March 30, 2006

Entrepreneurial Gyan

Posted by Bizaholic | 8:14 PM | with 0 comments »

Some entrepreneurial gyan from Eric Flamholtz, author of Growing Pains, is posted on The Entrepreneurial Mind blog. Read the full post here.

Snapshot of the gyan:

"What you can't measure, you can't manage."

Set a specific quantitative goal for your business and develop a plan to get there.

Niches are not always small -- they are defensible positions within a market.

A mission should have a qualitative and a quantitative component.

Companies compete not just with products and within markets, but through their operating systems, management systems, and culture.

"You make your own luck by being prepared."

March 22, 2006

Salt, Pepper, and Sales Target

Posted by Bizaholic | 11:54 PM | with 2 comments »

What is common between salt, pepper, and sales target? All three have their real value only if used in right proportion. Another similarity is that all three are essential ingredients. You cannot really do without them.

When used in right amount salt and pepper can enhance the taste and generate appetite. A little more or a little less spoils the dish and kills appetite. Similar is the story of sales target. It has to be in exactly right amount to generate enthusiasm and zing in the sales force. A little more or a little less and the results are either desperation or complacency.

Sales targets have basically three roles to play:
  1. In making budget
  2. In measuring the effectiveness of sales team.
  3. In motivating the sales team.

Of the three roles, the role of target in motivating the sales team has the highest impact potential. Yet it is the most neglected role. Many a time, sales professionals dance in illusion while designing their annual targets. They dream and visualize the members of their sales team to be supermen who can achieve any kind of sales goal. And result is often an unrealistic target based on day dreaming. But this euphoria generated by dream-target is short lived. Very soon they go to the market place and face reality. And within a month or two, it becomes clear that something is wrong. The team realizes that however hard they try they are not going to achieve their unrealistically grand target. It is not difficult to guess what happens next. Desperation and decline in motivation sets in that in all probability would disturb even the achievable part.

Another typical approach is to set a target that is very easily achievable. Here also there is a big problem. Everyone knows from the beginning that it’s going to be a cake walk. As a result complacency sets in and achievement of the true potential is missed. No body cares to go the extra mile because all that you need is within your hand’s reach.

The third approach, though very rare, is to make a target that is just in right amount, neither more nor less. It’s what I call “a designer target”. Here the target aims at making the entire sales experience blissful by design, where the goals, satisfaction, enjoyment, bottom-line, and rewards are perfectly balanced like a culinary delight. It is like a honey dipped dart. It stings but it is sweet as well. Similarly, it stretches but exhilarates as well. It demands but it rewards as well. To sum up, all “designer targets” appear appetizing and motivate to go ahead and taste it. They simply add zing to the sales process just as salt and pepper give life to an exotic dish!

March 19, 2006

I just finished reading “Now, Discover Your Strengths” by Marcus Buckingham and Donald O. Clifton. It is a truly wonderful book and very practical too. You must read it if you haven’t yet.

Majority of us spend enormous amount of time on fixing our weaknesses. Typically, our attention is weakness centric. We hardly focus on our strengths. As a result, we miss utilizing our real talents in life and instead spend better part of our life in trying to turn weaknesses into strengths. But it never works.

None of us is born perfect and neither can we become perfect. Everyone will have his sets of strengths and weaknesses. No two persons are same. Everyone is unique in the way he thinks and responds to a given situation. So doesn’t it make sense to focus on our uniqueness to live a fulfilled and productive life? Why fret over something we don’t have? Why can’t we simply focus on what we have?

A very simple example: You have 2 meter cloth which you want to stitch into a shirt. But it takes 2.5 meter to make a shirt. Will it make any difference if you sulk or fret over lack of enough cloth to stitch a shirt? In any case you cannot stitch a shirt for yourself with the cloth you have and if you are hell-bent on stitching it anyway then definitely it will not fit you properly. Instead, if you take 2 meters of cloth and decide to stitch something that fits you and also doesn’t require more cloth than you have, will not it be more fruitful, productive, and satisfying?

The key to success and greatness lies in playing to our strengths and managing around our weaknesses. Remember that managing around weakness is not about turning weakness to strength rather it is about working on our weakness just enough to bring it to acceptable level of performance. The essence lies in spending majority of our time in sharpening our natural strengths and spending a small amount of time to bring our weakness to acceptable level of performance. It is all about excellence through strengths and average performance in areas of weaknesses.

So if a manager is great in planning and strategy but is weak in communication and execution then it would be better to focus on his strengths and work with someone who is great at communication and execution to create a synergy of strengths. Moreover, it would be important to bring the communication and execution skills to a minimum acceptable level so that the weaknesses don’t become burdens that reduce the impact of strengths. But starting to spend more and more time on making communication and execution his strengths – when he has no natural talents of either of them – is not a good strategy.

This strength centered perspective makes a lot of sense in the real world. But key to success with this strategy is a clear understanding of one’s natural talents, and then working to gain knowledge and related skill-set to make it a rock solid strength. If our understanding of our strengths is flawed or biased, this strength centered mindset may not do anything spectacular for us. Being honest to self as well as having self-knowledge is vital.

So the strength-centered mantra is very simple:
  1. Honestly identify your natural talents.
  2. Acquire relevant knowledge.
  3. Hone your skills.
  4. Play to your strengths.
  5. Manage around your weaknesses.

March 13, 2006

In my earlier post, Strong Competition and Organizational Well-being, I have argued that strong competition is good for an organization's health.

Gautam Ghosh adds another perspective to the argument. He argues that strong competition is good if the organization is an "open system". But if the organization is a "closed system", strong competition only hastens its demise. Read Gautam's views on this.

March 9, 2006

Sales and Hopeless Optimism

Posted by Bizaholic | 9:58 PM | with 1 comments »

Many sales personnel in many organizations seem to be unrealistic optimists. There is nothing wrong in being optimist. In fact, optimism is a virtue. But optimism works wonders only when it is grounded in reality. Blind optimism produces more problems than positive results. I call this phenomenon 'hopeless optimism'.

The root cause of 'hopeless optimism' is the fact that often sales personnel think of sales in isolation rather than it being a means to profits. Their perspective is functional and not holistic. They are perhaps unaware that 'hopeless optimism' adversely affects other aspects of operations as well as bottomline.

The worst victim of this 'hopeless optimism' is the supply chain with cascading effect on almost all areas of organization's performance. It is like a chain reaction.

'Hopeless optimism' starts with unrealistic sales forecast. Unrealistic sales forecast results in high production. Then comes the bolt from the blue when sales is fairly less than forecast. This results in unnecessary inventory. Unnecessary inventory results in fruitless investment as well as unproductive use of costly warehouse space. All these block a good chunk of working capital of the company. Slowly, with incremental increase of excess inventory every month, a good amount of inventory starts ageing rapidly resulting in reduction of market value of the goods. As the old inventory level rises, pressure builds and management starts to take action to liquidate it at discount. So discount contributes yet another cost. And this is not yet the end of the story. When old inventory enters market, chances are high that some of it might have deteriorated in quality. When customers use this lower quality material, chances are very high that brand equity and relationship a company has with its customers may take a beating! Now just calculate the present cost and future cost of the string of events originating from 'hopeless optimism' of many sales personnel. You might be shocked to see the numbers.

Moral of the story: Dream but with your feet firmly on ground. Never hallucinate!

March 8, 2006

Harvard Business School Working Knowledge has an interesting article, “Is Your Organization Reptile or Mammal?”, by Jonathan Byrnes.

The author tries to build an analogy categorizing the organization as reptile or mammal as far as customer and supplier relationships are concerned. It has many relevant insights that managers and business leaders can find practically useful.

The article is built on detailed analysis of two fundamental aspects – reproduction and metabolism – in which reptiles and mammals differ from each other. It, then, tries to categorize organizations as reptiles or mammals based on how their strategies address the organizational equivalent of reproduction and metabolism in managing customer and supplier relationships.

The article touches following points:

  1. Should organizations go for too many relationships and scatter their resources in the hope that some turn out to be profitable enough to sustain the business profitably?
  2. Should organizations develop a few solid relationships and concentrate their resources on them?
  3. Should organizations be dependent on their environment for survival?
  4. Should organizations proactively control their environment?

Some really thought provoking ideas!

March 7, 2006

Meaning and Motivation

Posted by Bizaholic | 9:54 PM | with 4 comments »

Leadership blog has an execellent post on 'Meaningful Work'. It makes an argument that meaning is the secret ingredient in motivation.

I would say, perceived meaning in work is the pillar on which motivation rests. It is not meaning or meaninglessness but perceived meaning or meaninglessness that matters in determining motivation level of people. Work without perceived meaning is worthless and demotivating. If people perceive that what they are doing is essentially meaningless then their motivation level sinks. On the other hand, if they perceive their work to have a worthy meaning or purpose their motivation level rises.

At individual level, many things may seem meaningless even though some of them may be essential at group level. In such scenario, ample doses of infused meaning or purpose can work miracle in enhancing motivation of people. Spicing a seeminly uninteresting and meaningless work with enthusiasm and excitement can bring out meaning that glues individuals to their work. And here comes one of the most integral roles of a leader - to infuse meaning to meaninglessness by creating a shared purpose, vision, and goal.

The key to motivation is perceived meaning!

March 6, 2006

Is strong competition good for an organization? This is what I have been thinking for the last one week. Some recent developments in the organization I work have tickled my mind. The more I am thinking on this the more convinced I am becoming that strong competition is indeed very healthy for an organization.

Typically, when an organization has a virtual monopoly in the market and there is no strong competition complacency sets in. It reflects in the day to day operations of the organization. Gradually, this complacency builds into arrogance and a feeling of invincibility. Due to all these, they start taking their customers and business for granted. Of course, there are exceptions to this generality. There are indeed many self-motivated and avant-garde organizations that despite being a monopoly are always on the move to bring better and better products and services to the market without getting complacent. In fact, they compete with themselves. But overall, it’s true that in absence of competition, lethargy sets in organizations resulting in loss of dynamism.

What strong competition does?
Strong competition brings the dynamism back to the organizations. A sense of urgency sets in and every moment is spent in trying to outmaneuver the competition. It becomes a matter of survival. And is it hard to guess what your reaction will be when you are thrown in the ring of life and death with an equal opponent? You will give your best to live. Similar is the story of organizations when faced with strong competition. They bring the best out of themselves to outmaneuver the competition. Systems and processes get revamped. Better people find their place under the sun and the average ones are shown the doors. Innovation rather than complacency drives the organization in its constant endeavour to outwit the competition. Better products and services with better value proposition come out faster in the market. Strong competition forces the organizations to sprint rather than run at the pace of a snail. All these result in a better managed and agile organization that works at its full potential to deliver best returns to the shareholders.

It is not only the organization that benefits from strong competition. In markets where there is strong competition almost every organism in the market ecosystem benefits. Customers are the biggest beneficiary. They get the most bangs for their bucks. In markets with strong competitive forces, it is a game of delivering the most relevant benefits at the least cost. Even the trade partners benefit. In the presence of strong competitive forces, they get their bargaining power which also results in trade efficiency.

And these are not the end. The best part of presence of strong competitive forces is in the fact that it helps in growing the market. It is all about making the pie bigger and tastier. As efficiency sets in the market ecosystem, every organism gets the right bundle of benefits at the right price. Typically, this will result in greater affordability thereby bringing in more customers to the fold. A perfect example would be the telephony market in India. Just 12 years back there was a monopoly of Department of Telecommunication in India. It was marked with obscene pricing that was not affordable for 90% of the potential consumers. Inefficiency was at its zenith. It used to take 2 years to get a phone connection. Slowly, the telecommunication sector opened. Private players entered first with cell phones and then with landlines. This resulted in fierce competition among players. And see what the strong competitive forces have done to Indian telephony market in just 12 years. Call rates have fallen by almost 100%. India has the cheapest mobile telephony charges in the world. Maintaining a mobile phone has become affordable even for a road-side vendor selling tea. India has the highest number of mobile phone in the world. Level of customer service has increased manifold. Now it takes hardly a few hours to get a new telephone connection. And to top it all, the efficient players in the telecommunication market are growing exponentially and getting good profit. Isn't it a win-win situation? Would all these have been possible if we had a sustained monopoly in the telecommunication market?

Well, it is not chimera. It is reality. And what I’m seeing these days in my organization is reinforcing my belief that strong competition is the vital component of an organization’s well-being. It is strong competitive forces that will help organizations achieve their true potential. Those who can withstand the grind will survive and excel, the weak hearted will get brutal death.

March 5, 2006

The Beatles Principles

Posted by Bizaholic | 3:45 PM | with 1 comments »

Strategy + Business has published an interesting article, ‘The Beatles Principles’, in its Spring 2006 issue. It draws inspiration from Beatles, one of the all-time most successful music bands, to improve teamwork and creativity in organizations. It is a wonderful article that tells, in an easy to understand language, some vital truths about improving the performance of the team and bringing more creativity to work.

The author has deduced four Beatles Principles:

Beatles Principle Number 1: Invest in and build face time between team members long before they are required to appear together.

Beatles Principle Number 2: Evolve your “songs” and bring the same level of ideas, new perspectives, excitement, and enthusiasm to your hundredth meeting with a client that you brought to the first.

Beatles Principle Number 3: Help team members become brands-within-a-brand by giving them a song — an idea or proposal — that will help them to shine.

Beatles Principle Number 4: Put exceedingly diverse professionals on the same team, mix specialists with generalists, and foster friendly competition to produce the best ideas.

March 1, 2006

Today I was browsing through Atul’s archives. Amidst many an interesting thought something caught my attention. It was a small piece on Mediocrity vs Excellence. In fact, it caught my attention because I related well to it. It is something which was on my mind since last few months.

Atul says that mediocrity, many a time, tries to pull excellence down. He gives a simple reason for this phenomenon. Mediocrity breeds insecurity.

Mediocrity pulling down excellence is perhaps a bitter truth of life, more so in corporate life. On many occasions I have seen that a mediocre can go to any length to protect his turf and derail excellence. And life can be pretty tough if mediocrity has an absolute majority at workplace. And even tougher situation is when mediocrity rules.

Any initiative by excellence to bring about positive changes is seen as a threat. And then mediocrity pulls up all the tricks from its sleeves to pull the rug from beneath excellence’s feet. It is frustrating at times depending on which side of the fence you are.

But the biggest loser is the organization. Excellence, sooner or later, will find its real place under the sun either in one organization or the other. But this practice of mediocrity pulling down excellence, if rampant in any organization, can hamper an organization’s growth as well as productivity. Chances are high that in sustained company of mediocrity, an organization will become staid and immobile. The negative vibes originating from the insecurity and Machiavellian scheming of mediocre will soon reflect on the face of the organization as well.

Moreover, an organization ruled by mediocrity cannot ever dream of innovative ideas and practices. It will always remain in its own little world like a frog in a well who thinks that the well is the world beyond which there is nothing. Breakthrough ideas and innovation come from the company of or an inclination towards excellence. In today’s world when everything is in a flux it is innovative ideas and their flawless execution that keeps an organization agile and growing. Progress cannot be expected from those who deride excellence and hate it.

I think, in near future, managing the tussle between excellence and mediocrity may become a key differentiator between leaders and laggards.