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Archive for March, 2013

Innovation or Acquisition

March 29, 2013 3 comments

As leaders of an organization, one is always confronted with the need to constantly find avenues of growth to keep their share holders happy. If you are leading one such organization, you are also constantly grappling with the question about where could the next level of growth come from.

Do you have innovative products or services in your portfolio which can lead you to the next level of growth? If you are like most of your counter-parts, you usually find out that your innovation pipeline doesn’t look very lucrative when it comes to high growth products or services. Then you start looking at probable acquisitions (usually strategic) that you could make to be able to grow fast enough.

Acquisitions:

Now, there is enough evidence in the world that most acquisitions do not work. Examples are abundant of failed acquisitions. Also, acquisitions cause a lot of disruption in terms of integration with your products, services and employees. Also, the talent that you acquire with the acquisition, mostly leaves the company at the first opportunity. So, you are left with a product/service that you could maybe exploit for a bit of growth and with all the people who did not add very much value in creating the product or service itself. You again find yourself at a junction where you again face the same question – where can i find more growth? What acquisitions can i make?

Add to this, the cost of acquisition, the model is a self-sustaining loop and also takes you away from the probability that you will ever be able to find the next block-buster product or service in-house.

So, the question is how do you get out of this trap and continue to grow:

Innovation:

Long term profitable growth can only be possible if your team is able to identify the possible growth areas and are able to design products and services to exploit the same.

This however is easier said than done. In order to enable this, you must be willing to invest in your innovation engine. There are two types of investment that we can talk about here.

– Monetary investment: I am always surprised to see companies spend millions and billions of dollars on acquisitions and at the same time make it so difficult to fund some of their innovation projects by a few 100 thousands or a few millions. Unless you make it easier to find funding for innovation projects you shall never be able to get block-buster products or services.

– Emotional investment: You find that a leader is heavily involved in all the discussions around an acquisition. However, the same leaders do not spend even half that time in supporting the innovation projects running in their organisations. The lack of their public support also has a big impact on the success of their innovation engine.

There is enough being said about innovation and how to run an innovation program or create a culture of innovation. Most of these advise is common-sense but as they say, common sense does not necessarily translate to common practice.

This does not mean that acquisitions are always bad. If you acquire for the right reasons and the right thing, acquisitions can add a lot of value. Some reasons where acquisition makes more sense could be:

– Acquire IP or product lines which when combined with your current portfolio (current and pipeline) can provide you competitive advantage in the market.
– Acquire a business if it is a good investment opportunity in your market. Do not try and integrate it with your existing business. The integration is mostly a wasted effort and mostly does not lead to improving the overall business.
– Never acquire for the talent or the business process of culture of the organizations. Culture and business processes cant be transferred from one to the other and the talent usually leaves at the first opportunity.

So, building a good innovation engine which consistently produces breakthrough products resulting in high growth is simple and effective, but not easy.

Acquiring companies is easier but not simple or effective.

What do you chose to do? Innovate or acquire?

Do let me know your thoughts by commenting below or tweet them to me at @rmukeshgupta.

Categories: Innovation, leadership

Forgive, Forget and Renew Your Relationships

March 27, 2013 1 comment

Today, we celebrate Holi – a festival of colors. This is also a festival when we encourage people to forgive, forget and re-new all our relationships!

This festival is all about giving another chance to ourselves and restart the year with a clean slate.

Organizations, like individuals, also develop good, bad and worse relations with other organizations (customers, partners, etc). It would do the organizations (CEO’s and leaders) a world of good, if they also did something like this

  • With partners
    • Re-new, reiterate commitment to work together & support each other.
    • Ask them the question – “How do you think we can work better?”
  • With key customers:
    • Reiterate commitment to support them in their journey
    • Ask them – “How can we support your business better?”
  • With customers/prospects where you lost business in the past:
    • Ask them “How can we work together this year”

Though there are regular review cycles that are planned and executed, it always works wonder if you reach out to these folks with an open mind and a willingness to improve (outside of the formal settings).

This is the responsibility of the leader to initiate and engage in this dialogue. This will also provide them new insights on which relationships are working and which one’s are not.

In times of uncertainty, this insight can prove to be critical.

Holi is also about forgetting everything and having a blast! It is also important for teams and organizations to also not to forget having a blast!

Happy Holi to all!

PS: Do let me know your thoughts on this by commenting below or by tweeting your thoughts to me at @rmukeshgupta.

