecking order and every nation must sell itself before selling its products.

This marketing of the nation as a brand leads to what Joseph Nye, a former U.S. assistant secretary of defense and Harvard University professor of international relations, calls ``soft power,'' which he defines as ``the ability to get what you want through attraction rather than through coercion.'' “Coercion”, he says, “needs the stick of military power or the carrot of money. A country's soft power, by contrast, rests upon the attractiveness of its culture, the appeal of its domestic political and social values, and the style and substance of its foreign policies''

When talking about the Indian culture, words like spirituality, yoga and alternate medicine immediately strike a chord in the western mind and these are considered chic. With the largest functioning democracy, independent judiciary and free press, the Indian political and social values are definitely aligned with the west. And foreign policies, after the opening up of the economy in 1991 have been forward looking. These are just indicators of the soft power that India can wield on the world and pull the world’s attention onto itself if marketed effectively.

But then, acquiring soft power is just one side of the marketing coin. This side addresses the problem of changing the world’s perception of India. The other side of the marketing coin deals with creating, communicating and delivering actual value for businesses and individuals wanting to associate with India. Unlike soft power, this ‘value’ is not universal to all. Hence the need for creating as many value centers as possible each with its own unique value proposition (UVP). Some of the value centers that have come up inadvertently in India are Diamond state- Gujarat, IT city- Bangalore and Textile town- Tirupur. Eventually these value centers become brands unto themselves and they will be the windows through which their customers look at India.

The companies in these value centers will individually have to become world class in order to compete with similar companies having similar workforce trying to woo the same global customer. To achieve that they carve niches and create UVPs within their operating space and become world renowned brands like Infosys and Wipro have in the field of IT. The leaders of these companies then become brand ambassadors for the country.

These companies competing as they are with each other and the rest of the world will require every employee to be accountable and deliver value to the company and eventually to its customer. In a way every employee has to market himself and his work to survive and succeed.

Thus every employee, by doing his work in a way that adds most value to the customer is marketing himself, the company, the value center and the nation! As every citizen realizes this, we begin to decide our own future and the future of the nation. And what an exciting future it promises to be…

Fortune in an electric train!

Fortune in an Electric Train:

“If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value conscious consumers, a whole new world of opportunity will open up” – C.K.Prahalad, The Fortune At the Bottom of the Pyramid.

It was a sunny Friday afternoon as I boarded my train to Tiruvallur from the bustling Moore market complex in Chennai Central. The train was full and I considered myself lucky to find a seat albeit close to the aisle. I usually prefer the window seat because I like to gaze at the country side and the breeze sets a somnolent ambience. But this was a different day and a different experience.

Seated along with me was a cross section of what I would call India’s semi-urban population. There was an electrician, two nuns, an old couple, a couple of political enthusiasts, a group of factory workers and a bunch of school kids. I call them semi-urban because they work, pray, shop, study and conduct most of their activities in the city while living in the towns and villages surrounding it. With nothing else to do, I began to eavesdrop inadvertently. The conversations’ though banal had a surprisingly common thread running through. All of them and I repeat all of them were bullish about their careers, companies and India in general. These are the kind of conversations that would make any marketer worth his salt salivate.

My train came to a halt as it approached a station and so did my train of thoughts at the sight of the grime and commotion outside. The hawkers and beggars were having a field day with the huge crowds that thronged the station. I began to wonder as to just how we as a country could be so bullish about ourselves while lagging behind the developed countries by such a wide margin. Hope and opportunity were the two words that immediately came to my mind.

As the train started moving away; I saw a hawker who was carrying his wares, jump into the train. Through the crowd, I could see that he had made it safely. He went about his business straight away- hawking samosas. He was selling them at Rs.2 a piece. I did not buy them being concerned about hygiene, but everyone around me was interested. I could see from their expressions that the samosas were hot and tasty but I was more interested in something else. How could he deliver the samosas right where his customers wanted them at this price? Then out of nowhere came a guy supplying chilled water packets at Rs.1 each. As is anyone’s guess, these were lapped up immediately. I am tempted to add that it was a very good example of ‘complementary businesses in collusion’.

The conversations around me had by now reached a feverish pitch and I became interested in a debate that was ensuing between the two political activists. They were discussing the political implications of the regional government’s decision to give away a free color television to everyone. Here we were, I thought, trying to put up a brave capitalist face on the one hand and touching new heights in socialistic ideas on the other. But then these extremities are what make our nation so fascinating. The hawkers with their wares kept coming. There was a biscuit vendor selling freshly baked butter biscuits at Rs.1 each, a hawker selling roasted peanuts, a little girl selling a variety of trinkets, an old woman came to sell unripe guavas and even the original samosa vendor came back to sell the crumbs and leftovers that he had at a differential price. Like clock work they came with appropriate time gaps between them in an order that ensured that there was business for all. It sure would have made any supply chain manager proud. The amazing part in all this was that even if one treated oneself to each and every goody on the smorgasbord, it would have hardly made a dent by twenty rupees (that is less than half a US dollar at current exchange rates).

Discerning as these people where while parting with what they had, they definitely had the propensity to buy probably because of the inherent bullishness that I had mentioned earlier. But then, where were the organized companies and their goods? Did they not see the opportunity at hand? The legalities of the situation might have demanded restraint from them, I supposed. Then again, what did my fellow travelers have to offer these companies? Well, they had some money, definitely had time in their hands and most importantly they had the willingness to spend, a very good proposition for the likes of insurance brokers, awareness campaigners, market researchers, new product testers and everyone in this ilk.

I saw the bright yellow signage outside hinting that my station had arrived. As I got down and watched the train move away, I saw yet another vendor jumping in. These vendors and hawkers, I thought, understood co-creation of value, the importance of – communication with their customers and with their co-opetitors, just in time supply chains, carrying zero inventories, differential pricing, manufacturing close to their customers, economies of scale and scope and many more. Of course, they weren’t aware of these concepts, but out of sheer necessity and instinct, they simply understood!

They surely have a lot more to teach us. The question is – Are we ready to listen?

PS: In 2003, BBC aired a program on the Dabbawalas of Mumbai, which was part of a series on unique businesses of the world. In 2003, Paul S. Goodman and Denise Rousseau, both faculties at the Graduate School of Industrial Administration of the Carnegie Mellon University, made their first full-length documentary called 'The Dabbawallas'. According to the press release of the TV station presenting the documentary, "The film also serves as a counterpoint. Instead of asking how knowledge in developing countries can help less developed countries, this film focuses on how developed countries can learn from less the developed countries”.Back home, the Dabbawalas were invited to speak at the Confederation of Indian Industry (CII) meets and at leading Indian business schools such as IIM, Bangalore and Lucknow.