Wednesday, October 5, 2016

Need for speed. Need for ambition. Need for hunger to disrupt.

Having worked closely with multinationals and Indian corporates, I couldn't help but notice the difference. I admire Indian corporates for business prowess but at the same time feel concerned about lack of hunger for radical innovation.

Innovation in Indian corporates are mostly incremental improvement efforts with an objective to enhance quarterly results. Their pursuit of business excellence and performance is commendable. However, a sole focus on this pursuit alone can lead to 'frog in slow boiling water' syndrome. Whereby Indian corporates do a good job in adapting to heating competition and business pressures, but do not show ambition to jump out and disrupt.

To illustrate, a large Indian conglomerate announced that they want to go Digital. But after meeting them, it turned out that their definition of Digital was narrow, it was limited to leveraging ecommerce in their business units. They lacked the ambition to use Digital Technologies  to disrupt their business and market.

Another case in point is automotive sector. Indian automotive companies are  rightly focused on improving products & securing sales in a competitive market. Recently we heard a news that an automotive company partnered with leading taxi aggregator service. What we do not hear, unlike in rest of the world, is Hybrid/Electric vehicles, Self driving cars/trucks, Connected system, Drones, Next Gen Mobility etc. These disruptions are bound to shift the most value adding link in entire value-chain away from traditional automotive companies, chipping away their differentiation and margins.

Indian corporates are good in responding to competitive pressures with clever tweaks on existing markets and products. Unfortunately, they are not investing on breaking the mold and taking disruptive bets. Many do not even have a defined Product Strategy to cater to both business and technology trends/shifts.

Going forward, disruptive forces will bring fundamental shifts in several industries. Value chains will change, some industries may morph and others would cease to exist. Hence, Indian corporates need to be ambitious, spearhead disruptions and make future bets.

Sunday, September 4, 2016

Know the Visionaries, Pragmatists & Conservatives

If creating innovative products is hard, selling them is even harder. A B2B innovative product caters to either an implicit/un-met need OR a not-thought-of gain. In either case, selling it is an uphill task. Its quite similar to high-tech market development model as explained by Geoffery A. Moore. The model divides the customers majorly into Early Adopters (Visionaries), Early Majority (Pragmatists) and Late Majority (Conservatives).

When the customers are companies in B2B, segregating them in these boxes is not that straightforward. Companies have both good and lacking areas. For example, an Airline may be ahead in customer service but might be a laggard on operations side. A more pronounced segregation is seen inside a company. People in the company are from across the spectrum of Visionaries, Pragmatists and Conservative. And each contributes in their own way to effective running of an organisation:

Visionaries: These are enthusiasts, seek the radical improvement, can see the big picture and strategic opportunity. People like them are usually found wearing the hat of Innovation, R&D and Business Development. Usually, they hold budget to invest in new ideas but do not control big ticket purchase decisions.

Pragmatist: They form a big chunk in the organization. They look for quantified benefits, low risk, proven solutions and are comfortable with incremental improvements. These are Departmental heads in Operations, Marketing, Finance etc. They decide on big ticket purchases and their expectations can be different from that of visionaries.

Conservatives: They too are sizable. They always have the word of caution, prefer in-house development, worry about compatibility with existing systems and prefer convenience over performance. These usually come from support departments like IT, Procurement, Administration and others, but are also found in line departments. They can influence and delay big ticket purchases.

Similar to market development model of Geoffery A. Moore, there is a chasm between Visionaries and Pragmatists. A buy-in from visionary can get you a pilot phase, a foot in the door. But for the big-ticket purchase and company-wide deployment, buy-in from Pragmatists becomes the key.

To cross the chasm, its important to reach out to the Pragmatists early on to understand their expectations. And pick up a specific area to solve on an industrial scale. This may narrow down the scope, but then Rome was not built in a day. A pragmatist buy-in becomes a strong reference in that market segment.

There is no one size fits all when it comes to bringing innovation to market. Knowing your Visionaries, Pragmatists and Conservatives does help and feeds into a sound product and market strategy.

Monday, August 1, 2016

'Fail Fast', a catchphrase that can fail you

Mantras and catch-phrases dominate the management lexicon these days. Consultants, thought leaders and experts use it to condense ideas and popularize them. Business leaders pick it up and go gung-ho with it in their organizations. Before one knows it, catch-phrases start getting applied in literal sense, overshadowing common sense at times... until the next catchphrase arrives.

One of such catchphrase is 'Fail Fast' used in combination with 'Fail Cheap', 'Succeed Faster' etc. However, its 'Fail Fast' that grabs attention the most. Its important to understand the circumstances 'Fail Fast' should not be applied.
  • When perseverance is key, keep this catchphrase at bay. For example, while struggling with product-market fit, its tempting to drop ideas/projects if customer feedback is not very encouraging. Or when crossing the chasm, where a slow adoption rate may tempt to shelve the product. Or when working on innovation, which is not a linear journey but a winding road filled with conflicts and struggles.
  • When working relationships are to be built. Imagine a company hires an individual/agency to partner on a new initiative. Things do not go well first six months. What does the company do? Fail the partner! And face the same issues all over again. When both the company and the partner are on a journey to something new, its important to communicate, empathize and invest in making the relationship work.
But their are circumstances where 'Fail Fast' catchphrase is relevant. 
  • When experiments are required for problem solving. Or when iterations are required in Agile development. In these circumstances Fail Fast is to Learn Fast.
  • When its required to galvanize a risk averse management to take on new initiatives without the fear of making mistakes. Fail Fast is to Bounce Back Fast for the management when mistakes are made.

Saturday, July 2, 2016

AI for Business Simplified

What is AI? How can it affect my business and industry? What can I do with AI? 

AI is hot and happening these days. Investment activity is high. The research in AI is finding its way into real-life applications. Corporates are waking up to it and are grappling with above questions. Having leveraged AI for business applications, my attempt here is to address above questions in plain language sans buzzwords.

AI simply put is computers doing things normally done by human mind. Hence, by this definition, an AI ..: 

Recognizes and understands like a human

AI technologies are attempting to provide computers the ability like human mind to recognize and understand unstructured inputs like handwritten inputs, natural language, audio, pictures, video and more. The application of these in real world are diverse:

  • Understand queries in natural language. Current popular applications are personal assistants like Siri, Cortana, Google Now. However, in future it will extend to work related queries 'Which fastener should I use for ....?' 
  • Extract valuable data/information from handwritten documents, audio and video  for analysis. Eg: Handwritten records in regulated industries, Audio and video recordings of experts and executives, Customer feedback.
  • Automate management of unstructured data: Imagine an app that goes through all your pictures and videos, identifies the best moments and catalogues them in a timeline and makes a collage out of it. Or a software that organizes lifecycle data of a product/part (say car engine) from paper records and databases.
Social media and consumer tech companies like Facebook, Google, Microsoft, Amazon, Apple, Amazon are leading in such applications since they deal with natural language, pictures, audio & videos.

Interacts/Responds like a human

Enabling machine to converse like humans allows to automate human interaction and improve user experience.
  • Customer service, service desk, 'Help and FAQ' can be automated by using chatbots which can understand and respond to queries in natural language. 
  • Chatbots can be used for branding. A customer can actually talk to a brand. Eg: Barbie chatbot for interaction with kids.
  • Chatbots can be your concierge and advisor: Eg: Book itinerary (flights, taxi, hotel) through chat. Organize and order your shopping. Advice on preparations for special occasions.

Thinks like a human

AI technologies are adding self-learning power to computational power of machines so that they can rival humans in performing specialized tasks. The applications are diverse:
  • Gaming: AI have been pitted against humans in Chess and Go. In future Gaming will include AI to make games more adaptive and engaging.
  • Driving: Driverless (Tesla, Google,..) and driving assistance (Porsche) vehicles are evolving rapidly.
  • Training/Assessment: Recently AI performed better when pitted against a fighter pilot in dog fight simulation. In future, one could imagine AI training humans at specific tasks and also assessing them.    
  • Professional services: AI is automating the knowledge and analysis work in legal and financial world. UBS and Goldman Sachs are using AI for both employees and customers.
  • Automation in IT industry: Many aspects of software development and testing can be automated with AI. 
  • Healthcare: AI will participate/assist in diagnosis, treatment, nursing and follow-up. It will improve overall healthcare quality and reduce costs.
  • Shopping: AI will learn buying preferences over time and suggest relevant and interesting products. Will benefit both shoppers and retailers alike.
  • Entertainment: Insights into likes and dislikes of individuals and masses will help entertainment industry to put together better storylines and shows.
  • Security: AI technologies can learn about anti social elements, terrorists, criminals from past actions and investigations; and predict their behavior and next move.
  • Business decision making: Activities like processing data, mathematical analysis, applying frameworks, forecasting can be managed by AI. AI assistants to CXOs are a distinct possibility. And maybe an AI CEO in future. 

Creates like a human

It has been argued that AI can emulate human creativity and art. AI can learn and produce beautiful music, painting, poetry etc.. Recently, Google's Magenta created a 90-second piano melody. The early attempts by AI are tad simple and imperfect but cannot be ignored by art world.

Feels like a human (Self aware)

This is still far-off and in realm of science fiction. If it happens, mankind would have effectively spawned a new intelligent species. The implications of which would be far reaching and best left to imagination for now.

AI technologies & applications are expanding fast and will disrupt businesses, job profiles, our daily work and get more intertwined in our personal life.

Wednesday, May 11, 2016

Servant Leader : paradoxical but effective leadership style

We are well familiar with autocratic, participative and laissez-faire styles of leadership. They are considered to cover the entire spectrum from controlling to facilitating. Yet, there is another paradoxical approach beyond this spectrum, i.e. a Servant Leader.

Why do we need a Servant Leader? Are the familiar leadership styles not enough. To answer this, let's first understand the relevance of these familiar leadership styles:
  • Autocratic leadership: Leader directs and controls the team. Role of every team member is clear and compliance is important to achieve the objective. Eg: Production, Construction, Military
  • Participative: The team also participates in the decision making. This works with knowledge workers who are self-motivated and eager to share their ideas. Eg: IT industry
  • Laissez-faire: The leader only offers guidance and support. The team members has complete freedom to decide and complete their work. This suits when working with highly skilled and experienced people who are independent. Eg: R&D, Innovation, Creativity works
Other leadership styles like transactional, bureaucratic etc.. also lie in the same spectrum.

There are two basic premise for above leadership styles.
  • There is a team in place 
  • The leader has some formal authority over the team.

What if the above two premise are taken away? Imagine a situation when one needs to achieve an objective with people over whom he/she has no formal authority, who are in different departments, some of them are experts and some other department head themselves. Each having a day job and independent responsibilities. How does one lead then?

This is where Servant Leader comes in. A Servant Leader is outside the spectrum of above familiar leadership styles because he is the doer first. He/she does not control. Instead he/she inspires support and commitment based on the merit of what he proposes and his work.

Based on my personal experience, servant Leader is very effective in  following conditions:

  • The objective is novel and ambitious
  • Uncertainty in how to achieve the objective
  • Requires specialised knowledge and expertise.
  • The team to achieve the objective constitutes other departments, experts and external partners
  • Team members have a day job and general lack of time to support outside their regular work

In above conditions, 'leading by doing' works best. The leader gets access to specialised skillset and benefits from expert knowledge of team members. The team members would be more open to contribute without feeling burdened by extra work. The leader will still be in charge, anchoring the whole initiative and steering it. The team members will also act as ambassadors of the project and contribute to overall buy-in within and outside the organisation.

Servant Leader may sound paradoxical but it is very real and works. The usual management education portrays a leader who is sitting on top of his team, is autocratic or benevolent depending upon the situation and the team does the work. Turn this portrayal on its head and you get a Servant Leader who might be sitting at bottom or side of the team and leads by doing.

Saturday, April 9, 2016

Being Future ready (contd..): Making active and effective bets rather than passive ones

The previous post on ‘Being Future Ready’ discussed the approach to creating future bets and portfolio. In this post, we pick up from where we left off, i.e. making active bets rather than passive ones.

A technology bet is passive if its being researched and developed in a silo with no link to business and market. A bet on new business model or market segment is passive if its only being explored in powerpoint presentations and reports. Such passive bets are common to organisations with siloed and conventional way of working.

In contrast, an active bet has product/commercial applications and benefits in medium and short term (refer figure below). An active technology bet would see a launch of prototype/demo in short-term and the first product application over mid-term. An active bet on a new market or business model would have a pilot phase in short-term, followed by a commercial offering over mid-term.

For bets in unrelated areas (an unconnected market/industry or technologies), finding a partner is an apt approach. To evaluate and find a right partner in short-term and then work closely with the partner towards field/market test over mid-term. The partnership approach allows to access new capabilities, share risks and gain experience/expertise.

For a company with not so deep pockets, the partnership approach can be extended to core and adjacent areas. This would reduce investment requirements and allow to have a diverse portfolio of bets.

Active bets are easier said than done. It requires an organisation which is tuned to cross-functional, design thinking and agile way of working; collaboration with customers and external parties; and a positive disposition towards risk and failure. Even with best of intentions, it's the organisational readiness which becomes the constraint and an active bet may relegate into passive one.

Friday, March 11, 2016

Being Future ready: creating a Portfolio of Bets

How does one prepare for the future business environment? What new markets will emerge? What kind of products and services will customers pay for? What technologies will disrupt the industry? What will disappear? What will become a commodity? And what will be the new high-margin and value adding areas in future?

Above questions are the key to long term business and product strategy of a company. So how does a company be future ready? There could be four approaches to it.
  1. Predict the future accurately and invest for it?
  2. Invest in various potential futures scenarios?
  3. Evolve as the future unfolds?
  4. Shape the future itself?
However, each of the above may not be sufficient in itself.
  • As to first point, predicting the future has never been easy. A future is an outcome of complex interactions of several factors, some of which are known today and some are not. For every person who predicts the future correctly (and becomes famous), there are hundreds who get it wrong.
  • As to second point, creating several future scenarios is helpful. It improves the probability but still doesn’t guarantee success.
  • For the third approach, it’s easy to apply but then the company remains a laggard, a follower, a second-best. It’s not a bad business strategy though. Not every company can be a leader.
  • Fourth is a game-changing proposition, but need to be realistic if the company has the required resource and clout to shape the futue.

What could be a realistic and practical approach then? The recommended approach is to create a portfolio of future bets by leveraging the above four approaches. Each bet can be dropped or scaled up in response to business environment. And a dropped bet can be revisited if required.
Following are the three grounds for creating the future bets:
  • Future scenario studies based on megatrends,  customer shifts and other factors.
  • Emerging or current hot topics so as to evolve with them.
  • Own strengths (technological or business). So that company can shape a future where the strength will give a competitive advantage.

Number and size of such bets would also depend on how deep the pockets are of a company.
But what does a company with not so deep pockets can do about it? How to make Active bets rather than just Passive bets? Well… that would be the topic for my next post.

Sunday, February 7, 2016

To Pivot, or not to Pivot...that is the question!

'Pivot' implies strategic course correction. Its perhaps the most challenging decision for both startups and corporate innovation projects. Both entrepreneurs and intrapreneurs go through this dilemma some or other time. The dilemma is exacerbated when the situation do not seem that bad but is also not getting any better.

To make a good pivot decision, lets understand its business impact areas. From my experience, there are three distinct areas of Pivot:

  • Customer: A pivot decision may involve changing the customer segment itself. Eg: Selling it to an intermediary rather than to end consumer, Moving from B2C to B2B,.. 
  • Value offering: A pivot decision would be to rethink the offering to customer. Offerings generally evolve based on customer feedback. But sometimes one may have to change the offering completely. Eg: Selling platform rather than the content on it. 
  • Technology: The technology behind the offering may have to be changed sometimes. This is perhaps the most common pivot decision and logical to arrive at compared to the above two.

Pivots are necessary to identify the right approach to grow the business, whether its a startup or corporate business development. 

However, its the cost of Pivot that discourage people from doing it. How can we reduce the cost of Pivot? How can we take a peek in the future post Pivot?

  • One way to reduce the cost is to develop MVPs (Minimum Viable Product). Building an MVP over an existing product does not cost much. Sometimes MVP can be a mockup with less automation and more manual backend support. MVPs can be used to get feedback from new customers, get feedback on a new offering and/or a new technology. 
  • Also to reduce cost, Pivot needs to applied judiciously. It cannot be a blind exploration exercise or a leap of faith. To identify potential Pivot opportunities, a value mapping exercise on paper is useful, followed by taking the feedback from the customer. Its important to clarify with the customer his willingness to pay for proposed product/service.

Another hurdle for Pivot is more of human nature. To love one's ideas so much so to not consider Pivot as an option. I will not call it as human weakness because such passion is required for entrepreneurs and intrapreneurs to succeed. Its the role of mentors then to help them see the reason and guide them.

To Pivot, or not to Pivot?.. Is not a reactive approach, but a proactive question that needs to be asked from time to time, especially when in predicament by flat-lining sales/profit and a mediocre situation.

Sunday, January 3, 2016

B2B Marketing: transitioning from Messaging to Dialogue

A customers needs supplier as much as a supplier needs customer. Yet, the process of discovering each other is fraught with pitfalls. Having experienced B2B buying cycle from both sides (supplier and customer), its insightful to see how the information asymmetry impacts the success of B2B marketing. The customer has the information of its needs(both explicit and implicit). Gaining this insight and closing the information asymmetry is key to the success of a B2B supplier/company. 

A B2B company instead relies on one-way messaging to customers and closes the information asymmetry other way around. In Push marketing stage, a company is busy advertising its offering and same messaging is carried over in Pull marketing when dealing with queries from customers. Emphasis is on expanding the media mix to include blogs, social media, conferences and others. But the nature and content doesn't change, often to maintain 'consistency' in marketing messages.

The way to gain information symmetry is to enter into a Dialogue with customer. To pick the brains of the customers, to seek their views, to brainstorm with them and to be genuinely interested in understanding their needs. Opportunities for dialogue can be created within push and pull marketing stages. For example, instead of highlighting product features at a conference, storytell a future vision and how is your company contributing to it. When customer reaches out with queries, try to meet him (not as salesman but) as a fellow professional to offer guidance. Rather than just posting messages, use social media to start a dialogue.

I would conclude by citing an outcome from McKinsey study on B2B companies. The top quality that is appreciated most by customers (700 global executives) is 'Cares about honest, open dialogue with its customers and society'. And surprisingly, the above quality was missing in brand messaging of surveyed B2B companies. 

Sunday, December 6, 2015

The Digital boost to the Business: A practical approach

Business are looking at Digital as a mean to drive revenues, efficiencies and competitive advantage. 'Digital' could mean different things for different people. For some, its about digitisation and mobile devices. For others its Cloud, IoT and Data Analytics. Digital is not IT. The discussion on Digital is often skewed towards a narrow set to technologies. Instead, the starting point should be the business and then comes the technologies that can be leveraged.

A straightforward approach would be to divide the business into following areas and then frame the digital initiatives:

Customer Offerings: Digital can be a game changer in terms of how a business designs its offerings and serves its customers. 
An entire new line of product based services can be enabled by digital initiatives. There are examples of a water purifier company selling pure water remotely. Consumers can buy the pure water just like a prepaid talktime on mobile.   
Sensors, Digital Material Technology (MIT) and others can improve the physical products itself. 
Various digital technology enablers include Big Data, IoT, Analytics, Augmented Reality, UAVs, Digital Materials and so on...

Processes: Digital innovations can improve effectiveness of processes like design, supply chain, production, maintenance, financial, marketing, HR and administrative.  
Production can benefit from IoT, 3D printing, AR, Wearables, and Robotics based solutions.
Supply chain can benefit from Tracking and Analytics solutions.
Fintech is an emerging area. Serious Gaming, AR, VR and Virtual Simulation technologies can benefit training and design processes. Marketing can benefit from social media analytics, mobility and animation technologies.

Decision Making: Digital can help make decision making at all levels of management more objective and data driven. 
Data visualisation and analytics is a common thrust area. Social media technologies help management keep an ear to ground and also communicate better.

Infrastructure: Digitalising the infrastructure allows the company to get more out of its fixed investments, be it buildings, equipment or IT. 
Smart buildings save money. Digital solutions enable predictive maintenance which can improve equipment productivity. IT infrastructure can expand its horizons to data lakes, remote sharing and connectivity, contextual search, mobility to give the digital edge to organisational working.

Digital initiatives in above areas can be at both departmental level and corporate level. Coherence and synergies between them can be ensured by transparency and open interaction across departments. A core central team can also help coordinate and facilitate such initiatives.

Lastly, there is a behavioural aspect to this topic. There is no ready template for digital business or digital initiatives that a business can simply adopt and implement. Its innovation driven and an intrapreneur skillsets are required to conceive and implement digital initiatives in an organisation.

Friday, October 16, 2015

Indian Aviation: Lifts & Drags

Indian Aviation is gaining global attention with the potential it holds. It is fastest growing and 3rd largest in absolute number of passenger growth. Billionaires growth rate of 20% indicates the potential for corporate aviation. The huge gap in flights per capita (4 times less than China and 40 times less than US) is another indicator of unrealised potential.

The 'Lift' that Indian Aviation is experiencing is more due to favourable econometric factors.
  • Growing GDP and GDP/capita
  • Income distribution moving towards to middle and high income groups
  • Young demographics and increasing working population
  • Increasing urbanisation
  • Downward trend in inflation adjusted travel cost due to competition driven efficiencies

However, story of Indian Aviation is also of missed opportunities. It missed out on using geographic advantage of India to become a major hub for East-West connectivity in 1990s. More than half of the revenues of foreign travel in & out of India is with foreign players rather than with Indian operators. India also lost out on becoming MRO hub to smaller countries in neighbourhood. India constitutes just about 1% of Global MRO market. 

The 'Drags' on the Indian Aviation are due to policy and structural issues.
  • High fuel cost compared to global prices due to taxes (excise, sales tax). Hence, airlines in India are saddled with higher fuel cost compared to their global counterparts.
  • 5/20 rule (International operations only after 5 years of domestic operations and 20 aircrafts fleet). This rule delayed the airlines in India spreading their wings globally. Only few large airlines operate internationally. And the rule stifles new entrants with ambitious growth plans. 
  • Unattractive incentives for route dispersal to remote and unprofitable hubs. 
  • Lack of low cost airports. Lack of alternate airports in busy hubs. For example, Bangalore is not allowed to have its old airport as an alternate airport for domestic LCC. 
  • High tax burden on MRO operations.
  • Inadequate FBOs for General Aviation.
  • Non Acceptance of Bio jet fuel for aviation. Biojet fuel can cut both costs and emissions. In addition, it will stimulate growth in biofuel segment which has links to rural economy.
The above issues stem from years of Govt. indifference to aviation. Aviation unfortunately has been considered transport of elite and its stimulating effect on economy has been ignored. Aviation can speed up the business exchange, goods movement, tourism and overall economic growth. Today commercial aviation caters to a middle class citizen for both leisure and business travel. 

Even if we were to take the corporate aviation which is used by business heads, it helps them save 20% of time compared to commercial airlines and enable them to visit remote places at their convenience. Thats a huge improvement in their productivity and connectivity which translates into faster decision making and business growth.

In India, Aviation is a major employer and supports 1.7 million jobs. Globally, aviation contributes to 3.5% of Global GDP, but in India it contributes just about 1.5%. The 'Lift' from the favourable econometric factors presents an opportunity to derive substantial economic benefit and create jobs provided the 'Drags' are addressed. Or else, it would again become another of many missed opportunities.

Data sources: Airbus, IATA, Frost & Sullivan

Sunday, August 30, 2015

Framework for Trans-national R&D strategy

Multinational companies generally tend to have R&D concentrated at their parent company location. Having a closed setup in one place has its obvious advantages in terms of better coordination, efficiency and information security. 

However, multinationals do want to break the mould and connect with and learn from broader ecosystem around the world. The approach though has been more or less ad-hoc,
  • captive centres to fulfill an offset obligation or for access to cost effective talent
  • sponsoring research in relevant areas 
Some multinationals just do it since other are doing the same. 

A more structured and strategic approach can not only deliver operational benefits but can also build competitive advantage. This blog post would highlight a strategic approach to R&D setup and partnerships in different regions of the world.

A regional R&D strategy would be aligned and in sync with corporate and R&D strategy of the company. And it would have following three objectives as its corner stones:
  • Leverage strengths of the geographic region
  • Provide advantage over competition
  • Build strategic relations/assets for the company in that region

To build the above strategy, a broad based research would be required covering various aspects of the given region. 

To analyse the research data and derive meaningful insights, one could use a matrix layout to analyse and rank on multiple criteria. The outcome of the analysis has to be actionable insights related to the three corner stones mentioned above.

However, a strategy is never complete with an executable plan. Following framework is a good tool to derive and communicate the action plan.

For many companies, decision for expanding R&D outside home location is driven by operational and obligational considerations. However, companies gain to benefit more by treating it as a strategic move and putting more thought and diligence behind it.

Sunday, August 9, 2015

Emerging Hyper-local Aggregation markets and startups

Aggregation model of business brings various sellers and buyers on a common platform. Flipkart, Snapdeal, Redbus, MakemyTrip and many more companies have since matured the aggregation model and grown in both valuations and scale of operations.

These aggregators sacrificed profitability to build market share. The nascent e-commerce market and sluggish economy only added to their woes. Soon the long term sustainability of aggregator model came under questioning. But interestingly, the aggregator model is only picking up pace, now in its new avtaar of Hyper-local Aggregation.

New startups have cropped up who are aggregating at the local level of a city or even a neighbourhood. Big Basket is delivering locally sourced groceries at one's doorstep. FoodPanda, TinyOwl, Delyver are delivering food from nearby restaurants. And new players like Grofers are delivering from your trusted shops in the neighbourhood. Then there is Practo who helps locate and rank doctors locally. SeekSherpa aggregates local people who provide tours with real local flavour.

The urban lifestyle is fuelling the demand for such hyper local aggregators. A typical urban consumer has disposable income but not time. They look for convenience and tend to buy experience. It's not the lack of demand but the poor service delivery which can hurt a hyper local aggregator startup. Cracks are already showing up; Cab drivers do not show up, Food orders get cancelled, Low quality vegetables delivered, not enough SKUs. 

Another area of concerns is scale. Can these hyper local aggregators scale up and become unicorns? Or would their growth stabilize at a smaller scale. Unlike Flipkart and likes, these startups are not nationwide. The only way to grow in scale is to replicate their business model in as many cities as possible.

Nevertheless, its encouraging to see new sprouts of economic activity at local levels and should be nurtured. And with creative offerings of these young startups, its certainly interesting times ahead for urban consumer.

Sunday, June 28, 2015

Business-model Innovation driven by Emerging Technologies

Business model innovation can disrupt markets over a short period. It can expand markets, reduce costs and even change the competition landscape.

Examples of business model innovation tends to be around clever bundling, pricing, consumer financing and sales channels. However, the purpose of this post is to highlight how emerging technologies have enabled business model innovation.

  • A good case in point is Insurance. Connected Vehicle technologies have allowed insurers to provide custom insurance solutions based on vehicle usage and driving patterns/behaviour. 

  • IoT (Internet of Things) and Data Analytics are driving Product to Service model. Companies are now connecting to their product remotely and selling the service delivered by the product. For example, iBot Inc ( is working with water purifier makers to sell pure drinking water.

  • The traditional manufacturing business model of scale and specialisation is bound to lose its competitive edge to 3D printing. 3D printing technologies can manufacture far more intricate and variety of shapes (Eg: bionic designs), and allow manufacturing to be more decentralised, democratized and viable at small scale. 

  • Recently, many technologies have emerged to reduce the size of video and CAD files without compromising the quality. These lightweight media technologies can now enable more cloud hosted and remote delivery business models. For example, specialized training (involving virtual simulation and walk-through) can move out from specially equipped facilities to remote portable devices.

  • Emerging mobile technologies are disrupting the website based business models. Today consumers spend far more time on their smartphones and apps. But that's not the only reason why e-commerce companies are betting on mobile platforms. Mobile platforms bring more engaging technologies like searching that coveted dress with just its picture, indoor navigation and assistance in a store, virtual reality based envisioning tools and others. 

R&D and Engg. tend to focus more on product and process innovation. Business model innovation is more strategic and needs top leadership commitment. Hence, new entrants and small companies are often ahead in implementing it while large players struggle with internal approvals and bureaucracy. 

Sunday, May 3, 2015

Startups and Corporates: How Goliaths are shaking hands with Davids

Big corporates have realised the need to engage with start-ups for various reasons:
  • Access to new technologies to feed into R&D pipeline
  • Access to solutions for improving operations and product differentiation
  • Find new B2B customers and catch them young.
  • Talent attraction and retention
  • Attractive investment ROIs
  • ‘Speed To Innovation’ 
Engaging with start-ups has its own challenges. The expectations of startups and their timelines are vastly different from those of established companies. The traditional partnership or vendor-supplier models do not fit here. Following are the emerging engagement models:

Incubator: This model is used by corporates to engage with early stage start-ups. The start-ups have an idea, skillset to execute and a working prototype in some cases. Companies incubate the start-ups if the ideas are relevant to the business and provide funds, resources and mentors (both business and technical). The engagement duration is long, about 2-4 years. The successful start-up is either acquired or the start-up team is acqui-hired. This model is more popular with investor communities and industry bodies.

Accelerator: This model is used to engage with later stage start-ups. These start-ups would have a working product/solution and a customer base. An accelerator is a 5-6 months structured program in which start-ups are given space, facilities (equipment, internet, food etc..), funding, mentorship and access to customers. Towards the end of the time-bound program, the corporate has to select the startups and decide on how to leverage/assimilate the outcome. If start-ups adapt their product to corporate's needs (also called pivoting), then they are invested in. A graduation day marks the end of the program and the start-ups are showcased in front of the industry and investor community.  

Partnerships: The above models are structured programs. However, corporates can choose to go for a flexible and open model. The start-up community is regularly scanned in areas relevant to the company. Relevant start-ups are reached out to for further discussions and partnership. In this model, compared to the earlier two models, there is limited opportunity to mould the start-ups to suit corporate needs. The model works fine if the start-ups are potential product/service providers to the corporate.

Strategic Investments: Some start-ups are matured, of high value with high potential to impact the corporate's industry. These start-ups do not need the incubation or acceleration. These are companies of future. Corporates make large investment and pick up equity in them so to enjoy high rate of return and also to remain plugged-in in their development and exercise influence. Also, it lends prestige and visibility as corporates are seen as technology leaders who are thinking ahead.

The start-up ecosystem is highly dynamic and belies the standards/norms that big corporates are used to. Engaging start-ups demands resources and time of the organisation. With start-up ecosystem expanding by leaps and bounds, the huge money pouring in and skyrocketing valuations, no corporate can ignore it. The corporates who have been running structured engagements are open to sharing their experience and resources. The newcomes need to leverage the same while formulating their approach.

Tuesday, March 31, 2015

Startups and Corporates: How Davids are raising stakes for Goliaths

This post is a precursor to the next one 'Startups and Corporates: How Goliaths are shaking hands with Davids'. 

Democratisation of Research & Product Development

Earlier, New Product Development used to be expensive and hence only big corporates with deep pockets and research agencies were the main R&D centres. With time, new R&D areas and inexpensive ways of working emerged, allowing a person to access and work on cutting edge technologies from comfort of his/her home.

  • Software simulations reduced cost and time. One can simulate a complete physical system and run countless simulations at no incremental cost. 
  • Software itself became driver for new inventions. Hardware coded functionalities gave way to software coded functionalities. Eg: Software defined radio
  • Fabrication became inexpensive with 3D printing. No need for elaborate setup of lathe, 5 axes milling machines etc. One can now order Metal/Plastic printed parts over internet and get them delivered at the doorstep. Going forward even electronics will be 3D printed.
  • Open Source has revolutionized access to high end technology. From hardware to software, open source has made them inexpensive and readily available. Eg: Arduino, Raspberry Pi, OpenCV, Octave etc. (visit for various open source hardware)

With above developments, R&D is no longer an exclusive club. It is now open and democratised allowing anyone and everyone to participate. For instance, in the field of Augmented Reality, alongside big brand devices like Google Glass, MS HoloLens and Epson Moverio, there are also devices from Start-ups like Oculus, Magic Leap, InfinityAR, Meta, i2i and others.  

Technology start-ups have mushroomed who are developing new products alongside corporates. And there is no dearth of Angel & VC money to scale them up. 

Splintering/Unbundling of Value Chain

Large organisations cover large segments of value chain. And organisations tend to integrate vertically or horizontally to grow. With size, comes the rigidity and constraints. Large organisations are slow in closing performance gaps and addressing new market opportunities. And these become white spaces for startups to enter. Potentially, a large segment of value chain can be split into small segments, each being served by a start-up. This trend is visible in several industries. A good example is logistics industry where the value chain has been splintered by several start-ups. Refer

Another example is Home Delivery for food items. Delivery at door step is a segment of value chain which is integral part of PizzaHut, Dominos etc. They have long advertised their home delivery to differentiate themselves. But start-ups have emerged in this segment alone, collecting the food packets from the restaurants and delivering it to doorsteps of the customer. The value chain segment of food preparation and its delivery has been split into two and competition just got tougher. 

Further, start-ups generally go after high margin and high growth business. Which naturally puts the squeeze on the high-margin value segments of large organisations. 

In next post, the ways an organisation can address above challenges will be discussed. Stay tuned...

Tuesday, February 24, 2015

Innovation Multiplier: Building on other Innovation & Invention Bricks

Innovation multiplier is something quite obvious to me. Yet, I am writing on this because I have seen several ideas and prototypes which do not leverage this simple concept.

Many attempts at Innovation start with the technology or concept with which the idea owner is comfortable with. He/she ignores what is state of art in both technology and does not incorporate the same. As a result, the demonstrator or MVP fails to 'Wow' the audience and investors.
For instance, an idea around Augmented Reality using cameras which use the older technology of depth sensing. It constrained the form factor and the quality of the results. 
A solution deployment proposal still leveraging the big black server boxes when the small and sleek computer sticks would suffice.

Same goes for business approach as well. Ideas built on older business assumptions are bound to have average market success and find poor traction with investors. For instance, a detailed proposal on a B2B solution attempting to build an industry data standard for entry barrier. But today when the data can be easily converted into different formats and shared across platforms, creating a data standard would be a futile exercise.

An innovation should leverage all the leading (state of the art) technological and business developments. Even if the underlying technology bricks are yet to mature. Technologies are maturing very fast today, especially when their is a specific business application. And in worst case, its always easy to scale down on technology rather than scaling up.

Tuesday, December 30, 2014

Frugal Discovery mode to decode Emerging markets

In general, companies take a linear approach to launch new products and services. First comes the market research, then the forecasts, then the product R&D followed by a big-bang launch. This approach works fine for existing markets. But when it comes to emerging markets, such approach fails to deliver. And history is replete with such examples:
  • IBM PCjr (IBM much hyped PC for consumer market which failed on cost and features)
  • Apple Newton (Big bang launch of a product ahead of its time. With features for which market was not ready then.)
  • HP's Kitty Hawk (Designed for emerging PDA market which collapsed. Meanwhile, missed out on huge market of video gaming systems)
  • Premier Smokeless Cigarettes (Launched when smoke was considered a major health risk, but the taste/flavor was rejected by the users)

The common thread in above and similar examples is that
  1. Companies wade into uncharted territories solely based on their research & forecasts. Their efforts give them the confidence that they have figured out the unknowable/uncertain emerging market. 
  2. And they put huge money, resources and execution capacity behind the launch. This big bet launch gives them little financial room later to turn back and correct course. The managers leading the launch also hurt their credibility.

For uncharted territories, the suggested approach is to use a Discovery mode for the first point above and combine it with Frugal approach to address the second point.

The framework below explains when the Frugal Discovery mode is relevant.

The Discovery mode is required when:
  • Customers do not know what they want. The need is yet to be created/perceived.
  • A company is not sure what customers want. Though the company may rely on its market forecasts. But the actual use may be out of their research radar.
It takes time for consumers to warm up to new product/service features. And to better understand their own needs w.r.t. to given product/service. Discovery mode allows exploration and learning to both company and its customers. 

And being Frugal in discovery mode helps to:
  • Conserve resources for second or even third attempt at getting the product strategy right. Companies tend to do the opposite by opening the full tap and going gung-ho with full scale implementation in the first attempt.
  • In discovery mode, iterations may happen even in commercialization phase on product design and manufacturing capacity. And since such iterations are later in product development lifecycle, they are going to be costly. Hence, it helps to be frugal from the beginning.
Be frugal, make limited prototypes, test market and iterate. Customers will also learn what they actually want and new customer segments might emerge. 

Many companies are now looking beyond their traditional markets towards emerging markets to drive growth. And to do that, they would need to move beyond the traditional approach of big bang launches with know-it-all attitude to a more humble, frugal and discoverer approach.  

Sunday, November 16, 2014

Organisational-level Strategies towards New/Emerging markets & Disruptive products

In the last post, several organisational-level constraints were discussed which impede entering new/emerging markets and launch of disruptive products. In this post, the strategies to overcome these constraints are discussed. There is no one-size-fits-all and each strategy caters to specific conditions and challenges. These conditions and challenges can be both Market based or Operations based.

And the strategy would constitute designing an organisation which best fits the given Market & Operational conditions.

Strategy: Acquire & Maintain Autonomy

This strategy implies acquiring the target organisation (which offers a potential disruptive product for an emerging market). And to keep this organisation insulated from the influence of parent organisation's systems and processes. This strategy will be suitable in following conditions:

Market conditions:

  • If the target customers are going to be different from existing customer base. 
  • If the initial market size is going to be much lower than that of existing offerings.

Operational conditions: 

  • If the cost structure are going to be different. Especially, if the margins are going to be lower.
  • The technical inclination & competencies to develop the product are not available internally.
  • The product development process is different from that of parent organisation.

Strategy: Spin-out and give Autonomy

This strategy is similar to above with a difference that the external organisation is a spin-out rather than an acquisition.

The market conditions for this strategy remains same as that mentioned for the previous acquisition strategy. An external autonomous organisation is suitable to address a different market size and customers.

With regards to operational aspects, this strategy is applicable if the disruptive product is being developed in-house. But the operational conditions required to deliver the product are in contrast with that of organisation's.
  • The cost structure and margins are going to be different from that of existing products.
  • The product development process needs to be different from that of parent organisation.

Strategy: Ring-fencing  to create an Unit inside Parent Organisation

This strategy implies creating a near-autonomous organisational unit in the parent organisation. This unit will derive its resources from parent organisation but will have operational independence.

The strategy works if the target market conditions are going to be a close match to that of parent's organisation.

  • The target customers for the disruptive product are a close match to existing customer base. 
  • The initial market size is not going to differ much from that of existing offerings.

Ring-fencing is required to address the differences in following operational conditions from that of parent organisation.

  • The cost structure is going to be different. Especially when the margins are going to be lower.
  • The required product development process is different from that of parent organisation.
It of less consequence whether the product idea is in-house or externally acquired.

Another variant of above strategy is Ring-fencing to create an Unit inside a Function

If there is not much difference in operational aspects, then creating a near-autonomous unit inside a function is good enough to address the difference in market conditions.

In case, if the disruptive product is an offshoot of core products of the organisation, has similar cost structure, but has a different target market. In such a case, creating a focused marketing and sales team will be enough to enter the new market.

Strategy: Acquire & Integrate

This strategy is safe to use if an external disruptive product idea requires similar operational conditions and market conditions as that of parent organisation.

Various strategies are summarized below in a framework.
The y-axis refers to Market aspects like Target customers, Market size etc.
The x-axis refers to Operational aspects like Cost Structures, Technical competencies, Product Development process etc..

Sunday, October 5, 2014

Organisation-level constraints on entering New/Emerging markets & launching Disruptive products

An organisation may have several new disruptive product and service ideas. But what matters is how the organisation takes those ideas forward. There are examples where an organisation was first to come up with an idea. But it was some other company which recognized the potential and invested in its development and market launch. As you may be aware, the digital camera was first invented in Kodak!

Why does it happen that a successful organisation which has a great portfolio of products ideas, lose out to others who arrive late in market with similar products. Is it because of the people in that successful organisation or the processes or the culture or because of its customers?

__Existing product/service offerings defines an organisation in terms of the cost structure, profit margins, market size and customer segments. Any organisation cannot change its cost structure overnight, especially to one with lower overheads and thinner margins. Hence, there is a tendency to support product ideas which promise higher margins and are in line with existing cost structure.

__Similarly, when it comes to taking market feedback for product ideas, the sales and marketing personnel reach out to existing customer base. Though the product ideas may be more suitable for an entirely different and emerging market. Since, the existing offerings serve as a reference, an organisation expects the market size of a new idea to be at least as large as that of existing offerings. Smaller markets are not considered as they may not fulfill the desired growth rates of the organisation. 

Hence, when it comes to investing in new products/services, an organisation operates in confines of its cost structure, product margins and customer base. These are organisation level characteristics, independent of people working in it. Product/service ideas which serve existing customers and promise higher margins get support while other ideas starve for resources. 

However, there are ways to influence an organisation and to work-around (or break) its organisation level confines to launch disruptive products and enter new markets. Will discuss the same in upcoming posts. until then.. bye...

Saturday, August 16, 2014

Delivering Breakthrough Innovation: Selecting customers for feedback and launch

The series of posts on "Delivering Breakthrough Innovation" are based on my experience. And in this post, I would like to talk about the challenge one finds in the marketplace when introducing innovative products/services. 

If you believe that overcoming organisation's internal skepticism & resistance for a breakthrough idea is all it takes to introduce an innovation in market. Wait, till you step in the market! One would find that the internal skepticism also reflects in external world. This shouldn't come as a surprise, because internal industry and market experts have the same mental map as the customers. And hence, they mirror the customer behavior and expectations. 

Customers too are engrossed in their day to day operations and would not imagine something disruptive in their way of working. In a B2B scenario, the customer like any another company, would have their silos, with each functional head expecting incremental improvements in their areas. Hence, level of internal resistance can be a good indicator of resistance to be expected in marketplace. 

So, one needs to be realist and not expect their innovative product/service to be an instant hit in market. At the same time, one should not get discouraged due to initial skepticism and kill the idea prematurely. Following are the pitfalls to be avoided when going to market:

___The management will insist on early feedback from customers before further investment in the idea. But all customers are not alike. Some are conservative and others are progressive, commonly know as 'Early Adopters' and 'Laggards'.
  • If progressive customers are known, feedback should be taken from them. 
  • If progressive customers are not identifiable, then customer feedback should come from a reasonable sample size. This lowers the risk of a conservative feedback. 
  • Also, as mentioned in previous posts, a prototype helps to get objective customer feedback. Even a conservative customer though skeptical, would still be forced to be objective in evaluating it. 

___Some disruptive innovations may require customer trials for further improvement and benefit assessment. While selecting a launch customer for trials, it must be ensured that the customer has reasonable interest in the idea and will give necessary support during trials. Also, the customer can be incentivised in terms of foreground IP sharing or concessions rates going further.

For success of a disruptive innovation, managing externally (market feedback and launch) is as important as managing internally (internal buy-in and development).

Saturday, June 14, 2014

Monitoring Shifts in Related Value Networks and Beyond

A value network constitutes the chain from suppliers to the ultimate customer which serve a specific set of customer needs. A simple example would be of value network of Flash memory sticks. The participants in this value network and their products serve low and portable memory storage needs of the customers. Another example would be value network of long range aircrafts which serve long distance mobility needs of people.

For a given value network there are related value networks which share some common traits. For instance, value networks related to Flash memory are portable computing, desktop computing and mainframe computing. A company may serve more than one value network by different product range.

A company tends to be occupied with shifts in its own value network to compete and survive in the marketplace. The shifts in related value networks and beyond get ignored. As a result, companies are caught off-guard when shifts in other value networks transform their own backyard.
Taking the popular disk drive example where the 3.5in drives in  mini-computers value network entered as game-changer in the desktop computing value network.
Taking the portable music player example which was serving mobile music value network. The portable music players were wiped out when the smartphones from mobile calling value network added multimedia capabilities.

In present times, a company needs to monitor shifts/changes in related value networks and beyond. For instance, an aircraft manufacturer can monitor shifts in value networks of regional, short haul, long haul, business, hobby, cargo and even beyond like space travel, surface transport etc.

While monitoring the various value networks, its important to investigate in various dimensions:
  • Can a emerging product/technology in other value network impact my value network?
  • Can a changing business model in other value network be applied to my value network?
  • Can my product/service fit in other value network as well?
The investigation will reveal both threats and opportunities for a company outside its value network.

Saturday, May 10, 2014

Delivering Breakthrough Innovation: Buy-in & Investment challenge

The last post dealt with execution challenge of an innovative idea. For execution, management buy-in and investment are required. The selection process for investment is a formalized process in many companies. And there lies the risk. Many innovative ideas slip through the cracks when they start their journey down this formalized process. It happens because the investment process is focused on delivering certainty. Innovative ideas are by nature have uncertainty associated with them. They struggle against the "certainty and no-risk" seeking comments like the following: 

Show me the money!: Revenues, cost estimates, business case, profitability, IRR are common in investment and capital budgeting decisions. Answering above questions is easy for a sustaining project which is based on existing technology, business model and market. But a disruptive idea can be different on all the three areas. Since there is no precedence, much of the time is lost in collecting data and figures. Due to uncertainty and non-precedence, the numbers are easy to challenge and hence more data is demanded. Instead of working to mature the idea, the team is caught is spiral of more data, more questions, hence more data. Some good ideas just die a slow death on a PowerPoint presentation.

My customers never mentioned about this problem!: Many companies institute a discipline of "listen to your customers". Customers are asked about their problems, a list is made based on the feedback and circulated to relevant internal departments for further action. If the innovative idea does not answer any problem in the list, then there is a slim chance of any support for the idea. One forgets that the list is just explicit needs of customers. Innovative ideas generally cater to implicit needs, or an unexplored opportunity.

It does not match with my yearly performance targets!: The investment process in general requires commitment from an internal customer who would industrialize/market the idea. An innovative idea will get blocked if it does not fit with the performance targets of the internal customer. In spite of obvious long term potential of an idea, the yearly targets influence the investment decisions. 

Not sure if it can work in real conditions!: As part of the formalized process, the experts will be called in, and questions will be raised on how a solution/idea would perform in actual operational conditions. And as one would expect, the disruptive idea/solution will not have all the answers. The formalized process in general do not provide room for "we will resolve the issues as we go along". Every issue needs to be resolved today! If not, come back with more information for the next meeting.

Formalized process for investment are important in an organisation to ensure that capital is efficiently allocated. Unfortunately, an organisation tend to use this formalized process as a single hammer for every type of nail.

Some organisations have woke up to the need of providing alternate channels for innovative and disruptive ideas, keeping them separate from the sustaining projects.

Friday, March 7, 2014

Delivering Breakthrough Innovation: The Execution Challenge

My earlier two posts dealt with zeroing on a potential break-through idea with the feedback from customers and experts. And believe me when I say that you have come just a quarter of the way. Still there is a long road ahead of execution and implementation. More disruptive the idea, more challenging is its execution.

But why is execution of a disruptive innovation so difficult, especially in established companies? The answer lies in organisation and processes of the company which is performance driven and focused on incremental growth in the boundaries set by the market conditions.

In other words, participating in execution of disruptive innovation is not part of any KPI of a manager and in many cases works against the existing KPIs. Consider following execution elements and the challenges: 
  • Detail solution design and development: Any disruptive idea typically requires a cross-functional team and external expertise. However, R&D and Engineering team are busy with projects for improving existing product. They cannot spare the manpower. And working with external experts raises IP & confidentiality issues.
  • Procurement of hardware/services for development: The procurement team is focused on cost reduction and applies the same process. The suppliers need to be registered and meet the criteria. They want competing quotes and negotiation for any procurement. Whereas you want to work with a designated supplier who is agile and understands your requirements without asking for a 50 page specification document. 
  • Production: The production plan is frozen for the year. There is no availability of machines and skilled manpower to work on your product. 
  • Customer discussion and feedback: Marketing team is busy with promoting existing products. Salesmen are busy with hitting their targets and have no time to discuss ideas with customers.

In nutshell, the organisational processes are designed for what they do best, to build on the past performance and efficiently earn the daily bread and butter for the company. Disruptive innovation is antithesis to what they are designed to do.

A certain organisational support is required to handle disruptive innovation. It would be wrong to rely just on an individual leadership and charisma.

The organisational support can come in following ways:
  •        Empowered team for Innovation with access to top management.
  •        Designated coordinators from each functional dept.
  •        Faster procurement channels
  •        Flexibility in pursuing external partnerships with start-ups, academics and other companies.
  •        A dedicated budget and regular review via say roadshows.

With the organisational support in place, next comes the team. The team may constitute of persons from diverse industry backgrounds and in-house experts. The common behavioural aspects are self-driven, open to new ideas and ability to perform in uncertain environment.

The organisational support and a good team are the foundation to manage and execute disruptive innovation. However, there is no formula for the execution itself. It can be chaotic, iterative, going back and forth, working-around, re-work etc. At the same time it would require painstaking attention to detail, documenting experiment results and mundane project planning & management.

So do you still think Innovation is glamorous and exciting?? J