Archive for March, 2007

Art of silent negotiations

March 29, 2007

Hadn’t we often wished we haven’t said something to someone ?  You can ask for an instant apology and even strive to explain you didn’t really mean what you had said.  But then you’ve lost the advantage of covert intentions since a shrewd listener would’ve tracked it down. Things are never the same.  

In business, just as in other life situations, such occasions are guaranteed embarrassments. Outcome of critical decisions often hinge on spontaneous (in)discretion whether to react or hold back on specific occasions – be it negotiating terms of a routine service agreement with vendors or while walking tightrope on a valuation issue with a prospective acquirer or seller. By intelligently punctuating the negotiation stages with occasional interludes of silence, clever negotiators get what they want.  Tom Evslin has nicely illustrated a few such instances here. 

A little analysis of the power of silence itself.   

We can’t speak about silence. By that, we disturb it. For most of us it’s really difficult to remain silent when another talks to us since we need to disprove Newton’s third law.  Some situations demand exactly that just yet. How do we create that silence (a living, vibrant one and not of the eerie kind as in a graveyard) in us ? 

The silence I seek to build is that of an enlightened master.  To get there, we need to know what could stop us along the way. First off, we don’t trust our ability to experience it.  We think, this is not for us. Why not ?  This is the property of the universe and rightfully belongs to us.  You need only be alive and seeking.  Secondly, shed the guilt in us and start respecting ourselves. Stop measuring us by our failures and try remembering the good things that we’ve done to others and for ourselves.  The memories of good things evoke significant positive energy and that is the strength of our being.  Third, understand what enlightenment means. It just means knowing your true self by consulting your conscience as often as you can in practically every thing you say and do. Soon you’ll realize not a thing you say or do that is not supported by your conscience.  You are enlightened.  

Words can have the opposite effect if left unsaid too. Almost as if they were spoken as opposites. Silence can equal the opposite. “I love you” unsaid can become “I don’t love you” out loud. This calls for application of discretion – another art by itself.

Hovering over the outcomes of life events when we had said or unsaid something and drawing lessons help develop an innate sense of discretion in us.  The entire process is quickened.  At the next decision point, the process becomes almost automatic. We synthesize all the available data and lay down all options we have. We go over each of these options with our colleagues and trace out what’s in the firm’s best interest.  Then we develop different scenarios of the negotiations in our mind and decide whether to react (if so, how) or not, to each of such situations.  All these processes concurrently questioned and debated internally with our conscience and that which seem to be downright deal breakers are eliminated.  While being tough, we don’t let go off that deal.  

The best negotiators are those who seem fair to all even as they end up with a clear edge.  Evslin says it’s not enough to win negotiations, it’s important to win in its right dimension – don’t just settle for some crumbs when you can win the loaf ! 

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Commit to excel

March 22, 2007

“Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative and creation, there is one elementary truth the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents, meetings and material assistance which no man could have dreamed would have come his way. Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now.“ – (Johann Wolfgang von Goethe).

The terms “Commitment” and “Excellence” have been so much used, abused, quoted in and out of context that I know I am just adding to the clutter. But I have a different goal. It’s not meant to be a motivation lecture, I use it here to get people to startup on new ventures. I’ve gotta’ make a living out of it.

What prompted me to write this piece was a series of startup dropouts that I came to know last week. Some of the projects were so near the gate, needing only that bit of an extra nudge. I’ve had grand plans for them, I had already talked up a few VCs over these and in fact had scheduled some meetings in the coming weeks to review the status of the project.

In a few cases, the founder(s) felt they had far too many critics in their team than colleagues. I haven’t gone into the merits of those, but I feel if you can build a team in which disagreements can be frank, even harsh, but where once a decision is made the team can get behind it and implement without reservation, then you actually have a team. I advised them to have the courage to act on their knowledge, but the humility to doubt what they know. When all else is lost, future still remains. Isn’t it ?