Categories: leadership Tags: ,

Simple but not easy

March 25, 2013 2 comments

The solution to most complex problems that you could ever encounter are almost always Simple, but not easy!

You want to increasei your profits; Solution is to grow your sales and reduce your costs, together. Simple, but not easy.

You want to increase your sales; Keep your existing customers happy so they buy more from you and keep adding more customers to the system. Simple, but not easy.

You want to reduce your costs; reduce and eliminate all activities that do not contribute to either acquire or service a customer. Simple, but not easy.

You want to transform yourself from a manager to a leader; Start inspiring people around you. Simple, but not easy.

It is our tendency to ignore these simple solutions as they seem to be too simple to be true and start our quest for complex solutions to solve these challenges. We start talking about Business Process Re-engineering or a re-structuring exercise hoping that these will solve our problems.

This is also the root cause for the failure of most change initiatives (almost 70% of change initiatives fail).

The best way to solve any challenge is to find the simple solution and start working towards finding the ideas to make these simple solutions come to life.

Do you agree with my thoughts? Do let me know your thoughts by either commenting below or by tweeting them to me at @rmukeshgupta.

Looking forward to the ensuing discussion.

Categories: Ideas, leadership Tags:

Interesting discussion on the future of education (Video)

March 22, 2013 Leave a comment

Below is an exciting conversation between Fred Dust (Partner, IDEO), Michael Karnjanaprakorn (Co-Founder and CEO, Skillshare); Tim Marshall (Provost and Chief Academic Officer, The New School) and Andrew Yang, Founder and CEO, Venture for America. These are some of the pioneers who are exploring new ways to prepare our kids for their future (what else does education do).

Though, I agree with most of the things that are being discussed here, I think that true revolution in education will only come once we are able to integrate such efforts in the mainstream education movement.

Also, we all say that education is a life-long activity, but does any of the education institutes implement this?

Do we have a college or a school or an online course that we can take for life? One that does not have a specific start date and a end date?

Is it practical and possible to create an institution that can enroll us and take us on a quest for education for our lifetime?

This is a great opportunity for anyone who steps up and creates such an institute.. Would you?

Let me know your thoughts on this post by commenting below or by tweeting them to me at @rmukeshgupta.

 

Categories: Ideas, Ideas Tags: ,

What’s the Measure of a Sales Managers Success

March 20, 2013 1 comment

One of the most important pillar of building a high performing sales team, is the performance of your sales managers. So, how do you evaluate the performance of a sales manager?

If your organization is like most of the sales organizations, the answer is very simple – Does he hit his sales quota?

Sales organizations function like a clear top-down organization. The sales VP or CSO or whatever he is called gets a quota (based on the CEO’s commitment to the stock market or to the board members and investors), say $100 Million.

He then adds a cushioning factor and distributes this to his direct reports. Lets say he has 4 direct reports – the total sales quota for these reports add up to $110 Million. They then distribute this among their direct reports with a cushion added to their quotas. You get it.

However, the question is, if this is the best that we can do? Also, does this improve the effectiveness of the sales organization or undermines it? Does it truly measure the sales managers effectiveness on what they are supposed to do?

In my opinion, this is not the right way to measure the sales managers performance.

Why?

Because, sales quotas should be the measure of success or failure only for those who actually go out and sell for a living.

The role of a sales manager is to enable his team to exceed their sales quotas. The key word there is – ENABLE.

The primary responsibility of a sales manager should be the following:

  • Recruit well.
  • Ensures that they are become productive quickly
  • He needs to monitor their effort, attitude and performance.
  • He needs to coach his team as per each individuals requirement.
  • Reinforce positive behaviors and discourage non-positive behaviors.
  • Needs to help/coach each of his sales executives to exceed their sales quotas

So, if they are responsible for the above, how should they be evaluated?

In my opinion, a combination of the below could serve as a starting point:

  • Has the entire sales organization exceeded its sales quota?
  • Has everyone in his team exceeded their sales quota?
  • As they say, the strength of any team is equal to the strength of its weakest link. Who in his team is the weakest performer and by how much in comparison to his quota? This should have a bearing on the sales managers evaluation.

This also means that all the managers of the sales managers should also be evaluated using similar metrics.

One drawback of this model is that this could tempt the sales managers to set low sales quotas for all their sales executives to ensure that they all over-achieve their quotas and hence the sales managers get good evaluations. The counter-balance here is for the CEO to achieve by setting the bar high for the sales organization quarter after quarter.

