Aspirations and Realism: Balancing Business Perspective

As everyone has aligned themselves to the realities of downturn and slowdown, as the case might be for different companies, we are setting into some very interesting business times. We have lived in times of crazy growth for a long time. Last three decades or so have been either times of slow stable growth (pre 1991) or high growth (post 2000)…..seldom have we been in times of downfall from existing positions. To that effect none of us have ever gone through such business conditions in our working lifetime in all probabilities. These times will probably teach us some of the most hard hitting and valuable business lessons.

 Some of the lessons many corporate honchos have already started to realize are:

Lesson 1 : Best business plans are those which are made on real business and real market…..anything that’s based on too many complex set of assumptions made in order to reflect geometrical growth, are bound to be high risk prone

Lesson 2 : Best form of profitability is real cash flows….virtual profit booking in ever inflating books  might cause  for some exciting exit options to investors in good times, however in more difficult times they will struggle to even maintain regular expenses

Lesson 3 : Its good to have internal accruals and then growth…not vice versa

Lesson 4 : Ability to get high amount of debts and have a high debt equity model might make the business model look attractive to some….however heavy debt is what it is on balance sheet…debt that needs to be serviced

Lesson 5 : Steady growth is not bad and periods of consolidation after every round of growth is very good….often we don’t give the business an opportunity to go through consolidation phase in fear of loosing growth advantage

 While some of the above lessons are bringing about great sense of realism about ways of managing business, to me what’s interestingly standing out is importance of “strategy” in such times….rather paradoxically though. It’s important to understand that market is what we make of it. If ever strategy was going to create huge differentiation for organizations, its periods like now. These are times to learn from conditions and not succumb to them. Far too many organizations have resigned to the fate of economic conditions today….there is difference in picking up the learning’s and moving forward, as against getting risk averse due to mistakes made in the past.

 Closer home, in the last quarter or so I have seen consulting firms in India which are down by 30-40%, as against firms which are up by 20-25%. That’s a huge differentiation getting created. Same very firms in the last year were growing at same pace when market forces created natural growth.

 Organizations which can imbibe realism in ways of running and managing business, but not loose sight of creating aspirations and meeting them through clear business strategies, are likely to go long way in times to come….watch out for how industry leadership positions in several industries change in next few years….they will change hands much faster than they would have in good times.

Cheers

News to Share

Hey everybody:

It’s been a while since I have been able to come back to post something here…we have had an addition to the family in the month of Jan this year by arrival of lovely Yuhaan. Our first child, my darling son )

Life has been very pretty but also hectic past few months with Yuhaan. As I am personally settling down in my role as a father, will hopefully have little time in future to drop in now and then and add a post. Am posting a picture of Yuhaan in the meantime )

Cheers

Era of Fast Forward and Speculation

With intense globalization, several economic theories have gone out of the window….timelines on most of the things have been redefined. 2008 was perhaps a perfect example of how economic order has changed in the world.

 

Everything is fairly fast forward in this era….also there is an added element that plays a very influential role on various factors influencing economies, perhaps the most important role….Speculation.

 

One look at some interesting highlights of 2008 say a story. It’s a year stock market touched a high of 22K and a low of 8K, oil touched a high of $150+ and a low of $40, real estate went from all time high prices to a point where many real estate companies are looking ways to bailout, GDP growth touched a high of 9-9.5% to a low of 6-6.5%. There were also economies like US and Japan, which have gone into almost recession statistically. Few decades back one could have never imagined this entire chain of events taking place within a span of 12months. What would have been a cycle for decade, takes place now within months and years.

 

Now interestingly while there are several real factors like sub-prime crisis, fall in US consumption etc which have contributed to this situation, but a fluctuation of this order can not be explained by just simple demand and supply. There is allegedly a big role played by speculation.

 

Businesses are no different. Each day, each week, each month is important in sustaining growth of an organization. Unlike years back, one can’t afford to relax for a bit. You miss the bus for one month and chances are that year is gone. It’s a lot of energy and sustenance, more than anything else to ensure a successful business. Also environment with its ups and down, with elements of speculation and such other uncontrollables, is not getting any easy.

 

So specifically with regards to India, are we in times where growth is not a possibility for some years? I personally don’t think so. These are times of real test. These are times where one needs to put in huge amount of energy in doing the things right on everyday basis, these are times when you need real business and real ideas, and not just business plans. These are times where brick and mortar businesses where customer value is clearly identifiable, are more likely to exceed. We are still an economy growing at 7%pa approximately, which is not a mean number by any ways.