Criticism, for me is better than flattery any day. It sometimes hurts, but is less damaging. You’ll soon find out whether she points to a genuine flaw or is she just wanting to prick your ego. While you give both types a right to be heard, you’ve the liberty to not take the latter kind seriously. But flattery is like cologne water, to be smelt of, not swallowed.

I would say every entrepreneur starts off with a success. Know why? By demonstrating the ability to take risks, (s)he has actually crossed the first hurdle – fear of the unknown. It could be either that you’ve considered all aspects of your decision and have taken an intelligent bet or it could just be that you took it like a child crawling playfully towards the edge of a staircase. I have seen almost 80% don’t cross this hurdle, the crucial first step. Allow yourself a celebration for that !

People mistakenly think that if they take a risk and it doesn’t turn out the way they expect it to, that it’s all over. The sky will fall, their world will come crashing down, and that they’ll never bounce back from it. It’s precisely because of that one shot do or die mentality that prevents people from taking risks. Step back and look at the forest. Don’t look at the trees. Risk is not just about looking at one tree. It’s about exploring an entire forest.

You’ve got to understand that risk is nothing but a label and the reason why risk yields so much power over us is precisely because of that. Labels are extremely powerful because we tend to pass judgment solely based on that. When something is labeled, we equate some sort of image to it. Armani – fancy suit. Ferrari – fast car. Nike – running shoes. In this case, what image does the label of risk conjure up? Imminent danger. We judge risk as imminent danger and are influenced by it.

We need to change the label. Stop thinking of risk as just a one shot do or die situation. Instead, start thinking of risk as a journey of exploration. It’s not just about one shot. It’s about a journey, a journey you choose to embark on for the purpose of exploring a different path. Columbus did not take a risk. He chose to go on a journey to explore the new world.” ( Hat tip : Brian Kim)

Commit to excel every one must. In scouring the unknown there’s a sense of excitement. You can’t obviously get this in any other profession except what is creative. Entrepreneurship is as much about creativity as it is about taking risks. And then there’s the glory. If you find any value, any lift of the spirit in a beautiful mathematical proof, in an elegant balletic turn, in any of the myriad human endeavors that have no utility but only breathtaking beauty, then you should feel something when our little species succeeds in establishing new life in a void that for all eternity had been the province of the gods. If you don’t feel that, you are — don’t take this personally — deaf to the music of our time ! .

All about ideas

March 13, 2007

When you ask a creative person how they did something, they may feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after awhile. That’s because they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or have thought more about their experiences than other people have. (Steve Jobs)

Our memories do not mirror our real life experiences, but an aggregation of many bits and pieces. In fact what you think as `the idea’ could be a blurred image that your mind captures as you focus on something. That’s precisely what you should catch on, think through, submit to analysis till it gets to be a presentable concept. You may still like to add to it as it may not be perfect, but there will be less to knock off.

Normally it is said that people get their best ideas not while at work – they get it at a picnic, in the car, in the shower, in the bed etc. So the trick is to make sure those ideas don’t escape. They’re valuable ideas that come to you for free when you least expect it. But if you’re prepared, you can capture the little scamps and use them later.  Always remember to jot them down as soon as they occur.

Sometimes the best decisions are made when you’re most tired: raw, unfettered emotions come through, not burdened with the lattices of straining to put too much effort into something that’ll ultimately result in nothing. And it’s not just merely about speaking your mind, either, but expression unkempt by cliched “I tell it like it is”, the way an icebreaker smashes through blocks of solid water. No, this is better: you’re telling it how you wish it to be.

Our brain has two basic phases during the innovation process**

1) Generating ideas and 2) Evaluating them.

Most of the time, when we’re innovating, we’re doing both parts at the same time. First one, then the other, in that sequence all in split second.  Even for a simple decision whether to go out for dinner or cook at home, the process is the same.  So our brain is almost always at work, generate idea, reject, reject, reject, if accepted > evaluate, reject… It’s not a comment on the ratio of the quality of ideas we get. It’s got more to do with our ability (or the lack of it) to incubate and process every idea that crosses our mind.

