Autonomics

How many of you guys reading this have compared the Cut throat rippers more elegantly known as the Chennai Auto walas with their counterparts in other cities? or atleast bangalore?

Its pretty obvious.For travelling 10 kms in Chennai you end up paying around RS. 150 and for the same 10 kms in bangalore, you pay around RS.75.So, are the guys in chennai involved in day light robbery? Not really.

When you look at the cost of the auto, its pretty much the same in both the cities.The roads in bangalore too are as good or bad as the ones in chennai.And, in both the places, the demand for Autos is pretty much high.So what is the black sheep here? Its the Fuel!

Chennai Autos run on petrol, that costs around RS.50 a litre and gives you a mileage of around 20 km.Where as the Bangalore Autos run on biogas(Really!) and they give you a mileage of around 20 Km for a litre of biogas which costs RS.27!!!Thats almost half the cost of the Fuel in Chennai!! Now we all know, where the issue is.

There are certain issues with biogas in bangalore.There are only 6-8 Petrol bunks supplying biogas for 1.5 lac autos! And the right sort of engine oil is not being provided.These issues should be weeded out before the system gets inefficient.

Otherwise, biogas is something that should be looked at for other metros aswell.Seriously, public transportation system for the upper middle class needs a revamp so that these chaps can spend on better things uplifting the economy further. :)

Podcasting - A Powerful Broadcasting medium

I'm right now at Podworks, an event that at least till now has given me some interesting info about online communication in general.Hoping to learn something interesting on innovative means of communication and broadcasting.

Sometime back, it was the newspaper that people relied on to get information.If you want to reach out to a large section of people, the only means was newspapers.Then, as technology evolved, we got the radio and then the television.These again helped spread messages and communicate to a mass audience with much more convenience.And we can simply classify broadcasting as a communication form to reach out to the masses.

Now enter Internet.Slowly, corporates and other businesses found this new innovative means instead of newspaper/TV/Radio to start spreading the word about what ever they wanted to.But still the common man's thoughts, views were not able to reach out to the masses.Then came Blogging.You can call it the Newspaper run by the common man.His way to express his views, opinions and also what he feels IS the news, to the general public.This made the entire society open up and every individual felt empowered with a strong communications means.

Its now easy to figure out, Podcasting for the individual is like the TV/Radio to the Governments/Corporations.This means of broadcasting is a lot more powerful and there is such a wide scope for innovation in delivering your message and to a large section of the society.

And seeing the guys here at podworks and looking at the opportunities this powerful medium of communication has created, i certainly believe this makes real sense.The age of the empowered induvidual has indeed arrived.

P.S : The first embedded video on my blog.And I choose the event, which probably teaches you how to cover up even your wildest nightmare come true :-)

Motive mismatch - Part II

I mentioned about motive mismatch within an organization in this post. And recently i saw this real life account of a HR chap.

"In one of the BPO organizations i worked for, the CEO gave stiff targets to all employees.HR was given a ridiculously high target for recruitment per week and the finance department an equally high profit target. Finance tried to keep the expense low by salary cost, which was a major expense head.This resulted in HR not getting quality people, creating a delay in recruitment which they covered up by compromising on the quality and recruiting mediocre candidates, in turn creating a huge quality issue in operations.The end result was that the client pulled out, the CEO was upset and a blame game started"

Thats some validation for my theory.But i would say, motive mismatch doesn't stop with corporations.Even as an individual, we have different motives and we need to achieve various goals at the same time.Some people find ways to tackle it through prioritization.Some look at it as an opportunity cost situation and pick the best possible decision that fits for the time being.But the process through which all this occurs is about reconciliation,between different motives,thoughts and actions.

To reconcile between the various options, at the end of the day,we must have a clear goal or Vision, and the decision must be the one which will benifit the vision the maximum in the time horizon you are looking at it.Its tough.But possible.

Can you process it?

We all know that we are bright guys.We want to come up with something innovative.Creative.We are capable of doing that.But does the entire world stop and take notice the moment you do that? Rarely.

There is a mysterious something that exists in between the moments that go down in history.Sometimes its hard work.Sometimes its pain.Sometimes its bull work.Sometimes its PROCESS.

To give a simple example to get the issue started, think of scaling.Lets say you have an very innovative idea for selling a product.You know, if you communicate with every client in a innovative manner which you have just figured out, you can sell the product to an entire continent.Great.

But the real work starts when you have to figure out how to reach out to the entire continent with your idea.Lets assume that there are a billion people in this continent.Now we all know that, if you yourself go out and sell it to each of these chaps, you'll get the idea across and sell the product.But this my friend can happen only in a perpetual world.

You now actually need to figure out a process through which even a uneducated salesman can go and sell your idea.Now hows this for a challenge?

This is what big organizations of made of.They are all successful in implementing the process be it in scaling or production or marketing. But sometimes we creative individuals get stuck inside a process loop and we start cursing it left right and center.My suggestion to all you guys would be to get into the process loop, study it, understand it and get out and apply it on your own :-)

Now, the process of scaling is what my example talks about and this does not apply every where.Take for example the Web.It is so well connected and networked,the process of scaling is not so very important if you can master the process of effective targeting.

To get some expert opinion on the subject, an interview by Subrato bagchi(Founder, Mindtree) to Knowledge @ warton where he describes in entirety the importance of process to start-ups, proves to be a worthy read...

"Let's take the example of process. There is a mistaken notion that every start-up [begins its existence in] a garage, and a [garage-sized firm] doesn't have to have a process. More start-ups remain at that size and then they go off the scene, because they fail to embrace process. Even if you start small -- and you have to start small -- you can pretend that, "You know what? I'm a Fortune 500 company, and I need to front-load my organization with the right process." This is because process is not about a framework that will bind you up; process is like plumbing. It's like infrastructure.
Let us imagine that you want to someday build a skyscraper. You have to pre-think what plumbing must go into the skyscraper. It cannot be an afterthought. The plumbing you require for building a skyscraper is very different from the plumbing that you require for a two-bedroom house. You don't build the plumbing for a two-bedroom house today and say, "As I build another floor, and then another floor, I will add to the plumbing." No. That doesn't work. So you have to pretend that, "I am a skyscraper." The inlet and outlet for the skyscraper is going to be very different. So pretending [or imagining] is a very, very important thing."


And further down in the article he describes how too much emphasis on process is also not good and a balance has to be striked.

"You talk about one of the indicators of the financial health of an organization through P/E ratios. When I was raising MindTree, one day it occurred to me that we were putting too much of an emphasis on process and building of process and process as an enabler. I found that the Human Resources folks -- we actually call them People Function folks in MindTree -- were becoming more process-centric, and process does not solve all problems. Process works only when it is given life through empathy. I didn't know how to drive home the point, and then it occurred to me that we could have a different take on the P/E ratio concept. I called those folks and said that we need to balance every process with empathy. Think of it as a new way of looking at the P/E ratio. Deal with every situation partly by looking at process and partly by looking at empathy.

Process is not a substitute for building an emotionally rich organization. Process without emotion can quickly bring you down to the lowest common denominator. It is very important while dealing with human situations, dealing with customers, suppliers, investors and with our own people. We must balance process with empathy. We must build on process but be led with empathy."

You can read the entire interview here

The intention of this debate is not to come to a conclusion on whether do we need processes. Its not a tutorial on how to implement processes successfully.It is to get us thinking on why sometimes mundane & boring stuff aren't really so dumb as we think.

Invaluable valuations!

For a couple of weeks now, I've had the opportunity to look at companies through an Analyst view point. Its quite fascinating actually to take an excel sheet, punch in numbers and tell a story at the end. It’s almost like you are having the horoscope of the company at hand and telling the company's stake holders where the hell they are heading. Let me describe the process a little briefly here.

First, you pick up the company and all its annual and quarterly statements of the past 5 years. Then, you painstakingly (yes, it is!) punch it into the excel sheet. This is the first stage, know as populating the sheet.

Next, you need to define Metrics. Metrics are the key drivers of growth of the company. This is where you need to really understand the business of the company to exactly figure out what the metrics are. In general, cues about the metrics will be present either in the annual report or the Analyst earning calls. But if its not there, you are going to have a tough time.

After you identify the metrics, you identify the trends of the metrics through available data. With this information, we forecast the future cash flows of the company. Now we use the standard discounted cash flow technique to value the company. Sounds simple?

You might feel now that valuations are as easy as I described it above. Well, its just a process and not a solution. Take a look at this company for example. ICGE. We have a company that invests in 20 -25 private e commerce companies. It actively gets involved in the management of 10-12 of them and the rest are through a short term investment point of view. Now, let’s look at the value of its assets. Look at what we've got here. Shares of 20 odd private limited companies. Okay good. Now how do we value these 20 odd stock holdings the company holds? Since they are private companies and more importantly start-ups, I’m sure most analysts and fund managers don’t have even a spec of an idea on how to value them. Valuating start-ups is a totally different ballgame. Its a game played by VC's and Angels. Even Private equity investors don’t dare to enter the realm.

The reason simply is, to understand a start-up, you really need an in-depth understanding of the product and the market the startup is trying to address and its really time consuming .The start-ups can be so dynamic. And so are their cash flows. And guess what, we have 20 of them sitting in this company’s portfolio. It’s not worth spending so much time on these start-ups if you are a fund manager minting money in high volume deals of blue-chip companies.

Let go of start-ups. Even Public Growth companies are so damn hard to valuate. The Numbers and Annual reports never give you the complete picture and the information about the companies too will be scarce.