 

Often people ask me what’s the impact of current environment on business. I reflect back and conclude for past several years, businesses had got used to having very high growth plans, and actually exceeding that with somewhat ease. Now plans are getting realistic and more sane, and one will need to work very hard to come within touching distance.

 

These I personally believe are very interesting times, for many of us who have never gone through such a huge learning curve in such a short span.

 

~~Rohit~~

Creating Organization Structure – Strategy, Operations and People

  

There are so many views about how does one create structure for an organizations that usually it boils down to ones conviction about what will work and what will not work. Given the far reaching impact of structure on delivering strategy, unfortunately this can have unpredictable implications. In addition due to the lagging effect and gestation period, it’s too late by the time one discovers if the structure designed is working well or not.

 

While structure is such an interesting point of view based exercise at times, there isn’t any laundry list of dos and don’ts for an effective exercise; in my experience some of the following factors impact the same in one way or another:

 

-          Strategy (future scenario) and Process (operations management) are two key levers in any situation. However it’s very critical to understand the trigger for the exercise. Basis the strategy and trigger the relative focus on the two levers could change.

 

-          A very deep process view based exercise is usually triggered by productivity and efficiency enhancement kind of strategies, which is only one of the possible strategies. Basis whether the business strategy is of growth, returns, diversification, product focus, market focus, efficiency focus, productivity focus etc. the approach to the exercise could be drastically different. High level phases might read the same though to naked eye.

 

-          Broad dimensions of structure are Product, customer and geography/market. Even though these elements will remain in any structure, depending upon how the interplay of these dimensions plays out at various levels in the organization, number of structure options is almost endless.

 

-          Matrix structure is more articulation of reporting relationships and MIS and not so much of structure. This is more about how one wants the operations to flow in terms of people interactions and decisions.

 

-          MECE (Mutually Exclusive and Cumulatively Exhaustive) is a very simple but important concept that every structure options must qualify. This in itself can ensure better traction and growth compared to a rather convoluted structure.

 

-          In most cases distortion happens when you start to map people and make adjustments due to ‘sensitivities’… but that’s the reality of every organization.

 

-          Structure, MIS, Variable pay can impact behaviors and culture in a desired direction

 

 

~~Rohit~~

 

 

Key to Success

 

1. Never walk down the hall without a document in your hands. People with documents in their hands look like hardworking employees heading for important meetings. People with nothing in their hands look like they’re heading for the cafeteria. People with the newspaper in their hands look like they’re heading for the bathroom. Above all, make sure you carry loads of stuff home with you at night, thus generating the false impression that you work longer hours than you do.

2. Use computers to look busy. Any time you use a computer, it looks like work to the casual observer. You can send and receive personal e-mail, calculate your finances and generally have a blast without doing anything remotely related to work. These aren’t exactly the societal benefits that everybody from the computer revolution expected but they’re not bad either. When you get caught by your boss –and you will get caught–your best defense is to claim you’re teaching yourself to use the new software, thus saving valuable training dollars. You’re not a loafer, you’re a self-starter. Offer to show your boss what you learned. That will make your boss scurry away like a frightened salamander.

3. Messy desk. Top management can get away with a clean desk. For the rest of us, it looks like you’re not working hard enough. Build huge piles of documents around your workspace. To the casual observer, last year’s work looks the same as today’s work; it’s volume that counts. Pile them high and wide. If you know somebody is coming to your cubicle, bury the document you’ll need halfway down in an existing stack and rummage for it when he/she arrives.

4. Voice mail. Never answer your phone if you have voice mail. People don’t call you just because they want to give you something for nothing – they call because they want you to DO work for THEM.

That’s no way to live. Screen all your calls through voice mail. If somebody leaves a voice mail message for you and it sounds like impending work, respond during the lunch hour. That way, you’re regarded as hardworking and conscientious even though you’re being a devious weasel. If you diligently employ the method of screening incoming calls and then returning calls when nobody is there, this will greatly increase the odds that they will give up or look for a solution that doesn’t involve you.

The sweetest voice mail message you can ever hear is “Ignore my last message. I took care of it.” If your voice mailbox has a limit on the number of messages it can hold, make sure you reach that limit frequently. One way to do that is to never erase any incoming messages. If that takes too long, send yourself a few messages. Your callers will hear a recorded message that says, “Sorry, this mailbox is full” a sure sign that you are a hardworking employee in high demand.

 

~~Rohit~~