These are my thoughts on this topic. Do you agree with my thoughts? Do let me know your thoughts on this topic by commenting below or tweet them to me at @rmukeshgupta.

Whats the future of business?

March 18, 2013 Leave a comment

The future of business is real time.

What does it take to run a real-time business? In my opinion, if one wants to create a business that is run in real-time, they need to take inspiration from how professional sports teams are run.

CEO plays the role of the general managers of the team, answerable to the owners (board of directors or shareholders), have a vision for the team and communicate it to the clearly to coaches and players.

The coach is responsible for the team composition and with the support team is primarily responsible for one thing only – train the players so well, that they are able to adapt to any situation that they face while playing off.

Sure, the coach can still help by suggesting and getting the right combination in the field, adapt and suggest changes in the strategies, but again if the players are not able to execute the same in real-time, the strategies will fail.

Managers are the coaches who train the players, with the other support functions like HR, training, finance make the support team. Manager’s role is to ensure that the players have trained enough that they are able to adapt to anything that the opposition can come up with.

Customer facing employees (or front line employees) are the players who need to be able to adapt and adopt to everything that the customer or the competition throws at them.

They need to use their training to win the match. The captain on the field needs to make on-the-spot decisions based on how the competition & the customer react.

In this model, the most important set of folks are these customer facing employees, as it is they  who need to be able to react in real-time based on what they encounter in the field.

So, if businesses want to transform themselves into real-time enterprises  they will need to treat their employees as their most important assets. They need to be trained well and should be able to choose the right play based on their reading of the situation. Their managers (coaches)  can suggest the play to use based on their readings of the situation, but the responsibility to run the play still rests with these employees. So, just like the players, these customer facing employees  should be empowered enough to take decisions on the spot and act on them without having to go back and forth for an approval.

In this model, the organization realizes the importance of their front line employees and so tailors everything in the organization to enable these employees to go out there and take decisions that is right for them and the organizations. This means providing them with the right information at the right time in the right format. This is where technology can play a very important role in the organization. Any technology that enables availability of the right information at the right time in the right format to front line employees, serves its purpose.

It is KEY that these employees know the intent of the organization and have  practiced different plays (Strategies) to achieve this intent so many times, that these have become a part of their sub-conscious.

The other critical piece in this model is also the fact that team work at the front line matters even more. The team will be only as strong as their weakest player. So, it is critical that everyone in the front line understand the intent and their roles in the plays that the organization has trained them for to achieve the intent. Each of them need to play their part.

This also means that decision making will need to be local at the team level and not at the corporate level. The corporate only provides the intent and ensures that every function in the organization is there to support the team to go out and give their best.

This also means that the front line employees are also the highest paid people in the organization. This is a radical shift from today’s model, where they are the lowest paid in the organization and it considered that higher you are in the hierarchy, the more you get paid as your contribution is considered to be more important.

This shift could be the most important to do as this is a cultural shift of magnitude so huge that you can equate this to an earthquake of magnitude 8.5 on the Richter scale.

This model also means that you need to do away with a large chunk of mid-managers as they do not have a role to play. The organization needs to become lean, nimble and fast.

Everything that the organization does needs to serve one and only one purpose – “Enable the front line employees to execute their plays flawlessly”. If a task or a process or a program does not serve this purpose, it is not done. Full Stop.

The question is if it is possible for any organization to follow this model at all? Is this practical?
I think it is. If the football teams, baseball teams, soccer teams, cricket teams around the world can do this, I am sure that other businesses can also execute this.

The question is not – “Will businesses move towards this model?”
but the questions is – “who will be the early adopter for this model?”

Start-ups are an obvious choice, but I think they do not face the challenges that this model solves and hence i would think that are less likely to adopt this.

The businesses that have had some successes and now want to grow big and compete against the biggest and the best organizations in the world are more likely to adopt this model as this provides them with an clear competitive advantage against their larger competitors.

Also, as they are just starting to compete at that level  means that their systems & processes are still being defined and hence the resistance to change will also be the least.

Do let me know your views on this topic by commenting below or tweeting your thoughts to me at @rmukeshgupta.

What if money were no object ? (Video)

March 5, 2013 2 comments

What if money were no object?

What would you do with your customers if you thought that money was no object?

How would you serve the customer?

How would your customer act if money were no object in his/her dealing with you?

Some questions to ponder and you shall come up with ideas that you would never have gotten in the first place..

– @rmukeshgupta

Categories: Ideas Tags: