Philosophy of Business as I understand

Whenever I walked on the streets of Kanpur, India, I looked the world with curiosity. Always, I wondered why people keep working day and night on different things. Why is there a sense of guilt among people who are involved in business? Why wealth creation is not taken positively in society? More I thought about these things more I got confused. Then I started ignoring about society and business. Years went working for business without knowing business. When I started pursuing Post Graduate Programme with a goal of enhancing my career prospects, same questions started staring at me. I was again clueless but this time I was determined to form an opinion about business before start working for business.

Business should ideally work to create opportunities of growth by designing specialized services and segregating the tasks. To achieve this we need to make an environment where willful exchange of goods can happen freely. Business gives an opportunity to people to pursue their own interests and not bogged down by the complexity of earning a living. A poet is writing poems and that is valued by people. He is free to write poems and earn a living by creating beautiful poems. Business gives an opportunity to him to do what he likes and exchange his writing for some other goods such as food etc. In the most basic form, business is a liberating device for people.

Business works on the principles of interests sharing. A person can maximize his life’s achievement by focusing on things that interests him. In nutshell, Business creates value for everybody in the society: directly or indirectly. There are different stakeholders of business : Customers, suppliers, shareholders, employees , Top management, government and not to forget society as a whole. A business generates employment and fulfills the needs of customers. It creates value for shareholders and founders. But a business impacts society by generating value beyond its boundaries. Think about a shop which is selling healthy food and determined to sell only healthy food, its direct stakeholders get benefits but as people will not fall sick, doctors will get more time to attend others patients. Parents will fall less sick and that’s why they can spend more time with children.

What motivates people?

I think, its the number one question in every top executive's mind. No business or company can be run by an individual or family members. There is a need to expand the business to make things really big and efficient. Business is not done in isolation and everybody has to work with people. So, more a manager understands people's mind, He increases chances of success.

So what motivates people : Money? People who are really motivated by money, choose crime or politics as career. People who want to do something good for the society and their families join business. Yes I am making a case for good people in business and excluding the exceptions.

I was watching Dan Pink's video and he clearly points out that there are three things that motivates people :

1. Autonomy
2. Mastery
3. Purpose

People must have a purpose. They must know for what they are working for. Does purpose of a project or program motivates the team members? If people's purpose is not aligned with project's mission, project is destined to fail.

There are skills that need to be possessed to do a particular task. If team members are not skilled enough to do a task, they will soon get demotivated due to inability. Their motivation will reach to zero if there is no way they can contribute. Managers must figure out ways to help employees to acquire new skills.

Autonomy is very important for employees. The agency theory came and agency problem is blown out of proportion. Employees are seen as enemies. Employees are not enemy of an organization. They must be given enough freedom to do a task. Too much monitoring really hurts the thinking ability of employees and they become robots.

To understand things more see the following video :

Disruptive Innovation assumes Customer Obsession

 

If you want to read further and not familiar with the idea of disruptive innovation, Please watch above video. 

Disruptive innovation is not an idea but a ray of hope for mankind. When I say this, I really mean it. Seeing the organization as a big beast which is fighting for survival created multiple problems in the minds of the managers. There are ways to innovate and capitalize on ideas to create new markets and new customers.  When we assume that total pie for all the human beings is same we start believing too much in porter's five forces.

We all studied Michael E. Porter's five forces model to understand business dynamics. This model was introduced to study industries which were driven by resources. Today we are living in knowledge driven economy... Ideas are more powerful than everything else. By innovating new business models any xyz person can compete with large foolish and immovable dinosaurs. There are numerous examples when innovators challenged the large corporations : Facebook is  challenging Google, Linkedin is challenging all Job portals, Twitter is challenging all News papers...

Porter's Assumption : Pie is fixed. Fight to get maximum out of it.

None of these companies started to compete for existing customers. All these companies created new customer base. These companies didn't focus on extracting more from buyers and suppliers. They didn't focus on erecting barriers to entry and didn't bother about substitutes. Clearly these companies survived and thrived on customer obsession which is must for disruptive innovation. As I pointed out in my last article, start thinking about customers, profits will automatically flow.

Disruptive Innovation : Expand the Pie... Take little from it... This little piece will be sufficient.

Old Model :

Focus on profit -----------> Beat suppliers-------> Kill buyers----> Focus on competition ----> Stop new players---> Neglect customers ---> Unhappy Customers----> Low $$$

New Model :

Focus on Customers ------------> New Ideas to serve ---------> New products -----------> Happy customers----> $$$$$

Start loving your customers to disrupt the market by understanding their next generation needs!

Wired to Fail

I always thought about ideas which are thrown to me and wondered if I will be able to critically analyze everything, every time. We live in a world where we have our own experiences and these experiences become chains for free thinking. We think everything in the reverse direction and hence lead to the wrong conclusion. In fact, I am arguing that first we assume conclusion and then we make arguments for it.

Assume you want to launch a retail chain in India and make it profitable. What is your first reaction to it? Is it possible to launch such retail chain? Is this idea viable? is it operationally feasible? All such questions will come to our mind and we may reach to a conclusion that such a solution is not possible.  Wait a minute... how are you thinking...

Operational efficiency ----> Strategy to compete ----> Create value for customers

Its a totally reverse way of thinking. We are not thinking to create something useful to customers but we want to create something taking into consideration our own shortcomings and capabilities... is it not funny that we are creating something with constraints and then expecting to be well taken by customers. Think Over it Again... Is it the way Sam Walton thought about it.. No Not at All... His thinking was as following:

Low prices everyday ----> Strategy to achieve this goal ----> Create operational capability to achieve the goals

That's why today Walmart is so successful. Analysis of turn over ratio and other things came later on once business became successful... we need to think what customers want and then prepare strategy and finally create innovative solutions to gain operation capabilities.

Another great example of this fallacy is reaction of Steve Ballmer on iPhone...


He was thinking what customers are not able to do... Ballmer, a legend on his own fell for reverse thinking... He was thinking what is not possible and what customers can't do... He couldn't realize that customers want something more productive ... be it touch phone... keyboard or whatever... Ballmer corrected his mistakes by launching windows 7 mobile later on...

So, Think in Right direction... don't get trapped in game of  neurons... Reverse the reverse thinking to get it right