What happens to the generative side of the process is that it gets fed up with being rejected all the time. And that’s just in our own brain. Imagine when we add the entire team to the equation ! Lots of ideas, lots of people shutting them down, and then eventually the group stops suggesting ideas and innovative thoughts.

One way to eliminate the idea shut down is to deliberately separate our generating from our evaluating. Otherwise, it’s like trying to drive with one foot on the accelerator while the other foot is on the brake. You’ll make a lot of noise, but you won’t go anywhere. It’s tough on the car.

It’s easier said than done, so use these deliberate rules when you’re generating and evaluating:

GUIDELINES for GENERATING: *

1. Defer Judgment — you can judge the ideas all you want… LATER! For now, just keep them coming and write them down!

 2. Strive for Quantity — set a quota for ideas and don’t stop until you get there. Even  then, don’t feel the need to stop generating! For simple issues, go for at least 30 ideas. More for complicated problems. When you generate lots of ideas, you’ll get lots of great ideas. Quantity yields quality. Of course, you’ll get lots of bad ideas, too, but don’t worry about them until you start judging. But not yet!

3.  Seek Wild and Unusual Ideas — Seek out wacky ideas. Actively try to find them. Because they stretch your mind. They force you to look in new corners of your brain where you’ll find some odd ideas that might not be so outrageous when you tone them down a bit. It’s easier to tame a wild idea than to invigorate a weak one.

4. Combine and Build on Other Ideas — It’s not enough to just generate a bunch of ideas unless you can build on them or fit ideas together that offer new possibilities. As you’re generating, keep playing with ideas to see if you can let ideas spark off of each other to create new ones.

GUIDELINES for EVALUATING: 

1. Use Affirmative Judgment — Instead of pointing out all the ideas in which you don’t see merit, focus on the ideas that are potentially valuable. Look for the good. Don’t point out the bad. Never mind the ugly.

2. Be Brave: Consider Novelty — When evaluating ideas, it’s too easy to fall back on the safe ideas you’ve tried before or that you know have been done before. But we’ll soon realize, innovation doesn’t come from golden oldies ideas. They come from bold, fresh, new, novel ideas. And that’s sometimes uncomfortable. So focus on looking for them.

3. Stay on Target — As you evaluate ideas, remember what you’re trying to accomplish. What was the original objective? Keep that in mind when you’re reviewing ideas. Otherwise, it’s easy to go off on tangents without getting what you want. Like the saying goes, “when you’re up to your butt in alligators, sometimes it’s easy to forget that you started out to drain the swamp.”

4. Keep Focused — It’s easy to see one idea and latch on to it, excluding all of the other great ideas that you generated. Watch out! Force yourself to be patient enough to explore each and every idea and ponder it’s strengths before moving on to evaluate the next idea.

If you can’t remember all that, remember this; to generate new ideas, you have to be able to defer judgment and open your mind to new ideas. And to evaluate new ideas, you have to open your mind to new ideas. Otherwise nothing gets through but old ideas. Now, how innovative is that?!

*With thanks to Alex Osborn, from his book, “Applied Imagination”

**permitted by : newandimproved.com newsletter

Letting go and moving on with life

March 9, 2007

Eugene Herrigel, the German Philosopher who introduced Zen to Europe found that out the hard way.

Herrigel was learning Kyudo, a form of Japanese archery from a highly skilled but slightly eccentric master by name Awa Kenzo.  At first he was baffled by what he was taught – that art must become artless, that the archer must aim at himself – yet gradually he began to glimpse the depth of wisdom concealed in such paradoxes.

One day Kenzo was explaining when to let go the drawstring of his bow, to gain maximum effect for the shot.  After weeks of trying when Herrigel couldn’t get it right, the teacher sat down to explain it.

“Consider a toddler sitting in the middle of several colorful toys.  Her attention is drawn to one of them, plays with her hands, licks and bites it – her focus is totally on that toy and nothing else.  At that moment, all else is irrelevant and unimportant to her.  After a while her attention is drawn by another toy and that’s when the one she was obsessed with so far becomes history.  That’s how you let go off something – with total finality.  You may come back to it later, but for NOW, it’s all gone.

Herrigel was so much impressed by that lesson that he chronicled it elaborately in his book “Zen in the Art of Archery”.  Whether it’s an arrow heading towards the target, taking a life altering decision, quitting a bad habit, chucking a job or doing something for a greater good, do it with the flavor of finality.  Right NOW, it’s just that on top of your mind and let go off all else. ( Hat Tip : Mukul Sharma )

Arjuna was an outstanding and diligent student, learning everything that his Guru Dronacharya could teach him, and early attaining the status of “Maharathi” or outstanding warrior. Guru Dronacharya once decided to test his students. He hung a wooden bird from the branch of a tree and then summoned his students. One by one, he asked his students to aim for the eye of the wooden bird and be ready to shoot; then, when they were ready, he would ask the student to describe all that he was able to see. The students generally described the garden, the tree, flowers, the branch from which the bird was suspended and the bird itself. Guru Dronacharya then asked them to step aside. When asked what he could see, Arjuna told his Guru that he could only see the bird’s eye. Another fable is that Arjuna, while eating in the dark, realized that if he could practice archery in the dark he would become vastly more proficient.

The archer ceases to be conscious of himself as the one who is engaged in hitting the bull’s-eye which confronts him. This state of unconscious is realized only when, completely empty and rid of the self, he becomes one with the perfecting of his technical skill, though there is in it something of a quite different order which cannot be attained by any progressive study of the art.  That’s how you achieve what you’d set out in life for.

At what level of confidence do you let go off something ?

Need to think – High and Low

March 7, 2007

I read this article “ Big Leaders think big and small” by Harvard Scholar Dr.Ram Charan and have turned an instant fan of his thoughts and ideas.  In this article, Dr.Charan explains why it is important for people to pay attention to details, even as they are focused on the big picture.

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Some gems from that article  ;

 “At 50,000 feet, you can see the total picture of your business, your industry, and maybe even the world economy. You can detect interesting patterns that might create opportunities for your business — imperative to stay ahead of the game.

But if your thinking is always in the stratosphere, you might miss important details. You also have to be incisive, drilling to the specifics.

[Dr.Charan quotes] Kay Krill, CEO of retailer Ann Taylor, captured it nicely when she told a Wall Street Journal reporter last September, “You have to fly at 50,000 feet, but you also have to come down and mow the lawn every now and again.” 

In business, how you think is just as important as what you think. 

Reframing is being able to change your vantage point, to look at a phenomenon or problem from a very different perspective. It’s how leaders redefine their market and create new growth trajectories — Coke going from competing in soft drinks to competing in other liquid refreshments, for instance. 

When Robert Pittman first became CEO of Six Flags amusement parks, he wanted to dig into the details of the business, so he went to work as a street cleaner. At that level, he noticed something he didn’t like: The hard-working janitorial staff viewed customers as the enemy who stood in the way of their mission to keep the parks clean.

So he reframed their mission from cleanliness and safety to “giving customers the greatest day of their life.” Seeing their roles in a different light gave the staff a more positive attitude toward customers and paved the way for a better customer experience.”

Full text of the article is here.  Read and benefit.

What is your secret of success in attending to details without losing focus on the big picture ?

Doing it !

March 6, 2007

Building a performance culture is never as easy as it sounds. Looking back a few years, I try to recall a few of those companies that hogged great media attention and had a grand strategic vision. Many of them failed. And many of them will fail again and again, because the heroes are strategic visionaries that never bothered to deal with the issue of execution; continually and personally making sure that things were actually done. You know, when all is said and done, usually more is said than done…

“Execution” is about getting things done, being persistent and realistic, as well as managing the 3 core processes; strategy (why? and what?), operations (how?) and people (who?).  It is the missing link between aspirations and results and making it happen is the business leader’s most important job.

For a business, I believe it’s paramount to make sure that you have a well-balanced team on all levels in the hierarchy. This also includes having enough executives with execution traits. Don’t assume you have it, go test it!

Overcoming fear

In my experience, the single biggest enemy of effective execution is fear of failure. You fail, but you survive. Usually. Sadder, maybe. Smarter, maybe.  More adult and more human, certainly.

To create is to fail – if only by revising plans, revisiting strategies and tying up loose ends that seemed a good idea during the months they took to draw.  Eventually the sign of a good execution strategy should be such that the quality of the company and the character of its management leap off the page.

We all fall down in our lives at one point or another. Some stay down; others get back up.   

Since failure is painful, it’s impolite to dwell on it. You don’t shake Maria Sharapova’s hand and say, “Nice to meet you, lady. That last set of yours sure was a botch job.” 

We can cringe in embarrassment at our failures or wear them proudly as noble scars, as the evidence of struggle that they certainly are.

Standing out

Disciplines like strategy, leadership development, and innovation are the sexier aspects of being at the helm of a successful business; actually getting things done never seems quite as glamorous. The ultimate difference between a company and its competitor is, in fact, the ability to execute.

Making the transition from good to great doesn’t require a high-profile CEO, the latest technology, innovative change management, or even a fine-tuned business strategy. At the heart of those rare and truly great companies was a corporate culture that rigorously found and promoted disciplined people to think and act in a disciplined manner.

How would you like to improve the execution skills of your team ?

Sorry chief, wasn’t my fault – the FM sucked !

March 1, 2007

“Your liberty ends where my nose begins” – P.Chidambaram, Finance Minister (FM) in the Government of India seemed to declare to VCs in India investing in sectors other than select categories like IT, Biotech etc. After all these years of kid-glove treatment and patronage, the FM said enough is enough.

The Finance Bill, 2007 seeks to restrict the `pass through’ status for Venture Capital Funds (‘VCFs’)/ Venture Capital Companies (‘VCCs’) to income from investment in domestic unlisted companies only, engaged in certain specified businesses such as IT, bio-tech etc (‘VCU’). 

Currently, VCFs/ VCCs enjoy complete pass-through status under Section 10(23FB) of the Indian Income Tax Act, 1961, irrespective of nature of income.  Instead, the income is taxed in the hands of its investors at the time of distribution under Section 115U of the Act, on a pass-through basis.  VC firms normally get themselves registered as a company in tax havens such as Mauritius, Cyprus etc., with which India has a double taxation avoidance agreement ( DTAA ) and since these countries have little or no taxes on either business profits or capital gains, it has been a case of tax freedom all the way for the VC funds so long as they have registered themselves with the Securities and Exchange Board of India (SEBI). 

But now in the Budget 2007 tabled before the Indian Parliament yesterday, the FM has restricted its application to select sectors only.  The FM’s proposal with regards to the tax “pass-through” provision for venture capital funds will cause irreparable harm to innovation and entrepreneurship in India and seriously discourage the growth of venture capital in India, says Indian Venture Capital Association (IVCA) in a statement.

But is it really why they cry or is there more to it ? 

The truth is that VC firms, realizing the risks involved in startups and the longer exit duration, have quietly transformed themselves into pure Private Equity players, even as they were lapping up the tax incentives offered to minimise the venture investment risk.  This hole has now been plugged and naturally it throws a monkey wrench in their covert designs. 

The ground reality has been that VC funds primarily trooped into India for investing in the over hyped IT / ITES sectors only.  Since the startup ecosystem in India was just evolving, there were fewer investible opportunities.  The VC funds were also not very proactive and were making do with posting one or two greenhorns ( just out of Harvard / Stanford, two years with Mckinsey / Goldman Sachs, spent preparing a few vertical Excel worksheets first, then horizontalizing them before running to the copier howling `Eureka’ ) as Associates / Principals in India even as their general partners preferred to chew gum in the US.  And, how were they selected ?  On their ability to speak just one or two out of 18 official Indian languages and for their world beating `ability’ to convert lakhs of Indian rupees into millions of US $$ in their reports to the VC partners in US. 

Getting back home, this wet-behind-the-ears twig realized it commanded too much of respect locally since entrepreneurs and Investment Bankers filled its inbox with Business Plans and Executive Summaries.  Soon it became ego-laden Asshole (ELAH) inaccessible to startup founders who became snarky worms in a pile of shit and deserved to be deftly shooed away citing a flaw or two in their business model.  Startups meant sweat, no glitz or glare – ELAH wanted none of it.  

Looking at the developing situation, the local charlatans like stock brokers and construction / real estate tycoons took advantage of the naivete of the ELAH.  As a result of such serenading, most of the VC funds soon had one or more stock broking outfit or a construction company in their portfolio, stakes acquired at obscene valuations by the ELAH, besides the oh-so-great travel portals and online marriage bureaus it had patronised – in a country where PC / broadband penetration continues to be less than 2% of total population and where 95% of the marriages are traditionally arranged between known families by parents who do not trust online-buddies to marry their son / daughter.  

By now the ELAH had already lost touch with its widely touted strategic prowess in IT / ITES skills ( by taking up an I-Banking career right after a heavily state-subsidised Engineering / computer science education ) for which its IIT / Stanford / MIT stints have presumably trained it for and using which it was expected to guide and mentor the IT startups.  The ELAH had little or no clue over the problems ailing the Indian property scene which was plagued by defective titles and benami transactions ( illegal surrogate ownership) and the flagrant violation of estate and construction laws by the Construction mafia.  By any reckoning, it takes none short of a real estate wizard to be a VC in that space, which these suits-in-tropics ( ELAH swears by western “legacy systems” and wears it even as it’s 42 degree celsius outside – he tracks New York weather ! ) could hardly be. What ELAH and its employers failed to realize was while education is acquisitive, practical commercial sense is intuitive.  Let me bring Tom Perkins here – Versatility has its limits too.

If this has been the case with construction,  the other unfamiliar segment where the ELAH had forayed was stock broking. Indian stock brokers were as a breed notorious for their scheming (and scamming ) ways,  sought VC investments while the SENSEX was at its historic peak and while they were riding the peak cycle.  Naturally valuations will be stratospheric.  Warren Buffet would’ve surely cringed, but ELAH plunged right in, made several million $$ investment at > 100x P/E, came out and proudly blogged about it the next day.  Ah, it had its 15 seconds of wide-grinned fame too over the tube, got a few col inches in print,  took copies ( ah, there he goes – I’d told you, he got `trained’ at Mckinsey / Goldman Sachs ) for marking to its employers at Menlo Park / Sandhill Road – all part of elaborate pre-arranged PR initiative by the charitable (beneficiary) brokerage at ELAH’s special request.  The only pre-investment due diligence ELAH insisted was- “get me in the limelight”.  The brokerages were more than happy to provide it ! 

All this probably couldn’t have gone unnoticed at the North Block.  The Ministry of Finance had actually expected these guys to build and nurture the entrepreneurial startup ecosystem in India – and precisely the reason why these incentives were doled out in the first place.  Now that the real game was up and it promptly pulled the rug from under their feet.  It’ll take a while before the General Partners in the US smell the rot, realize their mistake and revisit their hiring practices to fire the ELAH and appoint local people who have their skin in the game as VCs.

Hopefully by then ELAH would quietly have rolled out its plan B for survival and may be fumbling with its execution too.   When asked about those investments, ELAH has a ready excuse now – “the third world sucks, Chief..wasn’t my fault…!”