There were a couple of firms which covered ICGE, and all they can do is to set the floor and possible ceiling values of the company. Nothing more. This is where, a person with a real insight into the e commerce industry and the dynamics of start-ups can be a killer. Are you one? Do let me know your thoughts on this fascinating company!! :-)

On the whole, Asset Valuation is such an exciting field partly because of the huge amounts of money at stake and also it involves loads of intuitive assumptions, deep understanding of the fundamentals of the business, and at last an good grasp of numbers, which is the only thing that can validate your story. As someone rightly pointed out Trend is your friend, but fundamentals are your lifeguard! :-)

A Wise man's Quote

A wise man once quoted:

"Without a stint in Sales don’t even think of taking up a marketing Position!"

For all of you who don’t understand the Wiseman’s quote, I have only one thing to say...
Read on!
Consider you start a Product Company; you will have a nice supply chain, defining how your company runs its day to day operations. At one end you will have acquisition of raw materials, and on the other end comes the process of selling, the last but not the least.

Everyone buys. But how many people sell? Very few. And some people even go to the extent of considering Selling as a derogatory Verb! Actually, there is some sense and reasoning behind this statement as well.

A company has a mission or in common terms, a motive. In the same way, every employee will have his own too (within the company).Unfortunately there always exists a conflict of motives, between the various employees.

Take for example, consumer banking. The motive of the sales executive is to maximize the number of accounts he opens for the bank. His incentives don’t depend on the quality of the clients (but, of course there are protocols restricting the liberty to a certain extent).On the other hand, an investment advisor in the same bank has his incentive structure based on the investment influx he brings into the bank and the profits he generates for the bank through his investments. The salesman tends to wash his hands off the issue,the moment he gets the account opened without caring for the investment advisor and for the welfare of the company!

This motive mismatch doesn’t just stay within the employees, but transfers into a Client-Company mismatch as well. The salesman with selfish motives gets the account opened even without understanding the consumer's need and position. Once the account is opened, the investment advisor realizes that the customer acquired, is not the right one for him to maximize his gains and ill treats the client. This ends up in a bad relationship between the bank and its client!This example is just to showcase a conflict of motive existing in a corporate structure. But more importantly, we need to look at what exactly does sales mean to marketing?

Sales is the primary reason why marketing came to existence! The term, marketing the product was coined for describing the process of selling the product in the market. But, slowly as a corporation grew more sophisticated, the process of selling became complicated!

Once marketing came into existence to understand the complexities of trade and sell intelligently, it also started impacting other important aspects of a fully developed corporate. Sales became a mundane process. Marketing started divulging into Brand valuation, Customer relationship management and various other critical elements of the company and these issues also got embedded into the mission of the marketing function.

But for a moment, just take away sales and imagine where marketing stands! It’s a dead duck!

How many ever functions that marketing will handle with various levels of importance, Sales is where marketing should never ever lose focus on. It is sales that is the bread winner for the company. As an analogy, we can exist without Air Conditioner, but can we exist without air?

It’s really important that the marketing guys understand how their sales arm is functioning, to the fullest possible detail and take decisions accordingly. They should most importantly avoid a Motive conflict as discussed above.

So all you marketing guys make sure you don’t dump the importance of understanding the seller's perspective. The proof of the pudding is in eating, how ever attractive or aromatic the pudding is... :-)

Can you spot the trend?

Marketing is damn dynamic! Don’t you think so? If not, think again!

For starters,Consider the evolution of marketing. It goes something like this, starting from Ford in the early 1900's :
Production Concept - Mass Production and Wide Distribution
Product Concept - Maximize product Features & more and more R&D
Consumer Concept - Identify Consumer needs & make your product work around them, and the most recent one…
Holistic marketing - Integration of Societal Marketing, Internal Marketing, Consumer Centricity and Marketing Communications!

Now, for everyone in the marketing domain at this point in time, holistic marketing will be a natural way of handling the Marketing Campaign and Building Brands! And 100 years back Production concept would have been the IN thing!But the question I’m trying to address is what the Marketing paradigm will be, two years down the line?

A Couple of quick thoughts. Without a doubt, the evolution of communication medium will have a strong bearing in the marketing Process. And another trend to be noted is that, most products are shifting from a Sellers market to a Buyers market, owing to Immense Competition in all walks of life!

Its quite palpable currently that their exists high levels of information Clutter and consumer loyalty is decreasing drastically as well. How one can affect the Decision making process of the consumer remains a key question at all levels of a Marketing Drive!Reaching a customer directly with your marketing campaign having a mix of creativity, Celebrity and other masala stuff to create a Top of the mind awareness might just not work out anymore! This is where i see the evolution of the next marketing Phenomenon - Credibility marketing!

The customer has realized, at the end of the day, what counts is the experience his product gives him and the needs that are being satisfied by the product. The Guys who communicate the REAL experience the consumer with his product, be it good or bad, through a reliable source (agreed, debatable) will be the ones who will be able to sell something! There is no time for creating Product Perceptions...guys, move on!

To put it simple and straight, cut all the crap about Creativity and your social conscience. Tell me what your product has, with real and credible Experience. In a nut shell, Marketing will become a Reality show packed in an Elevator pitch!

P.S: After writing down my thoughts, i googled Credibility Marketing. And looks like the shift has already begun :-)