Archive for the ‘strategy’ Category

Be a problem creator

July 17, 2010

Given a choice people would resist a shift from their comfort zones. They live with a feeling that the status quo has everything they want from life and why alter it so long as they are at peace with it. It makes people keep at doing stuff they’ve been doing for years together and at the end of it, define it as their career. It has clearly not been their bidding. It happened to them by default. Let’s call them `the chancers’.

A great majority of careerists are chancers. I’ve talked to some of my own friends belonging to that set and have found most of them unhappy over where they wound up. Many tried to switch careers midway, but it’s a cruel world out there that didn’t let them veer off the course because they got labeled already. “You were an accountant for the last 20 years, now how can we trust you with marketing” – is the refrain. They go try again and nothing happens. But then bills have to be paid and they are forced to stick with the soul-sucking career they’ve gotten into.

So what should they do to get around it…? First off, they should create a problem before they can solve it. Recognize that you are cut for something different and you won’t settle short. Settling for the status quo is easy, but it bleeds you from inside. Make it your mission to get to where your heart is. Work towards it. Use your weekends and workday evenings to talk to people who are in the field of your choice and get to know its intricacies, finding out ways to “get in”. But the best method is to start freelancing, go blog your views on it. Take on the mighty and the frivolous, but make sure you have solid arguments that stand out. When I say freelancing, I really mean it in a literal sense. Do it for free for a few guys and make them see how good you are at it. You may not make money initially, but you are building referrals and even track record in a small way. Use it to your advantage until the moment of reckoning finally arrives. It will.

Most importantly, never give up, never compromise. Go after it. Get it.

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Busting the Beijing myth – It’s China after all!

February 11, 2010

William Fung, Li & Fung’s managing director of Li & Fung Ltd., a century-old Hong Kong–based sourcing company which manages a 40-economy sourcing network, calls his company’s recent record “flat-world success”. Excerpts from his interview –

“The existing measurements of trade are very much antiquated. When the president of the United States says, “We’re running a trade deficit with China,” he’s working off an erroneous base for measurement. The way we determine a product’s country of origin is based on something called “major transformation,” rather than value-added processes. If the major transformation is final assembly, and that occurs in China, the product will be said to be made in China and exported back to the U.S. — even if most of the value of that product is actually manufactured in the United States. In other words, under that system of measurement, the country that gets credit for making the item may not be the one that gets the majority of the economic benefits.

For example, look at a laptop today. Chances are that the monitor is made in Taiwan, the memory is from some plant in Penang, the assembly might be in China, but “Intel Inside” is the most expensive component. Because it’s assembled in China, they slap “Made in China” on it, and it becomes part of the U.S. trade deficit with China.”

I’ve often wondered why Chinese consumers make do with quality that sucks. The fact if one were to believe Mr.Fung goes like this.

“In China, there has always been a dichotomy between the industry that supplies the domestic markets and the industry that supplies exports, world-class products. If you were setting up a world-class factory in China, for example, you could set it up tax-free, but you couldn’t do so if it were for domestic products. Also, the export sector has been whipped into shape by companies like ours and customers around the world who demand compliance with rules or standards involving technology, speed of response, quality, health and safety, the environment, and other issues. The domestic side is not faced with the same compliance issues. So the hundreds of thousands of factories supplying the domestic market are generally of lower quality…. The big thing in China that will provide its next growth is to satisfy the local consumer by merging these two sectors…. Chinese consumers are like any other consumers; they just want the best product their money can buy, whether it’s from India or China or anyplace else.”

On its artificially depreciated currency –

“Everyone thinks China is such a juggernaut, but it has a serious weakness, one that reminds me of Japan in the 1970s and ’80s: a lot of production capacity, but no raw materials. China has some cotton but is still importing a lot from Pakistan and the United States. It has almost no wood. All the metals are imported. The only energy source China has in abundance is coal, which is highly polluting. China is very vulnerable, because it is subject to worldwide fluctuations in the prices of raw materials.”

“When the RMB [renminbi] appreciated [in 2005–07], China fell into a fairly uncompetitive situation. Now, China believes that it can be competitive if its industrial base, especially for exported goods, moves away from the high-cost coastal regions and into the interior. Until that happens, China is unlikely to let the renminbi appreciate, because doing so would put the country in a position of being vulnerable to changes in materials prices.”

Well, it may not be the complete picture. I can think of Chinese military might that’s quite formidable. No country would settle for cheap ammo for its armed forces. So it’s not all bad quality after all. But Mr. Fung’s contention seems plausible. I whisper “Trust, but verify”. It’s China, after all…!!!

How (Why) to unseat the incumbent vendor

July 31, 2009

A clear message for the last ten years is that selling is all about relationship. Relationships built and strengthened over time, makes it easier to pursue new business with existing customers. You know how to hit their “hot buttons” than that of a net new customer (especially if their gatekeepers are doing a damn good job). This often accounts for the bulk of new business. Cold-call prospects are likely to be entrenched already, and you have to unseat the incumbent — your competition. In addition, enterprise is hiring more and more gatekeepers to keep up with the recessionary trend. It is increasingly difficult to reach out to the executive level and make inroads.

Then why does broad marketing attempts try to replicate the relationship approach to the prospects where you have no relationship, instead of approaching them in other ways?

Here is a compelling need to unseat the incumbent vendor that’s often not easy.

But there are always customers that don’t have a regular incumbent. So make the channel partners focus on the long tail. Not just the top visible ten percent that are on top of every competitor’s mind. The ones that advertise loudly on every media and so targeted by all. It’s better to lose that ten percent because they will likely get the most competitive of offers that will shrink the enterprise margin wafer thin. Start from the back, Begin with the marginal customer that slinks under the vendor radar. You will likely hit the hot button faster.

Get them to dive deeper with the customer and know their needs. Ensure flow back of customer intelligence from the savviest of channel sales force. Share the findings with the rest of the force and poke their ego by crediting the partner that came up with the nuance. A sense of deficiency (in letting the peer channel partner get up close with the corner office) and underperformance should invigorate the rest into brisk activity.

Shall we call it the immersive approach..? Is that transformational enough…? What do you think…?
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The middle class watch

February 17, 2009

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In recessionary times like this, one can never figure the ways of the middle class consumer right, except that (s)he is extremely value conscious and so on.  Yet for most businesses that harp on “high volume, low margin” model, it is the principle catchment category given the sheer size.

Neither rich nor poor, it stands out by its sheer variety in terms of background, profession and income levels.  With that change their aspirations and lifestyles.  This is precisely what lures foreign investors (both portfolio and strategic) and businesses such as high street retail to capitalize from emerging markets like India and China.  Here’s the Economist version.

In essence, the middle class mind works like a radar, picking up on signals from near and far, tending more towards free market and democracy.  They are not entirely risk averse and they are not afraid of breaching barriers to entry.  Closer home we have Narayana Murthy of Infosys and Kishor Biyani of Future Group to lean on. These value-for-money attitudes transform countries and economies. With its aspirations and capacity for delayed gratification, the middle class is more likely to invest in education and other sources of human capital, which are vital to prosperity. For years, policymakers have tied economic success to the rich (“trickle-down economics”) and to the poor (“inclusive growth”). But it is the middle class that is the real motor of economic growth.

Now the middle class is at risk as globalization goes into reverse they may well be hit harder than the rich or poor. They’ve learned to borrow and enjoy life and so are hurt by the credit crunch. They have houses and shares, so their wealth is diminished by falling asset prices. That’s roughly 2.5 billion sharing that plight and one never knows how their minds will work when their hopes are dashed.

May be, they could survive a downturn in the short term. But a prolonged crash might well undo much of the progress the developing world has lately made towards democracy and political stability. It is hard to imagine the stakes being higher.

It pays to track the direction of the middle class thought process.  If you are an entrepreneur, that’s a critical segment you can’t afford to ignore.  That’s where you should focus your business intelligence resources now that you’ve pretty much nothing else to do as people walk more on the road than into your store 😉

Fears are but fears

January 30, 2009

Mistakes are how we learn to do something new — because if you succeed at something, it’s probably something you already knew how to do. You haven’t really grown much from that success — at most it’s the last step on your journey, not the whole journey. Most of the journey was made up of mistakes, if it’s a good journey.

 

So if you value learning, if you value growing and improving, then you should value mistakes. They are amazing things that make a world of brilliance possible.

 

Celebrate your mistakes. Cherish them. Smile.

 

When I endorse that, I don’t exactly mean go sing “Oh…la…la…la…  I’ve made a mistake”.  It’s enough if we don’t sulk over it excessively or feel suicidal.  It’s ok to lose some sleep over it so long as it is therapeutic, a form of longish meditation that helps you go over what went wrong and vow to get back at it in reparatory mode.  I can personally vouch for this since I had left my day job long back and set out on my own, making a few mistakes before deciding which road to take for my own enterprise (that center around securing private and public investing for other enterprises besides making some on my own) and feeling entirely happy and relaxed in the end because I never had to spend another second amidst crushing mediocrity that consistently drained my spirit to excel, leaving me to rot years on end. No more ruinous bosses, no more bitching peers, no more clumsy subordinates – it’s a complete sense of liberation giving me total control over myself and what I do with my time.  Envy me. How many of you have that luxury?

 

To that moral I might as well add – Conquer your fears.  It’s worth it because – fears after all, are just that

What makes us buy stuff – rationality or emotions?

January 14, 2009

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Dan Hill, author and President of Sensory Logic on the relevance of emotions in consumer buy calls.

 

“Over-complex campaigns that rely on digital technology forget the simple truth; that even the most jaded heart still seeks to believe that it has found a reliable ally. You’ll know you’ve reached the point where there’s an emotional bond when the stories consumers tell about your brand spontaneously involve the use of first-person pronouns, and are told with a burst of spontaneous feeling.

 
Above all else, remember that it is easiest to sell loyalty when the brand resonates with the consumer’s sense of self. When you address who people are, what they associate with, and what they do and value, you create an emotional connection so deep that consumers no longer think about what to buy.

 
Great brand worth becomes internalised and accepted as a reflection – and extension – of the consumer’s own beliefs. Fail to make an emotional connection, and you lose out, because value is determined emotionally. Brand attributes are like the claims related to a product. They are merely assertions unless the consumer’s emotional brain finds them valid and worth embracing.

 

….Value is determined emotionally because our brain’s decision-making process returns to the emotional segment to ‘sign the cheque’ . Only the sensory and the emotional parts of the brain connect to muscle activity. To translate branding efforts into sales, you should bear in mind that the rational brain is more like a lobbyist than a legislator: its role is simply to influence how the emotional brain will ‘vote’ on a potential purchase….”

 

Terrific insight.  I have experienced it myself at several supermarkets.  The product that I end up buying may not exactly be the product that often is larger in size or better in economics. It’s sometimes the one which appeals to me at that moment because my daughter used to like it while she was younger – an emotional connect as Dan says.

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Cucumber standard, anyone?

November 15, 2008

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De-leveraging may be a fashionable word now (but nobody bothered when global markets were riding the leverage propelled liquidity wave).  One of the solutions folks put forth now is to return to gold standard as a way out of the economic mess. Remember why gold standard gave way to dollar standard?  Gold was way too rigid, it was scarce and its production process was complex.  There was not enough metal to go around.  Printing paper was easier.  America had all the gold after the War and Europe was in tatters.  That made it easy for U.S.Dollar to become global currency.

 

Anyways it’s amazing how they chose gold as the substance to be valuable in our world.  Isn’t it just sludge that comes out of the mud?  Mud sludge, if you will. Humanity decided to base all of its wealth and prosperity on mud sludge.  Imagine they had picked something else like flowers or something, how different would things be. It’s funny to think gold is valuable just because some people in ancient times decided that the sludge they found in the ground should be called valuable. After all, it wouldn’t be valuable at all if the ancient people felt it ain’t worth the sweat and let it just be mud sludge.  Why couldn’t they have picked something better, like honey or something. Why did they have to pick something that is so rare and capable of getting extinct? Were they trying to make life tough for future generations so they’d always have to go around digging? What if one day there is none left in the ground? Would we all starve? Or could we just decide that the ancients were wrong and we could then pick something better to represent the wealth of the world. If we did, we wouldn’t pick something stupidly rare like truffles in the ground, we could pick something easier to mine or grow. Like cucumbers. Now wouldn’t that be something?

 

“Get me Hank Paulson please, will ya?”

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Dream list and Wall Street mess

October 1, 2008

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Busy looking up Forbes Fab 400.  Grrrrrunt….sighhhhhhhh… my name is not yet on it.  And you’re not on that list either (unless someone is reading it to you! 😉

 

How do people get in there?  Simple. Notch up $1.3 billion minimum networth.  A task made slightly easier because of a falling dollar in case if you happened to work outside US.  I scan each one of them (and let my imaginations run wild – it’s easy!).  Not all have earned it.  Most got there because their rich dad dropped dead.  Good Luck to the fortunate few!

 

Coming to think of it, the entire Wall Street mess can be fixed if these 400 guys donated half their wealth (averaging $3.5 billion) to that $700 billion kitty. No need for congressional approval or for Hank Paulson to go down on his knees.  No need to tax the poor guy setting off moral hazard alarms. He is not going to stake claim for the riches that Wall Street may offer (if and when it turns the corner), so you guys can split it back again in the ratio of your contribution.

 

I can safely say this as long as I don’t figure in that list.  When I do – no marks for guesses.  This is how I will likely go — “Sure lets give more money to people that just finished ripping us off! I tell you what… the best thieves in the world can make stealing 700 billion dollars look legal!  This bail out “plan” was in part initiated by a man, Treasury Secretary Paulson, who was paid $42 million in his last year on Wall Street and helped engineer this fiasco. America, you have a man in charge who was part of the problem and not the solution. To him your few thousand dollars share of the bail out is pocket change – so why raid us?”

 With that, I’ll tuck away my wallet 🙂

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Future is best left alone

September 17, 2008

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“The key to doing better is to “bring evolution inside” and get the wheels of differentiation, selection, and amplification spinning within a company’s four walls. Rather than thinking of strategy as a single plan built on predictions of the future, we should think of strategy as a portfolio of experiments, a population of competing Business Plans that evolves over time.” – says Eric D. Beinhocker, author of “The Origin of Wealth” and senior adviser Mckinsey & Co.

 

I tend to agree. Most strategies fail because they come with their own predictions of the future.  I think of Kellogs failing to make it to the Indian breakfast table despite their persistence over a couple decades now.  They are still bleeding.  While they relied on their experience in western markets where persistence paid off, they took the Asian palate for granted.  It is very difficult to please Asians with something as bland as cereals and cold milk. Asians love their spices; they know how to cook a delicious breakfast. They have variety practiced over the ages.  A cold bowl of cereals can never beat a steaming idly, sambar and chutney.  Never.  So has been the experience of Coke and Pepsi – they just can’t beat a fresh fruit juice, lassi or coconut water that are devoured in the region.

 

So how useful are the tools of conventional strategy analysis to make crystal-ball predictions about the future? Rather, they are best used to prepare minds, provide context for making real-time decisions and to help teams deal with all the uncertainties they knew would come their way. The strategic planning exercise purely for devising a forward strategy is wasted effort; it can be a critical way to get your senior team to communicate, to give them a common frame of reference, a shared understanding of the facts, and a language for talking to each other.

 

In the end, the Guru gives some broad outlines –

First, the process should be focused on structuring in-depth discussion and debate among principal decision makers. Typical planning processes result in underlings presenting slides to senior decision makers in precooked dog-and-pony shows—very little learning goes on in such meetings. Instead, the focus should be on creating a forum in which senior decision makers meet to roll up their sleeves and wrestle intensely with the issues (and sometimes each other). Such forums need to be small (if too many lieutenants are in the room, the senior people won’t speak openly) and have adequate time—a full day per business unit per year for the CEO and top team is a good rule of thumb, versus the hour or two typical in most company off-sites.

Second, the process must be fueled by facts and analysis. If only opinions are brought to the table, chances are that everyone will leave the room with the same mental models he or she walked in with. This means intense preparation in the months leading up to the strategy conversation, and while staff and consultants can help, the senior principals need to be fully engaged in the preparation as well. A shared understanding of a common fact base is the single most valuable outcome of the process.

Third, there must be other forums clearly designated for decision making. If the strategy process becomes overburdened with near-term decisions on budgets, setting targets, and allocating capital, then learning goes out the window. The decision-making forums should be linked to, but separate from, the strategic learning process.

Let future unravel upon us.  If it’s unknowable, why waste energies predicting it?  Chance favors the prepared mind, after all!

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